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IN THE MATTER OF: WADSWORTH INVESTMENT CO., INC. * * * * * * * * * * * * * * * * * * * |
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ORDER MODIFYING Docket No. CFNR-10-7779-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of 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, WIC has been registered as a broker-dealer under the Act since at least January 1, 1986, with its principal place of business in Wallingford, Connecticut;
WHEREAS, on August 11, 2010, the Banking Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine (Docket No. CFNR-10-7779-S) against Wadsworth Investment Co., Inc. (“WIC”) and William F. Wadsworth, Sr. (“Wadsworth, Sr.”). The August 11, 2010 action also sought to revoke the registration of WIC as a broker-dealer in Connecticut and the registrations of Wadsworth, Sr. as a broker-dealer agent and an investment adviser agent under the Act. The August 11, 2010 Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Revoke Registration as Broker-dealer Agent, Notice of Intent to Revoke Registration as Investment Adviser Agent and Notice of Intent to Fine was amended and restated on June 1, 2011 (“Amended Notice”);
WHEREAS, WIC and Wadsworth, Sr. requested a hearing on the allegations contained in the Amended Notice;
WHEREAS, after due notice, a hearing was held at the Department of Banking over thirteen various days between July 19, 2011 and September 15, 2011;
WHEREAS, WIC presented evidence and argument and otherwise availed itself of Sections
36b-15 and 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
36b-15 and 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
WHEREAS, on February 7, 2012, the Commissioner entered Findings of Fact, Conclusions of Law and an Order (the “Final Decision and Order”), the terms of which are incorporated by reference herein, rendering permanent the Amended and Restated Order to Cease and Desist against WIC and Wadsworth, Sr.;
WHEREAS, the Final Decision and Order fined WIC and Wadsworth, Sr. Two Hundred Fifty Thousand Dollars ($250,000) and Two Hundred Thousand Dollars ($200,000), respectively;
WHEREAS, the Final Decision and Order revoked the registrations of Wadsworth, Sr. as a broker-dealer agent and as an investment adviser agent effective February 7, 2012;
WHEREAS, the Final Decision and Order also forestalled the revocation of WIC’s broker-dealer registration if certain restrictions and conditions, including proof of remedial measures, were satisfied within ninety (90) days following the Commissioner’s entry of the Final Decision and Order;
WHEREAS, in accordance with the Final Decision and Order, WIC opened a dialogue with the Securities and Business Investments Division (the “Division”) of the Department of Banking to discuss remedial steps necessary to safeguard against future violations of the Act and the Regulations;
WHEREAS, in addressing such remedial steps, WIC and Wadsworth, Sr. acknowledged that the Final Decision and Order was supported by sufficient evidence, and indicated to the Division that neither would pursue an administrative appeal under Section 4-183 of the Connecticut General Statutes;
WHEREAS, Section 4-181a of the Connecticut General Statutes provides, in part, that: “(2) Within forty days of the personal delivery or mailing of the final decision, the agency . . . may decide to reconsider the final decision. (3) If the agency decides to reconsider a final decision, pursuant to subdivision . . . (2) of this subsection, the agency shall proceed in a reasonable time to conduct such additional proceedings as may be necessary to render a decision modifying, affirming or reversing the final decision, provided such decision made after reconsideration shall be rendered not later than ninety days following the date on which the agency decides to reconsider the final decision”;
WHEREAS, Section 36b-31(a) of the Act provides, in part, that: “The Commissioner may from time to time make, amend and rescind such . . . orders as are necessary to carry out the provisions of Sections 36b-2 to 36b-34, inclusive [of the Act]”;
WHEREAS, Section 36b-31(b) of the Act states, in part, that: “No . . . order may be made, amended or rescinded 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 ... [the Act]”;
WHEREAS, the Commissioner finds that the issuance of this Order modifying the sanctions and remedies contained in the Final Decision and Order is appropriate in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
ORDER
THE COMMISSIONER HEREBY ORDERS THAT:
| 1. | Paragraph 1.(a) of the February 7, 2012 Order shall be modified, retroactive to February 7, 2012, to add the following language at the end of the paragraph: “If Wadsworth Investment Co., Inc. is unable to hire a full-time Chief Compliance Officer within such ninety day time frame, it shall retain, with the preapproval of the Commissioner and on an interim basis, one or more qualified individual consultants to review its compliance and supervisory procedures and provide input into the hiring of a permanent full-time Chief Compliance Officer. Following the hiring of a permanent full-time Chief Compliance Officer Wadsworth Investment Co., Inc. may continue to retain the services of the qualified individual consultants on an as-needed basis to ensure its compliance with regulatory requirements. Nothing in this paragraph shall preclude Wadsworth Investment Co., Inc. from designating William F. Wadsworth, Jr. to replace William F. Wadsworth, Sr. as the new President of Wadsworth Investment Co., Inc. if Wadsworth Investment Co., Inc. is able to demonstrate to the Commissioner that additional compliance personnel have been retained to overcome any deficiencies in the securities regulatory experience of William F. Wadsworth, Jr.” |
| 2. |
Paragraph 1.(b) of the February 7, 2012 Order shall be modified, retroactive to February 7, 2012, to add the following language at the end of the paragraph: “William F. Wadsworth, Sr. may continue to hold a minority ownership interest in Wadsworth Investment Co., Inc. as long as he is otherwise in compliance with the terms of this Order.” |
| 3. | Paragraph 5. of the February 7, 2012 Order is rescinded and replaced with the following provision, retroactive to February 7, 2012: “Pursuant to Section 36b-27(d) of the Act, that a FINE of Twenty Five Thousand Dollars ($25,000) be imposed against Wadsworth Investment Co., Inc., to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than forty-five (45) days from February 7, 2012. In addition, Wadsworth Investment Co., Inc. shall refund to its customers, on or before May 15, 2012, the approximately $52,000 in contingent deferred sales charges referenced in paragraph 142 of these Findings of Fact, Conclusions of Law and Order and provide written proof of payment to the Commissioner.” |
| 4. | Paragraph 6. of the February 7, 2012 Order is amended by deleting the word “and” at the end of the paragraph; |
| 5. | Paragraph 7. shall be renumbered as Paragraph 8. and the following new provision shall replace former Paragraph 7.: “Notwithstanding Paragraph 2. of this Order, nothing in this Order shall preclude William F. Wadsworth from reapplying for registration as a broker-dealer agent and/or as an investment adviser agent under the Act; provided that such reapplication shall be without prejudice to the Commissioner’s ability to deny such registration or impose such restrictions and conditions, including, without limitation, an interim suspension and/or heightened supervision, as may be necessary and appropriate in the public interest or for the protection of investors; and” |
| 6. | With the exception of the modifications described above, all other provisions of the Final Decision and Order shall remain in effect; |
| 7. | A copy of this Order Modifying Remedial Restrictions and Conditions shall be mailed forthwith to Wadsworth Investment Co., Inc. and to William F. Wadsworth, Sr.; and |
| 8. | This Order Modifying Remedial Restrictions and Conditions shall become final when entered. |
| So ordered at Hartford, Connecticut | ______/s/__________ | |
| this 10th day of April, 2012. | Howard F. Pitkin | |
| Banking Commissioner |
Administrative Orders and Settlements