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NEWBRIDGE SECURITIES * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER DOCKET No. RCF-11-7794-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 (“Department”), conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Respondent to determine if it had violated, was violating or was about to violate provisions of the Act or Regulations;
WHEREAS, on April 15, 2011, 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, Order to Make Restitution, Notice of Intent to Revoke Registration as a 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 amended its customer trade confirmations and/or pre-confirmations to provide each of its Connecticut customers with additional disclosure acceptable to the Division which adequately described the “Handling Fee” appearing on the trade confirmations and/or pre-confirmations;
WHEREAS, Respondent and the Division requested a continuance 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 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), (b) . . . 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 to make restitution, (c) an order revoking Respondent’s registration as a broker-dealer in Connecticut, and (d) 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. | As more fully described in paragraph 11 of Section III of the Notice and paragraph 14 of Section IV of the Notice, Respondent violated Section 36b-4(a) of the Act 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 omissions were material to investors, and Respondent’s failure to adequately disclose the nature of these charges made Respondent’s limited explanation misleading; |
| 2. | As more fully described in paragraph 11 of Section III of the Notice and paragraph 16 of Section IV of the Notice, Respondent violated Section 36b-4(b) of the Act and engaged in dishonest and unethical practices in connection with the offer or purchase 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 omissions were material to investors, and Respondent’s failure to adequately disclose the nature of these charges made Respondent’s limited explanation misleading; and |
| 3. | Respondent’s conduct, as set forth in paragraph 11 of Section III of the Notice and paragraph 18 of Section IV of the Notice, was proscribed by the Financial Industry Regulatory Authority (formerly NASD) Conduct Rules 2210, 2430 and 2440, and constituted a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations. |
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 on it 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; and (b) sent correspondence to each Connecticut customer who received the reimbursement explaining that the “Handling Fee” reimbursement was a result of an investigation conducted by the Division; |
| 3. | No later than the date this Consent Order is entered by the Commissioner, Respondent shall provide to the Division 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; and |
| 4. | No later than the date this Consent Order is entered by the Commissioner, Respondent shall remit to the Department by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, or by wire transfer, the sum of ten thousand dollars ($10,000) 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 10th day of November 2011. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Robert P. Spitler, state on behalf of Newbridge Securities Corporation, 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 Newbridge Securities Corporation; that Newbridge Securities Corporation agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Newbridge Securities Corporation consents to the issuance of this Consent Order.
| Newbridge Securities Corporation | |
| By: | __________/s/_______________ |
| Name: Robert P. Spitler | |
| Title: President & CFO |
State of: Florida
County of: Broward
On this the 18th day of October 2011, before me, Yvonne C. Casey-Ford, the undersigned officer, personally appeared Robert P. Spitler, who acknowledged himself/herself to be the President/CFO of Newbridge Securities Corporation, a corporation, and that he/she, as such [blank in original], being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herself as President/CFO.
In witness whereof I hereunto set my hand.
_____/s/___________________________
Notary Public
Date Commission Expires: March 08, 2015