On September 1, 2020 the Securities and Exchange Commission (“SEC”) filed an emergency action charging investment adviser Matthew O. Clason with stealing thousands of dollars from an advisory client. Clason was an investment adviser representative of a registered investment adviser as well as a registered representative of a broker-dealer. Clason was terminated by his firm on August 13, 2020 for failing to properly comply with firm procedures surrounding the handling of client funds.

As of August 2020, the aforementioned client believed to have had approximately $1 million under management with Clason, spread over 5 accounts. One of the accounts included a joint checking account with Clason, established in 2018. Clason had access to the account for investment purposes beginning February 2019. It was alleged that Clason stole over $300,000 from the client, who also suffered from limited mobility and other health conditions. Clason cultivated a personal relationship which included favors, all while selling securities managed on the client’s behalf to fund transfers to the joint bank account held by the Client and Clason. Oftentimes, the client would ask Clason to withdraw cash from the bank account and deliver it to her. The client had understood that many of the withdrawals were for investment purposes. However, numerous large cash withdrawals took place from different bank locations that were never approved nor passed by the client, nor did the client receive the cash that was withdrew. Due to the mishandling of the client’s funds, Clason was terminated from the adviser and the SEC filed an action against Clason seeking a temporary restraining order, an order to freeze Clason’s assets, as well as other relief.

Through this conduct, Clason violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 the (the “Advisers Act”). Clason’s behavior involved fraud and reckless disregard of regulatory requirements which lead to substantial loss or risk of this loss to other persons.

The SEC has taken many initiatives in order to protect senior investors, including more enforcement, new tools and providing suggestions for financial firms and professionals. In 2017, the Enforcement Division formed the Retail Strategy Task Force (“RTSF”) to develop and implement strategies and techniques for addressing the types of misconduct that most affect retail investors. The RTSF investigate fraudulent schemes that frequently target the most vulnerable members of the investing public. The SEC recently approved two FINRA rule changes that, starting last year, give broker-dealers new tools to protect seniors. The RTSF leverages technology and data analytics to assess all areas of risk including identifying patterns and pursuing investigations of suspected incidents targeting retail investors. Lastly, financial firms should have strong policies, procedures and practices implemented to protect senior clients. These policies should be tailored to reflect the particular business, clients and circumstances. For example, FINRA Rule 2165 requires firms provide training as a condition of becoming eligible for the safe harbor for pausing a disbursement. This pause is permitted when elder financial exploitation is reasonably suspected.

Click here to review the court complaint filed against Matthew Clason.