A somewhat bizarre chapter in industry history has wound down after Capital Financial Holdings has bought 3 million of its own shares back from its pawnbroker affiliate.
Capital Financial has been hit hard by the collapse of the private placement sales channel, in which it was a major player.
However, it initially sold the shares to a company called PawnMart back in 2006, well before the collapse of private placement vendors like Medical Capital and Provident Royalties, much less the 2008 credit crunch.
As a result, the easy moral conclusions aren't easy to draw here. Capital Financial didn't "pawn its own shares to cover its private placements."
And while funding conditions in the industry aren't great, this is not evidence that struggling broker-dealers "have to pawn their own stock to survive."
Remember, the firm didn't just pawn its shares recently. They bought them back at a huge premium of something like 500% over recent market price.