In accordance with Governor Lamont's emergency declaration, employees and the public are asked to observe social distancing measures to ensure communal safety and to slow the spread of the novel coronavirus (COVID-19). People are asked to work from home and telecommute wherever possible. Adhering to these instructions, the Department of Banking has closed its offices to the public. However, agency staff will continue to provide services to consumers and industry through telework. When contacting the Department, please use electronic communication whenever possible. Agency staff will continue to check voicemails during this time. Consumers are encouraged to use our online form for complaints. If you are unsure where to send an inquiry, you may send it to Department.Banking@ct.gov and it will be routed appropriately. Thank you for your patience during this time.

Securities and Business Investments Division
Securities Bulletin

Vol. XXXIII No. 4 - Winter 2019
Features
Enforcement and Other Highlights


FEATURES

Quarterly Statistical Summaries

Click here for summary.

 


ENFORCEMENT AND OTHER HIGHLIGHTS

Administrative Actions

Great Heritage Investments, LLC (CRD No. 288521) and George Henry Messier (CRD No. 1005894) – Order to Cease and Desist, Notice of Intent to Restrict or Impose Conditions on Securities or Investment Advisory Activities and Notice of Intent to Fine Issued

On December 19, 2019, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Restrict or Impose Conditions on Securities or Investment Advisory Activities and Notice of Intent to Fine (Docket No. CRNDF-19-8436-S) against Great Heritage Investments, LLC of 14 Main Street South, Woodbury, Connecticut 06798 and George Henry Messier, Chief Compliance Officer of the firm.  Great Heritage Investments, LLC is registered as an investment adviser under the Connecticut Uniform Securities Act and George Messier is registered as an investment adviser agent of the firm in Connecticut.

The action alleged that, contrary to Section 36b-5(b)(1) of the Act, the firm failed to enter into signed investment advisory agreements with its clients; that the firm violated Section 36b-5 of the Act and Section 36b-31-5a of the Regulations by disseminating misleading advertising and performance representations; that the firm failed to maintain the records required by Section 36b-14(a)(1) of the Act and Section 36b-31-14b of the Regulations; that, in violation of Section 36b-23 of the Act, respondents made materially misleading statements in filings made with the Commissioner; and that respondents failed to update their regulatory filings as required by Section 36b-31-14e of the Regulations.

Among the relief sought by the department was a requirement that the firm refrain from exercising custody or control over client funds or securities; file proposed advertising with the agency; limit client advice to exchange-listed securities, investment companies, governmental securities, commercial paper and certificates of deposit; and that the firm retain a regulatory consultant to perform compliance reviews of the firm’s operations.

The respondents were afforded an opportunity to request a hearing on the Order to Cease and Desist, the Notice of Intent to Fine and the activity restrictions sought by the agency.

 

GHC Fund One LLC a/k/a Gilbert Hill Fund I, LLC – Order Imposing Fine Entered

On October 23, 2019, the Banking Commissioner entered an Order Imposing Fine (Docket No. CRF-19-8311-S) against GHC Fund One LLC a/k/a Gilbert Hill Fund I, LLC, now or formerly of 49 Richmondville Avenue, Westport, Connecticut 06880.  GHC Fund One LLC had been the subject of a June 25, 2019 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-19-8311-S) alleging that in 2008, $300,000 of GHC Fund One LLC membership interests were sold to a Massachusetts investor with the representation that the investor's monies would be used by GHC Fund One LLC to implement its day trading strategy; that, in actuality, the investor's monies were used to purchase shares of an unrelated entity based in Waterbury, Connecticut; that the investor made a second investment of $50,000 in 2009; and that at least a portion of the total investment was used to pay the personal expenses of the Respondent’s control person.  The June 25, 2019 action alleged that the foregoing conduct constituted a violation of Sections 36b-16 and 36b-4(a) of the Connecticut Uniform Securities Act.  Since the Respondent failed to request a hearing on the Order to Cease and Desist and Order to Make Restitution, the Order to Cease and Desist and Order to Make Restitution became permanent on September 24, 2019.

Similarly, the Respondent did not request a hearing on the Notice of Intent to Fine, and the October 23, 2019 Order Imposing Fine was entered by default. Finding that the Respondent violated Sections 36b-16 and 36b-4(a) of the Act, the Commissioner fined the Respondent $100,000.

 

Reed Francis Bermingham (CRD No. 5526970) d/b/a Bermingham Wealth Strategies Fined $100,000

On December 12, 2019, the Banking Commissioner entered an Order Imposing Fine (Docket No. CRF-19-8509-S) against Reed Francis Bermingham of West Hartford, Connecticut and Guilford, Connecticut.  Prior to May 18, 2018, Respondent Bermingham was registered as a broker-dealer agent and an investment adviser agent of Commonwealth Financial Network under the Connecticut Uniform Securities Act.  The Order Imposing Fine had been preceded by an October 10, 2019 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-19-8509-S) alleging that, following his departure from Commonwealth Financial Network, Respondent Bermingham advised one of his Commonwealth Financial Network clients that Respondent was opening Bermingham Wealth Strategies and that the client should sell his securities positions and open a brokerage account at TD Ameritrade with the proceeds.  Respondent would then manage the securities portfolio for a fee.  According to October 10, 2019 action, although the client remitted $20,400 to Respondent, the monies were not deposited into the TD Ameritrade account but were used to pay for Respondent’s personal expenses.  The October 10, 2019 action further alleged that Respondent violated Section 36b-6(c)(1) of the Connecticut Uniform Securities Act by transacting business as an unregistered investment adviser and that Respondent engaged in practices that violated the antifraud provisions in Section 36b-5(a) of the Act.

Since Respondent Bermingham did not request a hearing on the Order to Cease and Desist and the Order to Make Restitution, each of those orders became permanent on October 30, 2019.

Respondent Bermingham likewise did not request a hearing on the Notice of Intent to Fine, and the Order Imposing Fine was entered by default.  Adopting as findings the allegations in the October 10, 2019 Notice of Intent to Fine, the Commissioner imposed a $100,000 fine against Respondent Bermingham.

 

CONSENT ORDERS

Horter Investment Management, LLC (CRD No. 119880)

On December 18, 2019, the Banking Commissioner entered a Consent Order (No. CO-19-14430-S) with respect to Horter Investment Management, LLC of 11726 Seven Gables Road, Symmes Township, Cincinnati, Ohio 45249.  The firm is registered as an investment adviser with the Securities and Exchange Commission.

The Consent Order alleged that the firm violated Section 36b-6(c)(3) of the Connecticut Uniform Securities Act by engaging one Robert William Brinkman (CRD No. 1511170) as an unregistered investment adviser agent.  More specifically, from approximately January 2015 to approximately January 2019, Brinkman purportedly solicited and referred investment advisory clients to Daniel Reens (CRD No. 6576660), a former investment adviser agent of Horter Investment Management, LLC, and Reens in turn and while under the supervision of Horter Investment Management, LLC, paid a portion of the related investment advisory fees he earned to Safe Harbor Retirement LLC, an entity associated with Brinkman.  In addition, on January 16, 2019, Horter Investment Management, LLC purportedly paid Safe Harbor Retirement LLC $29,337.95 as a solicitation fee.

Brinkman was the subject of a September 27, 2019 Consent Order (No. CO-19-8416-S) entered by the Commissioner relating to the conduct in question, and a similar Consent Order was entered with respect to Reens on October 22, 2019 (No. CO-19-8537-S).

The December 18, 2019 Consent Order directed Horter Investment Management, LLC to cease and desist from regulatory violations and fined the firm $12,500.

 

Daniel Reens (CRD No. 6576660)

On October 22, 2019, the Banking Commissioner entered a Consent Order (No. CO-19-8537-S) with respect to Daniel Reens of Newtown, Connecticut.  Daniel Reens had previously applied for registration as an investment adviser agent of Safe Harbour LLC, a Connecticut-registered investment adviser, and had previously been registered as an investment adviser agent of Horter Investment Management, LLC.  On August 19, 2019, an application was filed to withdraw Reens' pending investment adviser agent application with Safe Harbour LLC, and on October 14, 2019, an application was filed to withdraw Reens' registration as an investment adviser agent of Horter Investment Management, LLC in Connecticut.

The Consent Order alleged that, from approximately January 2016 to approximately January 2019, Reens violated Section 36b-5(f) of the Connecticut Uniform Securities Act by paying a portion of the investment advisory fees he received from Horter Investment Management, LLC to Safe Harbor Retirement, an unregistered entity that was associated with Safe Harbour LLC, and failing to disclose this arrangement to affected Horter Investment Management, LLC clients.  The Consent Order also alleged that Daniel Reens violated Section 36b-31-14e(a) of the Regulations under the Act by failing to amend his regulatory filings to disclose that he was doing business as Bulwark Financial, LLC.

The Consent Order directed Daniel Reens to cease and desist from regulatory violations and, in light of the cooperation displayed by Reens in connection with the agency’s review, fined him $4,000.

 

STIPULATION AND AGREEMENTS

ETFConcepts, LLC (CRD No. 159411)

On November 14, 2019, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-19-8536-S) with ETFConcepts, LLC, a Connecticut registered investment adviser located at 290 East Litchfield Road, Litchfield, Connecticut 06759.  The Stipulation and Agreement alleged that, from approximately August 1, 2017 through May 9, 2019, the firm engaged an unregistered investment adviser agent in violation of Section 36b-6(c)(3) of the Connecticut Uniform Securities Act.  The investment adviser agent in question has since applied for registration under the Act.

In resolution of the matter, the firm agreed to refrain from regulatory violations and to pay $1,350 to the department.  Of that amount, $1,000 constituted an administrative fine and $350 represented reimbursement for past due investment adviser agent registration fees.

 


STATISTICAL SUMMARY

Licensing At A Glance
at the end of the quarter

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Broker-dealers Registered

2,085

 2,103

 2,106  2,039
Broker-dealer Agents Registered 171,305  172,601 175,348 168,913
Broker-dealer Branch Offices Registered 2,531  2,527 2,533 2,488
Investment Advisers Registered 496 506 506 484
SEC Registered Advisers Filing Notice 2,251  2,278 2,286 2,219
Investment Adviser Agents Registered 14,639 14,733 15,018  14,867
Exempt Reporting Advisers 138  137 140 141
Agents of Issuer Registered 5  5 5 3
Conditional Registrations 0  0 1 0

 

Securities and Business
Opportunity Filings

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Offerings Reviewed 29 33 47 20 129
Investment Company Notice Filings 504 532 442 7,495 8,973
Exemptions and Exemptive Notices 972 1,155 1,151 1,168 4,446
Examinations
Broker-dealers 22 31 44 35 132
Investment Advisers 46 44 25 40 155
Securities Investigations
Opened 12 22 7 18 59
Closed 23 12 7 15 57
Ongoing as of End of Quarter 81 90 90 92
Subpoenas issued 7 16 10 12 45
Matters referred from Attorney General 0 2 0 0 2
Matters referred from Other Agencies 3 6 1 2 12
Business Opportunity Investigations
Investigations Opened 0 0 2  1 3
Investigations Closed 0 0 2 0 2
Ongoing as of End of Quarter 0 0 0  1
Enforcement: Remedies and Sanctions
Notices of Intent to Deny (Licensing) 1 1  0 2
Notices of Intent to Suspend (Licensing) 0 0 0 0 0
Notices of Intent to Revoke (Licensing) 0 0 0 0 0
Denial Orders (Licensing) 0 0 0  0 0
Suspension Orders (Licensing) 0 0 0  0 0
Revocation Orders (Licensing) 0 0 0  0 0
Notices of Intent to Fine 2 2 0 2 6
Orders Imposing Fine 0 0 0 2 2
Cease and Desist Orders 2 2 0 2 6
Notices of Intent to Issue Stop Order 0 0 0 0 0
Activity Restrictions/Bars 1 0 1 1 3
Stop Orders 0 0 0 0 0
Vacating/Withdrawal/ Modification Orders 0 0 0 0 0
Restitutionary Orders and Disgorgement Orders 2 2 0 1 4
Injunctive Relief Obtained 0 0 0 0 0

Proceedings and Settlements

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Administrative Actions 2 2  0 3 7
Consent Orders 5 0 3  2 10
Stipulation and Agreements 3 3 6 1 13

Monetary Relief*

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Monetary Sanctions Imposed $143,590  $6,475 $47,225 $117,850  $315,140
Portion attributable to settlements
$143,590
$6,475 $47,225  $17,850 $215,140
Attributable to Court-Ordered Penalties 0  0 0  0 0
Restitution or Other Monetary Relief
(includes rescission offer amounts)
$1,299,312 $49,306 $721,250  $485,000 $2,554,868
*Cents eliminated

Securities Referrals

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Criminal Matters 1 1 3
Civil (Attorney General) 2 1 0  0 3
Other Agency Referrals 0 1  0

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