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FOX RUN MANAGEMENT LLC (CRD Number 149092) * * * * * * * * * * * * * * * * * * * |
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STIPULATION File No. ST-09-7671-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 (the “Regulations”) promulgated under the Act;
WHEREAS, Fox Run Management LLC (“FRM”) of 35 Fox Run Lane, Greenwich, Connecticut is the general partner of, and holds a controlling interest in, Fox Run Alpha Fund, L.P. (CRD number 44826), a broker-dealer registered under the Act since June 16, 1999;
WHEREAS, FRM and Fox Run Alpha Fund, L.P. share the same business address and were both formed as Delaware entities on August 22, 1997;
WHEREAS, Fox Run Alpha Fund, L.P.’s activities include 1) trading securities for its own account; and 2) acting as an issuer of securities;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, has conducted an examination of Fox Run Alpha Fund, L.P.’s records pursuant to Section 36b-14(d) of the Act and 36b-31-14f of the Regulations, and an investigation of Fox Run Alpha Fund, L.P. and its affiliates pursuant to Section 36b-26 of the Act to determine whether they, or any of them, had violated, were violating or were about to violate any provision of the Act or any regulation or order under the Act;
WHEREAS, as a result of such examination and investigation, the Commissioner ascertained that from 1999 to 2008, FRM rendered investment advisory services for compensation solely to Fox Run Alpha Fund, L.P. at a time when FRM was not registered as an investment adviser under Section 36b-6(c) of the Act and at a time when one or more individuals performing such services for FRM were not registered as investment adviser agents of FRM under the Act;
WHEREAS, upon being apprised of the Division’s concerns, FRM filed an application for investment adviser registration under the Act on December 22, 2008;
WHEREAS, FRM (1) represents, through its execution of this Stipulation and Agreement, that it relied upon prior legal counsel in not pursuing investment adviser registration from 1999 forward; and (2) has supplied the Division with documents evidencing such reliance on legal counsel;
WHEREAS, FRM further represents, through its execution of this Stipulation and Agreement, that so long as FRM is registered or required to be registered as an investment adviser under the Act, FRM will consult with experienced securities legal counsel at least once a year to ensure that FRM, its affiliates and successors in interest are in compliance with applicable state and federal securities laws and regulations;
WHEREAS, Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, FRM desires to settle the matters described herein and, without either admitting or denying the truth of the Commissioner's allegations set forth hereinabove, 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, FRM, 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. | FRM, its members, officers, representatives, agents, employees, affiliates, and successors in interest shall refrain from engaging, directly or indirectly, in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act; |
| 2. | No later than the date this Stipulation and Agreement is executed by the Commissioner, FRM shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum of two thousand five hundred dollars ($2,500), five hundred dollars $500) of which shall constitute an administrative fine; one thousand five hundred dollars $1,500) of which shall be applied to reimburse the department for past due registration fees; and five hundred dollars ($500) of which shall be applied to defray the Division’s examination and investigative costs; |
| 3. | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against FRM, its affiliates and successors in interest 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 FRM and reflected herein is subsequently determined to be untrue; and |
| 4. | This Stipulation and Agreement shall become binding when executed by FRM and the Commissioner. |
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 12th day of June 2009.
I, Peter Klein, state on behalf of Fox Run Management 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 Fox Run Management LLC and that Fox Run Management LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
Fox Run Management LLC
By _________/s/___________________
Peter Klein
Chief Executive Officer
On this 9th day of June 2009, personally appeared Peter Klein, 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 Fox Run Management 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: April. 30, 2010