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NOTICE OF INTENT TO REVOKE NOTICE OF RIGHT TO HEARING |
I. PRELIMINARY STATEMENT
| 1. | 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 the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”). |
| 2. | Pursuant to Sections 36b-26(a) and 36b-14(d) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation and examination involving Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act or Regulations. |
| 3. |
As a result of the investigation and examination, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act and Regulations. |
| 4. | As a result of the investigation and examination, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-27(a) of the Act. |
| 5. |
As a result of the investigation and examination, the Commissioner brings this administrative action pursuant to Section 36b-15(a) of the Act and Section 4-182(c) of the General Statutes of Connecticut to revoke the registration of Meyers Associates, L.P. (“Meyers Associates”) as a broker-dealer in Connecticut and revoke the registration of Bruce Meyers (“Meyers”) as a broker-dealer agent in Connecticut.
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| 6. |
As a result of the investigation and examination, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 7. | Meyers Associates is a New York limited partnership with its principal place of business at 45 Broadway, Second Floor, New York, New York 10006. From September 23, 1994 to the present, Meyers Associates has been registered in Connecticut as a broker-dealer under the Act. The General Partner of Meyers Associates is Meyers-Janssen Securities Corp. (“Meyers-Janssen”). Meyers Associates is not registered as an investment adviser under the Act. |
| 8. | Meyers is the Chief Executive Officer of Meyers Associates and the majority owner and control person of Meyers Associates because of Meyers’ control of and majority ownership in Meyers-Janssen. Meyers has been registered as a broker-dealer agent of Meyers Associates under the Act since September 23, 1994. |
III. STATEMENT OF FACTS
Prior Matters Involving Respondents
| 9. | From April 8 through April 10, 2008, the Division conducted an examination (“2008 Exam”) of Meyers Associates pursuant to Section 36b-14(d) of the Act. Based on certain findings from the 2008 Exam, on November 23, 2010, the Commissioner, acting pursuant to Sections 36b-15 and 36b-27 of the Act, issued an Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. RCF-10-7817-S) (“2010 Notice”) against Meyers Associates, which 2010 Notice is incorporated by reference herein. The 2010 Notice alleged that Meyers Associates employed unregistered agents, offered and sold unregistered securities, engaged in fraud in connection with the offer and sale of a security, engaged in dishonest and unethical practices in connection with the offer and sale of a security, violated FINRA Conduct Rule 2210, and failed to enforce and maintain adequate supervisory procedures. |
| 10. | Meyers Associates requested a hearing on the matters alleged in the 2010 Notice. On June 14, 2011, Meyers Associates and the Commissioner entered into a Consent Order (Docket No. RCF-10-7817-S) (“Consent Order”) in order to resolve the matters alleged in the 2010 Notice without the need for further administrative proceedings, which Consent Order is incorporated by reference herein. |
| 11. | The Consent Order, inter alia, required Meyers Associates to remit to the Department of Banking twelve thousand five hundred dollars ($12,500) as an administrative fine and to pay the cost of one or more examinations of Meyers Associates conducted by the Division within twelve months following the entry of the Consent Order. |
| 12. | From June 13, 2012 through June 15, 2012, the Division conducted an examination of Meyers Associates (“2012 Exam”) in accordance with the Consent Order. During the course of the 2012 Exam, the Division uncovered various deficiencies. |
| 13. | As a result of the 2012 Exam, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act and Regulations. |
Violations of the Act and Regulations Uncovered During the 2012 Exam
| 14. |
As the majority owner and control person of Meyers Associates, Meyers oversaw the compliance department at Meyers Associates and was responsible for ensuring that the firm complied with both state and federal securities statutes and rules. | |||||||||||
| 15. | On October 1, 2007, Meyers Associates placed one of its broker-dealer agents (“Agent A”) on a heightened supervision plan (“Plan”). The Plan provided that Meyers Associates would suspend Agent A if he was the subject of any written complaint(s) and would terminate Agent A if any such complaint(s) could be verified. The Central Registration Depository (“CRD”) system reflects that subsequent to the implementation of the Plan, Agent A was the subject of the following customer complaints:
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| 16. |
In approximately July 2012, Meyers Associates revised the Plan to, inter alia, require preapproval by a general securities principal of all of Agent A’s transactions and require Agent A to immediately notify his supervisor of any complaint or action filed against him (“Revised Plan”). The Revised Plan also provided that any additional customer complaints could result in a fine, suspension or termination and that immediate termination might result in the event that Agent A did not follow the Revised Plan or if Agent A violated a Meyers Associates or regulatory policy or rule. According to CRD records, subsequent to the implementation of the Revised Plan, Agent A was the subject of the following customer complaints and regulatory actions:
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| 17. | Meyers Associates has not taken any meaningful disciplinary action in response to Agent A’s pattern of customer complaints. | |||||||||||
| 18. | Despite the above disciplinary history, Meyers Associates continues to employ Agent A and maintain Agent A’s broker-dealer agent registrations with Connecticut and other states. | |||||||||||
| 19. |
In approximately March 2010, Meyers Associates filed to register another of its agents (“Agent B”) as a broker-dealer agent under the Act. On April 5, 2010, based on Agent B’s disciplinary history, the Division sent a letter to Meyers Associates asking it to provide the Division with detailed information regarding how Meyers Associates planned to supervise Agent B and requiring Meyers Associates to immediately notify the Division if Agent B became the subject of any sanction imposed by a state securities regulator. On April 29, 2010, Meyers Associates provided the Division with the requested information regarding Agent B’s supervision and agreed to immediately notify the Division if Agent B became the subject of a sanction imposed by a state regulator. Agent B became registered as a broker-dealer agent of Meyers Associates in Connecticut on May 3, 2010. Two days later, on May 5, 2010, Agent B entered into an “Order Imposing Terms, Conditions and Undertaking In Connection with Registration under the Vermont Uniform Securities Act” (“Vermont Order”). Meyers Associates never notified the Division of the Vermont Order. The Division discovered the Vermont Order in June 2012 while preparing for the 2012 Exam. | |||||||||||
| 20. | On October 17, 2011, FINRA implemented Rule 1230(b)(6) which established a new registration category and qualification examination (“Operations Professional Registration Category”) for personnel who perform certain operations functions. FINRA Rule 1230(b)(6) delineates those operations functions that subject an employee to the Operations Professional Registration Category and requires such personnel to complete and pass the Series 99 Test. | |||||||||||
| 21. | At various times between approximately October 17, 2011 and the present, Employee A has either been designated as the Director of Operations of Meyers Associates or has performed the operations functions that subject Employee A to the Operations Professional Registration Category. However, despite Employee A’s obligation to complete and pass the Series 99 test, Meyers Associates has not required Employee A to do so. | |||||||||||
| 22. | On October 31, 2006 and at various times in 2012, Meyers Associates offered and/or sold securities in and/or from 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. |
Additional Violations
| 23. | On June 8, 2012, in anticipation of the 2012 Exam, the Division sent Meyers Associates a written request for documents and information (“Document Production Request”) to prepare and produce to the Division when it arrived for the 2012 Exam. Although the Division is not required to make an advance request for documents when exercising its visitorial power to inspect a registrant’s books and records, the Division gave Meyers Associates the Document Production Request to provide additional focus and to emphasize to the firm the importance of providing information in a timely manner. However, when the Division arrived at Meyers Associates on June 13, 2012 for the 2012 Exam, only one of the documents in the Document Production Request was ready to be produced. By the conclusion of the 2012 Exam, Meyers Associates still had not produced all the documents and information responsive to the Document Production Request. Subsequent to the 2012 Exam, the Division sent Meyers Associates additional e-mails requesting that Meyers Associates produce all of the documents and information in the Document Production Request, in addition to other documents the Division wanted to examine based on the 2012 Exam. |
| 24. | From approximately June 8, 2012 to the present, Respondents engaged in a pattern of dilatory tactics in responding to the Division’s requests for books, records and information. It was necessary for the Division to make multiple and repeated requests to Respondents before Respondents produced documents and information, and even when documents and information were furnished, they were produced in a slow, incomplete and piecemeal fashion. |
| 25. | On November 9, 2011, FINRA issued an Order Accepting Offer of Settlement (“FINRA Order”) on behalf of Respondents (FINRA Disciplinary Proceeding No. 20090163324-01), in which Respondents were censured and fined $35,000, jointly and severally, and Meyers was suspended from association with any FINRA member in any principal and supervisory capacity for four months. Without admitting or denying the allegations, Respondents consented to the entry of findings that Meyers Associates failed to completely respond, and to timely respond, to FINRA requests for information and documents. The findings also stated that Meyers was ultimately responsible for supervision at Meyers Associates because the requests were all addressed to Meyers, who delegated the task of responding to others and failed to ensure that the responses were complete and timely. |
IV. STATUTORY AND REGULATORY BASIS FOR
ORDER TO CEASE AND DESIST,
REVOCATION OF REGISTRATIONS AS A BROKER-DEALER
AND A BROKER-DEALER AGENT
AND ORDER IMPOSING FINE
a. Failure by Meyers Associates to
Enforce and Maintain Adequate Supervisory Procedures
| 26. | Paragraphs 1 through 25, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 27. |
Meyers Associates’ failure to establish, enforce and maintain a system for supervising the activities of Meyers Associates’ agents and employees that was reasonably designed to achieve compliance with applicable securities laws and regulations, as more fully described in paragraphs 14 through 21, inclusive, constitutes a wilful violation of Section 36b-31-6f of the Regulations, which forms a basis for an order to cease and desist to be issued against Meyers Associates pursuant to Section 36b-27(a) of the Act, the revocation of Meyers Associates’ broker-dealer registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act, and the imposition of a fine upon Meyers Associates pursuant to Section 36b-27(d) of the Act. In addition, Meyers Associates’ failure to supervise its agents supports the initiation of revocation proceedings under Section 36b-15(a)(2)(K) of the Act. |
b. Failure to Reasonably Supervise by Meyers
| 28. | Paragraphs 1 through 27, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 29. |
As a person charged with exercising supervisory authority on behalf of a broker-dealer, Meyers’ failure to reasonably supervise the broker-dealer agents of Meyers Associates, as more fully described in paragraphs 14 through 21, inclusive, forms a basis for the revocation of Meyers’ broker-dealer agent registration in Connecticut pursuant to Section 36b-15(a)(2)(K) of the Act. In addition, Meyers’ role in materially aiding and/or causing Meyers Associates’ supervisory violations would support the entry of an order to cease and desist against Meyers under Section 36b-27(a) of the Act, the imposition of a fine upon Meyers pursuant to Section 36b-27(d) of the Act and proceedings to revoke Meyers’ broker-dealer agent registration in Connecticut pursuant to Section 36b-15(a)(2)(M) of the Act. |
c. Violation of Section 36b-16 of the Act by Meyers Associates -
Offer and Sale of Unregistered Securities
| 30. | Paragraphs 1 through 29, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 31. |
Meyers Associates offered and sold securities in or from Connecticut to at least one investor, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 22. The offer and sale of such securities absent registration constitutes a wilful violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Meyers Associates under Section 36b-27(a) of the Act and for the imposition of a fine upon Meyers Associates under Section 36b-27(d) of the Act. In addition, Meyers Associates’ wilful violation of Section 36b-16 of the Act forms a basis for the revocation of Meyers Associates’ broker-dealer registration in Connecticut under Section 36b-15(a)(2)(B) of the Act. |
d. Wilful Violation of Section 36b-14(d) of the Act and
Section 36b-31-14f of the Regulations by Meyers Associates –
Failure to Provide Copies of and Make Required
Books and Records Available When Requested
| 32. | Paragraphs 1 through 31, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 33. |
Meyers Associates’ failure to provide copies of and make its required books and records available to the Commissioner when so requested, as more fully described in paragraphs 23 and 24, constitutes a wilful violation of Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations. Such wilful violations form a basis for an order to cease and desist to be issued against Meyers Associates pursuant to Section 36b-27(a) of the Act, the revocation of Meyers Associates’ broker-dealer registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act, and the imposition of a fine upon Meyers Associates pursuant to Section 36b-27(d) of the Act. |
e. Material Assistance and Wilful Aiding and Abetting by Meyers
in Meyers Associates’ Wilful Violation of Section 36b-14(d) of the Act
and Section 36b-31-14f of the Regulations –
Failure to Provide Copies of and Make Required Books
and Records Available When Requested
| 34. | Paragraphs 1 through 33, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 35. |
The conduct of Meyers, as more fully described in paragraphs 23 and 24, is conduct that materially assisted and willfully aided and abetted Meyers Associates’ violation of Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations and therefore forms a basis for an order to cease and desist to be issued against Meyers under Section 36b-27(a) of the Act, the revocation of Meyers’ broker-dealer agent registration in Connecticut pursuant to Section 36b-15(a)(2)(M) of the Act, and for the imposition of a fine upon Meyers under Section 36b-27(d) of the Act. |
f. Dishonest and Unethical Business Practices Within the Meaning of
Section 36b-31-15a(b) of the Regulations by Meyers Associates
| 36. | Paragraphs 1 through 35, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 37. |
The conduct of Meyers Associates, as more fully described in paragraph 25, is conduct proscribed by FINRA Rule 1230(b)(6). Such conduct constitutes a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations, which forms a basis for an order to cease and desist to be issued against Meyers Associates under Section 36b-27(a) of the Act and the revocation of Meyers Associates’ broker-dealer registration in Connecticut pursuant to Section 36b-15(a)(2)(H) of the Act. |
g. Respondents Subject to FINRA Sanctions
| 38. | Paragraphs 1 through 37, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 39. |
The FINRA sanctions censuring and fining the Respondents and suspending Meyers, as more fully described in paragraph 25, form a basis for the revocation of Meyers Associates’ broker-dealer registration in Connecticut and Meyers’ broker-dealer agent registration in Connecticut pursuant to Section 36b-15(a)(2)(F)(iii) of the Act. |
V. ORDER TO CEASE AND DESIST, NOTICE OF INTENT TO REVOKE
REGISTRATIONS AS A BROKER-DEALER AND AS A BROKER-DEALER AGENT,
NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the investigation and examination, the Commissioner finds that, with respect to the activity described herein, Meyers Associates has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-14(d) of the Act, at least one violation of Section 36b-31-14f of the Regulations, at least one violation of Section 36b-31-6f of the Regulations and has engaged in conduct that constitutes a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations;
WHEREAS, as a result of the investigation and examination, the Commissioner finds that, with respect to the activity described herein, Meyers has materially assisted Meyers Associates in at least one violation of Section 36b-14(d) of the Act and one violation Section 36-31-14f of the Regulations and has wilfully aided and abetted Meyers Associates in at least one violation of Section 36b-14(d) of the Act and at least one violation of Section 36b-31-14f of the Regulations;
WHEREAS, the Commissioner also has reason to believe that grounds exist for revoking Meyers Associates’ registration as a broker-dealer in Connecticut pursuant to Sections 36b-15(a)(2)(B), 36b 15(a)(2)(K), 36b-15(a)(2)(H) and 36b-15(a)(2)(F)(iii) of the Act;
WHEREAS, the Commissioner has reason to believe that grounds exist for revoking Meyers’ registration as a broker-dealer agent in Connecticut, pursuant to Sections 36b-15(a)(2)(K), 36b-15(a)(2)(F)(iii) and 36b-15(a)(2)(M) of the Act;
WHEREAS, Section 36b-15(f) of the Act provides, in pertinent part, that “[n]o order may be entered under this section except as provided in subsection (c) of this section without (1) appropriate prior notice to the . . . registrant and to the employer . . . if such . . . registrant is an agent . . . (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
WHEREAS, notice is hereby given to Respondents that the their respective registrations in Connecticut shall be revoked, subject to each Respondents’ right to request a hearing on the allegations set forth above;
WHEREAS, notice is hereby given to Respondents that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation;
WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist against Respondents, the issuance of an order revoking the registrations of Respondents in Connecticut, and the imposition of a fine upon Respondents is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
WHEREAS, the Commissioner ORDERS that MEYERS ASSOCIATES L.P. CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation, (1) failing to enforce and maintain adequate supervisory procedures that are reasonably designed to achieve compliance with applicable securities laws and regulations, (2) offering or selling unregistered securities in Connecticut, (3) failing to provide copies of and make its required books and records available to the Commissioner when so requested, and (4) engaging in dishonest and unethical business practices;
WHEREAS, the Commissioner ORDERS that BRUCE MEYERS CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, (1) materially aiding in and/or causing a violation of Section 36b-31-6f of the Regulations, and (2) materially aiding in and/or causing a violation of Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations;
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Sections 36b-15(f) and 36b-27 of the Act, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the General Statutes of Connecticut and Section 36a-1-21 of the Regulations. If a hearing is requested, the hearing will be held on March 27, 2014, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, each Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
This Order to Cease and Desist shall remain in effect and become permanent against any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner shall issue an order revoking Meyers Associates’ registration as a broker-dealer in Connecticut if Meyers Associates’ fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner shall issue an order revoking Meyers’ registration as a broker-dealer agent in Connecticut if Meyers fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner may order that the maximum fine be imposed upon any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 10th day of February 2014. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 10th day of February 2014, the foregoing Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Meyers Associates, L.P., 45 Broadway, Second Floor, New York, New York 10006, certified mail no. 7012 3050 0002 1692 6415; Bruce Meyers, 45 Broadway, Second Floor, New York, New York 10006, certified mail no. 7012 3050 0002 1692 6422; and Meyers Associates, L.P., and Bruce Meyers, c/o Robert I. Rabinowitz, Esq., Becker & Poliakoff, LLP, 125 Half Mile Road, Suite 103, Red Bank, New Jersey 07701, certified mail no. 7012 3050 0002 1692 6439.
| ______/s/__________ | |
| Elena Zweifler | |
| Prosecuting Attorney |