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CONSENT ORDER No. CO-10-7823-S |
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, Asset & Financial Planning. Ltd. (“AFP”) of 11 Raymond Avenue, Poughkeepsie, New York is an investment adviser that became registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940 on March 6, 1984, and filed a notice with the Commissioner pursuant to Section 36b-6(e) of the Act on August 27, 1997;
WHEREAS, AFP is under common control with Prime Capital Services, Inc. (“PCS”) (CRD number 18334), a broker-dealer registered under the Act and having a branch office located at 70 New Canaan Avenue, Norwalk, Connecticut;
WHEREAS, on July 14, 2006, AFP and the Commissioner entered into a Stipulation and Agreement, the terms of which are incorporated by reference herein, which alleged that from January 1, 2001 through December 31, 2005, AFP violated Section 36b-6(c) of the Act by engaging two unregistered investment adviser agents (the “2006 Unregistered Agents”);
WHEREAS, during the course of an examination of PCS, the Securities and Business Investments Division (the “Division”) of the Department of Banking obtained evidence that, from January 1, 2006 through May 31, 2010, AFP continued to engage the 2006 Unregistered Agents in an unregistered capacity and engaged two additional unregistered agents as well;
WHEREAS, the July 14, 2006 Stipulation and Agreement obligated AFP to comply with all statutory requirements governing the registration of affected personnel as investment adviser agents, and to review, revise and implement such supervisory and compliance procedures as were necessary to ensure such compliance;
WHEREAS, notwithstanding the July 14, 2006 Stipulation and Agreement, AFP continued to violate the Act by engaging the 2006 Unregistered Agents in an unregistered capacity and by engaging two additional unregistered investment adviser agents;
WHEREAS, the July 14, 2006 Stipulation and Agreement provided that its execution by the Commissioner was without prejudice to the right of the Commissioner to take enforcement action against AFP based upon a violation of the Stipulation and Agreement or the basis for its entry if the Commissioner determined that AFP was not complying with the terms of the Stipulation and Agreement;
WHEREAS Section 36b-6(c) of the Act provides, in part, that: “No investment adviser shall engage an investment adviser agent unless such investment adviser agent is registered under … [the Act]”;
WHEREAS, AFP provided the Division with a written representation that the investment adviser agents involved in the unregistered activity are no longer receiving any investment advisory fees for investment advisory accounts and the advisory fees would be paid only to representatives who are properly registered with the Division as investment adviser agents;
WHEREAS, the foregoing allegations, if proven, would support proceedings under Section 36b-27 of the Act seeking the entry of an order to cease and desist and/or an order imposing an administrative fine of up to $100,000 per violation against AFP;
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the Connecticut General Statutes;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes provides that “[u]nless precluded by law, a contested case may be resolved by . . . consent order”;
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 Connecticut Uniform Securities Act]”;
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 AFP reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
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;
WHEREAS, AFP, without admitting or denying any of the Commissioner’s allegations or findings, expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, AFP, through its execution of this Consent Order, represents and agrees that none of the violations alleged in this Consent Order shall occur in the future;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, AFP, through its execution of this Consent Order, voluntarily waives the following rights:
| 1. | To receive prior written notice within the meaning of Sections 36b-27(a), 36b-27(d) and 4-177(b) of the Connecticut General Statutes; |
| 2. | To present evidence and argument and to otherwise avail itself of Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present its position in a hearing in which it is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest, the matters described herein, including the validity of this Consent Order; |
CONSENT TO ENTRY OF FINDINGS
WHEREAS, AFP, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner:
| 1. | The entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | From January 1, 2001 through at least May 31, 2010, AFP violated Section 36b-6(c) of the Act by engaging two unregistered investment adviser agents, despite having been sanctioned by the Commissioner in 2006 for engaging the same individuals in an unregistered capacity; |
| 3. | From January 1, 2006 through at least May 31, 2010, AFP violated Section 36b-6(c) of the Act by engaging two additional unregistered investment adviser agents; |
| 4. | The foregoing would support proceedings under Section 36b-27 of the Act seeking the entry of an order to cease and desist and/or an order imposing an administrative fine of up to $100,000 per violation against AFP; |
CONSENT TO ENTRY OF SANCTIONS
WHEREAS, AFP, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on it the following sanctions:
| 1. | AFP, its representatives, agents, employees, affiliates, assigns, and successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any organizational or other device, including, without limitation, engaging unregistered investment adviser agents; and |
| 2. | No later than the date this Consent Order is entered by the Commissioner, AFP shall remit to the Department of Banking, via certified bank check or bank wire, payable to “Treasurer, State of Connecticut”, the sum of eleven thousand one hundred fifty dollars ($11,150), ten thousand dollars ($10,000) of which shall constitute an administrative fine and one thousand one hundred fifty dollars ($1,150) of which shall constitute reimbursement for past due investment adviser agent registration fees; |
CONSENT ORDER
NOW THEREFORE,
the Commissioner enters the following:| 1. | The Findings and Sanctions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against AFP based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed; and |
| 3. | The Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _______/s/_________ | |
| this 15th day of Oct., 2010. | Howard F. Pitkin | |
| Banking Commissioner |
I, William J. Burns, state and on behalf of Asset & Financial Planning, Ltd., that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Asset & Financial Planning, Ltd., that Asset & Financial Planning, Ltd. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Asset & Financial Planning, Ltd. voluntarily consents to the entry of this Consent Order, expressly waving any right to a hearing on the matters described therein.
| Asset & Financial Planning, Ltd. | |
| By | ______/s/_________________ |
| William J. Burns | |
| Chief Compliance Officer |
On this 7th day of October 2010, personally appeared William J. Burns, signer of the foregoing Consent Order, who, being duly sworn, did acknowledge to me that [he] was authorized to execute the same on behalf of Asset & Financial Planning, Ltd., a corporation, and acknowledged the same to be [his] free act and deed, before me.
_____/s/_____________________________
Notary Public
My Commission Expires: September 20, 2013