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IN THE MATTER OF: RNT WEALTH MANAGEMENT LLC (Collectively "Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING DOCKET NO. NDCDRF-16-8200-S |
I. PRELIMINARY STATEMENT
| 1. | 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. |
| 2. | Pursuant to Sections 36b-8 and 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation into the activities of Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act or Regulations (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act and Regulations. |
| 4. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists under Section 36b-15(a) of the Act for denying Robert Neil Tricarico’s (“Tricarico”) registration as an investment adviser agent of Harbor Vista Wealth Management LLC (IARD No. 174937) (“Harbor Vista”) in Connecticut. |
| 5. |
As a result of the Investigation, the Commissioner has reason to believe that a basis exists to issue a cease and desist order against Respondents as authorized by Section 36b-27(a) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists to order that Respondents make restitution as authorized by Section 36b-27(b) of the Act. |
| 7. | As a result of the Investigation, the Commissioner has reason to believe that a basis exists to impose a fine upon Respondents as authorized by Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 8. |
Tricarico is an individual whose address last known to the Commissioner is 11 Cloverly Circle, Norwalk, Connecticut 06855. Tricarico has been registered as a broker-dealer agent under the Act at various times from October 22, 1992 to January 5, 2015, and has been registered as an investment adviser agent under the Act at various times from June 7, 1993 to January 5, 2015. |
| 9. | RNT Wealth Management LLC (“RNT”) is a Connecticut limited liability company formed on February 13, 2009. RNT’s address last known to the Commissioner is 6 South Trail, Darien, Connecticut 06820. Tricarico is the sole member of RNT. |
III. STATEMENT OF FACTS
| 10. | From approximately June 18, 2010 to November 21, 2012, and while associated with Wells Fargo Advisors Financial Network, LLC and LPL Financial LLC as an investment adviser agent and broker-dealer agent, Tricarico misappropriated over one million dollars from a client. The client died on October 7, 2013. On November 21, 2014, the Executrix of the client’s estate filed a civil complaint against Tricarico in Connecticut Superior Court (Moore v. Tricarico, Docket No. FBT-CV14-6046911-S) alleging breach of fiduciary duty, theft, unfair trade practices and breach of contract. The civil action against Tricarico was ultimately settled and withdrawn in April 2015. |
| 11. | Tricarico was registered with LPL Financial LLC (CRD No. 6413) (“LPL”) as a broker-dealer agent from May 16, 2011 until January 5, 2015, and as an investment adviser agent from May 18, 2011 until January 5, 2015. On January 5, 2015, LPL filed a Form U-5 indicating that Tricarico’s association with the firm had been terminated in light of the civil action described above. |
| 12. | On January 15, 2015, the Division interviewed Tricarico in Westport, Connecticut concerning a complaint the Division had received from the Executrix of the estate in the civil proceeding. Tricarico made false statements to the Division when he was questioned about the money he had taken from the client. Tricarico stated that the client gave him approximately $150,000 during 2009 and 2010. In reality, from approximately June 18, 2010 to November 21, 2012, Tricarico misappropriated over one million dollars from the client. Tricarico knew that his statement to the Division was false because he was personally involved in transferring funds from the client’s accounts to himself directly and through RNT, an entity he controlled. |
| 13. | On May 1, 2015, as part of the Investigation, Subpoenas Duces Tecum were issued to Respondents (“Subpoenas”). |
| 14. | On May 27, 2015, pursuant to the Subpoenas, Tricarico provided testimony to the Division under oath. |
| 15. | Under oath, Tricarico testified that, as required by the Subpoena, he would produce responsive documents to the Division by June 1, 2015 regarding litigation, arbitrations, and complaints of which Tricarico or any of his affiliated entities was the subject. Tricarico, on behalf of himself and RNT, also agreed to produce to the Division by June 1, 2015 a list of investors or individuals who loaned Tricarico or RNT money to operate a business in Connecticut, as well as Tricarico’s personal checking account and bank records as required by the Subpoenas. |
| 16. | Respondents have never produced any of the subpoenaed documents that they had agreed to provide to the Division during their sworn testimony. |
| 17. | During Tricarico’s on the record testimony, Tricarico exercised his right not to answer any questions about any of the individuals who may have loaned him money or about any of their accounts. Tricarico also refused to answer questions about any other litigation, including the complaint filed by the executrix of the estate. In addition, Tricarico refused to answer questions concerning his employment history. |
| 18. | Harbor Vista is a Delaware limited liability company formed on January 16, 2015. On February 11, 2015, Harbor Vista filed with the Commissioner an application for registration as an investment adviser in Connecticut pursuant to Sections 36b-7 and 36b-32 of the Act. |
| 19. | The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory organization registered with the Securities and Exchange Commission (“SEC”) pursuant to Section 15A of the Securities Exchange Act of 1934. |
| 20. | On February 24, 2015, FINRA suspended Tricarico in all capacities pursuant to Article VI, Section 3 of FINRA’s Bylaws and FINRA Rule 9554 for failing to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance (Case No. 10 00920). |
| 21. | On April 9, 2015, Tricarico applied for registration as an investment adviser agent of Harbor Vista in Connecticut by electronically filing a Form U-4 (Uniform Application for Securities Industry Registration or Transfer) (“2015 Form U-4”) pursuant to Sections 36b-7 and 36b-32 of the Act. Tricarico electronically signed the 2015 Form U-4 on January 26, 2015, and Harbor Vista electronically signed the 2015 Form U-4 on April 9, 2015. In executing the 2015 Form U-4, Tricarico represented that “I swear or affirm that I have read and understand the items and instructions on this form and that my answers (including attachments) are true and complete to the best of my knowledge. I understand that I am subject to administrative, civil or criminal penalties if I give false or misleading answers . . . I agree to update this form by causing an amendment to be filed on a timely basis whenever changes occur to answers previously reported. Further, I represent that, to the extent any information previously submitted is not amended, the information provided in this form is currently accurate and complete.” (Emphasis supplied) Similarly, in executing the 2015 Form U-4, Harbor Vista represented that “I have taken appropriate steps to verify the accuracy and completeness of the information contained in and with this application. I have provided the applicant an opportunity to review the information contained herein and the applicant has approved this information and signed the Form U4.” The 2015 Form U-4 was never amended since the date it was initially filed. |
| 22. | Item 14E of the 2015 Form U-4 asked, “Has any self-regulatory organization ever . . . (4) disciplined you by expelling or suspending you from membership, barring or suspending your association with its members, or restricting your activities?” (Emphasis supplied) Tricarico responded “no.” |
| 23. | On April 30, 2015, Tricarico entered into an Acceptance, Waiver and Consent (“AWC”) with FINRA (Case No. 2014043719001). Under the terms of the AWC, Tricarico consented to the entry of findings that he violated FINRA Rules 8210 and 2010 when he failed to provide documents and information requested by FINRA during the course of an investigation into whether Tricarico converted customer funds. Pursuant to the AWC, Tricarico consented to the imposition of a bar from association with any FINRA member in any capacity. |
| 24. | At no time from April 9, 2015 to the present has Tricarico amended or updated the 2015 Form U-4 in any manner. Consequently, no Form U-4 disclosures were made concerning such items as the FINRA suspension and the FINRA bar. |
| 25. | Between at least March 2015 and April 2015, RNT issued securities in the form of promissory notes (“RNT Notes”). Tricarico executed the notes as President of RNT. The address for RNT on the notes was the same address as that of Harbor Vista. |
| 26. | Between at least March 2015 and April 2015, Tricarico offered and sold the RNT Notes to at least five of his former broker-dealer clients (“Investors”). Each note featured a guaranteed rate of return of ten percent (10%) per annum and a personal guaranty by Tricarico that he would make prompt and unconditional payment if RNT failed to make payment. Tricarico also executed the RNT Notes as individual guarantor. Four of the RNT Notes were in the sum of $10,000 and one of the RNT Notes was in the sum of $15,000. While the term of the notes varied from one month to one year, the investor had the option of extending the maturity date for a longer unspecified period. |
| 27. | Contrary to the representations in the RNT Notes, RNT and Tricarico failed to make any payments on the RNT Notes to the Investors. |
| 28. | Both the RNT Notes and the guarantees associated therewith constituted securities within the meaning of Section 36b-3(19) of the Act. Such securities were not registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status. |
| 29. | In connection with the offer and sale of the RNT Notes and the associated guarantees, Tricarico failed to provide the Investors with any offering document or other written disclosure describing the risks associated with the investment or the registration status of the securities and failed to disclose to Investors that RNT and Tricarico lacked sufficient funds to make the payments on the RNT Notes. |
| 30. | Tricarico has never been registered under the Act as an agent of issuer of RNT. |
IV. STATUTORY AND REGULATORY BASIS FOR
DENIAL OF REGISTRATION AS AN INVESTMENT ADVISER AGENT,
ORDER TO CEASE AND DESIST, ORDER TO MAKE RESTITUTION
AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act -
Offer and Sale of Unregistered Securities
| 31. | Paragraphs 1 through 30, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 33. [sic] |
Respondents offered and sold securities in or from Connecticut to at least one investor, as more fully described in paragraphs 25 through 27, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 28. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, the imposition of a fine upon Respondents under Section 36b-27(d) of the Act, and, as wilful misconduct, constitutes grounds for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 34. | Paragraphs 1 through 33, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 35. |
The conduct of Respondents, as more fully described in paragraphs 25 through 30, inclusive, constitutes, in connection with the offer, sale or purchase of any security, directly or indirectly employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates as a fraud or deceit upon any person. Such conduct constitutes a violation of Section 36b-4(a) of the Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b- 27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, the imposition of a fine upon Respondents under Section 36b-27(d) of the Act, and, as wilful misconduct, constitutes grounds for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
c. Violation of Section 36b-6 of the Act –
Unregistered Agent Activity
| 36. | Paragraphs 1 through 35, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 37. |
Tricarico transacted business as an agent of issuer in this state absent registration, as more fully described in paragraphs 25 through 30, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Tricarico under Section 36b-27(a) of the Act, the imposition of a fine upon Tricarico under Section 36b-27(d) of the Act, and, as wilful misconduct, constitutes grounds for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
| 38. | RNT employed Tricarico as unregistered agent of issuer in this state, as more fully described in paragraphs 25 through 30, inclusive. Such conduct constitutes a violation of Section 36b-6(b) of the Act, which forms a basis for an order to cease and desist against RNT under Section 36b-27(a) of the Act and for the imposition of a fine upon RNT under Section 36b-27(d) of the Act. |
d. Violation of Section 36b-23 of the Act –
Making a Statement in an Investigation that is
False or Misleading in a Material Respect
| 39. | Paragraphs 1 through 38, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 40. |
Tricarico’s statements to the Division, on his individual behalf and/or on behalf of RNT, as more fully described in paragraph 12, were, at the time and in light of the circumstances under which they were made, false or misleading in a material respect, which constitutes a violation of Section 36b-23 of the Act. Such violation forms a basis for an order to cease and desist to be issued against Tricarico under Section 36b-27(a) of the Act, the imposition of a fine upon Tricarico under Section 36b-27(d) of the Act, the denial of Tricarico’s investment adviser agent registration pursuant to Section 36b-15(a)(2)(L) of the Act and, as wilful misconduct, the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
| 41. | Tricarico’s negative response when asked on the 2015 Form U-4 “Has any self-regulatory organization ever: . . . (4) disciplined you by expelling or suspending you from membership, barring or suspending your association with its members, or restricting your activities?”, as more fully described in paragraphs 19 through 24, inclusive, is a statement which was, in light of the circumstances under which it was made, false or misleading with respect to a material fact. Such false or misleading statement constitutes grounds for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(A) of the Act. The filing of such a false or misleading statement with the Commissioner also constitutes a wilful violation of Section 36b-23 of the Act and a basis for denying Tricarico’s investment adviser agent registration in Connecticut under Section 36b-15(a)(2)(B) of the Act. |
e. Failure to Produce Subpoenaed Documents
| 42. | Paragraphs 1 through 41, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 43. |
Respondents’ failure to produce subpoenaed documents to the Division, as more fully described in paragraphs 14 through 17, inclusive, constitutes grounds for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(L) of the Act. |
f. FINRA Sanctions
| 44. | Paragraphs 1 through 43, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 45. |
The FINRA sanctions suspending and barring Tricarico, as more fully described in paragraphs 19, 20 and 23, form a basis for the denial of Tricarico’s investment adviser agent registration in Connecticut pursuant to Section 36b-15(a)(2)(F)(iii) of the Act. |
g. Violation of Section 36b-31-14e(a) of the Regulations –
Failure to Promptly File a Correcting Amendment
| 46. | Paragraphs 1 through 45, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 47. |
Tricarico’s failure to update his 2015 Form U-4 on file with the Commissioner to disclose, inter alia, the prior suspension by FINRA and the bar by FINRA ,as more fully described in paragraphs 19 through 24, inclusive, constitutes a violation of Section 36b-31-14e(a) of the Regulations, which forms a basis for an order to cease and desist to be issued against Tricarico pursuant to Section 36b-27(a) of the Act and, as wilful misconduct, the denial of Tricarico’s registration as an investment adviser agent in Connecticut pursuant to Section 36b-15(a)(2)(B) of the Act. |
V. NOTICE OF INTENT TO DENY REGISTRATION AS
AN INVESTMENT ADVISER AGENT, ORDER TO CEASE AND DESIST,
ORDER TO MAKE RESTITUTION, NOTICE OF INTENT TO FINE
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Tricarico has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act, at least one violation of Section 36b-6(a) of the Act, at least one violation of Section 36b-23 of the Act, and at least one violation of Section 36b-31-14e(a) of the Regulations;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, RNT has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act, and at least one violation of Section 36b-6(b) of the Act;
WHEREAS, the Commissioner has reason to believe that a basis exists under Section 36b-15 of the Act for denying Tricarico’s registration as an investment adviser agent in Connecticut;
WHEREAS, Section 36b-15(f) of the Act provides, in pertinent part, that: “[n]o order may be entered under this section except as provided in subsection (c) of this section without (1) appropriate prior notice to the applicant . . . and to the employer or prospective employer if such applicant . . . is an . . . investment adviser agent, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;
WHEREAS, the Commissioner further finds that the issuance of an Order denying Tricarico’s registration as an investment adviser agent in Connecticut, an Order to Cease and Desist against Respondents, an Order to Make Restitution against Respondents and the imposition of a fine upon Respondents is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
WHEREAS, notice is hereby given to Respondents that the Commissioner intends to impose a fine not to exceed the maximum fine of one hundred thousand dollars ($100,000) per violation upon Respondents;
WHEREAS, the Commissioner ORDERS that ROBERT NEIL TRICARICO CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities; (2) in connection with the offer, sale or purchase of any security, directly or indirectly employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person; (3) acting as an agent of issuer in this state absent registration; (4) making statements to the Division during an investigation which are, at the time and in the light of the circumstances under which they are made, false or misleading in a material respect; (5) filing documents with the Commissioner that contain statements which are, at the time and in the light of the circumstances under which they are made, false or misleading in a material respect; and (6) failing to promptly file correcting amendments to his application for registration as an investment adviser agent;
WHEREAS, the Commissioner ORDERS that RNT WEALTH MANAGEMENT LLC CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) offering and selling unregistered securities; (2) in connection with the offer, sale or purchase of any security, directly or indirectly employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates or would operate as a fraud or deceit upon any person; and (3) employing an agent of issuer in this state absent registration;
WHEREAS, the Commissioner ORDERS that Respondents MAKE RESTITUTION of any sums obtained as a result of Respondents’ violations of Section 36b-16 and Section 36b-4(a) of the Act, plus interest at the legal rate set forth in Section 37-1 of the General Statutes of Connecticut. Specifically, the Commissioner ORDERS that:
| 1. | Within thirty (30) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with a written disclosure which covers the period from January 1, 2015 to the date this Order to Make Restitution becomes permanent and which contains (a) the name and address of each Connecticut investor; (b) the amount Respondents collected from each Connecticut investor, (c) the date of each investment, and (d) the amount of any refunds of principal or purported interest payments made to each Connecticut investor; |
| 2. | Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondents shall reimburse each investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments. Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to each affected investor; and |
| 3. | Within ninety days (90) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with proof in the form of copies of the certified checks and the return receipts required by paragraph 2 of Section V hereof that Respondents have reimbursed each investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported interest payments, with respect to all transactions effected from January 1, 2015 to the date this Order to Make Restitution becomes permanent. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to Sections 36b-15(f) and 36b-27 of the Act, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any Respondent will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. If a hearing is requested, the hearing will be held on June 7, 2016, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, each Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
If any Respondent does not request a hearing within the time period prescribed or fails to appear at any such hearing, the allegations herein against any such Respondent will be deemed admitted. Accordingly, the Commissioner shall, as the case may be, issue an order denying Tricarico’s registration as an investment adviser agent in Connecticut, the Order to Cease and Desist and Order to Make Restitution shall remain in effect and become permanent against any such Respondent and the Commissioner may order that the maximum fine be imposed upon any such Respondent.
| Dated at Hartford, Connecticut, | _____/s/____________ | |
| this 22nd day of April 2016. | Jorge L. Perez | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 22nd day of April 2016, I caused to be mailed by certified mail, return receipt requested, the foregoing Notice of Intent to Deny Registration as an Investment Adviser Agent, Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing to: Robert Neil Tricarico, 11 Cloverly Circle, Norwalk, Connecticut 06855, certified mail no. 7012 3050 0002 1692 8532; RNT Wealth Management LLC 6 South Trail, Darien, Connecticut 06820, certified mail no. 7012 3050 0002 1692 9133; RNT Wealth Management LLC, c/o National Registered Agents, Inc., One Corporate Center, Hartford, Connecticut 06103-3220, certified mail no. 7012 3050 0002 1692 9140; and Harbor Vista Wealth Management LLC, 46 Southfield Avenue, 3 Stamford Landing, Suite 205, Stamford, Connecticut 06902, certified mail no. 7012 3050 0002 1692 9157.
| ___/s/_____ | |
| W. C. Hall | |
| Paralegal |