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IN THE MATTER OF: STRAND, ATKINSON. * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-07-7400-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, on September 8, 2006, Strand Atkinson Williams &York, Inc. (“Strand”) of 200 SW Market Street, Suite 1900, Portland, Oregon filed with the Securities and Business Investments Division of the Department of Banking (the “Division”) an application for registration as a broker-dealer pursuant to Sections 36b-7 and 36b-32 of the Act and disclosed in such application that it had effected securities transactions for one or more Connecticut customers at a time when Strand was not registered as a broker-dealer in Connecticut;
WHEREAS, the Commissioner ascertained, as a result of such disclosure, that from at least November 2004 through August 2006, Strand 1) transacted business as a broker-dealer absent registration in contravention of Section 36b-6(a) of the Act; and 2) at various times during that period, employed at least two unregistered broker-dealer agents in contravention of Section 36b-6(b) of the Act;
WHEREAS, the Division obtained evidence that on November 28, 2006, the National Association of Securities Dealers (the “NASD”) censured and fined Strand $50,000 following allegations that Strand violated Securities and Exchange Commission Rule 17a-4, Municipal Securities Rulemaking Board Rule G-41 and NASD Conduct Rules 2110, 3010(c)(1)(B), 3010(d), 3011, and 3110 by failing to: 1) maintain written supervisory procedures to specify a cycle according to which the firm’s non-OSJ branches would be inspected; 2) retain employee BlackBerry™ e-mail messages in an accessible, reviewable format; 3) review incoming and outgoing BlackBerry™ e-mails; and 4) develop and implement a written anti-money laundering program reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act and the regulations promulgated thereunder (Acceptance, Waiver & Consent Case No.E3B2005004401);
WHEREAS, the Division obtained evidence that on May 10, 2007, the State of Missouri issued a Consent Order (Case No. AP-07-20) that included a fine of $5,000 based on allegations that Strand transacted unregistered broker-dealer business in Missouri and employed unregistered agents who transacted business on behalf of Strand;
WHEREAS, the Division obtained evidence that 1) on December 21, 2006, the State of Alabama Securities Commission entered a cease and desist order against Strand (No. CD-2006-0045) based upon allegations that the firm had transacted business as a dealer in Alabama absent registration; 2) the matters alleged in the Alabama cease and desist order were settled via a consent order entered on May 15, 2007; and 3) the consent order, among other things, directed Strand to refrain from effecting securities transactions into, within or from the State of Alabama until the firm was properly registered in that state;
WHEREAS, Section 36b-15(a) of the Act provides, in part, that: “The commissioner may, by order, deny . . . any registration or, by order, restrict or impose conditions on the securities or investment advisory activities that an applicant . . . may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive, or a predecessor statute or any regulation or order under said sections or a predecessor statute . . . (F) is the subject of any of the following sanctions that are currently effective or were imposed within the past ten years . . . (iii) a suspension, expulsion or other sanction issued by a national securities exchange or other self-regulatory organization registered under federal laws administered by the Securities and Exchange Commission . . . if the effect of the sanction has not been stayed or overturned by appeal or otherwise . . . or (v) a cease and desist order entered by . . . the securities agency or administrator of any other state . . . but the commissioner may not . . . (II) enter an order under this subparagraph on the basis of an order under any other state act unless that order was based on facts which would constitute a ground for an order under this section . . . . ”
WHEREAS, Section 36b-27 of the Act authorizes the Commissioner to enter an order to cease and desist and to impose a fine of up to $100,000 per violation after affording Strand an opportunity for a hearing;
WHEREAS, Section 36b-6(a) of the Act provides, in part, that: “(a) No person shall transact business in this state as a broker-dealer unless such person is registered under sections 36b-2 to 36b-33, inclusive . . . No individual shall transact business as an agent in this state unless such individual is (1) registered as an agent of the broker-dealer . . . whom such individual represents in transacting such business, or (2) an associated person who represents a broker-dealer in effecting transactions described in subdivisions (2) and (3) of Section 15(h) of the Securities Exchange Act of 1934”;
WHEREAS, Section 36b-6(b) of the Act provides, in part, that: “No broker-dealer shall employ an agent unless such agent is (1) registered under sections 36b 2 to 36b-33, inclusive, or (2) an associated person who represents a broker-dealer in effecting transactions described in subdivisions (2) and (3) of Section 15(h) of the Securities Exchange Act of 1934”;
WHEREAS an administrative proceeding initiated under Sections 36b-15 and 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 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-33, inclusive [of the Connecticut Uniform Securities Act]”;
WHEREAS, the Commissioner finds 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;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Strand, 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), 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; |
FINDINGS OF THE COMMISSIONER AS TO EVIDENTIARY SUFFICIENCY TO INITIATE ADMINISTRATIVE PROCEEDINGS
WHEREAS, the Commissioner finds that sufficient grounds would exist to initiate administrative proceedings against Strand, including proceedings to deny or condition Strand’s registration as a broker-dealer under the Act, proceedings to enter an order to cease and desist against Strand under Section 36b-27(a) of the Act and proceedings to impose a fine of up to $100,000 per violation pursuant to Section 36b-27(d) of the Act, based on the following, all of which are more fully described above, after granting Strand an opportunity for a hearing:
| 1. | From at least November 2004 through August 2006, Strand transacted business as a broker-dealer absent registration in contravention of Section 36b-6(a) of the Act; |
| 2. | At various times between November 2004 and August 2006, Strand employed at least two unregistered broker-dealer agents in contravention of Section 36b-6(b) of the Act; |
| 3. | The sanctions imposed by the NASD in Case No. E3B2005004401, which sanctions have not been stayed or overturned by appeal or otherwise, would constitute a basis for an administrative action under Section 36b-15(a)(2)(F)(iii) of the Act; |
| 4. | The entry of the cease and desist order by the State of Alabama (No. CD-2006-0045), which cease and desist order has not been vacated or withdrawn, would support an administrative action under Section 36b-15(a)(2)(F)(v) of the Act; |
CONSENT TO ENTRY OF SANCTIONS AND REMEDIAL MEASURES
WHEREAS, Strand, through its execution of this Consent Order and without admitting or denying the Commissioner’s allegations, consents to the Commissioner issuing an order imposing on it the following sanctions and remedial measures:
| 1. | Strand, acting through its officers, directors, employees and representatives, shall cease and desist from engaging, directly or indirectly, in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, including, without limitation, transacting business in or from this state absent registration as a broker-dealer and employing unregistered agents; |
| 2. | Strand shall implement revised supervisory and compliance procedures designed to improve regulatory compliance which procedures shall, at a minimum, provide for enhanced monitoring of state broker-dealer and agent licensing requirements; |
| 3. | For a two-year period, commencing on the date this Consent Order is entered by the Commissioner, Strand shall submit to the Division Director a written report each calendar quarter 1) describing any securities-related complaints, actions or proceedings (including arbitrations) (such complaints, actions or proceedings referred to collectively as “Complaints”) involving Connecticut residents and initiated against Strand or any of Strand’s officers, agents, employees or representatives for the quarter; 2) providing information on the disposition of any such Complaints or on any Complaints reflected in an earlier report filed pursuant to this paragraph; and 3) attaching copies of such Complaints and any dispositional documents. If no securities-related Complaints exist for the quarter, the report shall so indicate. The first report shall be due no later than ten calendar days following the close of the quarter ending September 30, 2007, and the final report shall be due no later than ten calendar days following the close of the quarter ending September 30, 2009; and |
| 4. | No later than the date this Consent Order is entered by the Commissioner, Strand shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum of four thousand seven hundred fifty ($4,750) dollars, three thousand dollars ($3,000) of which shall constitute an administrative fine; seven hundred fifty dollars ($750) of which shall represent past due broker-dealer and agent registration fees; and one thousand dollars ($1,000) of which shall be applied to defray the Division’s costs in investigating this matter; |
ORDER
THE COMMISSIONER HEREBY ORDERS THAT:
| 1. | The Sanctions and Remedial Measures 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 Strand, 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; |
| 3. | Contemporaneously with the entry of this Consent Order by the Commissioner, the name “Strand, Atkinson, Williams & York, Inc.” shall be entered on the register of broker-dealers in accordance with Section 36b-8 of the Act; and |
| 4. | This Consent Order shall become final when issued. |
________/s/_________
Howard F. Pitkin
Banking Commissioner
So ordered at Hartford, Connecticut
this 8th day of August 2007.
this 8th day of August 2007.
CONSENT TO ENTRY OF ORDER
I, Bradford Adam Wear, state on behalf of Strand, Atkinson, Williams & York, Inc. 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 Strand, Atkinson, Williams & York, Inc.; that Strand, Atkinson, Williams & York, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Strand, Atkinson, Williams & York, Inc. voluntarily consents to the entry of this Consent Order expressly waiving any rights it may have to a hearing on the matters described herein.
Strand, Atkinson, Williams & York, Inc.
By
________/s/_______________
Bradford Adam Wear
President
On this 3rd day of August 2007, personally appeared Bradford Adam Wear, 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 Strand, Atkinson, Williams & York, Inc., a corporation, and acknowledged the same to be his free act and deed, before me.
_______________/s/_____________
Notary Public
My Commission Expires: 3-11-09