DOB: Sands Brothers Asset Mgt Stipulation

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IN THE MATTER OF:

SANDS BROTHERS ASSET
MANAGEMENT LLC

(CRD NO. 110076)

("Respondent")

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STIPULATION
AND AGREEMENT

Docket No. RCF-2007-7093-S

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies promulgated under the Act (“Regulations”);

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Respondent to determine whether it had violated, was violating or was about to violate any provisions of the Act or Regulations (“Investigation”);

WHEREAS, on November 29, 2004, Respondent, Laidlaw & Company (UK) Ltd., f/k/a Sands Brothers International Ltd. (“Laidlaw”) (CRD No. 119037), and Martin Scott Sands (CRD No. 1186904) (“Martin Sands”), a registered broker-dealer agent of Laidlaw, entered into a consent order with the Commissioner (“2004 Consent Order”), pursuant to Section 36b-15(a) of the Act, conditioning the registration of Martin Sands as an investment adviser agent of Respondent, and requiring reporting of his securities-related activities by, inter alia, Respondent;

WHEREAS, as one of the conditions ordered by the Commissioner in the 2004 Consent Order, Respondent was required to, inter alia, “notify the Division Director in writing each calendar quarter of any securities-related complaints, actions or proceedings (including arbitrations and updates thereto) involving . . . [Martin Sands] which occur during the quarter, including the disposition thereof.  Such report shall be provided no later than ten business days following the close of the quarter and shall include any written reprimands, censures or warnings issued by . . . [Respondent] to . . . [Martin Sands].  If no complaints, actions, proceedings, firm actions or updates exist for the quarter, the report shall so indicate.  The first report shall cover the quarter ending December 31, 2004, and the final report shall cover the quarter ending December 31, 2006”;

WHEREAS, as a result of the Investigation, the Division alleges that Respondent failed to disclose:  (1) an October 1, 2004, claim for arbitration filed against Martin Sands with the National Association of Securities Dealers (“NASD”) in the quarterly report filed with the Division Director for the quarter ending December 31, 2004; (2) a May 16, 2005, Consent Order of Withdrawal issued against Martin Sands by the State of Illinois, Secretary of State, Securities Department, in the quarterly report filed with the Division Director for the quarter ending June 30, 2005; and (3) a February 1, 2006, Settlement Agreement and Release of the NASD arbitration claims in the quarterly report filed with the Division Director for the quarter ending March 31, 2006;

WHEREAS, as a result of the Investigation, the Division alleges that Respondent, in violation of Section 36a-23 of the Act, filed quarterly reports with the Commissioner which were, at the time and in the light of the circumstances under which they were made, false or misleading in any material respect and omitted to state a material fact;

WHEREAS, on May 18, 2007, the Commissioner, acting pursuant to Sections 36b-27(a), 36b-15(a) and 36b-27(d) of the Act and Section 4-182(c) of the Connecticut General Statutes, issued an Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing (collectively “Order”) against, inter alia, Respondent, which Order is incorporated by reference herein;

WHEREAS, the Order stated that the Commissioner had ordered Respondent to cease and desist from violating the Consent Order and Section 36b-23 of the Act; that the Commissioner intended to impose a fine against Respondent; that a hearing would be held on July 17, 2007, on the matters alleged in the Fine Notice (“Fine Hearing”); and that, if Respondent failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of Four Hundred Thousand Dollars ($400,000) be imposed upon Respondent;

WHEREAS, Respondent requested a hearing on the matters alleged in the Order (“Hearing”);

WHEREAS, Respondent and the Division requested continuances of the Fine Hearing and Hearing;

WHEREAS, the Fine Hearing and Hearing are currently subject to an open-ended continuance;

WHEREAS, Respondent, through its execution of this Stipulation and Agreement, without either admitting or denying the Commissioner’s allegations set forth in the Order, voluntarily enters into this Stipulation and Agreement solely for the purpose of obviating the need for formal administrative proceedings concerning the allegations contained in the Order;

WHEREAS, an administrative proceeding initiated under Sections 36b-15(a) and 36b-27 of the Act and Section 4-182(c) of the Connecticut General Statutes would constitute a “contested case” within the meaning of Section 4-166(2) of the Connecticut General Statutes;

WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by stipulation, unless precluded by law;

WHEREAS, Respondent and the Commissioner now desire to resolve the matters alleged in the Order;

WHEREAS, Respondent agrees that the Order may be used in construing the terms of this Stipulation and Agreement and agrees to the language in this Stipulation and Agreement;

AND WHEREAS, Respondent, through its execution of this Stipulation and Agreement, voluntarily waives any rights it 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 agree and stipulate as follows:

1.
Respondent shall cease and desist from violating the Act, Regulations and orders thereunder, including, but not limited to, the 2004 Consent Order and Section 36b-23 of the Act;
2.
Respondent shall:
    
(i) 
No later than the date of the issuance of this Stipulation and Agreement, designate and retain an independent consultant(s) (“Consultant”) sufficiently experienced in securities regulatory, supervisory, and compliance issues, specifically knowledgeable about the Act and Regulations, and not unacceptable to the Division Director, to conduct an initial written review (“Initial Review”) and four (4) subsequent compliance reviews (“Compliance Reviews”).  The Initial Review shall examine Respondent’s supervisory and compliance policies and procedures and the adequacy of current compliance employee staffing and experience levels, and make recommendations to ensure that such compliance policies and procedures safeguard against violations of the Act and Regulations. The Compliance Reviews shall examine and detail Respondent’s ongoing compliance with the recommendations made in the Initial Review, make recommendations to ensure that Respondent’s compliance policies and procedures continue to safeguard against violations of the Act or Regulations and any orders issued thereunder, and ensure that all compliance employee staffing and experience levels continue to be adequate;
(ii) Within ninety (90) days of the issuance of this Stipulation and Agreement, submit a copy of the Initial Review to the Division Director; within six (6) months of the submission of the Initial Review, submit a copy of the first Compliance Review; within six (6) months of the submission of the first Compliance Review, submit a copy of the second Compliance Review; within one (1) year of the submission of the second Compliance Review, submit a copy of the third Compliance Review; within one (1) year of the submission of the third Compliance Review, submit a copy of the fourth and final Compliance Review;
(iii) Submit, simultaneously with the Initial Review and each Compliance Review, a written report to the Division Director, signed and attested to by the Chief Compliance Officer of Respondent, disclosing any securities-related complaints, actions or proceedings (including arbitrations and updates thereto) which occur during the relevant time period, including the disposition thereof (“Litigation Report”).  If no complaints, actions, proceedings, firm actions or updates exist for the relevant time period, the Litigation Report shall so indicate;
(iv) Submit, simultaneously with the Initial Review and each Compliance Review, a written report to the Division Director, signed and attested to by the Chief Compliance Officer of Respondent, indicating the steps that have been taken to implement the Consultant’s recommendations found in the Initial Review and each Compliance Review;
(v) In the event that a determination be made at any time not to implement any particular recommendation(s) made by the Consultant, provide a written explanation to the Division Director indicating the reason(s) for not implementing such recommendation(s); and
(vi) In the event that the Consultant is terminated or ceases working for Respondent prior to the submission of the final Compliance Review, immediately notify the Division Director in writing and provide the Division Director with a written statement detailing the circumstances surrounding the departure.  In a timely fashion thereafter, retain a new Consultant sufficiently experienced in securities regulatory, supervisory, and compliance issues, specifically knowledgeable with the Act and Regulations, and not unacceptable to the Division Director;
3.
Commencing on the date of the issuance of this Stipulation and Agreement and for a period of four (4) years, Respondent shall provide access to any and all books, papers, correspondence, memoranda, agreements or other documents or records which the Commissioner deems necessary to determine whether Respondent, or any of its principals, officers, agents, employees and representatives, has violated, is violating or is about to violate any provisions of the Act or Regulations;
4.
In the event that the Chief Compliance Officer is terminated or ceases working for Respondent prior to the submission of the final Compliance Review, Respondent shall immediately notify the Division Director in writing and provide the Division Director with a written statement detailing the circumstances surrounding the departure.  In a timely fashion thereafter, retain a new Chief Compliance Officer sufficiently experienced in securities regulatory, supervisory, and compliance issues, specifically knowledgeable about the Act and Regulations, and not unacceptable to the Division Director;
5. No later than the date this Stipulation and Agreement is issued by the Commissioner, Respondent shall remit to the Department of Banking, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of Forty-two Thousand Five Hundred Dollars ($42,500) representing an administrative fine of Thirty-two Thousand Five Hundred Dollars ($32,500) and investigative costs of Ten Thousand Dollars ($10,000);
6. Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Respondent and any of its principals, officers, agents, employees and representatives based upon a violation of this Stipulation and Agreement or if any representation made by Respondent and reflected herein is subsequently discovered to be untrue.  For purposes of this paragraph, any violation of this Stipulation and Agreement shall be deemed to be a violation of an order of the Commissioner; and
7. This Stipulation and Agreement shall become binding when executed by the Commissioner.

IN WITNESS WHEREOF, the parties hereto have executed this Stipulation and Agreement on the dates indicated.

________/s/_________
Howard F. Pitkin
Banking Commissioner


Executed at Hartford, Connecticut,
this 9th day of September 2009.


I, Martin Sands, state on behalf of Sands Brothers Asset Management, LLC, 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 Sands Brothers Asset Management, LLC; that Sands Brothers Asset Management, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Sands Brothers Asset Management, LLC consents to the issuance of this Stipulation and Agreement, expressly waiving any right to a hearing on the matters described herein.


By ________/s/____________________
    Name:  Martin Sands
    Title:  [blank in original]
    Sands Brothers Asset Management LLC


State of:  Connecticut

County of:  Fairfield


On this the 27th day of Aug, before me, Theresa M. Bildt, the undersigned officer, personally appeared Martin S. Sands, who acknowledged himself to be the Co-Chairman of Sands Brothers Asset Management LLC, a limited liability company, and that he, as such Co-Chairman, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Co-Chairman.

In witness whereof I hereunto set my hand.


____________/s/__________________________
Notary Public/Commissioner of the Superior Court
Date Commission Expires: 10/31/2013


I, Steven Sands, state on behalf of Sands Brothers Asset Management, LLC, 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 Sands Brothers Asset Management, LLC; that Sands Brothers Asset Management, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Sands Brothers Asset Management, LLC consents to the issuance of this Stipulation and Agreement, expressly waiving any right to a hearing on the matters described herein.


By ________/s/____________________
    Name:  Steven Sands
    Title:  [blank in original]
    Sands Brothers Asset Management LLC



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