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ORDER TO CEASE AND DESIST NOTICE OF RIGHT TO HEARING |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”). |
| 2. | Pursuant to Section 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (“Department”), has been conducting an ongoing investigation into the activities of Respondent to determine if Respondent has violated, is violating, or is about to violate provisions of the Act or the Regulations (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondent has violated certain provisions of the Act and Regulations. |
| 4. | As a result of the Investigation, the Commissioner has the authority to issue a cease and desist order against Respondent pursuant to Section 36b-27(a) of the Act. |
| 5. |
As a result of the Investigation, the Commissioner brings this administrative action pursuant to Section 36b-15(a) of the Act and Section 4-182(c) of the General Statutes of Connecticut to revoke Respondent’s registration as an investment adviser agent in Connecticut. |
II. RESPONDENT
| 6. | Michael James Byl (“Byl”) is an individual whose addresses last known to the Commissioner are: 124 West 60th Street, Apt 45A, New York, New York 10021; and c/o LGAUS LLC, 14A Greenbriar Lane, Wilton, Connecticut 06897. At all times pertinent hereto, Byl was and remains a control person of LGAUS LLC d/b/a Landmark Global Advisors LLC (CRD No. 156330) (“Landmark”). Landmark is a Connecticut limited liability company located at 14A Greenbriar Lane, Wilton, Connecticut 06897-3401. |
III. STATEMENT OF FACTS
| 7. | Effective January 3, 2012, Landmark became registered as an investment adviser under the Act and Byl became registered as an investment adviser agent of Landmark under the Act pursuant to a Stipulated Agreement with the Commissioner. Landmark and Byl have remained registered under the Act. |
| 8. | On April 4, 2012, a FINRA arbitration award (“2012 Arbitration Award”) was issued against Byl (In the Matter of the Arbitration Between: Coleman McCarthy v. Southridge Investment Group LLC, Michael James Byl, and William Schloth; Case No. 09 06667). The arbitration panel determined that Byl, William Schloth and Southridge Investment Group LLC were jointly and severally liable and ordered them to pay the claimant $259,087.97 in compensatory damages and $520,766.82 in punitive damages plus fees. On April 24, 2013, Southridge Investment Group LLC’s motion to vacate the 2012 Arbitration Award was denied. |
| 9. | On December 18, 2013, FINRA, a self-regulatory organization, suspended Byl pursuant to Article VI, Section 3 of FINRA’s Bylaws and FINRA Rule 9554 for failing to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance (Case No. 09-06667). Such suspension is currently effective and has not been stayed or overturned by appeal or otherwise. |
| 10. | From December 18, 2013, to the present, Byl has failed to update his Form U-4 on file with the Commissioner to disclose, inter alia, the 2012 Arbitration Award, his failure to pay the 2012 Arbitration Award and his suspension by FINRA. |
| 11. | On February 7, 2014, the Commissioner gave Byl and Landmark written notice pursuant to Section 4-182(c) of the General Statutes of Connecticut that Byl’s failure to pay the 2012 Arbitration Award, the suspension by FINRA and the failure to promptly file a correcting amendment with the Commissioner to disclose the FIRNRA suspension would provide a basis for the revocation of Byl’s registration as an investment adviser agent in Connecticut. The Commissioner gave Byl the opportunity to show compliance with all lawful requirements for the retention of his registration as an investment adviser agent in Connecticut. Byl provided the Department with a response to the February 7, 2014 written notice. The response, however, was not persuasive. To date, Byl has failed to pay the 2012 Arbitration Award or to update his Form U-4 filing. |
IV. STATUTORY AND REGULATORY BASIS FOR
ORDER TO CEASE AND DESIST AND
REVOCATION OF REGISTRATION
AS AN INVESTMENT ADVISER AGENT
a. Dishonest and Unethical Business Practices
Within the Meaning of Section 36b-31-15d(a)(3) of the Regulations –
Failure to Pay Arbitration Award
| 12. | Paragraphs 1 through 11, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 13. |
Section 36b-31-15d(a) of the Regulations provides, in pertinent part, that “[i]n implementing section 36b-15(a)(2)(H) of the general statutes, the following shall be deemed ‘dishonest or unethical practices in the securities . . . business’ by investment adviser agents without limiting those terms to the following practices . . . (3) Engaging in any of the practices specified in . . . [subdivision] (19) of section 36b-31-15c of the regulations.” |
| 14. | Section 36b-31-15c(a) of the Regulations provides, in pertinent part, that “[i]n implementing section 36b-15(a)(2)(H) of the general statutes, the following shall be deemed ‘dishonest or unethical practices in the securities . . . business’ by investment advisers without limiting those terms to the following practices . . . (19) Failing to comply with any securities-related arbitration award, where a timely motion to vacate or modify such award has not been made pursuant to applicable law or where such a motion has been denied”. |
| 15. | Byl’s failure to pay the 2012 Arbitration Award, as more fully described in paragraphs 8, 9 and 11, constitutes a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15d(a)(3) of the Regulations, which forms a basis for an order to cease and desist to be issued against Byl under Section 36b-27(a) of the Act, and the revocation of Byl’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(H) of the Act. |
b. FINRA Sanction
| 16. | Paragraphs 1 through 15, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 17. |
The FINRA sanction suspending Byl, as more fully described in paragraph 9, forms the basis for the revocation of Byl’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(F)(iii) of the Act. |
c. Violation of Section 36b-31-14e(a) of the Regulations –
Failure to Promptly File a Correcting Amendment
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. | |||||||||
| 19. |
Section 36b-31-14e of the Regulations provides, in pertinent part, that:
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| 20. | Byl’s failure to update his Form U-4 on file with the Commissioner to disclose, inter alia, the 2012 Arbitration Award, his failure to pay the 2012 Arbitration Award and his suspension by FINRA, as more fully described in paragraphs 8 through 11, inclusive, constitutes a wilful violation of Section 36b-31-14e(a) of the Regulations, which forms a basis for an order to cease and desist to be issued against Byl pursuant to Section 36b-27(a) of the Act, and the revocation of Byl’s registration as an investment adviser agent in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
V. ORDER TO CEASE AND DESIST, NOTICE OF INTENT TO REVOKE
REGISTRATION AS AN INVESTMENT ADVISER AGENT
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Respondent has committed at least one violation of Section 36b-31-14e(a) of the Regulations and has engaged in conduct that constitutes a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15d(a)(3) of the Regulations;
WHEREAS, the Commissioner has reason to believe that grounds exist to revoke Respondent’s registration as an investment adviser agent in Connecticut pursuant to Sections 36b-15(a)(2)(B), 36b-15(a)(2)(H) and 36b-15(a)(2)(F)(iii) of the Act;
WHEREAS, Section 36b-15(f) of the Act provides, in pertinent part, that “[n]o order may be entered under this section except as provided in subsection (c) of this section without (1) appropriate prior notice to the . . . registrant and to the employer . . . if such . . . registrant is an . . . investment adviser agent, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
WHEREAS, notice is hereby given to Respondent that his registration as an investment adviser agent in Connecticut shall be revoked, subject to Respondent’s right to request a hearing on the allegations set forth above;
WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist against Respondent and the issuance of an order revoking Respondent’s registration as an investment adviser agent in Connecticut is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
WHEREAS, the Commissioner ORDERS that MICHEAL JAMES BYL CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) failing to comply with an arbitration award, (2) failing to promptly file a correcting amendment to Form U-4, and (3) engaging in dishonest and unethical business practices;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Sections 36b-15(f) and 36b-27 of the Act, Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following Respondent’s receipt of this Notice. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se.” Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the General Statutes of Connecticut and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on August 19, 2014, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
This Order to Cease and Desist shall remain in effect and become permanent against Respondent if Respondent fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner shall issue an order revoking Respondent’s registration as an investment adviser agent in Connecticut if Respondent fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 3rd day of July 2014. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 3rd day of July 2014, the foregoing Order to Cease and Desist, Notice of Intent to Revoke Registration as an Investment Adviser Agent and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Michael James Byl at 124 West 60th Street, Apt 45A, New York, New York 10021, certified mail no. 7012 3050 0002 1692 6545; and c/o LGAUS LLC d/b/a Landmark Global Advisors LLC, 14A Greenbriar Lane, Wilton, Connecticut 06897-3401, certified mail no. 7012 3050 0002 1692 6552; and to LGAUS LLC d/b/a Landmark Global Advisors LLC, 14A Greenbriar Lane, Wilton, Connecticut 06897-3401, certified mail no. 7012 3050 0002 1692 6569.
| ____/s/____________ | |
| Paul A. Bobruff | |
| Prosecuting Attorney |