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MIT ASSOCIATES, LLC * * * * * * * * * * * * |
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CONSENT ORDER CONDITIONING No. CO-02-6700-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 June 6, 2002, MIT Associates, LLC (hereinafter, the “Applicant”), a newly formed limited liability company located at 1171 East Putnam Avenue, Riverside, Connecticut filed with the Commissioner an application for registration as a broker-dealer pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS the principals and owners (collectively, the "Principals") of the Applicant are Michael Haines Finnell (CRD number 1496955), president; Drew James Otocka (CRD number 4544909); Christopher Vose Streit (CRD number 438339); and Thomas Grover Cleveland (CRD number 4544879), FINOP, all of whom have applied for registration as broker-dealer agents of the Applicant pursuant to Sections 36b-7 and 36b-32 of the Act;
WHEREAS the Form U-4 agent applications for Messrs. Otocka, Streit, Cleveland and Finnell indicate, respectively, that: 1) from October 1999 to the present, Drew J. Otocka was a managing director of MIT Asset Management; 2) from January 1986 to the present, Christopher Vose Streit was the president of MIT Asset Management; 3) from September 1997 to the present, Thomas G. Cleveland was the vice president of MIT Asset Management; and 4) in July 2002, Michael Haines Finnell joined MIT Asset Management, Inc. as a managing director and secretary;
WHEREAS on April 22, 2002, the Commissioner entered into a Stipulation and Agreement with MIT Asset Management, Inc. claiming that, from December 31, 1997 to December 31, 2001, MIT Asset Management, Inc. had transacted business as an investment adviser in violation of Section 36b-6(c) 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 the Applicant pursuant to Section 36b-8 of the Act;
WHEREAS as a result of such investigation, the Division 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 the Applicant may perform in this state;
WHEREAS Section 36b-15(a) of the Act provides, in part, that:
The commissioner may 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 ... or, in the case of a broker-dealer ... , any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer ... (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 …. (Emphasis added)
WHEREAS the Division believes that the former principals of MIT Asset Management, Inc. from December 1997 to December 2001 failed to ensure that MIT Asset Management, Inc. complied with state investment adviser registration provisions, thus suggesting that the Applicant lacks sufficient knowledge and experience in the regulatory compliance aspects of the securities business;
WHEREAS the Applicant agrees to the entry of this Consent Order solely for the purpose of obviating the need for formal administrative proceedings on the matters described above;
WHEREAS the Applicant voluntarily agrees to waive any right to a hearing upon the entry of this Consent Order, and waives the right to seek judicial review or otherwise challenge or contest the validity of this Consent Order;
WHEREAS the Commissioner finds that the entry 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 this Act;
NOW, THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:
| 1. | Except as provided in paragraph (3) of this Consent Order Conditioning Registration as a Broker-dealer, the obligations of the Applicant pursuant to this Consent Order Conditioning Registration as a Broker-dealer shall terminate two years from the entry hereof. Nothing in this Consent Order Conditioning Registration as a Broker-dealer, however, shall preclude the Applicant from applying in writing for relief from any of the provisions of this Consent Order Conditioning Registration as a Broker-dealer prior to the expiration of such two year period. The Department shall have discretion to grant or deny any such requested relief; |
| 2. |
Commencing on the date the name "MIT Associates, LLC” is entered on the register of broker-dealers pursuant to Section 36b-8 of the Act, the securities business of the Applicant in or from Connecticut will be limited to the offer and sale of private placements made in accordance with Section 4(2) of the Securities Act of 1933 or federal Regulation D, 17 C.F.R. § 230.501 et seq. as well as in compliance with applicable provisions of the Act and the Regulations thereunder; |
| 3. |
Absent the express written consent of the Division Director, the Applicant shall not transact securities business with Connecticut customers who do not qualify as "accredited investors" as that term is defined in Rule 501(a) of federal Regulation D, 17 C.F.R. Section 230.501(a); |
| 4. |
Commencing on the date this Consent Order is entered by the Commissioner, the Applicant shall submit to the Division Director a written report each calendar quarter 1) describing any securities-related complaints, actions or proceedings (including arbitrations) (such complaints, actions or proceedings referred to collectively as "Complaints") initiated against the Applicant or any of the Applicant’s officers, agents, members, employees or representatives for the quarter; 2) providing information on the disposition of any such Complaints or on any Complaints reflected in an earlier report filed pursuant to this paragraph; and 3) attaching copies of such Complaints and any dispositional documents. If no securities-related Complaints exist for the quarter, the report shall so indicate. The first such report shall be due on March 31, 2003 and the final report shall be due on March 31, 2005. |
| 5. |
Commencing on the date this Consent Order is signed by the Commissioner, the Applicant shall notify the Division Director in writing within five business days following any change in the Applicant’s officers, control persons or individuals identified in the Applicant’s supervisory procedures manual as having responsibility for regulatory compliance; |
| 6. |
The Applicant shall keep its books and records open to inspection by the Commissioner as required by Section 36b-14 of the Act and Section 36b-31-14f of the Regulations thereunder; |
| 7. |
Entry of this Consent Order Conditioning Registration as a Broker-dealer by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against the Applicant based upon a violation of this Consent Order Conditioning Registration as a Broker-dealer if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation or undertaking made by the Applicant in connection with its application for registration as a broker-dealer is subsequently discovered to be untrue or unfulfilled; |
| 8. |
The name of MIT Associates, LLC be and is hereby entered on the Register of Broker-dealers pursuant to Section 36b-8 of the Act; |
| [9.] |
This Consent Order Conditioning Registration as a Broker-dealer shall become final when issued. |
| So ordered at Hartford, Connecticut | ______/s/______ | |
| this 19th day of December 2002. | John P. Burke | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Michael Haines Finnell, state on behalf of MIT Associates, LLC, that I have read the foregoing Consent Order Conditioning Registration as a Broker-dealer; that I know and fully understand its contents; that I am authorized to execute this Consent Order Conditioning Registration as a Broker-dealer on behalf of MIT Associates, LLC; that MIT Associates, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that MIT Associates, LLC voluntarily consents to the entry of this Consent Order Conditioning Registration as a Broker-dealer expressly waiving any rights it may have to a hearing on the matters described herein.
MIT Associates, LLC
By _________/s/_______
Michael Haines Finnell
President
Michael Haines Finnell
President
On this 19 day of Dec. 2002, personally appeared Michael Haines Finnell, signer of the foregoing Consent Order Conditioning Registration as a Broker-dealer, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of MIT Associates, 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: Sept. 30, 2004
Notary Public/Commissioner of the Superior Court
My Commission Expires: Sept. 30, 2004