DOB: Summer 2016 Securities Bulletin

Securities and Business Investments Division

Securities Bulletin

Vol. XXX  No. 2 
Summer 2016

Features

Enforcement and Other Highlights 
Contributors

[Vacant], Director
Cynthia Antanaitis, Assistant Director 


Harbor Vista Wealth Management LLC (IARD No. 174937)

On April 22, 2016, the Banking Commissioner issued a Notice of Intent to Deny Registration as an Investment Adviser (Docket No. NDCD-16-8295-S) with respect to Harbor Vista Wealth Management LLC.  The firm, headed by Guy-Max Delphin (CRD No. 3083371), is located at 46 Southfield Avenue, 3 Stamford Landing, Suite 205, Stamford, Connecticut 06902.  The action also included an Order denying the firm’s withdrawal of its registration application as an investment adviser; an Order to Cease and Desist; and a Notice of Intent to Fine.

    
The action was based on the firm’s allegedly misleading responses to certain form filings concerning one Robert Neil Tricarico (CRD No. 1500863) whom the firm identified as an advisory affiliate.  Tricarico was the subject of 1) a February 24, 2015 FINRA suspension for failing to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information regarding the status of compliance (Case No. 10-00920); and 2) an April 30, 2015 FINRA bar (Case No. 2014043719001) for failing to provide information requested by FINRA during a FINRA investigation into whether Tricarico converted customer funds. 
The action alleged that Harbor Vista Wealth Management LLC violated 1) Section 36b-23 of the Connecticut Uniform Securities Act by making a materially false or misleading statement in a document filed with the Commissioner; and 2) Section 36b-31-14e(a) of the Regulations under the Act by failing to promptly file a correcting amendment.

  
The Commissioner ordered that Harbor Vista Wealth Management LLC’s application to withdraw its pending investment adviser registration be denied until final resolution of the matters alleged.  Harbor Vista Wealth Management LLC was afforded an opportunity to request a hearing on the allegations.  No hearing request having been made, the Order to Cease and Desist became permanent on May 11, 2016.  The Notice of Intent to Deny Registration as an Investment Adviser and the Notice of Intent to Fine remain pending.
  

Robert Neil Tricarico (CRD No. 1500863) and RNT Wealth Management LLC

On April 22, 2016, the Banking Commissioner issued a Notice of Intent to Deny Registration as an Investment Adviser Agent, Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. NDCDRF-16-8200-S) against Robert Neil Tricarico, an applicant for registration as an investment adviser agent of Harbor Vista Wealth Management LLC (IARD No. 174937).  Also named in the action was RNT Wealth Management LLC of 6 South Trail, Darien, Connecticut.  Respondent Tricarico was the sole member of RNT Wealth Management LLC.

On November 21, 2014, the executrix of a client’s estate had filed a civil complaint against Tricarico in Connecticut Superior Court (Moore v. Tricarico, Docket No. FBT-CV14-6046911-S) alleging that Tricarico had misappropriated over $1 million from the decedent while Tricarico was associated with Wells Fargo Advisors Financial Network, LLC and LPL Financial LLC.  The civil suit was ultimately settled and withdrawn in April 2015.  Before the civil suit was settled, and in conjunction with a department investigation, Tricarico allegedly made false statements to the Division concerning the sums appropriated.  The Commissioner’s action alleged that such statements violated Section 36b-23 of the Connecticut Uniform Securities Act, and that Tricarico knew the statements were false because he was personally involved in transferring funds from the client's accounts to himself directly and through RNT Wealth Management LLC, an entity he controlled.

The Commissioner’s action also alleged that, in the spring of 2015, Tricarico and RNT Wealth Management LLC violated Section 36b-16 of the Act by offering and selling unregistered promissory notes issued by RNT Wealth Management LLC to at least five of Tricarico’s  ex-broker-dealer clients.  The notes guaranteed a ten percent return.  The action alleged that despite the guaranteed nature of the notes, RNT Wealth Management LLC and Tricarico failed to make any payments to investors.  The action also alleged that the respondents violated the antifraud provisions in Section 36b-4(a) of the Act by failing to provide investors with any offering document or other written disclosure describing the investment’s risks, the registration status of the securities or the fact that RNT Wealth Management LLC and Tricarico lacked funds to make payments on the notes.  In addition, in violation of Section 36b-6 of the Act, Tricarico allegedly transacted business as an unregistered agent of issuer, and RNT Wealth Management LLC unlawfully employed him in that unregistered capacity.

The action was also based on Tricarico’s allegedly misleading responses to certain form filings, responses which violated Section 36b-23 of the Act and 36b-31-14e(a) of the Regulations thereunder.  Specifically, the responses concerned 1) a February 24, 2015 FINRA suspension for failing to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information regarding the status of compliance (Case No. 10-00920); and 2) an April 30, 2015 FINRA bar (Case No. 2014043719001) for failing to provide information requested by FINRA during a FINRA investigation into whether Tricarico converted customer funds.

Since neither Robert Neil Tricarico nor RNT Wealth Management LLC requested a hearing, the Order to Cease and Desist and Order to Make Restitution became permanent as to each of them on May 26, 2016 and May 10, 2016, respectively.  The Notice of Intent to Deny Registration as an Investment Adviser Agent and Notice of Intent to Fine remain pending.

Entertainment Only, LLC – Order to Cease and Desist and Notice of Intent to Fine Issued

On April 20, 2016, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-16-8302-S) against Entertainment Only, LLC, a Florida concert promoter located at 243 Golden Harbour Trail, Bradenton, Florida.  The principal owner of the company is Ryan A. Vincent.  The action alleged that the company violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities in the form of investment agreements.  The action also alleged that, in effecting the securities sales, the company employed an unregistered agent of issuer in violation of Section 36b-6(b) of the Act.  Two Connecticut residents invested a total of $154,000 with Entertainment Only, LLC.  To date, $110,000 in cash has been returned to the investors.

Entertainment Only LLC was provided with an opportunity to request a hearing on the Order to Cease and Desist and Notice of Intent to Fine.

Halcyon Cabot Partners, Ltd. (CRD No. 32664) – Broker-dealer Registration Revoked

On April 20, 2016, the Banking Commissioner entered an Order revoking the 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 had been preceded by a February 16, 2016 Notice of Intent to Revoke Registration as a Broker-dealer that 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.

Since the Notice was returned to the department as undeliverable, and since the firm failed to request a hearing on the allegations in the Notice, those allegations were deemed admitted and the firm’s broker-dealer registration was revoked effective April 20, 2016.


Rockingham Capital Advisors LLC (CRD No. 130690) and Scott Little Frew (CRD No. 1961205) Assessed $5,160 for Unregistered Investment Advisory Activity

On May 16, 2016, the Banking Commissioner entered a Consent Order (No. CO-16-8196-S) with respect to Rockingham Capital Advisors LLC of 141 Founders Road, Glastonbury, Connecticut 06033 and Scott Little Frew, managing member of the firm.  The Consent Order stated that, following the firm’s failure to renew its investment adviser registration when that registration expired on December 31, 2011, the firm continued to transact investment advisory business in Connecticut, and that Scott Little Frew continued to transact business as an investment adviser agent while unregistered.

The Consent Order directed Rockingham Capital Advisors LLC and Frew to cease and desist from regulatory violations.  In addition, the Consent Order required that the firm and Frew remit $5,160 to the department, jointly and severally.  Of that amount, $4,000 constituted an administrative fine and $1,160 represented reimbursement for past due registration fees.

Paul Anthony Steffany (CRD No. 1082262) – Permanent Bar Issued

On May 13, 2016, the Banking Commissioner entered a Consent Order (No. CO-16-8275-S) with respect to Paul Anthony Steffany, a former broker-dealer agent of Raymond James & Associates, Inc.  The Consent Order alleged that grounds existed for initiating administrative proceedings under Section 36b-15(a) of the Connecticut Uniform Securities based on an October 8, 2015 bar (No. 2014041650301) imposed by the Financial Industry Regulatory Authority against Steffany.  The FINRA action had alleged that Steffany was trustee of a testamentary trust for an estate that was a customer of Raymond James; that from January 2007 through April 2014, Steffany violated NASD Rule 2330(a), FINRA Rule 2150(a), NASD Rule 2110, and FINRA Rule 2010 by converting at least $112,742 of estate funds purportedly as compensation for Steffany’s services as trustee; that Steffany converted the funds by transferring monies from the estate’s brokerage account at Raymond James to an estate bank account held outside of the firm, having the bank account statements sent to his home to conceal his conduct from Raymond James and writing checks from the estate account to cover his personal expenses; and that from August 2007 through April 2014, Steffany violated NASD Rule 2110 and FINRA Rule 2010 by forging the signature of a co-executor on at least twelve checks made payable to the estate and later used certain of these funds for his personal use.  According to the FINRA action, Steffany ultimately refunded approximately $112,742 to the estate and resigned as trustee.

The Consent Order permanently barred Steffany from 1) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent; 2) soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut; 3) engaging in any activity that would require Steffany to obtain a license or register under Chapters 668 or 669 of the Connecticut General Statutes governing Nondepository Financial Institutions and Regulated Activities, respectively, and 4) serving as a control person, qualified individual or branch manager of any entity regulated by the Commissioner under Chapter 668 of the Connecticut General Statutes.
 


John A. Tatoian Sanctioned for Offering Unregistered Securities, Acting as Unregistered Agent of Issuer

On April 8, 2016, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-16-8259-S) with John A. Tatoian of Somers, Connecticut.  The Stipulation and Agreement alleged that, in 2013, John A. Tatoian offered unregistered securities of a Florida-based issuer in contravention of Section 36b-16 of the Connecticut Uniform Securities Act and transacted business as an unregistered agent of issuer in violation of Section 36b-6 of the Act.  Two Connecticut residents ultimately purchased securities of the Florida issuer.  In furtherance of his desire to resolve the matter informally, John A. Tatoian provided the Commissioner with evidence that 1) Tatoian had voluntarily remitted $95,000 in restitution to the first investor, and that the issuer had paid the balance of $5,000 to that investor; and 2) Tatoian had voluntarily remitted $4,000 in partial restitution to the second investor, had executed a note obligating Tatoian to pay an additional $44,000 to that investor and that the issuer had paid the balance of $6,000 to the second investor.


Pursuant to the Stipulation and Agreement, John A. Tatoian agreed to refrain from regulatory violations.  Tatoian also agreed, for five years, to retain and consult with experienced securities legal counsel to ensure that future securities-related activities were conducted in compliance with regulatory requirements.  In addition, Tatoian agreed to reimburse the agency $200 for past due agent registration fees.
 
 


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 2,214
  
  
Broker-dealer Agents Registered 163,316 164,563
  
  
Broker-dealer Branch Offices Registered 2,681 2,657
  
  
Investment Advisers Registered 520 535     
  
SEC Registered Advisers Filing Notice 2,109 2,130     
  
Investment Adviser Agents Registered 12,770 13,061    
  
Exempt Reporting Advisers
102
106
  
  
Agents of Issuer Registered 19 19     
  
Conditional Registrations
1
0
  
  
 
 

Securities and Business
Opportunity Filings

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Offerings Reviewed 45 54
  
     99
Investment Company Notice Filings 812 546
  
     1,358
Exemptions and Exemptive Notices 850 885            1,735
 
 
Examinations
     
Broker-dealers 38 24
  
      62
Investment Advisers 47 37
  
     84
 
 
Securities Investigations
 
Opened 23 30     
  
53
Closed 7 31     
  
38
Ongoing as of End of Quarter 126 125     
  
Subpoenas issued 9 8           17
Matters referred from Attorney General 1 3           4
Matters referred from Other Agencies 2 3           5
 
 
Business Opportunity Investigations
 
Investigations Opened 0 0            0
Investigations Closed 0 1
  
     1
Ongoing as of End of Quarter 2 1               
 
 
Enforcement: Remedies and Sanctions
 
Notices of Intent to Deny (Licensing) 0
2
  
     
2
Notices of Intent to Suspend (Licensing)
0
0
  
  
0
Notices of Intent to Revoke (Licensing)
1
0
  
  
1
Denial Orders (Licensing) 0 0
  
     0
Suspension Orders (Licensing) 0 0
  
  
0
Revocation Orders (Licensing) 1 1
  
     2
Notices of Intent to Fine 0 3
  
     3
Orders Imposing Fine 1 0
  
     1
Cease and Desist Orders 0 3
  
     3
Notices of Intent to Issue Stop Order 0 0
  
  
0
Activity Restrictions/Bars 1 1
  
  
2
Stop Orders 0 0           0
Vacating/Withdrawal/ Modification Orders 0 1               1
Restitutionary Orders 0 1
  
      1
Injunctive Relief Obtained 0 0           0
 
 

Proceedings and Settlements

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Administrative Actions
3
4
  
     
7
Consent Orders
3
2
  
     
5
Stipulation and Agreements
1
1
   
     
2
 
 

Monetary Relief*

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Monetary Sanctions Imposed
$621,370
$5,360
  
    
$626,730
Portion attributable to settlements
$21,370
$5,360
  
  
$26,730
Attributable to Court-Ordered Penalties
0
0
  
  
0
Restitution or Other Monetary Relief
(includes rescission offer amounts)
$1,161,000
$154,000
   
       $1,315,000

*Cents eliminated

 

Securities Referrals

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



Securities Division