A veteran Philadelphia-area broker, Austin Dutton, who for years has been under the scrutiny of securities regulators, is now facing one of the most dire developments in the career of a financial advisor: a Wells Notice.
The Financial Industry Regulatory Authority Inc. in October filed its Wells Notice against Dutton, according to his BrokerCheck report. The notice is essentially a letter informing the investment professional of the substance of allegations and charges the regulator intends to bring.
Dutton did not return a message Monday morning to comment.
Finra made its "preliminary determination" to recommend a disciplinary action against Dutton for allegedly violating industry rules regarding turning over information and documents, according to the BrokerCheck report.
"We've had a bunch of Austin Dutton complaints from investors, and I'm not surprised to hear he is being investigated by a securities regulator," said Dax White, a plaintiff's attorney. "Finra is looking to get his attention with the Wells Notice. It's not a good day for Austin Dutton.
Dutton's securities licenses has been suspended and he has not been registered since January 2022. His career spans 25 years with nine broker-dealers. He has a total of 36 so called "disclosure items" on his BrokerCheck report, ranging from customer complaints to investigations.
Dutton for years has faced questions from securities regulators for a variety of reasons.
Citing “dishonest or unethical practices in the securities business,” the Pennsylvania Department of Banking and Securities in 2017 fined Dutton $200,000. Dutton “recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for the customer,” according to his BrokerCheck report regarding the Pennsylvania matter.
Finra suspended him for 2½ months in the summer of 2022 from the securities industry for failing to respond to the regulator’s requests for information, an industry mandated rule.
Earlier this year, Dutton lost an industry arbitration claim of $43,645 to a client related to sales of GWG Holdings Inc. L Bonds.
"Dutton has not paid that arbitration award," said the attorney, Kal Nekvasil, who represented the customer in that claim. "I'm glad additionally regulatory action has been taken against him. My client in that claim is a retired, disabled firefighter. He was 73-years-old, and Dutton put most of his life savings into GWG bonds."
GWG Holdings, which sold $1.6 billion in bonds backed by life settlements through a network of independent broker-dealers and registered reps like Dutton, filed for Chapter 11 bankruptcy protection in April 2022.
While some investors who bought GWG bonds have sued brokers and broker-dealers through arbitration overseen by the Financial Industry Regulatory Authority Inc., many are waiting for the bankruptcy court to decide what value, if any, the bonds actually have before filing claims, according to recent conversations with plaintiff’s attorneys.
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"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
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