Securities and Business Investments Division
Securities Bulletin

Vol. XXXVII No. 4 - Winter 2023

Features

• Quarterly Statistical Summaries

Enforcement and Other Highlights

• Stipulation and Agreements
• Other Orders
• Conditional Registrations

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Stipulation and Agreements

Validea Capital Management LLC (CRD No. 130887)

On October 19, 2023, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-23-202324-S) with Validea Capital Management LLC, a Connecticut-registered investment adviser located at 363 Ridgewood Road, West Hartford, Connecticut 06107.  The Stipulation and Agreement alleged that 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 resolution of the matter, the firm agreed to refrain from violative conduct and to pay $5,250 to the department.  Of that amount, $5,000 constituted an administrative fine and $250 represented payment of past due investment adviser agent registration fees.
 

Other Orders

Safeguard Metals LLC and Jeffrey Ikahn

On November 3, 2023, the Banking Commissioner entered an Order Pursuant to Judicial Consent Order (No. 23-2021-34-S) against Safeguard Metals LLC and Jeffrey Ikahn.   Safeguard Metals LLC, located at 30 N Gould Street, Suite R, Sheridan, Wyoming and 21550 Oxnard Street, 3rd Floor, Woodland Hills, California, is a precious metals promoter focusing on gold and silver coin sales.   Jeffrey Ikahn, also known as Jeffrey S. Santulan and Jeff Hill, is the sole owner and control person of Safeguard Metals LLC.   The Commissioner’s Order, entered pursuant to the Connecticut Uniform Securities Act, permanently barred both Safeguard Metals LLC and Ikahn 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 an investment adviser registered or required to be registered in Connecticut; and 3) acting in any other capacity that requires a license or registration under laws administered by the Commissioner.   The Commissioner’s Order was consistent with a court-ordered Consent Order of Permanent Injunction and Other Statutory and Equitable Relief entered in the related civil action described below.

The Commissioner’s action followed a federal lawsuit initiated on February 1, 2022 and brought by the federal Commodity Futures Trading Commission, in conjunction with numerous states, including the State of Connecticut Department of Banking.  The suit was filed in the United States District Court for the Central District of California (Commodity Futures Trading Commission et al. v. Safeguard Metals LLC and Jeffrey Ikahn, C.D. Cal. Civil No.: 2:22-cv-00691-JFW-SKx).  On October 20, 2023, the District Court ordered that defendants Safeguard Metals LLC and Ikahn comply with certain undertakings and requirements in a Consent Order of Permanent Injunction and Other Statutory and Equitable Relief entered by the District Court against the defendants.   The judicial Consent Order obviated the need for a trial on the merits.   Customer restitution and civil monetary penalties were slated to be considered in the next phase of the federal action.

The judicial Consent Order found that, between October 2017 and July 2021, the defendants deceived more than 450 customers nationwide into purchasing precious metals through false and misleading statements.  Most of the defendants’ customers were elderly.  More specifically, the defendants defrauded customers into establishing self-directed retirement accounts, with Safeguard Metals LLC as depository, to buy precious metals; charged exorbitant price markups on silver coins purchased by customers; misrepresented to customers how defendants earned profits; and lulled customers into a false sense of security by making misrepresentations about the value of the customers' precious metals or their safety as an investment.  The Consent Order also found that the defendants violated the antifraud provisions in Section 6(c)(1) of the Commodity Exchange Act, 7 U.S.C. § 9(1), and CFTC Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)-(3) (2022).

Significantly, the judicial Consent Order also found that the defendants violated the antifraud provisions in the participating state jurisdictions’ securities laws and transacted business as an investment adviser and investment adviser agent while unregistered with the states.

The judicial Consent Order permanently enjoined the defendants from engaging in violative conduct.  By agreeing to the Consent Order, the defendants also consented to the entry of an administrative order by the states banning or barring the defendants from participating in the commodities or securities industries, including, without limitation, any position of employment, management, or control of any broker dealer, investment advisor, or commodity advisor.
  

Conditional Registrations

Calm River Capital LLC (IARD No. 326721)

On November 14, 2023, the Banking Commissioner issued an Order (No. COND-202343-S) conditioning the investment adviser registration of Calm River Capital LLC under the Connecticut Uniform Securities Act.  The firm has its principal office at 42 Greenlea Lane, Weston, Connecticut 06883.

The Order stated that, since the firm's principals did not fulfill the experience requirements for becoming registered as an investment adviser, a basis would exist for denying the registration absent the imposition of conditions.  In response, the firm represented that a qualified individual with prior securities industry experience would be joining the firm post-registration and would be solely responsible for advising clients and exercising trades in client accounts.

The Order imposed the following additional conditions on the firm:  1) for three years, the firm and its principals would not have custody or control of client funds or securities; 2) for three years, the firm would limit its new advisory activity to clients who are “accredited investors” within the meaning of Rule 501(a) of federal Regulation D; 3) within twelve months, the investment adviser agents of the firm would complete twelve credit hours of continuing education focusing on the investment advisory industry; and 4) for two years, the firm would retain an independent third party consultant to evaluate the firm’s compliance with regulatory requirements.

The firm became registered as an investment adviser in Connecticut on November 14, 2023.
  

Statistical Summary