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GEORGE LEMUEL DIVEL, III * * * * * * * * * * * * * * * |
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CONSENT ORDER CONDITIONING No. CO-08-7504-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 25, 2008, George Lemuel Divel, III (“Divel”) filed with the Commissioner an application for registration as a broker-dealer agent of Capitol Securities Management, Inc. (CRD number 14169) of 7918 Jones Branch Drive, Suite 800, McLean, Virginia, 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 Divel pursuant to Section 36b-8 of the Act;
WHEREAS, as a result of such investigation, the Division has obtained evidence that on November 21, 2007, the State of Maryland suspended Divel for three months from acting as a broker-dealer agent and investment adviser representative in Maryland and directed that he permanently cease and desist from regulatory violations (Case No. 2005-0299) based on findings that Divel engaged in dishonest or unethical practices by, inter alia, engaging in unauthorized securities transactions in the trust accounts of two elderly clients following their deaths and accepting commissions for such unauthorized transactions;
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 or registrant may perform in this state if he finds (1) that the order is in the public interest and (2) that the applicant ... (F) is the subject of any of the following sanctions that are currently effective or were imposed within the past ten years: (i) An order issued by the securities administrator of any other state . . . suspending . . . registration as a[n] . . . agent . . . [or] investment adviser agent . . . or (v) a cease and desist order entered by . . . the securities agency or administrator of any other state . . . . [or] (H) has engaged in fraudulent, dishonest or unethical practices in the securities or commodities business, including abusive sales practices in the business dealings of such applicant, registrant or person with current or prospective customers or clients”
WHEREAS, Divel neither admits nor denies that the activities and sanctions described above would support administrative proceedings under Section 36b-15 of the Act;
WHEREAS, on May 19, 2008, Capitol Securities Management, Inc. filed through the Central Registration Depository a Form U-5 (Uniform Termination Notice for Securities Industry Registration) to withdraw Divel’s Connecticut application for registration as a broker-dealer agent of Capitol Securities Management, Inc.;
WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that: “withdrawal of an application for registration as a[n] . . . agent . . . becomes effective ninety days after receipt of . . . a notice of intent to withdraw such application for registration or within such shorter period of time as the commissioner may determine, unless a denial . . . proceeding is pending when the . . . notice is filed or a proceeding to deny . . . or impose conditions upon the withdrawal is instituted within ninety days after the . . . notice is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the commissioner may nevertheless institute a denial . . . proceeding under subsection (a) of this section within one year after withdrawal became effective”;
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-33, 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-33, inclusive”;
WHEREAS, the Commissioner finds that the entry of this Consent Order is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-33, inclusive, of the Act;
WHEREAS, Divel, through his consent to the entry of this Consent Order, represents that he has not, while associated with Capitol Securities Management, Inc., conducted any securities activities that would cause him be deemed an “agent” within the meaning of Section 36b-3(1) of the Act, nor will he engage in any future securities-related activity in this state without compliance with the Act and the Regulations thereunder;
WHEREAS, Divel, without admitting or denying any of the Commissioner’s allegations or findings, expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, Divel 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;
NOW THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:
1.
a)
b)
During the term of such bar, Divel shall not rely on any definitional exclusion or exemption under the Act that would otherwise excuse registration by a person transacting business in Connecticut as an agent of issuer, broker-dealer agent, investment adviser agent, broker-dealer or investment adviser;
c)
During the term of such bar, Divel shall refrain from (1) supervising any broker-dealer agents with respect to securities business transacted in or from Connecticut or with respect to Connecticut-based securities brokerage accounts; and (2) acting as a finder for compensation, receiving or splitting commissions or similar remuneration and/or receiving referral fees in conjunction with the offer, sale or purchase of securities effected in or from Connecticut;
2.
3.
4.
Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Divel if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by or on behalf of Divel and reflected herein is subsequently discovered to be untrue;
5.
This Consent Order shall not preclude additional proceedings by the Commissioner against Divel for acts or omissions not specifically addressed in this Consent Order or for acts and/or omissions that do not arise from the facts or transactions addressed herein; and
6.
This Consent Order shall become final when entered.
________/s/_________
Howard F. Pitkin
Banking Commissioner
this 5th day of August 2008.
CONSENT TO ENTRY OF ORDER
I, George Lemuel Divel, III, being duly sworn, state that I have read the foregoing Consent Order; 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 voluntarily consent to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
________/s/________________________
George Lemuel Divel, III
Subscribed and sworn to before me
this 1st day of August 2008.
_______________/s/___________________
Notary Public
My Commission Expires: 2-1-2010