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IN THE MATTER OF:
CRD NO. 136681
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NOTICE OF INTENT TO DENY
REGISTRATION AS INVESTMENT
NOTICE OF RIGHT TO HEARING
DOCKET NO. ND-2007-7293-S
I. PRELIMINARY STATEMENT
||The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”).|
Pursuant to Section 36b-8 of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation of Respondent. Section 36b-8 of the Act provides, in pertinent part, that:
On receipt of the application for registration as a[n] . . . investment adviser . . . the commissioner may make such investigation of the applicant and the applicant’s affairs as the commissioner deems necessary or advisable.
As a result of the investigation by the Division, the Commissioner brings this administrative action pursuant to Section 36b-15(a) of the Act to deny the investment adviser registration of Respondent in Connecticut. Section 36b-15(a) of the Act provides, in pertinent part, that:
The commissioner may, by order, deny . . . any registration . . . if the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . or, in the case of a[n] . . . investment adviser, any partner, officer, or director . . . (A) [h]as filed an application for registration which as of its effective date . . . contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact . . . [or] (D) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities or commodities business . . . .
Section 36b-15(e)(1) of the Act provides, in pertinent part, that:
[W]ithdrawal of an application for registration as a[n] . . . investment adviser . . . becomes effective ninety days after receipt of . . . a notice of intent to withdraw such application for registration . . . unless . . . a proceeding to deny . . . is instituted within ninety days after the . . . notice is filed. If a proceeding is . . . instituted, withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines.
Respondent is a corporation with its principal place of business at 48 Route 6, Suite G01, Yorktown Heights, New York 10598.
III. STATEMENT OF FACTS
||Frederick Augustus Moran (“Moran”) is Chairman, President and Chief Investment Officer of Respondent.
||On April 4, 1997, the United States District Court for the Southern District of New York entered a Final Judgment of Permanent Injunction and Other Equitable Relief against Moran in a civil action brought by the Securities and Exchange Commission (“SEC”) (SEC v. Frederick Augustus Moran et al., Case No. 95 Civ. 4472 (BN)). The court’s order permanently restrained and enjoined Moran from (1) violating the antifraud provisions in Section 206(2) of the Investment Advisers Act of 1940; (2) violating Section 204 of the Investment Advisers Act of 1940 and Rule 204-1(b)(1) thereunder by, inter alia, failing promptly to file an amendment on Form ADV correcting such information if the information contained in response to Items 1-5, 8, 11, 13A, 13B, 14A and 14B of Part 1 of any application for registration as an investment adviser or any amendment thereto filed by Moran became inaccurate; (3) violating Section 207 of the Investment Advisers Act of 1940; and (4) violating Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 15b3-1 thereunder.|
||On December 8, 2005, Respondent filed with the Commissioner a Form ADV, Uniform Application for Investment Adviser Registration (“Application”), for registration as an investment adviser in Connecticut.|
||In Item 11(H)(1) of the Application, Respondent was asked whether “any domestic . . . court . . . [has] in the past ten years, enjoined you or any advisory affiliate in connection with any investment-related activity”. The Glossary of Terms to the Application defines “advisory affiliate” as “all of your officers, partners or directors (or any person performing similar functions) . . . ”. Respondent responded to this question in the negative.|
On December 14, 2006, Respondent filed with the Commissioner a Form ADV-W, Notice of Withdrawal from Registration as an Investment Adviser, to withdraw its Application.
IV. STATUTORY BASIS FOR DENIAL OF REGISTRATION AS
a. False or Misleading Statements in an Application
||Paragraphs 1 through 9, inclusive, are incorporated and made a part hereof as if more fully set forth herein.|
||Respondent’s response in the negative when asked whether “any domestic . . . court . . . [has] in the past ten years, enjoined you or any advisory affiliate in connection with any investment-related activity”, as more fully described in paragraph 8, is a statement which was, in light of the circumstances under which it was made, false or misleading with respect to a material fact. Such false or misleading statement constitutes grounds for denial of the Application, pursuant to Section 36b-15(a)(2)(A) of the Act.|
b. Permanent Enjoinment from Engaging in Conduct or
Practices Involving an Aspect of the Securities Business
||Paragraphs 1 through 11, inclusive, are incorporated and made a part hereof as if more fully set forth herein.|
The decision by the United States District Court for the Southern District of New York to permanently enjoin Moran from violating, inter alia, various sections of the Investment Advisers Act and the Exchange Act, as more fully described in paragraph 6, involves an officer of the Respondent being permanently enjoined by a court of competent jurisdiction from engaging in or continuing any conduct or practice involving an aspect of the securities business. Such permanent enjoinment constitutes grounds for denial of the Application, pursuant to Section 36b-15(a)(2)(D) of the Act.
V. NOTICE OF INTENT TO DENY REGISTRATION AS
INVESTMENT ADVISER AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that there are grounds to deny Respondent’s application for registration as investment adviser, pursuant to Sections 36b-15(a)(2)(A) and 36b-15(a)(2)(D) of the Act;
WHEREAS, the Commissioner believes that the issuance of an order denying registration as an investment adviser in Connecticut would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, Section 36b-15(f) of the Act provides, in pertinent part, that “[n]o order may be entered under this section . . . without (1) appropriate prior notice to the applicant . . ., (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”.
NOW THEREFORE, notice is hereby given to Respondent that its application for registration as investment adviser in Connecticut shall be denied, subject to its right to request a hearing on the allegations set forth above.
A hearing will be granted to Respondent if a written request for a hearing is received by the Department of Banking, Legal Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following its receipt of this Notice. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on May 2, 2007, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the Connecticut General Statutes. At such hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If Respondent fails to request a hearing within the prescribed time period, the Commissioner shall issue an order denying registration as investment adviser in Connecticut.
Dated at Hartford, Connecticut
this 13th day of March 2007. ________/s/_________
Howard F. Pitkin
I hereby certify that on this 13th day of March 2007, the foregoing Notice of Intent to Deny Registration as Investment Adviser Agent and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Moran Capital Management, Inc., 48 Route 6, Suite G01, Yorktown Heights, New York 10598, registered mail no. RB028033834US.
Jesse B. Silverman
Administrative Orders and Settlements