by Brian Mahany
For months we have been reporting on the steady demise of brokerage firms tied to investments in DBSI, Medical Capital Holdings and Provident Royalties. Several firms have gone out of business as a result of selling securities in these companies to their investors. When a brokerage firm goes under, there is often little an investor can do to collect.
Today’s InvestmentNews carries yet another story of a failed broker-dealer, but this one has a twist. According to the article, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) has ordered Cap West to pay 40 former customers $7.9 million in damages and another $1.2 million in legal fees. That sounds like a great victory for investors.
An arbitration award is only a piece of paper. Unless the stockbroker or brokerage firm behind the award is solvent, the award won’t even buy a cup of country.
Although “ordered” to pay over $9 million, Cap West’s lawyer reportedly told the reporter that the company was so broke it didn’t even have an obsolete phone book. That means the 40 investors will likely walk away with nothing.
Unfortunately, there are no magic answers. Sometimes, defendants have hidden assets or money squirrled away. If what the lawyer says is true, however, Cap West has nothing.
Is there a lesson here? Yes! The longer you wait to sue a stockbroker, investment advisor or brokerage firm, the more difficult it is to collect even if you win.
In the Cap West case, the parties had apparently settled, although by the time they reached an agreement the money was gone.
If you are the victim of an investment fraud, don’t wait. That means don’t wait to hire an asset recovery or fraud lawyer and don’t wait expecting the government will do it for you.
For more information, contact attorney Brian Mahany. The call is confidential. Brian can be reached at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota.