The initial class action suit was filed in October against Burns following the news that Burns had disappeared the day before he was due to hand over documents to the SEC. The securities regulator subsequently brought fraud charges against Burns and his companies, alleging that he sold some $10m in ‘sham’ promissory notes to at least 40 investors from 2017 to 2020. Aside from the negligence claims, Ray’s order dismissed the plaintiffs’ claims of breach of contract and violations of the Georgia Securities Act by Matson Money. He found ‘no specific provisions that have been breached to support the breach of contract claims.’ Ray also found that the plantiffs’ allegations failed to establish that Matson ‘materially aided’ Burns in his scheme. According to the class action suit, Burns and his entities Investus Advisers, doing business as Dynamic Money, Investus Financial and Peer Connect, had an exclusive agreement to refer all clients to Matson Money and Burns’ agreements with his clients expressly required them to open investment accounts with Matson Money. The suit claims that Matson Money, in turn, was required by its contracts with Burns’ clients to invest their money solely in its proprietary mutual funds.
‘Matson Money’s agreements with advisors such as Mr. Burns clearly state that Matson Money is not responsible for the separate, unrelated investment activities of its customers, nor is it responsible for actions on the part of independent financial advisors it does not supervise who work with their clients in capacities outside the scope of the customers’ Matson Money relationship. This is fully consistent with the law governing fiduciary duty and negligence claims.’ Russell Sayre, partner at Taft Stettinius & Hollister LLP and attorney for Matson Money, said in an email to Citywire that he is confident the negligence assertions will be dismissed on the grounds that Matson Money’s role as a fiduciary to clients extends only to the portion of their assets invested in Matson Money investment funds.
Attorneys for the plaintiffs did not respond to Citywire’s request for comment by press time. ‘It is at least arguable that Matson Money’s fiduciary duty required it to supervise and monitor the investment activities of Burns and Investus, even though the transactions occurred outside of the Matson Money Accounts,’ the court order states. ‘Hence, the negligence and negligence per se claims may proceed to discovery.’
Those with knowledge of Chris Burns’ whereabouts are encouraged to contact the FBI. Note: A section of this article has been edited to more accurately characterize the nature of the court order. In a statement issued to Citywire RIA in October, the firm commented: ‘Suggesting that Matson Money is involved in Mr. Burns’ activities is like suggesting that GM is involved in a bank robbery because it manufactured the robber’s getaway car.’
‘Even though it was required to do so, Matson Money did not conduct adequate due diligence to identify the source of funds being received and under the firm’s control,’ the suit said. The suit claims that while the promissory notes in question were not listed on the Matson Money account statements, Matson Money ‘permitted interest (i.e. false profits) from the promissory notes’ to be deposited into clients’ investment accounts.
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