In a recent development, Austin Dutton, a former broker and investment advisor at American Trust Investment Services, Inc. (CRD 3001) in Pennsylvania, is facing allegations of breach of contract, breach of fiduciary duty, negligent supervision, and violation of the best interest obligations (Reg BI). The customer dispute, filed on February 13, 2024, is currently pending resolution and involves alternative investments.
According to the disclosure details, the allegations against Austin Dutton include breaching contractual and fiduciary responsibilities, failing to adequately supervise, and not adhering to the best interest obligations outlined in Regulation Best Interest (Reg BI). The damages requested by the customer have not been disclosed, and the settlement amount is yet to be determined.
Investment fraud and bad advice from financial advisors can have devastating consequences for investors. A study by Bloomberg found that in 2020 alone, the Securities and Exchange Commission (SEC) ordered nearly $4.7 billion in disgorgement and penalties for investment misconduct.
Understanding the FINRA Rules and Regulations
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Regulation Best Interest (Reg BI) is a rule implemented by the Securities and Exchange Commission (SEC) that requires broker-dealers to act in the best interest of their retail customers when making investment recommendations. This rule enhances the standard of conduct for broker-dealers, ensuring that they prioritize their clients’ interests above their own.
In addition to Reg BI, FINRA Rule 3110 requires broker-dealers to establish and maintain a system of supervision to ensure compliance with applicable securities laws and regulations. This includes the supervision of registered representatives, such as Austin Dutton, to prevent and detect any potential misconduct or violations.
Breach of contract and breach of fiduciary duty are serious allegations that suggest a failure to uphold the legal and ethical obligations owed to clients. When a financial advisor or broker-dealer breaches these duties, they may be held liable for any resulting damages or losses incurred by their clients.
The Importance for Investors
This case serves as a reminder of the importance of working with trustworthy and ethical financial professionals. Investors should be aware of their rights and the obligations that their financial advisors and broker-dealers owe them.
When investing, it is crucial to understand the risks associated with various investment products, particularly alternative investments, which may be more complex and less regulated than traditional securities. Investors should thoroughly research and ask questions about any investment opportunity before committing their funds. Due diligence is essential to make informed investment decisions and protect one’s financial well-being.
If an investor suspects that their financial advisor or broker-dealer has engaged in misconduct or violated their obligations, they should promptly report their concerns to the appropriate authorities, such as FINRA or the SEC. Seeking the guidance of an experienced investment fraud attorney can also help investors understand their legal options and pursue potential remedies.
Red Flags and Recovering Losses
Investors should be vigilant for red flags that may indicate financial advisor malpractice or misconduct. Some warning signs include:
- Unexplained or excessive account losses
- Unauthorized trades or transactions
- Lack of communication or transparency from the advisor
- Pressure to invest in unsuitable or high-risk products
If an investor suspects they have fallen victim to investment fraud or misconduct, they may be able to recover their losses through FINRA arbitration. This process allows investors to seek compensation from their financial advisor or broker-dealer for damages resulting from misconduct or violations of securities laws and regulations.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Austin Dutton and American Trust Investment Services, Inc. The firm has over 50 years of experience and a 98% success rate in helping investors recover losses through FINRA arbitration.
Investors who have suffered losses due to the alleged misconduct of Austin Dutton or American Trust Investment Services, Inc. are encouraged to contact Haselkorn & Thibaut for a free consultation. The firm operates on a contingency basis, meaning clients pay no fees unless a recovery is obtained. To discuss your case with an experienced investment fraud attorney, call Haselkorn & Thibaut‘s toll-free number at 1-888-885-7162 .
