Matthew Evan Eckstein of Syosset New York the chief executive officer of SISK Investment Services Inc. and former stockbroker registered with Gould Ambroson Associates LTD has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to a Default Decision issued by FINRA Office of Hearing Officers containing findings that Eckstein committed securities fraud and made unsuitable investment recommendations to customers. Department of Enforcement v. Matthew Evan Eckstein Disciplinary Proceeding No. 2017054146302 (Aug. 28, 2018).
According to the Decision, recommendations had been made by Eckstein for four customers to invest $1,360,000.00 in a company operated by KB – a friend of Eckstein. Apparently, customers were provided with no materials that detailed the terms and conditions of the investments. The customers were also not provided any agreement or note that confirmed the purchases that they had made. Instead, those transactions were undocumented, and made part of KB’s fraudulent scheme.
The Decision stated that Eckstein knew, or was reckless in failing to know, that when he made the recommendations to customers, he had been making misleading or false statements concerning the investment. For example, Eckstein apparently told investors that their money was guaranteed and that their investments were similar to investing in a certificate of deposit; those statements were false.
Eckstein also steered a customer towards effecting a $300,000.00 liquidation of the customer’s mutual funds to make the investment in the company by indicating that the customer’s retirement would be funded through the investments Eckstein recommended rather than the customer’s existing mutual funds. The Decision stated that Eckstein lacked any basis to steer the customer into replacing mutual fund holdings with the investments Eckstein recommended, and Eckstein failed to conduct any due diligence concerning the investments. In addition, customers were apparently deprived of information regarding Eckstein’s lack of due diligence and rationale in making the recommendations.
The Decision further stated that Eckstein never informed the customers about Eckstein’s relationship to KB, which if disclosed would have caused Eckstein’s objectivity in the transactions to be questioned by a reasonable investor. For example, Eckstein reportedly received a $100,000.00 loan from KB that was later forgiven by him. Customers were also apparently deprived of the fact that most of the funds they provided to Eckstein had been placed in a bank account that Eckstein had access to. FINRA Office of Hearing Officers concluded that Eckstein’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2020.
The Decision further stated that Eckstein failed to conduct due diligence on investments recommended to the customers. Instead, Eckstein depended on KB’s representations. The Decision stated that Eckstein lacked an adequate foundation for concluding that it was suitable for anyone to be invested in the company. Moreover, Eckstein evidently poorly advised the customers given the customers’ conservative objectives for investing, low tolerance for risk, and limited experience with investing. Consequently, FINRA’s Office of Hearing Officers concluded that Eckstein’s conduct was violative of FINRA Rules 2010 and 2111(a).
The Decision went on to state that Eckstein engaged in the aforementioned securities transactions away from Gould Ambroson Associates LTD. Those transactions were reportedly arranged outside the scope of his employment, and he never provided the firm with any notification concerning his activities. FINRA Office of Hearing Officers concluded that by Eckstein selling away from the firm, his conduct was violative of FINRA Rule 2010 and NASD Rule 3040.
Furthermore, the Decision stated that Eckstein obstructed FINRA’s investigation into his misconduct. Particularly, FINRA reportedly sent Eckstein multiple requests for information under Rule 8210, and Eckstein failed to respond on multiple occasions. FINRA found that Eckstein’s activities in this regard were violative of FINRA Rules 2010 and 8210.
FINRA Public Disclosure reveals that Eckstein has been identified in four customer initiated investment related disputes containing allegations of his misconduct while employed with Gould Ambroson Associates LTD. Specifically, a customer filed an investment related arbitration claim involving Eckstein’s conduct in which the customer requested $252,500.00 in damages founded on accusations against Eckstein of unsuitability, negligence, misrepresentation and breach of fiduciary duty in reference to securities Eckstein sold away from the firm. FINRA Arbitration No. 18-00529 (Feb. 9, 2018).
Eckstein is also the subject of a customer initiated investment related arbitration claim where the customer sought $850,000.00 in damages supported by allegations including breach of contract, breach of fiduciary duty, selling unregistered securities, and fraud in reference to Eckstein’s private securities transactions. FINRA Arbitration No. 18-02030 (June 1, 2018). Subsequently, a customer filed an investment related arbitration claim concerning Eckstein’s activities in which the customer requested $970,000.00 in damages based upon accusations that Eckstein executed transactions in the customer’s account that were not suitable for the customer, breached contractual and fiduciary duties to the customer, converted the customer’s funds, and defrauded the customer. FINRA Arbitration No. 18-02095 (June 7, 2018).
Eckstein was subsequently named in a customer initiated investment related arbitration claim where the customer sought $499,999.00 in damages founded on allegations that Eckstein’s activities lacked supervision; fiduciary duties had been breached; misrepresentations had been made to the customer; securities laws of North Carolina, New Jersey and Pennsylvania had been violated; and SEC, FINRA and NASD rules had been violated. FINRA Arbitration No. 18-02432 (July 2, 2018).
Eckstein was terminated from SISK Investment Services, Inc. on June 22, 2018, and the firm was expelled by FINRA.
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