On Dec. 19, 2022, the Financial Industry Regulatory Authority (FINRA) permanently barred former California-based LPL Financial LLC broker John Nicholas Matson from association with any FINRA member in all capacities. Matson’s registration as a general securities representative and general securities principal was terminated by LPL in a Uniform Termination Notice for Securities Industry Registration (Form U5) filed on December 7.
In late October 2022, a customer called the FINRA Securities Helpline for Seniors and stated that Matson “recommended the customer invest in a promissory note and had thereafter ceased making promised interest payments on the note.” After multiple discussions with FINRA via phone and over email, Matson refused FINRA’s request for supplementary information, a violation of FINRA Rule 8210.
Without admitting to 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.” Read the full BrokerCheck report here.
This is not the first time that Matson has found himself at the center of allegations. According to the BrokerCheck report, in April 2010 a customer accused Matson of churning, making unsuitable investment recommendations, negligence, breach of contract, breach of duties, and failure to supervise. The claimant requested damages of $353,000, and the matter—as mentioned in the report’s broker comment—was settled for $137,500 to “avoid the costs and uncertainties of litigation.”
Seven years later, the BrokerCheck report details a client request of $33,685 in damages for a “a progressive lapse in supervision and management of specific accounts,” which resulted in significant losses between March 2013 to December 2015. The dispute was denied.
How does FINRA protect investors, particularly the most vulnerable?
First and foremost, FINRA Rule 2010 dictates that members shall observe “high standards of commercial honor and just and equitable principles of trade” in conducting business. A financial advisor’s refusal to provide FINRA with documentation for its investigation is not only a violation of Rule 8210 but also does not meet the standards of commercial honor.
More specifically, though, FINRA adopted the first uniform, national standards to protect senior investors in February 2018. According to a FINRA news release, the first of the two rule changes states that a firm must make “reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account.” The second rule change allows FINRA member firms “to place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold.”
With these changes, FINRA—in collaboration with its members—sought to provide firms with the necessary tools and guidance for protecting seniors and other vulnerable investors from financial exploitation.
We can help.
If you or someone you know has lost money because of broker or financial advisor misconduct, Lance McCardle and his team of experienced investment fraud lawyers can help. Our firm has helped hundreds of clients recover their losses due to broker fraud or negligence. Contact us today.
