CapWest Securities

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert “Rusty” Tweed (Tweed) has been the subject of at least 8 customer complaints and one termination from a brokerage firm for cause. The customer complaints against Tweed allege a number of securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, misrepresentations and false statements, and securities fraud, among other claims. The securities involved in the customer disputes include private placements, tenants-in-common (TICs), and variable annuities.

Tweed entered the securities industry in 1993. From February 2005, until February 2007, Tweed was registered with United Securities Alliance, Inc. From February 2007, until October 2010, Tweed was associated with CapWest Securities, Inc. (CapWest) Thereafter, from August 2010, until April 2011, Tweed was registered with brokerage firm MAM Securities, LLC. Tweed went back to CapWest from April 2011, until August 2011. Finally, Tweed has been registered with Concorde Investment Services, LLC since August 2011.

In addition to Tweed’s registrations, his BrokerCheck records reveal a number of other business ventures that Tweed is involved with including Tweed Financial Services, the Exeter Group LLC, Athenian Fund, LLC, Waterloo LLC, TFS Properties, Inc., Starpoint Energy, LLC, Tweed Marketing Services, LLC, and Tax Guard 1031.

The sales of Tenants-in-Common (TIC) interests grew significantly during the early 2000s from approximately $150 million in 2001 to approximately $2 billion by 2004. The Financial Industry Regulatory Authority (FINRA) has noted that TICs are illiquid investments for which no secondary market exists and that subsequent sales of the property may occur at a discount to the value of the real property interest. FINRA has also warned that the risk that the fces and expenses charged by the TIC sponsor can outweigh the potential tax benefits associated with a Section 1031 Exchange. FINRA also instructed members that they have an obligation to comply with all applicable conduct rules when selling TICs by ensuring that promotional materials used are fair, accurate, and balanced.

According to FINRA former brokerage firm CapWest Securities, Inc., (CapWest) violated industry content standards in communications with the public. FINRA found that the communications: (1) were not fair and balanced and failed to provide a sound basis for evaluating TIC investments being promoted; (2) used exaggerated and or misleading statements; (3) used prohibited statements by projecting the results of the products being promoted; and (4) used customer testimonials without proper disclosures. FINRA also found that CapWest violated supervisory standards by failing to implement effective supervisory procedures. FINRA found that all of these violations and conduct were inconsistent with just and equitable principles of trade.

FINRA’s investigation involved CapWest’s promotion and sales of Section 1031 Exchanges and TIC investments that started being sold in the early 2000s. CapWest made public communications to promote tax-deferred exchanges of real property under Section 1031 of the Internal Revenue Code (IRC) as well as TIC investments. The IRC permits an investor to defer paying capital gains tax on the sale of real estate held for use for investment by exchanging the investment for “like-kind” property of equal or greater value.

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