On January 13, 2012, the national plaintiff securities law firms of Dimond Kaplan & Rothstein, P.A. ("DKR") and Blum & Silver, LLP ("B&S") received a $9 million-plus FINRA arbitration award against Capwest Securities, Inc. ("Capwest"), a Lakewood, Colorado, brokerage firm. The Colorado FINRA arbitrators found CapWest liable under various common law and state securities statutes claims for selling fraudulent Provident, Shale Royalties, Medical Capital, and DBSI securities. DKR and B&S represented approximately 30 investors and alleged, among other things, that CapWest failed to conduct adequate due diligence on the fraudulent securities before CapWest approved the products for sale to investors. Those allegations involve a fundamental type of stockbroker negligence.
Before recommending and selling any investment, brokerage firms are required to conduct due diligence to determine whether the investments should be sold to any investor. The investors in this case alleged that CapWest approved and then recommended and sold the investments in the face of numerous red flags that should have caused CapWest to reject the investments.
The FINRA arbitration award included $7,925,763 in compensatory damages and $1,188,863, in attorneys' fees.
