SEC Fraud Charges Against South Bay Acquisitions, John Matson

South Bay Acquisitions and its principal John Matson allegedly defrauded investors in a Ponzi scheme, according to SEC charges filed in July. Filed in the United States District Court for the Southern District of California, the SEC’s complaint alleges that Matson (CRD# 1796541) and his company “made unregistered offerings of securities and raised more than $1.5 million from five individual investors.” The pending charges seek permanent injunctions, disgorgement, and civil penalties.

Mr. Matson allegedly issued investors “LLC Bonds” from the company, representing to investors that he would “manage the proceeds as a fiduciary” for their benefit. However, the SEC’s complaint alleges, he and South Bay Acquisitions “transferred money from South Bay or otherwise diverted South Bay funds” to his personal account, and he used them for personal expenses. “The complaint alleges that South Bay also operated as a Ponzi scheme in which investor funds were used to pay promised returns to earlier investors,” according to the SEC.

As the SEC notes, Mr. Matson was formerly registered with the Financial Industry Regulatory Authority as a broker. His BrokerCheck report shows that he was registered with LPL Financial in Manhattan Beach, California from 2017 until 2022. That year, FINRA barred him in connection with allegations that he refused to provide documents and information requested by FINRA, which was investigating allegations that he recommended a promissory note to an investor and then “ceased making promised interest payments on the note.”

Mr. Matson’s BrokerCheck report also discloses several investor complaints.  The most recent, filed in 2023, alleged that as a representative of LPL Financial, he sold a promissory note away from the firm. The complaint reached a settlement of $180,000.

An earlier investor complaint, filed in 2023, similarly alleged that he sold promissory notes away from LPL Financial. In 2024 the complaint reached a settlement of $180,000.

According to the Financial Industry Regulatory Authority, John Matson holds 26 years of securities industry experience. Having been barred from acting as a broker or otherwise associating with a broker-dealer firm, he is not registered with any firm or state. His registration history includes LPL Financial, Ameriprise Financial Services, Citigroup Global Markets, and Merrill Lynch. His credentials include the passage of five securities industry qualifying exams: the General Securities Principal Examination, or Series 24; the General Securities Representative Examination, or Series 7; the Futures Managed Funds Examination, or Series 31; the Securities Industry Essentials Examination, or SIE; the Uniform Securities Agent State Law Examination, or Series 63; and the Uniform Investment Adviser Law Examination, or Series 65. (Information current as of August 1, 2024.)

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