The allegations read: Plaintiff securities and exchange commission (sec) alleges in their complaint this matter involves a ponzi scheme and misappropriation of client assets by defendant john matson (matson), a former registered representative and associated person of a dually registered broker-dealer and investment adviser firm, and his company, south bay acquisitions, llc (south bay), based in manhattan beach, california (collectively defendants). Between january 2012 and september 2021, matson sold securities with a face value of $1,560,000 issued by south bay to five investors, raising approximately $1,535,000. The securities, which were denoted "llc bonds" and were functionally promissory notes, included language stating that the defendants would manage the proceeds as fiduciaries and promising 12 to 20% interest. Despite his obligation to act as a fiduciary, and without disclosure to investors, matson immediately and consistently transferred money from south bay or otherwise diverted south bay funds (including some south bay funds earned from another source) to his personal account, in transactions totaling approximately $1,566,250 through july 2023, where it was used for personal expenses. He also used investor funds to pay promised returns to earlier investors.
