To protect the health and safety of the public and our employees, the Department of Banking has limited the number of employees at our office at 260 Constitution Plaza in Hartford. When contacting the Department, please use electronic communication whenever possible. Consumers are encouraged to use our online form for complaints. If you are unsure where to send an inquiry, you may send it to Department.Banking@ct.gov and it will be routed appropriately. Thank you for your patience during this time.

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IN RE APPLICATION OF:

JASON N. GINDER
    (CRD No. 1577288)

As a Broker-dealer Agent of 

SANDERS MORRIS HARRIS INC.
    (CRD No. 20580)

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CONSENT ORDER
CONDITIONING REGISTRATION
AS AN AGENT

No. CO-12-8010-S

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, Jason N. Ginder (“Ginder”) was registered as a broker-dealer agent under the Act at various times from April 29, 1987 through May 11, 2011;

WHEREAS, Ginder has been registered with the Financial Industry Regulatory Authority, Inc. (or the National Association of Securities Dealers, Inc.), at various times from April 29, 1987 through the present;

WHEREAS, Ginder has been registered as a broker-dealer agent under the securities laws of the State of New York from April 29, 1987 through the present, and under the securities laws of the State of California from February 26, 1987 through the present;

WHEREAS, Sanders Morris Harris Inc. (“SMH”), of 600 Travis, Suite 5800, Houston, Texas, has been registered as a broker-dealer under the Act since June 4, 1991;

WHEREAS, Ginder applied for registration as a broker-dealer agent of SMH under the Act on May 4, 2012;

WHEREAS, Section 36b-6(a) of the Act provides, in part, that “[n]o individual shall transact business as an agent in this state unless such individual is (1) registered as an agent of the broker-dealer . . . whom such individual represents in transacting such business”;

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation of Ginder pursuant to Section 36b-8 of the Act (“Investigation”);

WHEREAS, as a result of the Investigation, the Division ascertained that on March 9, 2011, the United States District Court for the Southern District of New York entered a Final Judgment of Permanent Injunction and Other Relief as to Defendant Jason N. Ginder in Securities and Exchange Commission v. O’Meally et al., No. 06 Civ. 6483 (LTS) (“Final Judgment”).  The Final Judgment permanently restrained and enjoined Ginder from violating Section 17(a) of the Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder.  In addition, the Final Judgment ordered Ginder to pay a civil penalty in the amount of three hundred thousand dollars ($300,000) pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act;

WHEREAS, as a result of the Investigation, the Division ascertained that on March 18, 2011, the Securities and Exchange Commission (“SEC”) entered an Order Instituting Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions (“SEC Order”) against Ginder (Administrative Proceeding File No. 3-14298).  The SEC order provided that “[p]ursuant to Section 15(b)(6) of the Exchange Act and Section 203(f) of the . . . [Investment Advisers Act of 1940] . . . Ginder be, and hereby is suspended from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent, and from participating in any offering of penny stock for a period of nine (9) months, effective on the second Monday following entry of this Order.”  The nine month suspension commenced with the opening of business on March 28, 2011, and concluded at the close of business on December 27, 2011;

WHEREAS, the Final Judgment and SEC Order were based on allegations that Ginder, from at least January 2001 until September 2003, while employed by Prudential Securities Inc., defrauded mutual fund companies and the funds’ shareholders in order to engage in “market timing” trades on behalf of two hedge fund customers through the use of multiple customer account numbers and financial adviser numbers;

WHEREAS, Ginder acknowledges that he is the subject of the Final Judgment and SEC Order described herein;

WHEREAS, the Final Judgment and SEC Order have not been overturned by appeal or otherwise;

WHEREAS, other than the Final Judgment and SEC Order, Ginder has not been the subject of any reported disciplinary actions or complaints since August 21, 2002;

WHEREAS, Section 36b-15(a) of the Act provides, in part, that “[t]he commissioner may, by order . . . restrict or impose conditions on the securities . . . activities that an applicant . . . may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the applicant . . . (D) is permanently . . . enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of a business involving securities . . . [or] investments . . . [or] (F) is the subject of any of the following sanctions that . . . were imposed within the past ten years:  (i) [a]n order issued by . . . the Securities and Exchange Commission . . . suspending . . . registration as . . . [an] agent . . . or the substantial equivalent of those terms, as defined in sections 36b-2 to 36b-34, inclusive”;

WHEREAS, the Final Judgment and SEC Order described herein would provide a basis under Section 36b-15 of the Act for the Commissioner to restrict or impose conditions on the securities activities that Ginder may perform in this state, after providing Ginder with prior notice and an opportunity for a hearing;

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-15 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 provide that a contested case may be resolved by consent order, unless precluded by law;

WHEREAS, SMH agrees to the entry of this Consent Order Conditioning Registration as an Agent (“Consent Order”) solely as a condition to the registration of Ginder as a broker-dealer agent under the Act, and understands that the entry of this Consent Order does not constitute a finding by the Commissioner of a violation of any provision of the Act or any regulation or order under the Act by SMH, nor shall it operate as a restriction or limitation on the securities activities of SMH in the State of Connecticut;

WHEREAS, Ginder expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;

AND WHEREAS, the issuance 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.

CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Ginder, through his execution of this Consent Order, voluntarily waives the following rights:

1. To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-15(f) of the Act and Section 4-177(a) of the General Statutes of Connecticut;
2. To present evidence and argument and to otherwise avail himself of Section 36b-15(f) of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present his position in a hearing in which he 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 ACTIVITY RESTRICTIONS

WHEREAS, Ginder, through his execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on him the following restrictions:

1. Ginder shall be on ADMINISTRATIVE PROBATION as a broker-dealer agent for a period of five (5) years from the date of this Consent Order;
2. Ginder shall refrain from: (a) engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act; (b) engaging in conduct that would contravene the supervisory and compliance policies and procedures of any broker-dealer with whom he is or becomes associated; and (c) engaging in any act or practice to circumvent restrictions on market timing imposed by any issuer of securities, insurance company or securities brokerage firm, including, without limitation, employing multiple broker identifying numbers, multiple customer accounts, accounts coded as confidential, multiple branch codes and multiple clearing firms, and misrepresenting the identities of brokerage customers or the agent(s) servicing customer accounts; and
3.

For five (5) years following the entry of this Consent Order by the Commissioner and during Ginder’s association with SMH, Ginder shall abide by, and SMH shall observe, the following procedures with respect to Ginder’s activities as a broker-dealer agent:

(a)
Ginder shall be prohibited from effecting securities transactions in or from Connecticut in “penny stocks,” as that term is defined by Rule 3a51–1 under the Securities Exchange Act of 1934;
 
(b)     Ginder will be subject to supervision by a qualified principal of SMH and will not manage or supervise himself or the securities-related activities of other registered representatives;
  
(c) Ginder will be supervised by a primary supervisor of SMH and an interim supervisor of SMH when the primary supervisor is not on-site or available;
   
(d)   The offices of Ginder’s primary supervisor and interim supervisor shall be located in close physical proximity to Ginder’s office;
 
(e)   All new accounts and new account documentation will be reviewed and initialed by Ginder’s primary supervisor (or interim supervisor if the primary supervisor is off-site or unavailable) prior to the account opening;
 
(f)   Prior to settlement, all order tickets will be reviewed and initialed, either manually or electronically, by Ginder’s primary supervisor (or interim supervisor if the primary supervisor is off-site or unavailable);
  
(g)   Ginder shall not be permitted to purchase or effect the sale of any mutual funds for customers without the prior written approval of Ginder’s primary supervisor (or interim supervisor if the primary supervisor is off-site or unavailable).  Copies of the primary or interim supervisor’s written approval of Ginder’s mutual fund orders shall be kept in the subject customer’s file;
  
(h)   All of Ginder’s non-electronic written communications with clients and prospective clients relating to mutual funds, including advertising and newsletters, will be approved and initialed by Ginder’s primary supervisor (or interim supervisor if the primary supervisor is off-site or unavailable) before the communication is mailed or disseminated, and a copy of such communication shall be delivered to SMH’s compliance department to be kept in Ginder’s file;
  
(i)   All of Ginder’s electronic communications within the firm and with clients and prospective clients will be disseminated through an SMH authorized e-mail system or instant messaging system, filtered through SMH’s server and subject to SMH’s electronic communications review policies and procedures.  Ginder’s primary supervisor (or interim supervisor if the primary supervisor is off-site or unavailable) will perform a weekly review of Ginder’s e-mail and instant message accounts, to ensure that Ginder is in compliance with this Consent Order Conditioning Registration as an Agent, the Act and the Regulations thereunder.  Copies of all reviewed e-mails will be retained electronically and will be readily accessible in electronic or paper form to SMH supervisory and compliance personnel and the Commissioner. SMH acknowledges that its e-mail system has the capability to evidence the review of said e-mails;
  
(j)   Any securities transaction, activity or account that is not performed or held at SMH shall require the written approval of Ginder’s primary supervisor and SMH’s Chief Compliance Officer, and a copy of such approval shall be delivered to SMH’s compliance department to be kept in Ginder’s file; and
  
(k)   Ginder shall be required to participate in annual ethics training.

CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

1. The Activity Restrictions set forth above be and are hereby entered;
2. Entry of this Consent Order is without prejudice to the right of the Commissioner to take enforcement action against Ginder based upon a violation of this Consent Order or based on the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed, or if any representation made in any document furnished by or on behalf of Ginder in connection with Ginder’s application for registration as a broker-dealer agent is subsequently discovered to be untrue;
3. After three years have elapsed from the date this Consent Order is signed by the Commissioner, SMH may request that the Commissioner release it and Ginder from the provisions of this Consent Order by filing a written application with the Division Director setting forth the basis for the request. The Division Director shall review the request and make a decision based on the Director’s review. The Division Director may, in his/her sole discretion, grant, deny or condition the relief sought pursuant to this paragraph;
4. Contemporaneously with the entry of this Consent Order, the name “Jason N. Ginder” shall be entered on the register of broker-dealer agents in accordance with Section 36b-8 of the Act; and
5. This Consent Order shall become final when entered.


So ordered at Hartford, Connecticut,       _______/s/____________
this 21st day of June 2012.      Howard F. Pitkin 
         Banking Commissioner 

CONSENT TO ENTRY OF ORDER

I, Jason N. Ginder, state that I have read the foregoing Consent Order Conditioning Registration as an Agent; 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 issuance of this Consent Order Conditioning Registration as an Agent.



_____/s/_______
Jason N. Ginder


State of:  NY

County of:  NY

On this the 19 day of June 2012, before me, Jason N. Ginder [sic], the undersigned officer, personally appeared Jason N. Ginder, 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/____________________________
Frances Mattera
Notary Public
Date Commission Expires:  March 30, 2015
 

CONSENT TO ENTRY OF ORDER

I, Leslie B. Jallans, Chief Compliance Officer of Sanders Morris Harris Inc. (“SMH”), state on behalf of SMH that I have read the foregoing Consent Order Conditioning Registration as an Agent with respect to Jason N. Ginder; that I know and fully understand its contents; that I am authorized to execute the same on behalf of SMH; that SMH agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that SMH voluntarily consents to the issuance of this Consent Order Conditioning Registration as an Agent, expressly waiving any right to a hearing on the matters described herein.

       Sanders Morris Harris Inc.
  
  
By: ______/s/_____________
    Leslie B. Jallans
     Chief Compliance Officer


State of:  Texas
County of:  Harris

On this the 18 day of June 2012, before me, Phyllis Walt, the undersigned officer, personally appeared Leslie B. Jallans, who acknowledged herself to be Chief Compliance Offer of Sanders Morris Harris Inc., and that she, as such Chief Compliance Officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as Chief Compliance Officer.
In witness whereof I hereunto set my hand.



_____/s/______________________________
Notary Public
Date Commission Expires:  November 4, 2012


Conditional Registrations