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PETER D. HERSHMAN * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-15-8222-S |
I. PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (the “Act”) and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies promulgated under the Act (the “Regulations”);
WHEREAS, Peter D. Hershman (“Hershman”) is an individual who resides in Branford, Connecticut and who has never been registered in any capacity under the Act;
WHEREAS, Essex Financial Services, Inc. (CRD No. 127549) (“EFS”) of 176 Westbrook Road, Essex, Connecticut 06426 is an investment adviser registered with the Securities and Exchange Commission since August 7, 2003 and a broker-dealer registered under the Act since September 22, 2003;
WHEREAS, at no time has Hershman been an officer, director or employee of EFS or a person subject to EFS’ supervision and control and thus a “supervised person” as defined in Section 202(a)(25) of the Investment Advisers Act of 1940;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into Hershman’s relationship with EFS to determine whether Hershman has violated, is violating or is about to violate any provision of the Act or any regulation or order under the Act;
WHEREAS, as a result of such investigation, the Division obtained evidence, as more fully described herein, that would support the initiation of administrative 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 Hershman;
WHEREAS, an administrative proceeding 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 provide that a contested case may be resolved by consent order, unless precluded by law;
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, 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 Hershman reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Hershman voluntarily enters into this Consent Order, acknowledging that this Consent Order is in lieu of any court action or administrative proceeding;
WHEREAS, Hershman, 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, 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; and
WHEREAS, Hershman, through his execution of this Consent Order, represents and agrees that none of the violations alleged in this Consent Order shall occur in the future;
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Hershman, 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-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 himself of Section 36b-27 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. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, Hershman, through his execution of this Consent Order, and without admitting or denying any of the Commissioner’s allegations, acknowledges the following allegations of the Commissioner:
| 1. | Commencing in 2011, Hershman, with the express or implied authorization of EFS, solicited at least one investment advisory client on behalf of EFS and received compensation from EFS during 2012 in connection with such solicitation activity. |
| 2. | Hershman violated Section 36b-6(c) of the Act by transacting business as an unregistered investment adviser agent of EFS. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Hershman an opportunity for a hearing;
AND WHEREAS, Hershman 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, Hershman, through his execution of this Consent Order, consents to the Commissioner’s entry of an order imposing on him the following sanctions:
| 1. | Hershman 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, transacting business in or from Connecticut as an investment adviser agent absent registration; and |
| 2. | No later than the date this Consent Order is entered by the Commissioner, Hershman shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of three thousand five hundred dollars ($3,500) 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 Hershman if the Commissioner determines that compliance is not being observed with the terms hereof; |
| 3. | This Consent Order shall not preclude additional proceedings by the Commissioner against Hershman 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; and |
| 4. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut | _____/s/____________ | |
| this 26 day of June 2015. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Peter D. Hershman, 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 voluntarily consent to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
| _____/s/_________ |
| Peter D. Hershman |
On this 23rd day of June 2015, personally appeared Peter D. Hershman, signer of the foregoing Consent Order, who, being duly sworn, did acknowledge the same to be his free act and deed, before me.
| __________/s/____________________ |
| Commissioner of the Superior Court |
| Date Commission Expires: [n/a] |