The Pennsylvania Department of Banking and Securities fined Austin Richard Dutton Jr (doing business as Bridge Valley Financial Services, LLC) $200,000 for engaging in dishonest or unethical practices by recommending that at least one customer purchase, sell, or exchange a security without reasonable grounds to believe that such transaction was suitable. Dutton's employing firm, Newbridge Securities, also received a $499,000 fine.
Oddly enough, Dutton became associated with a new firm, Center Street Securities, Inc., on July 21, 2017, exactly three days prior to the Department's filing.
According to the order, Dutton (CRD #2739167), while associated with Newbridge Financial Services Group, Inc., recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for his customer, given the customer's investment objectives and risk tolerances. Though the document failed to specify how many clients were involved, it did state that Dutton engaged in the misconduct from January 2012 through December 2016.
An InvestmentNews article portrayed Dutton as "well known in Philadelphia" for selling non-traded real estate investment trusts (REITs) managed by American Realty Capital (ARC), also known as AR Global. Dutton says the $200,000 fine has nothing to do with his REIT business.
In June, a federal jury found American Reality Capital Properties ex-CFO Brian Block guilty of securities fraud. The Block trial was related to a federal investigation into REIT-related fraud at ARC and concerned sales of a product called the ARCP REIT.
ARC and ARCP REIT are part of ARC chairman Nicholas Schorsch's REIT empire, which investigators and regulators have targeted in regulatory sweeps amidst allegations that Schorsch-affiliated REITs and firms have engaged in misconduct, including that of securities fraud.
In 2014, Dutton admitted to selling REITs in ARC and RCS Capital Corp, stating, "I made a big mistake: I gave every client my cell number...As a hundred retired policemen [and clients] have said to me, 'You must be the smartest guy in the world. Or the dumbest guy in the world. Because you have all our money, and we know where you live, and we all carry guns.'"
A customer dispute filed against Dutton in 2015 and since settled alleged misrepresentations and omissions, breach of fiduciary duty, negligence, breach of contract and failure of supervision.
In a related finding (SEC-CAO #170043), the Department found that from 2012 through 2016, Newbridge failed to maintain a reasonable supervisory system for applying and enforcing written procedures related to sales of structured products. PA ordered Newbridge to pay an administrative assessment of $499,000 for the supervisory violations.
If you have invested with Austin Richard Dutton Jr or with any broker or financial adviser in Nicholas Schorsch's REIT empire, including American Reality Capital (ARC), American Reality Capital Properties (ARCP REIT) or other products recommended without reasonable grounds to believe the transaction was suitable given your specific investment objectives and risk tolerance profile, and these unsuitable recommendations have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.