A Decatur County judge will hear arguments Jan. 30 for and against a proposed $3 million settlement of two class-action lawsuits against financial adviser Donald DeWaay and the Clive broker-dealer office he recently shuttered.

HISTORY:
The lawsuits were filed earlier this year by DeWaay clients who claim they lost millions of dollars in investments that turned sour, primarily in private placements in real estate deals and oil and gas leases. The investments were offered by other firms, many that have since declared bankruptcy, and promoted by DeWaay and his agents.

LICENSE:
On Nov. 9, DeWaay informed the Financial Industry Regulatory Authority (FINRA) that he was giving up his registration as a broker-dealer.

IMPACT:
DeWaay’s attorneys have said that settlement of individual claims could bankrupt DeWaay and his businesses.

The class-action lawsuits would block any attempt by individuals to recoup their losses through FINRA arbitrations.

The judge gave preliminary approval to the $3 million settlement and ruled that plaintiffs could not opt out of the agreement. A separate set of investors asked to intervene in the case.

HOW IT FELL APART:
DeWaay blames a falling economy that wrung the value out of many investments, especially those in real estate. An audit of his personal finances blamed his withering fortune primarily on a collapse of real estate values. However, clients and others claim that he played in an area that involved high risk and paid the price when the economy soured.