2 have fraud charges dropped

The Utah Division of Securities announced Wednesday that all securities fraud charges previously brought against David A. Russon and Brian G. Kasteler have been dropped.

In a prepared statement, the division also expressed regret for any harm a press release it issued earlier this month may have caused to the men's reputation.

The division previously had alleged that First Western Advisors and two current and two former brokers (Russon and Kasteler) were part of securities fraud involving nine Utahns who invested more than $20.6 million. The division filed a petition to revoke and bar licenses and impose fines against First Western and brokers Gary W. Teran, Carl A. Page, Russon and Kasteler.

In its earlier filing, the division said clients' investments were placed into share levels with higher commissions and fees without disclosing that to the investors. It also alleged that First Western failed to maintain accurate books and records and supervise the activities of the four brokers.

On Wednesday, in addition to dropping the securities fraud charges, the division said it has satisfactorily resolved the remaining non-fraud claims against Russon and Kasteler. It will continue to pursue its claims against First Western Advisors, Teran and Page, the division said.

Lisa Davis James, spokeswoman for First Western, said in a prepared statement Wednesday that the settlement with Russon and Kasteler was a "welcome outcome" considering the facts of the situation.

"We are currently discussing a resolution of this matter with the Utah Division of Securities," James said in the statement. "We applaud the state and the brokers for their willingness to reach an agreement that resolves the concerns of both parties and serves the best interests of clients.

"First Western Advisors Inc. has been a trusted financial firm for nearly 25 years, and we take our responsibilities and relationships with our clients very seriously."

A stipulation and consent order filed at the division states that Russon and Kasteler agreed to settle the matter by way of the order, which fully resolves the claims the division had against them. Russon and Kasteler neither admitted nor denied the division's investigative findings, the order stated.

They consented to offer the clients whose accounts were at issue the option of converting their class B or C stock shares to class A shares at no charge, and offered to pay each of the six clients the difference for expenses incurred due to higher fees associated with the shares they bought. And the men agreed to cooperate in the division's case against First Western, Teran and Page.

The division declined to comment beyond the settlement document.