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MEYERS ASSOCIATES, L.P. * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER NO. CO-17-8342-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, Meyers Associates, L.P. n/k/a Windsor Street Capital, L.P. (“Meyers”) is a New York limited partnership with its principal place of business at 45 Broadway, Second Floor, New York, New York 10006. From September 23, 1994 to the present, Meyers has been registered in Connecticut as a broker-dealer under the Act, with the exception of a suspension of its registration from March 24, 2015 to June 17, 2015. According to New York State Division of Corporations records, on August 11, 2016, Meyers changed its name to White Oak Capital Securities L.P. and on September 19, 2016, Meyers changed its name to Windsor Street Capital, LP;
WHEREAS, the Commissioner and Meyers entered into two Consent Orders, one on June 14, 2011 (Docket No. RCF-10-7817-S), and one on March 24, 2015 (Docket No. CFNR-14-8132-S), both of which are incorporated by reference herein;
WHEREAS, in accordance with Section IV(9) of the March 24, 2015 Consent Order, the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”) conducted an on-site examination of Meyers’ primary office located at 45 Broadway, New York, New York from September 14, 2016 through September 16, 2016 (“September 2016 Exam”);
WHEREAS, subsequent to and in connection with the September 2016 Exam, the Commissioner, through the Division, conducted an investigation, pursuant to Section 36b-26(a) of the Act, into the activities of Meyers to determine whether it had violated, was violating or was about to violate provisions of the Act or Regulations;
WHEREAS, as a result of such investigation and examination, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Notice”) on December 5, 2016, which Notice is incorporated by reference herein;
WHEREAS, on December 16, 2016, Meyers requested a hearing on the matters alleged in the Notice;
WHEREAS, on December 19, 2016, the Commissioner issued a Notification of Hearing and Designation of Hearing Officer appointing Attorney Stacey Serrano as Hearing Officer and scheduling the hearing for February 22, 2017, at 10 a.m.;
WHEREAS, on February 10, 2017 Meyers filed a Form BDW to withdraw its registration as a broker-dealer under the Act;
WHEREAS, Section 36b-15(e)(1) of the Act provides, in relevant part, that "[w]ithdrawal from registration as a broker-dealer . . . becomes effective ninety days after receipt of an application to withdraw such registration . . . unless a . . . revocation . . . proceeding is pending when the application . . . is filed . . . If a proceeding is pending . . . withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines";
WHEREAS, on February 15, 2017, Hearing Officer Serrano granted a continuance of the hearing scheduled for February 22, 2017 to May 4, 2017 at 10 a.m.;
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 36b-27(f) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a) . . . or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
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, Meyers and the Commissioner now desire to resolve the matters alleged in the Notice without the need for further administrative proceedings, and this Consent Order is entered solely for such purpose;
WHEREAS, Meyers 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, Meyers agrees that the Notice may be used in construing the terms of this Consent Order, and agrees to the language in this Consent Order;
WHEREAS, on April 27, 2016 and November 11, 2016, the Financial Industry Regulatory Authority (“FINRA”) imposed fines of $700,000 and $350,000, respectively, against Meyers for various securities violations, including, but not limited to, violations of NASD Rule 3010(a) and FINRA Rules 3310(a) and 2010 (FINRA Department of Enforcement v. Meyers Associates, L.P, et al., Disciplinary Proceeding No. 2010020954501 FINRA Office of Hearing Officers, Extended Hearing Panel Decision (April 27, 2016); FINRA Department of Enforcement v. Meyers Associates, L.P, Disciplinary Proceeding No. 2013035533701, FINRA Office of Hearing Officers, Extended Hearing Panel Decision (November 11, 2016)) (“FINRA Actions”). The FINRA Actions are currently on appeal to FINRA’s National Adjudicatory Council;
WHEREAS, on January 25, 2017, the U.S. Securities and Exchange Commission (“SEC”) issued an Order Instituting Administrative and Cease and Desist Proceedings (“SEC Order”) against Meyers and its prior Chief Compliance Officer. Among other things, the SEC Order alleged that Meyers facilitated the unregistered sale of penny stocks without performing adequate due diligence on such securities and violated the firm’s anti-money laundering program by repeatedly failing to file suspicious activity reports with the U.S. Department of the Treasury Financial Crimes Enforcement Network relating to the penny stock transactions. The SEC Order is currently pending;
WHEREAS, Meyers maintains that in anticipation of its having to pay the aforementioned FINRA fines and a fine to the SEC in connection with the SEC Order, it is and will be financially unable to pay the maximum fine that might have been ordered as a result of the Notice or as a term of this Consent Order pursuant to Section 36b-27(f) of the Act;
AND WHEREAS, Meyers, through its execution of this Consent Order, specifically assures the Commissioner that none of the violations alleged in the Notice shall occur in the future.
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Meyers, 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(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 itself 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 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 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, Meyers, through its execution of this Consent Order, acknowledges the following allegations and admits sufficient evidence exists for the Commissioner to issue an order to cease and desist, an order revoking Meyers’ registration as a broker-dealer in Connecticut, and an order imposing a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued under the Act:
| 1. | Meyers violated Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations by failing to provide copies of and make required books and records available to the Division when requested; |
| 2. | Meyers violated Section 36b-31-14a of the Regulations by failing to maintain true, accurate and current books and records; |
| 3. | Meyers violated Section 36b-31-6f of the Regulations by failing to establish, enforce and maintain a system for supervising the activities of its agents and employees that was reasonably designed to achieve compliance with applicable securities laws and regulations; |
| 4. | Meyers violated Section 36b-16 of the Act by offering and selling securities to at least one Connecticut investor, which securities were not registered in Connecticut under the Act; and |
| 5. | Meyers violated the cease and desist provision of the 2011 Consent Order, as well as Subsections 11 and 12 of Section IV of the 2015 Consent Order. |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Meyers an opportunity for a hearing;
AND WHEREAS, Meyers 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, Meyers, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:
| 1. | Meyers, its representatives, officers, agents, employees, affiliates, assigns, control persons or successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, either directly or through any person, organization or other device, including without limitation, (i) failing to provide copies of and make its required books and records available to the Commissioner when requested, (ii) failing to maintain true, accurate and current books and records, (iii) failing to enforce and maintain adequate supervisory procedures that are reasonably designed to achieve compliance with applicable securities laws and regulations, and (iv) offering or selling unregistered securities in Connecticut; and |
| 2. | No later than the date this Consent Order is entered by the Commissioner, Meyers shall remit to the Department, by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut,” the sum of twenty-five thousand dollars ($25,000) as an administrative fine. |
V. CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Meyers’ withdrawal of its broker-dealer registration under the Act shall become effective upon the entry of this Consent Order; |
| 3. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Meyers 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; |
| 4. | This Consent Order shall not preclude additional proceedings by the Commissioner against Meyers, its representatives, officers, agents, employees, affiliates, assigns, control persons or successors in interest for acts or omissions not specifically addressed in the Notice or this Consent Order or for acts and/or omissions that do not arise from the facts or transactions addressed in such Notice or this Consent Order; |
| 5. | Meyers, its representatives, officers, agents, employees, affiliates, assigns, control persons or successors in interest 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. | Meyers 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 Respondent’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 15th day of May 2017. | Jorge L. Perez | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, Joseph Charles Marinelli, state on behalf of Meyers Associates, L.P. n/k/a Windsor Street Capital, L.P. (“Meyers”), 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 Meyers; that Meyers agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Meyers consents to the entry of this Consent Order.
| Meyers Associates, L.P. n/k/a Windsor Street Capital, LP | |
| By: | ________/s/________________ |
| Joseph Charles Marinelli | |
| Chief Financial Officer |
State of: New York
County of: New York
On this the 10th day of May 2017, before me, the undersigned officer, personally appeared Joseph Charles Marinelli, who acknowledged himself to be the Chief Financial Officer of Meyers, and that he, as such Chief Financial Officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing in his capacity as Chief Financial Officer of Meyers.
In witness whereof I hereunto set my hand.
| ____/s/_____________________ |
| Notary Public |
| Date Commission Expires: 2019 |