Investors of Matthew Eckstein please call 1-866-817-0201. Mr. Eckstein was previously employed by Sisk Investment Services and Gould, Ambroson & Associates. Initial consultations are free and confidential.
The Financial Industry Regulatory Authority (FINRA) recently expelled Eckstein when he failed to appear at a regulatory hearing to contest allegations of severe misdeeds in his handling of securities portfolios.
Eckstein engaged in a practice referred to as “selling away.” A form of fraud, this is a practice where a securities broker sells a private security without the approval of a licensed securities firm. This prevents the firm from vetting the investment to determine legitimacy and that the funds received actually are used to purchase the investment.
In a selling away situation, the investment is commonly of a company that the broker either owns, has an interest or that a friend or relative owns. This is a common form of fraud and one in which his employing firm should have had supervisory mechanisms in place to detect and prevent.
The investments at issue in the present matter were investments in Conmac Capital and Conmac Funding.
In recommending that his customers make the Conmac investment, Eckstein knowingly, or at a minimum, recklessly, made false and misleading statements regarding the investment—saying, for example, that it was “fully guaranteed,” when it was not, and describing it as comparable to a certificate of deposit with a bank (“CD”), when it was not.
Eckstein, the Respondent in the FINRA suit, also persuaded one of his customers to liquidate close to $300,000 in mutual fund holdings in order to invest in the Issuer, representing that the investment would be sufficient to fund her retirement while the mutual fund investments would not. He had no basis, however, for urging the customer to replace her mutual funds with an investment in the Issuer. He had conducted no due diligence on the investment. Moreover, he never disclosed to his customers his lack of a basis for his representations and recommendations, and his lack of due diligence—material information to any reasonable investor.
“Respondent also failed to disclose financial connections to investors that would have caused a reasonable investor to question Respondent’s objectivity and the safety of his or her money.” He did not disclose that nearly all of the money that his customers gave him to invest in the Issuer was deposited into a bank account in the name of an affiliate of the Issuer, and that Respondent had access to those investor funds as a signatory on the bank account. “Respondent also did not disclose that KB had given him over $100,000.”
Eckstein and his employer are currently defendants in multiple suits concerning the his fraud. These suits are largely being handled through the FINRA arbitration process. Investors waive certain rights to bring claims in court when signing account opening documents with FINRA-licensed securities brokerages.