According to FINRA, J. Richard Matheis was barred from association with any FINRA member in all capacities on August 24, 2023.
FINRA found that Matheis refused to appear for on-the-record testimony requested by FINRA as part of its investigation into whether he engaged in any sales practice violations.
Sales practice violations encompass a wide range of potential misconduct in how securities are sold to customers. These violations can include making misrepresentations or omitting material facts, recommending unsuitable investments, excessive trading or churning, unauthorized trading, charging excessive markups or commissions, and failing to provide required disclosures, among others. Sales practice violations can cause significant financial harm to investors and undermine trust in the securities markets.
When FINRA investigates potential sales practice violations, it seeks to determine whether registered persons have complied with their obligations under FINRA rules and securities laws. These investigations are critical to FINRA's mission of protecting investors and maintaining market integrity.
On-the-record testimony is a key investigative tool that allows FINRA to gather sworn statements from individuals with knowledge of the matters under investigation. This testimony helps FINRA understand what occurred, evaluate witness credibility, and determine whether violations took place.
Matheis's refusal to provide testimony prevented FINRA from fully investigating whether he engaged in sales practice violations. This refusal to cooperate is a serious violation because it obstructs FINRA's ability to investigate potential misconduct and protect investors.
Registered persons have a fundamental obligation to cooperate with FINRA investigations, including appearing for on-the-record testimony when requested. This obligation continues even after an individual is no longer associated with a member firm. When registered persons refuse to provide testimony, they undermine the regulatory process and demonstrate a disregard for their regulatory responsibilities.
Because refusal to cooperate with FINRA investigations is such a serious violation, FINRA typically imposes a bar from the securities industry. This sanction is appropriate because someone who refuses to cooperate with regulatory oversight poses an unacceptable risk to investors.
A bar prohibits an individual from working for any FINRA member firm in any capacity. This means Matheis cannot work as a registered representative, principal, or in any other role at a broker-dealer. The bar protects investors by ensuring that individuals who obstruct regulatory investigations cannot continue to work in the securities industry.
Investors can research the background and disciplinary history of their financial professionals through FINRA's BrokerCheck system, a free online resource that provides important information to help investors make informed decisions.
