Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, December 22, 2009

SEC Settles Fraud Charges Against Texas Investment Adviser Who Used Football Players to Promote Offerings

The SEC filed securities fraud charges against Kurt B. Barton, an Austin, Texas investment adviser, and two businesses he controls for operating a multi-million dollar scam that used former professional football players to promote its offerings.  According to the SEC, Barton and Triton Financial LLC raised more than $8.4 million from approximately 90 investors by selling "investor units" in an affiliate, Triton Insurance, and telling investors that their funds would be used to purchase an insurance company. The SEC alleges that these representations were false and investor proceeds were instead misused to pay day-to-day expenses at Triton and its affiliate.

According to the SEC's complaint, filed in federal court in Austin, Barton and Triton used former football players as well as stockbrokers and other salesmen to promote Triton securities to potential investors. Barton and Triton have consented to court orders freezing their assets. Triton has been registered with the Texas State Securities Board (TSSB) as an investment adviser since June 2006.

Triton was the subject of a March 2009 Sports Illustrated article that prompted the TSSB to examine Triton's business. The article described Triton's use of former Heisman Trophy winners and NFL players to promote its investments to potential investors, including other football players. The article noted one particular mass e-mail, sent by a former NFL quarterback to numerous NFL alumni, that discussed Triton's activities and touted Triton's returns on its investments. According to the SEC's complaint, the defendants provided the TSSB with altered and fabricated documents during the examination that followed the article's publication.

Without admitting or denying the SEC's allegations, the defendants have consented to permanent injunctions against future securities fraud violations. They have also consented to appointment of a receiver and to orders freezing their assets, prohibiting destruction of documents, and requiring that they provide an accounting.

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