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DMR INVESTMENT ADVISERS, LLC * * * * * * * * * * * * * * * * * * |
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STIPULATED AGREEMENT No. ST-07-7432-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, on February 27, 2007, DMR Investment Advisers, LLC (“DMR”), a Connecticut limited liability company located at 658 Hoyden Hill Road, Fairfield, Connecticut, filed with the Commissioner an application for registration as an investment adviser pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS, on March 27, 2007, Daniel M. Rose (“Rose”), sole manager of DMR, filed with the Commissioner an application for registration as an investment adviser agent pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS, DMR’s application for investment adviser registration indicated that DMR, through Rose, proposed to initially conduct an investment advisory business on a part-time basis, but that Rose has not been employed in the securities business as an agent, investment adviser agent, broker-dealer investment adviser or related capacity;
WHEREAS, Rose, who has an advanced degree in medicine, has represented to the Commissioner that 1) he has completed 60% of the course work to obtain the Certified Financial Planner® designation and expects to take the certification examination in January 2008; and 2) he is also enrolled in the Finance Certificate Program at a local university;
WHEREAS, Rose has passed the Series 65 examination and has no reported disciplinary history;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking has conducted an investigation of DMR pursuant to Section 36b-8 of the Act;
WHEREAS, as a result of such investigation, the Division believes that DMR has not fulfilled the experience requirements set forth in Section 36b-31-7b of the Regulations;
WHEREAS, Section 36b-31-7b of the Regulations under the Act provides, in part, that:
(a) Each applicant for investment adviser registration shall (1) have been engaged in the securities business as a broker-dealer, agent, investment adviser or investment adviser agent spending a major portion of his or her working time in the securities business for at least three years within the seven calendar years preceding the date of the application or (2) be otherwise qualified by knowledge and experience as determined by the commissioner. An attorney who has had at least three years of substantial experience in the practice of securities law, an accountant who has had at least three years of substantial experience in the sale of securities or the rendering of advice about the purchase or sale of securities and any other person who can demonstrate equivalent knowledge and experience in the sale of securities or the rendering of investment advice may be deemed to have sufficient experience for purposes of this subsection.
(d) Persons acting as managers shall meet the experience requirements of subsection (a) of this section. For purposes of this subsection, ‘manager’ means (1) any person who supervises investment adviser agents either directly or indirectly or (2) any person responsible for the day-to-day operation and supervision of an investment adviser office in this state.
WHEREAS, as a result of such investigation, the Division also believes that a basis exists under Section 36b-15(a)(2)(J) of the Act for restricting or imposing conditions on the securities or investment advisory activities that DMR may perform in this state based on DMR’s lack of securities-related experience;
WHEREAS, Section 36b-15(a) of the Act provides, in part, that:
The 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 … (J) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided in subsection (b) of this section ….
WHEREAS, DMR, through Rose, represents through its execution of this Stipulated Agreement that it has read and has familiarized itself with the Act and the Regulations thereunder, particularly those provisions governing the compliance responsibilities of investment advisers;
WHEREAS, DMR voluntarily agrees to waive any right to a hearing upon the issuance of this Stipulated Agreement, and waives the right to seek judicial review or otherwise challenge or contest the validity of this Stipulated Agreement;
NOW, THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| (1) | For three years, commencing on the date this Stipulated Agreement is signed by the Commissioner, DMR and Rose shall refrain from having custody or control of client funds or securities; |
| (2) |
For three years from the date this Stipulated Agreement is signed by the Commissioner, DMR and Rose shall not exercise discretionary trading authority with respect to client accounts nor shall they charge performance fees; |
| (3) | For one year following the Commissioner’s signing of this Stipulated Agreement, the investment advisory business of DMR and Rose in and from Connecticut shall be limited to referring clients to other investment advisers and receiving a referral fee in conjunction therewith. This restriction is expressly conditioned on such investment advisers being registered under the Act, in compliance with the notice filing requirement in Section 36b-(e) of the Act or exempt from federal registration under Section 203(b)(3) of the Investment Advisers Act of 1940 and excluded from the state definition of “investment adviser” by virtue of the Commissioner’s Order of October 14, 1997; |
| (4) | For two years following the signing of this Stipulated Agreement by the Commissioner, DMR shall not employ general advertising, whether via print, broadcast or electronic media, to promote its investment advisory business in or from Connecticut; |
| (5) | Following the expiration of twelve months from the Commissioner’s signing of this Stipulated Agreement, DMR may expand its investment advisory activities to service clients who qualify as “accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933; |
| (6) | Following the expiration of twenty-four months from the Commissioner’s signing of this Stipulated Agreement, DMR may expand its investment advisory activities to service clients who do not qualify as “accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933. Until three years have elapsed from the signing of this Stipulated Agreement by the Commissioner, the following restrictions apply: (a) the number of nonaccredited investor clients in Connecticut or any other jurisdiction shall not exceed five; and (b) DMR shall limit its investment advisory activity with respect to such nonaccredited investor clients to securities listed on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market; securities issued by investment companies regulated under the Investment Company Act of 1940; commercial paper; certificates of deposit; corporate debt securities; municipal securities; United States government securities; and insurance products subject to regulation by the Insurance Commissioner; |
| (7) | Following the expiration of six months from the Commissioner’s signing of this Stipulated Agreement, DMR shall consult with a regulatory consultant experienced in state and federal investment advisory legal and compliance issues and not unacceptable to the Division Director to ensure that DMR is in compliance with this Stipulated Agreement, the Act and the Regulations thereunder. DMR shall identify such consultant in writing to the Division Director no later than the date this Stipulated Agreement is signed by the Commissioner. Following the initial consultation, DMR shall meet and confer with such consultant annually until three years have elapsed from the signing of this Stipulated Agreement by the Commissioner; |
| (8) | Rose shall, within eighteen months following the signing of this Stipulated Agreement by the Commissioner, complete the Certified Financial Planner® course of study and pass the related certification examination. Rose shall provide to the Division Director a written report not less frequently than quarterly concerning his compliance with this paragraph, and including information on the courses attended, their dates and locations as well as documentation evidencing his passage of the certification examination. If, at the conclusion of such eighteen month period, Rose fails to achieve a passing score on the certification examination, the Division Director retains discretion to impose such additional restrictions on the investment advisory activities of DMR and Rose as are necessary in the public interest or for the protection of investment advisory clients; |
| (9) | For three years, DMR shall notify the Division Director in writing each calendar quarter of any securities-related complaints, actions or proceedings (including arbitrations and updates thereto) involving the DMR or its managing member that 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. If no complaints, actions, proceedings or updates exist for the quarter, the report shall so indicate. The first report shall be due no later than ten business days following the quarter ending September 30, 2007, and the final report shall be due no later than ten business days following the quarter ending September 30, 2010; |
| (10) | Execution of this Stipulated Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against DMR based upon a violation of this Stipulated Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by or on behalf of DMR in connection with its application for registration is subsequently discovered to be untrue; |
| (11) | If DMR fails to comply with the terms and conditions of this Stipulated Agreement, the Division, in its discretion, may impose sanctions including, without limitation, a monetary penalty and/or a registration revocation or suspension, and DMR, through its execution of this Stipulated Agreement, knowingly waives notice and an opportunity for a hearing in connection with the imposition of any such sanction. Prior to imposing sanctions pursuant to this paragraph, the Division shall provide DMR with an informal opportunity to demonstrate its compliance with this Stipulated Agreement and, if applicable, a reasonable time to wind down its business operations; and |
| (12) | The name of DMR Investment Advisers, LLC be and is hereby entered on the Register of Investment Advisers pursuant to Section 36b-8 of the Act; and |
| (13) | This Stipulated Agreement shall become binding when executed by the parties hereto. |
IN WITNESS WHEREOF
, the undersigned have executed this Stipulated Agreement on the dates indicated. ________/s/_________
Howard F. Pitkin
Banking Commissioner
this 22 day of August, 2007.
I, Daniel M. Rose, state on behalf of DMR Investment Advisers, LLC, that I have read the foregoing Stipulated Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulated Agreement on behalf of DMR Investment Advisers, LLC; and that DMR Investment Advisers, LLC 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.
DMR Investment Advisers, LLC
By
________/s/_______________
Daniel M. Rose
Managing Member
On this 13th day of August 2007, personally appeared Daniel M. Rose, signer of the foregoing Stipulated Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of DMR Investment Advisers, LLC, a limited liability company, and acknowledged the same to be his free act and deed, before me.
_______________/s/_______________________
Notary Public/Commissioner of the Superior Court
My Commission Expires: Oct. 31, 2010