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RONALD MARVIN (Collectively "Respondents")
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-12-7791-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 Section 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act or Regulations (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondents have 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 Respondents pursuant to Section 36b-27(a) of the Act. |
| 5. |
As a result of the Investigation, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 6. | Ronald Marvin (“Marvin”) is an individual whose address last known to the Commissioner is 9 Roscrea Place, Weston, Connecticut. Marvin was previously registered under the Act as a broker-dealer agent of Sloan Securities Corp. (“Sloan”) (CRD No. 17930) from September 7, 2004 until May 11, 2011. Marvin conducted broker-dealer agent activities on behalf of Sloan from a branch office located at 225 Main Avenue, Norwalk, Connecticut. Marvin was terminated by Sloan on December 23, 2009 for borrowing money from a client without prior written approval in violation of Sloan’s policies and procedures and Financial Industry Regulatory Authority Rule 2370. |
| 7. | RMV Holding Company, LLC (“RMV Holding”) is a Connecticut limited liability company, formed by Marvin on November 20, 2003, with its principal place of business at 225 Main Avenue, Norwalk, Connecticut. Marvin is the sole principal and member of RMV Holding. RMV Holding was, at all times pertinent hereto, the general partner of RMV Partners, L.P. (“RMV Partners”). |
| 8. |
RMV Investments, LLC (“RMV Investments”) is a Connecticut limited liability company, formed by Marvin on November 21, 2003, with its principal place of business at 225 Main Avenue, Norwalk, Connecticut. Marvin is the sole principal and member of RMV Investments. RMV Investments was formed for the purported purpose of providing administrative services to RMV Partners. |
III. STATEMENT OF FACTS
| 9. | RMV Partners is a Delaware limited partnership with its principal office at 225 Main Avenue, Norwalk, Connecticut. RMV Partners filed with the Commissioner a Notice of Sale of Securities pursuant to Rule 506 of Regulation D and Section 4(6) of the Securities Act of 1933 on March 4, 2004, and operates as an investment fund. As of the 2004 offering date, RMV Partners had approximately $725,000 in capital contributions. RMV Partners has several limited partners. RMV Partners has maintained a securities brokerage account at Sloan. Marvin managed RMV Partners’ account at Sloan in his individual capacity and/or his capacity as the sole member of RMV Holding. |
| 10. | From February 2004 through December 2009, as the sole managing member of RMV Holding (the General Partner of RMV Partners), Marvin earned a 1% management fee from RMV Holding for providing investment advice on securities and overseeing RMV Partners’ brokerage account at Sloan. |
| 11. | From February 2004 through December 2009, Marvin, as the sole member of RMV Holding (the General Partner of RMV Partners), transacted business as an investment adviser by giving investment advice on securities to RMV Partners for compensation without being registered as an investment adviser under the Act. |
| 12. | From February 2004 through December 2009, RMV Holding transacted business as an investment adviser by giving securities-related investment advice, through Marvin, to RMV Partners for compensation without being registered as an investment adviser under the Act. |
| 13. | From February 2004 through December 2009, Marvin transacted business as an investment adviser agent of RMV Holding by providing investment advice on securities to RMV Partners for compensation. |
| 14. | From January 3, 2005 through and including March 24, 2010 and during the time that RMV Holding and/or Marvin were providing investment advisory services to RMV Partners, Marvin, in his capacity as member of RMV Holding, made multiple wire transfers totaling approximately $703,000 from RMV Partners’ account at Sloan to RMV Holding’s bank account. Such wire transfers exceeded the 1% management fee to which RMV Holding and/or Marvin were entitled. Upon RMV Holding’s receipt of each wire, Marvin, in his individual capacity and/or his capacity as member of RMV Holding, wired the same amount from RMV Holding’s bank account to RMV Investments’ bank account. Thereafter, Marvin, in his individual capacity and/or his capacity as the Manager of RMV Investments, wrote checks to himself totaling approximately $703,000 from RMV Investments’ bank account. Marvin used such funds for his personal use. Neither Marvin nor RMV Holding disclosed to the limited partners of RMV Partners the existence of the multiple wire transfers or the fact that RMV Partners’ funds were being diverted to Marvin’s personal use. |
| 15. | Marvin’s receipt of the approximately $703,000 in wire transfers referenced in paragraph 14 was not supported by any legitimate business purpose. Although RMV Investments and Marvin had entered into a December 5, 2003 Employment Agreement, whereby Marvin would serve as the Manager of RMV Investments and would earn a monthly salary of fifteen thousand dollars from January 1, 2004 through December 31, 2005 for purportedly providing administrative services to RMV Partners, that Employment Agreement expired on December 31, 2005. Notwithstanding the expiration of the Employment Agreement, Marvin continued to draw approximately $15,000 per month from RMV Investments from January 3, 2005 through and including March 24, 2010. Coincidentally, the monthly draws made by Marvin totaled approximately $703,000. |
| 16. | Marvin failed to disclose to the limited partners of RMV Partners (the recipient of investment advice) that 1) pursuant to the December 5, 2003 Employment Agreement, Marvin would be receiving a $15,000 per month salary from RMV Investments purportedly to provide administrative services to RMV Partners; and 2) such monthly payments would continue from January 3, 2005 through and including March 24, 2010, notwithstanding the expiration of the Employment Agreement. |
| 17. |
From approximately June 2004 through approximately November 2009, while registered as a broker-dealer agent of Sloan under the Act, Marvin wired money every month from RMV Partners’ brokerage account at Sloan to RMV Holding, totaling $145,000. Marvin failed to disclose to the limited partners of RMV Partners that these wire transfers were taking place, and also failed to disclose to the limited partners of RMV Partners that the wired amounts were loans from RMV Partners to RMV Holding. In addition, Marvin failed to disclose to Sloan that the wired amounts were loans from RMV Partners to RMV Holding. |
| 18. | Marvin also failed to disclose to the limited partners of RMV Partners (the recipient of investment advice) the potential conflict of interest involving Marvin acting simultaneously as: (1) the broker-dealer agent for RMV Partners’ brokerage account at Sloan; (2) the managing member of the General Partner of RMV Partners; and (3) the managing member of RMV Investments. |
| 19. | Marvin further failed to disclose to the limited partners of RMV Partners (the recipient of investment advice) the potential conflict of interest involved in Marvin directing loans from RMV Partners to RMV Holding while Marvin was the managing member of RMV Holding. |
| 20. | Ultimately, Marvin repaid RMV Partners $145,000 that RMV Holding borrowed. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND ORDER IMPOSING FINE
a. Violation of Section 36b-6(c)(1) of the Act by Marvin
Unregistered Investment Adviser Activity
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. |
Marvin transacted business as an investment adviser absent registration, as more fully described in paragraphs 9 through 11, inclusive. Such conduct constitutes a violation of Section 36b-6(c)(1) of the Act, which forms a basis for an order to cease and desist to be issued against Marvin under Section 36b-27(a) of the Act, and for the imposition of a fine upon Marvin under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-6(c)(2) of the Act by Marvin
Unregistered Investment Adviser Agent Activity
| 23. | Paragraphs 1 through 22, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 24. |
Marvin acted in the capacity of an investment adviser agent absent registration, as more fully described in paragraphs 9, 10 and 13. Such conduct constitutes a violation of Section 36b-6(c)(2) of the Act, which forms a basis for an order to cease and desist to be issued against Marvin under Section 36b-27(a) of the Act, and for the imposition of a fine upon Marvin under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6(c)(1) of the Act by RMV Holding
Unregistered Investment Adviser Activity
| 25. | Paragraphs 1 through 24, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 26. |
RMV Holding transacted business as an investment adviser absent registration, as more fully described in paragraph 12. Such conduct constitutes a violation of Section 36b-6(c)(1) of the Act, which forms a basis for an order to cease and desist to be issued against RMV Holding under Section 36b-27(a) of the Act, and for the imposition of a fine upon RMV Holding under Section 36b-27(d) of the Act. |
d. Violation of Section 36b-5(f) of the Act by Marvin
Prohibited Activity in Connection With Advisory Activity
| 27. | Paragraphs 1 through 26, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 28. |
The conduct of Marvin, as more fully described in paragraphs 14 through 19, inclusive, in connection with directly or indirectly receiving compensation or other remuneration for advising another person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, constitutes engaging in a dishonest or unethical practice in connection with the rendering of such advice. Such conduct constitutes a violation of Section 36b-5(f) of the Act, which forms a basis for an order to cease and desist to be issued against Marvin under Section 36b-27(a) of the Act, and for the imposition of a fine upon Marvin under Section 36b-27(d) of the Act. |
e. Violation of Section 36b-5(f) of the Act by RMV Holding
Prohibited Activity in Connection With Advisory Activity
| 29. | Paragraphs 1 through 28, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 30. |
The conduct of RMV Holding, as more fully described in paragraphs 14 and 15, in connection with directly or indirectly receiving compensation or other remuneration for advising another person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, constitutes engaging in a dishonest or unethical practice in connection with the rendering of such advice. Such conduct constitutes a violation of Section 36b-5(f) of the Act, which forms a basis for an order to cease and desist to be issued against RMV Holding under Section 36b-27(a) of the Act, and for the imposition of a fine upon RMV Holding under Section 36b-27(d) of the Act. |
f. Material Assistance by RMV Investments in
Violation of Section 36b-5(f) of the Act
| 31. | Paragraphs 1 through 30, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 32. |
The conduct of RMV Investments, as more fully described in paragraphs 14 and 15, is conduct that materially aided Marvin and/or RMV Holding’s violation of Section 36b-5(f) of the Act and therefore forms a basis for an order to cease and desist to be issued against RMV Investments under Section 36b-27(a) of the Act, and for the imposition of a fine upon RMV Investments under Section 36b-27(d) of the Act. |
g. Violation of Section 36b-31-15b(a)(1) of the Regulations
Dishonest or Unethical Business Practices by Agents
| 33. | Paragraphs 1 through 32, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 34. |
While registered as a broker-dealer agent under the Act, Marvin borrowed money or securities from an account carried for a customer without the customer’s prior consent and without notice to the broker-dealer whom he represented, as more fully described in paragraph 17. Such conduct constitutes a dishonest or unethical practice by agents within the meaning of 36b-31-15b(a)(1) of the Regulations, which forms a basis for an order to cease and desist to be issued against Marvin under Section 36b-27(a) of the Act. |
h. Violation of Section 36b-31-15d(a)(2) of the Regulations
Dishonest or Unethical Business Practices by Investment Adviser Agents
| 35. | Paragraphs 1 through 34, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 36. |
Marvin failed to disclose to a client in writing before any advice was rendered any conflict of interest relating to him which could reasonably be expected to impair the rendering of unbiased advice, as more fully described in paragraphs 18 and 19. Such conduct constitutes a dishonest or unethical practice by investments adviser agents within the meaning of Section 36b-31-15d(a)(2) of the Regulations, which forms a basis for an order to cease and desist to be issued against Marvin under Section 36b-27(a) of the Act. |
V. 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, Marvin has committed at least one violation of Section 36b-6(c)(1), at least one violation of Section 36b-6(c)(2) of the Act, and at least two violations of Section 36b-5(f) of the Act, and has engaged in conduct proscribed by Section 36b-31-15b(a)(1) of the Regulations and Section 36b-31-15d(a)(2) of the Regulations;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, RMV Holding has committed at least one violation of Section 36b-6(c)(1) of the Act and at least one violation of Section 36b-5(f) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, RMV Investments has materially aided in at least one violation of Section 36b-5(f) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist against Respondents and the imposition of a fine upon Respondents 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 Respondents that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation upon Respondents;
WHEREAS, the Commissioner ORDERS that Ronald Marvin CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) acting in the capacity as an investment adviser absent registration, (2) acting in the capacity as an investment adviser agent absent registration, (3) in connection with directly or indirectly receiving compensation or other remuneration for advising another person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, engaging in any dishonest or unethical practice in connection with the rendering of such advice, (4) borrowing money or securities from an account carried for a customer without the customer’s prior consent and without notice to the broker-dealer whom he represents, and (5) failing to disclose to a client in writing before any advice is rendered any conflict of interest relating to him which could reasonably be expected to impair the rendering of unbiased advice;
WHEREAS, the Commissioner ORDERS that RMV Holding CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) transacting business as an investment adviser absent registration; and (2) in connection with directly or indirectly receiving compensation or other remuneration for advising another person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, engaging in any dishonest or unethical practice in connection with the rendering of such advice;
WHEREAS, the Commissioner ORDERS that RMV Investments CEASE AND DESIST from directly or indirectly materially aiding in the violation of the provisions of the Act and Regulations, including without limitation, materially aiding any person in engaging in a dishonest or unethical practice in connection with the rendering of advice on securities within the meaning of Section 36b-5(f) of the Act;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant Section 36b-27 of the Act, each 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 each Respondent’s receipt of this Order. 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 July 10, 2012 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, each 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 any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner may order that the maximum fine be imposed upon any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 9th day of May 2012. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 10th day of May 2012, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to: Ronald Marvin, 9 Roscrea Place, Weston, Connecticut 06883, certified mail no. 7011 0470 0002 2573 4322; RMV Holding Company, LLC at 225 Main Avenue, Norwalk, Connecticut 06851, certified mail no. 7011 0470 0002 2573 4339; and c/o Thomas E. Dardani, Agent, 2425 Post Road, Southport, Connecticut 06890, certified mail no. 7011 0470 0002 2573 4346; and RMV Investments, LLC at 225 Main Avenue, Norwalk, Connecticut 06851, certified mail no. 7011 0470 0002 2573 4353; and c/o Thomas E. Dardani, Agent, 2425 Post Road, Southport, Connecticut 06890, certified mail no. 7011 0470 0002 2573 4360.
| ______/s/__________ | |
| Elena Zweifler | |
| Prosecuting Attorney |