FINRA

Matlock was named a respondent in a FINRA complaint alleging that he misrepresented material facts on a loan application and loan agreement he submitted to the U.S. Small Business Administration (SBA) in order to obtain an Economic Injury Disaster Loan (EIDL). The complaint alleges that Matlock falsely represented in a loan application to the SBA that he sought a loan for a sole proprietorship in New Jersey that had earned gross revenue of $120,000 during the 12-month period prior to January 31, 2020, and that it had one employee. The business for which Matlock sought a loan did not even exist as of the time he submitted the loan application. Matlock reaffirmed the truth and accuracy of these false representations when he executed the loan agreement necessary to secure a $59,000 EIDL. He also falsely represented in the loan agreement that he would only use the proceeds to alleviate economic injury caused by the COVID-19 emergency. However, one week after signing the loan agreement, Matlock used a substantial part of the loan proceeds to purchase shares of common stock of an energy company in his personal brokerage account. The complaint also alleges that Matlock engaged in an outside business activity (OBA) without providing prior written notice to his member firm or obtaining required firm approval. After applying for the EIDL, Matlock formed a limited liability company ostensibly to provide remodeling services. Although Matlock was the sole member/manager of the company, which he formed as a for-profit business, he did not provide any notice to the firm of this outside business prior to the firm terminating his employment. The complaint further alleges that Matlock failed to produce certain bank account statements requested by FINRA. These statements were material to FINRA's investigation into whether the company Matlock purported to exist in his loan application had any revenue in the year ending January 31, 2020, and to FINRA's investigation into whether Matlock received any compensation in connection with his undisclosed remodeling business.

Decision

Bar (Permanent)

All capacities

Indefinite

1/30/2023

Default decision rendered January 3, 2023. The sanction was based on findings that Matlock misrepresented material facts on a loan application and loan agreement he submitted to the Small Business Administration (SBA) to obtain an Economic Injury Disaster Loan (EIDL). The findings stated that Matlock falsely represented that he sought a loan for a sole proprietorship in New Jersey, that the proprietorship had generated gross revenue of $120,000 in a 12-month period, and it had one employee. However, the proprietorship did not exist at the time of the loan application. Matlock reaffirmed the truth and accuracy of his representations when he executed the loan agreement necessary for a $59,000 EIDL loan. In addition, Matlock falsely stated in the loan agreement that he would use the proceeds exclusively to alleviate economic injury caused by the COVID-19 pandemic. Yet Matlock did not use the loan proceeds for his purported business. Instead, Matlock used the proceeds to purchase shares of common stock in an energy company. The findings also stated that Matlock engaged in an outside business activity (OBA) without providing prior written notice to his member firm. After applying for the EIDL loan, Matlock formed a limited liability company in the State of New Jersey to perform remodeling services for profit. Matlock was the sole member and manager of the company. The findings also included that Matlock failed to produce information and documents requested by FINRA. Matlock made a partial but incomplete production of bank statements requested. The bank statements were material to FINRA's investigation into whether the company Matlock had referred to in his EIDL loan application had any revenue in the year specified in his application, and to FINRA's investigation into whether he had received compensation in connection with his undisclosed OBA. The decision became final January 30, 2023.

J.P. MORGAN CHASE BANK, NA

Discharged

NON SECURITIES RELATED. TERMINATED BY AFFILIATE BANK. REGISTERED REP WAS TERMINATED AFTER APPLYING FOR, AND RECEIVING FUNDS FROM THE SMALL BUSINESS ADMINISTRATION ECONOMIC INJURY DISASTER LOAN WITHOUT OWNING OR PARTICIPATING IN A LEGITIMATE BUSINESS.