State of Connecticut Department of Banking

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IN THE MATTER OF:

MEYERS ASSOCIATES, L.P.

CRD No. 34171

("Respondent")



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CONSENT ORDER

DOCKET NO. RCF-10-7817-S

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 promulgated under the Act (“Regulations”);
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, as amended by Public Act 10-141, into the activities of Respondent to determine if it had violated, was violating or was about to violate provisions of the Act or Regulations.  Such investigation included an examination of Respondent’s books and records at Respondent’s principal place of business;
WHEREAS, on November 23, 2010, the Commissioner, acting pursuant to Sections 36b-15 and 36b-27 of the 2010 Supplement to the General Statutes (“2010 Supplement”), as amended by Public Act 10-141, and Section 4-182(c) of the General Statutes of Connecticut, issued an Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Notice”) against Respondent, which Notice is incorporated by reference herein;
WHEREAS, Respondent requested a hearing on the matters alleged in the Notice (“Hearing”);
WHEREAS, Respondent and the Division requested continuances of the Hearing;
WHEREAS, the Hearing has been continued so that the parties may engage in settlement discussions;
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 Sections 36b-15 and 36b-27 of the 2010 Supplement, as amended, 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, 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, Respondent and the Commissioner now desire to resolve the matters alleged in the Notice without the need for further administrative proceedings;
WHEREAS, 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;
WHEREAS, Respondent agrees that the Notice may be used in construing the terms of this Consent Order, and agrees to the language in this Consent Order;
AND WHEREAS, Respondent specifically assures the Commissioner that none of the violations alleged in the Notice or this Consent Order shall occur in the future.

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Respondent, through its execution of this Consent Order, voluntarily waives the following rights:

1. To be afforded notice and an opportunity for a hearing within the meaning of Sections 36b-15(f) and 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 itself of Sections 36b-15(f) and 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present its position in a hearing in which it is 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, Respondent, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them, yet admits sufficient evidence exists for the Commissioner to issue:  (a) a permanent order to cease and desist, (b) an order revoking Respondent’s registration as a broker-dealer in Connecticut, and (c) an order imposing a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued thereunder:

1. Respondent wilfully violated Section 36b-6(b) of the Act, as amended by Public Act 10-141, by employing least five unregistered agents, as more fully described in paragraph 13 of Section III of the Notice;
2. Respondent wilfully violated Section 36b-16 of the Act, as amended by Public Act 10-141, by effecting at least six offers and sales of securities for the accounts of at least three Connecticut customers, which securities were not registered in Connecticut under the Act, as more fully described in paragraphs 14 and 15 of Section III of the Notice;
3. As more fully described in paragraph 16 of Section III of the Notice, Respondent wilfully violated Section 36b-4(a) of the 2010 Supplement by failing to disclose to its Connecticut customers that the transactional “Handling Fee” it charged them included a profit to Respondent, that certain customers paid lower fees and that the fee was not based on the costs of handling a particular transaction.  Respondent’s omission was material to investors, and Respondent’s failure to adequately disclose the nature of these charges made Respondent’s limited explanation misleading;
4. As more fully described in paragraph 16 of Section III of the Notice, Respondent wilfully violated Section 36b-4(b) of the 2010 Supplement, and engaged in dishonest and unethical practices in connection with the offer and sale of any security, by failing to disclose to its Connecticut customers that the transactional “Handling Fee” it charged them included a profit to Respondent, that certain customers paid lower fees and that the fee was not based on the costs of handling a particular transaction.  Respondent’s omission was material to investors, and Respondent’s failure to adequately disclose the nature of these charges made Respondent’s limited explanation misleading;
5. Respondent’s conduct, as set forth in paragraph 16 of Section III of the Notice, was proscribed by Financial Industry Regulatory Authority (formerly NASD) Conduct Rule 2210, and constituted a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations; and
6. Respondent violated Section 36b-31-6f of the Regulations by engaging in conduct contrary to its written supervisory procedures, to wit:  (1) failing to ensure that its personnel were appropriately registered in the states in which Respondent’s personnel conducted business, as more fully described in paragraphs 11 through 15, inclusive, of Section III of the Notice; and (2) failing to ensure that the securities sold by its personnel were appropriately registered in the states in which they were sold, as more fully described in paragraphs 11 through 15, inclusive, of Section III of the Notice;

WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondent an opportunity for a hearing;

AND WHEREAS, Respondent acknowledges the possible consequences of an administrative hearing and voluntarily agrees to consent to the entry of the sanctions described below.

IV. CONSENT TO ENTRY OF SANCTIONS

WHEREAS, Respondent, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:

1.
Respondent, its representatives, agents, employees, affiliates, assigns, or successors in interest 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;
2.
Within forty-five (45) days from the date this Consent Order is entered by the Commissioner, Respondent shall provide the Division with proof, with respect to all transactions effected from January 1, 2008 to the present, that Respondent has:  (a) reimbursed each Connecticut customer the difference between the amount of the “Handling Fee” paid by the Connecticut customer for each transaction and the actual amount of Respondent’s ticket and clearing charge and the postage fee assessed by Respondent’s clearing firm; (b) amended its customer trade confirmations and/or pre-confirmations to provide each of Respondent’s Connecticut customers with additional disclosure acceptable to the Division which adequately describes the “Handling Fee” appearing on the trade confirmations and/or pre-confirmations; and (c) sent correspondence to each Connecticut customer who received the reimbursement explaining that the “Handling Fee” reimbursement was a result of an examination conducted by the Division;
3.
No later than the date this Consent Order is entered by the Commissioner, Respondent shall provide to the Division Director for review and approval the letter that will be sent to those Connecticut customers eligible for the “Handling Fee” reimbursement described in paragraph 2 of Section IV Consent to Entry of Sanctions of this Consent Order;
4.
Respondent shall:

(a)  
No later than the date this Consent Order is entered by the Commissioner, designate and retain an independent consultant(s) (“Consultant”) sufficiently experienced in securities regulatory, supervisory and compliance issues, specifically knowledgeable about the Act and Regulations, and not unacceptable to the Commissioner, to conduct a compliance review (“Compliance Review”) of Respondent’s operations and prepare a written report (“Compliance Report”) outlining the Consultant’s findings and recommendations.  The Compliance Review shall examine, among other things, Respondent’s supervisory and compliance policies and procedures as well as the adequacy of current compliance employee staffing and experience levels, and make recommendations to ensure that such compliance policies and procedures safeguard against violations of the Act and Regulations;
  
(b)
Within ninety (90) days of the date this Consent Order is entered by the Commissioner, file a copy of the Compliance Report with the Division.  The Division shall return the Compliance Report to Respondent within a reasonable time after such Compliance Report is filed;
  
(c)
File, simultaneously with the Compliance Report, a written report with the Commissioner, signed and attested to by the Chief Compliance Officer of Respondent, indicating the steps that have been or will be taken to implement the Consultant’s recommendations and the timetable for implementing those recommendations.  If the Respondent determines not to implement one or more particular recommendation(s) made by the Consultant, the report shall include a written explanation indicating the reason(s) for not implementing such recommendation(s); and
  
 (d)
 If, prior to the filing of the Compliance Report, the Consultant’s engagement is terminated or the Consultant ceases working for Respondent, Respondent shall immediately notify the Division in writing and provide the Division with a written statement detailing the circumstances surrounding the Consultant’s departure.  Promptly thereafter, Respondent shall retain a new Consultant sufficiently experienced in securities regulatory, supervisory and compliance issues, specifically knowledgeable about the Act and Regulations and not unacceptable to the Commissioner to fulfill Respondent’s obligations under paragraph 4 of Section IV of this Consent Order;
   
5.
Respondent shall pay the cost of one or more examinations to be conducted by the Division within twelve (12) months following the entry of this Consent Order by the Commissioner.  Such expenses shall be in accordance with state travel regulations, and shall not exceed three thousand five hundred dollars ($3,500) in the aggregate; and
6. No later than the date this Consent Order is entered by the Commissioner, Respondent shall remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, or by wire transfer, the sum of twelve thousand five hundred dollars ($12,500) as an administrative fine.

V. CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

1. The Sanctions set forth above be and are hereby entered;
2. Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Respondent 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; and
3. This Consent Order shall become final when issued.



Issued at Hartford, Connecticut,       _______/s/____________
this 14th day of June 2011.      Howard F. Pitkin 
         Banking Commissioner 

CONSENT TO ENTRY OF ORDER

I, Bruce Meyers, state on behalf of Meyers Associates, L.P., 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 Meyers Associates, L.P.; that Meyers Associates, L.P. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Meyers Associates, L.P. consents to the issuance of this Consent Order.


       Meyers Associates, L.P.
  
  
By: ______/s/_________________
    Bruce Meyers, President
Meyers-Janssen Securities Corp.
     (It’s [sic] General Partner)


State of:  New York
County of:  New York

On this the 9th day of June 2011, before me, Barbara A. Jetter Cereghino, the undersigned officer, personally appeared Bruce Meyers, who acknowledged himself to be the President of Meyers-Janssen Corp., the General Partner of Meyers Associates, L.P., a limited partnership, and that he, as such President of the General Partner, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited partnership by himself as President of the General Partner.
In witness whereof I hereunto set my hand.



______/s/_________________________
Notary Public
Date Commission Expires:  May 31, 2014

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