Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Austin Dutton (Dutton), previously associated with American Trust Investment Services, INC., has at least 5 disclosable events. These events include 3 customer complaints, 2 regulatory events, alleging that Dutton recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $100,000.00 on July 18, 2024.
Breach of contract, breach of fiduciary duty, failure to supervise and negligence and violation of reg bi.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $100,000.00 on February 13, 2024.
Breach of contract, breach of fiduciary duty, negligent supervision and violation of the best interest obligations (reg bi).
FINRA BrokerCheck shows a final customer complaint on January 05, 2024.
Dutton was named a respondent in a FINRA complaint alleging that he recommended customers purchase illiquid alternative investments without having a reasonable basis to believe that these purchases were suitable. The complaint alleges Dutton’s recommendations of alternative investments to the customers, most of whom were retired or approaching retirement, were unsuitable based on their investment profiles-including their net worths, investable assets, annual incomes, investment objectives, and risk tolerances. The recommendations generated more than $72,000 in commission for Dutton. The complaint also alleges that Dutton falsified his member firm’s books and records and caused numerous books and records, including new account documents, Direct Business Profile and Agreement forms, Accredited Investor Forms, and Suitability Forms to contain false and inaccurate information regarding customers. The records Dutton falsified caused them to contain false and inaccurate information about his customers’ net worth, risk tolerance, investment objective, and concentration percentage in alternative investments. The complaint further alleges that Dutton did not respond to FINRA’s requests for information and documents and when he did, Dutton did not respond in a timely manner. The information requested was material to FINRA’s investigation of whether Dutton made unsuitable recommendations of alternative investments to additional customers. Dutton responded to a request only after the initiation and near-completion of a FINRA proceeding that would have resulted in his bar from the securities industry if he did not comply. Dutton has subsequently failed to respond to other FINRA requests for information in connection with a separate investigation into whether Dutton engaged in a private securities transaction.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $500,000.00 on December 08, 2023.
Breach of fiduciary duty, breach of contract, failure to supervise and negligence.
FINRA BrokerCheck shows a final customer complaint on July 26, 2023.
Respondent Dutton failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest.
An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Dutton has been in the securities industry for more than 25 years. Dutton has been registered as a Broker with American Trust Investment Services, INC. since 2021.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
