| Securities and Business Investments Division | |
|
Securities Bulletin | |
| Vol. XIII No. 2 | Summer 1999 |
Features
- A Word from the Banking Commissioner
- Commissioner Clarifies 1994 Stance on Bank Platform Personnel as "Investment Adviser Agents"
- Top Ten Reasons Not to Attend Securities Forum '99
- Securities Forum Program Information
- Second Quarter Statistical Summaries
Enforcement Highlights:
- Ralph Lambiase, Division Director
- Cynthia Antanaitis, Assistant Director and Bulletin Editor
- Eric Wilder, Assistant Director
- Marge Kagan, Subscription Coordinator
- Cynthia Antanaitis, Assistant Director and Bulletin Editor
Contributors:
A WORD FROM THE BANKING COMMISSIONER
The Department of Banking has always supported legislative efforts at both the state and federal levels to reduce the regulatory burden on financial services firms. However, we have been very troubled by proposals put forth by the Securities Industry Association ("SIA") which we believe would be harmful to Connecticut investors. Congress is now considering SIA recommendations in drafting legislation, the Securities Markets Enhancement Act of 1999 ("SMEA"), purportedly to improve our securities markets.
One SIA proposal, currently removed from active consideration by the Senate Banking Committee, would have dismantled the current system of multiple state registrations for broker-dealer agents and created a "home state" licensing system. Agents who are registered with the National Association of Securities Dealers and with the state from which they conduct business, according to the SIA proposal, would not be subject to other states' review. Since, on average, more that 90% of the agents registered in a particular jurisdiction are from out-of-state, this would severely restrict the ability of states to protect their citizens.
As Connecticut investors trust broker-dealer agents to help them meet such important financial goals as investing for college, retirement and medical needs, we believe agents should be held to high professional and ethical standards. Yet under the SIA proposal, agents with histories of criminal conduct including attempted murder, assault, drug possession, theft and further offenses that would quickly disqualify other professionals from pursuing their vocation would become automatically licensed in Connecticut.
In response to the licensing proposal, the Securities Division conducted a study to show how easily applicants with extensive histories of disciplinary actions and criminal convictions can become registered to sell securities. The report, titled "Study of the Effect of Industry Hiring Practices and SRO Agent Licensing on Connecticut Investor Protection," documents a pattern by industry firms to overlook egregious agent conduct for the sake of commission dollars those agents would generate. The report has been provided to Congress and other parties and is available on the agency's Web site.
While it advocates easing licensing standards and would deny states the basic right to determine who can do business within their borders, the SIA also seeks to limit the ability of states to act against violators by restricting rescission remedies and enforcement actions, proposals that would further jeopardize Connecticut investors. We believe these proposals would inadvertently shield a small, unsavory segment of the industry from scrutiny and penalize the entire industry by eroding the confidence American investors have placed in our markets.
The department's eleventh annual Securities Forum conference is scheduled for Monday, October 25 at the Omni Hotel in New Haven, Connecticut. We've provided a tongue-in-cheek "Top 10 Reasons Not to Attend" the Forum in the Bulletin. Those interested in the conference should see the program and registration information contained in this issue or visit our web site.
John P. Burke
Banking Commissioner
AMENDMENT TO 6/30/94 POLICY STATEMENT RE RETAIL SALES BY
DEPOSITORY INSTITUTIONS OF MUTUAL FUNDS AND OTHER
NONDEPOSIT INVESTMENT PRODUCTS
| SUBJECT: |  |
STATUS OF DEPOSITORY INSTITUTION PLATFORM AND OTHER SUPPORT PERSONNEL AS "INVESTMENT ADVISER AGENTS UNDER THE CONNECTICUT UNIFORM SECURITIES ACT |
I. SUMMARY
Recent legislative changes to the definition of "investment adviser agent" in Section 36b-3(11) of the Connecticut Uniform Securities Act have prompted the Connecticut Banking Commissioner to reassess the department's June 30, 1994 Policy Statement Re Retail Sales by Depository Institutions of Mutual Funds and Other Nondeposit Investment Products (the "1994 Policy Statement") as that policy statement relates to platform and similar support personnel performing what might otherwise be considered "investment adviser agent" functions.
This update to the 1994 Policy Statement is limited to support personnel who are bona fide employees of the depository institutions and not registered or required to be registered as broker-dealer agents under the Connecticut Uniform Securities Act. Among other things, this update clarifies that the department would not be inclined to view referral activities by support personnel as triggering investment adviser agent registration where 1) the referral is only accompanied by a nominal referral fee of a fixed dollar amount per referral; 2) the fee is payable to the support person by the financial institution itself rather than by the investment adviser to whom the referral is directed; 3) the existence of the referral fee arrangement is clearly disclosed to each customer who is referred; 4) the investment adviser to whom the prospect is referred is registered under the Connecticut Uniform Securities Act or eligible for an exemption thereunder (e.g. as a Securities and Exchange Commission registered investment adviser); and 5) payment of the referral fee does not depend on whether the referral results in the customer actually engaging the adviser.
II. BACKGROUND
A. The 1994 Policy Statement
On June 30, 1994, the Banking Commissioner issued a revised policy statement entitled "Department of Banking Policy Statement Re Retail Sales by Depository Institutions of Mutual Funds and Other Nondeposit Investment Products" (the "1994 Policy Statement"). The 1994 Policy Statement followed a February 15, 1994 Interagency Statement by federal banking regulators providing needed guidelines on mutual fund and other investment related activity by banks and credit unions. Noting that marketplace and federal regulatory developments were changing, the Connecticut 1994 Policy Statement specifically contemplated that it would be interim in nature, and that future revisions might be warranted.
The 1994 Policy Statement focused on securities product sales conducted through a separate service corporation, subsidiary or affiliate of the financial institution or through an independent third party marketing organization ("TPM"). Among the issues addressed was whether representatives of the financial institution were required to register as "agents" of the participating broker-dealer under Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act. The 1994 Policy Statement divided these representatives into three groups: 1) those actually effecting securities transactions for customers; 2) platform personnel reviewing alternative products a customer might wish to purchase; and 3) bank tellers or other personnel referring a customer to one of the foregoing two groups.
The Policy Statement affirmed six functions, any one of which would trigger broker-dealer agent registration: 1) opening customer accounts and/or making suitability determinations regarding the purchase or sale of securities (other than merely collecting or verifying information for transmittal to and action by another person registered as an agent or a broker-dealer); 2) rendering investment advice or making investment recommendations in connection with the purchase or sale of securities; 3) soliciting orders to purchase or sell securities; 4) processing orders to purchase or sell securities; 5) regularly handling inquiries or engaging in the resolution of securities-related complaints; and 6) directly or indirectly supervising sales personnel or assuming responsibility for the day-to-day operation and supervision of any Connecticut place of business of a broker-dealer. The 1994 Policy Statement pointed out, however, that, where an individual merely performed clerical or ministerial functions, he or she would not be considered a statutory "agent", and that merely referring complaints and/or transmitting order forms or like information to a registered broker-dealer agent would be deemed "clerical or ministerial."
Referrals were likewise distinguished in the broker-dealer agent context. According to the 1994 Policy Statement, broker-dealer agent registration would not be triggered where the referral was unaccompanied by commentary or observations regarding the appropriateness or terms of a securities product or investment option. In a footnote, the policy statement added that given the breadth of the state's "investment adviser agent" definition, "a teller or other person who may receive a fee or other compensation for referring a customer to an investment adviser firm, without more, would fall within the statutory definition and ordinarily be required to be registered as an investment adviser agent of that firm." (Emphasis supplied) Thus, the 1994 Policy Statement treated referral arrangements differently, depending on whether the customer was directed to a broker-dealer or an investment adviser. Moreover, it did not elaborate on what circumstances would remove bank personnel making referrals from the definition of "investment adviser agent."
Since the date of the 1994 Policy Statement, financial institutions have forged more alliances with providers of financial planning and investment advisory services. In addition, enactment of the National Securities Markets Improvement Act of 1996 ("NSMIA") split the regulation of investment advisers between the states and the Securities and Exchange Commission (the "SEC") and circumscribed, in certain instances, the state regulation of advisory personnel. This change in regulatory and industry environment has prompted the department to re-evaluate its stance regarding the payment of referral fees to financial institution personnel directing customers to federal or state registered investment advisers.
B. Depository Institutions as Statutory "Investment Advisers"
Were a depository institution to provide securities investment advisory services directly rather than through an affiliate, service corporation, subsidiary or TPM, the question of investment adviser agent registration would not arise. Section 36b-6(c) of the Connecticut Uniform Securities Act states, in part, that: "No individual shall transact business as an investment adviser agent, within or from this state, unless he is registered as an investment adviser agent of the investment adviser for whom he acts in transacting such business." (Emphasis added) If the individual does not act on behalf of an "investment adviser" as statutorily defined, the obligation to register would not be triggered. Section 36b-3(10)(B) of the Act excludes from the Connecticut "investment adviser" definition "a bank and trust company, a national banking association, a savings bank, a savings and loan association, a federal savings and loan association, a credit union, a federal credit union or a trust company." In addition, NSMIA (codified at 15 U.S.C. Sec. 80b-3a(b)(1)) preempted state regulation of "any person - (A) that is registered under section 80b-3 of this title as an investment adviser, or that is a supervised person of such person, except that a State may license, register, or otherwise qualify any investment adviser representative who has a place of business located within that State; or (B) that is not registered under section 80b-3 of this title because that person is excepted from the definition of an investment adviser under section 80b-2(a)(11) of this title." Section 80b-2(a)(11)A) of the federal Investment Advisers Act of 1940 excepts from the federal "investment adviser" definition "a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) which is not an investment company." Section 80b-2(a)(2) of the Investment Advisers Act of 1940 defines "bank" to mean:
(A) a banking institution organized under the laws of the United States, (B) a member bank of the Federal Reserve System, (C) any other banking institution or trust company, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency, and which is supervised and examined by State or Federal authority having supervision over banks, and which is not operated for the purpose of evading the provisions of this subchapter, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph.
Except for the fact that the federal exclusion does not cover credit unions, the state and federal exclusions are very similar. Future Congressional developments may prompt the states and the SEC to reconsider these exclusions. However, under current law, in the unlikely event a depository institution opts to offer investment advisory services directly (rather than through an affiliate, service corporation or TPM), the exclusions would render investment adviser agent registration issues moot.
C. Recent Changes to the Connecticut Definition of "Investment Adviser Agent"
Section 36b-3(11)(A) of the Connecticut Uniform Securities Act, as amended by P.A. 97-220, defines the term "investment adviser agent" to include an individual, including an officer, partner or director of an investment adviser, employed, appointed or authorized, or associated with, an investment adviser 1) to "solicit business from any person for such investment adviser, within or from this state, and who receives compensation or other remuneration, directly or indirectly, for such solicitation" or 2) who "makes any recommendations or otherwise renders advice regarding securities to clients and who receives compensation or other remuneration, directly or indirectly, for such advisory services."
For SEC-regulated investment advisers exempt from Connecticut registration under subdivisions (1) and (2) of Section 36b-6 of the Act, Section 36b-3(11) excludes from the "investment adviser agent" definition individuals employed, appointed or authorized by, associated with or acting on behalf of such advisers who are "supervised persons" unless the "supervised person" meets certain criteria. The Connecticut definition of "supervised person" is identical to that contained in NSMIA, and the criteria for including certain "supervised persons" within the Connecticut "investment adviser agent" definition parallels that in SEC Rule 203A-3 under the Investment Advisers Act of 1940. Section 36b-3(11)(C)(iii) of the Connecticut Uniform Securities Act defines "supervised person" to mean "any partner, officer, director, or other person occupying a similar status or performing similar functions or employee of an exempt investment adviser, or other person who provides investment advice on behalf of such investment adviser and is subject to the supervision and control of such investment adviser." The depository institution personnel who are the subject of this policy statement would generally not be considered "supervised persons" of a third party adviser given their lack of employee, officer or director status, and the fact that they are not under the supervision and control of the adviser. Therefore, whether they must register as investment adviser agents will turn on whether they engage in compensated solicitation activity or render investment advice to clients for compensation.
III. Financial Institution Support Personnel as "Investment Adviser Agents"
A. Functions Performed by Financial Institution Support Personnel
As depository institutions augment the services offered to their customers, personnel performing customary depository roles are often called upon to answer customer questions regarding expanded services. Tellers, platform personnel, bank branch managers, loan officers and the like, for example, may all be put in the position of explaining financial institution services or otherwise referring customers to third parties for further assistance. This Policy Statement is limited to support personnel who are bona fide employees of the depository institutions and not registered or required to be registered as broker-dealer agents under the Connecticut Uniform Securities Act. For a description of those services that would trigger broker-dealer agent registration, see Page 2 of this Policy Statement. Where the third party is an investment adviser, and the support person receives a referral fee or other compensation linked to the service being offered, the support person's status as an "investment adviser agent" turns on 1) whether he or she is employed, appointed, authorized by or associated with" the third party investment adviser; and 2) whether, on behalf of the third party adviser, he or she engages in either compensated solicitation activity or compensated securities-related investment advice or recommendations to advisory clients.
B. Applying the "Investment Adviser Agent" Definition to Support Personnel
Significantly, the "investment adviser agent" definition is not limited to situations where there is a traditional employment relationship between the support person and the adviser or where the support person is an associated person of a third party broker-dealer/investment adviser. The definition also extends to instances where the support person is "authorized" to act for the adviser, whether directly, as in a contractual arrangement, or by implication. For example, a support person has implied authority to act for an investment adviser where the investment adviser is affiliated with the financial institution; where the person's conduct suggests that he or she is holding himself or herself out as a representative of the adviser; or where it is otherwise foreseeable that the support person would act for the benefit of the adviser.
The next question is whether the employment or authority extends to solicitation or the rendering of investment advice. Solicitation connotes a proactive, service-specific role in the adviser's marketing effort and carries with it an obligation to ensure that investment advice is what the particular customer really needs. Compensated solicitation activity would clearly require investment adviser agent registration. Solicitation should be contrasted with a general explanation of services offered by or through the financial institution where 1) the explanation is accompanied by referring the customer or prospect to the adviser itself for further information; and 2) no value judgment on the service or its appropriateness is made by the support person. From a public interest standpoint, referring customers directly to the adviser for further information has three advantages. First, it minimizes the financial institution's and the investment adviser's exposure to liability should the support person misrepresent or omit to state material information concerning the services. Second, done properly, it reinforces the separation of banking versus securities advisory functions and thus avoids public confusion. Finally, it advances customer service by educating the public on all products and services offered by or through the financial institution.
Of course, uncompensated referral or solicitation activity would not raise registration questions. Often, however, support personnel may be paid a "referral fee" for directing customers or prospects to an investment adviser. The department would not be inclined to view referral activities accompanied by a nominal referral fee of a fixed dollar amount per referral payable to the support person by the financial institution as triggering investment adviser agent registration where the existence of the referral fee arrangement is clearly disclosed to each customer who is referred and where the investment adviser to whom the prospect is referred is registered under the Connecticut Uniform Securities Act or eligible for an exemption thereunder (e.g. as a Securities and Exchange Commission registered investment adviser). However, a contrary result would follow where the compensation arrangement undercuts customer service and encourages support personnel to engage in actual solicitation. For example, support personnel receiving all-expense paid trips or other inappropriate incentives specifically designed to boost referrals would be deemed investment adviser agents in this instance. The same would hold true for other means of promoting sales over service such as making the payment of the referral fee contingent on the customer actually engaging the adviser, or adversely affecting the support person's employment evaluation based primarily on the number of referrals he or she generates. In addition, where the referral fee, whether nominal or not, is paid directly to the bank support person by the investment adviser and not under the auspices of the employing financial institution, the support person would have to register as an investment adviser agent of the third party adviser.
The definition of "investment adviser agent" in Section 36b-3(11) also is triggered where an individual makes recommendations or otherwise renders advice regarding securities to clients and receives compensation or other remuneration for those services. Clearly, if a support person is actively engaged in making securities recommendations or otherwise rendering securities advice to clients for compensation, regardless of how nominal, that person is an "investment adviser agent" and would have to register as such. Distributing literature or otherwise explaining institutional services without expressing any judgments on investments or their suitability to a client would not trigger registration under this prong of the definition.
This policy statement supersedes the department's prior position on this issue as reflected in the 1994 Policy Statement.
John P. Burke
Banking Commissioner
Date: May 5, 1999
TOP TEN EXCUSES NOT TO ATTEND
SECURITIES FORUM '99
#10. MY DOG ATE MY REGISTRATION FORM.
Nice try. Not only will we be doing a mass mailing of registration forms as Securities Forum nears, but you will be able to find important Forum information on the department's web site in September and even register at the door. So you can make as many extra copies of the registration materials as you (or Fido) need and not miss a compliance beat.
#9. I'M TOO BUSY.
While you're burning the midnight oil, your competitors will be mastering compliance tips and shortcuts to make their jobs easier - so they can take on more clients.
#8. I'D LIKE TO BRING MY ASSOCIATES BUT IT WOULD COST TOO MUCH.
The Department offers a discount for each additional guest you bring - so your whole compliance team can benefit.
#7. I GET HUNGER PANGS WATCHING THE PANELISTS SIP THEIR ICE WATER.
Lunch, coffee and refreshments will be included in the registration fee, so your energy levels will remain high and your mind sharp.
#6. I WILL BE OUT OF TOWN ON A PLANE TO TAHITI ON OCTOBER 25th.
According to the long-range weather outlook, a typhoon is scheduled to hit the South Pacific on October 25th. So while you're taking cover under a bamboo hut, your colleagues will be soaking up the radiance of a New England autumn at New Haven's Omni Hotel.
#5. I GET LOST WALKING TO MY CAR. WHERE IS NEW HAVEN ANYWAY?
Easy to follow directions will be included with the registration materials. New Haven is centrally located and accessible by car, rail, bus or whatever means of transportation you happen to bump into.
#4. I LIKE TO AVOID REGULATORS.
Hey, so do a lot of other people. But last year's Forum brought in over 300 attendees, so it would be very easy for you to blend in with the crowd.
#3. I KNOW ALL THERE IS TO KNOW. IN FACT, I'M AMENDING MY STATE AND FEDERAL FORM ADV RIGHT NOW.
Looks like someone missed the past two Forums. Had you gone, you would have discovered that you no longer have to register with both the SEC and Connecticut. (And you wonder why the SEC sent you a cancellation notice?)
#2. I'D LIKE TO GO, BUT I CAN ONLY STAY FOR PART OF THE DAY.
The Forum's agenda will be broken down into several panels and a general session - so you can pick and choose presentations to suit your interests and your schedule. And some panels will even be repeated.
#1. I PREFER MORE EXCITING PURSUITS - LIKE BUNGEE JUMPING.
For some registrants, going through a books and records examination is exactly like bungee jumping. And since the Forum will discuss examinations, what better way is there to uncover those buried memories and recapture the thrill?
SECURITIES FORUM ’99
Monday, October 25, 1999
Omni Hotel, New Haven, CT
Securities Forum ’99 is an exceptional opportunity to track current and evolving regulatory trends. We’re honored this year to have as our keynote speaker Mary Schapiro, President of NASDR. The conference features an outstanding series of panels, with repeated morning and afternoon sessions. Highlights include:
Investment Adviser Issues
Has federal legislation made state books and records examinations more efficient? Will Connecticut require the new Series 65 Competency Examination for all investment adviser agents? Will we see a national computerized database for advisory agents? Explore the long-range outlook for investment advisers.
| Moderator: Harold B. Finn, III Chairperson, Securities Advisory Council Finn, Dixon and Herling |
Cesar H. Garcia Associate Examiner Securities Division |
| Salvatore Cannata Principal Examiner Securities Division |
U.S. Securities & Exchange Commission To be announced |
Broker-dealer Licensing and Examination Issues
As Web CRD enters its second month, what benefits and "bugs" have industry and regulators found? Has a drive towards revised federal books and records requirements affected the Division’s examination program? How are regulators responding to Internet issues such as agent postings and expanded trading? From the state perspective to the voice of NASDR, this panel has it all.
| Moderator: Stephen H. Solomson Securities Advisory Council O’Connell, Flaherty & Attmore |
Andrew M Schatz Securities Advisory Council Schatz & Nobel |
| John A. Horne Associate Examiner Securities Division |
Eric J. Wilder Assistant Director Securities Division |
| Fred McDonald Associate Director - Boston District NASD Regulation, Inc. |
Keys to an Effective Supervisory Program
As brokerage operations become more decentralized in the electronic age, supervisory challenges multiply. Unlock the secrets to building or bolstering a supervisory program that prevents sales practices abuses and withstands regulatory scrutiny.
| Moderator: Rick Slavin Securities Advisory Council Cohen & Wolf |
Sidney A. Igdalsky Supervising Examiner Securities Division |
| Cheryl Cook-Snyder General Partner - Compliance Edward Jones |
Herbert F. Janick, III Senior VP and General Counsel PaineWebber Incorporated |
The Internet: Supervisory Safeguards and Dangers
No longer just an advertising vehicle, the Internet is becoming a foundation for electronic commerce. Discover how web sites, e-mail and bulletin boards have affected securities offerings and customer relations. What supervisory obligations do broker-dealers and investment advisers have in this environment?
| Moderator: William H. Cuddy Securities Advisory Council Day, Berry & Howard |
Philip L. Dukes Administrative Attorney Department of Banking |
| Mary Curran General Counsel Discover Brokerage Direct |
Pamela M. Kenny First VP and Associate General Counsel Prudential Securities Inc. |
Capital Formation Issues
This panel offers practical tips on raising capital in small to mid-size issuer transactions involving IPOs, direct placements, assisted accredited investor deals, ACE-NET and the Internet. An exclusive segment targets business opportunity issues facing the entrepreneur not quite ready to "go it alone."
| Moderator: Willard F. Pinney, Jr. Securities Advisory Council Murtha, Cullina, Richter and Pinney LLP |
Jeffrey S. Goodson Principal Examiner Securities Division |
| Cynthia Antanaitis Assistant Director Securities Division |
Frank Morse Partner, Carter Morse & Company President, Connecticut Venture Group |
| Donna L. Brooks Securities Advisory Council Shipman & Goodwin LLP |
Regulatory Issues
A revolution in technology and financial services reform lies at the doorstep of the next century. Hear an up-to-the-minute report on legislation, criminal law enforcement, trading practices and more from the perspective of state and federal regulators and SROs. Expect the unexpected during this candid workshop.
| Moderator: Ralph A. Lambiase Director Securities Division |
Willis H. Riccio Vice President and Director Boston District Office NASD Regulation, Inc. |
| John Blawie Senior Assistant State's Attorney Chief State's Attorney's Office |
U.S. Securities & Exchange Commission To be announced |
| Salvatore Pallante Senior Vice President New York Stock Exchange |
Visit our web site for a complete conference program and watch your mail for a conference flyer. You can also reserve your place early by using the "early bird" registration form.
Registration Form
Monday, October 25, 1999
Omni Hotel, New Haven, CT
FIRM: _____________________________________________
STREET ADDRESS: __________________________________
CITY: _________________ STATE: _______ ZIP CODE: _____
I WILL ATTEND THE FOLLOWING BREAK-OUT PANELS:
(Please check appropriate panels)
First Morning Session: (9:00 to 10:15 a.m.)
B. Broker-dealer Licensing and Examination Issues _____
C. Keys to an Effective Supervisory Program _____
Second Morning Session: (10:30 to 11:45 a.m.)
E. Broker-dealer Licensing and Examination Issues (repeat) _____
F. The Internet: Supervisory Safeguards and Dangers _____
Luncheon: (12:00 noon to 1:30 p.m.)
Keynote: Mary Schapiro, President, NASDR
First Afternoon Session: (1:45 to 3:00 p.m.)
H. The Internet: Supervisory Safeguards and Dangers (repeat) _____
I. Capital Formation Issues _____
Second Afternoon Session: (3:15 to 4:30 p.m.)
ADDITIONAL ASSOCIATES ATTENDING:
TOTAL ENCLOSED: $ ______
$65 per person or $60 per person with 2 or more registrants per firm.
Make checks payable to "Murtha, Cullina, Richter and Pinney LLP" and forward to: Murtha, Cullina, Richter and Pinney LLP, c/o Debra Sciarra, CityPlace I, 185 Asylum St., Hartford, CT 06103-3469
Enforcement Highlights
LRT Enterprises, LLC - Investment Adviser Registration Denied
Ronald F.W. Ceccherini - Order to Cease and Desist Becomes Permanent
On June 14, 1999, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order (Docket No. ND-CD-99-5260-S) denying the investment adviser registration of LRT Enterprises, LLC of 230 Forest Ridge Road, Waterbury, Connecticut. The Commissioner's action had been preceded by an April 22, 1999 Notice of Intent to Deny registration with respect to the firm and an April 22, 1999 Order to Cease and Desist against Ronald .F.W. Ceccherini, the firm's principal. Ceccherini, who was formerly registered as a sole proprietor investment adviser under the Connecticut Uniform Securities Act, acted as the manager of LRT Enterprises, LLC which succeeded to his advisory business.
The Order denying registration found that LRT Enterprises, LLC filed a materially incomplete registration; failed to remit an application fee; failed to register an investment adviser agent; and did not fulfill its duty to file a correcting amendment to its registration. The matter was uncontested by the firm.
Also uncontested was the Order to Cease and Desist against Ronald Ceccherini which became permanent on May 27, 1999. That Order to Cease and Desist had alleged that, while registered as an investment adviser, Ceccherini did not honor division requests to correct inaccuracies in his registration; failed to file financial reports or maintain required books and records; and did not keep his records open to reasonable examination by the Division.
Mark Honigsfeld- Order to Cease and Desist Entered
On May 17, 1999, the Banking Commissioner entered an Order to Cease and Desist, Notice of Right to Hearing and Notice of Intent to Fine (Docket No. CF-99-5359-S) with respect to Mark Honigsfeld of 969 East End, Woodmere, New York. Honigsfeld was the chairman, chief executive officer and secretary of Compu-DAWN, Inc., a entity in whose stock the brokerage firm of Morgan Taylor and Associates, Inc. (f/k/a E.C. Capital, Inc.) made a market. The Commissioner's action followed an investigation by the Securities and Business Investments Division under the Connecticut Uniform Securities Act. That investigation uncovered evidence that from at least April, 1998 to November, 1998, Honigsfeld, using the name "Valuefind", posted messages on an Internet message board dedicated exclusively to Compu-DAWN stock and failed to disclose his insider status with the corporation. The Order to Cease and Desist and Notice of Intent to Fine further alleged that the messages were misleading in that they created the impression that Honigsfeld was an individual investor; and that, under the leadership of Honigsfeld, investors were sure to make money. The Order to Cease and Desist and Notice of Intent to Fine also claimed that Honigsfeld, posing as "Valuefind", conversed on the message boards with a Morgan Taylor agent using the alias "DrAlpine"; that the identities of both parties were not disclosed; and that "Valuefind" and "DrAlpine" used the message boards in a misleading manner by strongly implying that adding Mark Honigsfeld to Compu-DAWN's management would increase the company's share value. The respondent was afforded an opportunity to request a hearing on both the Order to Cease and Desist and the Notice of Intent to Fine.
Great American Financial Network, Inc. (CRD # 14108) - Broker-dealer Registration Revoked
On April 26, 1999, the Banking Commissioner issued Findings of Fact, Conclusions of Law and an Order (Docket No. RC-99-5216-S) revoking the broker-dealer registration of Great American Financial Network, Inc. The Commissioner found that the firm had employed unregistered agents; offered and sold unregistered, non-exempt securities of Great America Hotels & Resorts, Inc.; and failed to establish, enforce and maintain an adequate supervisory system. The Commissioner also found that the firm engaged in dishonest or unethical practices by 1) sending customers confirmations to make the customers accept transactions to which they had not agreed; and 2) marking the related order tickets as unsolicited. Great American Financial Network, Inc. did not appear or contest the Commissioner's action.
Mark Jay Sitzer (CRD # 1488396) - Notice of Intent to Deny Registration as an Agent Issued
On April 15, 1999, the Banking Commissioner issued a Notice of Intent to Deny the registration of Mark Jay Sitzer as a broker-dealer agent of FAS Wealth Management Systems, Inc. under the Connecticut Uniform Securities Act (Docket No. ND-99-5305-S). The Commissioner's action was based on allegations that, on March 31, 1998, the New York Stock Exchange fined Sitzer $20,000, censured him, and barred him from membership, approved person status and from employment or association in any capacity with any member or member organization for one month. The Notice of Intent to Deny further alleged that the NYSE sanction had not been stayed or overturned by appeal or otherwise. Respondent Sitzer was afforded an opportunity to request a hearing on the Notice of Intent to Deny registration. On April 20, 1999, however, respondent withdrew his application, thus rendering the matter moot.
Boutros Fouad Mansour (CRD # 2426615) Ordered to Cease and Desist from Regulatory Violations
On April 15, 1999, the Banking Commissioner issued an Order to Cease and Desist and Notice of Right to Hearing (Docket No. CD-99-5340-S) against Boutros Fouad Mansour of Manchester, Connecticut. Respondent Mansour was an ex-broker-dealer agent of Securities America, Inc. The Order to Cease and Desist alleged that, from at least March 1997, Respondent Mansour sold to at least five Connecticut purchasers unregistered arbitrage or hedge investments for $51,470 in the aggregate, and guaranteed purchasers that their funds would be returned within 30 days upon request. The Order to Cease and Desist further claimed that Respondent Mansour violated the antifraud provisions of the Connecticut Uniform Securities Act since he did not, in actuality, purchase any investments for the Connecticut purchasers nor did he return any of the sums invested with him. The Order to Cease and Desist also alleged that Respondent violated Section 36b-31-6e of the Regulations under the Act by engaging in private securities transactions without notice to Securities America, Inc. with whom he was associated at the time. Since the matter was uncontested, the Order to Cease and Desist became permanent on June 29, 1999.
Community Network Association, Inc. (CRD # 47038) - Stop Order Entered Denying Effectiveness to Business Opportunity Registration; Order to Cease and Desist Becomes Permanent
On April 5, 1999, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order denying the business opportunity registration of Community Network Association, Inc. of 3653 Flakesmill Road, Suite 204, Decatur, Georgia (Docket No. CD-99-732-B). The corporation was in the business of selling a network marketing system and inventory enabling purchaser-investors to start a business marketing pre-paid telephone calling cards. In denying the business opportunity registration, the Commissioner determined that from at least January 1997, sales of the network marketing system to at least 340 Connecticut purchasers were made absent registration under the Connecticut Business Opportunity Investment Act. The Commissioner also found that, when the company actually did file for registration, its application was materially incomplete and therefore a basis existed for denying effectiveness to the registration. Respondent Community Network Association, Inc. did not contest the matter.
Similarly uncontested was a February 11, 1999 Order to Cease and Desist against the corporation based on the same set of facts. That Order to Cease and Desist became permanent on March 3, 1999.
American Express Financial Advisors, Inc. (CRD # 6363) Assessed $35,000
On June 30, 1999, the Banking Commissioner entered a Consent Order (File No. 99-5118-S) with respect to American Express Financial Advisors, Inc., a broker-dealer and investment adviser having its principal office at IDS Tower, Minneapolis, Minnesota. The Commissioner's action followed a Securities and Business Investments Division investigation which alleged that the firm 1) employed an unregistered investment adviser agent from 1992 to March 1999; 2) failed to supervise Vincent M. Giaquinto who, from approximately December 1989 to February 1998, attempted to misappropriate customer funds earmarked for investment in mutual funds and insurance products by creating fictitious customer statements; and 3) failed to oversee the activities of two other agents who engaged in private securities transactions involving sales of North American Broadcasting securities.
Acknowledging that the firm had repaid affected Connecticut investors, the Consent Order required that American Express Financial Advisors, Inc. remit $35,000 to the department, $15,000 of which constituted an administrative fine, $10,000 of which would be allocated to the department's Investor Protection Fund; and $10,000 of which represented reimbursement for agency investigative costs. The Consent Order also required that the firm refrain from engaging in violative conduct; submit quarterly reports for two years concerning any securities-related complaints, actions or proceedings involving Connecticut residents; and conduct a review of its internal supervisory and compliance procedures.
United American Securities, Inc. a/k/a UAS Asset Management (CRD # 21274) Fined $2,500; Assessed an Additional $1,000 for Costs
On June 23, 1999, the Banking Commissioner entered into a Stipulation and Agreement (File No. ST-99-5378-S) with United American Securities, Inc., an investment adviser regulated by the Securities and Exchange Commission. The firm, which is also registered as a broker-dealer under the Connecticut Uniform Securities Act, maintains its principal office at 441 Lexington Avenue, Suite 806, New York, New York. The Stipulation and Agreement followed a Securities and Business Investments Division investigation which revealed indications that, commencing on or about February 11, 1998, the firm employed one Roy J. Makowsky as an investment adviser agent without registering Makowsky in that capacity. Pursuant to the Stipulation and Agreement, the firm agreed to 1) review, revise and implement enhanced supervisory and compliance procedures; 2) refrain from engaging in violative conduct; and 3) pay $3,500 to the department, $2,500 of which would constitute an administrative fine and $1,000 of which would represent reimbursement for agency investigative costs.
Primex a/k/a Primex Prime Electronic Execution, Inc. (CRD # 29394) Fined $25,000; Ordered to Pay Restitution to Defrauded Clients
On June 18, 1999, the Banking Commissioner entered a Consent Order (File No. CO-98-4037-S) with respect to Primex a/k/a Primex Prime Electronic Execution, Inc., an applicant for broker-dealer registration having its principal office at 150 North Michigan Avenue, Suite 690, Chicago, Illinois. The Commissioner's action was an outgrowth of a Securities and Business Investments Division investigation under the Connecticut Uniform Securities Act. That investigation uncovered evidence that, from at least September, 1996 through August, 1997, the firm 1) transacted business as a broker-dealer while unregistered; 2) employed James A. Pabilonia, Sr. (CRD Number 839841) as an agent while Pabilonia was unregistered; 3) transacted business from an unregistered branch office in Willimantic, Connecticut; 4) filed a misleading statement concerning its Connecticut broker-dealer activities; and 5) failed to establish, enforce and maintain an adequate supervisory system.
The Consent Order 1) directed the firm to cease and desist from regulatory violations; 2) mandated that, by August 15, 1999, the firm provide restitution to investors defrauded by James Pabilonia; 3) fined the firm $25,000; and 4) required that the firm implement revised supervisory procedures designed to improve regulatory compliance. The Consent Order also provided that a failure to abide by its terms would result in the immediate revocation of the firm's broker-dealer registration and the immediate imposition of a $25,000 fine.
Ralph Richard Everett d/b/a Everett Financial Group, Inc. (CRD # 1385324) Fined $25,000, Assessed an Additional $5,000 for Costs
On June 7, 1999, the Banking Commissioner entered a Consent Order (File No. CO-99-4083-S) with respect to Ralph Richard Everett, a registered investment adviser under the Connecticut Uniform Securities Act and a registered broker-dealer agent of FFP Securities, Inc. The Commissioner's action followed a Securities and Business Investments Division investigation that uncovered evidence that Everett recommended and effected the purchase or sale of limited partnerships, real estate investment trusts and variable annuities without regard to whether such investments were suitable for customers.
Acknowledging that Everett had extended rescission offers to affected Connecticut residents, the Consent Order fined Everett $25,000, required that he reimburse the agency $5,000 for investigative costs and directed him to cease and desist from regulatory violations. Except for liquidating transactions for existing customers, Everett also was required to restrict his securities business to the purchase, sale and redemption of investment company securities; governmental securities; exchange-listed options; and securities listed on the New York Stock Exchange, the American Stock Exchange and the National Market System of NASDAQ. Other Consent Order provisions included a seven year prohibition on acting in a supervisory capacity for any broker-dealer or investment adviser transacting business in Connecticut; a mandate that Everett consult with securities legal counsel at least once per calendar quarter with respect to his securities-related activities; a requirement that Everett complete the Regulatory Element of the Securities Industry Continuing Education Program; a directive to report to the agency quarterly for two years concerning any securities-related complaints, actions or proceedings; and an obligation to furnish existing advisory clients with a copy of the Consent Order. The Consent Order also contained a proviso that ongoing investor liquidity problems with limited partnership, annuity and/or REIT investments would require Everett to provide ongoing status reports to the department until the customer concerns were resolved.
Jeffrey R. Epstein (CRD # 819226) Fined; Connecticut Securities Business Restricted
On May 25, 1999, the Banking Commissioner entered a Consent Order (Docket No. CDD-99-5000-S) with respect to Jeffrey R. Epstein, an applicant for registration as a broker-dealer agent of Raymond James & Associates, Inc. Epstein had been the subject of a March 5, 1999 Order to Cease and Desist and Notice of Intent to Deny Registration as an Agent (Docket No. CDD-99-5000-S) issued by the department. The Order to Cease and Desist and Notice of Intent to Deny Registration had alleged that Epstein, then a broker-dealer agent of A.G. Edwards & Sons, Inc., engaged in private securities transactions ("selling away") without appropriate notice to his employing firm in violation of Section 36b-31-6(e) of the Regulations under the Connecticut Uniform Securities Act. Also named in the Order to Cease and Desist was the issuer of the securities, Empire Capital Corporation of 1055 Washington Boulevard, Suite 8A, Stamford, Connecticut. The Consent Order vacated the Notice of Intent to Deny Registration as Agent and the Order to Cease and Desist which had been issued against Epstein.
The Consent Order directed Epstein to pay $6,500 to the agency, $5,000 of which constituted an administrative fine, $1,000 of which represented reimbursement for department investigative costs and $500 of which would be allocated to the agency's Investor Education Fund. The Consent Order also required that, for two years, Epstein restrict his Connecticut securities business to federally-regulated investment company securities; government securities; exchange-listed options; and securities listed on the New York Stock Exchange, the American Stock Exchange and the National Market System of NASDAQ. In addition, the Consent Order directed Epstein to refrain from violative conduct.
EGS Securities Corporation (CRD # 28347) Assessed $6,500 for Unregistered Branch Office Activity
On May 19, 1999, the Banking Commissioner entered a Consent Order (File No. CO-99-5347-S) with respect to EGS Securities Corporation, a Connecticut-registered broker-dealer having its principal office at 350 Park Avenue, 11th Floor, New York, New York. The Consent Order followed a Securities and Business Investments Division investigation which revealed indications that, from at least 1991 through 1998, the firm had transacted business from a Connecticut location without registering that site as a branch office under the Connecticut Uniform Securities Act.
The Consent Order directed the firm to implement revised supervisory and compliance procedures designed to prevent and detect regulatory violations. In addition, the Consent Order required that the firm submit a quarterly report for two years describing the initiation and outcome of any securities-related complaints, actions or proceedings involving Connecticut residents. Finally, the Consent Order required that the firm pay $6,500 to the department, $5,000 of which constituted an administrative fine; $1,000 of which represented reimbursement for agency investigative costs; and $500 of which would be allocated to the agency's Investor Education Fund in recognition of EGS' common interest in ensuring that investors become knowledgeable on all aspects of securities transactions and securities regulation.
Charles Schwab & Co., Inc. (CRD # 5393) Assessed $100,000 for Supervisory Deficiencies
On May 13, 1999, the Banking Commissioner entered a Consent Order (Docket No. CO-99-5303-S) with respect to Charles Schwab & Co., Inc., a broker-dealer registered under the Connecticut Uniform Securities Act. The firm maintains its principal office at 101 Montgomery Street, San Francisco, California. The Consent Order was predicated on allegations that the firm failed to implement supervisory procedures relating to the withdrawal of funds from customer accounts for the purpose of paying investment advisory fees to an independent investment adviser. The adviser directing the withdrawal of excessive fees purportedly did so without his clients' permission or approval.
The Consent Order acknowledged that the firm had compensated affected Connecticut residents $77,375 in the aggregate. In addition, the Consent Order required that the firm, with legal assistance, review its supervisory and compliance procedures relating to withdrawals of fee payments to third party advisers; prepare a report on those procedures; and submit a copy of the report and an implementational timetable to the Division Director for review. The Consent Order also required that the firm pay $100,000 to the agency, $75,000 of which constituted an administrative penalty; $15,000 of which represented reimbursement for division investigative costs; and $10,000 of which would be allocated to the department's Investor Education Fund. Finally, the Consent Order provided that the firm pay the cost, not to exceed $5,000, of one or more examinations to be conducted within twenty-four months.
Waddell & Reed, Inc. (CRD # 866) Assessed $15,000 for Failure to Supervise
On May 12, 1999, the Banking Commissioner entered into a Stipulation and Agreement (File No. ST-99-2948-S) with Waddell & Reed, Inc., a broker-dealer registered under the Connecticut Uniform Securities Act and having its principal office at 6300 Lamar Avenue, Shawnee Mission, Kansas. The Commissioner alleged that the firm exercised insufficient supervision over David Andrew Stevenson (CRD number 1335836), an agent who was jailed for securities fraud and larceny on December 16, 1997 following a February 14, 1997 permanent bar by the agency. Stevenson had purportedly misappropriated over $2 million in customer funds and redeemed customer mutual fund holdings without customer consent.
The Stipulation and Agreement acknowledged that Waddell & Reed Inc. had made internal changes to its compliance system; voluntarily paid over $2 million to Connecticut investors; and cooperated with the department in its investigation of the matter. Pursuant to the Stipulation and Agreement, the firm agreed to conduct an examination prior to December 31, 1999 of all Connecticut branch offices and submit a written report of the results to the Division Director within 30 days following completion of the examination. The firm also agreed to pay $15,000 to the department, $5,000 of which represented reimbursement for the division's investigative costs and $10,000 of which would be allocated to the agency's Investor Education Fund. Finally, the firm agreed to provide quarterly reports to the division for two years concerning any complaints, actions or proceedings involving Connecticut residents.
U.S. Securities & Futures Corp. (CRD # 36045) Fined $15,000
On May 10, 1999, the Banking Commissioner entered a Consent Order (File No. CO-98-5109-S) with respect to U.S. Securities & Futures Corp., a broker-dealer registered under the Connecticut Uniform Securities Act and having its principal office at 100 Wall Street, 11th Floor, New York, New York. The Commissioner's action followed a Securities and Business Investments Division investigation which revealed indications that, in April, 1997, the firm 1) employed one Christopher Ray as an unregistered agent; 2) misrepresented customer account documentation to reflect John Hing, the firm's president, as the agent maintaining the accounts rather than Christopher Ray; 3) executed unauthorized transactions for at least three Connecticut residents; and 4) failed to establish, enforce and maintain an adequate supervisory system.
Acknowledging that the firm had refunded monies to two Connecticut clients, the Commissioner fined the firm $15,000 and ordered it to cease and desist from regulatory violations. In addition, the Consent Order required that the firm 1) retain a consultant to review the firm's supervisory and compliance procedures and submit a written report to the agency; 2) resubmit the consultant's report without question within 24 hours following an agency request or be subject to a summary suspension of its broker-dealer registration; 3) limit trading on behalf of non-accredited investors in Connecticut to exchange-listed securities and NASDAQ-NMS securities; 4) submit a quarterly report to the Securities and Business Investments Division indicating that the firm had verified the "accredited investor" status of those Connecticut customers who were trading in securities that were neither exchange listed nor designated as NASDAQ-NMS securities; 5) refrain from offering or selling in Connecticut any over-the-counter securities not approved for trading on NASDAQ; 6) ensure that John Hing completed the Regulatory Element of the Securities Industry Continuing Education Program within 60 days; and 7) for two years, reimburse the department up to $2,500 for the costs of any examinations of the firm's offices during that period. The Consent Order also provided that a failure to abide by its terms would result in the immediate revocation of the firm's broker-dealer registration and the immediate imposition of a $15,000 fine.
Reid A. Matthews Barred for 10 Years
On April 22, 1999, the Banking Commissioner entered a Consent Order (Docket No. CO-99-5143-S) with respect to Reid A. Matthews. The Commissioner's action followed a Securities and Business Investments Division investigation which uncovered evidence that from approximately January 1998 through May 1998, Matthews had offered and sold unregistered non-exempt Certificates of Deposit of Royal Meridian International Bank, a Massachusetts based entity purportedly operated as a ponzi scheme. At the time, Matthews was not registered as an agent of issuer or as a broker-dealer agent under the Connecticut Uniform Securities Act.
The Consent Order barred Matthews for 10 years from acting as a broker-dealer agent, an agent of issuer, a broker-dealer, an investment adviser or a compensated finder and from splitting commissions or receiving referral fees in connection with the recommendation, sale or purchase of securities. The Consent Order also directed Matthews to cease and desist from regulatory violations and fined him $2,000.
Gateway Asset Management Co., Inc. and Robert Benedict Davies (CRD # 2767953)
On April 22, 1999, the Banking Commissioner entered into a Stipulation and Agreement (File No. ST-99-5333-S) with Gateway Asset Management Co., Inc., a New Canaan, Connecticut-based investment adviser regulated by the Securities and Exchange Commission, and Robert Benedict Davies, an applicant for investment adviser registration under the Connecticut Uniform Securities Act. The Stipulation and Agreement was precipitated by allegations that Davies had rendered services for Gateway Asset Management Co., Inc. without being registered as an investment adviser agent of the firm.
Pursuant to the Stipulation and Agreement, Gateway Asset Management Co., Inc. and Davies agreed to refrain from engaging in violative conduct. Gateway Asset Management Co., Inc. also agreed to take measures to ensure compliance with state investment adviser agent registration requirements and to pay a $1,000 fine. Davies was assessed $500 as a monetary penalty.
Paul Joseph Zanoni - Consent Order Conditioning Registration as an Investment Adviser Issued
On April 5, 1999, the Banking Commissioner issued a Consent Order (File No. CO-99-5335-S) under the Connecticut Uniform Securities Act conditioning the registration of Paul Joseph Zanoni as an investment adviser. Paul Joseph Zanoni maintains an office at 55 Highland Street, Wethersfield, Connecticut. The Consent Order was predicated on deficiencies in securities-related experience and training.
Pursuant to the Consent Order, Paul Zanoni agreed to 1) refrain from having custody of client funds or securities for two years; 2) for two years, refrain from exercising discretionary trading authority or control over client funds or securities (other than funds or securities of his immediate family) unless prior written approval from the Division Director were obtained; 3) for two years, advise clients (other than members of his immediate family) exclusively on securities listed on the New York Stock Exchange, the American Stock Exchange and/or the National Market System of NASDAQ; corporate debt securities; municipal securities; securities issued by investment companies subject to regulation under the Investment Company Act of 1940; United States government securities and insurance products subject to regulation by the Connecticut Insurance Commissioner; 4) absent written permission from the Division Director, refrain from sharing in commissions or other remuneration earned by any broker-dealer or any agent executing securities transactions as a result of recommendations made by Paul Zanoni; 5) for two years, refrain from acting as a finder for compensation, splitting commissions or receiving referral fees in conjunction with the offer, sale or purchase of securities;6) for two years, report to the division on a quarterly basis concerning any securities-related complaints, actions or proceedings initiated against his advisory business; and 7) pass the Series 65 examination within 60 days.
Also on April 5, 1999, Paul Joseph Zanoni became registered as an investment adviser under the Connecticut Uniform Securities Act.
STATISTICAL SUMMARY
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year to Date |
|---|---|---|---|---|
| Securities Registrations by Coordination | ||||
| Initial Filings Received | 28 | 35 | 63 | |
| Renewal Filings Received | 8 | 9 | 17 | |
| Securities Registrations by Qualification | ||||
| Initial Filings Received | 0 | 3 | 3 | |
| Renewal Filings Received | 0 | 0 | 0 | |
| Post-Sale Filings Received | 0 | 0 | 0 | |
| Investment Company Notice Filings | ||||
| Initial open-end received | 177 | 176 | 353 | |
| Renewal open-end received | 111 | 10 | 121 | |
| Unit investment trusts received | 169 | 202 | 371 | |
| Renewal UIT received | 11 | 1 | 12 | |
| Initial closed-end received | 5 | 1 | 6 | |
| Renewal closed end received | 5 | 0 | 5 | |
| Exemptions and Notices | ||||
| Private Placement Filings | 487 | 530 | 1,017 | |
| Other Exemption Notices | 5 | 6 | 11 | |
| Examinations | ||||
| Broker-dealers | 56 | 37 | 93 | |
| Investment Advisers | 3 | 27 | 30 |
|
1st |
2nd |
3rd |
4th Quarter |
Year |
|---|---|---|---|---|
| Broker-Dealer Firms | ||||
| Initial Registrations Received | 73 | 108 | 181 | |
| Successor Registrations Received | 0 | 0 | 0 | |
| Renewal Registrations Received | 2,183 | 0 | 2,183 | |
| Broker-dealers registered 6/30/99 | 2,387 | |||
| Broker-Dealer Agents | ||||
| Initial Registrations Received | 10,836 | 9,056 | 19,892 | |
| Mass Transfers Received | 454 | 994 | 1,448 | |
| Renewal Registrations Processed | 89,127 | 0 | 89,127 | |
| Broker-dealer Agents Registered June 30, 1999 | 105,775 | |||
| Broker-Dealer Branch Offices | ||||
| Registrations Received | 216 | 130 | 346 | |
| Branch Offices Registered 6/30/99 | 1,498 | |||
| Investment Adviser Firms | ||||
| Initial Registrations Received | 14 | 12 | 26 | |
| Successor Registrations Received | 1 | 1 | 2 | |
| Renewal Registrations Processed | 121 | 2 | 123 | |
| Investment Advisers Registered 6/30/99 | 409 | |||
| SEC Registered Adviser Notices Received | 44 | 35 | 79 | |
| SEC Registered Adviser Notices Renewed | 88 | 0 | 88 | |
| SEC Registered Advisers Filing Notice 6/30/99 | 890 | |||
| Investment Adviser Agents | ||||
| Initial Registrations Received | 217 | 241 | 458 | |
| Mass Transfers Received | 1 | 0 | 1 | |
| Renewal Registrations Processed | 553 | 33 | 586 | |
| Investment Adviser Agents Registered 6/30/99 | 4,109 | |||
| Investment Adviser Branch Offices | ||||
| Registrations Received | 29 | 54 | 83 | |
| Branch Offices Registered 6/30/99 | 525 | |||
| SEC Adviser Branch Notices Received | 14 | 29 | 43 | |
| SEC Advisers Filing Branch Notice 6/30/99 | 148 | |||
| Agents of Issuer | ||||
| Initial Registrations Received | 12 | 10 | 22 | |
| Renewal Registrations Received | 1 | 0 | 1 | |
| Agents of Issuer Registered 6/30/99 | 166 |
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year to Date | |
|---|---|---|---|---|---|
| Securities Investigations | |||||
| Opened | 51 | 77 | 128 | ||
| Closed | 41 | 74 | 115 | ||
| Ongoing as of 6/30/99 | 97 | ||||
| Subpoenas issued | 9 | 6 | 15 | ||
| Cases referred from Attorney General | 2 | 2 | 4 | ||
| Cases referred from other agencies | 2 | 2 | 2 | ||
| SECURITIES ENFORCEMENT | |||||
| Administrative Actions | |||||
| Notices of Intent to Deny (Licensing) | 2 | 2 | 4 | ||
| Notices of Intent to Suspend (Licensing) | 0 | 0 | 0 | ||
| Notices of Intent to Revoke (Licensing) | 1 | 0 | 1 | ||
| Denial Orders (Licensing) | 3 | 1 | 4 | ||
| Suspension Orders (Licensing) | 0 | 0 | 0 | ||
| Revocation Orders (Licensing) | 2 | 1 | 3 | ||
| Notices of Intent to Fine | 0 | 1 | 1 | ||
| Orders Imposing Fine | 0 | 0 | 0 | ||
| Cease and Desist Orders | 6 | 3 | 9 | ||
| Notices of Intent to Issue Stop Order | 0 | 0 | 0 | ||
| Stop Orders | 0 | 0 | 0 | ||
| Vacating Orders | 0 | 1 | 1 | ||
| Settlements | |||||
| Consent Orders | 9 | 8 | 17 | ||
| Stipulation and Agreements | 0 | 4 | 4 | ||
| Monetary Relief | |||||
| Monetary Sanctions | $168,100 | $240,000 | $408,100 | ||
| Voluntary Restitution | $3,851,697 | $59,101 | $3,910,798 | ||
| Securities Referrals | |||||
| Criminal (Chief State's Attorney) | 1 | 1 | 2 | ||
| Civil (Attorney General) | 0 | 0 | 0 | ||
| Other Agency Referrals | 0 | 0 | 0 | ||
The Securities and Business Investments Division is also charged with
administering the Connecticut Business Opportunity Act.
|
Business Opportunities | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year to Date | |
|---|---|---|---|---|---|
| Initial Registrations Received | 0 | 8 | 8 | ||
| Initial Registrations Effective | 5 | 7 | 12 | ||
| Renewal Registrations Received | 1 | 11 | 12 | ||
| Renewal Registrations Effective | 0 | 8 | |
|
8 |
| Exemption and Exclusion Notices | 8 | 3 | |
|
11 |
| Post-Sales Registrations Received | 0 | 1 | |
|
1 |
| Post-Sale Registrations Effective | 0 | 0 | |
|
0 |
| Investigations Opened | 4 | 5 | |
|
9 |
| Investigations Closed | 1 | 3 | |
|
4 |
| Investigations ongoingas of 6/30/99 | |
|
10 | ||
| Cases referred by Attorney General | 0 | 0 | |
|
0 |
| Cases referred by other agencies | 0 | 2 | |
|
2 |
| Supoenas issued | 0 | 0 | |
|
0 |
| Cease and Desist Orders | 1 | 0 | |
|
1 |
| Notices of Intent to Issue Stop Order | 1 | 0 | |
|
1 |
| Stop Orders | 0 | 1 | |
|
1 |
| Notices of Intent to Fine | 0 | 0 | |
|
0 |
| Orders Imposing Fine | 0 | 0 | |
|
0 |
| Monetary Sanctions Imposed | 0 | 0 | |
|
0 |
| Voluntary Restitution | 0 | 0 | |
|
0 |
| Criminal Referrals (Chief State's Attorney) | 0 | 0 | |
|
0 |
| Civil Referrals (Attorney General) | 0 | 0 | 0 | ||
| Other Agency Referrals | 0 | 0 | 0 | ||