State of Connecticut Department of Banking

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IN THE MATTER OF: 


MEYERS ASSOCIATES, L.P.
CRD No. 34171










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ORDER TO CEASE AND DESIST

NOTICE OF INTENT TO REVOKE
REGISTRATION AS A BROKER-DEALER

NOTICE OF INTENT TO FINE

                      AND

NOTICE OF RIGHT TO HEARING

DOCKET NO. CRF-16-8342-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-14(d) and 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an examination and investigation involving Meyers Associates, L.P. (“Meyers”) to determine if Meyers has violated, is violating or is about to violate provisions of the Act or Regulations.
3.
As a result of the examination and investigation, the Commissioner has reason to believe that Meyers has violated certain provisions of the Act and Regulations.
4. As a result of the examination and investigation, the Commissioner has reason to believe that a basis exists to issue a cease and desist order against Meyers pursuant to Section 36b-27(a) of the Act.
5.
As a result of the examination and investigation, the Commissioner brings this administrative action pursuant to Section 36b-15(a) of the Act and Section 4-182(c) of the General Statutes of Connecticut to revoke the registration of Meyers as a broker-dealer in Connecticut.
6.
As a result of the examination and investigation, the Commissioner has reason to believe that a basis exists to impose a fine upon Meyers pursuant to Section 36b-27(d) of the Act.

II.  MEYERS ASSOCIATES, L.P.

7. Meyers is a New York limited partnership with its principal place of business at 45 Broadway, Second Floor, New York, New York 10006.  From September 23, 1994 to the present, Meyers has been registered in Connecticut as a broker-dealer under the Act, with the exception of a suspension from March 24, 2015 to June 17, 2015, as discussed below in paragraph 12.  This is the third administrative proceeding initiated by the Commissioner against Meyers since 2010.

III.  PRIOR CONNECTICUT SANCTIONS

A.  2011 Consent Order

8. In April 2008, the Division conducted an investigation and examination (“2008 Investigation and Exam”) of Meyers pursuant to Section 36b-14(d) of the Act.  Based on certain findings from the 2008 Investigation and Exam, on November 23, 2010, the Commissioner, acting pursuant to Sections 36b-15 and 36b-27 of the Act, 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 a Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. RCF-10-7817-S) (“2010 Notice”) against Meyers, which 2010 Notice is incorporated by reference herein.
9. On June 14, 2011, Meyers and the Commissioner entered into a Consent Order (Docket No. RCF-10-7817-S) (“2011 Consent Order”) to resolve the matters alleged in the 2010 Notice, which 2011 Consent Order is incorporated by reference herein.  The 2011 Consent Order, inter alia, required Meyers to remit to the Department of Banking twelve thousand five hundred dollars ($12,500) as an administrative fine, to pay the cost of one or more examinations of Meyers by the Division within twelve months following the entry of the 2011 Consent Order, and to hire an independent consultant to conduct a compliance review of Meyers’ policies and procedures and prepare a written report outlining the independent consultant’s findings and recommendations.  In addition, the 2011 Consent Order directed Meyers to 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.

B.  2015 Consent Order

10. In accordance with the 2011 Consent Order, from June 13, 2012 through June 15, 2012, the Division conducted a follow-up examination of Meyers (“2012 Exam”), during which the Division uncovered various deficiencies involving both Meyers and its principal, Bruce Meyers (CRD No. 1045447).  Bruce Meyers was the Chief Executive Officer (“CEO”) and control person of Meyers and had been registered as a broker-dealer agent of Meyers under the Act from September 23, 1994 to March 24, 2015.  The Division also conducted a related investigation of both Meyers and Bruce Meyers.
11. As a result of the examination and investigation, on February 10, 2014, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent, Notice of Intent to Fine and Notice of Right to Hearing against Meyers and Bruce Meyers, which was amended on February 13, 2015 (“Amended Notice”).  The Amended Notice is incorporated herein.  Meyers and Bruce Meyers requested a hearing on the matters alleged in the Amended Notice.
12. On March 24, 2015, the Commissioner entered into a Consent Order with Meyers and Bruce Meyers (“2015 Consent Order”) to resolve the matters alleged in the Amended Notice, which 2015 Consent Order is incorporated by reference herein.  Pursuant to the 2015 Consent Order, inter alia, Meyers remitted an administrative fine of fifty thousand dollars ($50,000), Meyers’ Connecticut broker-dealer registration was suspended for a period of sixty (60) days (or until the fine of $50,000 was paid), and Meyers was required to pay the cost of an examination of Meyers by the Division within eighteen (18) months of the 2015 Consent Order.  Moreover, Section IV. (8), (11) and (12), respectively, of the 2015 Consent Order required Meyers to, inter alia, do the following things:
  
   a)   Retain an outside independent consultant to advise Meyers’ officers and staff on compliance with all applicable state, federal, or self regulatory organization rules and requirements;
 
b)  By October 1, 2015, file with the Commissioner a complete copy of the consultant’s report, including a written summary prepared by Meyers addressing the consultant’s recommendations that had been or that would be implemented and including the proposed implementation timetable as well as the reasons any recommendations would not be implemented;
   
c)  Within sixty (60) days of the entry of the 2015 Consent Order, create and maintain a directory which catalogs where all records maintained by Meyers and its employees are maintained and identifies the form in which such records are stored (“Directory”).  The 2015 Consent Order required Meyers to keep the Directory accurate and up-to-date and  maintain a copy of the Directory, open to inspection by the Commissioner, at Meyers’ principal office; and
   
d)  For a period of three (3) years, refrain from offering or selling in or from Connecticut securities listed or traded on the OTC Bulletin Board, OTCQB marketplace or the OTC Pink marketplace. 
13. With regard to Bruce Meyers, the 2015 Consent Order, inter alia, required him to withdraw his registration as a broker-dealer agent of Meyers under the Act.  The Consent Order precluded Bruce Meyers from reapplying for registration as an agent of a broker-dealer under the Act for three years from the date the 2015 Consent Order was entered.
14. On April 23, 2015, the Financial Industry Regulatory Authority’s (“FINRA”) Department of Registration and Disclosure (“RAD”) determined that the 2015 Consent Order subjected Bruce Meyers to a statutory disqualification from the securities industry as defined in Section 3(a)(39) of the Securities Exchange Act of 1934.  As a result of Bruce Meyers’ ownership interest in Meyers, Meyers could not maintain its membership in FINRA if Bruce Meyers continued to be associated with the firm.  On June 4, 2015, Meyers filed a Membership Continuance Application (“MC-400 Application”) with FINRA’s RAD requesting permission for Bruce Meyers to continue to associate with Meyers despite being statutorily disqualified.  RAD denied Meyers’ MC-400 application on May 9, 2016.
15. In May 2016, Meyers filed with the Securities and Exchange Commission (“SEC”) an appeal of RAD’s May 9, 2016 denial of Meyers’ application to permit Bruce Meyers to continue to associate with Meyers despite being statutorily disqualified.  That review is currently pending.  As a result of Bruce Meyers’ statutory disqualification, he ended his registration with Meyers on June 6, 2016 because he could no longer be associated with the firm.
16. On June 8, 2016, Meyers amended its Form BD to remove Bruce Meyers as CEO and substitute John Telfer (“Telfer”) (CRD No. 1099745), Meyers’ Chief Compliance Officer (“CCO”), as Meyers’ CEO.  From June 6, 2016 to September 16, 2016, Telfer functioned as both the CCO and CEO of Meyers.

    
IV.  THE DIVISION’S 2016 EXAM AND INVESTIGATION
OF MEYERS UNCOVERED WIDESPEAD ORGANIZATIONAL
DEFICIENCIES AND A LACK OF ADHERENCE TO
FUNDAMENTAL COMPLIANCE PRINCIPLES

17. In accordance with the 2015 Consent Order, from September 14, 2016 through September 16, 2016, the Division conducted an on-site examination of Meyers’ primary office located at 45 Broadway, New York, New York (“2016 Exam”).  During the course of the 2016 Exam, the Division uncovered numerous deficiencies, which, taken as a whole, indicate a systemic culture of noncompliance throughout the firm.

A.  Failure to Provide Books and Records When Requested

18. As part of the 2016 Exam, the Division requested approximately twenty-four (24) documents or categories of documents from Meyers pursuant to Sections 36b-14(d) and 36b-26 of the Act and Section 36b-31-14f of the Regulations.  During the 2016 Exam, Meyers only provided the Division with two documents:  (i) Meyers’ Form BD; and (ii) Meyers’ Form 4530s (Disclosure and Complaint filings) from 2015 to the present.
19.  
Following up on Meyers’s incomplete production of documents, on September 19, 2016, the Division sent Meyers an e-mail informing Meyers that there were still at least twenty-two outstanding documents (or categories of documents) that Meyers was required to provide to the Division pursuant to Section 36b-14 of the Act.  On September 23, 2016, Meyers provided the Division with certain documents, purportedly responsive to the Division’s request for records and documents made during the 2016 Exam (“Meyers’ September 23, 2016 Response”).  However, Meyers’ September 23, 2016 Response was inadequate and not sufficiently responsive because many of the documents provided by Meyers on September 23, 2016 were either missing information, ambiguous, nonresponsive and/or raised additional questions.
20.
On October 21, 2016, the Division sent a compliance letter (“Compliance Letter”) to Meyers, providing it with an opportunity to demonstrate why Meyers did not violate the Act and/or the Regulations with respect to deficiencies found during the 2016 Exam or for misrepresentations made to the Division subsequent to the 2016 Exam.  The Division gave Meyers a deadline of October 31, 2016 to respond to the Compliance Letter.
21. At noon on October 31, 2016, Meyers requested that it be given more time to respond to the Compliance Letter, which request was declined by the Division.  At approximately 6:00 pm on October 31, 2016, Meyers sent the Division a written response to the Compliance Letter (“Response to the Compliance Letter”) which included documents purportedly responsive to the Division’s outstanding requests.  Both the Response to the Compliance Letter and the accompanying documents failed to adequately address the concerns outlined in the Compliance Letter, and raised multiple additional questions regarding Meyers’ compliance, operational and supervisory structure.  As illustrated in the following examples, Meyers failed to provide certain documents or provided inadequate responses to the Division’s requests:

a.    The Division requested copies of all internal departmental audits conducted in 2014/15.  Meyers’ initial response was “N/A,” without an explanation as to why there were no such audits performed in either 2014 or 2015.  As discussed below, Meyers later provided documents that Meyers claimed to be responsive to this request.  However, these documents were not internal departmental audits.
 
b.     The Division requested FINRA Rule 3120 Reports for 2015.  Meyers responded that it could not find such reports.
 
c.    The Division requested Meyers’ most recent (quarterly) FOCUS report.  Meyers did not provide the report.
 
d. The Division requested Meyers’ most recent year-end (annual) FOCUS report.  Meyers did not provide the report.
 
e. The Division requested Meyers’ cash receipts/disbursements for 2016.  Meyers did not provide the documents.
 
f. The Division requested six order tickets for six specific securities transactions.  Meyers did not provide these order tickets to the Division.
  
  
B. Failure to Produce True, Accurate and Current Books and Records
 
22.
Section 36b-31-14a(a) of the Regulations requires that the books and records kept and maintained by broker-dealers be true, accurate and current.  However, as reflected in the following examples, several of the records Meyers produced to the Division were not true, accurate and current:

a.    On September 23, 2016, Meyers produced an Excel spreadsheet, which appeared to be a list of all Meyers’ registered agents.  The spreadsheet listed 56 agents.  On October 1, 2016, Meyers produced a “Designation of Supervisors and Officers” (“Designation Record”), indicating that Meyers employed 36 agents and 7 supervisors.  At no time did Meyers explain the discrepancy.  To date, Meyers has not confirmed to the Division how many agents the firm actually employs.
 
b.    The Designation Record reflected that there were agents located at the “55 Broad Street Office” [sic] and that these agents were supervised by Supervisor A.  Presumably, this reference was to 55 Broad Street, New York, New York (Meyers Branch CRD # 533264).  However, according to Meyers’ CRD record, as of August 31, 2015, Meyers Branch CRD #533264 had moved from 55 Broad Street, New York, New York to 42 Richmond Terrace, Staten Island, New York.  In addition, Meyers Branch CRD #533264 filed a form BR Closure on May 13, 2016.  Therefore, when Meyers provided the Division with the Designation Record, it was wholly inaccurate in that (1) at the time, there was no Meyers branch located at 55 Broad Street, New York, New York; and (2) the branch that had previously been located at 55 Broad Street, New York, New York moved to Staten Island on August 31, 2015, and no longer existed as of May 13, 2016.  Meyers has been unable to provide the Division with current accurate information regarding how many branches it maintains and where such branches are located.
    
c.   On September 23, 2016, Meyers provided an Organizational Chart dated June 9, 2016 to the Division.  The chart contained multiple inaccuracies and/or ambiguities:
  
    (i)  Telfer was still listed as the firm’s CEO/CCO despite the fact that he resigned from Meyers on September 17, 2016.
 
  (ii)  A compliance officer whose association with the firm was terminated on September 9, 2016 was still listed as a Compliance Officer.
 
  (iii)  Bruce Meyers was still listed on the Organizational Chart, despite the fact that he had not been registered with the firm since June 6, 2016.
 
Consequently, Meyers was unable to provide the Division with basic information regarding the firm’s organizational structure and whom it employed.
 
d. The Division requested documentation on all of Meyers’ Connecticut accounts.  Many of the documents provided in response to this request were ambiguous, nonresponsive and/or inaccurate:
 
   (i)   The Division requested that Meyers provide account documentation for its Connecticut accounts.  Although Meyers provided some new account forms or other account documentation for approximately 63 Connecticut accounts, Meyers also provided the Division with a separate Excel spreadsheet reflecting that Meyers holds 110 Connecticut accounts.
 
   (ii)  Of the 63 Connecticut accounts for which Meyers purportedly provided new account documentation, Meyers did not provide any new account documentation for 25 accounts.  Rather, for these 25 accounts, Meyers provided a two-page document from Marquis Financial Services which stated the following:  “This is to inform you that Marquis Financial Services (“Marquis”) is in the process of closing its retail business and will no longer offer this service.  We are however delighted to recommend that you allow us to automatically transfer your account(s) to Meyers Associates, LP (“Meyers”), an independent broker-dealer also located in New York City.”  Meyers provided no explanation concerning this letter and no other documentation was provided to the Division regarding these 25 accounts.
 
(iii)  Rule 17a-3(a)(17) under the Securities Exchange Act of 1934 requires that Meyers update client account information every thirty-six (36) months in any account wherein a suitability determination needs to be made, such as when a client makes a trade.  Based on the limited account information for Connecticut accounts provided by Meyers to the Division, there were at least three Connecticut accounts where the new account information was dated more than thirty-six (36) months from trading done in those accounts.  Therefore, Meyers failed to update client account information as required by Rule 17a-3(a)(17) under the Securities Exchange Act of 1934.
 
(iv) Without any explanation, Meyers provided new account documentation for some clients from Massachusetts and Florida, despite the fact the Division only requested such documentation for the firm’s Connecticut clients.
   
(v)  One of the new account documents for a Connecticut account contained the following inconsistent statement:  “I also acknowledge that I am below retirement age or above the age of retirement.” (emphasis added) This letter appears to have been prepared by Meyers personnel and signed by the client.
 
23. Meyers’ production of documents in response to the Division’s requests indicated that Meyers was consistently unable to provide the Division with basic information and documents regarding its organizational structure, whom it employed and how many Connecticut accounts it maintained.
  

C.  Violations of 2015 Consent Order
Failure to Produce Directory of Records –
Violation of Section IV, Subsection 11
  
24. Section IV, Subsection 11 of the 2015 Consent Order required Meyers to create and maintain a directory which cataloged where all records maintained by Meyers and its employees were kept and that identified the form in which such records were stored (“Directory”).  The 2015 Consent Order required Meyers to keep the Directory accurate and up-to-date and to maintain a copy of the directory, open to inspection by the Commissioner, at Meyers’ principal office.
25.  
On September 15, 2016, during the Division’s exam, Division staff requested a copy of the Directory from Meyers.  Meyers did not produce the Directory on September 15, 2016.  On September 16, 2016, Division staff reiterated its request for the Directory to Telfer, the firm’s then CEO and CCO.  Telfer stated that while he did not have access to the Directory and did not know where the Directory was located, another Meyers employee (“Employee A”), based in the Florida branch, should have a copy of it.  However, in reality, as of approximately September 9, 2016, Employee A had been terminated by Meyers, purportedly due to a reduction in staff.  The Directory was never provided to the Division staff during the 2016 Exam.
26. In the Response to the Compliance Letter dated October 31, 2016, Meyers represented that it was providing the Division with the “directory of record [M]aintenance.”  What Meyers provided, however, was a list of items the Division gave to Meyers during the 2016 Exam.  To date, Meyers has not produced anything appearing to be the Directory required under Section 11 of the 2015 Consent Order.  The failure to create and maintain the Directory is a violation of Section 11 of the 2015 Consent Order.
  
  
Sale of securities on the OTC Markets –
Violation of Section IV, Subsection 12
27. Section IV, Subsection 12 of the 2015 Consent Order required that for a period of three (3) years “Meyers Associates shall not offer or sell in or from Connecticut securities listed or traded on the OTC Bulletin Board, OTCQB marketplace or the OTC Pink marketplace.”
28. During the 2016 Exam, Division staff discovered that agents of Meyers solicited five purchases of ImageWare Systems, Inc. (“ImageWare Securities”) from two Connecticut clients.  ImageWare Securities are listed on the OTC Markets (specifically the OTCQB), and are products Section 12 of the 2015 Consent Order specifically prohibits Meyers from offering or selling.
29. In the Response to the Compliance Letter dated October 31, 2016, Meyers stated that the ImageWare trades “[were] an oversight on the firm.  It appears that the firm violated the order . . . .”

D.  Failure to Supervise

Meyers Did Not Address the Recommendations and
Concerns of the Independent Consultant

30. Section IV(8) of the 2015 Consent Order required Meyers to hire an outside independent consultant (“Consultant”) to conduct an audit and review of Meyers to assess the adequacy of Meyers’ compliance system and ensure that it was adequate to prevent and detect securities law violations.
31.  
From June 16 through June 19, 2015, the Consultant conducted a review of Meyers’ compliance, operational and supervisory systems.  On September 18, 2015, as required by the 2015 Consent Order, the Consultant sent a detailed written report (“Meyers Consultant Report”) to Meyers, which contained numerous recommendations regarding how Meyers should improve and enhance the compliance, operational and supervisory structure of the firm.
32. Among other things, the Meyers Consultant Report stated that:  (a) Meyers’ compliance and supervision departments were inadequately staffed; (b) Telfer had multiple functions at the firm, including serving as Meyers’ CCO, the anti-money laundering (“AML”) compliance officer, the primary contact for Meyers’ Business Continuity plan and as a member of the New Hire committee; (c) some of Telfer’s duties should be delegated to other employees or new personnel should be hired; and (d) the firm’s Written Supervisory Procedures (“WSPs”) should be reviewed and updated as soon as possible.  Among several other areas of concern, the Meyers Consultant Report stated that Meyers should and needed to revise the WSP section regarding what unregistered agents could and could not say during telephone calls to prospective clients.  Specifically, the Meyers Consultant Report pointed out that the current WSPs stated that Meyers did not engage in telemarketing, which was not the case.  The Meyers Consultant Report made it clear that the WSPs should be updated as soon as possible to correct this inaccuracy.
33. On September 29, 2015, Meyers sent the Commissioner the Meyers Consultant Report with a cover letter stating that, among other things, Meyers anticipated that the WSPs [review and update] project would be completed within 3 months.  In another section of the cover letter, Meyers stated that the WSPs review and update “is a priority for the firm” and that the “WSPs will be reviewed and updated accordingly, no later than January 16, 2016.” (emphasis added)
34. Despite the Meyers Consultant Report’s indisputable observations regarding the problems with Meyers’ compliance and supervisory staffing, Meyers failed to implement meaningful changes to address the problems found by the Consultant.
35. First, Meyers added to Telfer’s responsibilities when the firm made him the CEO in June 2016, despite the Consultant’s observation that Telfer had too many responsibilities.
36.  
Second, despite Meyers’ September 29, 2015 statement to the Division that the review and update of the WSPs would be a priority and completed by January 16, 2016, this was not done.  When the Division staff requested a copy of the updated WSPs during the 2016 Exam, Meyers informed the Division staff that the updated WSPs would not be completed until October 1, 2016.  On September 26, 2016, Meyers reiterated to the Division that the estimated date of completion of the updated WSPs would be October 1, 2016.
37. In the Compliance Letter dated October 21, 2016, the Division again put Meyers on notice that it had not yet provided Division staff with updated WSPs.  On October 31, 2016, Meyers represented to the Division that that [sic] it would be providing a draft of the WSPs but that “the firm has not made this draft effective.”  On November 3, 2016, Meyers provided the Division with WSPs dated October 1, 2016.  Meyers did not advise the Division whether the WSPs provided to the Division on November 3, 2016 were currently effective and complete.  The WSPs appear to remain incomplete.
38. As a whole, the 2016 WSPs reflect that Meyers did not follow many of the Consultant’s recommendations regarding how to improve Meyers’ compliance procedures.  For example:
   
a.    The 2016 WSPs sections on Calling (Telemarketing) and Cold Callers had not been changed to correct the inaccuracies and problems that the Meyers Consultant Report specifically highlighted.   First, the 2016 WSPs contained the same inaccurate statement that was in the previous WSPs -- that Meyers did not telemarket to individuals, despite the fact that it did telemarket to individuals.  Meyers did not correct this section of the WSPs despite the Consultant’s recommendation to do so.  Second, the Calling (Telemarketing) and Cold Callers section failed to set forth clear and comprehensible policies and procedures regarding what unregistered agents could and could not do during a telephone call to a potential client.  The Meyers Consultant Report specifically said that these two areas of the WSPs needed to be updated and improved.
 
b. After Bruce Meyers ceased acting as the firm’s CEO on June 8, 2016, Telfer assumed additional responsibilities as the new CEO (in addition to being the CCO and the AML compliance officer), despite the Consultant’s observation that Telfer had too many responsibilities and that some of  Telfer’s duties should be delegated.
 
c. As of September 17, 2016, Telfer was no longer employed by Meyers.  However, Sections 7.2 and 2.16.1 of the 2016 WSPs stated that the firm had designated Telfer as the firm’s anti-money laundering program compliance person and/or officer.  Consequently, Meyers failed to provide basic information to the Division about Meyers’ organizational and managerial structure.
 
Organizational Deficiencies Subsequent to Telfer’s Resignation
 
39. On September 19, 2016, the Division learned that on September 16, 2016, Telfer voluntarily resigned from Meyers, including resigning as Meyers’ CEO and CCO.  Telfer notified the Division that two current Meyers employees would be handling all of the firm’s registration, licensing and regulatory inquiries and requirements.
40. In response to the resignation of Telfer, the Division sent Meyers a letter on September 21, 2016 requesting information and documentation relating to the new supervisory structure, namely: the name of the current CEO and CCO, and the written authority relied upon in designating the assignments of the new CEO and CCO.  On September 26, 2016, Meyers sent the Division a letter identifying a current employee of Meyers as the interim CEO and CCO (“Interim CEO/CCO”), but failed to indicate the authority upon which the designation of authority to that employee was based.
41. The October 21, 2016 Compliance Letter requested that Meyers provide information evidencing the authority relied upon in making these new assignments.
42. On October 31, 2016, in the Response to the Compliance Letter, Meyers produced a chart showing the individuals responsible for certain functions at the firm and the respective agents these individuals supervised (“Chart”).  The Chart was not responsive to the Division’s request concerning who had the authority to make personnel assignments.  In addition, the Chart was incorrect and incomplete in that it omitted certain employees that were listed as registered employees of Meyers on CRD, and failed to correctly reflect the branch office locations of certain employees.  To date, Meyers has failed to explain the authority relied upon in making personnel assignments, despite the Division’s repeated requests for such information.
  
Meyers Ignored Red Flags in Choosing the Interim CEO/CCO
 
43. The Interim CEO/CCO chosen by Meyers to replace Telfer had a history of customer complaints and regulatory disclosures that should have raised red flags and alerted Meyers to potential problems regarding this individual’s ability to handle the firm’s supervisory and compliance matters.  For example:
  
   a.    In February 2008, the Interim CEO/CCO was the subject of an internal review at the firm where she worked from March 2003 to April 2008.  The firm reported to FINRA that the Interim CEO/CCO, was under internal review for, among other things, allegedly forging the name of a firm Series 24 principal on monthly supervisory branch reviews.  (The CRD record of this internal review did not reflect the disposition of this matter);
 
b.  On July 17,  2009, the Interim CEO/CCO consented to a FINRA Acceptance, Waiver and Consent, wherein, without admitting or denying the findings, she was fined $5,000 and suspended from FINRA association in any principal capacity for twenty (20) business days.  This matter related to allegations that the Interim CEO/CCO failed to adequately supervise a registered representative who engaged in unsuitable trading in customers’ accounts;
 
c.  On December 19, 2013, a customer complaint alleging unsuitability and fraudulent and unauthorized trading was filed with FINRA against the Interim CEO/CCO arising out of her actions at the firm she worked immediately prior to Meyers.  This matter is currently pending.
 
d.  On August 2, 2016, the Montana Commissioner of Securities and Insurance issued a “Notice of Proposed Agency Action and Opportunity for Hearing,” against the Interim CEO/CCO (and other parties), alleging that the Interim CEO/CEO failed to supervise agents at the firm she worked at immediately prior to Meyers.  This action is currently pending.
 
44. The decision by the firm to replace Telfer with the Interim CEO/CCO constitutes a failure to supervise because Meyers failed to evaluate the qualifications of its supervisory and management personnel.  There were numerous red flags in the Interim CEO/CCO’s disciplinary history which should have prompted Meyers to further examine whether the Interim CEO/CCO was qualified to handle the position.
45. Moreover, the Interim CEO/CCO’s Form U4 reflected that she was currently working at the Meyers branch located at 2150 Joshua’s Path, Suite 11E, Hauppauge, New York, and being supervised from the 45 Broadway, New York, New York office.  This information was inaccurate and represents another example of Meyers’ faulty compliance and record keeping.  In addition, this is a violation of Section 36b-31-14e of the Regulations, which requires information contained in an agent’s registration to be promptly amended if it becomes inaccurate.
46.  
The conduct in paragraphs 30 to 45, above, as well as Meyers’ violations of Section IV (11) and (12) of the 2015 Consent Order constitute a failure to supervise by Meyers in violation of Section 36b-31-6f of the Regulations.

E. Materially Misleading Statements Made to the Division
 
47. Meyers made multiple representations to the Division that Meyers would produce the updated WSPs and the 2015 Branch Audits to the Division by or on specified dates, respectively.
48. Meyers represented to the Division that the WSPs would be complete by January 16, 2016, then by October 1, 2016 and then by the first week of October 2016.  The WSPs were not produced to the Division until November 3, 2016.
49. Meyers represented to the Division on September 30, 2016 that the 2015 Branch Audits would be sent by overnight mail, which was not done.  On October 31, 2016, Meyers sent documents to the Division which were purportedly the 2015 Branch Audits, but were not branch audits.
50. To date, Meyers has failed to provide the Division with the 2015 Branch Audits, despite Meyers’ statement to the Division that it would do so.

F.  FINRA and Missouri Securities Division Sanctions
 
51. On June 30, 2016, FINRA issued a Letter of Acceptance, Waiver and Consent (“AWC Order”) relating to Meyers (FINRA Disciplinary Proceeding No. 20140438591-01), in which Meyers was censured and fined $15,000.  Without admitting or denying the allegations, Meyers consented to the entry of findings that Meyers failed to submit 272 reportable order events to the order audit trail system  (“OATS”) resulting in an inaccurate and/or incomplete audit trail.  The findings also stated that Meyers’ supervisory system was not reasonably designed to achieve compliance with OATS reporting.  This was FINRA’s second enforcement action against Meyers involving OATS violations.  On December 21, 2011, FINRA accepted a settlement offer from Meyers in which Meyer was censured and fined $25,000 resulting from violations relating to OATS reporting.
52. On February 26, 2016, the Missouri Securities Division entered a Final Order to Cease and Desist as to Meyers Associates, L.P. and Order Awarding Civil Penalties (“Missouri Cease and Desist Order”) (Case No. AP-10-42), finding that Meyers employed an unregistered agent.  The Missouri Cease and Desist Order prohibited Meyers from violating the Missouri Uniform Securities Act and fined Meyers $1,000.  The Missouri Cease and Order involved a similar charge addressed in the 2011 Consent Order – Meyers employing unregistered agents.  Subsequent to the 2011 Consent Order, on September 15, 2011, Meyers sent the Division a letter representing that Meyers planned to take corrective action relating to any deficiencies relating to the registration of agents.  Significantly, the Missouri Cease and Desist Order demonstrates that despite Meyers’ prior undertaking to correct deficiencies regarding its registration of agents, Meyers’ policies and procedures still resulted in the firm employing an unregistered agent.
  

G.  Sale of Unregistered Securities
  
53.
 On August 1, 2014, Meyers offered and/or sold JUHL Energy Inc. securities (“JUHL”) in and/or from Connecticut to at least one investor, which securities were not registered in Connecticut under Section 36b-16 of the Act, nor was an exemption filing or claim of covered-security status made with the Division.
54.   On November 7, 2016, the Division sent Meyers a letter providing it with an opportunity to demonstrate why Meyers did not violate section 36b-16 of the Act and/or the Regulations when it offered and sold JUHL securities.  On November 11, 2016, Meyers responded to the Division, stating that the sale was “exempt from registration in Connecticut under Sections 36b-2 to 36b-34, inclusive.”  Section 36b 21(g) of the Act provides that the burden of proving an exemption from securities registration is on Meyers (the person claiming the exemption).  Meyers failed to specify what exemption, if any, it was relying upon in offering and selling JUHL securities and therefore failed to sustain its burden of proof under Section 36b-21(g) of the Act.
55. Such sale of unregistered securities also violated Section IV of the 2011 Consent Order, in which Meyers was ordered to cease and desist from engaging in conduct constituting or which would constitute a violation of the Act.

IV.  STATUTORY AND REGULATORY BASIS FOR
ORDER TO CEASE AND DESIST,
REVOCATION OF  REGISTRATION AS A BROKER-DEALER
AND ORDER IMPOSING FINE

a.  Violations of Section 36b-14(d) of the Act and
Section 36b-31-14f of the Regulations by Meyers –
Failure to Provide Copies of and Make Required Books and
Records Available When Requested

56. Paragraphs 1 through 55, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
57.
Meyers’ failure to provide copies of and make its required books and records available to the Commissioner when so requested, as more fully described in paragraphs 18 through 21, inclusive, constitutes a violation of Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations, and as such supports the entry of an order to cease and desist against Meyers pursuant to Section 36b-27(a) of the Act, and the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act.  Such conduct also constitutes a wilful violation of Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations and provides a basis for the revocation of Meyers’ registration as a broker-dealer pursuant to Sections 36b-15(a)(2)(B) and 36b-15(a)(2)(L) of the Act.

b.  Violation of Section 36b-31-14a of the Regulations by Meyers –
Failure to Maintain True, Accurate and Current Books and Records

58. Paragraphs 1 through 57, inclusive are incorporated and made a part hereof as if more fully set forth herein.
59.
Meyers failed to maintain true, accurate and current books and records, as more fully described in paragraphs 22 and 23.  The failure to maintain true, accurate and current books and records constitutes a violation Section 36b-31-14a of the Regulations, which forms a basis for an order to cease and desist to be issued against Meyers under Section 36b-27(a) of the Act, the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act, and, as wilful misconduct, constitutes grounds for the revocation of Meyers’ registration as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act.

c.  Violations of the 2011 Consent Order and the
2015 Consent Order by Meyers

60. Paragraphs 1 through 59, inclusive are incorporated and made a part hereof as if more fully set forth herein.
61.
Meyers has violated the cease and desist provision of the 2011 Consent Order, and Section IV, Subsections 11 and 12 of the 2015 Consent Order, as more fully described in paragraphs 24 through 29, inclusive.  Such conduct supports the entry of an order to cease and desist against Meyers pursuant to Section 36b-27(a) of the Act, and the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act.  Such wilful violations form the basis for the revocation of Meyers’ broker-dealer registration in Connecticut pursuant to Section 36b 15(a)(2)(B) of the Act.

d.  Violation of Section 36b-31-6f of the Regulations by Meyers –
Failure to Establish, Enforce and Maintain
Adequate Supervisory Procedures

62. Paragraphs 1 through 61, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
63.
Meyers’ failure to establish, enforce and maintain a system for supervising the activities of its agents and employees that was reasonably designed to achieve compliance with applicable securities laws and regulations, as more fully described in paragraphs 30 through 46, inclusive, constitutes a violation of Section 36b-31-6f of the Regulations, which forms a basis for an order to cease and desist to be issued against Meyers under Section 36b-27(a) of the Act, the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act, and constitutes grounds for the revocation of Meyers’ registration as a broker-dealer pursuant to Section 36b-15(a)(2)(K) of the Act and, as wilful misconduct, Section 36b-15(a)(2)(B) of the Act.

e. Violation of Section 36b-23 of the Act by Meyers –
Materially Misleading Statements Made to the Division

64. Paragraphs 1 through 63, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
65.
Meyers made statements to the Division that were, at the time and in light of the circumstances under which they were made, misleading in a material respect, as more fully described in paragraphs 47 through 50, inclusive.  Such conduct violated Section 36b-23 of the Act, and, as such, supports the entry of an order to cease and desist against Meyers pursuant to Section 36b-27(a) of the Act and the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act.  Such conduct also constitutes a wilful violation of Section 36b-23 of the Act and provides a basis for the revocation of Meyers’ registration as a broker-dealer in Connecticut pursuant to Sections 36b-15(a)(2)(B) and 36b-15(a)(2)(L) of the Act.

f. Meyers Subject to Sanctions by FINRA and the Missouri Securities Division

66. Paragraphs 1 through 65, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
67.
The FINRA findings of violations and sanctions and the Missouri Securities Division’s cease and desist order against Meyers, as more fully described in paragraphs 51 and 52 form the basis for the revocation of Meyers’ broker-dealer registration in Connecticut pursuant to Sections 36b-15(a)(2)(F)(iii) and (vi) of the Act, respectively.

  g. Violation of Section 36b-16 of the Act by Meyers Associates –
Offer and Sale of Unregistered Securities

68. Paragraphs 1 through 67, inclusive, are incorporated and made a part hereof as if more fully set forth herein.
69.
Meyers offered and sold securities to at least one Connecticut investor, which securities were not registered in Connecticut under the Act, as more fully described in paragraphs 53 through 55, inclusive.  The offer and sale of such securities absent registration constitutes a violation of Section 36b- 16 of the Act, which forms a basis for an order to cease and desist to be issued against Meyers under Section 36b-27(a) of the Act, the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act, and, as a wilful violation, constitutes grounds for the revocation of Meyers’ registrations [sic] as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act.

VI.  ORDER TO CEASE AND DESIST,
NOTICE OF INTENT TO REVOKE REGISTRATION AS A BROKER-DEALER
NOTICE OF INTENT TO FINE AND
NOTICE OF RIGHT TO HEARING

WHEREAS, as a result of the examination and investigation, the Commissioner finds that, with respect to the activity described herein, Meyers has committed at least one violation of Section 36b-14(d) of the Act, at least one violation of Section 36b-31-14f of the Regulations, at least one violation of Section 36b-31-14a of the Regulations, at least one violation of Section 36b-31-6f of the Regulations, at least one violation of Section 36b-23 of the Act, at least one violation of Section 36b-16 of the Act, and violated the 2011 Consent Order and 2015 Consent Order.

WHEREAS, the Commissioner also has reason to believe that grounds exist for revoking Meyers’ registration as a broker-dealer in Connecticut pursuant to Sections 36b-15(a)(2)(B), 36b-15(a)(2)(F)(iii), 36b-15(a)(2)(F)(vi), 36b-15(a)(2)(K), and 36b-15(a)(2)(L) 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”;

WHEREAS, notice is hereby given to Meyers that its broker-dealer registration in Connecticut shall be revoked, subject to Meyers’ right to request a hearing on the allegations set forth above;

WHEREAS, notice is hereby given to Meyers that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation;

WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist against Meyers, the issuance of an order revoking the broker-dealer registration of Meyers in Connecticut, and the imposition of a fine upon Meyers 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, the Commissioner ORDERS that MEYERS ASSOCIATES L.P. CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation:  (1) failing to provide copies of and make its required books and records available to the Commissioner when so requested; (2) failing to maintain true, accurate and current books and records; (3) violating the 2011 Consent Order and the 2015 Consent Order; (4) failing to establish, enforce and maintain a system of supervising the activities of its agents and employees that is reasonably designed to achieve compliance with applicable securities laws and regulations; (5) making statements to the Commissioner that are, at the time and in light of the circumstances under which they are made, misleading in a material respect; and (6) offering or selling unregistered securities in Connecticut.

THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Sections 36b-15(f) and 36b-27 of the Act, Meyers 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 Meyers’ receipt of this Order.  To request a hearing, complete and return the enclosed Appearance and Request for Hearing Form to the above address.  If Meyers 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 February 1, 2017, 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, Meyers 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 Meyers does not request a hearing within the time period prescribed or fails to appear at any such hearing, the allegations herein against Meyers will be deemed admitted.  Accordingly, the Order to Cease and Desist shall remain in effect and become permanent against Meyers, the Commissioner shall issue an order revoking Meyers’ registration as a broker-dealer in Connecticut, and the Commissioner may order that the maximum fine be imposed upon Meyers.

So ordered at Hartford, Connecticut,       ____/s/_____________ 
this 5th day of December 2016. Jorge L. Perez
Banking Commissioner 



CERTIFICATION

I hereby certify that on this 5th day of December 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing to Meyers Associates, L.P., 45 Broadway, Second Floor, New York, New York 10006, certified mail no. 7012 3050 0000 6997 6391; and Meyers Associates, L.P., c/o Robert I. Rabinowitz, Esq., Becker & Poliakoff, 125 Half Mile Road, Suite 103, Red Bank, New Jersey 07701, certified mail no. 7012 3050 0000 6997 6407.

      
  __/s/_______ 
  W. C. Hall
  Paralegal


                                                 

Administrative Orders and Settlements