SEC no-action letter: J.P. Turner & Company, LLC and William L. Mello waiver request — SEC — US

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF
CORPORATION FINANCE
September 10, 2012
Scott Holcomb, Esq.

General Counsel

J.P. Turner & Company, L.L.C.

One Buckhead Plaza

3060 Peachtree Road NW, 11th Floor

Atlanta, GA 3030S

Re: In the Matter ofJ.P. Turner & Company, LLC, and William L. Mello Securities Exchange Act Release No. 67808, Sept. 10,2012, Administrative Proceeding File No. 3-15014--Waiver Request under Regulation A and Rule 505 ofRegulation D Dear Mr. Holcomb:
This responds to your letter dated today, written on behalf ofJ.P. Turner & Company, LLC ("J.P. Turner") and constituting an application for relief under Rule 262 ofRegulation A and Rule SOS(b)(2)(iii){C) ofRegulation D under the Securities Act of 1933 ("Securities Act"). You requested a waiver from disqualifications from exemptions available under Regulation A and Rule SOS that may have arisen by virtue ofthe order entered September 10,2012 by the Securities and Exchange Commission in In the Matter ofJ.P. Turner & Company, LLC, and William L. Mello, Release No. 34-67808 (the "Order"). The Order was entered against J.P. Turner under Section lS(b) ofthe Securities Exchange Act of 1934 ("Exchange Act"). It requires J.P. Turner to pay disgorgement of$200,000, prejudgment interest of$16,OSI, and a civil money penalty of$200,000. The Order also requires J.P. Turner to comply with an enumerated list ofundertakings, including an undertaking to retain the services ofan independent consultant, and contemplates that such compliance will require several months to accomplish. The Order also was entered against William L. Mello, President ofJ.P. Turner, under both Section IS(b) ofthe Exchange Act and Section 203(f) ofthe Investment Advisers Act of 1940 ("Advisers Act"). It suspen~ Mr. Mello from association in a supervisory capacity with any broker, dealer, or investment adviser for five months and requires him to pay a civil money penalty of $4S,OOO. According to your letter, J.P. Turner has requested a waiver because it understands that entry ofthe Order may have disqualified J.P. Turner from participating in Regulation A and Rule SOS offerings insofar as J.P. Turner is subject to an order ofthe Commission entered under Section lS(b) ofthe Exchange Act. In addition, you represented that J.P. Turner may be disqualified from participating as an underwriter because Mr. Mello is a managing member ofJ.P. Turner and entry of the order may render him a person subject to an order ofthe Commission entered under Section IS(b) ofthe Exchange Act and Section 203(f) ofthe Advisers Act. For purposes ofthis letter, we have assumed as facts the representations set forth in your letter and the findings supporting entry ofthe Order. We also have assumed that J.P. Turner will comply with the Order.

Scott Holcomb, Esq.
September 10, 2012
On the basis of your letter, I have determined that you have made showings of good cause under Rule 262 and Rule 505 that it is not necessary under the circumstances to deny the exemptions available under Regulation A and Rule 505 by reason of entry of the Order. Accordingly, pursuant to delegated authority, on behalf of the Division of Corporation Finance, and without necessarily agreeing that any such disqualifications arose by virtue of entry of the Order, the J.P. Turner is granted relief from any disqualifications from exemptions otherwise available under Regulation A and Rule 505 that may have arisen as a result of entry of the Order. Very truly yours, Chief, Office of Small Business Policy

J.P. Turner & Company, LLC
One Buckhead Plaza
3060 Peachtree Road NW, II th Floor
Atlanta, GA 30305
September 10, 2012
ADVANCE COPY VIA E-MAIL
Gerald J. Laporte, Esq.
Chief, Office of Small Business Policy
Division of Corporate Finance
U.S. Securities and Exchange Commission
100 F Street, N .E.
Washington, D.C. 20549
Re: In the Matter ofJ.P. Turner & Company, L.L.C., et al.
Administrative Proceeding Fi le No. 3-I 50 I 4 Dear Mr. Laporte:
This letter is submitted on behalf of J.P. Turner & Company, L.L.C. ("J.P. Turner" or "Respondent"), in connection with the settl ement of the above-referenced matter, which followed an investigation by the U.S. Securities and Exchange Commission (the "Commission"). The Settlement relates to alleged violations of the federal securiti es laws by the Respondent and William Mello in connection with the supervision of certain registered representatives. Respondent requests, pursuant to Rule 262 of Regulation A and Rule 505(b)(2)(iii)(C) of Regulation D, both promulgated under the Securities Act of 1933, as amended ("Securities Act"), a waiver of any disqualification from the exemptions under Regulation A and Rule 505 of Regulation D that may be applicable to the Respondent and any of its affiliates as a result of the entry of the Administrative Order described below. Respondent respectfully requests that any such waiver be granted effective upon the entry of the Administrative Order. It is Respondent's understanding that the Staff of the Division of Enforcement does not object to the grant of the requested waiver. J.P. TURNER & COMPANY, LLC N74875226.7 OFFI CE OF TH E GENERAL C OUNSE L O NE BUCKHEAD PLAZA <? 3060 PEACHTREE RD NW, lITH FLOOR <? ATLA NTA, GEORGIA 303 0~ ~lcm bcr slPe \V\V\V.jPTURNER. COM <? (404) 479-8300 <? (888) ~78-8763 <? FAX (888) 887-0373

Gerald J. Laporte, Esq.
September 10, 2012
BACKGROUND
The Staff of the Commission's Division of Enforcement engaged in settlement discussions with Respondent and Mr. Mello in connection with the above-described investigation. As a result ofthese discussions, Respondent and Mr. Mello have each submitted an Offer of Settlement which the Commission has determined to accept. The Commission alleges that (1) J.P. Turner failed reasonably to supervise certain registered representatives within the meaning of Section IS(b)( 4)(E) ofthe Securities Exchange Act of 1934 ("Exchange Act") with a view to preventing and detecting the registered representatives' violations of Section 17(a) ofthe Securities Act, Section 10(b) ofthe Exchange Act and Rule 10b-S thereunder; and (2) Mr. Mello, in his capacity as president ofthe firm, failed reasonably to supervise the registered representatives within the meaning of Section IS(b)(6) ofthe Exchange Act and within the meaning of Section 203(f) of the Investment Advisers Act of 1940 with a view to preventing and detecting the registered representatives' violations. As contemplated by the offers ofsettlement, the Commission issued an order instituting administrative proceedings against the Respondent and Mr. Mello (the "Administrative Order"). I Respondent and Mr. Mello neither admit nor deny the allegations in the Administrative Order except as to personal and subject matter jurisdiction, which they have admitted, and they consented to the entry ofthe Administrative Order. As negotiated by the parties, the Administrative Order, among other things: (i) censures J.P. Turner, (ii) requires that J.P. Turner comply with certain undertakings, including retaining, at its own expense, the services of an Independent Consultant to review and implement its written supervisory policies and procedures designed to prevent and detect churning, and (iii) requires J.P. Turner to pay disgorgement of $200,000, prejudgment interest of $16,OSl, and a civil money penalty of $200,000. The Administrative Order also suspends Mr. Mello from association in a supervisory capacity with any broker, dealer, or investment adviser for a period of five months, and requires him to pay a civil penalty of$4S,000. DISCUSSION Regulation A and Rule SOS ofRegulation D provide exemptions from registration under the Securities Act for certain offerings of limited size. Rule 262(b)(3) of Regulation A and Rule SOS(b)(2)(iii) ofRegulation D provide for disqualification from these exemptions if, among other things, any director, officer, general partner or 10% beneficial equity owner ofthe issuer, or any underwriter ofthe securities to be offered or any partner, director or officer of any such underwriter, in any such case is subject to an order ofthe Commission entered pursuant to
section IS(b), ISB(a), or ISB(c) of the Exchange Act, or section 203(e) or (f) ofthe Investment
Advisers Act of 1940 ("Advisers Act,,).2 These Rules, however, also provide that these I In the Matter ofJP Turner & Company, LLC, and William Mello, Administrative Proceeding File No. 3-15014 (Sept. 10,2012). 2 See 17 C.F.R. §§262(b)(3) and 505(b)(2)(iii). J.P. TURNER & COMPANY, LLC Al74875226.7 OFFICE OF THE GENERAL COUNSEL ONE BUCKHEAD PLAZA ~ 3060 PEACHTREE RD NW, lITH FLOOR ATLANTA, GEORGIA 3030~ Membc:rSIPC WWW.JPTURNER.COM (404) 479-8300 (888) 1)78-8763 FAX (888) 887-0373

Gerald J. Laporte, Esq.
September 10,2012 disqualifications shall not apply ifthe Commission detennines, upon a showing of good cause, that it is not necessary under the circumstances that the exemptions be denied.3 Respondent understands that the entry of the Administrative Order may have disqualified it and certain ofits affiliates from participating in certain offerings that are otherwise exempt under Regulation A and Rule 505 ofRegulation D under the Securities Act, insofar as the Respondent is subject to an order ofthe Commission pursuant to Section 15(b) ofthe Exchange Act. Further, Rule 262(b )(3) disqualifies "any partner, director, or officer of any ... underwriter [who] [i]s subject to an order of the Commission entered pursuant to Section 15(b), 15B(a), or 15B(c) ofthe Exchange Act, or Section 203(e) or (f) ofthe [Advisers Act]" from the exemptions provided by Regulation A or Rule 505 ofRegulation D under the Securities Act. Mr. Mello is not a partner, director, or officer ofthe Respondent, however, Mr. Mello is a managing member ofthe Respondent. As a managing member of a LLC, Mr. Mello may perfonn functions similar to directors. Respondent understands that it is possible that the Administrative Order against Mr. Mello could be deemed to disqualify the Respondent and certain of its affiliates from participating in certain offerings that are otherwise exempt under Regulation A and Rule 505 of Regulation D under the Securities Act. Pursuant to these regulations, the disqualifications could also apply to any issuer, underwriter or other person participating in such an offering with the Respondent. As noted above, however, the Commission has the authority to waive Regulation A and Rule 505 of Regulation D exemption disqualifications upon a showing of good cause that such disqualifications are not necessary under the circumstances.4 Respondent respectfully requests that effective upon the entry ofthe Administrative Order, the Commission waive any disqualifying effects that the Administrative Order may have under Regulation A and Rule 505 ofRegulation D, to the extent they may be applicable to the Respondent and any ofits affiliates, on the following grounds:

The disqualification of the Respondent from the exemptions under Regulation A and
Rule 505 ofRegulation D would be unduly and disproportionately severe given the nature ofthe conduct alleged in the Administrative Order. The conduct ofthe Respondent alleged in the Administrative Order does not pertain to whether or not securities offerings were conducted in compliance with the exemptions from registration provided by Regulation A or Rule 505 ofRegulation D. Rather, as noted above, the conduct alleged in the Administrative Order related to the supervision of certain registered representatives.
In the future, issuers may wish to retain J.P. Turner to participate in offerings ofsecurities
conducted in reliance on the exemption provided by Regulation A or Rule 505 of Regulation D. Consequently, the disqualification ofthe Respondent could adversely affect J.P. Turner's business operations with regard to securities distribution and could adversely affect third parties (which could include affiliates ofJ.P. Turner) that may 3 See 17 C.F.R. §§262 and 505(b)(2)(iii)(C). 4 See 17 C.F.R. §§230.262 and 230.505(b)(2)(iii)(C). J.P. TURNER & COMPANY, LLC Al74875226.7 OFFICE OF THE GENERAL COUNSEL ONE BUCKHEAD PLAZA 3060 PEACHTREE Ro NW, 11TH FLOOR ATLANTA, GEORGIA 3030~ MemberSIPC WWW.JPTURNER.COM (404) 479-8300 (888) ~78-8763 FAX (888) 887-0373

Gerald J. Laporte, Esq.
September 10, 2012 wish, but because ofthe disqualification would be unable, to retain J.P. Turner or participate with it in connection with transactions that rely on these exemptions.
3. During the period ofMr. Mello's suspension from association in a supervisory capacity
with any broker, dealer or investment adviser, Mr. Mello will not directly participate in any Regulation A or D offerings except to the extent that Mr. Mello could be deemed indirectly involved in a Regulation A or D offering due to his position as a managing member ofJ.P. Turner.
4. Respondent voluntarily cooperated with the Division of Enforcement's investigation by
producing documents, information, and witnesses at the Enforcement Staffs request without subpoena. Moreover, the Administrative Order notes that the Respondent took prompt remedial acts and cooperated with the Staff.
5. Finally, the disqualification ofRespondent would be unduly and disproportionately
severe because Respondent will be required under the Administrative Order to pay a total of$461,051 in disgorgement, interest and civil money penalties. J.P. Turner has also agreed to certain undertakings as set forth in the Administrative Order. Thus, the disqualification would result in an additional penalty beyond what the Administrative Order requires. In light ofthe foregoing, Respondent believes that disqualification is neither necessary nor in the public interest or for the protection ofinvestors, and that Respondent has shown good cause that relief should be granted. Accordingly, Respondent respectfully requests that the Commission, and the Division ofCorporate Finance pursuant to delegated authority, waive the disqualification provisions in Regulation A and Rule 505 ofRegulation D that may be applicable to Respondent and any ofits affiliates as a result ofthe entry ofthe Administrative Order. Please do not hesitate to contact me at (404) 479-8213 or our counsel for this matter, Amy Natterson Kroll at (202) 373-6118, if you have any questions regarding this request. Very trol y yours, ff!~~ General Counsel cc: William L. Mello J.P. TURNER & COMPANY, LLC Al74875226.7 OFFICE OF THE GENERAL COUNSEL ONE BUCKHEAD PLAZA 3060 PEACHTREE Ro NW, lITH FLOOR ATLANTA, GEORGIA 3030'5 MemberSIPC WWW.JPTURNER.COM (404) 479-8300 (888) '578-8763 FAX (888) 887-0373