Donald DeWaay, the former investment broker whose belief in high-risk private placements led to the collapse of his financial services businesses in Clive, could be headed back to court to face former clients after a court-approved settlement of their claims was overturned.

Decatur County District Judge John Lloyd abused his discretion when he approved a $3 million settlement in a class-action lawsuit, a three-judge panel of the Iowa Court of Appeals said in an opinion released Wednesday.

“We conclude the district court abused its discretion in approving this non-opt-out, limited-fund class certification for purposes of settlement because there has been no determination of the ‘maximum’ amount of funds available for settlement,”  Chief Judge David Danilson wrote for the majority, which also included Judges Amanda Potterfield and Thomas Bower.

Danielson pointed out that the case involved issues that had no precedent in Iowa.

Attorney Steve Wandro, who represented DeWaay in the lawsuit that was filed in January 2012, said the Iowa Supreme Court will be asked to review the appellate court ruling.

“The Iowa Supreme Court will have the final say,” Wandro said.

Lloyd approved what is called a “limited fund” settlement that prevented all former clients who lost millions of dollars in investments in real estate and oil exploration companies from pursuing individual claims.

A group of investors intervened in the case and appealed Lloyd’s ruling.

DeWaay’s woes came to light in a series of complaints filed with the Financial Industry Regulatory Authority Inc. and in federal bankruptcy cases involving companies for which he had promoted investment deals.

His attorneys argued that settling all of the claims would lead to the demise of the many business that operated out of a chalet-like campus in Clive, as well as the collapse of DeWaay’s personal finances. If those events would occur, clients would be unable to recover any of their money, the lawyers said.

Broker-dealer DeWaay Financial Network LLC gave up its registration to buy and sell securities in late 2012. At the time, it had few employees. The Iowa Lottery Commission has bought the firm’s former headquarters building, and the majority of DeWaay’s real estate holdings in Greater Des Moines and the Lake Okoboji area have been sold.

DeWaay, of West Des Moines, is listed as an investment adviser on FINRA’s BrokerCheck website, a public source of information about people involved in the buying and selling of private securities.

Wandro said today that many of DeWaay’s clients have seen an improvement in their portfolios as a result of gains in financial markets over the three years since the case was filed.

However, many of the clients covered by the lawsuit had invested with companies that are no longer operating, and at least one was determined to be operating a real estate fraud.

Prior to the lawsuit, DeWaay had settled some claims that were filed with FINRA, and others were stayed pending the outcome of the lawsuit.