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OFFICE OF SECURITIES
121 STATE HOUSE STATION
IN THE MATTER OF: )
) CONSENT AGREEMENT
Kovack Securities, Inc. ) No. 06-014-CAG
This Agreement is entered into between the State of Maine Office
of Securities (“the Office”) and Kovack Securities, Inc. (“KSI”), CRD #44848,
a broker-dealer with its principal place of business in
WHEREAS, the parties agree as follows:
1. At all times relevant to this matter, it has been unlawful in Maine for a person to act as a broker-dealer unless licensed or exempt from licensing pursuant to sections 10301 and 10302 of the Revised Maine Securities Act (“the Act”).
all times relevant to this matter, KSI was not licensed as a broker-dealer in
3. KSI filed an application with the Office for licensing as a broker-dealer on January 6, 2003.
letter dated January 28, 2003, the Office requested additional information regarding
the firm’s pending application, including information related to any securities
business that the firm had conducted in
February 3, 2003, the Office received a sworn affidavit from KSI affirming that
neither the firm nor its principals, agents or employees
had solicited or effected securities transactions in
6. Between February 3, 2003, and October 17, 2005, there was continuing correspondence between the Office and KSI regarding the firm’s pending broker-dealer application.
7. On October 26, 2004, the Office received a second sworn affidavit from KSI. The second sworn affidavit contained the same affirmations as the sworn affidavit received on February 3, 2003.
response to an inquiry from the Office and by letter dated September 8, 2005,
KSI’s clearing firm, National Financial Services LLC, provided
documentation to the Office that revealed that KSI had effected at least six (6)
transactions between July 6, 2004, and July 26, 2005, for the account of one (1)
is the Office’s position that KSI has acted as a broker-dealer in
10. KSI has represented to the Office that it was not its intention to violate the Maine Revised Securities Act.
11. Both parties desire an expeditious resolution of this matter.
NOW, THEREFORE, without trial or adjudication of any issue of fact or law, and without KSI admitting or denying that its conduct violated the Revised Maine Securities Act, it is agreed that:
1. KSI will comply with all licensing and other legal requirements governing persons acting as securities broker-dealers in the State of Maine at all times from the date hereof;
2. In lieu of the Office seeking the imposition of a penalty for the allegations contained herein, KSI will pay the sum of $3,000 to the Office upon KSI’s execution of this Agreement;
3. The Office will not take further action against KSI, based solely upon its unlicensed activity during the period preceding and including the date of execution of this Agreement, provided, however, that this paragraph applies only to those transactions previously disclosed to the Office by KSI’s clearing firm;
4. The Office will accept KSI’s request to withdraw its license application;
5. KSI will not reapply for licensing in Maine as a broker-dealer for at least one year from the date that this agreement is fully executed; and
6. This Consent Agreement constitutes the entire agreement between the Office and KSI. Further, KSI confirms that in entering into this agreement the firm is not relying on any representations, promises, or understandings other than those expressed herein.
December 30, 2005 s/R.J. Kovack
Date R.J. Kovak, Chairman
January 3, 2006 s/Michael J. Colleran
Date Michael J. Colleran
January 3, 2006 s/Bonnie E. Russell
Date Bonnie E. Russell
Assistant Securities Administrator
January 3, 2006 s/Cathy J. Williams
Date Cathy J. Williams