Securities and Business Investments Division
Securities Bulletin

Vol. XXXV No. 1 - Spring 2021

Features

• Online Filing Option for Unit Investment Thrusts Announced
• Quarterly Statistical Summaries

Enforcement and Other Highlights

• Administrative Actions
• Consent Orders
• Stipulation and Agreements

     _______________________________________________________________________

CONNECTICUT OFFERS ONLINE FILING OPTION FOR UNIT INVESTMENT TRUSTS
EFFECTIVE JANUARY 4, 2021

Starting January 4, 2021, unit investment trusts may begin using the North American Securities Administrators Association, Inc.’s (“NASAA”) online Electronic Filing Depository as a permissible means of making covered securities notice filings in Connecticut under the Connecticut Uniform Securities Act.

Developed by NASAA, EFD is an online system that allows an issuer to simultaneously make securities offering filings in multiple states and pay related fees online. In addition, the EFD website (www.efdnasaa.org) permits members of the public to search for and view, free of charge, filings made with state securities regulators through the system. Members of the public are reminded that making a filing with the Securities and Exchange Commission or with a state securities regulator does not mean that the SEC or the affected state has approved the securities or made any judgment on the soundness of the securities as an investment. Use of the EFD System is optional and is being rolled out in stages in Connecticut.

Although the Division strongly encourages issuers to use EFD for securities filings, paper filings and checks will continue to be accepted and processed by the Division for the immediate future.

Questions regarding EFD should be directed to William Olesky of the Division at (860) 240-8240 or william.olesky@ct.gov.

Administrative Actions

Travis Smith (CRD No. 4778832)

On March 26, 2021, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-21-8433-S) against Travis Smith of Hamden, Connecticut.  Smith, a former broker-dealer agent and investment adviser agent, was also the managing member and control person of Executive Consulting Group LLC, an inactive Connecticut entity.  The action alleged that, while Smith was registered as a broker-dealer agent and an investment adviser agent under the Connecticut Uniform Securities Act, he made arrangements with three Connecticut residents to manage their money without notifying his employing firm.  Smith allegedly persuaded the affected investors to invest their monies in securities issued by Woodbridge Group of Companies, LLC and its affiliates (collectively, "Woodbridge").  Woodbridge compensated Smith for the sales.  The action further alleged that Smith misappropriated a portion of investor monies and channeled them to Executive Consulting Group LLC's bank account for his personal use.  The affected investors were not advised of, nor did they consent to, the transfer.

The action alleged that Smith 1) sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act;  2) violated the antifraud provisions in Section 36b-4(a) of the Act; 3) engaged in dishonest or unethical practices in violation of Section 36b-4(b) of the Act; 4) violated Section 36b-6(a) of the Act by transacting business as an unregistered agent of issuer; 5) violated Section 36b-23 of the Act by not disclosing his involvement with Woodbridge in filings made with the Commissioner; and 6) violated Section 36b-31-14e of the Regulations under the Act by failing to update his regulatory filings.

Smith was afforded an opportunity to request a hearing on the allegations in the action.

Consent Orders

Thomas James Renison (CRD No. 6039707)

On March 25, 2021, the Banking Commissioner entered a Consent Order (Docket No. CRF-19-8426-S) with respect to Thomas James Renison of Glastonbury, Connecticut.

The Consent Order had been preceded by a January 9, 2020 administrative action naming Renison, his father, Thomas David Renison, and ARO Equity, LLC, a self-described “private investment fund.”  The administrative action had sought the entry of a cease and desist order and a civil penalty against Renison.  Renison was a member and owner of ARO Equity, LLC.  The action alleged that Renison violated Section 36b-23 of the Connecticut Uniform Securities Act by making materially false or misleading statements in filings made with the Commissioner.  More specifically, at the time Renison was registered as a broker-dealer agent in Connecticut, Renison failed to disclose his involvement with ARO Equity, LLC and the related compensation he received.  The action had also alleged that Renison materially aided ARO Equity, LLC and Thomas David Renison in fraudulent conduct they allegedly perpetrated against investors.

The Consent Order permanently barred Renison from transacting business in Connecticut as an agent, broker-dealer, broker-dealer agent, investment adviser or investment adviser agent; maintaining an ownership interest in a broker-dealer or investment adviser required to be registered in Connecticut; and acting in any other capacity requiring a license or registration under laws administered by the Commissioner.  The Consent Order also directed Renison to cease and desist from regulatory violations.  Acknowledging that Renison had provided the agency with documentation that he was financially unable to pay the fine that otherwise would have been imposed against him, the Consent Order stayed imposition of the fine for three years.  If, during that three year period, Renison's financial situation changed, he would be automatically obligated to pay a fine of $100,000 to the department.  If Renison's financial situation remained unchanged, the fine would be waived after three years.

Frederic H. Salusbury

On March 10, 2021, the Banking Commissioner entered a Consent Order (No. CO-21-11827-S) with respect to Frederic H. Salusbury of Greenwich, Connecticut.  The Consent Order alleged that Salusbury violated Section 36b-16 of the Connecticut Uniform Securities Act by selling an unregistered security, evidenced by a $100,000 promissory note, to a Connecticut resident.  The note featured a 10% rate of return.  The Consent Order acknowledged that Frederic Salusbury had provided the department with evidence that he had repaid the affected investor $122,431.61, representing principal and interest due on the note.

The Consent Order fined Salusbury $5,000 and directed him to cease and desist from regulatory violations.

Thomas David Renison (CRD No. 1863759)

On January 15, 2021, the Banking Commissioner entered a Consent Order (No. CRF-19-8426-S) with respect to Thomas David Renison.  Renison had been the subject of a January 9, 2020 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-19-8426-S) issued by the Commissioner.  The 2020 action stated that Renison was an undisclosed principal of ARO Equity, LLC, a self-described "private investment fund."  The 2020 action alleged that from approximately August 2015, ARO Equity, LLC and Renison violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling over $5.8 million of unregistered “fixed rate promissory notes” purportedly paying returns ranging from 8% to 12% to investors in Connecticut, Massachusetts, Tennessee and New Jersey.  Many of those investors were elderly retirees who tapped their retirement savings to make the investments.  The action had also alleged that Renison transacted business as an unregistered agent of issuer in violation of Section 36b-6 of the Act.  In addition, the action alleged that ARO Equity, LLC and Renison violated the antifraud provisions in Section 36b-4(a) of the Act by failing to disclose, among other things 1) that, contrary to respondents’ representations concerning the use of investment proceeds, investor monies were really being used to pay off earlier investors as well as ARO Equity, LLC’s business expenses and Renison’s personal expenses; 2) the specific risk factors related to the investments; 3) Renison’s prior disciplinary history; and 4) the precise business and operating history of ARO Equity, LLC and its affiliates, including financial information on the respondents.

The Consent Order noted that, following the initiation of the 2020 action, on June 5, 2020, Renison entered into a plea agreement with the U.S. Attorney for the District of Massachusetts in which he agreed to plead guilty and waive Indictment to Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. Section 1349, and Filing a False Tax Return, in violation of 26 U.S.C. Section 7206(1) (United States v. Renison, Case No. 20-cr-10109-GAO).  On October 6, 2020, Renison plead guilty to one count of Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. Section 1349, and two counts of Filing a False Tax Return, in violation of 26 U.S.C. Section 7206(1) (United States v. Renison, Case No. 20-cr-10109-GAO).  In connection with his guilty plea, Renison agreed to recommend that the Court order restitution to the Internal Revenue Service in an amount not less than $151,810, that the Court would, upon acceptance of Respondent’s guilty plea, enter an order of forfeiture of assets, including without limitation, $526,120, which was equal to the amount of proceeds Renison derived from the offenses, and incarceration and a fine within the Guidelines sentencing range as calculated by the Court.

Sentencing is currently pending, with the Court expected to order restitution of over $5 million to compensate the victims of ARO Equity, LLC’s and Renison's fraudulent activities.

The Consent Order directed Renison to cease and desist from regulatory violations.  In addition, based on Renison's demonstrated inability to pay the fine that otherwise would have been imposed by the Commissioner, the Commissioner stayed the imposition of the fine for three years.  If, following the expiration of three years, the agency determined that Renison remained unable to pay the administrative fine, the fine would be waived.

The Consent Order also permanently barred Renison from 1) transacting business in or from Connecticut as an agent, broker-dealer, broker-dealer agent, investment adviser or investment adviser agent; 2) maintaining a direct or indirect ownership interest in a broker-dealer or investment adviser registered or required to be registered in Connecticut; and 3) acting in any other capacity that required a license or registration under laws administered by the Commissioner.

Stipulation and Agreements

AE Wealth Management, LLC (CRD No. 282580)

On March 18, 2021, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-19-10815-S) with AE Wealth Management, LLC, an SEC-registered investment adviser located at 2950 SW McClure Road, Topeka, Kansas.  The Stipulation and Agreement alleged that from approximately January 2017 through August 2020, 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 has since become registered in Connecticut.  In resolution of the matter, the firm agreed to refrain from regulatory violations and to pay $4,875 to the department.  Of that amount, $4,500 constituted an administrative fine and $375 represented reimbursement for past due investment adviser agent registration fees.

Chatsworth Securities LLC (CRD No. 40804)

On January 27, 2021, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-2020-37-S) with Chatsworth Securities LLC, a Connecticut registered broker-dealer located at 95 East Putnam Avenue, Greenwich, Connecticut 06830.  The firm does not conduct retail brokerage operations, but acts as a placement agent for private placements.  The Stipulation and Agreement alleged that the firm violated Section 36b-6(c)(1) of the Connecticut Uniform Securities Act by transacting business as an investment adviser while unregistered.  More specifically, the firm allegedly received compensation consisting of a percentage of management fees charged by an investment fund for which the firm acted as placement agent.

In resolution of the matter, the firm agreed to refrain from regulatory violations and to remit $4,680 to the agency.  Of that amount, $4,000 constituted an administrative fine and $680 represented reimbursement for past due investment adviser and investment adviser agent registration fees.

The firm became registered as an investment adviser in Connecticut on December 18, 2020.

Volumetric Fund, Inc.

On January 19, 2021, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-20-202033-S) with Volumetric Fund, Inc. an open-end management company located at 87 Violet Drive, Pearl River, New York.  The fund has been offering securities to the general public since September 3, 1987.

The Stipulation and Agreement alleged that the fund violated Section 36b-16 of the Connecticut Uniform Securities Act by selling fund shares at a time when no registration or notice filing had been made with the agency.  The Stipulation and Agreement acknowledged that, in 2020, the fund self-reported, through a newly retained third party service provider, that the fund had made the securities sales to investors having a Connecticut nexus, but that many of the purchasers bought their shares at a time when they were located in New York State.  The Stipulation and Agreement also acknowledged that the fund had made a curative filing and provided assurances that it would comply with Connecticut's securities laws going forward.

Pursuant to the Stipulation and Agreement, the fund agreed to refrain from regulatory violations and to remit $10,000 to the department.  Of that amount, $50,000 constituted an administrative fine and $5,000 of which represented reimbursement for past due securities filing fees.

 

Statistical Summary