DOB: Meeting Street Consent Order

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IN THE MATTER OF:

MEETING STREET BROKERAGE, LLC

    (CRD No. 34764)

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CONSENT ORDER

No. CO-06-7254-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, Meeting Street Brokerage, LLC (“Meeting Street”) of 969 Southeast Federal Highway, Suite 100, Stuart, Florida, filed an application for registration as a broker-dealer under the Act and voluntarily disclosed in such application that it had effected securities transactions for one Connecticut customer at a time when Meeting Street was not registered as a broker-dealer in Connecticut;
 
WHEREAS, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (the “Division”), conducted a follow-up investigation pursuant to Sections 36b-8 and 36b-26 of the Act into the activities of Meeting Street to assess the accuracy of the information provided by Meeting Street as well as the firm’s compliance with the Act and the Regulations thereunder;
 
WHEREAS, the Commissioner ascertained, as a result of such investigation, that:  1) from at least August 2004 through March 2005, Meeting Street transacted business as a broker-dealer absent registration in contravention of Section 36b-6(a) of the Act; 2) after its application was filed, but before its registration became effective in Connecticut, Meeting Street continued to effect multiple securities transactions for at least one Connecticut investor; 3) Meeting Street employed at least one unregistered broker-dealer agent in contravention of Section 36b-6(b) of the Act; and 4) in contravention of Section 36b-16 of the Act, certain penny stocks sold by Meeting Street in Connecticut, to wit, Marmion Industries and CorpHQ, were not registered, nor had the Division received a claim of exemption or an indication of covered security status with respect to such securities;
 
WHEREAS, Meeting Street maintains that the Connecticut securities trades were unsolicited; that only one purchaser was involved; that such purchaser had represented to Meeting Street that it was an investment banking consulting company; and that Meeting Street had implemented procedures to improve its blue sky compliance systems;
 
WHEREAS, Meeting Street neither admits nor denies any of the Commissioner’s allegations, but expressly consents to the Commissioner’s jurisdiction in this matter and to the entry of the sanctions in this Consent Order;
 
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 . . . or, in the case of a broker-dealer . . . any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer . . . (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; [or] (K) has failed reasonably to supervise:  (i) The agents . . . of such applicant . . . if the applicant . . . is a broker-dealer . . . . ” ;
 
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 granting Meeting Street 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, Section 36b-16 of the Act provides that:  “No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-33, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21”;
 
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 Meeting Street, 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 Meeting Street, including proceedings to deny or condition Meeting Street’s registration as a broker-dealer under the Act, proceedings to enter an order to cease and desist against Meeting Street 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 Meeting Street an opportunity for a hearing:

1. From at least August 2004 through March 2005, Meeting Street transacted business as a broker-dealer absent registration in contravention of Section 36b-6(a) of the Act;
2. From at least August 2004 through March 2005, Meeting Street employed at least one unregistered broker-dealer agent in contravention of Section 36b-6(b) of the Act; and
3. In contravention of Section 36b-16 of the Act, certain penny stocks sold by Meeting Street in Connecticut, to wit, Marmion Industries and CorpHQ, were not registered, nor had the Division received a claim of exemption or an indication of covered security status with respect to such securities;
 

CONSENT TO ENTRY OF SANCTIONS AND REMEDIAL MEASURES

WHEREAS Meeting Street, through its execution of this Consent Order, consents to the Commissioner issuing an order imposing on it the following sanctions and remedial measures:

1. Meeting Street shall implement revised supervisory and compliance procedures designed to improve regulatory compliance, which procedures shall, at a minimum, provide for enhanced monitoring of state licensing and securities registration requirements;
2. For a two-year period, commencing on the date this Consent Order is entered by the Commissioner, Meeting Street 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 entities and individuals located in Connecticut and initiated against Meeting Street or any of Meeting Street’s members, 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 such report shall be due no later than ten business days following the close of the quarter ending June 30, 2006, and the final report shall be due no later than ten business days following the close of the quarter ending June 30, 2008; [and]
3. No later than the date this Consent Order is entered by the Commissioner, Meeting Street shall remit to the department via certified bank check payable to “Treasurer, State of Connecticut” the sum of five thousand eight hundred dollars ($5,800), five thousand dollars ($5,000) of which shall constitute an administrative fine, three hundred dollars ($300) of which shall represent past due registration fees and five hundred dollars ($500) of which shall constitute reimbursement for division investigative costs;

ORDER

THE COMMISSIONER HEREBY ORDERS THAT:

1. The 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 Meeting Street, its members, 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 Meeting Street and reflected herein is subsequently determined to be untrue;
3. Contemporaneously with the entry of this Consent Order by the Commissioner, the name "Meeting Street Brokerage, LLC” 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/_________
 John P. Burke
            Banking Commissioner

Dated at Hartford, Connecticut                 
this 17th day of May 2006.                         
 

CONSENT TO ENTRY OF ORDER

I, Vincent Esposito, state on behalf of Meeting Street Brokerage, 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 Meeting Street Brokerage, LLC; that Meeting Street Brokerage, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Meeting Street Brokerage, 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. 


Meeting Street Brokerage, LLC

By

  ________/s/_______________
 Vincent Esposito
 Managing Member 


On this 16th day of May 2006, personally appeared Vincent Esposito, 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 Meeting Street Brokerage, LLC, a limited liability company, and acknowledged the same to be his free act and deed, before me.

_______________/s/_______________________
Notary Public
My Commission Expires:  2-27-10



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