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ROCKHOUSE CAPITAL, LLC * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-10-7845-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking 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, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (the “Division”), has conducted an investigation pursuant to Section 36b-8 of the Act into the activities of Rockhouse Capital, LLC (“Rockhouse”), an applicant for investment adviser registration having its principal office at 500 West Putnam Avenue, Greenwich, Connecticut, and of Rockhouse’s officers, agents, employees and representatives to determine whether they, or any of them, have violated or are about to violate any provision of the Act or any regulation or order under the Act;
WHEREAS, the Commissioner, as a result of such investigation, alleges from August 2009 forward, Rockhouse transacted business as an investment adviser in this state absent registration and engaged unregistered investment adviser agents in violation of Section 36b-6(c) of the Act;
WHEREAS, the Commissioner acknowledges that Rockhouse has provided the Division with documentation that, during the period of unregistered activity, Rockhouse’s investment advisory clients were domiciled outside the State of Connecticut;
WHEREAS, the Commissioner believes that the foregoing allegations would support the initiation of an administrative proceeding to deny or condition Rockhouse’s investment adviser registration under Section 36b-15(a)(2)(B) of the Act;
WHEREAS, an administrative proceeding initiated 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 provides that “[u]nless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party”;
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, Section 36b-31(b) of the Act provides, in part, that: “No . . . 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 sections 36b-2 to 36b-34, inclusive [of the Act];
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Rockhouse, through its execution of this Consent Order, voluntarily waives the following rights:
| 1. | To receive prior written notice within the meaning of Sections 36b-15(f) 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, Rockhouse, through its execution of this Consent Order, and without admitting or denying the Commissioner’s allegations of violations, accepts and consents to the entry of the following Findings by the Commissioner:
| 1. | That 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. | That from August 2009 forward, Rockhouse transacted business as an investment adviser in this state absent registration and engaged unregistered investment adviser agents in violation of Section 36b-6(c) of the Act; and |
| 3. | That the department's allegations would support the initiation of administrative proceedings to deny or condition Rockhouse’s investment adviser registration under Section 36b-15(a)(2)(B) of the Act; |
CONSENT TO ENTRY OF SANCTIONS AND REMEDIAL MEASURES
WHEREAS, Rockhouse, through its execution of this Consent Order, consents to the Commissioner issuing an order imposing on it the following sanctions and remedial measures:
| 1. | Rockhouse shall implement revised supervisory and compliance procedures designed to improve regulatory compliance, which procedures shall, at a minimum, provide for enhanced monitoring of state investment adviser and investment adviser agent licensing requirements; |
| 2. | To assist it in fulfilling its obligations under paragraph 1 above, within sixty (60) days following the Commissioner’s execution of this Consent Order, Rockhouse shall submit to the Division Director in writing the names and credentials of at least two experienced securities compliance consultant candidates, who may be Connecticut-licensed attorneys, whom Rockhouse contemplates retaining. Rockhouse shall only retain the compliance consultant concerning whose credentials the Division Director has voiced no objection. After six months have elapsed from the Commissioner’s signing of this Consent Order, Rockhouse shall meet and confer with the selected compliance consultant to ensure that Rockhouse is in compliance with this Consent Order, the Act and the Regulations thereunder. After such initial consultation, Rockhouse shall meet and confer with such consultant annually until two years have elapsed from the signing of this Consent Order by the Commissioner; and |
| 3. | No later than the date this Consent Order is entered by the Commissioner, Rockhouse shall remit to the department via certified bank check made payable to “Treasurer, State of Connecticut” the sum of three thousand nine hundred ninety dollars ($3,990), three thousand dollars ($3,000) of which shall constitute an administrative fine, four hundred ninety dollars ($490) of which shall represent past due investment adviser and investment adviser agent registration fees; and five hundred dollars ($500) of which shall be applied to defray the Division’s investigative costs; |
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 Rockhouse, its officers, agents, employees or representatives based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by or on behalf of Rockhouse and reflected in this Consent Order is subsequently determined to be untrue; |
| 3. | Contemporaneously with the entry of this Consent Order by the Commissioner, the name “Rockhouse Capital, LLC” shall be entered on the register of investment advisers in accordance with Section 36b-8 of the Act; and |
| 4. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _______/s/_________ | |
| this 20th day of Sept. 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Terence Martin Kaufmann, state on behalf of Rockhouse Capital, LLC, 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 Rockhouse Capital, LLC; that Rockhouse Capital, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Rockhouse Capital, LLC voluntarily consents to the entry of this Consent Order expressly waiving any rights it may have to a hearing on the matters described herein.
| Rockhouse Capital, LLC | |
| By | ______/s/_____________ |
| Terence Martin Kaufmann | |
| President |
On this 7 day of September 2010, personally appeared Terence Martin Kaufmann, 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 Rockhouse Capital, LLC, a limited liability company, and acknowledged the same to be his free act and deed, before me.
_____/s/____________________
Notary Public
My Commission Expires: 9/30/11