DOB: McMahan Securities Consent Order

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IN THE MATTER OF:

MCMAHAN SECURITIES CO. L.P.


(CRD Number 22123 ) 
   

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CONSENT ORDER

No. CO-09-7623-S

PRELIMINARY STATEMENT

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, McMahan Securities Co. L.P. (“McMahan”) is a broker-dealer registered under the Act and having its principal office located at 500 West Putnam Avenue, Greenwich, Connecticut;
 
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an investigation of McMahan’s activities pursuant to Section 36b-26(a) of the Act and an examination of McMahan’s books and records pursuant to Section 36b-14(d) of the Act and 36b-31-14f of the Regulations to determine whether McMahan had violated, was violating or was about to violate any provision of the Act or any regulation or order under the Act (the “Investigation and Examination”);
 
WHEREAS, as a result of the Investigation and Examination, the Division obtained evidence, as more fully described in the Findings herein, that would support the initiation of administrative proceedings under Section 36b-15 of the Act to suspend or revoke McMahan’s broker-dealer registration under the Act or to restrict or impose conditions on the securities activities that the firm may perform in this state; and/or proceedings under Section 36b-27 of the Act seeking the entry of an order to cease and desist and/or an order imposing an administrative fine against McMahan;
 
WHEREAS, an administrative proceeding initiated under Sections 36b-27 or 36b-15 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…consent order”;
 
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, without holding a hearing and without trial or adjudication of any issue of fact or law, and prior to the initiation of any formal proceeding, the Commissioner and McMahan reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
 
WHEREAS, McMahan, without admitting or denying any of the Commissioner’s allegations or findings, expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
 
WHEREAS, McMahan has filed applications to register as agents those individuals whose unregistered activity was the subject of the Division’s Investigation and Examination;
 
WHEREAS, the Division acknowledges that McMahan has provided a written representation to the Division that McMahan has implemented policies and procedures to ensure that its records are available to the Commissioner during examinations;
 
WHEREAS, McMahan, through its execution of this Consent Order, represents and agrees that none of the violations alleged in this Consent Order shall occur in the future;   

CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, McMahan, 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;

CONSENT TO ENTRY OF FINDINGS

WHEREAS, McMahan, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner:

1. 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;
2. In contravention of Section 36b-6(b) of the Act, McMahan employed numerous unregistered agents who effected securities transactions in this state, many of which were unregistered for an extended period of time;
3. In its failure to uncover such unregistered activity, McMahan failed to implement procedures designed to achieve compliance with applicable securities laws and regulations as required under Section 36b-31-6f of the Regulations;

CONSENT TO ENTRY OF SANCTIONS

WHEREAS, McMahan, through its execution of this Consent Order, consents to the Commissioner issuing an order imposing on it the following sanctions:

1. McMahan, its partners, officers, representatives, agents, employees, affiliates and successors in interest shall cease and desist from engaging, directly or indirectly, in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, including, without limitation, employing unregistered agents in contravention of Section 36b-6(b) of the Act;
2. McMahan will establish, implement and maintain revised written supervisory procedures and update its supervisory systems as required under Section 36b-31-6f of the Regulations to ensure that all persons who require agent registration are properly registered;
3. No later than the date this Consent Order is entered by the Commissioner, McMahan shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum of twenty thousand one hundred thirty dollars ($20,130), thirteen thousand dollars ($13,000) of which shall constitute an administrative fine and seven thousand one hundred and thirty dollars ($7,130) of which shall represent reimbursement for past due agent registration fees;

CONSENT ORDER

THE COMMISSIONER HEREBY ORDERS THAT:

1. The Findings and 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 McMahan, its partners, officers, representatives, agents, employees, affiliates and successors in interest 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 McMahan and reflected herein is subsequently determined to be untrue; and
3. This Consent Order shall become final when entered.
 
 

               ________/s/_________ 
    Howard F. Pitkin
            Banking Commissioner

So ordered at Hartford, Connecticut                 
this 5th day of January 2010.

CONSENT TO ENTRY OF ORDER

I, David Bruce McMahan, state on behalf of McMahan Securities Co. L.P., 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 McMahan Securities Co. L.P.; that McMahan Securities Co. L.P. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that McMahan Securities Co. L.P. voluntarily consents to the entry of this Consent Order expressly waiving any rights it may have to a hearing on the matters described herein.     


      McMahan Securities Co. L.P.

By
      _________/s/__________ 
      David Bruce McMahan 
      Chief Executive Officer


On this 30th day of December, 2009 personally appeared David Bruce McMahan, 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 McMahan Securities Co. L.P., a limited partnership, and acknowledged the same to be his free act and deed, before me.


_______________/s/________________________
Notary Public/Commissioner of the Superior Court
My Commission Expires: May 31, 2013

  


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