SEC v. John N. Matson; and SOUTH BAY ACQUISITIONS, LLC, No. 3:24-cv-01342, Southern District of California (July 31, 2024) — Complaint

COMPLAINT
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William P. Hicks, Georgia Bar No. 351649
[email protected]
M. Graham Loomis, Georgia Bar No, 457868
[email protected]

Attorneys for Plaintiff
United States Securities & Exchange Commission
950 E. Paces Ferry Road NE
Suite 900
Atlanta, GA 30326
Tel: (404) 842-7600
Fax: (404) 842-7666

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.
JOHN N. MATSON and SOUTH BAY
ACQUISITIONS, LLC,
Defendants.

 Case No.

COMPLAINT

JURY TRIAL DEMAND

Plaintiff Securities and Exchange Commission (“SEC”) alleges as follows:

SUMMARY

1. This matter involves a Ponzi scheme and misappropriation of client
assets by defendant John Matson (“Matson”), a former registered representative and
associated person of a dually registered broker-dealer and investment adviser firm,
'24CV1342KSCH

COMPLAINT
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and his company, South Bay Acquisitions, LLC (“South Bay”), based in Manhattan
Beach, California (collectively “Defendants”).
2. Between January 2012 and September 2021, Matson sold securities with
a face value of $1,560,000 issued by South Bay to five investors (collectively “the
investors”), raising approximately $1,535,000.  The securities, which were denoted
“LLC Bonds” and were functionally promissory notes, included language stating that
the Defendants would manage the proceeds as fiduciaries and promising 12 to 20%
interest.
3. Despite his obligation to act as a fiduciary, and without disclosure to
investors, Matson immediately and consistently transferred money from South Bay or
otherwise diverted South Bay funds (including some South Bay funds earned from
another source) to his personal account, in transactions totaling approximately
$1,566,250 through July 2023, where it was used for personal expenses.  He also used
investor funds to pay promised returns to earlier investors.
VIOLATIONS
4. Defendants South Bay and Matson have engaged in acts and practices
that violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933
(“Securities Act”) [15 U.S.C. §§ 77q(a)(1), 77q(a)(2) and 77q(a)(3)]; Section 10(b) of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule
10b-5 thereunder [17 C.F.R. § 240.10b-5].

COMPLAINT
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JURISDICTION AND VENUE
5. The SEC brings this action pursuant to authority conferred upon it by
Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)],  and
Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78(u)(e)], to
enjoin the defendants from engaging in the transactions, acts, practices, and courses of
business alleged in this complaint, and transactions, acts, practices, and courses of
business of similar purport and object, for civil penalties and for other equitable relief.
6. This Court has jurisdiction over this action pursuant to Section 22(a) of
the Securities Act [15 U.S.C. § 77v(a)], and Sections 21(d), 21(e) and 27 of the
Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa].
7. Venue is proper in this District because defendant Matson resides within
this District.
8. In connection with the conduct described in this Complaint, Defendants
directly or indirectly made use of the mails, the means and instrumentalities of
interstate commerce, or the means or instruments of transportation or communication
in interstate commerce.  Among other things, Defendants used the wires and the
facilities of interstate banks and brokerage firms to move and hold funds obtained
pursuant to the scheme, and used telephones to communicate with investors.
9. Defendants, unless restrained and enjoined by this Court, will continue to
engage in the acts, practices, and courses of business alleged in the complaint, and in

COMPLAINT
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transactions, acts, and courses of business of similar purport and object.
DEFENDANTS
10. John N. Matson, age 67, is a resident of San Diego, California.  From
March 2007 to July 2015 and from November 2017 to December 2022, Matson was a
registered representative and investment adviser representative of a dually-registered
broker-dealer and investment adviser, BD-1.    From June 2015 through November
2017, Matson was a registered representative and investment adviser representative
of another broker-dealer, BD-2.  FINRA barred him from association with any
FINRA member firm in late 2022 in connection with his conduct described herein.
11. South Bay Acquisitions, LLC is a limited liability company organized
in California with its principal place of business in Manhattan Beach, California.
South Bay is not registered with the Commission in any capacity.
VIOLATIVE CONDUCT
12. In November 2011, while working for BD-1, Matson organized South
Bay with his wife.  The purpose of the entity was to seek out investment opportunities
including investments in private companies, real estate, and lending.
13. Shortly after forming South Bay, Matson solicited a customer
(Customer-A) of BD-1 to invest with South Bay as a higher-yield alternative, denoted
an “LLC Bond,” to the options available at BD-1.
14.   In January 2012, Customer-A invested $395,000 in South Bay pursuant
to a $400,000 subscription agreement for an LLC Bond.  The agreement provided for

COMPLAINT
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15% annual non-compound interest paid monthly for a period of ten years and
principal to be returned on the last day of the term.  According to the terms of the
agreement, the investment proceeds could be used for various investments, and South
Bay represented that it would manage the funds as a fiduciary.
15. Despite Matson’s fiduciary responsibility, the investor's funds were not
invested in any securities.  Instead, within nine days, Matson caused South Bay to
transfer $35,000 to Matson’s personal account.  Matson used investor funds to make
payments back to the investor and to transfer $5,000 to Matson’s account monthly
until April 13, 2012, when South Bay invested $100,000 in its only documented
investment.
16. Customer-A reinvested her principal and invested an additional
$200,000 in South Bay in September 2021 in exchange for $3,500 in monthly
payments, renewable annually.
17. Matson sold five more South Bay, LLC bond subscription agreements to
four other investors, some of which were customers of BD-1, based on similar
representations.
18. Customer-B invested $280,000 in exchange for a five-year, 20 percent
interest $300,000 subscription agreement in August 2013.
19.   Customer-C invested $180,000 in two transactions: $80,000 in
November 2014 and $100,000 in January 2015 each for five years with 15 percent
interest.

COMPLAINT
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20. A couple, collectively Customer-D, invested $180,000 for a five-year
agreement at 15 percent interest in May 2015.
21.   Customer-E invested $300,000 in a five-year agreement at 12 percent
interest in February 2019.
22.   In total, Matson solicited and raised $1,535,000 for SBA in exchange
for $1,560,000 in subscription agreements between January 2012 and September
2021.  The representations regarding the use of proceeds, i.e. that funds could be used
to make various investments, and that investor funds would be managed as a
fiduciary, were consistent across every agreement.
23. Matson understood throughout the scheme that a fiduciary was required
to do what was in the best interest of his clients.
24.   On information and belief, South Bay conducted virtually no business
and only made one investment—a $100,000 investment in a private company for
50,000 shares in April 2012.  South Bay subsequently sold 10,000 shares of its
investment in May 2018 for $250,000 and another 20,000 shares in April 2020 for
$400,000.  South Bay still holds 20,000 shares of the private company.
25. After April 2012, South Bay continued to make payments to investors
and frequently transferred investor funds to Matson’s account until September 2022
when the account had insufficient funds to make payments owed to investors.
26. In November 2014, February 2019 and November 2021, South Bay had
insufficient funds to make required payments and redemptions until new investor

COMPLAINT
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money was received.  Whenever the South Bay account had sufficient funds, Matson
frequently transferred money to his personal account.
27. In addition to using new investor funds to make monthly payments to
other investors, Matson also diverted $950,000 intended for the South Bay account to
his personal account, including investment proceeds from South Bay’s sole
documented investment.  In total, Matson received approximately $1,566,250 in
funds from Customers A-E from South Bay or in diverted South Bay funds.  Matson
did not disclose to the customers the material fact that he had used their funds to
transfer funds to himself or that investor funds would be used to repay other investors
at any time.
28. Despite his fiduciary responsibility, upon information and belief, Matson
did not pay interest on the funds received and did not disclose the material fact of his
self-dealing to the investors.
29. Beginning in 2016, after South Bay experienced near defaults in its
ability to make required periodic payments to the Customers, Matson made deposits
into South Bay which totaled approximately $1,468,100 through mid-2023, or
approximately $98,000 less than he had received from investors.  The sources of
these funds were personal loans from family, financing, and his own retirement
assets.
30. By September 2022, South Bay began to default on payments.  South
Bay then unilaterally reduced the payment amounts and provided no defined timeline

COMPLAINT
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for the return of principal to the remaining investors.
31. As of May 2023, one investor has not received payments equal to her
principal investment and another’s second investment remains underpaid.  These
investors have been harmed by losing approximately $280,000 in principal.  No
investor has received a return of their principal and the interest they were promised.
 COUNT I—FRAUD

 Violations of Section 17(a)(1) of the Securities Act
 [15 U.S.C. § 77q(a)(1)]

32. Paragraphs 1 through 31 are hereby re-alleged and are incorporated
herein by reference.

33. From at least 2012 to the present, Defendants, in the offer and sale of the
securities described herein, by the use of means and instruments of transportation and
communication in interstate commerce and by use of the mails, directly and
indirectly, employed devices, schemes and artifices to defraud purchasers of such
securities, all as more particularly described above.
34.   While engaging in the course of conduct described above, Defendants
acted with scienter, that is, with an intent to deceive, manipulate or defraud or with a
severe reckless disregard for the truth.
35. By reason of the foregoing, Defendants, directly and indirectly, have
violated and, unless enjoined, will continue to violate Section 17(a)(1) of the
Securities Act [15 U.S.C. § 77q(a)(1)].

COMPLAINT
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COUNT II—FRAUD

Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act
[15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]

36. Paragraphs 1 through 31 are hereby re-alleged and are incorporated
herein by reference.
37. From at least 2012 to the present, Defendants, in the offer and sale of the
securities described herein, by use of means and instruments of transportation and
communication in interstate commerce and of the mails, directly and indirectly:
 a.   obtained money and property by means of untrue statements of
material fact and omissions to state material facts necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading; and
 b. engaged in transactions, practices and courses of business which
would and did operate as a fraud and deceit upon the purchasers of such
securities,
all as more particularly described above.
38. By reason of the foregoing, Defendants directly and indirectly, have
violated and unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3)
of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].

COMPLAINT
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COUNT III—FRAUD

Violations of Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

39. Paragraphs 1 through 31 are hereby re-alleged and are incorporated
herein by reference.
40. From at least 2012 to the present, Defendants, in connection with the
purchase and sale of securities described herein, by the use of the means and
instrumentalities of interstate commerce and by use of the mails, directly and
indirectly:
  a. employed devices, schemes, and artifices to defraud;
 b. made untrue statements of material facts and omitted to state
material facts necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading; and
  c.   engaged in acts, practices, and courses of business which would
and did operate as a fraud and deceit upon the purchasers of such
securities,
all as more particularly described above.
41. In engaging in such conduct, Defendants acted with scienter, that is, with
an intent to deceive, manipulate or defraud or with a severe reckless disregard for the
truth.

COMPLAINT
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42. By reason of the foregoing, Defendants, directly and indirectly, have
violated and unless enjoined, will continue to violate Section 10(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
RELIEF REQUESTED
WHEREFORE, the SEC respectfully requests that this Court enter a judgment:
I.
Finding that Defendants committed the violations alleged.
II.
Enjoining the Defendants from violating Section 17(a) of the Securities Act [15
U.S.C. § 77q(a)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule
10b-5 thereunder [17 C.F.R. § 240.10b-5], pursuant to Sections 20(b) of the Securities
Act [15 U.S.C. § 77t(b)] and 21(d)(1) of the Exchange Act [15 U.S.C. § 78u(d)(1)] and
enjoining defendants   South Bay and Matson from participating in the issuance of any
security.
III.
Prohibiting, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C.
§ 78u(d)(2)],  defendant Matson from acting as an officer or director of any issuer that
has a class of securities registered pursuant to Section 12 of the Exchange Act [15
U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the
Exchange Act [15 U.S.C. § 78o(d)].

COMPLAINT
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IV.
Ordering   Defendants   to   disgorge   their   ill-gotten   gains,   together   with
prejudgment interest.
V.
 Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15
U.S.C. § 78u(d)(3)].
VI.
Retaining jurisdiction over this action to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VII.
 Granting such other and further relief as this Court deems just and appropriate.
JURY TRIAL DEMAND
 The Commission hereby demands a jury trial as to all issues so triable.
This 30th day of July, 2024.

Respectfully submitted,

/s/    William P. Hicks
William P. Hicks
Senior Trial Attorney
Georgia Bar No. 351649
[email protected]

COMPLAINT
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M. Graham Loomis
    Regional Trial Counsel
    Georgia Bar No. 457868
    [email protected]

United States Securities & Exchange
Commission
950 E. Paces Ferry Road NE
    Suite 900
    Atlanta, GA 30326
    404-842-7600

COMPLAINT 1  
 

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William P. Hicks, Georgia Bar No. 351649 
[email protected] 
M. Graham Loomis, Georgia Bar No, 457868 
[email protected] 
 
Attorneys for Plaintiff 
United States Securities & Exchange Commission 
950 E. Paces Ferry Road NE 
Suite 900 
Atlanta, GA 30326 
Tel: (404) 842-7600 
Fax: (404) 842-7666 

 
 
 

UNITED STATES DISTRICT COURT 
 

SOUTHERN DISTRICT OF CALIFORNIA 
 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 
 

vs. 

JOHN N. MATSON and SOUTH BAY 
ACQUISITIONS, LLC, 

Defendants. 
 

 Case No. 
 
 
COMPLAINT 
 
JURY TRIAL DEMAND 
 

 
 
 

Plaintiff Securities and Exchange Commission (“SEC”) alleges as follows: 
 

SUMMARY 
 

1. This matter involves a Ponzi scheme and misappropriation of client 

assets by defendant John Matson (“Matson”), a former registered representative and 

associated person of a dually registered broker-dealer and investment adviser firm, 

'24CV1342 KSCH

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.1   Page 1 of 13



 

COMPLAINT 2  
 

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and his company, South Bay Acquisitions, LLC (“South Bay”), based in Manhattan 

Beach, California (collectively “Defendants”).   

2. Between January 2012 and September 2021, Matson sold securities with 

a face value of $1,560,000 issued by South Bay to five investors (collectively “the 

investors”), raising approximately $1,535,000.  The securities, which were denoted 

“LLC Bonds” and were functionally promissory notes, included language stating that 

the Defendants would manage the proceeds as fiduciaries and promising 12 to 20% 

interest.  

3. Despite his obligation to act as a fiduciary, and without disclosure to 

investors, Matson immediately and consistently transferred money from South Bay or 

otherwise diverted South Bay funds (including some South Bay funds earned from 

another source) to his personal account, in transactions totaling approximately 

$1,566,250 through July 2023, where it was used for personal expenses.  He also used 

investor funds to pay promised returns to earlier investors.   

VIOLATIONS 

4. Defendants South Bay and Matson have engaged in acts and practices 

that violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 

(“Securities Act”) [15 U.S.C. §§ 77q(a)(1), 77q(a)(2) and 77q(a)(3)]; Section 10(b) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 

10b-5 thereunder [17 C.F.R. § 240.10b-5].  

 

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COMPLAINT 3  
 

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JURISDICTION AND VENUE 

5. The SEC brings this action pursuant to authority conferred upon it by 

Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)],  and 

Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78(u)(e)], to 

enjoin the defendants from engaging in the transactions, acts, practices, and courses of 

business alleged in this complaint, and transactions, acts, practices, and courses of 

business of similar purport and object, for civil penalties and for other equitable relief.  

6. This Court has jurisdiction over this action pursuant to Section 22(a) of 

the Securities Act [15 U.S.C. § 77v(a)], and Sections 21(d), 21(e) and 27 of the 

Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa].    

7. Venue is proper in this District because defendant Matson resides within 

this District. 

8. In connection with the conduct described in this Complaint, Defendants 

directly or indirectly made use of the mails, the means and instrumentalities of 

interstate commerce, or the means or instruments of transportation or communication 

in interstate commerce.  Among other things, Defendants used the wires and the 

facilities of interstate banks and brokerage firms to move and hold funds obtained 

pursuant to the scheme, and used telephones to communicate with investors.  

9. Defendants, unless restrained and enjoined by this Court, will continue to 

engage in the acts, practices, and courses of business alleged in the complaint, and in 

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COMPLAINT 4  
 

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transactions, acts, and courses of business of similar purport and object. 

DEFENDANTS 

10. John N. Matson, age 67, is a resident of San Diego, California.  From 

March 2007 to July 2015 and from November 2017 to December 2022, Matson was a 

registered representative and investment adviser representative of a dually-registered 

broker-dealer and investment adviser, BD-1.  From June 2015 through November 

2017, Matson was a registered representative and investment adviser representative 

of another broker-dealer, BD-2.  FINRA barred him from association with any 

FINRA member firm in late 2022 in connection with his conduct described herein. 

11. South Bay Acquisitions, LLC is a limited liability company organized 

in California with its principal place of business in Manhattan Beach, California. 

South Bay is not registered with the Commission in any capacity.   

VIOLATIVE CONDUCT 

12. In November 2011, while working for BD-1, Matson organized South 

Bay with his wife.  The purpose of the entity was to seek out investment opportunities 

including investments in private companies, real estate, and lending.  

13. Shortly after forming South Bay, Matson solicited a customer 

(Customer-A) of BD-1 to invest with South Bay as a higher-yield alternative, denoted 

an “LLC Bond,” to the options available at BD-1.  

14.   In January 2012, Customer-A invested $395,000 in South Bay pursuant 

to a $400,000 subscription agreement for an LLC Bond.  The agreement provided for 

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COMPLAINT 5  
 

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15% annual non-compound interest paid monthly for a period of ten years and 

principal to be returned on the last day of the term.  According to the terms of the 

agreement, the investment proceeds could be used for various investments, and South 

Bay represented that it would manage the funds as a fiduciary.    

15. Despite Matson’s fiduciary responsibility, the investor's funds were not 

invested in any securities.  Instead, within nine days, Matson caused South Bay to 

transfer $35,000 to Matson’s personal account.  Matson used investor funds to make 

payments back to the investor and to transfer $5,000 to Matson’s account monthly 

until April 13, 2012, when South Bay invested $100,000 in its only documented 

investment.   

16. Customer-A reinvested her principal and invested an additional 

$200,000 in South Bay in September 2021 in exchange for $3,500 in monthly 

payments, renewable annually.    

17. Matson sold five more South Bay, LLC bond subscription agreements to 

four other investors, some of which were customers of BD-1, based on similar 

representations.    

18. Customer-B invested $280,000 in exchange for a five-year, 20 percent 

interest $300,000 subscription agreement in August 2013.  

19.   Customer-C invested $180,000 in two transactions: $80,000 in 

November 2014 and $100,000 in January 2015 each for five years with 15 percent 

interest.  

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COMPLAINT 6  
 

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20. A couple, collectively Customer-D, invested $180,000 for a five-year 

agreement at 15 percent interest in May 2015.  

21.   Customer-E invested $300,000 in a five-year agreement at 12 percent 

interest in February 2019.    

22.   In total, Matson solicited and raised $1,535,000 for SBA in exchange 

for $1,560,000 in subscription agreements between January 2012 and September 

2021.  The representations regarding the use of proceeds, i.e. that funds could be used 

to make various investments, and that investor funds would be managed as a 

fiduciary, were consistent across every agreement. 

23. Matson understood throughout the scheme that a fiduciary was required 

to do what was in the best interest of his clients.  

24.   On information and belief, South Bay conducted virtually no business 

and only made one investment—a $100,000 investment in a private company for 

50,000 shares in April 2012.  South Bay subsequently sold 10,000 shares of its 

investment in May 2018 for $250,000 and another 20,000 shares in April 2020 for 

$400,000.  South Bay still holds 20,000 shares of the private company.     

25. After April 2012, South Bay continued to make payments to investors 

and frequently transferred investor funds to Matson’s account until September 2022 

when the account had insufficient funds to make payments owed to investors.   

26. In November 2014, February 2019 and November 2021, South Bay had 

insufficient funds to make required payments and redemptions until new investor 

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.6   Page 6 of 13



 

COMPLAINT 7  
 

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money was received.  Whenever the South Bay account had sufficient funds, Matson 

frequently transferred money to his personal account.   

27. In addition to using new investor funds to make monthly payments to 

other investors, Matson also diverted $950,000 intended for the South Bay account to 

his personal account, including investment proceeds from South Bay’s sole 

documented investment.  In total, Matson received approximately $1,566,250 in 

funds from Customers A-E from South Bay or in diverted South Bay funds.  Matson 

did not disclose to the customers the material fact that he had used their funds to 

transfer funds to himself or that investor funds would be used to repay other investors 

at any time.   

28. Despite his fiduciary responsibility, upon information and belief, Matson 

did not pay interest on the funds received and did not disclose the material fact of his 

self-dealing to the investors.   

29. Beginning in 2016, after South Bay experienced near defaults in its 

ability to make required periodic payments to the Customers, Matson made deposits 

into South Bay which totaled approximately $1,468,100 through mid-2023, or 

approximately $98,000 less than he had received from investors.  The sources of 

these funds were personal loans from family, financing, and his own retirement 

assets.    

30. By September 2022, South Bay began to default on payments.  South 

Bay then unilaterally reduced the payment amounts and provided no defined timeline 

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COMPLAINT 8  
 

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for the return of principal to the remaining investors.   

31. As of May 2023, one investor has not received payments equal to her 

principal investment and another’s second investment remains underpaid.  These 

investors have been harmed by losing approximately $280,000 in principal.  No 

investor has received a return of their principal and the interest they were promised.   

 COUNT I—FRAUD 
 

 Violations of Section 17(a)(1) of the Securities Act 
 [15 U.S.C. § 77q(a)(1)]  

 
32. Paragraphs 1 through 31 are hereby re-alleged and are incorporated 

herein by reference. 

 
33. From at least 2012 to the present, Defendants, in the offer and sale of the 

securities described herein, by the use of means and instruments of transportation and 

communication in interstate commerce and by use of the mails, directly and 

indirectly, employed devices, schemes and artifices to defraud purchasers of such 

securities, all as more particularly described above.  

34.   While engaging in the course of conduct described above, Defendants 

acted with scienter, that is, with an intent to deceive, manipulate or defraud or with a 

severe reckless disregard for the truth.  

35. By reason of the foregoing, Defendants, directly and indirectly, have 

violated and, unless enjoined, will continue to violate Section 17(a)(1) of the 

Securities Act [15 U.S.C. § 77q(a)(1)].   

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COMPLAINT 9  
 

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COUNT II—FRAUD 

 

Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act 

[15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)] 

 

36. Paragraphs 1 through 31 are hereby re-alleged and are incorporated 

herein by reference.   

37. From at least 2012 to the present, Defendants, in the offer and sale of the 

securities described herein, by use of means and instruments of transportation and 

communication in interstate commerce and of the mails, directly and indirectly: 

 a. obtained money and property by means of untrue statements of 

material fact and omissions to state material facts necessary in order to 

make the statements made, in light of the circumstances under which 

they were made, not misleading; and 

 b. engaged in transactions, practices and courses of business which 

would and did operate as a fraud and deceit upon the purchasers of such 

securities, 

all as more particularly described above.      

38. By reason of the foregoing, Defendants directly and indirectly, have 

violated and unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3) 

of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].   

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.9   Page 9 of 13



 

COMPLAINT 10  
 

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COUNT III—FRAUD 

 

Violations of Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] 
 

39. Paragraphs 1 through 31 are hereby re-alleged and are incorporated 

herein by reference. 

40. From at least 2012 to the present, Defendants, in connection with the 

purchase and sale of securities described herein, by the use of the means and 

instrumentalities of interstate commerce and by use of the mails, directly and 

indirectly:  

  a. employed devices, schemes, and artifices to defraud; 

 b. made untrue statements of material facts and omitted to state 

material facts necessary in order to make the statements made, in light of 

the circumstances under which they were made, not misleading; and 

  c. engaged in acts, practices, and courses of business which would 

and did operate as a fraud and deceit upon the purchasers of such 

securities, 

all as more particularly described above. 

41. In engaging in such conduct, Defendants acted with scienter, that is, with 

an intent to deceive, manipulate or defraud or with a severe reckless disregard for the 

truth. 

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.10   Page 10 of 13



 

COMPLAINT 11  
 

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42. By reason of the foregoing, Defendants, directly and indirectly, have 

violated and unless enjoined, will continue to violate Section 10(b) of the Exchange 

Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].  

RELIEF REQUESTED 

WHEREFORE, the SEC respectfully requests that this Court enter a judgment: 

I. 

Finding that Defendants committed the violations alleged. 

II. 

Enjoining the Defendants from violating Section 17(a) of the Securities Act [15 

U.S.C. § 77q(a)] and Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 

10b-5 thereunder [17 C.F.R. § 240.10b-5], pursuant to Sections 20(b) of the Securities 

Act [15 U.S.C. § 77t(b)] and 21(d)(1) of the Exchange Act [15 U.S.C. § 78u(d)(1)] and 

enjoining defendants South Bay and Matson from participating in the issuance of any 

security.   

III. 

Prohibiting, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C.  

§ 78u(d)(2)], defendant Matson from acting as an officer or director of any issuer that 

has a class of securities registered pursuant to Section 12 of the Exchange Act [15 

U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the 

Exchange Act [15 U.S.C. § 78o(d)].  

 

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.11   Page 11 of 13



 

COMPLAINT 12  
 

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IV. 

Ordering Defendants to disgorge their ill-gotten gains, together with 

prejudgment interest. 

V. 

 Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3)]. 

VI. 

Retaining jurisdiction over this action to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VII. 

 Granting such other and further relief as this Court deems just and appropriate. 

JURY TRIAL DEMAND 

 The Commission hereby demands a jury trial as to all issues so triable. 

This 30th day of July, 2024. 
 

 
Respectfully submitted, 

  
/s/ William P. Hicks   
William P. Hicks 
Senior Trial Attorney   
Georgia Bar No. 351649 
[email protected]   

 

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.12   Page 12 of 13



 

COMPLAINT 13  
 

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M. Graham Loomis 
    Regional Trial Counsel 
    Georgia Bar No. 457868 
    [email protected] 

 
United States Securities & Exchange 
Commission  
950 E. Paces Ferry Road NE 

    Suite 900 
    Atlanta, GA 30326 
    404-842-7600 

Case 3:24-cv-01342-H-KSC   Document 1   Filed 07/30/24   PageID.13   Page 13 of 13


	William P. Hicks, Georgia Bar No. 351649
	Violations of Section 17(a)(1) of the Securities Act
	[15 U.S.C. § 77q(a)(1)]
	COUNT II—FRAUD

	Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act
	[15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]
	Violations of Section 10(b) of the Exchange Act
	[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]