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STATE
OF MAINE
OFFICE
OF SECURITIES
121
STATE HOUSE STATION
AUGUSTA,
MAINE 04333-0121
CONSENT AGREEMENT 05-016-CAG
This
Consent Agreement is entered into between the Office of Securities ("the
Office”) and Maine Securities Corporation ("MSC"), a licensed broker-dealer
and investment adviser with a principal place of business at
WHEREAS the parties agree as follows:
1.
At all relevant times, MSC has been responsible
for compliance with the record-keeping obligations of a licensed broker-dealer. It is the Office’s position that section
10310(6) of the Revised Maine Securities Act ("the Act") mandates
that licensed broker-dealers meet the record-keeping requirements of the United
State Securities Exchange Act of 1934.
Those requirements are set forth in 17 C.F.R. §§ 240.17a-3 and 240.17a-4
and are commonly known as SEC Rules 17a-3 and 17a-4.
2.
At all relevant times, section 10313(1)(J) of
the Act has authorized the Securities Administrator to impose sanctions on a
broker-dealer if the Securities Administrator, after notice and opportunity for
hearing, finds that the broker-dealer has failed reasonably to supervise its
sales representatives.
3.
On October 7 and 28 and November 17-21, 2003, and
on January 26-28 and March 29, 2004, the Maine Office of Securities conducted
an on-site examination of MSC pursuant to section 10312 of the Act. Based on its examination, it is the Office’s
position that MSC has violated sections 10310(6) and 10313(1)(J) of the Act in
various respects, including without limitation the examples detailed below.
4.
MSC failed to complete trade tickets, a problem
that the SEC and the NASD each noted in connection with their examinations of
MSC in 2000 and 2001, respectively. It
is the Office’s position that the failure to complete trade tickets violates
SEC Rule 17a-3(6) and section 10310(6) of the Act.
5.
MSC failed to maintain copies of certain trade
tickets and confirmations. MSC could not
find any trade tickets or confirmations for January 2002 and for January
through March 2003 and initially could not find such documentation for other
periods in 2002 and 2003. It is the
Office’s position that the failure to maintain copies of trade tickets and
confirmations violates SEC Rule 17a-4(b)(1) and section 10310(6) of the Act.
6.
MSC failed to copy and send to the Office a
large volume of e-mail messages that the Office had requested be produced in
connection with the examination. MSC
stated that it was unable to provide copies of all of those e-mails due to
computer malfunctions. It is the Office’s
position that the failure to maintain e-mail messages violates SEC Rule
17a-4(b)(4) and section 10310(6) of the Act, and the failure to copy and send
those messages to the Office violates SEC Rule 17a-4(j) and section 10310(6) of
the Act.
7.
MSC management did not review all exception
reports generated by the clearing broker, and MSC did not have a written policy
or procedure in place to require a sufficient level of supervision in this
regard. It is the Office’s position that
MSC failed reasonably to supervise sales representatives under section 10313(1)(J)
of the Act.
8.
The parties desire an expeditious resolution of
this matter.
NOW, THEREFORE, without trial or
adjudication of any issue of fact or law, and without MSC admitting or denying
that its conduct violated the Revised Maine Securities Act, it is agreed that:
1. In
lieu of the Office seeking the imposition of a civil penalty for the matters
described herein, MSC shall pay $6,500.00 to the Securities Administrator;
2. MSC
shall take remedial steps as required by a separate letter agreement between
the parties; and
3. This Consent Agreement constitutes the
entire agreement between the Office of Securities and MSC, and MSC confirms
that in entering into this agreement it is not relying on any representations,
promises, or understandings other than those expressed herein.
Date: December 20, 2004 Maine Securities Corporation
By: s/Bradley
C. McCurtain
Bradley
C. McCurtain, President
Date: December 22, 2004 s/Christine A. Bruenn
Christine
A. Bruenn
Securities
Administrator
Reviewed
by:
Date: December 21, 2004 s/Bonnie
E. Russell
Bonnie
E. Russell
Assistant
Securities Administrator
Presented
by:
Date: December 21, 2004 s/Michael W. Atleson
Michael
W. Atleson
Staff
Attorney