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IN THE MATTER OF:

BLAINE CAPITAL, LLC
(IARD No. 282864)




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   STIPULATION AND
   AGREEMENT

No. ST-18-8396-S

   

WHEREAS, the Banking Commissioner (the “Commissioner”) is responsible for administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”) and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies (the “Regulations”) promulgated under the Act;

WHEREAS, Blaine Capital, LLC (“Blaine”) is an investment adviser having its principal place of business at Six Landmark Square, Fourth Floor, Stamford, Connecticut 06901.  Blaine was formally organized as a Connecticut limited liability company on April 28, 2016.  Blaine was previously known as Gray Wolf Capital Management, LLC and, prior to that, AZT Advisors LLC.  William B. Smith (CRD No. 2111154) is the sole principal of Blaine;

WHEREAS, on February 5, 2016, Blaine (then known as AZT Advisors LLC) filed an application for registration as an investment adviser with the Securities and Exchange Commission (the “SEC”) pursuant to SEC Rule 203A-2(c) which permits advisers expecting to be eligible for SEC registration within 120 days to register federally.  The SEC granted effectiveness to the registration on February 26, 2016;

WHEREAS, Section 36b-6(e) of the Act, as in effect prior to its 2017 amendment, provided, in part, that:  “The following investment advisers are exempted from the registration requirements under subsection (c) of this section:  Any investment adviser that (1) is registered . . . under Section 203 of the Investment Advisers Act of 1940 . . . Any investment adviser claiming an exemption pursuant to subdivision (1) of this subsection . . . shall first file with the commissioner a notice of exemption together with a consent to service of process as required by subsection (g) of section 36b-33 and shall pay to the commissioner or to any person designated by the commissioner in writing to collect such fee on behalf of the commissioner a nonrefundable fee of two hundred fifty dollars”;

WHEREAS, Blaine never filed with the Commissioner the notice required by Section 36b-6(e) of the Act;

WHEREAS, on May 12, 2016, Blaine filed a Form ADV amendment indicating that was no longer eligible for SEC registration.  Blaine did not file a partial Form ADV-W (Notice of Withdrawal from Registration as an Investment Adviser), however, until July 14, 2016 at which time the SEC terminated Blaine’s federal registration;

WHEREAS, on May 13, 2016, Blaine filed an application for registration as an investment adviser under the Act.  The firm’s state registration became effective on June 21, 2016;

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an examination of Blaine pursuant to Section 36b-14(d) of the Act and 36b-31-14f of the Regulations, and a related investigation under Section 36b-26 of the Act to determine whether Blaine had violated, was violating or was about to violate any provision of Act or any regulation or order under the Act (the “Examination and Investigation”);

WHEREAS, as a result of the Examination and Investigation, the Division ascertained that, 1) prior to its registration as an investment adviser on June 21, 2016, Blaine performed advisory services and collected advisory fees from clients in violation of Section 36b-6(c) of the Act; and 2) while registered as an investment adviser with the SEC, Blaine failed to file the notice required by Section 36b-6(e) of the Act;

WHEREAS, upon being notified of the Division’s findings, Blaine refunded $7,750.48 in advisory fees to those clients to whom it had rendered advisory services while unregistered;

WHEREAS, the Commissioner believes that the conduct described above would support administrative proceedings against Blaine under Sections 36b-15 and 36b-27 of the Act;

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;

WHEREAS, Blaine desires to settle the matters described above, and voluntarily enters into this Stipulation and Agreement;

WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;

WHEREAS, the Commissioner and Blaine acknowledge that this Stipulation and Agreement is in lieu of any court action or administrative proceeding against Blaine, its members, officers, employees, agents or representatives adjudicating any issue of fact or law on the specific matters described herein;

WHEREAS, Blaine, through its execution of this Stipulation and Agreement, voluntarily waives any rights it may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
    
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:

1.
Blaine, its representatives, agents, employees, affiliates, assigns and successors in interest shall refrain 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, transacting business as an unregistered investment adviser and engaging unregistered investment adviser agents;
2.
No later than the date this Stipulation and Agreement is executed by the Commissioner, Blaine shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut” or by electronic funds transfer, the sum of five thousand dollars ($5,000) as an administrative fine;
3. Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Blaine based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof;
4. Nothing in this Stipulation and Agreement shall be construed as limiting the Commissioner's ability to take enforcement action against Blaine based upon evidence of which the Commissioner was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act;
5. Through its execution of this Stipulation and Agreement, Blaine agrees that it 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 Stipulation and Agreement or create the impression that this Stipulation and Agreement is without factual basis; and
6. This Stipulation and Agreement shall become binding when executed by Blaine and the Commissioner.

IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.


Dated at Hartford, Connecticut       ____/s/_____________
this 15th day of May 2018. Jorge L. Perez
Banking Commissioner 


I, William Blaine Smith, state on Blaine Capital, LLC, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Blaine Capital, LLC; and that Blaine Capital, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

Blaine Capital, LLC
 
 
By    _______/s/_____________
William Blaine Smith
Managing Member and
Chief Compliance Officer



On this 26th day of April 2018, personally appeared William Blaine Smith, signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of Blaine Capital, LLC and acknowledged the same to be his free act and deed, before me.


_____/s/________________________
Notary Public
My Commission Expires:  07/31/2020




Administrative Orders and Settlements