DOB: Salt Wall Trading Inc - Fraser - Consent Order

* * * * * * * * * * * * * * * * * *


IN THE MATTER OF: 

DREW R. FRASER

SALT WALL TRADING, INC.

(Collectively "Respondents")  
   

* * * * * * * * * * * * * * * * * *

*
*
*
*
*
*
*
*
*
*

CONSENT ORDER

NO. CO-14-8077-S

I. PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act;
 
WHEREAS, Drew R. Fraser (“Fraser”) is an individual whose address last known to the Commissioner is 37 Fellows Road, Ipswich, Massachusetts 01938.  Fraser is not and has not been registered in any capacity under the Act;
 
WHEREAS, Salt Wall Trading, Inc. (“Salt Wall”), is a California corporation formed by Fraser on July 11, 2012, with a principal place of business located at 37 Fellows Road, Ipswich, Massachusetts 01938.  Fraser is chief executive officer and agent for service of process of Salt Wall.  Salt Wall is not and has not been registered in any capacity under the Act;
 
WHEREAS, at all times relevant hereto, Fraser has been the control person of Salt Wall;
 
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 Respondents to determine whether they, or any of them, had violated, were violating or were about to violate provisions of the Act or Regulations (“Investigation”);
 
WHEREAS, as a result of such Investigation, the Division obtained evidence that at various times from approximately November 30, 2012 to approximately January 25, 2013, Respondents offered and/or sold securities issued by Salt Wall in Connecticut to at least one investor, which securities were not registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status;
 
WHEREAS, as a result of such Investigation, the Division obtained evidence that at various times from approximately November 30, 2012 to approximately January 25, 2013, Fraser transacted business as an agent of issuer without being registered as an agent of issuer under the Act;
 
WHEREAS, as a result of such Investigation, the Division obtained evidence that Salt Wall employed one or more unregistered agents of issuer;
 
WHEREAS, the Commissioner has reason to believe that the foregoing conduct violates certain provisions of the Act, and would support administrative proceedings against Respondents under Section 36b-27 of the Act;
 
WHEREAS, Respondents represented to the Division that they have made sales of unregistered securities to six Connecticut investors;
 
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-34, 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-34, inclusive”;
 
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
 
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
 
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 Respondents reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
 
WHEREAS, Respondents expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
 
WHEREAS, the Commissioner finds that the entry of this 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;
 
WHEREAS, Respondents have provided documentation to the Division evidencing that they have made payments of $23,250 as restitution and obtained releases from the six Connecticut investors who purchased the unregistered securities, and subsequent to making these restitution payments Respondents are financially unable to pay the fine that otherwise would have been assessed against them pursuant to this Consent Order;
 
AND WHEREAS, Respondents, through their execution of this Consent Order, specifically assure the Commissioner that none of the violations alleged in this Consent Order shall occur in the future.   

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Respondents, through their execution of this Consent Order, voluntarily waive the following rights:

1. To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut;
2. To present evidence and argument and to otherwise avail themselves of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present their respective positions in a hearing in which each 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.

III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS

WHEREAS, Respondents, through their execution of this Consent Order, acknowledge the following allegations of the Commissioner without admitting or denying them, yet admit sufficient evidence exists for the Commissioner to issue a permanent order to cease and desist and an order imposing a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued thereunder:

1. Respondents violated Section 36b-16 of the Act through the offer and sale of unregistered securities in or from Connecticut to at least one investor, which securities were not registered in Connecticut under the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status;
2. Fraser violated Section 36b-6(a) of the Act by transacting business as an unregistered agent of issuer;
3. Salt Wall violated Section 36b-6(b) of the Act by employing one or more unregistered agents of issuer; and
4. The foregoing conduct, if proven, forms a basis for the initiation of administrative proceedings against Respondents pursuant to Section 36b-27 of the Act;

WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondents an opportunity for a hearing;

AND WHEREAS, Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.

IV. CONSENT TO ENTRY OF SANCTIONS

WHEREAS, Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of an order imposing on them the following sanctions:

1. Fraser shall cease and desist from directly or indirectly violating the provisions of the Act and the Regulations, including without limitation:  (a) offering and selling unregistered securities in and from Connecticut; and (b) transacting business as an agent of issuer in this state without registering as an agent of issuer under the Act;
2. For a period of seven (7) years commencing on the date this Consent Order is entered by the Commissioner, Fraser, either directly or through any person, organization, entity or other device, shall be BARRED from:  (a) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent, as such terms are defined in the Act, and notwithstanding any definitional exclusion that might otherwise be available under the Act; (b) from directly or indirectly soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut; and (c) from directly or indirectly engaging in any activity which would require Fraser to register under the Act;
3. Nothing in this Consent Order shall preclude Fraser, upon a showing of good cause, from applying in writing for relief from the provisions of paragraph 2 of Section IV Consent to Entry of Sanctions of this Consent Order after five (5) years have elapsed from the entry hereof.  The grant of such relief shall be in the sole discretion of the Division; and
4. Salt Wall, its representatives, agents, employees, affiliates, assigns, subsidiaries, and successors in interest shall cease and desist from directly or indirectly violating the provisions of the Act and the Regulations, including without limitation:  (a) offering and selling unregistered securities in and from Connecticut; and (b) employing one or more unregistered agents of issuer.

V. 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 any Respondent and/or its 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 with the terms herein is not being observed;  
3. Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against any Respondent and/or its affiliates and successors in interest based upon evidence of which the Division was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act; and  
4. This Consent Order shall become final when entered.


 
So ordered at Hartford, Connecticut,      _______/s/_________
this 28th day of February 2014.      Howard F. Pitkin 
    Banking Commissioner 


CONSENT TO ENTRY OF ORDER

I, Drew R. Fraser, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order.     

 
         
____/s/______
Drew R. Fraser



State of:  California

County of:  San Joaquin

On this the 22 day of February 2014, before me, Kelley Weis, the undersigned officer, personally appeared Drew R. Fraser, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
 
In witness whereof I hereunto set my hand.
  
 
         
____/s/_________________________
Notary Public
Date Commission Expires:  Oct 30 2015

 
CONSENT TO ENTRY OF ORDER

I, Drew R. Fraser, state on behalf of Salt Wall Trading, 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 Salt Wall Trading, Inc.; that Salt Wall Trading, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Salt Wall Trading, Inc. consents to the entry of this Consent Order.   

 
    Salt Wall Trading, Inc.
   
              
By: ____/s/____________
Drew R. Fraser
  Chief Executive Officer



State of:  California

County of:  San Joaquin

On this the 22 day of February 2014, before me, Kelley Weis, the undersigned officer, personally appeared Drew R. Fraser, who acknowledged himself to be Chief Executive Officer of Salt Wall Trading, Inc., and that he, as such Chief Executive Officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation himself as Chief Executive Officer.
 
In witness whereof I hereunto set my hand.
  
 
         
____/s/_________________________
Notary Public
Date Commission Expires:  Oct 30 2015

  

Administrative Orders and Settlements