DOB: Verition - Consent Order Conditioning Withdrawal

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IN THE MATTER OF:

VERITION SECURITIES LLC

   (CRD number 150918)


 

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  CONSENT ORDER CONDITIONING
  EFFECTIVENESS OF WITHDRAWAL
  OF APPLICATION FOR
  REGISTRATION AS A
  BROKER-DEALER

  No. CO-10-7819-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, on October 8, 2009, Verition Securities LLC. (“Verition”) of One American Lane, Greenwich, Connecticut filed with the Commissioner an application for registration as a broker-dealer pursuant to Sections 36b-7 and 36b-32 of the Act;

WHEREAS, the Commissioner, acting pursuant to Sections 36b-8 and 36b-26 of the Act and through the Securities and Business Investments Division (“the Division”) of the Department of Banking, conducted an investigation into the activities of Verition, its officers, owners, control persons, and affiliates to assess the accuracy of the information provided by the firm in its application for broker-dealer registration and in the applications of associated individuals seeking registration as broker-dealer agents of Verition under the Act;

WHEREAS, in connection with its application for broker-dealer registration, Verition, a non-FINRA member, filed with the Division Form U-4s (Uniform Application for Securities Industry Registration or Transfer) for several individuals, including a control person and indirect owner of Verition (the “Control Person Form U-4”);

WHEREAS, the Division ascertained, as a result of such investigation that 1) the Control Person Form U-4 did not disclose, as it should have, that the indirect owner and control person in question had been a defendant in two civil suits filed against him in 2007; and 2) Verition, acting through an authorized officer, signed the Control Person Form U-4, and represented on the Control Person Form U-4 that Verition had “taken appropriate steps to verify the accuracy and completeness of the information contained in and with this application”;

WHEREAS, following discussions with the staff of the Division, Verition filed an updated Control Person Form U-4 that disclosed the civil complaints in question;

WHEREAS, Verition maintains that the omission of these complaints in the submission was unintentional, as supported by the public availability of court and other public documents evidencing the filing of the civil complaints;

WHEREAS, Section 36b-23 of the Act provides, in part, that:  “No person shall make or cause to be made . . . in any document filed with the commissioner . . . any statement that is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with the statement, omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading”;

WHEREAS, on April 21, 2010, Verition filed an application to withdraw its broker-dealer registration application under the Act which Verition represents was a result of changes in its business plan;

WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that:

[W]ithdrawal of an application for registration as a broker-dealer . . . becomes effective ninety days after receipt of . . . a notice of intent to withdraw such application for registration or within such shorter period of time as the commissioner may determine, unless a denial . . . proceeding is pending when the . . . notice is filed or a proceeding to deny . . . or impose conditions upon the withdrawal is instituted within ninety days after the . . . notice is filed.  If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines.  If no proceeding is pending or instituted and withdrawal automatically becomes effective, the commissioner may nevertheless institute a denial . . . proceeding under subsection (a) of this section within one year after withdrawal became effective.
WHEREAS, Section 36b-31(a) of the Act, provides, in relevant part, that “[t]he commissioner may from time to time make … such … orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive”;
 
WHEREAS, Section 36b-31(b) of the Act provides, in relevant part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action 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 sections 36b-2 to 36b-33, inclusive”;
 
WHEREAS, the Commissioner finds that the entry of this Consent Order Conditioning Effectiveness of Withdrawal of Application for Registration as a Broker-dealer (hereinafter, “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;

ACKNOWLEDGEMENT OF THE COMMISSIONER’S ALLEGATIONS

WHEREAS, Verition, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them:

1. In contravention of Section 36b-23 of the Act, Verition represented on a Form U-4 filed with the Commissioner for a control person and indirect owner of Verition that Verition had taken appropriate steps to verify the accuracy and completeness of the information contained in the Form U-4 when, in reality, the Form U-4 failed to disclose that the control person and indirect owner was a defendant in two civil proceedings filed against him in 2007; and
2. If proven, the foregoing allegations would support the initiation of proceedings seeking the imposition of sanctions under Section 36b-15(a)(2)(B) of the Act and/or proceedings under Section 36b-27 of the Act based upon a violation of Section 36b-23 of the Act;

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 stipulation, agreed settlement, or consent order or by the default of a party”;

CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Verition, 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 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 ORDER CONDITIONING EFFECTIVENESS OF WITHDRAWAL OF APPLICATION FOR REGISTRATION AS A BROKER-DEALER

WHEREAS, Verition, through its execution of this Consent Order, consents to the Commissioner issuing an order rendering Verition’s application to withdraw its broker-dealer registration application effective upon the entry of this Consent Order, subject to the following conditions:

1. Verition and its successors in interest shall not reapply for registration as a broker-dealer under the Act until such time as it employs, and identifies to the Division Director in writing, a full time Chief Compliance Officer, a full time Chief Financial Officer and a full time Chief Operating Officer, all of whom can demonstrate in writing to the Division that each has passed an appropriate examination as principal. Upon application, the Division Director may consider a waiver of any of these requirements, including the full-time status requirement of an officer if said officer is alternately employed by an affiliate of Verition.  The Division Director shall have sole discretion in granting any waiver request;
2. In the event that Verition reapplies for registration under the Act, Verition or its successors in interest shall, for two years following the effectiveness of such registration reapplication, notify the Division Director in writing at least fourteen days prior to any proposed change in Verition’s Chief Compliance Officer, Chief Financial Officer and/or Chief Operating Officer, and shall include in such notice the identities of those individuals replacing them.  The Division Director shall have sole discretion in accepting any individual as a satisfactory successor;
3. No later than the date this Consent Order is entered by the Commissioner, Verition shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum of two thousand, five hundred dollars ($2,500), one thousand five hundred dollars ($1,500) of which shall constitute an administrative fine; and one thousand dollars ($1,000) of which shall be applied to defray the costs associated with the Division’s investigation of this matter;

ORDER

THE COMMISSIONER THEREFORE ORDERS THAT:

1. Verition’s application to withdraw its broker-dealer registration application shall be EFFECTIVE upon the entry of this Consent Order, subject to the conditions described above;
2. Verition, its officers, directors, control persons, agents, employees, representatives and successors in interest shall refrain from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act;
3. Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Verition based upon a violation of this Consent Order Conditioning Effectiveness of Withdrawal of Application for Registration as a Broker-dealer or the matters underlying its entry if the Commissioner determines that compliance is not being observed with the terms hereof;
4. This Consent Order Conditioning Effectiveness of Withdrawal of Application for Registration as a Broker-dealer shall become final when entered; and
5. This Order is not intended by the Commissioner to subject Verition, its officers, owners, control persons or affiliates to any disqualifications under the laws of any state, the District of Columbia or Puerto Rico or the US Virgin Islands, including, without limitation, any disqualifications from relying upon the state registration exemptions or state safe harbor provisions.


So ordered at Hartford, Connecticut       ________/s/________ 
this 19th day of July 2010.   Howard F. Pitkin 
    Banking Commissioner 


CONSENT TO ENTRY OF ORDER

I, Josh D. Goldstein, state on behalf of Verition Securities LLC., that I have read the foregoing Consent Order Conditioning Effectiveness of Withdrawal of Application for Registration as a Broker-dealer; that I know and fully understand its contents; that I am authorized to execute the same on behalf of Verition Securities LLC.; and that Verition Securities LLC. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein, expressly waiving any right to a hearing on the matters described herein.     

 
     Verition Securities LLC
           
______/s/__________
By   Josh D. Goldstein
  Chief Operating Officer



On this 16th day of July, 2010, personally appeared Josh D. Goldstein, signer of the foregoing Consent Order Conditioning Effectiveness of Withdrawal of Application for Registration as a Broker-dealer, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of Verition Securities LLC., a limited liability company, and acknowledged the same to be his free act and deed, before me.


______________/s/_________________________
Notary Public/Commissioner of the Superior Court
My Commission Expires:  July 31, 2014


  

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