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AUGMENT SECURITIES INC. * * * * * * * * * * * * * * * * * * |
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STIPULATION AND
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WHEREAS, Augment Securities Inc. (CRD No. 28373) (“Augment”) is a broker-dealer with its principal office at 1140 Avenue of the Americas, 9th Floor, New York, New York 10036. Augment has been registered as a broker-dealer under Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), from October 22, 1991 to December 31, 2017;
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of the Act and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”) conducted an investigation of Augment pursuant to Section 36b-26 of the Act (“Investigation”);
WHEREAS, as a result of the Investigation, the Division obtained evidence that Augment:
| 1. | Violated Section 36b-6(b) of the Act by failing to promptly notify the Commissioner that one of its broker-dealer agents had terminated his connection with the firm. Although Augment terminated such broker-dealer agent on May 15, 2017, Augment did not file the required Form U5 (Uniform Termination Notice For Securities Industry Registration) until July 13, 2017; | |
| 2. | Violated Section 36b-31-14e of the Regulations by failing to ensure consistency between Augment’s Form BD and one of its officer’s (“Officer”) Form U4. Although the Officer’s U4 reflects that he is the Compliance Assistant to the President of Augment, Augment’s Form BD lists the Officer as Augment’s President and Chief Compliance officer; | |
| 3. | Failed to sufficiently verify the accuracy of an agent’s Form U4 to reflect the existence of a civil judgment entered against the agent, as prescribed by Section 4(h) of Schedule A to the FINRA By-laws; and | |
| 4. | Failed to renew its broker-dealer registration under the Act for 2018 within the time frame prescribed by Section 36b-13(a) of the Act. Although Section 36b-13(a) of the Act requires broker-dealer renewal of registration no later than December 31 of each calendar year, [Augment] refiled its application to register as a broker-dealer on January 12, 2018; |
WHEREAS, after the Division put Augment on notice of the above deficiencies, Augment made the respective corrective amended filings;
WHEREAS, Augment’s broker-dealer registration shall become effective as of January 12, 2018, upon the Commissioner’s execution of this Stipulation and Agreement;
WHEREAS, the Commissioner believes that the foregoing evidence would support the imposition of administrative sanctions against Augment pursuant to Section 36b-15 and Section 36b-27 of the Act, as amended by Public Act 17-236;
WHEREAS, an administrative proceeding initiated under Section 36b-15 and Section 36b-27 of the Act, as amended, would constitute a “contested case” within the meaning of Section 4-166(4) 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 of the Connecticut State Agencies provide that a contested case may be resolved by stipulation or agreed settlement, unless precluded by law;
WHEREAS, the Commissioner and Augment desire to settle the matters described herein and voluntarily enter 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 and is being made to settle only the matters described herein;
WHEREAS, Augment expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Stipulation and Agreement;
WHEREAS, Augment, through the execution of this Stipulation and Agreement, voluntarily waives any rights Augment may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
AND WHEREAS, Augment specifically assures the Commissioner that none of the violations alleged in this Stipulation and Agreement shall occur in the future.
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| 1. |
No later than the date this Stipulation and Agreement is executed by the Commissioner, Augment shall remit to the Department by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut” the sum of two thousand five hundred dollars ($2,500) which shall constitute an administrative fine; |
| 2. |
Augment shall retain a regulatory consultant (“Consultant”) sufficiently experienced in state and federal legal and compliance issues and not unacceptable to the Division Director to perform two on-site compliance reviews of Augment. Augment shall identify such Consultant in writing to the Division Director prior to the date this Stipulation and Agreement is executed by the Commissioner. The Consultant’s on-site reviews shall include an evaluation of the firm and its agents’ filings on FINRA’s Central Registration Depository system, to ensure that Augment and its agents are in compliance with this Stipulation and Agreement, the Act and the Regulations thereunder. The Consultant shall perform the on-site reviews according to the following schedule (“Consultation Due Dates”), or more frequently should the Consultant deem additional reviews necessary. The initial consultation shall take place on or before September 28, 2018; and the second consultation shall take place on or before September 27, 2019. No later than thirty (30) days following each Consultation Due Date, the Consultant shall file with the Division Director a sworn affidavit, signed by the Consultant and with the written acknowledgement of the current Chief Compliance Officer, verifying compliance with the provisions of this paragraph and with this Stipulation and Agreement and verifying that the Consultant’s recommendations were implemented. |
| 3. | Augment, its representatives, agents, employees, affiliates, assigns and successors in interest shall refrain 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, including, without limitation, failing to make accurate regulatory filings in a timely manner; |
| 4. | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Augment or its 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; and |
| 5. | This Stipulation and Agreement shall become binding when executed by Augment and the Commissioner. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
| Dated at Hartford, Connecticut, | _____/s/_____________ | |
| this 19th day of March 2018. | Jorge L. Perez | |
| Banking Commissioner |
I, James Thomas Shanley, state on behalf of Augment Securities Inc., 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 Augment Securities Inc.; and that Augment Securities Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
| Augment Securities Inc. | ||
| By: | _______/s/_______________________ | |
| James Thomas Shanley | ||
| President and Chief Compliance Officer |
State of: New York
County of: Orange
On this the 13th day of March 2018, before me, the undersigned officer, personally appeared James Thomas Shanley, who acknowledged himself to be the President and Chief Compliance Officer of Augment Securities Inc., and that he, as such President and Chief Compliance Officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as President and Chief Compliance Officer.
In witness whereof I hereunto set my hand.
_____/s/_________________________
Notary Public
Date Commission Expires: 11/3/2020