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JAMES FOWLER HICKMAN * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-10-7745-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, James Fowler Hickman a/k/a Jay Hickman (“Hickman”) is currently registered as a broker-dealer agent under the Act and has been employed in the securities industry since at least 1992;
WHEREAS, on May 6, 2008, Hickman formed Aquinnah Investments, LLC (“Aquinnah Investments”) as a Massachusetts limited liability company for the purpose of directly or indirectly investing in, purchasing or otherwise acquiring, holding, trading, exchanging, selling, transferring and disposing of, or otherwise realizing upon securities and other investments;
WHEREAS, Aquinnah Investments shares office space at 65 Marlborough Street, Boston, Massachusetts with Aquinnah Group, LLC, a Massachusetts limited liability company co-managed by Hickman and Richard K. Wallace;
WHEREAS, Grove Electronics, LLC d/b/a Chip Partners (“Grove Electronics”) of 197 Main Street, Suite 206, North Reading, Massachusetts is an issuer of securities;
WHEREAS, on October 5, 2009, the Securities and Business Investments Division (the “Division”) received from Grove Electronics a Rule 506 notice filing pursuant to Section 36b-21(e) of the Act covering an offering of debt securities. Such notice filing disclosed that Grove Electronics would pay approximately $40,000 in sales commissions to Aquinnah Investments, and that Aquinnah Investments would solicit investors in Connecticut, Illinois, Massachusetts and New York. The notice filing also listed Hickman’s Central Registration Depository number in describing the sales commissions to be paid;
WHEREAS, following an inquiry by the Division pursuant to Section 36b-26 of the Act, Hickman provided documentation indicating that in September 2009, two Connecticut individuals had each invested $50,000 in Grove Electronics notes as a result of the efforts of Hickman and Aquinnah Investments; and Hickman represented that he had received commissions on such sales;
WHEREAS, the Commissioner alleges that, at the time the Connecticut sales of the Grove Electronics notes were made, Hickman was not registered as an agent of issuer or in any other capacity under the Act nor was Aquinnah Investments registered as a broker-dealer or in any other capacity under the Act;
WHEREAS, Section 36b-6 of the Act makes it unlawful to transact business as a broker-dealer, agent, investment adviser or investment adviser agent in this state unless registered;
WHEREAS, the foregoing allegations, if proven, would support 1) 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 Hickman and Aquinnah Investments; and 2) proceedings under Section 36b-15 of the Act to suspend or revoke Hickman’s broker-dealer agent registration under the Act or to restrict or impose conditions on the securities activities that Hickman may perform in this state;
WHEREAS, an administrative proceeding initiated under Sections 36b-27 or 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 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-33, 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, Hickman and Aquinnah Investments 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, Hickman, 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, Hickman, through his 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, Hickman, through his execution of this Consent Order, voluntarily waives the following rights:
| 1. | To receive prior written notice within the meaning of Sections 36b-15(f), 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 himself of Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present his position in a hearing in which he 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; |
FINDINGS OF THE COMMISSIONER AS TO EVIDENTIARY SUFFICIENCY TO INITIATE ADMINISTRATIVE PROCEEDINGS
WHEREAS, the Commissioner finds that, based on the following, which Hickman neither admits nor denies, sufficient grounds would exist to initiate administrative proceedings under Sections 36b-15 and 36b-27 of the Act to suspend or revoke Hickman’s broker-dealer agent registration in this state and/or to enter an order to cease and desist and/or an order imposing an administrative fine of up to $100,000 per violation against Hickman:
From at least September 2009, James Fowler Hickman, singly or through one or more entities controlled by him, transacted business as an agent of issuer or as a broker-dealer while unregistered in contravention of Section 36b-6 of the Act.
WHEREAS, Hickman, through his execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on him the following sanctions:
| 1. | Hickman 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, such conduct including, without limitation, transacting business as an unregistered agent of issuer or an unregistered broker-dealer in violation of Section 36b-6 of the Act; |
| 2. | Absent prior written approval from the Division Director, Hickman shall not, alone or through any corporate, partnership or other device, offer or sell securities on behalf of any issuer within or from Connecticut unless such transactions are effected within the scope of Hickman’s employment with a broker-dealer registered under the Act; |
| 3. | Hickman shall not, within or from Connecticut, act as a finder for compensation, split commissions or receive referral fees, directly or indirectly, in conjunction with the offer, sale or purchase of securities or the rendering of investment advice on securities unless such activities are performed within the scope of Hickman’s employment with a broker-dealer or investment adviser registered under the Act and in accordance with state and federal securities laws; |
| 4. | Absent prior written permission from the Division Director, Hickman shall represent only one securities broker-dealer or investment adviser at any one time in effecting or attempting to effect securities purchases or sales or in acting as an investment adviser agent; |
| 5. | No later than thirty days following the Commissioner’s entry of this Consent Order, Hickman shall furnish written proof to the Division Director that he has refunded to those Connecticut investors who purchased Grove Electronics notes in 2009 the pro rata share of the sales commission earned by Hickman or any entity under the control of Hickman and attributable to such Connecticut note sales. Such commission refund shall be made by certified or cashier’s check, payable to each affected Connecticut investor, and shall be accompanied by a copy of this Consent Order. Hickman shall submit written evidence of such payments, including copies of checks, to the Division Director; |
| 6. | No later than the date this Consent Order is entered by the Commissioner, Hickman shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum two thousand five hundred dollars ($2,500) as an administrative fine. |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The 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 James Fowler Hickman 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 or if any representation made by James Fowler Hickman and reflected herein or in any written communication by James Fowler Hickman to the Division relating to the matters herein described is subsequently determined to be untrue; and |
| 3. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _______/s/_________ | |
| this 28th day of June 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, James Fowler Hickman, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I voluntarily consent to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
| ______/s/__________ | |
| James Fowler Hickman | |
Subscribed and sworn to before me
this 23rd day of June, 2010.
______________/s/_________________________
Notary Public/Commissioner of the Superior Court
My Commission Expires: March 28, 2014