AdvisorHub (June 13, 2023 ) - A former top-ranked RBC Wealth Management-U.S. and Ameriprise Financial broker whose record includes a kidnapping charge and $2.5 million client claim has accepted an industry bar rather than cooperate with a regulatory investigation. 

Scott J. Matalon, who once managed a $250 million book, declined to participate in a Financial Industry Regulatory Authority request for information about a client complaint lodged with Ameriprise, where he was registered from 2013 to 2019, according to a June 6 settlement letter.

The settlement did not include details about the claim filed against the firm, and Matalon accepted the bar without admitting or denying the allegations. It also did not mention pending kidnapping and battery charges brought by Florida prosecutors in July 2021.

The former broker’s failure to cooperate violated Finra Rule 8210, which requires brokers provide information with respect to a Finra investigation, and the regulator’s catch-all Rule 2010 requiring brokers to observe “high standards” of commercial honor, according to the letter. 

Neither Matalon nor his lawyer, Gregory Tendrich, of an eponymous firm in Boca Raton, Florida, immediately responded to a request for comment.

Matalon had previously prevailed in at least one prior dealing with Finra when he in January 2021 secured an expungement of a customer arbitration from his record. 

The client alleged breach of fiduciary duty, suitability, and constructive fraud tied to sales of real estate investment trusts and variable annuities. Matalon contributed $20,000 to the $50,000 settlement that a previous firm, National Securities Corp., made with the customer tied to a 2019 complaint. 

Still, the three public Finra arbitrators on the case found that the claimant falsely alleged to have only moderate investment experience even though he had several investment accounts at other firms, including JP Morgan, was a high net-worth individual and an “accredited investor,” according to the expungement award. There was “no overriding public interest” for the disclosure to remain on his record, the arbitrators wrote. 

Outside plaintiff lawyers disagreed, however, and said it is an example of a case in which knowing a broker’s full history could have clued in his employers to the potential for future misconduct. 

“Can I draw a straight line between this expungement and the abuse that occurred with the client at Ameriprise?” Michael S. Edmiston, a plaintiff lawyer in Studio City, California, and past president of the Public Investors Advocate Bar Association, said. “It’s a little bit hard to connect that because the time periods overlap.” 

“However, from Ameriprise’s standpoint, knowing the existence of the prior arbitration claim, even though it had been expunged, would have given Ameriprise supervisors and compliance officers notice that they had a potentially troubled broker,” Edmiston continued. 

Finra has historically granted around 90% of all expungement requests, according to a 2021 PIABA report, which has criticized the regulator’s lax regulations on expungement requests. 

The Securities and Exchange Commission in April approved a package of expungement reforms that would establish special panels to oversee brokers’ requests to clear their records and also set a time limit for brokers to seek expungement. PIABA has said the proposal could have done more to preserve brokers’ records. 

A lawyer representing Matalon in the expungement, Frank Cuccio of Bressler, Amery & Ross LLC in New York, did not respond to a request for comment. 

Matalon was previously a ‘top’ broker and in 2019 was ranked #36 on Forbes’ next gen best-in-state wealth advisors list and #53 on its best-in-state wealth advisors list in New York. 

The ex-broker has a pending dispute on his record from 2022 claiming $2.5 million in damages. It claims that Ameriprise failed to supervise the broker who allegedly colluded with an accountant to steal funds from a customer, according to his BrokerCheck profile.

Matalon is also facing the pending felony charges for kidnapping and battery after he allegedly beat and imprisoned a woman in Broward County, Florida in July 2021, just three weeks after being arrested for domestic violence against another woman. He pleaded not guilty on all counts to the felony charges, and both criminal cases are still open, according to Broward County and Palm Beach County court documents.

Jeremy Kroll of Dutko & Kroll LLC in Fort Lauderdale, Florida, who has represented Matalon in the criminal case, did not respond to a request for comment. 

Matalon started his career in 2003 at a since-expelled firm, First Republic Group, in New York and worked at a number of firms including Newbridge Securities Corp. and Gilford Securities Inc. before landing at Ameriprise in 2013, where he and his team had produced around $2.7 million in annual revenue from over $250 million in client assets. 

The team in 2019 moved to RBC, and as part of the jump Matalon relocated to Boca Raton to open a new RBC office. 

“Scott Matalon was terminated by RBC in July 2021 for violating the firm’s Code of Conduct,” a spokesperson for RBC said in a statement. “RBC has no further involvement with Mr. Matalon.” 

A spokesperson for Ameriprise did not immediately respond to a request for comment.