The state has reached a settlement with Royal Alliance Associates, a New York broker-dealer whose former Stamford branch manager was convicted of defrauding senior citizens of about $4.2 million, the state banking commissioner said this week.
The settlement concludes an investigation that first focused on former Stamford branch manager Kevin Kelley, who worked there from 1989 through April 2004.
He has been in prison since June 7, when a federal jury in New York convicted him of four counts of securities fraud and three counts of wire fraud.
He was sentenced in November to 14 years in prison, though his attorney said at the time that he plans to appeal. He was also ordered to forfeit $15 million and pay another $4.2 million in restitution.
The settlement with the Department of Banking that was announced Tuesday permanently bars Kelly from acting as an investment adviser in Connecticut.
The order also assesses Royal Alliance a $750,000 administrative penalty, $500,000 of which will go to the state and $250,000 of which will be forgiven if the company proves it was used to hire additional auditors or compliance associates.
Kelley’s support staff maintained an account into which Kelley deposited client funds for his own use, according to the banking department. The settlement also indicates that the company failed to discover Kelley’s fraud through audits and failed to adequately enforce and maintain a system for supervising its agents’ activities.
A call seeking comment was left with Royal Alliance.
Connecticut Banking Commissioner Howard Pitkin said in a statement that the company has worked to return more than $9.2 million in misappropriated funds.
“We believe that the company has tried to make amends for a terrible situation in which one corrupt individual attempted to defraud his employer and many of their clients,” Pitkin said.