The allegations read: Without admitting or denying the findings, matthews consented to the sanctions and to the entry of findings that he participated in private securities transactions without providing prior written notice to, or obtaining prior written approval from, his member firm. The findings stated that in his capacity as the ceo of his firm's parent company, matthews sold approximately $1.8 million in convertible promissory notes, issued by the parent company, away from his firm to investors, some of whom were customers of the firm. Matthews sold the promissory notes through the parent company, not the firm. Matthews received expense reimbursements from the parent company in connection with his promissory note sales, and some of his compensation was paid with the proceeds of the sales. Matthews discussed his efforts to sell the promissory notes with his supervisor, but failed to request or receive approval in writing from his firm prior to participating in the transactions. The findings also stated that matthews sold convertible promissory notes to investors in an unregistered offering without disclosing in an offering document, the intended use of proceeds, the selling compensation he would receive, and the offering expenses, as required by finra rule 5122. Some of the investors were not qualified purchasers as defined in section 2(a)(51)(a) of the investment company act of 1940, and the sales were not exempt from the requirements of finra rule 5122. In addition, neither matthews nor his firm filed with finra any offering documents related to the sales. The findings also included that matthews willfully failed to disclose an unsatisfied $35,590 federal tax lien filed against him on his form u4.
