Cease and desist order issued to Wyoming Investment Management Services
DENVER — Colorado Securities Commissioner Gerald Rome has issued a cease and desist order to Wyoming Investment Management Services, LLC (WIMS) and company president Craig Scariot based on what the Division of Securities has deemed as unlicensed investment adviser activity in Colorado.
Part of the Department of Regulatory Agencies (DORA), the Division of Securities conducted an investigation in collaboration with the Securities and Exchange Commission (SEC), which found that from December of 2012 through March of 2015 Scariot had rented an office space in Cheyenne, Wyoming, which he also listed as the company’s official place of business on Form ADV filings with the SEC. However, the investigation revealed that throughout that time Scariot not only resided in Colorado, but also conducted the large majority of his business while in the state of Colorado, including receiving and placing phone calls from his cell phone, receiving and responding to emails, facilitating client funds transfers, and conducting general WIMS business. During this time, Scariot was the only investment adviser representative employed under WIMS.
Despite attempting to register the business with the SEC, Scariot needed to register WIMS and become licensed himself with the Division of Securities, which he did not do. Because he conducted the majority of his business in Colorado, Commissioner Rome concluded that he and the business were in violation of the Colorado Securities Act.
“At the time WIMS operated, Wyoming did not regulate investment advisers. That task fell to the SEC,” stated Commissioner Rome. “Because the SEC’s rate of examination is lower than Colorado’s, this can motivate the decision to operate under the regulatory radar screen by using a Wyoming address. We cannot protect investors effectively when investment advisers fail to seek required licensure in Colorado and therefore take the failure to obtain a license when required very seriously.”
The order issued by the Commissioner states: “Respondents Wyoming Investment Management Services, LLC and Craig Scariot shall immediately cease and desist from engaging in any action in connection with offer or sale of any security in or from Colorado, and from violating any further provision of the Colorado Securities Act.”