Financial advisor John Matson of Manhattan Beach, California, was recently barred from the securities brokerage industry for failing to cooperate with a regulatory investigation into allegations that he committed sales practice violations. The investigation reportedly related to allegations that Matson had issued a promissory note to an 80-year old customer and ceased making the required interest payments. At the time of the alleged misconduct, Matson was associated with the brokerage firm LPL Financial.
Selling away occurs when a broker or advisor recommends investments to his clients that are not approved for sale by his firm. In most cases, the investments are not registered with the appropriate state and federal regulators. Worse yet, in many cases, the issuer is running a Ponzi scheme, affinity fraud, or some other type of illegal operation to defraud investors. These schemes usually come to light when the issuer starts to default on its repayment obligations.
In a selling-away situation, the investor may have claims against the issuer of the security (i.e., the person or company that issued the promissory note or other investment). In most cases, the investor can also bring claims against the broker who recommended the investment and the firm where the broker works. The firm may be liable under an agency theory or because it failed to properly supervise the broker. Under FINRA rules, the firm is required to have a reasonable supervisory system in place to detect and prevent selling away.
If you have suffered investment losses as a result of the malpractice or misconduct of John Matson, our experienced team of securities attorneys may be able to assist you in recovering some or all of your losses. Call us toll-free at 888-607-4819 for a free consultation or email us through our “Contact” page to schedule a free consultation.