Failed CapWest Private Placements Continue To Plague Colorado Ex-Broker
- Created: Monday, 14 November 2011 07:22
Most discussion of failed private placements from vendors like Medical Capital Holdings and Provident Securities focuses on the broker-dealers that went out of business in the face of massive fines.
Such fines almost killed Securities America and doomed a list of smaller firms like QA3 and CapWest.
But with CapWest winding down its business in September, aggrieved clients are redoubling their efforts to collect from one ex-rep in particular: Randall Pope of Fort Collins, Colorado.
Pope was a regional star for the firm, selling about $7 million worth of Striker Petroleum paper from Oregon to Texas.
Unfortunately, the instruments imploded when oil prices declined, leaving the issuer in the same bankrupt position as Medical Capital Holdings and other high-profile failures.
Pope himself has since quit the business to run a basketball camp, but is still a defendant in several arbitration cases.
The clients say he ran a Ponzi scheme. He says he was simply selling securities that failed.
This is similar to the dispute over whether Securities America was guilty of rubber-stamping bad investments in order to raise commissions.
The firm and insiders alike swore that they did their due diligence. But in this environment, that's not enough to keep everyone happy.
Disclosure of risk is critical. Nothing is risk-free. Bizarre market scenarios can hurt even the most rock-solid-looking of positions. This is basic stuff, but clients need to know.
And product vendors can lie. Advisors need to drill down and if a product seems too good to be true, it probably is.
After all, there is plenty of product out there.