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IN THE MATTER OF: (Collectively "Settling Respondents") * * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER |
I. PRELIMINARY STATEMENT
WHEREAS, 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;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of the Settling Respondents to determine if they had violated, were violating or were about to violate provisions of the Act or Regulations;
WHEREAS, on December 17, 2013, the Commissioner, acting pursuant to Section 36b-27 of the Act, issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Notice”) (Docket No. CF-13-8064-S) against several respondents including Gregory Richard Imbruce, Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC, alleging multiple violations of the Act and Regulations, which Notice is incorporated by reference herein;
WHEREAS, the Notice included allegations against additional respondents, which allegations and respondents are not included in this Consent Order;
WHEREAS, this Consent Order relates only to Gregory Richard Imbruce, Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC (“Settling Respondents”);
WHEREAS, on December 27, 2013, the Settling Respondents requested a hearing on the matters alleged in the Notice;
WHEREAS, on December 30, 2013, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer, wherein the Commissioner scheduled the hearing on the matters alleged in the Notice for February 26, 2014 and appointed Department of Banking Attorney Stacey Serrano as the Hearing Officer on the matters alleged in the Notice;
WHEREAS, on February 11, 2014, Hearing Officer Serrano granted a continuance of the Hearing to May 20, 2014;
WHEREAS, on May 5, 2014, Hearing Officer Serrano granted a continuance of the Hearing to June 25 and June 26, 2014;
WHEREAS, on June 10, 2014, the Division issued an Amendment to the Notice (“Amendment”), which Amendment is incorporated by reference herein;
WHEREAS, on June 18, 2014, Hearing Officer Serrano granted a continuance of the Hearing to September 10-11, 2014;
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, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
WHEREAS, Section 36b-27(f) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a) . . . or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
WHEREAS, Glenrose Holdings LLC (“Glenrose”) is the managing member and controlling owner of respondents Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC;
WHEREAS, Gregory Richard Imbruce (“Imbruce”) is the managing member and control person of Glenrose;
WHEREAS, on August 25, 2014, Glenrose applied for registration as an investment adviser under the Act;
WHEREAS, on August 25, 2014, Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC each applied for registration as an investment adviser under the Act;
WHEREAS, on August 25, 2014, Asym Energy Partners LLC (“Asym Energy”), a Delaware limited liability company controlled by Imbruce, applied for registration as an investment adviser under the Act;
WHEREAS, on August 25, 2014, Imbruce applied for registration as an investment adviser agent of Glenrose under the Act, and on August 26, 2014, Imbruce applied for registration as an investment adviser agent of Asym Energy, Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC under the Act;
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, the Settling Respondents and the Commissioner now desire to fully and finally resolve the matters alleged in the Notice and Amendment relating to the Settling Respondents without holding a hearing and without trial or adjudication of any issue of fact or law;
WHEREAS, the Commissioner finds that the issuance of this Consent Order 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 the Act;
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, the Settling Respondents, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To be afforded an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. |
To present their position in a hearing in which they are represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. |
To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, the Settling Respondents, through their execution of this Consent Order, acknowledge the allegations of the Commissioner set forth in the Notice and Amendment relating to them, without admitting or denying those allegations;
WHEREAS, the Settling Respondents shall not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation set forth in the Notice and Amendment relating to the Settling Respondents or this Consent Order or create the impression that this Consent Order is without factual basis;
WHEREAS, the Settling Respondents shall not take any position in any proceeding brought by or on behalf of the Commissioner, or to which the Commissioner is a party, that is inconsistent with any part of this Consent Order;
WHEREAS, nothing in this Consent Order affects the Settling Respondents’ (i) testimonial obligations, or (ii) right to take legal or factual positions in litigation, arbitrations or other legal proceedings in which the Commissioner is not a party;
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting the Settling Respondents an opportunity for a hearing;
AND WHEREAS, the Settling Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, the Settling Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of a Consent Order imposing on them the following sanctions:
| 1. | The Settling Respondents shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device, including without limitation, violating Sections 36b-6(c)(1), 36b-6(c)(2), 36b-6(c)(3), 36b-4(a), and 36b-23 of the Act, and shall comply with the Act, its regulations and any order under the Act; |
| 2. | No later than the date this Consent Order is entered by the Commissioner, respondent Imbruce shall remit to the Department by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut” the sum of seventy-five thousand dollars ($75,000), which shall constitute an administrative fine; |
| 3. | As a precondition to the registration of Glenrose and Asym Energy as investment advisers under the Act, Respondent Imbruce shall retain a regulatory consultant (“Consultant”) sufficiently experienced in state and federal investment advisory legal and compliance issues and not unacceptable to the Division Director to perform on-site compliance reviews of Glenrose and Asym Energy and their investment advisory personnel, including Imbruce. Imbruce shall identify such Consultant in writing to the Division Director prior to the date this Consent Order is entered by the Commissioner. The Consultant’s on-site reviews shall include an evaluation of the investment advisory activities of Glenrose and Asym Energy and their investment advisory personnel, including Imbruce, to ensure that they are in compliance with this Consent Order, the Act and the Regulations thereunder. The Consultant shall perform the on-site reviews according to the following schedule (the “Consultation Due Dates”), or more frequently should the Consultant deem additional reviews necessary. The initial consultation shall take place on or by December 15, 2014; the second consultation shall take place on or by June 15, 2015 and the third consultation shall take place on or by December 15, 2015. No later than thirty (30) days following each Consultation Due Date, Imbruce shall file with the Division Director a sworn affidavit, signed by Imbruce, verifying compliance with the provisions of this paragraph and with this Consent Order and verifying that the Consultant’s recommendations were implemented. |
| 4. | For three (3) years following the entry of this Consent Order by the Commissioner, Imbruce shall limit his investment advisory activities in or from this state to investment advice regarding securities of issuers in the energy or energy-related industries and shall comply with all Connecticut requirements governing investment advisers and investment adviser agents. |
| 5. | For three (3) years following the entry of this Consent Order by the Commissioner, Imbruce shall refrain from the offer and/or sale in or from this state of securities issued by entities that are not in the energy or energy-related industries. Imbruce may apply to the Division Director in writing for relief from this restriction upon a showing of good cause; |
| 6. | Prior to the offer and/or sale of securities in or from this state, Imbruce shall (a) retain legal counsel experienced in the area of state securities regulation under the Act and not unacceptable to the Division Director to provide advice on compliance with the securities laws of Connecticut and other jurisdictions (“Retained Counsel”); and (b) direct Retained Counsel to prepare and submit all required filings and fees to the Commissioner and to provide the Division Director with a signed opinion of counsel setting forth the basis for any claim of exemption or covered security status under Section 36b-21 of the Act, at least thirty (30) days prior to the commencement of the offering. |
V. CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | This Consent Order is entered into solely for the purpose of avoiding the burdens and expense of an administrative hearing relating to the Settling Respondents and resolving this administrative investigation and proceeding, and is not intended to be used for any other purpose; |
| 3. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against the Settling Respondents based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed; |
| 4. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against any of the Settling Respondents based upon evidence of which the Division was unaware on the date hereof relating to a separate violation of the Act or any regulation or order under the Act; |
| 5. | This Consent Order alone will not constitute a bar to the approval of the applications of Glenrose, Asym Energy, Hunton Oil Genpar LLC, Giddings Genpar LLC and/or Asym Capital III LLC for registration as investment advisers under the Act or the applications of respondent Imbruce as an investment adviser agent of Glenrose, Asym Energy, Hunton Oil Genpar LLC, Giddings Genpar LLC and/or Asym Capital III LLC under the Act; |
| 6. | This Consent Order shall be binding upon the Settling Respondents and their successors and assigns as well as the successors and assigns of relevant affiliates with respect to all conduct subject to the provisions above and all future obligations, responsibilities, undertakings, commitments, limitations, restrictions, events and conditions; |
| 7. | This Consent Order is not intended by the Commissioner to subject any Covered Person (as defined below) to any disqualifications under the laws of the United States, any state, the District of Columbia, Puerto Rico, or the U.S. Virgin Islands, or under the rules or regulations of any securities or commodities regulator or self-regulatory organization, including, without limitation, any disqualification from relying upon state or federal registration exemptions or safe harbor provisions. “Covered Person” means each Settling Respondent and any of their current or former officers, directors or employees; |
| 8. | This Consent Order shall not disqualify any Covered Person from any business that they otherwise are qualified, licensed or permitted to perform under the applicable securities laws or regulations of Connecticut, and any disqualifications from relying upon Connecticut’s registration exemptions or safe harbor provisions that arise from the Consent Order are hereby waived; and |
| 9. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | ______/s/__________ | |
| this 26th day of August 2014. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Gregory Richard Imbruce, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order.
| _________/s/__________ |
| Gregory Richard Imbruce |
State of: Connecticut
On this the 25th day of Aug., 2014 before me, Goldy C. Rosen, the undersigned officer, personally appeared Gregory Richard Imbruce, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
_____/s/________________________
CONSENT TO ENTRY OF ORDER
I, Gregory Richard Imbruce, state on behalf of Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC (singly and collectively, the “General Partners”), that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of each of the General Partners; that each of the General Partners agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that each of the General Partners consents to the entry of this Consent Order.
| Hunton Oil Genpar LLC | |
| Giddings Genpar LLC | |
| By: | ________/s/____________ |
| Gregory Richard Imbruce | |
| Managing Member of | |
| Glenrose Holdings LLC | |
| (Their Managing Member) |
| Asym Capital III LLC | |
| By: | __________/s/________________ |
| Gregory Richard Imbruce | |
| Managing Member of | |
| Glenrose Holdings LLC, | |
| the Managing Member of | |
| Asym Energy Investment LLC | |
| (Its Managing Member) |
State of: Connecticut
_____/s/________________________
Notary Public
Date Commission Expires: 3/31/2016