Order Exempting Registered Broker-dealers
and Registered Investment Advisers from the Requirement That They Maintain an On-Site Manager at Each Connecticut Branch Office
WHEREAS, the Commissioner of Banking ("Commissioner") is charged with administering Chapter 672a of the Connecticut General Statutes, 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, Section 36b-31(a) of the Act provides, in pertinent part, that: "[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of . . . [the Act] . . . . For the purpose of . . . orders, the commissioner may classify securities, persons and matters within his jurisdiction, and prescribe different requirements for different classes";
WHEREAS, Section 36b-31(b) of the Act provides, in pertinent 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 . . . [the Act]";
WHEREAS, the Commissioner finds that the issuance of this Order is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
WHEREAS, Section 36b-31-6f of the Regulations provides, in pertinent part, that: "(b) Each registered broker-dealer and investment adviser shall establish, enforce and maintain a system for supervising the activities of its agents, investment adviser agents and Connecticut office operations that is reasonably designed to achieve compliance with applicable securities laws and regulations. (c) The supervisory system shall provide, at a minimum, for the following: . . . (3) For each Connecticut branch office . . . the designation of a manager who shall be responsible for its day-to-day operation and supervision and . . . who shall be located on the premises of such office on a full time basis" (emphasis added);
WHEREAS, Section 36b-31-31c of the Regulations provides that: "[t]he commissioner may exempt a person, security or transaction from a specified provision of sections 36b-31-2 to 36b-31-33, inclusive, of the regulations upon a finding that such exemption is in the public interest";
WHEREAS, the Commissioner acknowledges that the regionalization of Connecticut's business environment combined with technological advances in supervisory support may not justify a requirement that each branch office be staffed by an on-site manager in all instances;
AND WHEREAS, the Commissioner finds that the exemption provided by this Order is in the public interest.
NOW THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:
| 1. | A registered broker-dealer or registered investment adviser that has implemented a system of adequate supervisory controls over its branch office operations, designed to ensure a level of oversight comparable to that which would exist had its managers been located on-site, shall be exempt from the requirement in Section 36b-31-6f(c)(3) of the Regulations that each Connecticut branch office be staffed by a manager located on the premises of such branch office on a full time basis. A system of adequate supervisory controls may include, without limitation, a computerized tracking system relating to branch office activity, designation of regional managers, and/or frequent visits to the location by an off-site manager; | |
| 2. | Nothing in this Order shall eliminate or diminish the obligation of a registered broker-dealer or registered investment adviser under Section 36b-31-6f(b) of the Regulations to establish, enforce and maintain a system for supervising the activities of its agents, investment adviser agents and Connecticut office operations that is reasonably designed to achieve compliance with applicable securities laws and regulations; | |
| 3. | Nothing in this Order shall preclude the Commissioner from requiring on-site branch office supervision for any registered broker-dealer or registered investment adviser whose supervisory system exhibits deficiencies or whose business conduct or disciplinary record warrants that a higher level of supervision be imposed; and | |
| 4. | This Order shall remain in effect until modified, superseded or vacated by the Commissioner or other lawful authority. |
| So ordered at Hartford, Connecticut this 4th day of October 2002 |
John P. Burke Banking Commissioner |