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NOTICE OF INTENT TO DENY NOTICE OF RIGHT TO HEARING DOCKET NO. NDCD-2010-7769-S |
I. PRELIMINARY STATEMENT
| 1. | 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 the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (the “Regulations”). |
| 2. | Pursuant to Sections 36b-8 and 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an investigation into the activities of Financial Partners LLC (“FP”) and Douglas Kirk Landeen (“Landeen”) to determine if they, or either of them, had violated, were violating or were about to violate provisions of the Act, the Regulations or any order under the Act. |
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Section 36b-26(a) of the Act provides, in pertinent part: The commissioner may, subject to the provisions of the Freedom of Information Act . . . (1) [m]ake such public or private investigations within or outside of this state as the commissioner deems necessary to determine whether any person has violated, is violating or is about to violate any provision of sections 36b-2 to 36b-33, inclusive, or any regulation or order thereunder . . . . | |
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Section 36b-8 of the Act provides, in part, that: On receipt of the application for registration as a[n] . . . investment adviser or investment adviser agent, the commissioner may make such investigation of the applicant and the applicant’s affairs as the commissioner deems necessary or advisable. Upon completion of such investigation, the commissioner shall, subject to the authority of the commissioner to deny . . . such registration, enter the name of such person on a register of . . . investment advisers or investment adviser agents, as the case may be, to be kept in the office of the commissioner, properly indexed and open to the public. | |
| 3. | As a result of the investigation by the Division, the Commissioner has reason to believe that Respondent Landeen has violated certain provisions of the Act. |
| 4. |
As a result of the investigation by the Division, the Commissioner has the authority to issue a cease and desist order against Respondent Landeen pursuant to Section 36b-27(a) of the Act which provides, in pertinent part:
Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections . . . the commissioner may, in the commissioner’s discretion, order . . . the person . . . to cease and desist from the violations . . . of the provisions of said sections or of the regulations, rules or orders thereunder . . . After such an order is issued, the person named in the order may, within fourteen days after receipt of the order, file a written request for a hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. |
| 5. |
As a result of the investigation by the Division, the Commissioner has reason to believe that a basis exists under Section 36b-15(a) of the Act, as amended by P.A. 09-160, for denying Respondent FP’s registration as an investment adviser under the Act and for denying the registration of Respondent Landeen as an investment adviser agent of FP under the Act. Section 36b-15(a) of the Act, as amended, provides, in pertinent part: (a) The commissioner may, by order, deny . . . any registration or, by order, restrict or impose conditions on the securities or investment advisory activities that an applicant . . . may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . or, in the case of a[n] . . . investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the . . . investment adviser: (A) Has filed an application for registration which . . . as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact; (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive . . . or any regulation or order under said sections . . . (J) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business . . . . |
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Section 36b-23 of the Act provides, in part, that: No person shall make or cause to be made . . . in any document filed with the commissioner . . . under sections 36b-2 to 36b-33, inclusive, any statement that is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with the statement, omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading. | |
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Section 36b-31-14e of the Regulations provides, in part, that: (a) If the information contained in any application for registration as a[n] . . . investment adviser agent, or in any amendment thereto, is or becomes inaccurate or incomplete in any material respect for any reason, the applicant or registrant shall promptly file a correcting amendment with the commissioner. (b) For purposes of this section, an application or any amendment thereto filed by a[n] . . . investment adviser agent shall be deemed materially incomplete if it fails to disclose (1) any . . . criminal . . . complaint or notice of charges which may result in an affirmative answer on . . . Form U-4 or (2) information on the disposition, including any decision, order or sanction, resulting from the complaint or notice of charges described in subdivision (1) of this subsection. | |
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Section 36b-31-7b of the Regulations provides, in part, that: (a) Each applicant for investment adviser registration shall (1) have been engaged in the securities business as a broker-dealer, agent, investment adviser or investment adviser agent spending a major portion of his or her working time in the securities business for at least three years within the seven calendar years preceding the date of the application or (2) be otherwise qualified by knowledge and experience as determined by the commissioner . . . (d) Persons acting as managers shall meet the experience requirements of subsection (a) of this section. For purposes of this subsection, 'manager' means . . . (2) any person responsible for the day-to-day operation and supervision of an investment adviser office in this state. |
II. RESPONDENTS
| 6. | Landeen is an individual and the sole direct owner and managing member of FP. Respondent Landeen is also a control person of Respondent FP. |
| 7. | FP is a Connecticut limited liability company formed on February 22, 2008. Respondent FP maintains its principal office at 123 Hopmeadow Road, Bristol, Connecticut 06010. |
III. STATEMENT OF FACTS
| 8. | On April 24, 2009, Respondent FP filed with the Commissioner a Form ADV, Uniform Application for Investment Adviser Registration, for registration as an investment adviser in Connecticut pursuant to Sections 36b-7 and 36b-32 of the Act. |
| 9. | Neither FP’s Form ADV application nor supplemental information filed by FP with the Division indicated that FP had fulfilled the experience requirements set forth in Section 36b-31-7b of the Regulations. Neither Respondent FP nor Respondent Landeen had been employed in the securities business as an agent, investment adviser agent, broker-dealer, investment adviser or in a related capacity for at least three years within the seven calendar years preceding the date of Respondent FP’s investment adviser application. |
| 10. | On October 27, 2009, Landeen filed with the Division a Form U-4 (Uniform Application for Securities Industry Registration or Transfer) (the “2009 Form U-4”) to register as an investment adviser agent of Respondent FP in Connecticut. |
| 11. | Item 14A.(1) of the 2009 Form U-4 filed by Landeen asked, “Have you ever: (a) been convicted of or pled guilty or nolo contendere (‘no contest’) in a domestic, foreign, or military court to any felony? (b) been charged with any felony?” [Emphasis added] Respondent Landeen responded “no” to parts (a) and (b) of Item 14A.(1) of the 2009 Form U-4. |
| 12. | Since the date of the initial 2009 Form U-4 filing, Respondent Landeen has not amended Item 14A.(1) of the 2009 Form U-4 to modify his prior response. |
| 13. | On July 27, 1998, Respondent Landeen was sentenced to 27 months in prison after Respondent Landeen pled guilty to violations of 1) 18 U.S.C. 1341 [Mail Fraud] and 2) 26 U.S.C. 7206(1) [Wilful Subscription to False Tax Return], both felonies. (U.S. v. Landeen, D. Conn. Case No. 3:98-CR 63 JBA). Such conviction, which was not overturned on appeal or otherwise, was not disclosed on Respondent Landeen’s 2009 Form U-4 filing nor was the 2009 Form U-4 filing amended to disclose such conviction. |
| 14. |
On September 22, 2008, Respondent Landeen had filed with the Division a Form U-4 (Uniform Application for Securities Industry Registration or Transfer) (the “2008 Form U-4”) to register as an investment adviser agent of More for Less Financial Solutions, LLC (CRD number 126816) in Connecticut. That registration had become effective on September 22, 2008 and was terminated on April 17, 2009. |
| 15. | Item 14A.(1) of the 2008 Form U-4 filed by Landeen asked, “Have you ever: (a) been convicted of or pled guilty or nolo contendere (‘no contest’) in a domestic, foreign, or military court to any felony? (b) been charged with any felony?” [Emphasis added] Respondent Landeen had responded “no” to parts (a) and (b) of Item 14A.(1) of the 2008 Form U-4. |
| 16. | Respondent Landeen did not amend Item 14A.(1) of the 2008 Form U-4 to modify his prior response to reflect the criminal proceedings described in Paragraph 13 above. |
| 17. | The criminal proceedings described in Paragraph 13 above were not otherwise known to the Commissioner at the time Respondent Landeen’s 2008 investment adviser registration with More for Less Financial Solutions, LLC became effective under the Act and were only discovered by the Division subsequent to Respondent Landeen’s filing of the 2009 Form U-4. |
IV. STATUTORY BASIS FOR DENIAL OF REGISTRATION AS AN INVESTMENT ADVISER
The conduct of Respondent Landeen, a managing member and control person of FP, in wilful violation of Section 36b-23 of the Act and Section 36b-31-14e of the Regulations, constitutes a basis to deny Respondent FP’s investment adviser registration under Section 36b-15(a) of the Act, as amended. Section 36b-15(a) of the Act, as amended, provides, in pertinent part, that: The commissioner may, by order, deny . . . any registration . . . if the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . or, in the case of a[n] . . . investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the . . . investment adviser . . . (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b 2 to 36b 33, inclusive . . or any regulation or order under said sections . . . .
18.
Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
19.
Respondent FP’s failure to fulfill the experience requirements set forth in Section 36b-31-7b of the Regulations constitutes grounds for the denial of Respondent FP’s investment adviser registration pursuant to Section 36b-15(a)(2)(J) of the Act, as amended.
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V. STATUTORY BASIS FOR DENIAL OF REGISTRATION AS AN INVESTMENT ADVISER AGENT
| 21. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. | Respondent Landeen’s response in the negative when asked on the 2009 Form U-4 and the 2008 Form U-4, “Have you ever: (a) been convicted of or pled guilty or nolo contendere (‘no contest’) in a domestic, foreign, or military court to any felony? (b) been charged with any felony?”, as more fully described in paragraphs 10 through 17, inclusive, is a statement which was, in light of the circumstances under which it was made, false or misleading with respect to a material fact. Such false or misleading statement constitutes grounds for the denial of Respondent Landeen’s investment adviser agent registration pursuant to Sections 36b-15(a)(2)(A) of the Act, as amended. The filing of such a false or misleading statement with the Commissioner also constitutes a wilful violation of Section 36b-23 of the Act and a basis for denying Respondent Landeen’s investment adviser agent registration under 36b-15(a)(2)(B) of the Act, as amended. |
| 23. |
Respondent Landeen’s failure to amend the 2009 Form U-4 and the 2008 Form U-4 to disclose his prior criminal conviction constitutes a wilful violation of Section 36b-31-14e of the Regulations and a basis for denying Respondent Landeen’s investment adviser agent registration under Section 36b-15(a)(2)(B) of the Act, as amended. Section 36b-31-14e of the Regulations provides, in part, that: (a) If the information contained in any application for registration as a[n] . . . investment adviser agent, or in any amendment thereto, is or becomes inaccurate or incomplete in any material respect for any reason, the applicant or registrant shall promptly file a correcting amendment with the commissioner. (b) For purposes of this section, an application or any amendment thereto filed by a[n] . . . investment adviser agent shall be deemed materially incomplete if it fails to disclose (1) any . . . criminal . . . complaint or notice of charges which may result in an affirmative answer on . . . Form U-4 or (2) information on the disposition, including any decision, order or sanction, resulting from the complaint or notice of charges described in subdivision (1) of this subsection. |
VI. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AGAINST RESPONDENT LANDEEN
a. Violation of Section 36b-23 of the Act -
False or Misleading in a Material Respect
| 24. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 25. | The 2009 Form U-4 and the 2008 Form U-4 that Respondent Landeen filed with the Commissioner, as more fully described in paragraphs 10 through 17, inclusive, contained responses that were, at the time and in light of the circumstances under which they were made, false or misleading in a material respect. The making of such filings constitutes a violation of Section 36b-23 of the Act and forms a basis for an order to cease and desist against Respondent Landeen pursuant to Section 36b-27(a) of the Act. |
| 26. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. | Respondent Landeen’s failure to amend the 2009 Form U-4 and the 2008 Form U-4 to disclose his prior criminal conviction constitutes a violation of Section 36b-31-14e of the Regulations and a basis for issuing a cease and desist order against Respondent Landeen under Section 36b-27(a) of the Act. |
VII. NOTICE OF INTENT TO DENY REGISTRATION AS AN INVESTMENT ADVISER AND AS AN INVESTMENT ADVISER AGENT AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that a basis exists under Section 36b-15 of the Act, as amended, for denying Respondent FP’s registration as an investment adviser in Connecticut and for denying Respondent Landeen’s registration as an investment adviser agent under the Act;
WHEREAS, the Commissioner believes that the issuance of an order denying Respondent FP’s registration as an investment adviser in Connecticut and an order denying Respondent Landeen’s registration as an investment adviser agent under the Act would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, Section 36b-15(f) of the Act provides, in pertinent part, that: “No order may be entered under this section except as provided in subsection (c) of this section without (1) appropriate prior notice to the applicant . . . and to the employer or prospective employer if such applicant . . . is an . . . investment adviser agent, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
NOW THEREFORE, notice is hereby given to Respondent FP that its registration as an investment adviser in Connecticut shall be denied, subject to its right to request a hearing on the allegations set forth above.
NOW THEREFORE, notice is also hereby given to Respondent Landeen that his registration as an investment adviser agent in Connecticut shall be denied, subject to his right to request a hearing on the allegations set forth above.
A hearing will be granted to the respective respondent if a written request for a hearing is received by the Department of Banking, Securities Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following such respondent’s receipt of this notice. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any 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 March 24, 2010, 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, the respective 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.
If a respondent does not request a hearing within the prescribed time period, the Commissioner shall issue an order denying the respective respondent’s registration as an investment adviser or as an investment adviser agent, as the case may be.
VIII. ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING
AS A RESULT OF THE INVESTIGATION BY THE DIVISION, THE COMMISSIONER FINDS that, with respect to the activity described herein, Respondent Landeen has violated Section 36b-23 of the Act and Section 36b-31-14e of the Regulations.
THE COMMISSIONER FURTHER FINDS that the issuance of this Order 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.
THE COMMISSIONER THEREFORE ORDERS that Respondent Landeen CEASE AND DESIST from violating the provisions of the Act and the Regulations thereunder.
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the Act, Respondent Landeen will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Respondent Landeen if a written request for a hearing is received by the Department of Banking, Securities Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following Respondent Landeen’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent Landeen 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 March 24, 2010, 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 Landeen 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 shall remain in effect and become permanent against Respondent Landeen if he does not request a hearing within the prescribed time period.
| Dated at Hartford, Connecticut | ___________/s/_______________ | |
| this 21st day of January, 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 22nd day of January 2010, the foregoing Notice of Intent to Deny Registration as an Investment Adviser and as an Investment Adviser Agent, Order to Cease and Desist and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Douglas Kirk Landeen, 123 Hopmeadow Road, Bristol, Connecticut 06010, certified mail no. 7003 1010 0000 4562 0119; and to Financial Partners LLC, 123 Hopmeadow Road, Bristol, Connecticut 06010, certified mail no. 7003 1010 0000 4562 0126.
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Paul A. Bobruff
Prosecuting Attorney