DOB: Aegis Capital Corp Consent Order

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AEGIS CAPITAL CORP.

(CRD No. 15007) 
  
   

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CONSENT ORDER

No. CO-12-7993-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, Aegis Capital Corp. (“Aegis”) is a broker-dealer registered in Connecticut under the Act since November 19, 1992, and has its principal office located at 810 Seventh Avenue, 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 Aegis 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 Aegis had violated, was violating or was about to violate any provision of the Act or any regulation or order under the Act;
 
WHEREAS, as a result of such investigation and examination, the Division ascertained that Aegis permitted an individual associated with the firm, who was not registered in the State of Connecticut, to contact a Connecticut resident to solicit such resident to transfer a brokerage account maintained at the unregistered individual’s previous broker-dealer and to open a new account at Aegis;
 
WHEREAS, although the actual trade confirmation disclosed the amount of the markup charged in a principal transaction, the Division also uncovered evidence that Aegis, on at least one occasion, through its employees, sent a preliminary trade notification to one of its customers that did not disclose the amount of the markup charged on a principal transaction;
 
WHEREAS, Aegis, through its execution of this Consent Order, represents to the Division that it has amended its preliminary notifications to include the amount of the markup on principal transactions;
 
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 Aegis’ 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 Aegis;
 
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 Aegis reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
 
WHEREAS, Aegis, 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, Aegis, 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, Aegis, 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, Aegis, 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. Although the actual confirmation disclosed the amount of the markup charged in a principal transaction, by sending a preliminary trade notification on at least one occasion to one of its customers that did not disclose the amount of the markup charged on principal transactions, Aegis violated Section 36b-31-14a(a) of the Regulations by not maintaining accurate records required to be kept by the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder;
3. Specifically with respect to the matters identified herein, Aegis violated Section 36b-31-6f(b) of the Regulations by failing to enforce a supervisory system reasonably designed to achieve regulatory compliance;
4. The foregoing conduct would support administrative proceedings against Aegis under Sections 36b-15(a)(2)(B), 36b-15(a)(2)(H) 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, Aegis, through its execution of this Consent Order, consents to the Commissioner entering an order imposing on it the following sanctions:

1. Aegis, 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; and
2. No later than the date this Consent Order is entered by the Commissioner, Aegis shall remit to the Department of Banking, via certified bank check payable to "Treasurer, State of Connecticut", the sum of fifteen thousand dollars ($15,000) 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 Aegis 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 Aegis 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 27th day of April 2012.      Howard F. Pitkin 
    Banking Commissioner 


CONSENT TO ENTRY OF ORDER

I, Robert J. Eide, state on behalf of Aegis Capital Corp. 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 Aegis Capital Corp.; that Aegis Capital Corp. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Aegis Capital Corp. voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.

   Aegis Capital Corp.
 
   
By ________/s/______________
  Robert J. Eide, CEO



On this 4th day of April 2012, personally appeared Robert J. Eide, 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 Aegis Capital Corp., a corporation, and acknowledged the same to be his free act and deed, before me.


_____/s/________________________
Notary Public
Date Commission Expires:  12/13/2014


  

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