John Matson Barred by SEC and FINRA Over Alleged Ponzi Scheme

John Matson (CRD #: 1796541), a broker formerly registered with LPL Financial, has been barred by the SEC and FINRA, according to his BrokerCheck record, accessed on January 27, 2025. Keep reading if you want to know more about his alleged conduct as a broker.

SEC Bar

On December 20, 2024, the Securities and Exchange Commission barred John Matson following judgment being entered against him in a civil action previously filed by the SEC.

In that complaint, the SEC alleged that John Matson raised approximately $1,535,000 from five investors by selling securities issued by South Bay Acquisitions, LLC. These securities allegedly functioned as promissory notes and promised 12-20% interest.

He allegedly used investor funds to pay promised returns in the manner of a Ponzi scheme, and also used investors’ money for his personal expenses.

On September 23, 2024, judgment was entered by consent against John Matson in this civil action. He was enjoined from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Securities Act of 1933

Section 17(a) of the Securities Act of 1933 prohibits the use of fraudulent schemes and devices relating to the purchase and sale of securities across state lines. In particular, it prohibits the use of false or misleading statements and the omission of facts concerning securities.

Securities Exchange Act of 1934

Section 10(b) of the Securities Exchange Act of 1934 forbids the use of manipulative or deceptive devices in relation to the purchase or sale of securities. Rule 10b-5 extends this to include fraudulent schemes, untrue statements and omissions of fact.

Sanctions

The SEC permanently barred John Matson from associating with the following:

• Brokers
• Dealers
• Investment advisers
• Municipal securities dealers
• Municipal advisors
• Transfer agents
• Nationally recognized statistical rating organizations (NRSROs)

He was also barred from participating in penny stock offerings. Both bars took effect on December 20, 2024.

SEC Complaint

On July 30, 2024, the SEC filed a complaint alleging that John Matson misappropriated client assets from investments issued by his company, South Bay Acquisitions.

South Bay Acquisitions allegedly issued securities described as “LLC bonds” with a face value of $1.56 million. The SEC alleged that these securities were essentially promissory notes that promised to yield 12-20% interest for investors. John Matson and South Bay Acquisitions allegedly also claimed they would act as fiduciaries managing the proceeds.

From January 2012 and September 2021, John Matson allegedly raised approximately $1,535,000 from five investors by selling these securities. The SEC alleged that he immediately began transferring funds from South Bay Acquisitions, including funds not raised from this offering, totaling approximately $1,566,250.

John Matson allegedly used investor funds for his personal use and to pay earlier investors.

According to John Matson’s detailed BrokerCheck page, judgment rendered in this complaint enjoined him from future participation in the issuance of a security and from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933.

He was further prohibited from acting as an officer or director of an issuer with a registered security. He also consented to undertakings specified in the settlement and undetermined disgorgement.

Investor Disputes

On July 27, 2023, an investor alleged that John Matson sold her a promissory note away from the firm in February 2019. The note was allegedly in the amount of $300,000. The client received a settlement of $180,000.

On January 26, 2023, an investor named John Matson in a dispute alleging misconduct from January 5, 2012 to the date of dispute filing. This dispute was settled for $180,000.

FINRA Rule 3280

FINRA Rule 3280 requires brokers to provide written notice to their firm before engaging in private securities transactions. This includes selling away, which is the practice of brokers selling investments not offered or approved by their firm.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

Bar by FINRA

On December 19, 2022, John Matson consented to the entry of findings that he allegedly refused to provide documents and information requested by FINRA.

According to a Letter of Acceptance, Waiver & Consent (AWC), FINRA was investigating allegations made by an 80-year-old client that John Matson recommended a promissory note and later stopped making interest payments.

The AWC concluded that this alleged refusal to provide information violated FINRA Rules 8210 and 2010.

FINRA Rule 8210

FINRA Rule 8210 requires members to submit their books and records for inspection and to appear for testimony in connection with FINRA investigations.

Sanctions

FINRA barred John Matson on December 19, 2022. You can read the full AWC here.

Termination from LPL Financial

On November 16, 2022, John Matson was fired from LPL Financial following allegations that he participated in unapproved investments without notifying or receiving approval from the firm.

Background Information

John Matson has passed the following exams:

• General Securities Principal Examination – Series 24
• Securities Industry Essentials Examination – SIE
• Futures Managed Funds Examination – Series 31
• General Securities Representative Examination – Series 7
• Uniform Investment Adviser Law Examination – Series 65
• Uniform Securities Agent State Law Examination – Series 63

In the past, he worked for the following firms:

• LPL Financial (CRD#:6413)
• Ameriprise Financial Services (CRD#:6363)
• Citigroup Global Markets (CRD#:7059)
• Merrill Lynch, Pierce, Fenner & Smith (CRD#:7691)

Kurta Law Can Help

If you worked with John Matson and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm that exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.