| * * * * * * * * * * * * * * * * * *
IN THE MATTER OF: * * * * * * * * * * * * * * * * * * |
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
|
CONSENT ORDER |
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, ProEquities, Inc. (CRD No. 15708) (“ProEquities”), located at 2801 Highway 280 South, South Birmingham, Alabama 35223, has been registered as a broker-dealer under the Act since August 18, 1988, and ProEquities d/b/a Investment Advisors has been an investment adviser registered with the Securities and Exchange Commission (SEC No. 801-56010) since November 20, 1998, and has filed the notice required by Section 36b-6(e) of the 2018 Supplement to the General Statutes (“2018 Supplement”) since January 4, 1999;
WHEREAS, Matthew Charles Woodard (CRD No. 5699485) (“Woodard”) is an individual whose address last known to the Commissioner is 44 Fenwick Drive, Farmington, Connecticut 06032. Woodard was registered as a broker-dealer agent of ProEquities from September 13, 2013 to September 16, 2014, Woodard was the founding member, control person and the treasurer of Toppikgink 539, LLC d/b/a Titan Brokerage Services (“Toppikgink”). Toppikgink is a Texas limited liability company and an insurance brokerage agency, located at 1031 Farmington Avenue, Farmington, Connecticut;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation of ProEquities pursuant to Section 36b-26(a) of the Act (“Investigation”) to determine whether ProEquities had violated, was violating or was about to violate provisions of the Act or Regulations or any order thereunder;
WHEREAS, ProEquities had an ongoing duty to supervise Woodard during Woodard’s association with ProEquities;
WHEREAS, Investor One is a Connecticut resident who maintained a brokerage account at ProEquities from approximately September 2013 to August 2014 and was one of Woodard’s clients;
WHEREAS, as a result of the Investigation, the Division obtained evidence that on June 6, 2014 ProEquities received a Federal Funds Wire Transfer request signed by Investor One and initiated by Woodard for $10,000 from Investor One’s ProEquities account to Toppikgink’s bank account (“Third Party Wire”);
WHEREAS, ProEquities sent Investor One a written confirmation of the Third Party Wire. The written confirmation was provided as “added security in the event that either [Investor One] did not authorize the transaction or details regarding the transfer [were] incorrect” and asked Investor One to contact ProEquities with any questions. Investor One did not contact ProEquities. ProEquities did not otherwise verify or follow-up with Investor One confirming the purpose of the wire, its intended nature or that the recipient of the Third Party Wire was Toppikgink, a company controlled, in part, by Woodard; Contrary to ProEquities’ policies and procedures, Woodard never disclosed that he was associated with Toppikgink;
WHEREAS, it appears that Investor One was being unduly influenced by Woodard and that she may have believed that the Third Party Wire was for an investment in Toppikgink. In reality, Woodard used at least a portion of the wired funds to pay his personal expenses. Had ProEquities questioned Woodard or Investor One about the nature of the Third Party Wire, the Third Party Wire may not have been completed;
WHEREAS, on March 23, 2018, the Commissioner entered a Consent Order against Woodard relating to his activities involving Investor One (No. CO-17-8279-S), wherein the Division received documentation evidencing that Woodard paid in restitution to Investor One for, among other things, the Third Party Wire;
WHEREAS, as a result of the Investigation, the Commissioner has reason to believe that the foregoing conduct violates certain provisions of the Regulations, and would support administrative proceedings against ProEquities under Section 36b-15 of the Act and Section 36b-27 of the 2018 Supplement;
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 and Section 36b-27 of the 2018 Supplement would constitute a “contested case” within the meaning of Section 4-166(4) 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, 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 ProEquities have reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, ProEquities, without admitting or denying any of the Commissioner’s allegations, 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, ProEquities, through its execution of this Consent Order, specifically assures the Commissioner that the violation alleged in this Consent Order shall not occur in the future.
,
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, ProEquities, 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 Section 36b-15(f) of the Act, Section 36b-27 of the 2018 Supplement and Section 4-177(a) of the General Statutes of Connecticut; |
| 2. | To present evidence and argument and to otherwise avail itself of Section 36b-15(f) of the Act, Section 36b-27 of the 2018 Supplement 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 matters described herein, including the validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATION
WHEREAS, ProEquities, through its execution of this Consent Order, and without admitting or denying the Commissioner’s allegations, acknowledges the following allegation of the Commissioner:
| ProEquities violated Section 36b-31-6f(b) of the Regulations by failing to establish, enforce and maintain a system for supervising the activities of its agents 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 ProEquities an opportunity for a hearing;
AND WHEREAS, ProEquities 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, ProEquities, through its execution of this Consent Order, consents to the Commissioner’s entry of an order imposing on it the following sanctions:
| 1. | ProEquities, its representatives, agents, and employees 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 engaging in any activity in or from Connecticut that violates Section 36b-31-6f(b) of the Regulations; |
| 2. | No later than the date this Consent Order is entered by the Commissioner, ProEquities shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of seven thousand five hundred dollars ($7,500), which shall constitute an administrative fine; and |
| 3. | No later than the date this Consent Order is entered by the Commissioner, ProEquities shall remit to Investor One by cashier’s check, certified check or money order the sum of ninety dollars ($90), which represents the wire transfer fees incurred by Investor One in connection with the Third Party Wire and provide proof of such payment to the Commissioner. |
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 ProEquities 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 ProEquities 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; |
| 4. | ProEquities shall not take any action or make or permit to be made any public statement, including in regulatory filings, any proceeding in any forum 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; |
| 5. | ProEquities 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. Nothing in this provision affects ProEquities’ (i) testimonial obligations; or (ii) right to take a legal or factual position in litigation or other legal proceeding in which the Commissioner is not a party; and |
| 6. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | _____/s/_____________ | |
| this 20th day of July 2018. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Christopher Flint, state on behalf of ProEquities, Inc. (“ProEquities”), 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 ProEquities; that ProEquities agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that ProEquities consents to the entry of this Consent Order.
| ProEquities, Inc. | |
| By: | ______/s/_________ |
| Christopher Flint | |
| CEO |
State of: Alabama
County of: Jefferson
On this the 10th day of July 2018, before me, the undersigned officer, personally appeared Christopher Flint, who acknowledged himself to be the CEO of ProEquities, Inc., and that he, as such CEO, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of ProEquities, Inc., by himself as CEO.
In witness whereof I hereunto set my hand.
| ____/s/___________________________ |
| Notary Public |
| Date Commission Expires: 12/15/2021 |
Administrative Orders and Settlements