| * * * * * * * * * * * * * * *
LAMMERGEIER RESEARCH LLC
* * * * * * * * * * * * * * * |
*
* * * * * * * * * * * * * * * * |
CONSENT ORDER No. CO-13-8094-S |
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act;
WHEREAS, on October 4, 2012, Lammergeier Research LLC (“LRL”), a Delaware limited liability company with a principal place of business located at 4 Knollwood Drive East, Greenwich, Connecticut 06830, 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 November 26, 2012, Justin Michael Scott (“Scott”) and Omid Kamshad (“Kamshad”) each filed with the Commissioner an application for registration as an investment adviser agent of LRL pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS, Scott passed the Series 65 examination on April 13, 2013;
WHEREAS, Kamshad passed the Series 65 examination on March 27, 2013;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking has conducted an investigation of LRL, Scott and Kamshad pursuant to Section 36b-8 of the Act;
WHEREAS, Scott is the Managing Member and Co-Portfolio Manager of LRL;
WHEREAS, Kamshad is the Managing Member and Co-Portfolio Manager of LRL;
WHEREAS, in 2003, the Securities and Exchange Commission (the “SEC”) and the Massachusetts Securities Division brought actions against Scott and Kamshad alleging that they engaged in excessive short-term trading in personal deferred compensation accounts of Putnam mutual fund shares while employed by Putnam Investment Management, LLC, including shares over which they exercised investment authority;
WHEREAS, on June 4, 2007, a final judgment was entered by consent against Scott and Kamshad permanently enjoining them from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and ordering them to pay disgorgement (Securities and Exchange Commission v. Justin M. Scott and Omid Kamshad, Civil Action Number 03-12082-EFH, D. Mass.);
WHEREAS, on June 4, 2007, the State of Massachusetts Securities Division entered separate consent orders (collectively, “Massachusetts Consent Orders”) with respect to Kamshad and Scott. The Massachusetts Consent Orders (Docket No. E-2003-061) followed an administrative complaint filed against Scott and Kamshad alleging violations of the Massachusetts Uniform Securities Act. The Massachusetts Consent Orders ordered Scott and Kamshad to permanently cease and desist from violations of the Massachusetts Uniform Securities Act, suspended Scott and Kamshad for twelve months from association with any federal or state registered investment adviser in Massachusetts and ordered them to pay disgorgement and an administrative fine;
WHEREAS, Scott and Kamshad represent, through their execution of this Consent Order, that each has fulfilled his respective monetary obligations imposed by the June 4, 2007 final judgment obtained by the SEC and by the Massachusetts Consent Orders;
WHEREAS, neither Scott nor Kamshad has reported any intervening disciplinary events since the June 4, 2007 injunction and the June 4, 2007 Massachusetts Consent Orders;
WHEREAS, neither LRL, Scott nor Kamshad has ever been registered as an investment adviser or investment adviser agent under the securities laws of any state;
WHEREAS, as a result of such investigation, the Division believes that a basis exists under Section 36b-15(a)(2) of the Act for restricting or imposing conditions on the securities activities that LRL, Scott and Kamshad may perform in and from Connecticut;
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 the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . or, in the case of . . . [an] investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the . . . investment adviser . . . (D) is permanently . . . enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of a business involving securities . . . [or] investments . . . (F) is the subject of any of the following sanctions that are currently effective or were imposed within the past ten years . . . (vi) a cease and desist order entered by the Securities and Exchange Commission, a self-regulatory organization or the securities agency or administrator of any other state[;] |
WHEREAS, the June 4, 2007 permanent injunction and the Massachusetts Consent Orders described herein would provide bases under Section 36b-15 of the Act for the Commissioner to restrict or impose conditions on the securities activities that LRL, Scott and Kamshad may perform in this state, after providing LRL, Scott and Kamshad with prior notice and an opportunity for a hearing;
WHEREAS, Section 36b-31(a) of the Act, provides, in relevant part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-34, inclusive”;
WHEREAS, Section 36b-31(b) of the Act, provides, in relevant part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-34, inclusive”;
WHEREAS, an administrative proceeding initiated under Section 36b-15 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, LRL, Scott and Kamshad expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
AND WHEREAS, the issuance of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act.
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, LRL, Scott and Kamshad, through their execution of this Consent Order, each voluntarily waive the following rights:
| 1. | To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-15(f) of the Act and Section 4-177(a) of the General Statutes of Connecticut; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 36b-15(f) of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. | To present their respective positions in a hearing in which each is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order. |
CONSENT TO ENTRY OF ACTIVITY RESTRICTIONS
WHEREAS, LRL, Scott and Kamshad, through their execution of this Consent Order, consent to the Commissioner’s entry of a Consent Order imposing on them the following restrictions:
| 1. | For a two-year term, commencing on the date this Consent Order is entered by the Commissioner, LRL shall retain an independent consultant sufficiently experienced in state and federal securities law compliance and securities ethics and supervisory systems and not unacceptable to the Division Director to evaluate LRL’s supervisory, code of ethics, and compliance policies and procedures and the adequacy of current compliance employee staffing and experience levels, and make written recommendations to ensure that such compliance policies and procedures safeguard against violations of the Act, Regulations and this Consent Order. Such review and related recommendations shall be conducted and prepared on a quarterly basis by the independent consultant. LRL shall identify such independent consultant in writing to the Division Director prior to the entry of this Consent Order by the Commissioner. | ||||||
| 2. | For two (2) years following the entry of this Consent Order by the Commissioner, LRL and its principals, including Scott and Kamshad, shall consult with such independent consultant on a quarterly basis regarding the compliance of LRL, its principals, officers, agents, employees, representatives and affiliates with this Consent Order, the Act and the Regulations thereunder; | ||||||
| 3. | For two (2) years following the entry of this Consent Order by the Commissioner, LRL shall cause the independent consultant retained by LRL to prepare a quarterly written certification attesting that the independent consultant has conducted the review described in paragraph (1) above and has communicated the independent consultant’s findings and recommendations to LRL on a quarterly basis. Such certification shall be accompanied by the findings and recommendations for the quarter to which the certification relates. LRL shall retain such certifications and supporting documents in a separate file, open to inspection by the Commissioner during an examination or otherwise made available to the Commissioner upon the Commissioner’s request; | ||||||
| 4. | Should LRL or its successors in interest sever their relationship with the independent consultant identified to the Division Director, LRL and/or its successors in interest shall apprise the Division Director in writing of the reasons for such severance within thirty (30) days following such severance, and shall identify the successor independent consultant engaged to perform the services described in paragraphs (1) through (3). Any such successor independent consultant shall also be sufficiently experienced in state and federal securities law compliance and not unacceptable to the Division Director; | ||||||
| 5. | For two (2) years following the entry of this Consent Order by the Commissioner, LRL shall provide access to any and all books, papers, correspondence, memoranda, agreements or other documents or records which the Commissioner deems necessary to determine whether Scott, Kamshad, LRL or any of LRL’s principals, officers, agents, employees, representatives, control persons or affiliates has violated, is violating or is about to violate any provisions of the Act or Regulations or to assess LRL’s compliance with the terms of this Consent Order regardless of LRL’s federal, state or exempt filing status as an investment adviser. The obligation set forth in this paragraph shall also extend to Scott and Kamshad during their association with LRL over such two year period; | ||||||
| 6. | LRL shall notify the Division Director promptly, through appropriate amendments to the CRD and IARD filings of LRL, Scott and Kamshad, concerning (a) any securities-related complaints, actions or proceedings, including arbitrations, involving LRL, Scott and/or Kamshad; (b) any updates to such complaints or proceedings; and (c) dispositional information concerning such complaints or proceedings; and | ||||||
| 7. |
Absent prior written approval from the Commissioner, LRL, Scott and Kamshad shall limit their investment advisory activity in or from Connecticut to rendering investment advice to:
|
CONSENT ORDER
NOW THEREFORE
, the Commissioner enters the following:| 1. | The Activity Restrictions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Scott, Kamshad and/or LRL, its officers, agents, representatives, employees, affiliates and successors in interest based upon a violation of this Consent Order by the affected party or based on the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed, or if any representation reflected in this Consent Order or made in any document furnished by or on behalf of LRL, Scott or Kamshad in connection with their respective registration applications is subsequently discovered to be untrue; |
| 3. | Contemporaneously with the entry of this Consent Order, the name “Lammergeier Research LLC” be and is hereby entered on the register of investment advisers pursuant to Section 36b-8 of the Act; |
| 4. | Contemporaneously with the entry of this Consent Order, the name “Justin Michael Scott” be and is hereby entered on the register of investment advisers agents pursuant to Section 36b-8 of the Act; |
| 5. | Contemporaneously with the entry of this Consent Order, the name “Omid Kamshad” be and is hereby entered on the register of investment advisers agents pursuant to Section 36b-8 of the Act; and |
| 6. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | _______/s/____________ | |
| this 28th day of August 2013. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Justin Michael Scott, Managing Member of Lammergeier Research, LLC (“LRL”), state on behalf of LRL that I have read the foregoing Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent with respect to LRL, Justin Michael Scott and Omid Kamshad; that I know and fully understand its contents; that I am authorized to execute the same on behalf of LRL; that LRL agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that LRL voluntarily consents to the issuance of this Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent.
| Lammergeier Research, LLC | |
| By: | ____ /s/_______________ |
| Justin Michael Scott | |
| Managing Member |
State of: Conn.
On this the 22nd day of Aug. 2013, before me, Michael J. McIntosh, the undersigned officer, personally appeared Justin Michael Scott, who acknowledged himself to be Managing Member of Lammergeier Research, LLC, a limited liability company, and that he, as such Managing Member, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Managing Member.
_____/s/__________________________
Michael J. McIntosh
Notary Public
Date Commission Expires: Apr. 30, 2015
CONSENT TO ENTRY OF ORDER
I, Justin Michael Scott, state that I have read the foregoing Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the issuance of this Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent.
| _____/s/__________ |
| Justin Michael Scott |
State of: Conn.
On this the 22nd day of Aug. 2013, before me, Michael J. McIntosh, the undersigned officer, personally appeared Justin Michael Scott, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
_____/s/___________________________
Michael J. McIntosh
Notary Public
Date Commission Expires: Apr. 30, 2015
CONSENT TO ENTRY OF ORDER
I, Omid Kamshad, state that I have read the foregoing Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the issuance of this Consent Order Conditioning Registration as an Investment Adviser and as an Investment Adviser Agent.
| _____/s/_______ |
| Omid Kamshad |
Republic of France
Department of the Alpes-Maritimes
City of Nice
Consular Agency of the United States of America
On this the 31st day of July [sic], before me, Avery Kane, Consular Agent of the U.S.A., the undersigned officer, personally appeared Omid Kamshad, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
_____/s/________________________
Avery Kane
Consular Agent of the U.S.A.
Date Commission Expires: Indefinite