New York Securities Lawyer Blog
On January 28, 2020, the SEC charged Edward E. Matthes, a former registered representative and investment adviser in Wisconsin, with defrauding 26 of his majority elderly clients out of approximately $2.4 million.
According to the SEC’s complaint, between April 2013 and March 2019, Matthes made misrepresentations to his clients, claiming that a new investment opportunity would generate a higher return for them and earn a guaranteed minimum yield of 4% per year. The claimed investment opportunity did not exist and Matthes simply stole approximately $1.4 million from his clients. Matthes allegedly used the money to renovate his home, pay child support and purchase various luxury items.
Matthes further misappropriated an additional $1 million of his clients’ money by allegedly making unauthorized sales and withdrawals from his clients’ variable annuities and depositing the money directly into his personal bank account instead of clients’ accounts. Matthes used all of the funds he raised for his own personal use and to operate a Ponzi-like payment scheme, paying $170,000 to certain, select customers.
The SEC’s complaint, filed in federal district court in the Eastern District of Wisconsin, charged Matthes with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition to the SEC’s charges, FINRA permanently barred Matthes from associating with any FINRA member firm and Wisconsin’s securities division permanently barred Matthes from obtaining a securities license in Wisconsin. Without accepting or denying the allegations against him, Matthes agreed to a settlement with the SEC and will pay fines, including disgorgement and prejudgment interest. He is subject to penalties which are still to be determined.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. Additionally, attorneys at Lax & Neville are experienced with employment law in the financial services industry, and representing clients in inquiries and investigations conducted by the SEC and the Financial Industry Regulatory Authority (“FINRA”). If you are a victim of fraud or are a Financial Advisor or Broker-dealer with a prospective regulatory issue, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.