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PAUL ANTHONY STEFFANY * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER No. CO-16-8275-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, Paul Anthony Steffany (“Steffany”) of Stratford, Connecticut is an individual who was previously registered as a broker-dealer agent and an investment adviser agent of various firms under the Act. Steffany was registered as a broker-dealer agent of Raymond James & Associates, Inc. (“Raymond James”) (CRD No. 705) in Connecticut from June 8, 2007 to June 20, 2014 and as an investment adviser agent of Raymond James in Connecticut from June 21, 2007 to June 20, 2014. On June 20, 2014, Raymond James filed a Form U5 indicating that Steffany had been discharged, and terminating Steffany’s registrations with all jurisdictions and self-regulatory organizations;
WHEREAS, on October 8, 2015, the Financial Industry Regulatory Authority (“FINRA”), a self-regulatory organization registered with the Securities and Exchange Commission pursuant to Section 15A of the Securities Exchange Act of 1934, accepted a Letter of Acceptance, Waiver and Consent (“AWC”) (No. 2014041650301) executed by Steffany on October 1, 2015 in resolution of certain FINRA rule violations;
WHEREAS, the FINRA AWC alleged that Steffany was trustee of a testamentary trust for an estate that was a customer of Raymond James; that from January 2007 through April 2014, Steffany violated NASD Rule 2330(a), FINRA Rule 2150(a), NASD Rule 2110, and FINRA Rule 2010 by converting at least $112,742 of estate funds purportedly as compensation for Steffany’s services as trustee; that Steffany converted the funds by transferring monies from the estate’s brokerage account at Raymond James to an estate bank account held outside of the firm, having the bank account statements sent to his home to conceal his conduct from Raymond James and writing checks from the estate account to cover his personal expenses; and that from August 2007 through April 2014, Steffany violated NASD Rule 2110 and FINRA Rule 2010 by forging the signature of a co-executor on at least twelve checks made payable to the estate and later used certain of these funds for his personal use;
WHEREAS, the FINRA AWC acknowledged that Steffany had refunded approximately $112,742 to the estate and resigned as trustee;
WHEREAS, the FINRA AWC barred Steffany from association with any FINRA-regulated broker-dealer in any capacity;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Steffany to determine if he had violated, was violating or was about to violate provisions of the Act or Regulations (“Investigation”);
WHEREAS, on January 15, 2016, the Division provided Steffany with an opportunity to demonstrate in writing why Steffany’s registration as a broker-dealer agent should not be revoked or his securities-related activities restricted;
WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that:
WHEREAS, Section 36b-15(e)(1) of the Act provides, in part, that:
| Withdrawal from registration as a[n] . . . agent . . . or investment adviser agent . . . becomes effective ninety days after receipt of an application to withdraw such registration . . . or within such shorter period of time as the commissioner may determine, unless a . . . revocation or suspension proceeding is pending when the application . . . is filed or a proceeding to . . . revoke, suspend or impose conditions upon the withdrawal is instituted within ninety days after the application . . . is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the commissioner may nevertheless institute a . . . revocation or suspension proceeding under subsection (a) of this section within one year after withdrawal became effective[;] |
WHEREAS, Steffany did not file a written response to the Division’s January 15, 2016 correspondence;
WHEREAS, as a result of the Investigation the Commissioner has reason to believe that the foregoing conduct violates certain provisions of the Act, and would support administrative proceedings against Steffany 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(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 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 Steffany reached an agreement, the terms of which are reflected in this Consent Order, in full and final resolution of the matters described herein;
WHEREAS, Steffany 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, Steffany, through his execution of this Consent Order, specifically assures 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, Steffany, 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 Sections 36b-15(f) 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 himself of Sections 36b-15(f) and 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, Steffany, through his execution of this Consent Order, acknowledges and admits the following allegations of the Commissioner which are sufficient for the Commissioner to impose sanctions pursuant to Sections 36b-27 and 36b-15 of the Act:
| 1. | The sanctions imposed by FINRA against Steffany in Case No. 2014041650301 and more fully described herein provide a basis for suspending, revoking or restricting the securities-related activities that Steffany may perform in this state pursuant to Section 36b-15(a)(2)(F)(iii) of the Act; |
| 2. | Steffany engaged in fraudulent, dishonest or unethical practices in the securities business within the meaning of Section 36b-15(a)(2)(H) of the Act. Such conduct would support the initiation of proceedings to suspend or revoke Steffany’s registrations and/or to restrict the securities-related activities that Steffany may perform in this state; and |
| 3. | The conduct described herein violated NASD Rule 2110 and FINRA Rule 2010 which require associated persons to observe high standards of commercial honor and equitable principles of trade. Consequently, such conduct was also proscribed by Section 36b-31-15b of the Regulations and would support the entry of an order to cease and desist and an administrative fine under Section 36b-27 of the Act. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Steffany an opportunity for a hearing;
AND WHEREAS, Steffany 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, Steffany, through his execution of this Consent Order, consents to the Commissioner’s entry of an order imposing on him the following sanctions:
| 1. | Steffany shall cease and desist from directly or indirectly violating the provisions of the Act and the Regulations, including without limitation, engaging in fraudulent, dishonest or unethical practices in the securities business; and |
| 2. | Steffany shall be PERMANENTLY BARRED from (a) transacting business in or from Connecticut as a “broker-dealer”, “agent”, “investment adviser” or “investment adviser agent”, as such terms are defined in Section 36b-3 of the Act and notwithstanding any otherwise applicable exclusion or exemption; (b) directly or indirectly soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut ; (c) directly or indirectly engaging in any activity which would require Steffany to obtain a license or register under Chapters 668 or 669 of the General Statutes of Connecticut “Nondepository Financial Institutions,” and “Regulated Activities,” respectively, and (d) serving as a control person, qualified individual or branch manager for any entity regulated by the Commissioner under Chapter 668 of the General Statutes. |
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 Steffany 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. | After seven years have elapsed from the date the Consent Order is entered, Steffany may request that the Commissioner relieve him from the bar contained in Paragraph 2 of Section IV of this Consent Order by filing a written application with the Commissioner demonstrating why good cause exists for the Commissioner to grant such relief. The Commissioner may, in his/her sole discretion, grant, deny or condition the relief sought pursuant to this paragraph; |
| 4. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against Steffany 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; |
| 5. | Steffany 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; |
| 6. | Steffany 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. However, nothing in this Consent Order affects Steffany’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 |
| 7. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | ____/s/_____________ | |
| this 13th day of May 2016. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Paul Anthony Steffany, 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 consent to the entry of this Consent Order.
______/s/___________
Paul Anthony Steffany State of: CT
County of: Fairfield
On this the 6 day of May 2016, before me, the undersigned officer, personally appeared Paul Anthony Steffany, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
| ____/s/____________________________ |
| Notary Public |
| Date Commission Expires: July 31, 2020 |