Fall and Winter 2024 Securities Bulletin

State of Connecticut Department of Banking

Securities and Business Investments Division Securities Bulletin

Vol. XXXVIII Nos. 3 and 4 - Fall and Winter 2024

Features

Quarterly Statistical Summaries

Enforcement and Other Highlights

Administrative Actions

Consent Orders

Administrative Actions

Jason A. Goodhue (CRD No. 5121680)

On December 18, 2024, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (No. CF-24-8398-S) against Jason A. Goodhue, a Connecticut registered broker-dealer agent located at 129 Stonepost Road, Glastonbury, Connecticut 06033.

The action alleged that, while employed by his previous broker-dealer, Buell Securities Inc., Goodhue effected securities transactions electronically with a purported client of the firm without speaking with the client directly. Approximately $73,000 in client funds were affected. The action also alleged that Goodhue exercised discretionary trading authority in the client's account without the client's authorization. Ultimately, following the client’s discovery of the $73,000 in missing funds, it was ascertained that the electronic communications were fraudulent though seemingly sent from the client’s e-mail account.

Some of the client's transferred funds were recovered, and Buell Securities Inc. replaced the balance of the transferred funds. The affected client did not suffer any losses as a result. Goodhue was charged the difference between the sale price of the shares that were sold and the higher cost of replacing the shares.

The action alleged that Goodhue violated Section 36b-4(b) of the Connecticut Uniform Securities Act by engaging in dishonest or unethical practices and that he violated Section 36b-31-15b(a)(8) of the Regulations under the Act by exercising discretionary power in effecting transactions for a customer's account without obtaining written discretionary authority.

Goodhue was afforded an opportunity to request a hearing on the allegations contained in the Order to Cease and Desist and Notice of Intent to Fine.

Russell D. Davis and IRWT, LLC d/b/a In Russ We Trust

On July 22, 2024, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (No. CF-24-202412-S) against IRWT, LLC d/b/a In Russ We Trust, a Connecticut limited liability company located at 24 Anderson Avenue, Milford, Connecticut 06460. Also named in the action was Russell D. Davis, control person of the firm. IRWT, LLC held itself out as a crypto-consultancy company focused on profit projections. More specifically, Respondents sold subscriptions to a monthly online newsletter advising subscribers when to buy and sell certain cryptocurrencies.

The action alleged that, in connection with a Securities and Business Investments Division investigation of the Respondents, Respondent Davis wilfully violated Section 36b-23 of the Connecticut Uniform Securities Act by making a materially misleading statement to the Commissioner regarding the Respondents’ financial holdings.

The Respondents were afforded an opportunity to request a hearing on the allegations in the Order to Cease and Desist and Notice of Intent to Fine.

Consent Orders

Edward D. Jones & Co., L.P. (CRD No. 250)

On December 20, 2024, the Banking Commissioner entered a Consent Order (No. CO-23-11056-S) with respect to Edward D. Jones & Co., L.P., a Connecticut-registered broker-dealer located at 12555 Manchester Road, St. Louis, Missouri, 63131-3710.

The action was an outgrowth of a $17 million multi-state enforcement settlement. That investigation focused on the firm charging front-load commissions for investments in Class A mutual fund shares in situations where the customer sold or moved the mutual fund shares sooner than originally anticipated. The multi-state investigation found that the firm failed to implement sufficient supervisory procedures to detect the irregularities. By the same token, the Banking Commissioner alleged that the firm violated Section 36b-31-6f(b) of the Regulations under the Connecticut Uniform Securities by failing to establish and maintain reasonably designed supervisory procedures.

The Connecticut Consent Order directed the firm to pay $335,754.72 to the state, $320,754.72 of which constituted an administrative fine and $15,000 of which constituted Connecticut’s allocated share of the investigative costs involved in the multistate settlement.

Gerald Lawrence White (CRD No. 2418081)

On August 15, 2024, the Banking Commissioner entered a Consent Order (No. CO-24-202219-S) with respect to Gerald Lawrence White of 5A Top Pasture Road, Washington Depot, Connecticut 06794. Respondent White was previously registered as a broker-dealer agent under the Connecticut Uniform Securities Act. The Consent Order alleged that Respondent White violated Section 36b-6(c)(1) of the Act by transacting business as an unregistered investment adviser; and that Respondent White violated the antifraud provisions in Section 36b-5(a) of the Act by failing to disclose to affected investors the risk factors involved or that Respondent White would use a portion of investor funds for his personal expenses.

The Consent Order directed Respondent White to cease and desist from regulatory violations and barred him from transacting business in Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent, and from acting in any other capacity requiring a license or registration from the Commissioner. The Consent Order also temporarily stayed for three years the $50,600 restitutionary amount and the $100,000 fine that otherwise would have been imposed. Following expiration of the three year period, if Respondent White remained financially unable to pay the administrative fine, the fine would be waived but the restitutionary obligation would remain outstanding.

Vend Tech International, Inc.

On July 8, 2024, the Banking Commissioner entered a Consent Order (No. CSF-23-2022-42-B) with respect to Vend Tech International, Inc. of 2475 George Urban Boulevard, Depew, New York 14043. The Respondent is in the business of offering vending machine business opportunities under the brand names “Naturals2GO” and “All4U.” The Consent Order was preceded by a July 18, 2023 Notice of Intent to Issue Stop Order Denying Effectiveness to a Business Opportunity Postsale Registration, Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (No. CSF-23-2022-42-B). That action alleged that, commencing in 2014, the Respondent sold unregistered vending machine business opportunities to several Connecticut residents in violation of Sections 36b-62(a) and 36b-67(1) of the Connecticut Business Opportunity Investment Act. Seven years after the first sale, the Respondent filed to register the business opportunity after-the-fact. The action further alleged that, while that application was pending, the Respondent made yet another unregistered Connecticut sale which it did not disclose to the agency. Such nondisclosure, as well as the Respondent's failure to disclose business opportunity related sanctions levied against it by the states of Illinois, Washington and Maryland in 2021 and 2022 allegedly violated Section 36b-62(d) of the Act. The action also alleged that the Respondent violated Section 36b-63 of the Act by failing to provide prospective purchaser-investors with a disclosure document meeting the requirements of the Act. In addition, the action alleged that the Respondent used misleading materials in promoting its business opportunity to prospective purchasers in violation of Section 36b-67 of the Act.

The Consent Order fined Vend Tech International, Inc. $10,000 and directed it to cease and desist from regulatory violations. Pursuant to the Consent Order, Vend Tech International, Inc. agreed to extend a partial rebate offer to purchaser-investors with whom it had not previously settled and to make payment to those purchaser-investors electing to take the rebate. Vend Tech International, Inc.’s pending post-sale business opportunity registration became effective on July 8, 2024.

Statistical Summary

Licensing At A Glance

at the end of the quarter

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Broker-dealers Registered

1,977

1,968

1,970

1,936

Broker-dealer Agents Registered

204,660

207,829

209,539

205,917

Broker-dealer Branch Offices Registered

2,096

2,331

2,258

2,115

Investment Advisers Registered

426

427

434

414

SEC Registered Advisers Filing Notice

2,569

2,559

2,625

2,550

Investment Adviser Agents Registered

15,256

15,510

15,445

15,190

Exempt Reporting Advisers

213

218

226

229

Agents of Issuer Registered

Conditional Registrations

Securities and Business Opportunity Filings

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Offerings Reviewed

112

Investment Company Notice Filings

386

395

374

6,704

7,859

Exemptions and Exemptive Notices

1,231

1,440

1,508

1,394

5,573

Examinations

Broker-dealers

Investment Advisers

Securities Investigations

Opened

Closed

Ongoing as of End of Quarter

104

119

118

Subpoenas issued

Incoming Referrals from Attorney General

Incoming Referrals from Other Agencies

Business Opportunity Investigations

Investigations Opened

Investigations Closed

Ongoing as of End of Quarter

Enforcement: Remedies and Sanctions

Notices of Intent to Deny (Licensing)

Notices of Intent to Suspend (Licensing)

Notices of Intent to Revoke (Licensing)

Denial Orders (Licensing)

Suspension Orders (Licensing)

Revocation Orders (Licensing)

Notices of Intent to Fine

Orders Imposing Fine

Cease and Desist Orders

Notices of Intent to Issue Stop Order

Activity Restrictions/Bars

Stop Orders

Vacating/Withdrawal/ Modification Orders

Restitutionary Orders and Disgorgement Orders

Injunctive Relief Obtained

Proceedings and Settlements

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Administrative Actions

Consent Orders

Stipulation and Agreements

Monetary Relief*

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Monetary Sanctions Imposed

$110,002

$730,000

$10,000

$435,754.72

$1,292,756.72

Portion attributable to settlements

$110,002

$10,000

$435,754.72

$555,756.72

Attributable to Court-Ordered Penalties

Financial Literacy Contribution

Restitution or Other Monetary Relief ( includes rescission offer amounts )

$160,129

$50,600

$261,329

Cents eliminated

Securities Referrals

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year to Date

Criminal Matters

Civil (Attorney General)

Other Agency Referrals