Former LPL Financial representative Matthew Clason waived his right to be indicted and pleaded guilty to one count of wire fraud related to his misappropriation of more than $600,000 from an elderly investment client, the Department of Justice announced on May 13, 2021.

The SEC has accused Clason of exploiting a personal relationship and breaching his fiduciary duty to the client to perpetuate his fraud. His sentencing is scheduled for August 5, 2021, and he is currently released on bond pending sentencing. He faces a maximum term of imprisonment of 20 years.

Clason was an investment advisor and a registered representative of LPL Financial from 2016 until August 2020, when Clason was fired by the advisory firm for failing to comply with firm policies concerning handling client funds.

According to the SEC, Clason began his relationship with the 73-year-old Connecticut client in 2015. Clason managed five investment accounts and opened a joint bank account with the client. From 2018 to 2020, Clason reportedly transferred more than $668,000 from the client’s investment accounts into the joint bank account without the resident’s knowledge or authorization.

The SEC claims the client thought of Clason as more than just an investment advisor; she considered him to be a good friend. The client does not drive and has limited mobility and other health conditions. Clason drove her to various appointments and ran errands for her. They would sometimes meet as many as five times per week.

After creating the joint bank account, the client permitted Clason to make cash withdrawals of generally a few hundred dollars for miscellaneous monthly expenses or deliver it to her. The client understood any money withdrawn was for investment purposes.

As of July 2020. the total assets managed under the five investment accounts was approximately $483,000, but the client believed she had roughly $1 million.

According to the SEC, Clason had sold securities in the client’s advisory account and transferred the proceeds to their joint bank account. There was a total of 43 transfers from December 2018 to August 2020. Clason then made withdrawals of $10,000 at several bank branches.

The SEC believes these actions suggest an effort to avoid arousing bank staff’s suspicion and avoid scrutiny of cash withdrawals. Banks are required to report any cash transactions over $10,000 to federal authorities. The client allegedly did not know or approve of the cash withdrawals.

The Federal Bureau of Investigation (“FBI”) investigated the alleged conduct, and Assistant U.S. Attorney Heather L. Cherry is prosecuting. In September 2020, the SEC sought:

1. Entry of a temporary restraining order, preliminary injunction, order freezing assets, expedited discovery, an accounting, and order for other equitable relief in the form submitted with the Commission’s motion for such relief.
2. Entry of a permanent injunction prohibiting Clason from further violations of the relevant provisions of the federal securities laws.
3. Disgorgement of the money he misappropriated, plus pre-judgment interest.
4. Imposition of civil monetary penalties based on the egregious nature of Clason’s violations.

On September 15, 2020, Clason submitted a Letter of Acceptance, Waiver and Consent, to settle the alleged rule violated brought forward by the Financial Industry Regulatory Authority (“FINRA”).

Clason accepted and consented to the findings of FINRA without admitting or denying said findings. FINRA requested the production of information and documents from Clason regarding his employment termination, but Clason refused to comply with the request. FINRA indefinitely barred Clason from acting as a broker or otherwise associating with a broker-dealer firm.