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OFFICE OF SECURITIES
121 STATE HOUSE STATION
AUGUSTA, ME 04333
NOTICE OF INTENT TO CENSURE
AND IMPOSE A CIVIL PENALTY ON
BROKER-DEALER AND SALES
Commonwealth Financial Network (CRD # 8032)
(“Commonwealth”) is a business entity that has been licensed in
Alan Perry Hess (CRD # 802893) (“Hess”) is an
individual who has been licensed in
David Linus Kelly (CRD # 1597375) (“Kelly”) is an
individual who has been employed by Commonwealth since June 1991. At all times relevant to this matter, Kelly
was Commonwealth’s Manager of Trading and Operations. Kelly’s last known business address is
Peter Thompkins Wheeler (CRD # 1286415) (“Wheeler”) is
an individual who has been employed by Commonwealth since May 1984. Wheeler’s last known business address is
In April 1999, a Phippsburg,
At the time the
During December 1999 the
8. Between December 31, 1999, and February 2, 2000, Commonwealth transferred the assets from the Maine investors’ managed account to a new Commonwealth account for which Hess was the Account Representative (the “Hess account”) and had discretionary authority to buy and sell securities for the account. The assets transferred to the Hess account were (a) interests in six mutual funds with a total market value of $107,449.86 on the date of transfer and (b) cash and cash equivalents with a total value of $634.16 on the dates of transfer. The mutual fund holdings reflected a relatively conservative and diversified portfolio.
9. Hess proceeded to sell the mutual fund interests and used his discretionary authority to purchase shares of relatively speculative stocks, largely in the technology sector, for the account. Hess also employed a short-term trading strategy with respect to some of the equities in the account.
By the time the
At the time that they first met with Hess, the
The investments that Hess made for the
13. At all times relevant to this matter, Kelly was the designated home office principal responsible for reviewing new account applications, and both Kelly and Wheeler were the designated home office principals responsible for reviewing all brokerage account equity transactions.
Commonwealth and Hess engaged in unethical conduct or
practices in the securities business under 32 M.R.S.A. § 10313(1)(G) by making
unsuitable investments for the
Commonwealth, Kelly, and Wheeler failed reasonably to
supervise Hess under 32 M.R.S.A. § 10313(1)(J) in connection with the
16. Pursuant to 32 M.R.S.A. § 10313(1), the Securities Administrator (“Administrator”) may, after notice and opportunity for hearing, issue an order censuring a licensee if she finds that the order is in the public interest and that the licensee has engaged in any unethical conduct or practice in the securities business or has failed reasonably to supervise sales representatives.
17. Pursuant to 32 M.R.S.A. §10602(1)(E) and 10 M.R.S.A. § 8003(5), the Administrator may, after notice and opportunity for hearing, by order, impose a civil penalty not exceeding $1,500 for a single violation if the Administrator reasonably believes that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of the Act or any applicable rule or condition of licensure.
Pursuant to 32 M.R.S.A. § 10708(6), notice is hereby given that the Securities Administrator intends to issue an order censuring and imposing a civil penalty upon each of the respondents pursuant to 32 M.R.S.A. §§ 10313(1) and 10602(1)(E) and 10 M.R.S.A. § 8003(5).
Pursuant to 32 M.R.S.A. § 10708(2), interested parties have thirty (30) calendar days from the entry of this Notice of Intent to file a written request for a hearing.
Date: July 28, 2005 s/Christine A. Bruenn
Christine A. Bruenn
Date: July 28, 2005 s/Bonnie E. Russell
Bonnie E. Russell
Assistant Securities Administrator
Date: July 28, 2005 s/Michael W. Atleson
Michael W. Atleson