Essex Financial Services, Inc.

Allegations: ON NOVEMBER 23, 2015, THE BANKING COMMISSIONER ("COMMISSIONER") ENTERED A CONSENT ORDER (NO. CO-15-8158-S) WITH RESPECT TO ESSEX FINANCIAL SERVICES, INC. THE CONSENT ORDER ALLEGED THAT THE FIRM 1) VIOLATED SECTION 36B-6(C)(3) OF THE CONNECTICUT UNIFORM SECURITIES ACT BY ENGAGING AN ATTORNEY TO WHOM REFERRAL FEES WERE PAID AS AN UNREGISTERED INVESTMENT ADVISER AGENT; 2) VIOLATED SECTION 36B-31-14A(A) OF THE REGULATIONS UNDER THE ACT BY FAILING TO KEEP SEC REQUIRED RECORDS, NOTABLY LEDGERS AND SUPPORTING DOCUMENTS, TRUE AND ACCURATE; AND 3) CONTRAVENED SECTION 36B-31-6F(B) OF THE REGULATIONS UNDER THE ACT BY FAILING TO ESTABLISH, ENFORCE AND MAINTAIN A SYSTEM FOR SUPERVISING THE ACTIVITIES OF ITS AGENTS, INVESTMENT ADVISER AGENTS AND CONNECTICUT OFFICE OPERATIONS THAT WAS REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS. Status: Final Sanction Detail: FINE OF $25,000.00 WAS FULLY PAID BY THE FIRM ON 11/23/2015. NO PORTION OF THE PENALTY WAS WAIVED. Summary: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS. IN THE CONSENT ORDER, THE COMMISSIONER ACKNOWLEDGED THAT THE FIRM SELF-REPORTED THE ALLEGED VIOLATIONS TO THE DEPARTMENT OF BANKING AND COOPERATED WITH THE CONNECTICUT SECURITIES DIVISION THROUGHOUT ITS EXAMINATION AND INVESTIGATION OF THE FIRM. THE CONSENT ORDER AND RELATED BULLETIN RECITED THAT THE FIRM'S BOARD OF DIRECTORS, ON ITS OWN INITIATIVE, INSTITUTED A SERIES OF REMEDIAL MEASURES IN RESPONSE TO THE EVENTS RESULTING IN THE ALLEGED VIOLATION, INCLUDING, BUT NOT LIMITED TO, REMOVING ITS FORMER PRESIDENT AND CEO FROM THOSE POSITIONS AND RESTRUCTURING THE REPORTING STRUCTURE TO ADDRESS POTENTIAL COMPLIANCE PROBLEMS. ON NOVEMBER 23, 2015, THE FIRM TERMINATED THE EMPLOYMENT OF ITS FORMER PRESIDENT.

Allegations: THE SECURITIES AND EXCHANGE COMMISSION ALLEGED THAT THE FIRM VIOLATED THE CASH SOLICITATION PORTIONS OF THE INVESTMENT ADVISERS ACT WHICH PROHIBIT THE PAYMENT OF REFERRAL FEES TO A SOLICITOR UNLESS DISCLOSURE AND OTHER REQUIREMENTS ARE MET. Status: Final Sanction Detail: DISGORGEMENT OF $170,000 AND INTEREST OF $13181.31 PAID ON JANUARY 19, 2017. Summary: THE ALLEGED VIOLATIONS OCCURRED FROM EARLY 2011 TO AT LEAST APRIL 2013, WHEN THE FIRM'S FORMER PRESIDENT AND CEO, ALONG WITH A CONNECTICUT ATTORNEY, FRAUDULENTLY SCHEMED TO CIRCUMVENT THE RULE REGARDING PAYMENTS FOR CLIENT SOLICITATIONS. THE FIRM SELF-REPORTED THE ALLEGED VIOLATIONS TO THE COMMISSION AND ON NOVEMBER 23, 2015, THE FIRM TERMINATED THE EMPLOYMENT OF ITS FORMER PRESIDENT AND CEO. WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER") WHICH THE COMMISSION DETERMINED TO ACCEPT. IN THE OFFER, THE FIRM AGREED TO PROVIDE DISGORGEMENT OF $170,000 (PLUS INTEREST), WHICH REPRESENTED REVENUE THE FIRM RECEIVED FROM THE IMPROPER REFERRAL FEE ARRANGEMENT. IN DETERMINING TO ACCEPT THE OFFER, THE COMMISSION CONSIDERED REMEDIAL ACTS PROMPTLY UNDERTAKEN BY THE FIRM AND COOPERATION AFFORDED THE COMMISSION STAFF.

Allegations: THE SECURITIES AND EXCHANGE COMMISSION (COMMISSION) FOUND THAT DURING THE PERIOD JANUARY 1, 2014 TO MAY 22, 2018 (THE "RELEVANT PERIOD"), ESSEX FINANCIAL SERVICES, INC. (EFS) PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. EFS FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THE CONFLICTS OF INTERESTS RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. AS A RESULT OF THIS CONDUCT, IT WAS DETERMINED THAT EFS WILLFULLY VIOLATED SECTION 206(2) OF THE ADVISERS ACT. Status: Final Sanction Detail: EFS SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) OF THE ADVISERS ACT. RESPONDENT IS CENSURED, SHALL PAY THE PAYABLE AMOUNT OF DISGORGMENT AND PREJUDGMENT INTEREST OF $645,000 AND SHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. Summary: EFS, IN ITS CAPACITY AS A REGISTERED INVESTMENT ADVISER, VOLUNTARILY PARTICIPATED IN THE COMMISSION'S SHARE CLASS SELECTION DISCLOSURE ("SCSD") INITIATIVE. WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, EFS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION ACCEPTED. IN DETERMINING TO ACCEPT EFS'S OFFER, THE COMMISSION CONSIDERED THAT EFS SELF-REPORTED ITS CONDUCT TO THE COMMISSION PURSUANT TO THE SCSD INITIATIVE. IN ADDITION THE COMMISSION ACKNOWLEDGED THAT EFS HAS CERTIFIED TO THE COMMISSION STAFF THAT IT HAS COMPLETED CERTAIN UNDERTAKINGS SPECIFIED IN THE OFFER.