Bulletin # 2856 - Week Ending November 16, 2018

CREDIT UNION ACTIVITY
Branch Activity

DATE: November 15, 2018
CREDIT UNION: American eagle Financial Credit Union, Inc.
LOCATION: 84 Washington Avenue, North haven, CT  06473
ACTIVITY: Approved to Open Full Service Branch

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Amended Order to Cease and Desist, Amended Order to Make Restitution and Amended Notice of Intent to Fine Issued

On November 13, 2018, the Banking Commissioner issued an Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-18-8430-S) against Voya Financial Advisors, Inc. f/k/a ING Financial Partners, Inc. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act and maintains its principal office at 699 Walnut Street, Suite 1000, Des Moines, Iowa 50309. The action had been preceded by an April 23, 2018 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-18-8430-S).

The original action was an outgrowth of an investigation into the firm's failure to exercise supervisory controls over various agents overseen remotely from the firm's Grafton, Massachusetts office. Among the agents was Connecticut agent Dale Joseph Quesnel, Sr. (CRD No. 2231152) who allegedly engaged in improper selling away, and sold $1.9 million of securities issued by Overtime Marketing, LLC, Overtime Sports Southeast, LLC and Overtime Sports Southwest, LLC (the "Overtime Entities") as well as $250,000 of securities issued by Floridel, LLC. The action seeks restitution for those who invested in the Overtime Entities and in Floridel, LLC while Quesnel was associated with Voya Financial Advisors, Inc. The original action also cited alleged misconduct by Texas agent Daniel Tapia (CRD No. 2219749) who, despite Voya Financial Advisors, Inc.'s objection, paid Quesnel $35,000 for securities research for Tapia's business, Rembrandt Financial Group, LLC. The action also alleged that Voya Financial Advisors, Inc. failed to supervise the activities of Florida agent Stephen Mark Ruff (CRD No. 1527170) who, contrary to the firm's request, failed to completely sever his ties with Floridel, LLC. In addition, the action alleged that Voya Financial Advisors, Inc. was remiss in supervising Connecticut agent Eric Olojugba (CRD number 2925206) who failed to amend his Form U4 to reflect his outside business activity.

The amended action added additional claims supporting the firm’s alleged supervisory deficiencies. The amended action alleged that the firm also failed to detect agent Quesnel's outside business activity involving his serving as treasurer of a Connecticut tax district, and his transferring funds from the tax district's bank account to his own bank account at Rockville Bank, an account over which Voya Financial Advisors, Inc. had oversight. The amended action also alleged that Voya Financial Advisors, Inc. failed to exercise adequate supervisory controls over Grafton Branch supervisor John J. McDonnell Jr. (CRD No. 4369031) who invested $300,000 in Floridel and signed multiple documents on behalf of Floridel. McDonnell was also named as a defendant in two lawsuits involving Floridel. More specifically, Voya Financial Advisors, Inc. allegedly failed to follow its own policies and procedures regarding such outside business activity by McDonnell.

The firm was afforded an opportunity for a hearing on the amended action.

Connecticut-registered Broker-dealer Fined $499,000 as Part of Global Settlement Alleging Supervisory Deficiencies

On November 15, 2018, the Banking Commissioner entered a Consent Order (No. CO-18-8453-S) with respect to LPL Financial LLC, a Connecticut-registered broker-dealer having its principal place of business at 75 State Street, 22^nd Floor, Boston, Massachusetts 02109. The Consent Order was the result of a multistate investigation and global settlement that focused on the firm’s failure to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, nonexempt securities to firm customers from approximately October 1, 2006 through May 1, 2018. The unregistered sales were partially attributable to a third party compliance data feed not being fully utilized to detect the problem.

Among other things, the Consent Order alleged that the firm 1) violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered, nonexempt securities in Connecticut; 2) violated Section 36b-31-6f of the Regulations under the Act by failing to maintain adequate supervisory systems; and 3) violated Sections 36b-14(a)(2) and 36b-14(a)(3) of the Act by failing to maintain books and records necessary to ensure full and proper compliance with Blue Sky laws, rules and regulations.

The Consent Order directed the firm to cease and desist from regulatory violations and to pay a $499,000 penalty to the state, representing Connecticut’s share of the global settlement. In addition, the Consent Order required the firm to 1) offer to repurchase from investors affected securities held in LPL accounts; and 2) implement a “top-to-bottom” review of firm operations, policies, procedures and practices.

      Dated: Tuesday, November 20, 2018