DOB: Spring 2016 Securities Bulletin

Securities and Business Investments Division

Securities Bulletin

Vol. XXX  No. 1 
Spring 2016

Features

Enforcement and Other Highlights 
Contributors

Eric Wilder, Director
Cynthia Antanaitis, Assistant Director 


    {Eric}          

Eric J. Wilder, Director of the Securities and Business Investments Division, has announced plans to retire from the Department of Banking effective May 1, 2016.

Appointed to his current post on September 20, 2011, Mr. Wilder’s tenure with the Securities Division spanned over thirty years.  Prior to his appointment as Director of the Division, Mr. Wilder served as its Assistant Director.  He began his public service career in 1978 as an examiner in the Securities Division.

Mr. Wilder was previously active in the North American Securities Administrators Association, Inc. where he served on the Investment Adviser/Financial Planner Committee, the Market Manipulation Committee and the Uniform Examination Committee.  Mr. Wilder graduated from Western New England College where he earned a degree in Accounting. Mr. Wilder’s in-depth experience, particularly in the areas of enforcement and broker-dealer examinations, was an asset to the department. Following retirement, Mr. Wilder plans to spend more time with his family and to pursue fishing as well as other hobbies.
       


ADMINISTRATIVE ACTIONS

Dale Joseph Quesnel, Sr. (CRD No. 2231152) Fined $600,000, Order to Cease and Desist and Order to Make Restitution Rendered Permanent

On March 3, 2016, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order by default against Dale Joseph Quesnel, Sr., a former insurance licensee and a former broker-dealer agent of ING Financial Partners, Inc. n/k/a Voya Financial Advisors, Inc. (Docket No. CRF-15-8110-S).


Respondent Quesnel had been the subject of a June 22, 2015 Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine which also named Overtime Marketing, LLC, Overtime Sports Southeast, LLC, Overtime Sports Southwest, LLC, Kenny Hansmire and Floridel, LLC as respondents.  Since respondent Quesnel failed to appear at the hearing on the June 22, 2015 action, the allegations against him were deemed admitted. 
Accordingly, the Commissioner found that respondent Quesnel violated 1) Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered securities issued by the Overtime entities and by Floridel, LLC; 2) Section 36b-6(a) of the Act by transacting business as an unregistered agent of issuer for more than one entity; 3) Section 36b-23 of the Act by making material misrepresentations to the Division concerning his securities-related compensation; 4) the antifraud provisions in Section 36b-4(a) of the Act in connection with the offer and sale of securities; 5) Section 36b-31-6e of the Regulations under the Act by participating in private securities transactions without providing prior written notice to his employing broker-dealer; and 6) Section 36b-6(c)(1) of the Act by transacting business as an unregistered investment adviser.


The March 3, 2016 Order rendered the June 22, 2015 Order to Cease and Desist and Order to Make Restitution permanent.  In addition, the Order fined respondent Quesnel $600,000.

Martinez-Ayme Financial Group Incorporated d/b/a Martinez-Ayme Securities (CRD No. 109838) – Broker-dealer Registration Revoked

On February 18, 2016, the Banking Commissioner entered an Order revoking the broker-dealer registration of Martinez-Ayme Financial Group Incorporated d/b/a Martinez-Ayme Securities (Docket No. NR-15-8244-S).  The firm is located at 9495 Sunset Drive, Suite B275, Miami, Florida 33173.  The revocation order had been preceded by a November 23, 2015 Notice of Intent to Revoke Registration as a Broker-dealer that was based on a series of sanctions entered by the Financial Industry Regulatory Authority (FINRA), including 1) a September 19, 2013 Acceptance, Waiver and Consent (Case No. 2013037419101) censuring the firm and fining it $25,000 for placing market maker bid quotations and making securities purchases during restricted periods; 2) a March 9, 2015 Acceptance, Waiver and Consent (Case No. 2013035307701) censuring the firm and fining it $25,000 for net capital and related issues; 3) a June 10, 2015 FINRA expulsion based on the firm’s failure to pay the fine imposed by Case No. 2013035307701; and 4) a September 14, 2015 additional FINRA expulsion based on the firm's failure to pay the fine imposed in Case No. 2013037419101.

The Notice was returned to the department as undeliverable, and constructive service was made on the Banking Commissioner pursuant to Section 36b-33(g) of the Connecticut Uniform Securities Act.  Since the firm did not request a hearing on the Notice, a revocation order was entered by default.   Adopting as findings of fact and conclusions of law the allegations set forth in the Notice, the Commissioner revoked the firm’s broker-dealer registration effective February 19, 2016.

Halcyon Cabot Partners, Ltd. (CRD No. 32664) – Notice of Intent to Revoke Broker-dealer Registration Issued

On February 16, 2016, the Banking Commissioner issued a Notice of Intent to revoke the Connecticut broker-dealer registration of Halcyon Cabot Partners, Ltd. (Docket No. NR-16-8261-S).  The firm is located at 767 Third Avenue, 17th Floor, New York, New York 10017.  The action was based on several sanctions imposed by the Financial Industry Regulatory Authority (“FINRA”) on July 16, 2014, October 6, 2015 and December 16, 2015, including an expulsion from FINRA membership.  In expelling the firm from membership, FINRA alleged, among other things, that the firm wilfully violated the antifraud provisions in Section 10(b) of the Securities Exchange Act of 1934 as well as Rule 10b-5 thereunder in conjunction with a sham placement agent agreement and deceptive commission sharing arrangement.  Halcyon Cabot Partners, Ltd. was afforded an opportunity to request a hearing on the allegations in the Notice of Intent to Revoke Registration as a Broker-dealer.


Thomas E. Seiler Fined $1,500, Securities Activities Restricted, Following Allegations of Unregistered Activity

On February 2, 2016, the Banking Commissioner entered a Consent Order (No. CO-15-8269-S) with respect to Thomas E. Seiler, formerly of Darien, Connecticut.   In 2009 and 2010, Thomas E. Seiler was the general manager and director of sales for the Sono Field House, a Norwalk-based commercial recreation sports facility developed by Q 350 Ely LLC.  The Consent Order alleged that between September 2008 and September 2010, Thomas E. Seiler violated Sections 36b-16 and 36b-6(a) of the Connecticut Uniform Securities Act by offering and selling unregistered securities issued by Q 350 Ely LLC and transacting business as an unregistered agent of issuer.


The Consent Order directed Thomas E. Seiler to cease and desist from regulatory violations and prohibited him for ten years from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent.  The Consent Order also fined Thomas E. Seiler $1,500.

Q 350 Ely LLC, James P. Quinn and Gary Youm Fined $14,000 in the Aggregate for Registration Violations

On January 26, 2016, the Banking Commissioner entered a Consent Order (No. CO-15-8102-S) with respect to Q 350 Ely LLC, a Connecticut limited liability company located at 365 Dr. Martin Luther King, Jr. Drive, Norwalk, Connecticut 06854.  Q 350 Ely LLC was formed to develop a commercial recreation sports facility known as the Sony Field House in South Norwalk.  Also named in the Consent Order were James P. Quinn, manager of Q 350 Ely LLC, and Gary Youm who played a role in creating and developing the Sono Field House.  The Consent Order alleged that, from approximately September 2008 to September 2010, the named respondents sold unregistered Q 350 Ely LLC securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act.  The Consent Order also alleged that James P. Quinn and Gary Youm transacted business as unregistered agents of issuer in violation of Section 36b-6(a) of the Act and that Q 350 Ely LLC violated Section 36b-6(b) of the Act by employing unregistered agents of issuer.

The Consent Order directed the named respondents to cease and desist from regulatory violations and fined Q 350 Ely LLC $1,000.  In addition, the Consent Order imposed a $13,000 fine against James P. Quinn and Gary Youm, jointly and severally.

Filomeno Wealth Management, LLC Fined $2,000 for Engaging Unregistered Investment Adviser Agents

On January 11, 2016, the Banking Commissioner entered a Consent Order (No. CO-15-8272-S) with respect to Filomeno Wealth Management, LLC of 80 South Main Street, West Hartford, Connecticut.  The firm is registered as an investment adviser under the Connecticut Uniform Securities Act.  The Consent Order alleged that, at various times starting in 2013, the firm engaged one or more unregistered investment adviser agents in violation of Section 36b-6(c)(3) of the Act.  The Consent Order fined Filomeno Wealth Management, LLC two thousand dollars.  In addition, the Consent Order directed the firm to cease and desist from regulatory violations and to establish revised written supervisory procedures to ensure compliance with investment adviser agent registration requirements.
 


Peter R. Mack & Co., Inc. (CRD No. 18275) and Peter Richard Mack (CRD No. 316060) Assessed $3,870 for Unregistered Investment Advisory Activity

On February 3, 2016, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-16-8266-S) with Peter R. Mack & Co., Inc. and with Peter Richard Mack, president and chief compliance officer of the firm.  The firm, which is located at 191 Post Road West, Westport, Connecticut 06880, is currently registered as a broker-dealer and an investment adviser under the Connecticut Uniform Securities Act.  The Stipulation and Agreement alleged that between January 2013 and January 2016, the firm transacted business as an unregistered investment adviser and engaged one or more unregistered investment adviser agents in violation of Section 36b-6(c) of the Act.  Prior to January 2013, the firm’s principal office was located at 515 Madison Avenue, 27th Floor, New York, New York 10022.


In resolution of the matter, the firm took curative steps to register as an investment adviser in Connecticut and to register the affected investment adviser agent.  The firm also agreed to refrain from regulatory violations.  In addition, the firm and Peter Richard Mack agreed to remit $3,870, jointly and severally, to the department.  Of that amount, $3,000 constituted an administrative fine and $870 represented reimbursement for past due investment adviser and investment adviser agent registration fees.

 


Hoya Capital Real Estate, LLC (CRD No. 281848) – Investment Adviser Registration Conditioned

On March 22, 2016, the Banking Commissioner executed a Stipulated Agreement (No. ST-16-8288-S) conditioning the registration of Hoya Capital Real Estate, LLC as an investment adviser in Connecticut.  The firm, whose president is Alexander Rankin Pettee, is located at 133 Rowayton Avenue, Unit C, Norwalk, Connecticut 06853.  Connecticut law requires that the principals of an investment advisory firm fulfill certain experience requirements, and the firm did not satisfy the experience criteria.  The Stipulated Agreement required that, for two years, the firm 1) refrain from having custody or control of client funds or securities; 2) notify clients in writing within 24 hours of any discretionary trade executed in the affected client’s account; 3) limit its advisory activity to listed securities, investment company securities, commercial paper, certificates of deposit, corporate debt securities, municipal securities, U.S. government securities and insurance products subject to regulation by the Connecticut Insurance Commissioner; and 4) notify the Division of any securities-related complaints, actions, arbitrations or proceedings and include information on their disposition.

Hoya Capital Real Estate, LLC became registered as an investment adviser under the Connecticut Uniform Securities Act on March 22, 2016.
 


STATISTICAL SUMMARY

Licensing At A Glance
at the end of the quarter

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Broker-dealers Registered   2,207  
  
  
Broker-dealer Agents Registered 163,316   
  
  
Broker-dealer Branch Offices Registered 2,681  
  
  
Investment Advisers Registered 520         
  
SEC Registered Advisers Filing Notice 2,109          
  
Investment Adviser Agents Registered 12,770         
  
Exempt Reporting Advisers
102
  
  
  
Agents of Issuer Registered 19          
  
Conditional Registrations
1
  
  
  
 
 

Securities and Business
Opportunity Filings

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Offerings Reviewed 45     
  
     45 
Investment Company Notice Filings 812      
  
     812
Exemptions and Exemptive Notices 850                 850
 
 
Examinations
     
Broker-dealers 38     
  
      38
Investment Advisers 47     
  
     47
 
 
Securities Investigations
 
Opened 23          
  
23
Closed 7          
  
7
Ongoing as of End of Quarter 126          
  
Subpoenas issued 9                9
Matters referred from Attorney General 1                1
Matters referred from Other Agencies 2                 2
 
 
Business Opportunity Investigations
 
Investigations Opened 0                 0
Investigations Closed 0     
  
     0
Ongoing as of End of Quarter 2                    
 
 
Enforcement: Remedies and Sanctions
 
Notices of Intent to Deny (Licensing) 0
  
  
     
0
Notices of Intent to Suspend (Licensing)
0
  
  
  
0
Notices of Intent to Revoke (Licensing)
1
  
  
  
1
Denial Orders (Licensing) 0     
  
     0
Suspension Orders (Licensing) 0      
  
  
0
Revocation Orders (Licensing) 1     
  
     1
Notices of Intent to Fine 0     
  
     0
Orders Imposing Fine 1     
  
     1
Cease and Desist Orders 0     
  
     0
Notices of Intent to Issue Stop Order 0     
  
  
0
Activity Restrictions/Bars 1     
  
  
1
Stop Orders 0                0
Vacating/Withdrawal/ Modification Orders 0                    0
Restitutionary Orders 0     
  
      0
Injunctive Relief Obtained 0                0
 
 

Proceedings and Settlements

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Administrative Actions
3
  
  
     
3
Consent Orders
3
  
  
     
3
Stipulation and Agreements
1
  
   
     
1
 
 

Monetary Relief*

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Monetary Sanctions Imposed
$621,370
  
  
    
$621,370
Portion attributable to settlements
$21,370
  
  
  
  $21,370
Attributable to Court-Ordered Penalties
0
  
  
  
0
Restitution or Other Monetary Relief
(includes rescission offer amounts)
$1,161,000
  
   
       $1,161,000

*Cents eliminated

 

Securities Referrals

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Criminal Matters
0
  
  
  
0
Civil (Attorney General)
0
  
  
  
0
Other Agency Referrals
1
  
  
  
1



Securities Division