SEC Division of Corporation Finance no-action letter: Central States Capital Markets, LLC

40 Wall Street
Forty-First Floor
New York, New York 10005
(646) 200 - 6300 www.parkjensen.com
Douglas R. Jensen djensen@parkjensen.com
Direct dial (646) 200-6320
Telecopier (646) 200-6321
Elizabeth Murphy
Associate Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-3628
Re: In the Matter of Central States Capital Markets Dear Ms. Murphy:
This letter is submitted on behalf of my client Central States Capital Markets, LLC (“CSCM” or the “Firm”). CSCM has been engaged in settlement discussions with the staff of the Division of Enforcement concerning the resolution of an administrative proceeding that would result in the issuance of an order directing the Firm to cease and desist from committing or causing future violations of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. CSCM is prepared to settle the proceeding, and if accepted that Settlement will result in an order pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940 (the “Order”). That Order will impose sanctions on the Firm, including but not limited to an undertaking to engage an independent compliance consultant and to implement the recommendations of that consultant. Further, the Order would result in disqualification from relying on the exemptions available under Regulation D. We are requesting a waiver from that disqualification in the event that the SEC issues the disqualifying order. See 17 C.F.R. §§ 230.506(d)(2)(ii). If not relieved of the disqualification, the Firm would be precluded from involvement with offerings under Regulation D. Although it has participated in only one such offering since 2013, it is possible that CSCM’s customers may determine to proceed on that basis in the future, and in that event CSCM would be unable to assist them. Such a consequence would be harsh and disproportionate, given that the Order arises from conduct that occurred more than five-years ago, during the period between December 21, 2012 and March 13, 2013, and that did not involve the Firm’s core underwriting activities. Rather, the conduct involved a failure to file suspicious activity reports and to accurately document the procedures set forth in the Firm’s customer identification program.