Two dozen investor complaints have been filed against Newbridge Securities Corp. alleging millions in damages from the sale of illiquid, non-traded real estate investment trusts (REITs).
According to two attorneys handling the claims, Philadelphia public employees including police and fireman have filed complaints alleging that the illiquid REITs lacked suitability, and that Newbridge failed to supervise the broker who sold the REITS.
The broker, Austin Dutton, is well-known in the Philadelphia area as a leading seller of REITs managed by American Realty Capital, the real estate investment company controlled by Nicholas Schorsch. He also marketed REITs to police, fireman, and other public employees through his firm Bridge Valley Financial Services.
According to the lawyers filing the complaints, the clients had more than 50% of a lump sum retirement benefit invested in the illiquid, ARC REITs. They also bought REITs sponsored by United Development Funding, which had its offices raided by the FBI after allegations that it was operating like a Ponzi scheme.
Newbridge Faces Other Customer Complaints
Newbridge is coming under fire for additional risky investment products. Dimond Kaplan & Rothstein has filed a FINRA arbitration claim on behalf of a couple who lost a large portion of their life saving after following Newbridge’s advice. The couple allege that Newbridge recommended the purchase of a number of risky ETFs.
Dutton Previously Fined for Dishonest Practices
Austin Dutton was registered with Newbridge from August 2007 to August 2017, according to his BrokerCheck report. In July of last year, he was fined $200,000 by the Pennsylvania Department of Banking and Securities and cited for “dishonest or unethical practices in the securities business.”
In a parallel action, Pennsylvania also fined Newbridge $499,000 in July 2017 for failing to supervise a broker who was selling structured products to clients in the state.
In November and December of last year, one of the plaintiff’s lawyers filed four complaints against Newbridge for FINRA arbitration. Those claims total damages of $750,000 and allege a failure to supervise. In every case, Dutton was the advisor.
Newbridge Securities in Talks to Be Acquired by Foreign Firm
Newbridge Securities is said to be in talks with a foreign firm about acquisition. It is not clear if the Financial Industry Regulatory Authority Inc. has approved the transaction.
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