DOB: Walnut Street and Tower Square

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IN THE MATTER OF:

Walnut Street Securities, Inc.
   (CRD Number 15840)

Tower Square Securities, Inc.
   (CRD Number 833)

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STIPULATION AND
AGREEMENT

File No. ST-05-7239-S

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, Walnut Street Securities, Inc. (“Walnut”) of 13045 Tesson Ferry Road, B1-50, St. Louis, Missouri and Tower Square Securities, Inc. (“Tower Square”) of One CityPlace, 18th Floor, Hartford, Connecticut are under common control and are both registered as broker-dealers under the Act;

WHEREAS, pursuant to Section 36b-6(d) of the Act, the following branch offices of Walnut became registered in Connecticut on the dates indicated:  1) 160 Knickerbocker Avenue, Stamford, Connecticut (the “Stamford Knickerbocker Branch”) (registered November 25, 2003); 2) 191 Post Road West, Westport, Connecticut (the “Westport Branch”) (registered January 29, 2001); 3) 30 Oak Street, Stamford, Connecticut (the “Stamford Oak Street Branch”) (registered August 1, 2003); and 4) 355 Highland Avenue, Suite 201, Cheshire; Connecticut (the “Cheshire Branch”) (registered August 1, 2003);

WHEREAS, on December 13, 1999, Tower Square’s branch office located 15 New Britain Avenue, Unionville, Connecticut (the “Unionville Branch”) became registered under Section 36b-6(d) of the Act;

WHEREAS, on October 20, 2005 the parent firm of Walnut and Tower Square notified the Commissioner in writing that, with respect to Walnut, the Stamford Knickerbocker Branch, the Westport Branch, the Stamford Oak Street Branch and the Cheshire Branch had ceased operations on December 8, 2003, November 27, 2002, November 14, 2003 and February 27, 2004, respectively;

WHEREAS, on October 20, 2005 the parent firm of Walnut and Tower Square notified the Commissioner that, with respect to Tower Square, the Unionville Branch had ceased operations on July 23, 2003;

WHEREAS, the Commissioner, through the Securities and Business Investments Division (the "Division") of the Department of Banking, conducted a follow-up investigation pursuant to Section 36b-26 of the Act into the activities of Walnut, Tower Square, and their 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, Section 36b-6(f) of the Act provides, in part, that:  “Any broker-dealer   . . . ceasing to transact business at any branch office or main office in this state shall, in addition to providing written notice to the commissioner prior to the termination of business activity at that office, (1) provide written notice to each customer or client serviced by such office at least ten business days prior to the termination of business activity at that office or (2) demonstrate to the commissioner, in writing, the reasons why such notice to customers or clients cannot be provided within the time prescribed ... The notice to customers or clients shall contain the following information:  The date and reasons why business activity will terminate at the office; if applicable, a description of the procedure the customer or client may follow to maintain the customer’s account at any other office of the broker-dealer or investment adviser; the procedure for transferring the customer’s or client’s account to another broker-dealer or investment adviser; and the procedure for making delivery to the customer or client of any funds or securities held by the broker-dealer or investment adviser.”

WHEREAS, Section 36b-31-6f (b)of the Regulations under the Act adds that:  “Each registered broker-dealer . . . shall establish, enforce and maintain a system for supervising the activities of its agents . . . and Connecticut office operations that is reasonably designed to achieve compliance with applicable securities laws and regulations”;

WHEREAS, Walnut and Tower Square orally represented to the Division that while their respective agents had provided the written notice to customers or clients required by Section 36b-6(f) of the Act, neither firm was able provide copies of the written notice provided by the agents;

WHEREAS, the Commissioner alleges that 1) Walnut violated Section 36b-6(f) of the Act by failing to provide written notice to the Commissioner prior to the termination of business activity at the Stamford Knickerbocker Branch, the Westport Branch, the Stamford Oak Street Branch and the Cheshire Branch; 2) Tower Square violated Section 36b-6(f) of the Act by failing to provide written notice to the Commissioner prior to the termination of business activity at the Unionville Branch; and 3) Walnut and Tower Square violated Section 36b-31-6f(b) of the Regulations by failing to enforce a system for supervising the activities of its agents and Connecticut office operations that was reasonably designed to achieve compliance with Section 36b-6(f) of the Act;

WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;

WHEREAS, Walnut and Tower Square desire to settle the matters described herein and voluntarily enter into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein;

WHEREAS, Walnut and Tower Square, through their execution of this Stipulation and Agreement, voluntarily waive any rights each may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;

NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:

1. No later than the date this Stipulation and Agreement is executed by the Commissioner, Walnut shall remit to the department via check payable to "Treasurer, State of Connecticut" the sum of two thousand dollars ($2,000) as an administrative fine for failing to provide written notice to the Commissioner prior to the termination of business activity at the Stamford Knickerbocker Branch, the Westport Branch, the Stamford Oak Street Branch and the Cheshire Branch;
2. No later than the date this Stipulation and Agreement is executed by the Commissioner, Tower Square shall remit to the department via check payable to "Treasurer, State of Connecticut" the sum of five hundred dollars ($500) as an administrative fine for failing to provide written notice to the Commissioner prior to the termination of business activity at the Unionville Branch;
3. No later than the date this Stipulation and Agreement is executed by the Commissioner, Walnut and Tower Square shall, jointly and severally, remit to the department via check payable to “Treasurer, State of Connecticut” the sum of one thousand five hundred dollars ($1,500) as an administrative fine for failing to enforce a system for supervising the activities of its agents and Connecticut office operations that was reasonably designed to achieve compliance with Section 36b-6(f) of the Act;
4. Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Walnut, and/or Tower Square based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by Walnut, Tower Square or both and reflected herein is subsequently discovered to be untrue; and
[5.] This Stipulation and Agreement shall become binding when executed by all parties hereto.
 
 
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.

               ________/s/_________
 John P. Burke
            Banking Commissioner

Dated at Hartford, Connecticut                 
this 3rd day of March 2006.                         
 

I, Craig W. Markham, state on behalf of Walnut Street Securities, Inc. and Tower Square Securities, Inc., that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Walnut Street Securities, Inc. and Tower Square Securities, Inc., and that Walnut Street Securities, Inc. and Tower Square Securities, Inc. agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
                                                                   

      Walnut Street Securities, Inc.

By
       ________/s/_______________
      Craig W. Markham
      President

    

      Tower Square Securities, Inc.

By
       ________/s/_______________
      Craig W. Markham
      President



On this 27th day of January 2006, personally appeared Craig W. Markham, signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of Walnut Street Securities, Inc. and Tower Square Securities, Inc., both corporations, and acknowledged the same to be his free act and deed, before me.


_______________/s/_______________________
Notary Public/Commissioner of the Superior Court
My Commission Expires:  11-18-2008


 

 

Administrative Orders and Settlements