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IN THE MATTER OF:
JEFFERIES & COMPANY, INC.
(CRD No. 2347)
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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 Jefferies & Company, Inc. (“Jefferies”) of 11100 Santa Monica Boulevard, 11th Floor, Los Angeles, CA is a registered broker-dealer under the Act;
WHEREAS the Commissioner, through the Securities and Business Investments Division of the Department of Banking, has conducted an investigation pursuant to Section 36b-26 of the Act into the activities of Jefferies its members, 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 the Commissioner, as a result of such investigation, alleges that from the period of January 1, 1999 to February 6, 2006, Jefferies employed unregistered broker-dealer agents that operated from a Jefferies branch office located at One Station Place, Suite Three North, Stamford, Connecticut, in violation of Section 36b-6(b) of the Act;
WHEREAS all agents identified, have filed and become registered as of the date of this order.
WHEREAS Jefferies represented to the Commissioner that 1) its specified agents were not registered in this state due to its exception reporting system failing to recognize the registration needs of any employees that did not have the job title of “Account Executive”; and 2) the majority of its specified agents’ clients were "institutional" in nature;
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;
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 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 the Commissioner finds that the entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS Jefferies, through its execution of this Consent Order, voluntarily waives the following rights:
||To be afforded written notice and opportunity for a hearing within the meaning of Sections 36b-27(a) and 4-177(a) of the Connecticut General Statutes;|
||To present evidence and argument and to otherwise avail itself of Section 36b-27(a), and 4-177(a) of the Connecticut General Statutes;|
||To present its position in a hearing in which it is represented by counsel;|
||To have a written record of the hearing made and a written decision issued by a hearing officer; and|
||To seek judicial review of, or otherwise challenge or contest, the matters described herein, including the validity of this Consent Order;|
CONSENT TO ENTRY OF FINDINGS
Jefferies, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner:
||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;|
||That from approximately January 1, 1999 to February 6, 2006 Jefferies employed unregistered broker-dealer agents in violation of Section 36b-6(b) of the Act.|
CONSENT TO ENTRY OF SANCTIONS AND REMEDIAL MEASURES
WHEREAS Jefferies, through its execution of this Consent Order, consents to the Commissioner issuing an order imposing on it the following sanctions and remedial measures:
||No later than the date this Consent Order is executed by the Commissioner, Jefferies shall implement revised supervisory and compliance procedures designed to prevent and detect violations of the Act and the Regulations thereunder, which procedures shall, at a minimum, provide for enhanced monitoring of state broker-dealer agent registration requirements;|
||Jefferies shall refrain from engaging in conduct which would constitute a violation of the Act or the Regulations thereunder;|
||No later than the date this Consent Order is entered by the Commissioner, Jefferies shall remit to the department, via certified bank check, payable to "Treasurer, State of Connecticut", the sum of fourteen thousand four hundred fifty dollars ($14,450), ten thousand dollars ($10,000) of which shall constitute an administrative fine, and four thousand four hundred fifty dollars ($4,450) of which shall represent past due registration fees. |
||And, whereas Jefferies specifically assures the Commissioner that none of the violations alleged shall occur in the future; |
THE COMMISSIONER HEREBY ORDERS THAT:
||The Findings and Sanctions set forth above be and are hereby entered;|
||Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Jefferies, 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 Jefferies and reflected herein is subsequently determined to be untrue;|
||This Consent Order shall become final when issued.|
John P. Burke
So ordered at Hartford, Connecticut
this 8 day of September 2006.
CONSENT TO ENTRY OF ORDER
I, Cathleen Shine, state on behalf of Jefferies & Company, 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 Jefferies & Company, Inc; that Jefferies & Company, Inc agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Jefferies & Company, 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.
Jefferies & Company, Inc.
On this 14th day of August 2006, personally appeared Cathleen Shine, 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 Jefferies & Company, Inc, a corporation, and acknowledged the same to be her free act and deed, before me.
My Commission Expires: 4/18/2009
Administrative Orders and Settlements