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| SEC
ORDER APPROVING APPLICATION FOR RELIEF FROM A STATUTORY
DISQUALIFICATION
34-60133 (June 17, 2009)
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The Commission's Division
of Trading and Markets, pursuant to delegated authority, has
reviewed the instant Application and the record before FINRA.
Relying on the representations made by FINRA and Trinity
concerning the proposed association of Mr.Brennan, and the
Division of Trading and Markets has concluded that it is
appropriate for the Commission to APPROVE
the Application permitting Mr. Brennan to associate with Trinity as
an associated, but not registered, person subject to the
conditions of this order.
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SD
Event
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On December
23, 1998, the Commission issued an Order Making Findings,
Imposing Remedial Sanctions and Cease-and-Desist Order (“Bar
Order”) fining Mr.
Brennan $50,000 and barring him from associating with any broker,
dealer, investment adviser, or investment company, with the right
to reapply after five years.In the Bar Order, the
Commission found that Mr. Brennan willfully
violated Section 17(a) of the Securities Act of 1933, Section
10(b) of the Exchange Act and Rule 10b-5 thereunder, and willfully
aided and abetted violations of Sections 206(1) and 206(2) of the
Investment Advisers Act of 1940. Generally, the
Commission found that Mr. Brennan, while associated with an
investment adviser affiliate of CS First Boston, Inc., a
registered broker-dealer, as the affiliate’s vice president for
sales and marketing, engaged in fraudulent conduct with respect to
the offering of the CS First Boston Offshore Cash Reserve Fund,
made material misrepresentations to an investor and other
potential investors about the fund, and distributed false and
misleading marketing materials.
The Bar Order subjects
Mr. Brennan to a statutory disqualification under Section
3(a)(39)(B)(i)(II) of the Exchange Act (Barred by Commission).
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| Sentence
Expiration |
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| Prior
Industry Activity |
Mr.
Brennan first registered in the securities industry as an
investment company and variable contracts products limited
representative (Series 6) in December 1990. He re-qualified for
the Series 6 in January 2005. He also qualified as a uniform
securities agent state law (Series 63) in March 1991 and
re-qualified in February 2005. Mr. Brennan was associated with a
total of seven broker-dealers, including CS First Boston, Inc.,
from 1985 until 1998.
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| Background
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Trinity proposes to employ
Mr. Brennan in a non-registered
capacity to act as a consultant to broker-dealers and other
financial services institutions with respect to developing
exchange-traded funds (“ETFs”). Mr. Brennan
will not have any
involvement in securities sales activities, including the
marketing of any ETFs that he develops.
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| Sponsoring
Firm |
Trinity, headquartered in
Mequon, Wisconsin, became a FINRA member in September 2000.
Trinity employs 1 registered principal and 1 registered
representative, and acts as a mutual
fund retailer and engages in “solicitation activities
with respect to separately managed accounts, mutual funds, private
investment funds, and other collective investment vehicles.”
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| Proposed
Activity |
Trinity
proposes to employ Mr. Brennan in a non-registered
capacity to act as a consultant to broker-dealers and other
financial services institutions with respect to developing
exchange-traded funds (“ETFs”). Mr. Brennan
will not have any
involvement in securities sales activities, including the
marketing of any ETFs that he develops.
Mr. Brennan’s activities will consist
(A) consulting with clients regarding the strategic
development of a product, including selecting the product
niche ( e.g.,
fixed income, equity, sub-advised products, and wrap products).
For sub-advised products, Mr. Brennan will consult regarding
selection of a "sub-adviser" to assist the ETF sponsor
in developing the ETFs’ investment strategy;
(B) assisting with the retention
of key service providers, including requests for proposals
from potential legal counsel, administrators, custodians,
specialist firms, and any other necessary vendors; and
(C) working with clients and their legal counsel to prepare
registration statements or other regulatory filings, to obtain all
necessary regulatory approvals, and to request any
necessary exemptions. Mr. Brennan will be compensated by a
percentage of the fees received from the client, and his
compensation will not be contingent upon any ETF sales.
Mr. Brennan will act
only in an associated capacity and will not be a registered
representative of the Firm. Mr. Brennan will not
accept any customer funds
or securities, and will not
supervise any Trinity employees.
Mr. Brennan will be based out of his home in Merrimac,
Massachusetts, and will be supervised by Kirt Bjork, the Firm’s
president. Trinity will amend its supervisory procedures to
clearly specify that Mr. Bjork is the responsible supervisor for
Mr. Brennan. |
| Proposed
Supervisor |
Mr.
Brennan will be based out of his home in Merrimac, Massachusetts,
and will be supervised by Kirt
Bjork, the Firm’s president.
Trinity will amend its supervisory procedures to clearly specify
that Mr. Bjork is the responsible supervisor for Mr. Brennan.
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| Member
Regulation Recommendation |
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| Considerations |
PLAN OF SUPERVISION
- Mr. Brennan will conduct
all of his client communications via Trinity-issued
electronics, including, but not limited to, cell
phones, facsimile machines, and computers.
- Mr. Bjork will have
access to Mr. Brennan’s work calendar, and Mr.
Brennan will inform Mr. Bjork of the date, time, and location
of all of Mr. Brennan’s outside client appointments. Mr.
Brennan will be responsible for entering all meetings into his
meeting calendar to ensure that Mr. Bjork is aware of them
when reviewing the work calendar. Mr. Brennan will keep a log
of all of the meetings that he enters on his calendar
for ease of review.
- Mr. Brennan will have a dedicated phone line. Mr. Bjork
will have access to Mr. Brennan’s phone at all times,
and Mr. Brennan’s line will be accessible from Mr. Bjork’s
phone. Mr. Bjork will have the ability
to listen in on Mr. Brennan’s calls at any time by
picking up the phone.
When
Mr. Brennan’s phone rings, Mr. Bjork will be alerted and have
the ability to listen to the entire call.
For audit and compliance purposes, Mr.
Bjork will randomly listen in on Mr. Brennan’s phone line at
least twice a week, throughout an entire conversation.
If Mr. Bjork finds that any aspect of the call is not in
compliance with Mr. Brennan’s stated duties, Mr. Bjork will
discuss the issue with Mr. Brennan immediately, maintain a
record of this discussion, and present that record to a FINRA
examiner during the next statutory disqualification examination
of Mr. Brennan. Mr. Bjork will maintain a log of Mr. Brennan’s
telephone calls, review it on a monthly basis to ensure that
Mr. Brennan’s calls are in
compliance with his stated responsibilities, and keep the log
segregated for ease of review.
All of Mr. Brennan’s incoming
paper correspondence will be received by Mr. Bjork, at
the Firm’s home office. Mr. Bjork will review and approve
all of this correspondence upon its arrival, and forward it to
Mr. Brennan. Mr. Bjork will also review
all of Mr. Brennan’s outgoing paper correspondence before it
is sent. Mr. Brennan
will keep a record of all of his outgoing paper correspondence
and will keep a copy for ease of review. Mr. Bjork will keep a
written record evidencing his review of all of Mr. Brennan’s
paper correspondence.
For the purposes of client communication, Mr. Brennan will only
be allowed to use an e-mail account that is held at the Firm.
Mr. Bjork will have immediate access to all e-mail
communications on Mr. Brennan’s Firm e-mail account that are
either sent to or received by Mr. Brennan. If Mr. Brennan
receives a business related e-mail message in another e-mail
account outside the Firm, he will immediately deliver that
message to the Firm’s e-mail account. Mr. Brennan will also
inform the Firm of all outside e-mail accounts that he
maintains. Mr. Bjork will conduct a weekly review of all
e-mail messages that are either sent or received by Mr.
Brennan, will preserve the e-mail messages in electronic
format, and keep them segregated for ease of review.
Mr. Bjork will review, approve, and execute all of Mr.
Brennan’s client agreements. To evidence review, Mr. Bjork
will make copies of the agreements, initial them, and keep the
copies segregated for ease of review.
If Mr. Bjork is to be on vacation or out of the office for
more than one week, he will call Mr. Brennan at least once
during the second week. Mr.
Brennan will not be permitted to negotiate any client
agreements in Mr. Bjork’s absence, unless Mr. Bjork is able
to review and approve the agreement remotely. If Mr.
Bjork is in a position to review the agreement remotely, he
will preserve a copy of the agreement with his initials and
keep it segregated for ease of review. Mr. Brennan will not
send any written correspondence in Mr. Bjork’s absence,
without Mr. Bjork’s review and approval. No correspondence
that is received by the Firm during Mr. Bjork’s absence will
be forwarded to Mr. Brennan.
Mr. Bjork must certify quarterly (March 31, June 30,
September 30, and December 31) to FINRA’s Department of
Member Regulation that he and Mr. Brennan are in compliance
with all of the conditions of heightened supervision to be
accorded Mr. Brennan.
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| Citations |
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