Summer 2024 Securities Bulletin

State of Connecticut
Department of Banking

Securities and Business Investments Division Securities Bulletin

Vol. XXXVIII No. 2 - Summer 2024

Features

Quarterly Statistical Summaries

Enforcement and Other Highlights

Administrative Actions

Morse Investment Management Company, Inc. (CRD No. 128355)

On June 13, 2024, the Banking Commissioner entered an Order Revoking Registration as an Investment Adviser (No. NRC-24-20245-S) against Morse Investment Management Company, Inc. of 321 Main Street, Farmington, Connecticut 06032. The firm, an inactive corporation, was registered as an investment adviser in Connecticut since June 3, 1991.

The Order had been preceded by a February 28, 2024, Notice of Intent to Revoke Registration as an Investment Adviser and Notice of Right to Hearing (No. NRC-24-20245-S) which alleged that, since at least 2022, the firm violated Section 36b-31-14d(a) of the Regulations under the Connecticut Uniform Securities Act by failing to file a report of its financial condition with the Commissioner.

Since the Respondent failed to request a hearing on the Notice of Intent to Revoke Registration as an Investment Adviser, the Order Revoking Registration adopted as findings the allegations in the original Notice and revoked the firm’s registration effective June 14, 2024.

The Cheetah Fund L.P., C.M. Allen Capital Management, Inc. and Craig Murfee Allen (CRD No. 2625516)

On May 20, 2024, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (No. CRF-24-202310-S) against The Cheetah Fund L.P. , an investment fund located at 3090 East Paces Ferry Road, Suite 77, Atlanta, Georgia 30305, C.M. Allen Capital Management, Inc. and Craig Murfee Allen. C.M. Allen Capital Management, Inc., a Georgia corporation, was administratively dissolved on October 22, 2020. Respondent Allen of 3185 Nancy Creek Road NW Atlanta, Georgia 30327, was the control person of the two entities.

The action alleged that the Respondents violated Section 36b-16 of the Connecticut Uniform Securities by offering and selling unregistered interests in The Cheetah Fund L.P. to Connecticut investors. The action also alleged that the Respondents violated the antifraud provisions in Section 36b-4(a) of the Act by, among other things, making inflated unsubstantiated earnings claims to investors, falsely representing that The Cheetah Fund had been audited, falsely representing that a famous investor had invested in The Cheetah Fund and, in the case of Respondent Allen, using investor funds to pay his personal expenses. Connecticut investors were unsuccessful in attempting to recoup their invested funds from Respondents.

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

Arcview Capital, LLC (CRD No. 306029)

On April 24, 2024, the Banking Commissioner issued a Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Right to Hearing (No. NRC-24-20248-S) against Arcview Capital, LLC , a Connecticut-registered broker-dealer located at 159 20th Street, Suite 1B-17, Brooklyn, New York 11232. The action alleged that the Respondent violated Section 36b-31-6a(a) of the Regulations under the Connecticut Uniform Securities Act by failing to maintain a broker-dealer agent registration. The action further alleged that the Respondent failed to cure the problem following several requests from the Division.

The Respondent was afforded an opportunity to request a hearing on the allegations in the Notice.

Horang Securities, LLC (CRD No. 6004)

On April 24, 2024, the Banking Commissioner issued a Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Right to Hearin g (No. NRC-24-20249-S) against Horang Securities, LLC , a Connecticut-registered broker-dealer having its principal office at 27 W 72nd Street, New York, New York 10023. The action alleged that the Respondent failed to maintain a broker-dealer agent registration in violation of Section 36b-31-6a(a) of the Regulations under the Connecticut Uniform Securities Act. The action further alleged that the Respondent was not responsive to the Division’s requests that the problem be remedied.

The Respondent was afforded an opportunity to request a hearing on the allegations in the Notice.

Phillips & Company Securities Inc. ( CRD No. 35800)

On April 24, 2024, the Banking Commissioner issued a Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Right to Hearing (No. NRC-24-202410-S) against Phillips & Company Securities Inc. , a Connecticut-registered broker-dealer located at 521 SW 11th, Suite 200, Portland, Oregon 97205.

The action alleged that the Respondent violated Section 36b-31-6a(a) of the Regulations under the Connecticut Uniform Securities Act by failing to maintain a broker-dealer agent registration. The action further alleged that the Respondent failed to remedy the situation following several communications from the Division.

The Respondent was provided with an opportunity to request a hearing on the allegations in the Notice.

Radius Securities, LLC (CRD No. 286256)

On April 24, 2024, the Banking Commissioner issued a Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Right to Hearing (No. NRC-24-202411-S) against Radius Securities, LLC , a Connecticut-registered broker-dealer located at 42 Broadway, Suite 12-129, New York, New York.

The action alleged that the Respondent violated Section 36b-31-6a(a) of the Regulations under the Connecticut Uniform Securities Act by failing to maintain any Connecticut-registered agents. The action further alleged that the Respondent failed on several occasions to address the issue once notified by the Division.

The Respondent was afforded an opportunity to request a hearing on the matters alleged in the Notice.

Archer Micro Cap Value Fund, Limited Partnership and Artemis Capital Group L.L.C.

On April 4, 2024, the Banking entered two separate Orders Imposing Fine (No. CF-24-10824-S) against Archer Micro Cap Value Fund , a private investment fund located at 210 South Main Street, 1st Floor, Middletown, Connecticut and Artemis Capital Group L.L.C ., general partner of Archer Micro Cap Value Fund. The actions had been preceded by a January 19, 2024 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (No. CF-24-10824-S) alleging that the respondents sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that, between May 2015 and January 2017, Artemis Capital Group L.L.C. transacted business as an unregistered investment adviser by rendering investment advisory services to the Archer Micro Cap Value Fund. Since neither Respondent requested a hearing, the Order to Cease and Desist became permanent as to each on February 9, 2024.

Neither respondent requested a hearing on the Notice of Intent to Fine. Accordingly, the Commissioner adopted as findings the allegations in the original Order to Cease and Desist and Notice of Intent to Fine. Finding that Archer Micro Cap Value Fund committed at least one violation of Section 36b-16 of the Connecticut Uniform Securities Act, the Commissioner fined that entity $10,000. The Commissioner also found that Artemis Capital Group L.L.C. violated Section 36b-16 of the Act and transacted business as an unregistered investment adviser in violation of Section 36b-6(c)(1) of the Act. Artemis Capital Group L.L.C. was fined $20,000.

Burns Capital Investments LLC and Thomas Zachary Burns

On April 3, 2024, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order (Matter No. CRF-23-2022246-S) against Burns Capital Investments LLC and Thomas Zachary Burns , now or formerly of 1401 Windsor Station Drive, Windsor, Connecticut 06095 and 16A Windsor Street, Enfield, Connecticut 06082. The respondents had been the subject of a September 18, 2023 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Matter No. CRF-23-2022246-S). Respondents did not appear at the November 15, 2023 hearing.

The Order found that, from approximately December 2021 through August 2022, Burns, on behalf of himself and Burns Capital Investments LLC, raised at least $148,000 from at least nine investors for the purpose of investing their monies in a pooled cryptocurrency fund. Interests in the cryptocurrency fund were not registered in violation of Section 36b-16 of the Connecticut Uniform Securities Act. The Order also found that the Respondents violated the antifraud provisions of the Act by, among other things, falsely claiming that trades would be executed on a Coinbase cryptocurrency exchange; that Burns Capital Investments LLC was licensed and regulated as a money transmitter in Connecticut when that was not the case; by falsely stating the accounts were insured by SIPC; by commingling and diverting investor funds to their own use; and by failing to disclose to investors the risks involved.

The Order also found that the Respondents engaged in unregistered investment advisory activity in violation of Section 36b-6(c)(1) of the Act, and that Respondents violated section 36b-23 of the Act by making materially false or misleading statements in connection with an agency investigation.

The April 3, 2024 Order rendered the September 18, 2023 Order to Cease and Desist and the September 18, 2023 Order to Make Restitution permanent, and directed Respondents to pay restitution to affected investors within 60 days. In addition, the April 3, 2024 Order fined Respondents $700,000, jointly and severally.

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

Broker-dealer Agents Registered

204,660

207,829

Broker-dealer Branch Offices Registered

2,096

2,331

Investment Advisers Registered

426

427

SEC Registered Advisers Filing Notice

2,569

2,559

Investment Adviser Agents Registered

15,256

15,510

Exempt Reporting Advisers

213

218

Agents of Issuer Registered

Conditional Registrations

Securities and Business
Opportunity Filings

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Offerings Reviewed

Investment Company Notice Filings

386

395

781

Exemptions and Exemptive Notices

1,231

1,440

2,671

Examinations

Broker-dealers

Investment Advisers

Securities Investigations

Opened

Closed

Ongoing as of End of Quarter

104

Subpoenas issued

Matters referred from Attorney General

Matters referred 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

$840,002

Portion attributable to settlements

$110,002

Attributable to Court-Ordered Penalties

Financial Literacy Contribution

Restitution or Other Monetary Relief ( includes rescission offer amounts )

$160,129

Cents eliminated

Securities Referrals

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Criminal Matters

Civil (Attorney General)

Other Agency Referrals