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Financial Advisor John Matson Barred by the SEC

John Nicholas Matson (CRD#: 1796541) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 1996 and previously worked with Merrill Lynch, Pierce, Fenner & Smith Incorporated; Citigroup Global Markets Inc.; LPL Financial LLC; and Ameriprise Financial Services, Inc.

Allegations of Misconduct

According to publicly available records released by the U.S Securities and Exchange Commission (SEC), in December of 2024, the SEC deemed it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against John N. Matson (“Matson” or “Respondent”). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept.

On the basis of this Order and Respondent’s Offer, the Commission finds that between March 2007 and July 2015 and from November 2017 to December 2022, Matson was a registered representative and investment adviser representative of a firm dually registered with the Commission as a broker-dealer and investment adviser. Between June 2015 and November 2017, Matson was a registered representative and investment adviser representative of a second firm dually registered with the Commission as a broker dealer and investment adviser. On September 23, 2024, a judgment was entered by consent against Matson, which, among other things, permanently enjoined him from future violations of Section 17(a) of the Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, as set forth in the judgment entered in Civil Action Number 3:24-CV-01342, in the United States District Court for the Southern District of California.

The Commission’s complaint in that litigation alleged that, between January 2012 and September 2021, Matson sold securities with a face value of $1,560,000 issued by South Bay Acquisitions LLC (“South Bay”), a company controlled by him, to five investors (collectively “the investors”), raising approximately $1,535,000. The securities, which were denoted “LLC Bonds” and were functionally promissory notes, included language stating that the Matson and South Bay would manage the proceeds as fiduciaries and promising 12 to 20% interest. The complaint further alleged that, despite his obligation to act as a fiduciary and without disclosure to investors, Matson immediately and consistently transferred investor money from South Bay to his personal account to use for personal expenses. The complaint also alleged that Matson operated the program as a Ponzi scheme, using investor funds to pay promised returns to earlier investors.

Accordingly, it was ordered that Respondent Matson be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Respondent was also barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer, for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.

In addition, John Matson has been the subject of seven other disclosures, some of which include:
• July 2024—” Customer alleges that representative sold her a promissory note in the amount of $300,000 in February of 2019, away from the firm.” The damage amount requested was $300,000 and the customer dispute settled for $180,000.
• January 2023—“ 1/5/12 – 1/26/23.” The damage amount requested was $610,000 and the customer dispute settled for $180,000.
• December 2022—“ Without admitting or denying the findings, Matson consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA in connection with its investigation into a customer’s investments in promissory notes recommended by Matson. The findings stated that this matter originated from an 80-year-old customer’s call to the FINRA Securities Helpline for Seniors in which the customer advised that Matson had recommended the customer invest in a promissory note and had thereafter ceased making promised interest payments on the note.” FINRA Barred Matson.
• November 2022—Discharged by LPL Financial LLC, “Participated in Firm-unapproved investments without notice to, or approval from Firm.”
• March 2017—“ The client alleged due to a progressive lapse in supervision and management of specific accounts, significant losses were incurred from March 2013 to December 2015.” The damage amount requested was $33,685 and the customer dispute was denied.
• April 2010—“ COMPLAINT ALLEGES CHURNING, UNSUITABLE INVESTMENT RECOMMENDATIONS, NEGLIGENCE, BREACH OF CONTRACT, BREACH OF DUTIES AND FAILURE TO SUPERVISE, ALL RESULTING IN LOSS TO THE CLAIMANT.” The damage amount requested was $353,000 and the customer dispute settled for $137,500.

For a copy of John Matson SEC AdvisorInfo, click here.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.

 

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]