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AMERICAN CAPITAL PARTNERS, LLC (CRD No. 119249) * * * * * * * * * * * * * * * * * * * |
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STIPULATION No. ST-09-7647-S |
WHEREAS, the Banking Commissioner (the “Commissioner”) is responsible for administering 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 (the “Regulations”) promulgated under the Act;
WHEREAS, American Capital Partners, LLC (“ACP”) of 205 Oser Avenue, [Hauppauge], New York has been registered as a broker-dealer under the Act since July 23, 2002;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking has conducted an examination of ACP’s records pursuant to Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations, and a related investigation under Section 36b-26 of the Act to determine whether ACP had violated, was violating or was about to violate any provision of the Act or any regulation or order under the Act;
WHEREAS, the Commissioner, as a result of such examination and investigation, alleges that 1) from approximately 2007 forward, ACP violated Section 36b-6(b) of the Act by employing at least two individuals as agents at a time when such individuals were not registered as agents of ACP under the Act; 2) ACP engaged in conduct proscribed by Section 36b-31-15a(b) of the Regulations and FINRA Rule 1031(a) by employing one or more individuals as “cold callers” at a time when such individuals were not appropriately registered; and 3) in violation of Section 36b-31-6f(b) of the Regulations, ACP failed to establish, enforce and maintain a system for supervising the activities of its agents that was reasonably designed to achieve compliance with applicable securities laws and regulations;
WHEREAS, the foregoing allegations, if proven, would support the initiation of 1) administrative proceedings under Sections 36b-15(a)(2)(B), 36b-15(a)(2)(H) and 36b-15(a)(2)(K) of the Act to revoke or suspend ACP’s broker-dealer registration under the Act or to restrict or condition ACP’s securities activities in this state; and/or 2) administrative proceedings seeking the entry of an order to cease and desist and/or a fine of up to $100,000 per violation under Section 36b-27 of the Act;
WHEREAS, in furtherance of its desire to resolve this matter informally with the Division, ACP has furnished the Division with proof that it has extended to those Connecticut customers having potential suitability claims a rescission offer totaling approximately $12,985;
WHEREAS, ACP represents and undertakes, through its execution of this Stipulation and Agreement, that, with respect to any securities transaction having a Connecticut nexus, ACP shall not pay an override to any individual unless such compensation arrangement is embodied in a written agreement requiring that both the recipient of the override and the agent receiving the commission be registered under the Act;
WHEREAS, ACP acknowledges, through its execution of this Stipulation and Agreement, that it has an obligation under Section 36b-14(d) of the Act to keep its records open to examination by the Commissioner and a duty under Section 36b-31-14f of the Regulations to furnish access to all areas of its securities operations conducted on or off its premises and to otherwise facilitate any examination of its operations conducted by the Commissioner;
WHEREAS, Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, ACP desires to settle the matters described herein and voluntarily enters into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein;
WHEREAS, ACP, through its execution of this Stipulation and Agreement, voluntarily waives any rights it may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| (1) | No later that the date of this Stipulation and Agreement is executed by the Commissioner, ACP shall designate and retain an independent consultant sufficiently experienced in securities regulatory and compliance issues and not unacceptable to the Division Director to conduct a review of ACP's internal procedures for compliance with the Act and the Regulations and issue a written report thereon. The consultant's review shall pinpoint the following additional subject areas: (a) increased training to branch managers concerning their responsibilities in timely producing records in response to a regulatory examination; (b) increased training to firm personnel concerning the activities that would require registration on the part of agents and “cold callers”; (c) increased training on state registration requirements applying where representatives share a “rep number” and/or receive an override based on other representatives' production; and (d) increased training to firm personnel and improved supervisory controls with respect to sales communications with the public. The independent consultant shall initiate his or her review within three (3) months following the Commissioner’s execution of this Stipulation and Agreement or by July 1, 2009, whichever occurs first, and shall complete such review and issue a report thereon no later than sixty (60) days after the review has been initiated. No later than forty-five days after the report is issued, ACP shall provide the Division Director with a complete copy of the consultant’s report, including a summary of those recommendations that were implemented and, for any recommendations not implemented, the reasons therefor. The consultant’s report shall be returned to ACP following completion of the Division’s review; |
| (2) | For two years, commencing on the date this Stipulation and Agreement is executed by the Commissioner, ACP shall submit to the Division Director a written report each calendar quarter 1) describing any securities-related written reprimands, censures or warnings issued by ACP to its personnel and involving Connecticut securities activity (such written reprimands, censures or warnings referred to collectively as “Reprimands”) and any securities-related complaints, actions or proceedings (including arbitrations) (such complaints, actions or proceedings referred to collectively as “Complaints”) involving entities and individuals located in Connecticut and initiated against ACP or any of ACP’s members, control persons, agents, employees or representatives for the quarter; 2) providing information on the disposition of any such Reprimands or Complaints, or on any Reprimands or Complaints reflected in an earlier report filed pursuant to this paragraph; and 3) attaching copies of such Complaints or Reprimands and any dispositional documents. If no securities-related Complaints or Reprimands exist for the quarter, the report shall so indicate. The first such report shall be due no later than ten business days following the close of the quarter ending June 30, 2009, and the final report shall be due no later than ten business days following the close of the quarter ending June 30, 2011; |
| (3) | No later than the date this Stipulation and Agreement is executed by the Commissioner, ACP shall remit to the department by check made payable to “Treasurer, State of Connecticut” the sum of twenty thousand dollars ($20,000), fifteen thousand dollars ($15,000) of which shall constitute an administrative fine, and five thousand dollars ($5,000) of which shall be applied to defray the costs associated with the Division’s investigation of this matter; |
| (4) | ACP shall pay the expenses associated with one or more examinations of its office or offices conducted by the Division within twenty four (24) months following the Commissioner's execution of this Stipulation and Agreement. Such expenses shall be in accordance with state travel regulations, and shall not exceed three thousand dollars ($3,000) in the aggregate; |
| (5) | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against ACP based upon a violation of this Stipulation and 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 ACP and reflected herein is subsequently determined to be untrue; and |
| (6) | This Stipulation and Agreement shall become binding when executed by all parties hereto. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
________/s/_________
Howard F. Pitkin
Banking Commissioner
Dated at Hartford, Connecticut
this 9th day of June 2009.
I, Anthony Michael Gardini, Jr., state on behalf of American Capital Partners, LLC, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of American Capital Partners, LLC and that American Capital Partners, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
American Capital Partners, LLC
By _________/s/___________________
Anthony Michael Gardini, Jr.
Chairman and Chief Executive Officer
On this 24th day of March 2009, personally appeared Anthony Michael Gardini, Jr., signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of American Capital Partners, LLC, and acknowledged the same to be his free act and deed, before me.
____________/s/___________________
Notary Public
My Commission Expires: 8/1/2009