CMKM Diamonds Inc (fka CMKX)

[Investorman]

Brokers had a legal obligation to check the status of those securities to see if they have been registered.

No, they don't

As long as the company was registered with the SEC, they are permitted to trade the shares. When the registration is rovoked, they can no longer trade the shares. It isn't the brokers responsibility to determine if the shares were legally registered or not. Brokers do not evaluate, or even see, opinion letters and company records.

These shares were not stolen so your example doesn't apply.