Regulatory Crossroads: The Austin Dutton Saga

A seasoned broker based in the Philadelphia area, Austin Dutton, who has long been under regulatory scrutiny, now faces a significant development in his career as a financial advisor: a Wells Notice.

The Financial Industry Regulatory Authority Inc. (FINRA) filed a Wells Notice against Dutton in October, as indicated in his BrokerCheck report. This notice serves as a communication outlining the substance of allegations and charges that the regulator intends to bring against the investment professional.

As of Monday morning, Dutton had not responded to a message seeking comment.

FINRA has made a “preliminary determination” to recommend disciplinary action against Dutton for alleged violations of industry rules related to the disclosure of information and documents, according to the BrokerCheck report.

“We’ve received numerous complaints from investors about Austin Dutton, and I’m not surprised to hear that he is under investigation by a securities regulator,” said Dax White, a plaintiff’s attorney. “FINRA is aiming to get his attention with the Wells Notice. It’s not a favorable situation for Austin Dutton.”

Dutton’s securities licenses have been suspended, and he has not been registered since January 2022. With a career spanning 25 years and affiliations with nine broker-dealers, he has accumulated a total of 36 “disclosure items” on his BrokerCheck report, ranging from customer complaints to investigations.

Over the years, Dutton has faced inquiries from securities regulators for various reasons.

In 2017, the Pennsylvania Department of Banking and Securities fined Dutton $200,000, citing “dishonest or unethical practices in the securities business.” The fine was related to his recommendation of a security purchase to at least one customer without reasonable grounds to believe the transaction was suitable.

In the summer of 2022, FINRA suspended Dutton for 2½ months from the securities industry for failing to respond to the regulator’s requests for information, a rule mandated by the industry.

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 fulfilled that arbitration award,” noted attorney Kal Nekvasil, who represented the customer in that claim. “I’m additionally pleased that regulatory action has been taken against him. My client in that claim is a retired, disabled firefighter. He was 73 years old, and Dutton placed most of his life savings into GWG bonds.”

GWG Holdings, which sold $1.6 billion in bonds backed by life settlements through independent broker-dealers and registered reps like Dutton, filed for Chapter 11 bankruptcy protection in April 2022.

While some investors who purchased GWG bonds have filed arbitration claims against brokers and broker-dealers. Many are awaiting the bankruptcy court’s decision on the actual value, if any, of the bonds before proceeding with claims, according to recent discussions with plaintiff’s attorneys.