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PEARSON AND ASSOCIATES, LLC * * * * * * * * * * * * * * * * * * |
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STIPULATION AND
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WHEREAS, the Banking Commissioner (the “Commissioner”) is responsible for administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”) and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies (the “Regulations”) promulgated under the Act;
WHEREAS, Pearson and Associates, LLC is an investment adviser having its principal place of business at 586 Main Street, Dennis, Massachusetts 02638. Prior to its formation as a Massachusetts limited liability company on December 29, 2006, the firm’s founder, since deceased, transacted business as a sole proprietorship under the name Pearson Financial Services. The firm was restructured in 2015 to add three new limited liability company members in light of the founding member’s illness. The firm has no place of business in Connecticut;
WHEREAS, Section 36b-6(e) of the Act provides, in part, that: “The following investment advisers are exempted from the registration requirements under subsection (c) of this section: Any investment adviser that . . . (3) has no place of business in this state and, during the preceding twelve months, has had no more than five clients who are residents of this state”;
WHEREAS, commencing in 2009, Pearson and Associates, LLC began to incrementally expand its advisory services to serve Connecticut residents, adding approximately one to two Connecticut clients each year and ultimately reaching ten Connecticut clients;
WHEREAS, Pearson and Associates, LLC applied to become registered as an investment adviser under the Act in the summer of 2017, which registration shall become effective upon the Commissioner’s execution of this Stipulation and Agreement. Pearson and Associates, LLC reported its prior Connecticut advisory activities in connection with that application;
WHEREAS, neither Pearson and Associates, LLC nor its current or former members has any reported disciplinary history;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted a follow-up investigation of Pearson and Associates, LLC pursuant to Sections 36b-8 and 36b-26(a) of the Act to determine the extent to which it had violated, was violating or was about to violate provisions of the Act or Regulations;
WHEREAS, as a result of the foregoing investigation, the Commissioner obtained evidence indicating that from approximately 2009 forward, Pearson and Associates, LLC transacted business as an investment adviser in Connecticut while unregistered in contravention of Section 36b-6(c)(1) of the Act, and engaged an unregistered investment adviser agent in violation of Section 36b-6(c)(3) of the Act;
WHEREAS, the Commissioner believes that the conduct described above would support administrative proceedings against Pearson and Associates, LLC under Sections 36b-15 and 36b-27 of the Act;
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(4) of the General Statutes of Connecticut;
WHEREAS, Pearson and Associates, LLC desires to settle the matters described above, and voluntarily enters into this Stipulation and Agreement;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, the Commissioner and Pearson and Associates, LLC acknowledge that this Stipulation and Agreement is in lieu of any court action or administrative proceeding against Pearson and Associates, LLC, its members, officers, employees, agents or representatives adjudicating any issue of fact or law on the specific matters described herein;
WHEREAS, Pearson and Associates, LLC, through its execution of this Stipulation and Agreement, voluntarily waives any rights it may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| 1. |
Pearson and Associates, LLC, its representatives, agents, employees, affiliates, assigns and successors in interest shall refrain from engaging in conduct constituting or which would constitute a violation of the Act or any regulation, rule or order adopted or issued under the Act, either directly or through any person, organization or other device, including, without limitation, transacting business as an unregistered investment adviser and engaging unregistered investment adviser agents; |
| 2. |
No later than the date this Stipulation and Agreement is executed by the Commissioner, Pearson and Associates, LLC shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut” or by electronic funds transfer, the sum of six thousand one hundred ten dollars ($6,110), two thousand six hundred and ten dollars ($2,610) of which shall constitute reimbursement for past due investment adviser and investment adviser agent registration fees and three thousand five hundred dollars ($3,500) of which shall constitute an administrative fine; |
| 3. | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Pearson and Associates, LLC based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof; |
| 4. | Nothing in this Stipulation and Agreement shall be construed as limiting the Commissioner's ability to take enforcement action against Pearson and Associates, LLC based upon evidence of which the Commissioner was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act; |
| 5. | Through its execution of this Stipulation and Agreement, Pearson and Associates LLC agrees that it shall not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation referenced in this Stipulation and Agreement or create the impression that this Stipulation and Agreement is without factual basis; and |
| 6. | This Stipulation and Agreement shall become binding when executed by Pearson and Associates, LLC and the Commissioner. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
| Dated at Hartford, Connecticut | ____/s/_____________ | |
| this 19th day of March 2018. | Jorge L. Perez | |
| Banking Commissioner |
I, Coral A. Murphy, state on behalf of Pearson and Associates, LLC, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Pearson and Associates, LLC; and that Pearson and Associates, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
| Pearson and Associates, LLC | ||
| By | _____/s/_________________ | |
| Coral A. Murphy | ||
| Managing Member and | ||
| Chief Compliance Officer |
On this 16th day of March 2018, personally appeared Coral A. Murphy, signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that she was authorized to execute the same on behalf of Pearson and Associates, LLC and acknowledged the same to be her free act and deed, before me.
_____/s/_______________________
Notary Public
My Commission Expires: 8/31/2023