Wire fraud in violation of Title 18, United States Code, Section 1343

Pled guilty

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-88114; IA Release 5440, February 3, 2020: The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Edward E. Matthes. On January 30, 2020, a judgment was entered by consent against Matthes, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Edward E. Matthes, Civil Action Number 2:20-cv-00125, in the United States District Court for the Eastern District of Wisconsin.

Order

Bar (Permanent)

broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

2/3/2020

Participating in any offering of a penny stock

Indefinite

2/3/2020

Penny Stock Bar

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The SEC alleged that the representative defrauded 26 customers out of approximately $2.4 million. According to the SEC's complaint, the representative convinced his customers to invest in what he described as a safe investment that would earn a guaranteed minimum yield of 4% per year. As alleged in the complaint, the purported investment did not exist and the representative stole approximately $1.4 million for his personal use. The representative allegedly stole an additional $1 million by making unauthorized sales and withdrawals from his customers' variable annuities. To cover up his fraud, the representative allegedly created fake account statements and paid approximately $170,000 in Ponzi-like payments to customers. The SEC charged the representative with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

Order

Bar (Permanent)

All Capacities

Permanent

2/3/2020

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The United States Securities and Exchange Commission ("Commission") alleges between April 2013 and March 2019, Defendant Edward E. Matthes defrauded 26 of his mostly elderly retail brokerage customers and investment advisory clients out of approximately $2.4 million. During that time period, Matthes worked as a registered representative and investment adviser representative with a nationwide financial services firm dually registered with the Commission as a broker-dealer and investment adviser ("Registered Entity A"). Matthes lied to his customers and clients in order to convince them to invest in what he described as a safe investment offered by Registered Entity A that would earn a guaranteed minimum yield of 4% per year. Matthes then convinced his customers and clients to transfer approximately $1.4 million to him to fund the investments at Registered Entity A. Matthes' statements were false. In reality, the purported investment did not exist. Matthes did not invest his customers' and clients' money and instead stole it for his personal use. To cover up his fraud, Matthes created and provided several of his customers and clients with fake account statements on Registered Entity A letterhead. Matthes stole an additional $1 million from his brokerage customers by making unauthorized sales and withdrawals from variable annuity contracts that they held in accounts with him. Matthes spent the misappropriated funds on personal expenses, including home renovation expenses, car payments, and luxury items, and also used approximately $170,000 to make Ponzi-like payments to certain investors to keep his fraudulent scheme alive. By engaging in this conduct, Matthes violated Section 17(a) of the Securities Act of 1933 (the "Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act").

Judgment Rendered

Injunction

restrained, disgorgement; prejudgment interest, civil penalty and undertakings

Wisconsin

Respondent misappropriated over $1 million from his insurance clients, created fictitious investments and fictitious account summary forms

Order

Bar (Permanent)

all capacities

permanent

Respondent is permanently barred from all registrations

5/10/2019

Cease and Desist

The client alleged that the representative misappropriated funds by diverting assets into his own bank account. The client provided documentation including a copy of a check deposited into the representative's bank account and a fictitious account statement.

$86,228.00

$87,584.95

Client through personal representative alleged that the representative misappropriated funds by diverting client's assets for the representative's personal use.

$5,000.00

$190,923.34

The clients allege that due to the representative's actions, their only source of income is from social security and they do not have funds for any costly expenses. The clients provided documentation that the representative created fictitious account statements and diverted funds into his own bank account.

$232,937.72

$314,823.87

The client alleged that funds he intended to place with Mutual of Omaha were not invested. The client provided documentation including copies checks written directly to the representative that were deposited into the representative's personal bank account.

$100,000.00

$93,333.53

The client alleged that the representative misappropriated funds by diverting assets into his own bank account. The client provided documentation including a copy of a check deposited into the representative's account and a fictitious account statement.

$11,000.00

$11,957.84

The clients alleged that the representative misappropriated funds by diverting assets into his own bank account. The clients provided documentation including copies of checks deposited into the representative's bank account and fictitious account statements.

$174,057.91

$182,483.10

The clients alleged that the representative misappropriated funds by diverting their assets into his own bank account. The clients provided documentation including copies of checks deposited into the representative's bank account and a copy of a fictitious 1099 Form provided by the representative.

$354,154.83

$392,360.82

FINRA

Without admitting or denying the findings, Matthes consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection to an investigation that FINRA initiated based on an external tip.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

Indefinite

3/22/2019

The client alleged that the representative deposited a check intended for an IRA rollover into his own bank account for the representative's own personal use. The client provided a copy of the check deposited into the representative's bank account.

$37,000.00

$40,354.02

The clients alleged that the representative misappropriated funds by diverting assets into his own bank account. The clients provided documentation including copies of checks deposited into the representative's bank account and fictitious account statements.

$170,587.00

$188,347.92

The client alleged that the representative misappropriated funds by diverting customer assets into his own bank account. The client provided documentation including copies of checks deposited into the representative's bank account and fictitious account statements.

$45,590.94

$50,534.18

The clients alleged that the representative misappropriated funds by diverting assets into his own bank account. The clients provided documentation including copies of checks deposited into the representative's bank account and copies of fictitious account statements.

$512,950.53

$569,549.16

The client alleged that the representative misappropriated funds by diverting assets into his own bank account. The client provided documentation including copies of checks deposited into the representative's bank account and a fictitious account statement.

$55,000.00

$59,026.16

Mutual of Omaha Investor Services, Inc.

Discharged

The representative was discharged for creating fictitious account statements and diverting customer funds for his own personal use.

CUSTOMER ALLEGES UNSUITABLE TRANSFER OF FUNDS FROM INCOME AGREEMENT TO VARIABLE ANNUITY

$19,376.38

$75,892.11

MML INVESTORS SERVICES, INC.

Voluntary Resignation

STATE OF MISSOURI HAS ALLEGED THAT REPRESENTATIVE MADE AN UNSUITABLE SALE OF A VARIABLE ANNUITY TO A MISSOURI RESIDENT; THEY ALSO ALLEGED MISREPRESENTATION OF THE VARIABLE ANNUITY TO THE SAME MISSOURI RESIDENT. THE TRANSACTION IN QUESTION OCCURRED AT THE REPRESENTATIVE'S PRIOR BROKER/DEALER AFFILIATION.

AFTER DISCUSSING AN OPPORTUNITY TO RETURN TO A POSITION WITH THRIVENT FINANCIAL FOR LUTHERANS WITH MANAGING PARTNER, TOM KOPATZ, I VOLUNTARILY RESIGNED FROM MASS MUTUAL. MY DECISION TO RESIGN WAS NOT BASED UPON ANY LEGAL ACTIONS OR RESTRICTIONS PLACED UPON ME. MASS MUTUAL DID NOT PERSUADE, ENCOURAGE OR FORCE ME TO RESIGN IN ANY WAY.

STATE OF MISSOURI, OFFICE OF SECRETARY OF STATE, SECURITIES DIVISION

ALLEGED UNSUITABLE SALE OF A VARIABLE ANNUITY TO A MISSOURI RESIDENT; ALLEGED INVESTMENT OF 85-90% OF LIQUID NET ASSETS INTO A VARIABLE ANNUITY TO THE SAME MISSOURI RESIDENT.

Settled

Monetary Penalty other than Fines

$7,308.00

CUSTOMER ALLEGES FULL DISCLOSURE WAS NOT MADE BY REGISTERED REPRESENTATIVE. RESEARCH REVEALED NO WRONG-DOING ON REPRESENTATIVES PART.

$6,511.25

CUSTOMER ALLEGES PRODUCT WAS MISREPRESENTED

$9,350.00