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FILOMENO WEALTH * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-15-8272-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, Filomeno Wealth Management, LLC (“FWM”) is a Connecticut limited liability company formed on September 28, 2007 and located at 80 South Main Street, West Hartford, Connecticut 06107. FWM was registered as an investment adviser with the Securities and Exchange Commission from November 19, 2007 to June 27, 2014, and became registered as an investment adviser under the Act on June 24, 2014. The majority owner and affiliate of FWM is Filomeno & Company, P.C., a certified public accounting firm located at the same address as FWM;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an examination of FWM 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 FWM had violated, was violating or was about to violate any provision of Act or any regulation or order under the Act (the “Investigation and Examination”);
WHEREAS, as a result of the Investigation and Examination, the Commissioner has reason to believe that FWM has violated certain provisions of the Act, and that such violations would support administrative proceedings against FWM under Sections 36b-15 and 36b-27 of the Act;
WHEREAS, as a result of such Investigation, the Division obtained evidence that at various times between 2013 and the present, FWM engaged one or more unregistered investment adviser agents in contravention of Section 36b-6(c)(3) of the Act. In one instance, the unregistered investment adviser agent was compensated indirectly through payments from Filomeno & Company, P.C., FWM’s affiliate. In another instance, after allowing the individual’s existing investment adviser agent registration to terminate, FWM agreed to make investment advisory solicitation payments to a third party accounting firm controlled by the unregistered investment adviser agent;
WHEREAS, Section 36b-3(12) (A) of the Act defines “investment adviser agent” to include “(i) any individual, including an officer, partner or director of an investment adviser, or an individual occupying a similar status or performing similar functions, employed, appointed or authorized by or associated with an investment adviser to solicit business from any person for such investment adviser in this state and who receives compensation or other remuneration, directly or indirectly, for such solicitation; or (ii) any partner, officer, or director of an investment adviser, or an individual occupying a similar status or performing similar functions, or other individual employed, appointed, or authorized by or associated with an investment adviser, who makes any recommendation or otherwise renders advice regarding securities to clients and who receives compensation or other remuneration, directly or indirectly, for such advisory services” (Emphasis supplied);
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 Sections 36b-15 and 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(4) of the General Statutes of Connecticut, as amended by Public Act 15-61;
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, 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 FWM reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
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, FWM expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
AND WHEREAS, FWM, through its 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, FWM, through its 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 Sections 36b-15 and 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 itself of Sections 36b-15 and 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 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 validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, FWM, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them:
| 1. | FWM violated Section 36b-6(c)(3) of the Act by engaging one or more unregistered investment adviser agents as more fully described herein; and |
| 2. | In violation of Section 36b-31-6f of the Regulations under the Act, FWM failed to establish, enforce and maintain a system for supervising the activities of its investment adviser agents and Connecticut office operations that was reasonably designed to achieve compliance with applicable securities laws and regulations. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting FWM an opportunity for a hearing;
AND WHEREAS, FWM acknowledges the possible consequences of an administrative hearing and voluntarily agrees to consent to the entry of the sanctions described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, FWM, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing on it the following sanctions:
| 1. | FWM, 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, rule or order adopted or issued under the Act, either directly or through any person, organization or other device, including without limitation: (a) engaging unregistered investment adviser agents, and (b) failing to establish, enforce and maintain a system for supervising the activities of its investment adviser agents Connecticut office operations that is reasonably designed to achieve compliance with applicable securities laws and regulations; |
| 2. | FWM shall establish, implement and maintain revised written supervisory procedures and update its supervisory systems as required under Section 36b-31-6f of the Regulations to ensure that all persons who require investment adviser agent registration are properly registered; and |
| 3. | No later than the date this Consent Order is entered by the Commissioner, FWM shall remit to the Department by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, the sum of two thousand dollars ($2,000) as an administrative fine. |
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 FWM 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. | This Consent Order shall not preclude additional proceedings by the Commissioner against FWM for acts or omissions not specifically addressed in this Consent Order or for acts and/or omissions that do not arise from the facts or transactions addressed herein; |
| 4. | FWM shall not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation referenced in this Consent Order or create the impression that this Consent Order is without factual basis. However, nothing is this Consent Order affects FWM’s testimonial obligations or right to take any legal or factual position in litigation, arbitration, or other legal proceedings in which the Commissioner is not a party; and |
| 5. | FWM shall not take any position in any proceeding brought by or on behalf of the Commissioner, or to which the Commissioner is a party, that is inconsistent with any part of this Consent Order. |
| So ordered at Hartford, Connecticut, | _____/s/____________ | |
| this 11th day of January 2016. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Thomas J. Filomeno, state on behalf of Filomeno Wealth Management, LLC, 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 Filomeno Wealth Management, LLC; that Filomeno Wealth Management, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Filomeno Wealth Management, LLC consents to the entry of this Consent Order.
| Filomeno Wealth Management, LLC | |
| By: | _______/s/___________________ |
| Thomas J. Filomeno | |
| Managing Director |
State of: Connecticut
County of: Hartford
On this the 6 day of January 2016, before me, the undersigned officer, personally appeared Thomas J. Filomeno, who acknowledged himself to be the Managing Director of Filomeno Wealth Management, LLC, and that he, as such Managing Director, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Managing Director.
In witness whereof I hereunto set my hand.
| ____/s/__________________________ |
| Kathryn Plourde |
| Notary Public |
| Date Commission Expires: July 31, 2018 |