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 (“Regulations”) promulgated under the Act;

WHEREAS, RPM Capital Management, LLC (“RPM”) is an investment adviser formerly located at 2 Greenwich Office Park, Suite 300, Greenwich, Connecticut 06831.  RPM, a Connecticut limited liability company formed on March 20, 2012, applied for investment adviser registration in Connecticut on June 6, 2012 by filing with the Commissioner a Uniform Application for Investment Adviser Registration (“Form ADV”).  RPM became registered as an investment adviser under the Act on June 22, 2012.  On February 9, 2016, RPM became registered as an investment adviser with the federal Securities and Exchange Commission, and filed to withdraw its Connecticut investment adviser registration on March 30, 2016;

WHEREAS, Michele Mary Newland (“Newland”) is the Chief Investment Officer and Co-CEO of RPM who, with two others, played a significant role in the creation of RPM.  On March 8, 2016, Newland applied to register as an investment adviser agent of RPM under the Act;

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”), conducted an examination of RPM (“Examination”) pursuant to Section 36b-14(d) of the Act and a related investigation pursuant to Section 36b-26(a) of the Act (“Investigation”) into the activities of Respondents to determine whether they, or either of them, violated, have violated, or were about to violate provisions of the Act or Regulations;

WHEREAS, as a result of the Examination and Investigation, the Commissioner has reason to believe that Respondents have engaged in conduct, as more fully described herein, that violated certain provisions of the Act and Regulations and that would support administrative proceedings against Respondents under Section 36b-15 and Section 36b-27 of the Act;

WHEREAS, as a result of such Investigation, the Division obtained evidence that, from June 2012 through March 8, 2016, Newland transacted business as an investment adviser agent of RPM while unregistered in violation of Section 36b-6(c)(2) of the Act;

WHEREAS, Newland only applied for investment adviser agent registration under the Act on March 8, 2016, after being informed by the Division that she should register as an investment adviser agent;

WHEREAS, the Commissioner alleges that, commencing in 2012 and while acting in an unregistered capacity, Newland:  (1) had investment advisory interactions with clients or prospective clients; (2) routinely conducted research on potential bonds to be offered to clients, and was the sole individual at RPM responsible for choosing the bonds for clients; (3) contacted other firms to solicit their business and create sub advisory relationships for RPM; and (4) was authorized, by virtue of her position with RPM, to engage in solicitation and/or advisory activity on behalf of RPM;

WHEREAS, on the issue of registration under the Act, Newland represents she relied on the advice of both an in-house Chief Compliance Officer and an experienced, professional compliance consultant and did not personally investigate the issue;

WHEREAS, as a result of the Examination, the Division ascertained that RPM failed to establish and maintain written supervisory procedures as required under Section 36b-31-6(f) of the Regulations;

WHEREAS, as a result of the Examination and Investigation, the Division obtained evidence that RPM failed to maintain adequate books and records and to make those records available for inspection as required by law;

WHEREAS, the Commissioner has reason to believe that the foregoing conduct violates certain provisions of the Act and Regulations, and would support administrative proceedings against Respondents under Section 36b-15 and Section 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, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations provide that a contested case may be resolved by consent order, unless precluded by law;

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-24, 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, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner and Respondents reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;

WHEREAS, Respondents expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;

WHEREAS, the Commissioner finds that the entry 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;

AND WHEREAS, Respondents, through their execution of this Consent Order, specifically represent and agree that none of the violations alleged in this Consent Order shall occur in the future.

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Respondents, through their execution of this Consent Order, voluntarily waive the following rights:

WHEREAS, Respondents, through their execution of this Consent Order, acknowledge the following allegations of the Commissioner, without admitting or denying them:

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

AND WHEREAS, Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.

IV.  CONSENT TO ENTRY OF SANCTIONS

WHEREAS, Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of an order imposing on them the following sanctions:

V.  CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

CONSENT TO ENTRY OF ORDER

Administrative Orders and Settlements