Capwest Securities Suffers a $940,000 Loss in FINRA Case

CapWest Securities Incorporated came out on the short end of the stick in a Financial Industry Regulatory Authority (FINRA) arbitration held in Dallas, Texas in July 2011. The group of investors filed the claim against CapWest in March 2010, asserting various causes of action including violations of federal and state securities laws; breach of contract; breach of fiduciary duty, negligence; fraud and gross negligence, among others. The causes of action were all related to the recommendation and purchase of various investments in high risk, illiquid convertible debentures.

After the three (3) day evidentiary hearing had concluded, the FINRA arbitrators went into executive session to review all of the oral and documentary evidence prior to rendering their decision. The panel concluded that CapWest Securities was liable and ordered them to pay Claimant Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008, the sum of $137,100 in compensatory damages; that CapWest was liable and ordered them to pay Claimants Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership, the sum of $478,500 in compensatory damages; that CapWest Securities was liable and ordered them to pay Claimant Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008, the sum of $37,330 in interest calculated at the rate of 5% per annum from October 25, 2008 through and including July 15, 2011; that CapWest was liable and ordered them to pay Claimants Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership, the sum of $95,180 in interest calculated at the rate of 5% per annum from October 16, 2006 through and including July 15, 2011; that CapWest Securities was liable and ordered them to pay Claimant Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008, the sum of $17,450 in punitive damages pursuant to the Texas Deceptive Trade Practices Act; that CapWest was liable and ordered them to pay Claimants Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership, the sum of $57,370 in punitive damages pursuant to the Texas Deceptive Trade practices Act; that CapWest Securities was liable and ordered them to pay Claimants Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008 and  Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership, the sum of $9,030 in costs; that CapWest Securities was liable and ordered them to pay Claimants Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008 and Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership, the sum of $100,000 in attorneys’ fees. Finally, the panel decided and assessed the entire amount of $7,650 in forum fees of the arbitration against CapWest Securities. (FINRA# 10-01343; Robert E. Lee, Individually and as Trustee of the Robert Earl Lee Revocable Trust dated April 1, 2008 and Buford E. McCrae (“B.E. McCrae”), Individually and on behalf of the B.E. McCrae Family Limited Partnership and Beatrice M. McCrae, Individually and on behalf of the B.E. McCrae Family Limited Partnership and Victor Stefanovic v. CapWest Securities, Incorporated).

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