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HALCYON CABOT * * * * * * * * * * * * * * * * * |
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NOTICE OF INTENT TO REVOKE AND NOTICE OF RIGHT TO HEARING DOCKET NO. NR-16-8261-S |
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 Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act. |
| 2. | The Commissioner brings this administrative action to revoke the registration of Respondent as a broker-dealer in Connecticut pursuant to Section 36b-15 of the Act and Section 4-182(c) of the General Statutes of Connecticut. |
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| 3. | Respondent is a New York corporation whose address last known to the Commissioner is 767 Third Avenue, 17th Floor, New York, New York 10017. |
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| 4. | From September 8, 2005 to December 31, 2008, and from March 31, 2009 to the present, Respondent has been registered as a broker-dealer under the Act. |
| 5. | The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory organization registered with the Securities and Exchange Commission (“SEC”) pursuant to Section 15A of the Securities Exchange Act of 1934. |
| 6. | On July 16, 2014, Respondent entered into an Acceptance, Waiver and Consent (AWC) with FINRA (Case No. 20130388744-01). The AWC resulted in FINRA censuring Respondent and fining Respondent $7,500. Without admitting or denying the findings, Respondent consented to the sanctions and to the entry of findings that, from January 1, 2013 through September 30, 2013, Respondent failed to transmit 10,134 Reportable Order Events (ROES) to the Order Audit Trail System (OATS) on 176 business days. The findings stated that such conduct violated FINRA Rule 7450(a), and that Respondent did not qualify for exclusion from the OATS reporting requirements because it routed its orders through more than a single Reporting Member. |
| 7. | On October 6, 2015, FINRA, through an Order Accepting Offer of Settlement, expelled Respondent from FINRA membership for wilfully violating Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 and Rules 10b-5(a) and (c) thereunder (Case No. 2012033877802). Without admitting or denying the findings, Respondent consented to the sanctions and to the entry of findings that, inter alia, Respondent: (i) violated Section 10(b) of the Securities Exchange Act of 1934, Rules 10b-5(a) and (c) thereunder and FINRA Rule 2010 by entering into a sham placement agent agreement with Cell Therapeutics and funneling back its fee to an affiliate of a venture capital firm that had purchased Cell Therapeutics securities in a private placement; (ii) participated in a deceptive scheme involving a commission sharing agreement in violation of FINRA Rule 2010; (iii) falsified books and records in violation of NASD Rule 3110 and FINRA Rules 4511 and 2010; (iv) engaged in churning and excessive trading in violation of Rule 10b-5 under the Securities Exchange Act, NASD Rule 2310 and FINRA Rules 2020, 2111 and 2010; (v) failed to establish and implement an adequate anti-money laundering program in violation of FINRA Rules 3310(a) and 2010; (vi) failed to designate a qualified Anti-Money Laundering Compliance Officer in violation of FINRA Rules 3310(d) and 2010; and (vii) failed to establish, maintain and enforce a system and written procedures to supervise its business and associated persons in violation of NASD Rule 3010 and FINRA Rule 2010; |
| 8. | On December 16, 2015, FINRA expelled Respondent from FINRA membership for failing to pay fines and/or costs of $316.71 imposed by the July 16, 2014 AWC (Case No. 2013038874401). |
| 9. | Section 36b-15(a) of the Act provides, in pertinent part, that “[t]he commissioner may, by order . . . revoke any registration . . . if the commissioner finds that (1) the order is in the public interest, and (2) the . . . registrant . . . (F) is the subject of any of the following sanctions that are currently effective or were imposed within the past ten years . . . (iii) a suspension, expulsion or other sanction issued by a national securities exchange or other self-regulatory organization registered under federal laws administered by the Securities and Exchange Commission . . . if the effect of the sanction has not been stayed or overturned by appeal or otherwise[.]” |
| 10. | On November 12, 2015, the Commissioner, through the Securities and Business Investments Division of the Department of Banking, provided Respondent with written notice pursuant to Section 4-182(c) of the General Statutes of Connecticut that a basis existed under Section 36b-15(a)(2)(F)(iii) of the Act to revoke Respondent’s registration as a broker-dealer in Connecticut. The written notice gave Respondent an opportunity to show compliance with all lawful requirements for the retention of its Connecticut broker-dealer registration. The Commissioner requested a written response from the Respondent by December 1, 2015. To date, Respondent has failed to respond to the November 12, 2015 notice. |
IV. STATUTORY BASIS FOR REVOCATION
OF REGISTRATION AS A BROKER-DEALER
Respondent Subject to Sanctions by FINRA
| 11. | Paragraphs 1 through 10, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 12. | The July 16, 2014 sanction of Respondent, more fully described in paragraph 6, and the October 6, 2015 and December 16, 2015 expulsions of Respondent by FINRA, as more fully described in paragraphs 7 and 8, form a basis for the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(F)(iii) of the Act. |
V. NOTICE OF INTENT TO REVOKE REGISTRATION AS A BROKER-DEALER
AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that grounds exist to revoke Respondent’s registration as a broker-dealer in Connecticut pursuant to Section 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 . . . (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
AND WHEREAS, the Commissioner believes that the issuance of an order revoking Respondent’s registration as a broker-dealer in Connecticut would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act.
NOW THEREFORE, notice is hereby given to Respondent that Respondent’s registration as a broker-dealer shall be revoked, subject to Respondent’s right to request a hearing on the allegations set forth above.
THE COMMISSIONER ORDERS THAT, pursuant to Section 36b-15(f) 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. To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form 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 April 26, 2016, 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.
If Respondent fails to request a hearing within the time period prescribed or fails to appear at any such hearing, the allegations herein will be deemed admitted, and the Commissioner shall issue an order revoking Respondent’s registration as a broker-dealer in Connecticut.
| Dated at Hartford, Connecticut, | _____/s/____________ | |
| this 16th day of February 2016. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 16th day of February 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Right to Hearing to Halcyon Cabot Partners, Ltd., 767 Third Avenue, 17th Floor, New York, New York 10017, certified mail no. 7012 3050 0002 1692 8488.
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William C. Hall III
Paralegal