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IN THE MATTER OF: IARD No. 174937 * * * * * * * * * * * * * * * * * * |
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ORDER DENYING WITHDRAWAL AND NOTICE OF RIGHT TO HEARING DOCKET No. NDCD-16-8295-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. | Pursuant to Sections 36b-8 and 36b-26 of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation (“Investigation”) into the activities of Harbor Vista Wealth Management LLC (“Harbor Vista”). |
| 3. |
As a result of the Investigation by the Division, the Commissioner has reason to believe that Harbor Vista has violated certain provisions of the Act. |
| 4. | 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 for denying Harbor Vista’s registration as an investment adviser under the Act. |
| 5. |
As a result of the Investigation by the Division, the Commissioner has reason to believe that a basis exists to issue a cease and desist order against Harbor Vista as authorized by Section 36b-27(a) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists to impose a fine upon Harbor Vista as authorized by Section 36b-27(d) of the Act. |
II. RESPONDENT
| 7. |
Harbor Vista, an applicant for investment adviser registration under the Act, is a Delaware limited liability company formed on January 16, 2015. The address of Harbor Vista last known to the Commissioner is 46 Southfield Avenue, 3 Stamford Landing, Suite 205, Stamford, Connecticut 06902. |
III. STATEMENT OF FACTS
| 8. | Guy-Max Delphin (CRD No. 3083371) is the President and Chief Executive Officer of Harbor Vista. Guy-Max Delphin is also the Chief Executive Officer and control person of Delphin Investments LLC f/k/a Delphin Investments, Inc., a Connecticut-based investment adviser registered under the Act since February 17, 2009. Guy-Max Delphin’s address last known to the Commissioner is 250 West 89th Street, 7-F, New York, New York 10024. |
| 9. | Robert Neil Tricarico (CRD No. 1500863) (“Tricarico”) is an individual whose address last known to the Commissioner is 11 Cloverly Circle, Norwalk, Connecticut 06855. Tricarico has been associated with Harbor Vista, albeit not in a registered capacity, since at least April 1, 2015. |
| 10. | On February 11, 2015, Harbor Vista applied for registration as an investment adviser in Connecticut pursuant to Sections 36b-7 and 36b-32 of the Act by electronically filing a Form ADV (Uniform Application for Investment Adviser Registration) (“Form ADV”) dated February 10, 2015 through the Investment Adviser Registration Depository (“IARD”) system. |
| 11. | The instructions for Item 11 of the Form ADV [Disclosure Information] elicited information from Harbor Vista concerning the firm’s “disciplinary history and the disciplinary history of all your advisory affiliates. . . . One event may result in ‘yes’ answers to more than one of the questions below.” Affirmative responses to Item 11 questions require the filer to complete an appropriate Disclosure Reporting Page (“DRP”) for each “yes” answer. |
| 12. | The instructions for Form ADV Item 11 also explained that the term “advisory affiliates” consisted of “(1) all of your current employees (other than employees performing only clerical, administrative, support or similar functions); (2) all of your officers, partners, or directors (or any person performing similar functions); and (3) all persons directly or indirectly controlling you or controlled by you.” |
| 13. | Harbor Vista specifically identified Tricarico as an advisory affiliate of Harbor Vista on the Civil Action DRP of the firm’s Form ADV. Such identification was relevant to the firm’s responses to Item 11 of Form ADV Part 1A and the disciplinary questions in Form ADV Part 1B. |
| 14. | Item 11(E) of Part 1A of Form ADV asked “Has any self-regulatory organization . . . ever: . . . (2) found you or any advisory affiliate to have been involved in a violation of its rules (other than a violation designated as a "minor rule violation" under a plan approved by the SEC)? . . . [or] (4) disciplined you or any advisory affiliate by expelling or suspending you or the advisory affiliate from membership, barring or suspending you or the advisory affiliate from association with other members, or otherwise restricting your or the advisory affiliate’s activities?” (Emphasis supplied) |
| 15. | Harbor Vista answered “no” to Item 11(E) of Part 1A of Form ADV. |
| 16. | Harbor Vista electronically signed the Form ADV on February 9, 2015. In executing the Form ADV, Harbor Vista represented, through its compliance officer, that “I, the undersigned, sign this Form ADV on behalf of, and with the authority of, the investment adviser. The investment adviser and I both certify, under penalty of perjury under the laws of the United States of America, that the information and statements made in this ADV, including exhibits and any other information submitted, are true and correct . . . . .” (Emphasis supplied) |
| 17. | On February 19, 2015, Harbor Vista filed an Amended Form ADV through the IARD system. Like the initial Form ADV, the Amended Form ADV identified Tricarico as an advisory affiliate of the firm. No changes were made to the negative responses to Item 11(E) of Part 1A of Form ADV. In executing the Amended Form ADV, Harbor Vista represented, this time through its member, Guy-Max Delphin, that “I, the undersigned, sign this Form ADV on behalf of, and with the authority of, the investment adviser. The investment adviser and I both certify, under penalty of perjury under the laws of the United States of America, that the information and statements made in this ADV, including exhibits and any other information submitted, are true and correct . . . . .” (Emphasis supplied) |
| 18. | 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. |
| 19. | On February 24, 2015, five days after Harbor Vista filed its Amended Form ADV, FINRA suspended Tricarico in all capacities 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. 10 00920). |
| 20. | At no time did Harbor Vista file a Form ADV amendment reflecting the FINRA suspension of the firm’s advisory affiliate, Tricarico. |
| 21. | On January 26, 2015, Tricarico had executed a Form U-4 (Uniform Application for Securities Industry Registration or Transfer) to become registered as an investment adviser agent of Harbor Vista pursuant to Sections 36b-7 and 36b-32 of the Act. Item 14E of the Form U-4 asked, “Has any self-regulatory organization ever . . . (4) disciplined you by expelling or suspending you from membership, barring or suspending your association with its members, or restricting your activities?” Tricarico responded “no.” Although the Form U-4 did not allude to the FINRA suspension, Tricarico did attest, through his execution of the Form U-4 that he “agree[d] to update this form by causing an amendment to be filed on a timely basis whenever changes occur to answers previously reported. Further, I represent that, to the extent any information previously submitted is not amended, the information provided in this form is currently accurate and complete.” On April 9, 2015, following the FINRA suspension of Tricarico, Harbor Vista, through Guy-Max Dolphin, counter-executed the Form U-4, and, in so doing, attested that “I have taken appropriate steps to verify the accuracy and completeness of the information contained in and with this application.” The Form U-4 filed with the Commissioner on April 9, 2015 to register Tricarico as an investment adviser agent of Harbor Vista in Connecticut made no mention of the FINRA suspension and was not subsequently amended to include the FINRA sanction. |
| 22. | On April 30, 2015, twenty-one days after Harbor Vista executed the Form U-4 to register Tricarico as an investment adviser agent in Connecticut, Tricarico entered into an Acceptance, Waiver and Consent (“AWC”) with FINRA (Case No. 2014043719001). Under the terms of the AWC, Tricarico consented to the entry of findings that he violated FINRA Rules 8210 and 2010 when he failed to provide documents and information requested by FINRA during the course of an investigation into whether Tricarico converted customer funds. Pursuant to the AWC, Tricarico consented to the imposition of a bar from association with any FINRA member in any capacity. |
| 23. | At no time did Harbor Vista amend its Form ADV to reflect the February 24, 2015 suspension and the April 30, 2015 bar imposed by FINRA against the firm’s advisory affiliate Tricarico. |
| 24. | In light of the February 24, 2015 suspension of Tricarico by FINRA, the statement made by Harbor Vista on April 9, 2015 vouching for the accuracy of Tricarico’s Form U-4 filing was false when made. At no time did Harbor Vista take steps to ensure that the Form U-4 filing for Tricarico was complete and accurate. |
| 25. | The following year, on February 19, 2016, Harbor Vista electronically filed a Form ADV-W to withdraw its pending investment adviser registration in Connecticut. Pursuant to Section 36b-15(e)(1) of the Act, such application to withdraw the pending investment adviser registration is not yet effective. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST,
DENIAL OF REGISTRATION AS AN INVESTMENT ADVISER,
ORDER IMPOSING FINE AND ORDER DENYING WITHDRAWAL
a. Violation of Section 36b-23 of the Act -
Making a Statement in a Document
filed with the Commissioner that is
False or Misleading in a Material Respect
| 26. | Paragraphs 1 through 25, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. |
In light of the February 24, 2015 suspension of Tricarico by FINRA, the statement made by Harbor Vista on April 9, 2015, as more fully described in paragraphs 21 and 24, vouching for the accuracy of Tricarico’s Form U-4 filing with the Commissioner was, in the light of circumstances under which it was made, false or misleading with respect to a material fact. Such false or misleading statement violated Section 36b-23 of the Act and, as such, supports the entry of a cease and desist order against Harbor Vista under Section 36b-27(a) of the Act and the imposition of a fine upon Harbor Vista pursuant to Section 36b-27(d) of the Act. Such statement, being wilful, also supports proceedings to deny Harbor Vista’s registration as an investment adviser pursuant to Section 36b-15(a)(2)(B) of the Act. |
b. Violation of Section 36b-31-14e(a) of the Regulations –
Failure to Promptly File a Correcting Amendment
| 28. | Paragraphs 1 through 27, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 29. |
Harbor Vista’s failure to update its Form ADV on file with the Commissioner to disclose, inter alia, Tricarico’s prior suspension by FINRA and Tricarico’s bar by FINRA ,as more fully described in paragraphs 19, 20, 22 and 23, constitutes a 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 Harbor Vista pursuant to Section 36b-27(a) of the Act, the imposition of a fine upon Harbor Vista under Section 36b-27(d) of the Act, and, as wilful misconduct, the denial of Harbor Vista’s registration as an investment adviser in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
V. NOTICE OF INTENT TO DENY REGISTRATION AS
AN INVESTMENT ADVISER, ORDER TO CEASE AND DESIST,
NOTICE OF INTENT TO FINE, AND
NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Harbor Vista has committed at least one violation of Section 36b-23 of the Act, and at least one violation of Section 36b-31-14e(a) of the Regulations;
WHEREAS, the Commissioner has reason to believe that a basis exists under Section 36b-15 of the Act, for denying Harbor Vista’s registration as an investment adviser under 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 applicant . . . (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
WHEREAS, the Commissioner has reason to believe that a basis exists under Section 36b-27(a) of the Act and Section 36b-27(d) of the Act for entering an Order to Cease and Desist and an Order Imposing Fine against Harbor Vista;
WHEREAS, the Commissioner further finds that the issuance of an Order denying Harbor Vista’s registration as an investment adviser under the Act, an Order to Cease and Desist against Harbor Vista, and the imposition of a fine upon Harbor Vista 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, notice is hereby given to Harbor Vista that the Commissioner intends to impose a fine not to exceed the maximum fine of one hundred thousand dollars ($100,000) per violation upon Harbor Vista;
WHEREAS, the Commissioner ORDERS that HARBOR VISTA [WEALTH] MANAGEMENT LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) filing documents with the Commissioner that contain statements which are, at the time and in the light of the circumstances under which they are made, false or misleading in a material respect; and (2) failing to promptly file correcting amendments to its application for registration as an investment adviser;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Sections 36b-15(f) and 36b-27 of the Act, Harbor Vista 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 Harbor Vista’s receipt of this Order. To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form to the above address. If Harbor Vista will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. If a hearing is requested, the hearing will be held on June 8, 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, Harbor Vista 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 Harbor Vista fails to request a hearing within the prescribed time period or fails to appear at any such hearing, the allegations herein will be deemed admitted. Accordingly, the Order to Cease and Desist shall remain in effect and become permanent against Harbor Vista, the Commissioner shall issue an order denying Harbor Vista’s registration as an investment adviser, and the Commissioner may order that the maximum fine be imposed upon Harbor Vista.
VI. ORDER DENYING WITHDRAWAL OF REGISTRATION
AS AN INVESTMENT ADVISER
WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that: “withdrawal of an application for registration as . . . [an] . . . investment adviser . . . becomes effective ninety days after receipt of . . . a notice of intent to withdraw such application for registration or within such shorter period of time as the commissioner may determine, unless . . . a proceeding to deny . . . the withdrawal is instituted within ninety days after the application or notice 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 denial . . . proceeding under subsection (a) of this section within one year after withdrawal became effective”;
WHEREAS, Section 36b-31(a) of the Act provides, in relevant 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 relevant 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, the Commissioner finds that this action is necessary and appropriate in the public interest and 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, of the Act;
The Commissioner therefore ORDERS that the application submitted by Harbor Vista to withdraw its application for registration as an investment adviser is DENIED, until final resolution of the matters alleged in this Notice.
| Dated at Hartford, Connecticut, | _____/s/____________ | |
| this 22nd day of April 2016. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 22nd day of April 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent to Deny Registration as an Investment Adviser, Order Denying Withdrawal of Registration as an Investment Adviser, Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing to Harbor Vista Wealth Management LLC, 46 Southfield Avenue, 3 Stamford Landing, Suite 205, Stamford, Connecticut 06902, certified mail no. 7012 3050 0002 1692 8525.
| ___/s/_____ | |
| W. C. Hall | |
| Paralegal |