| * * * * * * * * * * * * * * * * * *
IN THE MATTER OF: DAVID LERNER ASSOCIATES, INC. * * * * * * * * * * * * * * * * * * |
* * * * * * * * |
STIPULATION AND ST-10-7882-S |
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, David Lerner Associates, Inc ("DLA") of 477 Jericho Turnpike, P.O. Box 9006, Syosset, New York has been registered as a broker-dealer under the Act since at least October 19, 1982;
WHEREAS, the Commissioner, acting pursuant to Section 36b-26 of the Act and through the Securities and Business Investments Division (the "Division") of the Department of Banking, has conducted an investigation into the activities of DLA, its officers, employees, agents and representatives to determine whether they, or any of them, have violated, are violating or are about to violate any provision of the Act or any regulation or order under the Act;
WHEREAS, in June 2010, the Division conducted an examination of the records of DLA pursuant to Section 36b-14(d) of the Act and 36b-31-14f of the Regulations;
WHEREAS, Section 36b-31-15b(a)(5) of the Regulations makes it dishonest or unethical business practice for a broker-dealer agent to divide or otherwise split commissions or other compensation receivable in connection with the purchase or sale of securities in this state with any person not registered in Connecticut and employed by the same broker-dealer;
WHEREAS, Section 36b-31-6f(b) of the Regulations obligates each registered broker-dealer to establish, enforce and maintain a system for supervising the activities of its agents that is reasonably designed to achieve compliance with applicable securities laws and regulations;
WHEREAS, as a result of the examination, the Commissioner alleges that, from 2005 through 2010, DLA permitted two sales assistants who were not registered as agents in Connecticut to be paid a percentage of agent commissions receivable in connection with Connecticut securities sales;
WHEREAS, such conduct, if proven, would support the initiation of administrative proceedings against DLA pursuant to Section 36b-15 of the Act;
WHEREAS, an administrative proceeding under Section 36b-15 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 permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, DLA desires to settle the matters described herein and voluntarily enters into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein;
WHEREAS, DLA, through his [sic] execution of this Stipulation and Agreement, voluntarily waives any rights it may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| (1) |
No later than the date this Stipulation and Agreement is executed by the Commissioner, DLA shall pay to the department, by bank check payable to "Treasurer, State of Connecticut," the sum of two thousand eight hundred dollars ($2,800), two thousand dollars ($2,000) of which shall constitute an administrative fine, and eight hundred dollars ($800) of which shall represent reimbursement for past due registration fees; |
| (2) |
DLA shall refrain from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, including, without limitation, permitting unregistered individuals to receive a portion of agent commissions attributable to securities purchases or sales in this state; |
| (3) | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against DLA based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof; |
| (4) | Nothing in this Stipulation and Agreement shall be construed as limiting the Commissioner's ability to take enforcement action against DLA based upon evidence of which the Division was unaware on the date hereof relating to any violation of the Act or any regulation or order under the Act; and |
| (5) | This Stipulation and Agreement shall become binding when executed by both parties hereto. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
| Dated at Hartford, Connecticut | _______/s/_________ | |
| this 11th day of January 2011. | Howard F. Pitkin | |
| Banking Commissioner |
I, Joseph Pickard, Senior Vice President and General Counsel, state on behalf of David Lerner Associates, Inc., that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of David Lerner Associates, Inc. and that David Lerner Associates, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
David Lerner Associates, Inc.
By
________/s/_________________________
Joseph Pickard,
Senior Vice President and General Counsel
On this 28th day of December 2010, personally appeared Joseph Pickard, signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of David Lerner Associates, Inc., a corporation, and acknowledged the same to be his free act and deed, before me.
_____/s/_____________________
Notary Public
My Commission Expires: 2/20/2013