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ROCHDALE SECURITIES LLC * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-13-8070-S |
I. PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (the “Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (the “Regulations”) promulgated under the Act;
WHEREAS, Rochdale Securities LLC (“Rochdale”) is a Delaware limited liability company having its principal office at 750 East Main Street, 7th Floor, Stamford, Connecticut 06902;
WHEREAS, Rochdale has been registered as a broker-dealer under the Act since at least February 26, 1997;
WHEREAS, on February 25, 2013, Rochdale filed through the Central Registration Depository (“CRD”) system a Form BDW (Uniform Request for Broker-dealer Withdrawal) seeking to withdraw its broker-dealer registration in all jurisdictions. The Form BDW indicated that the firm had ceased conducting business on October 26, 2012;
WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that: “Withdrawal from registration as a broker-dealer . . . becomes effective ninety days after receipt of an application to withdraw such registration . . . or within such shorter period of time as the commissioner may determine, unless a . . . revocation or suspension proceeding is pending when the application . . . is filed or a proceeding to deny, revoke, suspend or impose conditions upon the withdrawal is instituted within ninety days after the application . . . 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 . . . revocation or suspension proceeding under subsection (a) of this section within one year after withdrawal became effective”;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, has conducted an investigation under Section 36b-26(a) of the Act into the activities of Rochdale, its officers, agents, representatives and employees to determine whether they, or any of them, had violated, were violating or were about to violate any provisions of the Act or Regulations or any order thereunder;
WHEREAS, as a result of the investigation, the Division obtained evidence that Rochdale failed to have and maintain the minimum net capital required by Securities and Exchange Commission (“SEC”) Rule 15c3-1, 17 C.F.R. § 240.15c3-1 and by Section 36b-31-9b(a) of the Regulations. In addition, in violation of subsections (b) and (c) of Section 36b-31-9b of the Regulations, Rochdale and its agents failed to give the Commissioner telegraphic or other notice of the net capital deficiency, and failed to give the Commissioner an up-to-date statement of financial condition and such supplemental schedules and reports which were reasonably necessary to accurately reflect Rochdale’s total financial position;
WHEREAS, Rochdale maintains that a former agent, David Miller (CRD number 2570012), entered a series of unauthorized buy orders for shares of Apple, Inc. on October 25, 2012 in advance of an earnings announcement by Apple, Inc.; that Apple, Inc.’s stock price declined following the earnings announcement; that Rochdale then took ownership of the unauthorized Apple, Inc. position; and that, as a result, Rochdale lost approximately $5.3 million, causing Rochdale to fall below net capital requirements;
WHEREAS, on April 15, 2013, David Miller pleaded guilty to one count of conspiracy to commit wire fraud and one count of wire fraud (United States of America v. David Miller, Case No. 3:13CR-00075-RNC (D. Conn.)) in conjunction with the conduct described above;
WHEREAS, the Commissioner has reason to believe that Rochdale’s failure to satisfy regulatory net capital requirements, provide the Commissioner with notice of net capital deficiencies and provide related reports violates certain provisions of the Act and Regulations, and would support administrative proceedings against Rochdale under Sections 36b-15 and 36b-27 of the Act;
WHEREAS, an administrative proceeding initiated under Sections 36b-15 and 36b-27 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, Section 36b-31(a) of the Act provides, in pertinent 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 pertinent 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, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner and Rochdale reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Rochdale, 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;
AND 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 the Act;
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Rochdale, through its execution of this Consent Order, voluntarily waives the following rights:
| 1. | To be afforded notice and an opportunity for a hearing within the meaning of Sections 36b-27 and 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 itself of Sections 36b-27 and 36b-15(f) of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. | To present its position in a hearing in which it 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. |
III. CONSENT TO ENTRY OF FINDINGS
WHEREAS, Rochdale, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner without admitting or denying them:
| 1. | The entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | Rochdale violated Section 36b-31-9b of the Regulations by failing to have and maintain the required minimum net capital, failing to give the Commissioner telegraphic notice of the net capital deficiency, and failing to give the Commissioner an up-to-date statement of financial condition and such supplemental schedules and reports which were reasonably necessary to accurately reflect Rochdale’s total financial position; and |
| 3. | The foregoing conduct would support administrative proceedings against Rochdale under Section 36b-15(a)(2)(B) of the Act as well as under subsections (a) and (d) of Section 36b-27 of the Act. |
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Rochdale, through its execution of this Consent Order, consents to the Commissioner’s entry of an order imposing on it the following sanctions:
| 1. | From the date this Consent Order is entered by the Commissioner, the registration of Rochdale Securities LLC as a broker-dealer under the Act shall be REVOKED; and |
| 2. | Rochdale Securities LLC, its representatives, agents, employees, affiliates, assigns, and successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation, rule or order adopted or issued under the Act, either directly or through any person, organization or other device. |
V. CONSENT ORDER
NOW THEREFORE,
the Commissioner enters the following:| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Rochdale based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by Rochdale and reflected herein are subsequently discovered to be untrue; |
| 3. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against Rochdale, its officers, employees, representatives and agents based upon evidence of which the Division was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act; and |
| 4. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _______/s/_________ | |
| this 12th day of Aug. 2013. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Daniel J. Crowley, state on behalf of Rochdale Securities LLC, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Rochdale Securities LLC; that Rochdale Securities LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Rochdale Securities LLC consents to the entry of this Consent Order.
| Rochdale Securities LLC | |
| By | ______/s/_________________ |
| Daniel J. Crowley | |
| President |
State of: Conn.
County of: Fairfield
On this the 7th day of Aug. 2013 before me, the undersigned officer, personally appeared Daniel J. Crowley, who acknowledged himself to be the President of Rochdale Securities LLC, a limited liability company, and that he, as such President, 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 President.
In witness whereof I hereunto set my hand.
_____/s/_________________________
Notary Public
Date Commission Expires: April 30, 2014