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CONSENT ORDER NO. CO-15-8208-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, Rafferty Capital Markets, LLC (“Rafferty”) is a broker-dealer registered under the Act since April 21, 1998, with its principal office located at 1010 Franklin Avenue, Garden City, New York 11530;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”) conducted an examination of Rafferty pursuant to Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations (“Examination”) and a related investigation pursuant to Section 36b-26(a) of the Act (“Investigation”) to determine whether Rafferty had violated, is violating or was about to violate any provision of the Act or Regulations or any order thereunder;
WHEREAS, as a result of the Examination and Investigation, the Division obtained evidence that at various times from approximately September 2008 until June 19, 2015, Rafferty employed unregistered agents who effected securities transactions in or from this state. Rafferty took curative measures to register such individuals as agents under the Act, and the last agent became registered on June 19, 2015.
WHEREAS, as a result of the Examination and Investigation, the Commissioner has reason to believe that Rafferty has violated certain provisions of the Act and Regulations, and that such violations would support administrative proceedings against Rafferty under Sections 36b-15 and 36b-27 of the Act;
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(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 of Connecticut State Agencies 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 Rafferty reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Rafferty expressly consents to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, the Commissioner finds that 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;
WHEREAS, Rafferty acknowledges its employment of unregistered agents for an extended period of time during which such agents effected or attempted to effect purchases or sales of securities in this state;
AND WHEREAS, Rafferty, through its execution of this Consent Order, specifically assures the Commissioner that it has taken measures reasonably designed to ensure that the violations alleged in this Consent Order shall not occur in the future.
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Rafferty, 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 or otherwise challenge or contest the validity of this Consent Order. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, Rafferty, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them:
| 1. | From approximately September 2008 until June 19, 2015, Rafferty violated Section 36b-6(b) of the Act by employing multiple unregistered agents; and |
| 2. | Rafferty failed 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 in violation of Section 36b-31-6f of the Regulations. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Rafferty an opportunity for a hearing;
AND WHEREAS, Rafferty acknowledges the possible consequences of an administrative hearing and voluntarily agrees to the terms of this Consent Order as described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Rafferty, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | Rafferty, 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) employing unregistered agents, and (b) failing to establish, enforce and maintain a system for supervising the activities of its agents that is reasonably designed to achieve compliance with applicable securities laws and regulations; |
| 2. | Rafferty will 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 agent registration are properly registered; and |
| 3. | No later than the date this Consent Order is entered by the Commissioner, Rafferty shall remit to the Department by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, the sum of sixteen thousand fifty dollars ($16,050), ten thousand seven hundred dollars ($10,700) of which shall constitute an administrative fine and five thousand three hundred fifty dollars ($5,350) of which shall represent reimbursement for past due agent registration fees. |
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 Rafferty 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 Rafferty 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; and |
| 4. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | _____/s/____________ | |
| this 31st day of July 2015. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Thomas Mulrooney, state on behalf of Rafferty Capital Markets, 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 Rafferty Capital Markets, LLC; that Rafferty Capital Markets, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Rafferty Capital Markets, LLC consents to the entry of this Consent Order.
| Rafferty Capital Markets, LLC | |
| By: | _____/s/_______________________ |
| Thomas Mulrooney | |
| President and Chief Compliance Officer |
State of: New York
County of: New York
On this the 21 day of July 2015, before me, Thomas Mulrooney [sic], the undersigned officer, personally appeared Thomas Mulrooney, who acknowledged himself to be the President and Chief Compliance Officer of Rafferty Capital Markets, LLC, and that he, as such President and Chief Compliance Officer, 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 President and Chief Compliance Officer.
In witness whereof I hereunto set my hand.
| ______/s/___________________________ |
| Michelle L. Diaz |
| Notary Public |
| Date Commission Expires: Sep. 30, 2017 |