DOB: Andrew Garrett Consent Order

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ANDREW GARRETT INC.


(CRD No. 29931) 
   

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CONSENT ORDER

CO-2010-7838-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 promulgated under the Act (the “Regulations”);
 
WHEREAS, Andrew Garrett Inc. (“AGI”) is a broker-dealer registered in Connecticut under the Act since July 16, 1997, and has its principal office located at 140 East 45th Street, 11th Floor, New York, New York;
 
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an examination of AGI pursuant to Section 36b-14(d) of the Act and 36b-31-14f of the Regulations, and a related investigation under Section 36b-26 of the Act to determine whether AGI 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 that, from at least September 2008 through July 2009, an AGI registered representative split commissions earned from securities transactions for Connecticut customers with an AGI representative who, while registered in other jurisdictions, was not registered as an agent of AGI under the Act.  That individual was the subject of a March 2008 Consent Order entered by the Commissioner barring the individual for seven years from, inter alia, transacting business as an agent in Connecticut;
 
WHEREAS, AGI 1) represented to the Division that it had discontinued the practice of charging a commission/handling fee on riskless principal transactions in the accounts of Connecticut customers, and 2) provided the Division with evidence that it had reimbursed Connecticut customers for commission/handling fees on those trades;
 
WHEREAS, as more fully described in the Findings below, the Division believes that grounds exist under Section 36b-15 of the Act to suspend or revoke AGI’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 AGI;
 
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-34, 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 AGI reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
 
WHEREAS, AGI, 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, AGI, 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, AGI, 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 with respect to the matters described herein;
2. To present evidence and argument and to otherwise avail itself of Section 4-177c(a) of the Connecticut General Statutes with respect to the matters described herein;
3. To present its position in a hearing in which it is represented by counsel with respect to the matters described herein;
4. To have a written record of the hearing made and a written decision issued by a hearing officer with respect to the matters described herein; 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, AGI, through its execution of this Consent Order, accepts and consents to the entry of the following Findings by the Commissioner without admitting or denying them:

1. 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. From at least September 2008 through July 2009, AGI violated Section 36b-31-6f(b) of the Regulations by failing to establish, enforce and maintain a supervisory system reasonably designed to achieve regulatory compliance.  Specifically, AGI knowingly allowed its securities representatives to split commissions earned from Connecticut trading activity with an AGI representative who was not registered under the Act and who was the subject of a 2008 Consent Order entered by the Commissioner barring him from transacting business as an agent in Connecticut for seven years;
3. The foregoing conduct would support administrative proceedings against AGI under Sections 36b-15(a)(2)(B) and 36b-15(a)(2)(K) of the Act as well as subsections (a) and (d) of Section 36b-27 of the Act;

CONSENT TO ENTRY OF SANCTIONS

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

1. AGI, its representatives, agents, employees, affiliates, assigns, and successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device;
2. Within thirty (30) days from the date this Consent Order is executed by the Commissioner, AGI shall hire an independent consultant sufficiently experienced in securities regulatory and compliance issues and not unacceptable to the Division Director to (a) conduct a review of AGI’s internal supervisory and compliance procedures to ensure compliance with the Act and the Regulations, including, but not limited to, a review of trading in AGI’s Connecticut accounts and oversight of the firm’s agents’ activities; (b) prepare a written report on the adequacy of such supervisory and compliance procedures, which report shall include an outline of improvements needed and current deficiencies identified; and (c) ensure implementation of revised procedures in accordance with this Consent Order and applicable law.  The report shall be completed and submitted to the Division Director within ninety (90) days from the date this Consent Order is executed by the Commissioner, and shall include a copy of the consultant’s written report, together with a summary of those recommendations which have been implemented, an implementation timetable for those recommendations not yet implemented and, if any recommendations were not or will not be implemented, the reasons therefor;
3. No later than the date this Consent Order is entered by the Commissioner, AGI shall remit to the Department of Banking, via certified bank check, payable to "Treasurer, State of Connecticut", the sum of twenty thousand dollars ($20,000) as an administrative fine;

CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

1. The 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 AGI based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by AGI and reflected herein are subsequently discovered to be untrue; and
3. This Consent Order shall become final when entered.


 
So ordered at Hartford, Connecticut      _______/s/_________
this 5th day of October 2010.      Howard F. Pitkin 
    Banking Commissioner 


CONSENT TO ENTRY OF ORDER

I, Andrew G. Sycoff, state on behalf of Andrew Garrett 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 Andrew Garrett Inc., that Andrew Garrett Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Andrew Garrett Inc. voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.     

 
    Andrew Garrett Inc.
   
              
By ______/s/_____________
Andrew G. Sycoff
  Chief Executive Officer


On this 4th day of October 2010, personally appeared Andrew G. Sycoff, 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 Andrew Garrett Inc., a corporation, and acknowledged the same to be his free act and deed, before me.


_____/s/________________________
Notary Public
Date Commission Expires: 10/23/2013


  

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