Eckstein Named as Respondent in FINRA Complaint
The complaint alleges that these undocumented investments appear to have been part of a spurious investment scheme run by a close friend of Eckstein. Having done no due diligence on the issuer, Eckstein nevertheless recommended that at least four customers—including elderly, conservative investors—invest based on repayment terms, including maturity dates and interest payments, which he orally provided to them.
Eckstein recommended that the customers make investments in the issuer without disclosing to them that he did not have a reasonable basis for making such recommendations and that he knew, or was reckless in not knowing, that the issuer lacked the ability to repay its obligations to these investors. In the course of making these recommendations, Eckstein made material misrepresentations and omissions to customers. Eckstein also failed to inform investors that he had signature authority on the bank account of an affiliate of the issuer that was receiving investor funds–in other words, that he could access the funds the investors were purportedly investing. Eckstein further failed to disclose that he had received over $100,000 from his long-time friend and CEO of the issuer.
Eckstein’s misrepresentations and omissions were material, because a reasonable investor would consider them important in making investment decisions because they significantly altered the total mix of information available to the customers, and because they denied them the opportunity to make an informed decision about whether to invest in the issuer.
As a result of his conduct, Eckstein willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and violated FINRA Rule 2020. The complaint also alleges that Eckstein’s recommendations were unsuitable because Eckstein, among other things, lacked a reasonable basis to believe the investments were suitable for any investor and did not understand the potential risks and rewards inherent in the recommendation. The complaint further alleges that prior to forming his own shop in September 2015, Eckstein participated in private securities transactions when the customers invested in the issuer. Each of the transactions was done away from Eckstein’s member firm and was outside the regular course or scope of his employment with the firm.
Eckstein failed to seek written authorization from, or provide written notice to, the firm prior to participating in the transactions. The firm’s WSPs (Written Supervisory Policies) prohibited “selling away.” In addition, the complaint alleges that Eckstein caused a different member firm to violate Rule 17a-4 of the Exchange Act and FINRA Rules 2010 and 4511 by failing to preserve customer emails, text messages, facsimiles and account summaries he created for and sent to individuals.
Furthermore, the complaint alleges that after FINRA commenced its investigation, Eckstein failed to respond to requests for documents and information and in other instances, failed to completely or timely respond.
Eckstein was CEO & CCO of Sisk Investment Services Inc. (CRD# 19406), which was expelled from FINRA in June of 2018. Prior to that Eckstein worked for Gould, Ambroson & Associates LTD (CRD# 17412) for 17 years.
If you are an investor that lost money with Matthew E. Eckstein or any broker you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, please contact Darren Blum at 877-786-2552 (877-STOCK LAW), www.stockattorneys.com for a FREE EVALUATION of your potential case.