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IN THE MATTER OF: CHARLES EDWARD DEAR
As An Investment Adviser Agent of
DIASTOLE WEALTH MANAGEMENT, INC. * * * * * * * * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER CONDITIONING REGISTRATION AS AN INVESTMENT ADVISER AGENT File No. CO-02-6436-S |
WHEREAS the Banking Commissioner (the "Commissioner") is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the "Act") and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the "Regulations");
WHEREAS Diastole Wealth Management, Inc. ("DWM") of 1254 Boston Post Road, Old Saybrook, Connecticut is an investment adviser registered with the Securities and Exchange Commission that has made a notice filing with the Commissioner pursuant to Section 36b-6(e) of the Act;
WHEREAS Charles Edward Dear (hereinafter, "Dear") was previously registered as an investment adviser pursuant to a Consent Order Conditioning Registration as an Investment Adviser dated June 3, 2002;
WHEREAS on December 5, 2002, the Commissioner issued an Order Revoking Registration as Investment Adviser and Order Imposing Fine (Docket No. RF-2002-6436-S) revoking the investment adviser registration of Dear and fining Dear $5,000 based upon a determination that Dear violated the terms and conditions of the June 3, 2002 Consent Order Conditioning Registration as an Investment Adviser;
WHEREAS the Order Revoking Registration as Investment Adviser and Order Imposing Fine remains in effect, and has not been modified or vacated by the Commissioner or other legal authority;
WHEREAS on February 3, 2003, Dear filed with the Commissioner an application for registration as an investment adviser agent of DWM pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS the Commissioner, through the Securities and Business Investments Division (the "Division") of the Department of Banking has conducted an investigation of Dear pursuant to Section 36b-8 of the Act;
WHEREAS Section 36b-15(a) of the Act provides, in part, that "[t]he commissioner may by order deny ... any registration or by order restrict or impose conditions on the securities or investment advisory activities that an applicant ... may perform in this state if he finds (1) that the order is in the public interest and (2) that the applicant ... (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive, or a predecessor statute or any regulation or order under said sections or a predecessor statute [or] ... (E) is the subject of ... an order of the commissioner ... revoking registration as ... [an] investment adviser ....";
WHEREAS Dear neither admits nor denies that the allegations described above would support administrative proceedings under Section 36b-15 of the Act;
WHEREAS Dear agrees to the entry of this Consent Order Conditioning Registration as an Investment Adviser Agent solely for the purpose of obviating the need for formal administrative proceedings on the matters described above;
WHEREAS Section 36b-6(c) of the Act states, in part, that: "No investment adviser shall engage an investment adviser agent unless such investment adviser agent is registered under ... [the Act]";
WHEREAS DWM agrees to the entry of this Consent Order Conditioning Registration as an Investment Adviser Agent solely as a condition to its employment of Dear as an investment adviser agent in this state, and understands that the entry of this Consent Order Conditioning Registration as an Investment Adviser Agent does not constitute a finding by the Commissioner of a violation of any provision of the Act or any regulation or order under the Act by DWM, nor shall it operate as a restriction or limitation on the securities or investment advisory activities of DWM in the State of Connecticut;
WHEREAS Dear voluntarily agrees to waive any right to a hearing upon the entry of this Consent Order Conditioning Registration as an Investment Adviser Agent, and waives the right to seek judicial review or otherwise challenge or contest the validity of this Consent Order Conditioning Registration as an Investment Adviser Agent;
NOW, THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:
| 1. | During the term of his association with DWM, Dear shall not be involved in the day-to-day supervision of investment adviser agents, nor shall he manage or supervise himself; |
| 2. | During the term of his association with DWM, Dear shall not be supervised by an individual who a) was previously associated with Dear's investment adviser business, whether as an employee, agent, consultant or in any other capacity; or b) is related to Dear by blood, adoption or marriage; |
| 3. | During the term of his association with DWM, Dear shall be supervised by an individual of higher rank who shall be located in the same office and in close physical proximity to Dear. Should such individual be unable to perform such supervisory functions, DWM shall notify the Division Director concerning the identity of such individual's successor within five business days following such individual's cessation of supervisory activities with respect to Dear; |
| 4. | During the term of his association with DWM, Dear shall (a) limit his advisory services on behalf of DWM to insurance products regulated by the Connecticut Insurance Commissioner; shares of investment companies regulated by the Securities and Exchange Commission; and securities traded on a national securities exchange or on the National Market System of NASDAQ; (b) refrain from having custody of client funds or securities; and (c) refrain from holding or exercising discretionary trading authority over client accounts except as in accordance with DWM policies and procedures; |
| 5. | For two years, DWM shall notify the Division Director in writing each calendar quarter of any securities-related complaints, actions or proceedings (including arbitrations and updates thereto) involving Dear which occur during the quarter, including the disposition thereof. Such report shall be provided no later than ten business days following the close of the quarter and shall include any written reprimands, censures or warnings issued by DWM to Dear. If no complaints, actions, proceedings, firm actions or updates exist for the quarter, the report shall so indicate. The first report shall cover the quarter ending June 30, 2003, and the final report shall cover the quarter ending June 30, 2005; |
| 6. | While Dear is associated with DWM, DWM shall observe the following procedures with respect to Dear's activities as an investment adviser agent: (a) All outgoing written securities-related communications, including, without limitation, correspondence, advertising, newsletters, client literature and and e-mail, from Dear will be approved or initialed by Dear's supervisor before the communication is mailed or otherwise disseminated, and a copy of such communication shall be delivered to the compliance department to be maintained in Dear's file; (b) All incoming written securities-related communications, including correspondence and e-mail, directed to Dear shall be forwarded to Dear's supervisor for review, and a copy of all such securities-related communications maintained in a separate on-site communications file; and (c) The firm's compliance officer will review all monthly statements relating to accounts serviced by Dear, and will initial the firm's copy of each such monthly statement to show that the compliance officer has reviewed it; |
| 7. | Entry of this Consent Order Conditioning Registration as an Investment Adviser Agent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Dear for violations of this Consent Order Conditioning Registration as an Investment Adviser Agent, or based on the predicate for its entry, if the Commissioner determines that compliance is not being observed with the terms hereof, or if any representation made in any document furnished by or on behalf of Dear in connection with his applications for registration as an investment adviser agent is subsequently discovered to be untrue; |
| 8. | Through his execution of this Consent Order Conditioning Registration as an Investment Adviser Agent, Dear understands that, should the Commissioner take any enforcement action pursuant to the preceding paragraph of this Consent Order Conditioning Registration as an Investment Adviser Agent, Dear knowingly, wilfully and voluntarily waives his right to notice and an administrative hearing adjudicating the revocation of his investment adviser agent registration, and that such registration shall be immediately revoked; |
| 9. | Dear shall be on ADMINISTRATIVE PROBATION as an investment adviser agent for a period of three (3) years from the date of this Consent Order Conditioning Registration as an Investment Adviser Agent. Once three years have elapsed from the date hereof, Dear may apply in writing for relief from any of the provisions of this Consent Order Conditioning Registration as an Investment Adviser Agent upon a showing of good cause; |
| 10. | Dear shall CEASE AND DESIST from engaging in conduct that would constitute a violation of the Act or any regulation or order under the Act; |
| 11. | The name of Charles Edward Dear be and is hereby entered on the Register of Investment Adviser Agents pursuant to Section 36b-8 of the Act; and |
| 12. | This Consent Order Conditioning Registration as an Investment Adviser Agent shall become final when issued. |
So ordered at Hartford, Connecticut _______/s/__________
this 24th day of February 2003. John P. Burke
Banking Commissioner
CONSENT TO ENTRY OF ORDER
I, Charles Edward Dear, being duly sworn, do state that I agree voluntarily and without threat or coercion of any kind to the entry of this Consent Order Conditioning Registration as an Investment Adviser Agent, voluntarily waiving any right to a hearing on the matters described herein.
________/s/_______
Charles Edward Dear
Subscribed and sworn to before me this 19th day of February 2003.
Notary Public/Commissioner of the Superior Court
My Commission Expires: 10/31/04
I, Elizabeth Eden, managing director of Diastole Wealth Management, Inc., state on behalf of such entity that I have read the foregoing Consent Order Conditioning Registration as an Investment Adviser Agent; that I know and fully understand its contents; that I am authorized to execute the same on behalf of Diastole Wealth Management, Inc.; and that Diastole Wealth Management, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein, expressly waiving any right to a hearing on the matters described herein.
Diastole Wealth Management, Inc.
By _______/s/______
Elizabeth Eden
Managing Director
On this 19th day of February, 2003, personally appeared Elizabeth Eden, signer of the foregoing Consent Order Conditioning Registration as an Investment Adviser Agent, who, being duly sworn, did acknowledge to me that she was authorized to execute the same on behalf of Diastole Wealth Management, Inc., a corporation, and acknowledged the same to be her free act and deed, before me.
Notary Public/Commissioner of the Superior Court
My Commission Expires: 10/31/04