Customer seeking to be reimbursed for unsuitable investments that FA made in her account.

$20,000.00

$20,000.00

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-88316; IA Release 40-5456, March 4, 2020: The SEC deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 against E. Herbert Hafen. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, Respondent admits the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained herein, and consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions. On the basis of this Order and Respondent's Offer, the Commission finds that on September 4, 2019, Hafen pled guilty to one count of investment adviser fraud in violation of 15 U.S.C. §§ 80b-6 & 80b-17 and Title 18, U.S.C. § 2 before the United States District Court for the District of New York, in Criminal Case No. 1:19-cr-00637.

Order

Bar (Permanent)

Any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

3/4/2020

Penny Stock

Indefinite

3/4/2020

Connecticut

On February 11, 2020, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CDF-20-8474-S) against Herbert H. Hafen. The action alleged that respondent Hafen violated Section 36b-5(f) of the Connecticut Uniform Securities Act by engaging in dishonest or unethical practices in connection with his investment advisory activities. More specifically, from approximately July 2011 to 2018 and at a time when he was registered in Connecticut, Hafen allegedly convinced an elderly advisory client to move her IRA funds to an outside investment opportunity. Hafen allegedly knew that the IRA, which the client had inherited from her deceased husband, was intended to support the client for the rest of her life. Instead of investing the client's funds, Hafen purportedly used them to pay his own credit card bills, mortgage and other personal expenses and to repay another investor who had also relayed monies to Hafen for investment purposes. In addition, the action alleged that Hafen falsely represented to the client that her IRA account was valued at $300,000 when it really held only $150,000 in available funds. Ultimately, Hafen's employing firm reimbursed the client for her loss.

Order

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$100,000.00

Since respondent Hafen did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent on March 15, 2020. The respondent also did not request a hearing on the Notice of Intent to Fine. Accordingly, adopting as findings the allegations contained in the Notice, the Commissioner found that Hafen violated Section 36b-5(f) of the Act and imposed a $100,000 fine against Hafen.

CLIENT ALLEGED FINANCIAL ADVISOR MISAPPROPRIATED CLIENT'S FUNDS - APRIL 2008 TO MARCH 2018.

$50,000.00

Client complained that the financial advisor defrauded her by encouraging her to send her retirement funds to his personal account for a high yield investment. (5/10/2018-8/21/2018)

$110,000.00

$120,000.00

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

On September 4, 2019, the SEC filed the Complaint: Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against defendant E. Herbert Hafen ("Hafen" or "Defendant"), alleges that from at least July 2011 through April 2018, Defendant, who was employed as an investment adviser representative and broker-dealer registered representative at two large well-known Financial Institutions ("Financial Institution A" and "Financial Institution B," collectively, "The Financial Institutions"), engaged in a scheme to defraud his clients. This scheme involved Hafen convincing his retail clients that he had access to a purported investment opportunity outside the financial institution where he worked. He advised clients that the supposed investment would pay an annual six percent return and had little risk. Hafen convinced his clients to take their money out of the Financial Institutions - including liquidating stock holdings and personal retirement accounts - deposit that money into their personal bank accounts, and then transfer or wire the money to Hafen's personal bank account. Once Hafen had the money from his clients, he pocketed it, using it, not for any investments, but for his own personal purposes. While some of the victims received some or all of their money back, most of the money was never repaid. During the seven year scheme, Hafen took more than $1.6 million from 11 victims. Of the total $1.6 million, Hafen has returned approximately $650,000. By reason of the foregoing, Defendant has violated Section 10(b) of the Exchange Act and Rule 10b-5 and Sections 206(1) and 206(2) of the Advisers Act.

Judgment Rendered

Injunction

Undertakings

INVESTMENT ADVISER FRAUD

Pled guilty

FINRA

Respondent Hafen failed to respond to FINRA request for information.

Letter

Bar (Permanent)

All Capacities

Indefinite

2/1/2019

Pursuant to FINRA Rule 9552(h) and in accordance with FINRA's Notice of Suspension and Suspension from Association letters dated October 29, 2018 and November 23, 2018, respectively, on February 1, 2019, Hafen is barred from association with any FINRA member in any capacity. Respondent failed to request termination of his suspension within three months of the date of the Notice of Suspension; therefore, he is automatically barred from association with any FINRA member in any capacity.

Client's attorney alleged Financial Advisor misappropriated client's funds - July 2011 - January 2018.

$675,000.00

$430,000.00

Wells Fargo Clearing Services, LLC.

Discharged

Mr. Hafen admitted to entering into financial arrangements with clients that were not approved by the firm.