DOB: News Bulletin 1892 - May 26, 2000

The Department of Banking News Bulletin 

 Bulletin # 1892
Week Ending May 26, 2000

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.


STATE BANK ACTIVITY
Branch Activity

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Bank Examination Division, (860) 240-8180.
Note: dates are listed in month/day/year format.

Date Bank Location Activity
5/15/00 The Milford Bank
Milford
*9 Depot Street
  Milford, CT 06460
opening
date
5/24/00 People's Bank
Bridgeport
24 Washington Avenue
North Haven, CT 06473
filed
* Limited Branch

MONEY ORDER AND TRAVELERS CHECK LICENSE ACTIVITY

Pursuant to the provisions of Section 36a-600 of the Connecticut General Statutes, on May 25, 2000, Dollar Direct Inc. received approval to engage in the business of receiving money for transmitting the same.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Amended Notice of Intent to Revoke Registration as Broker-dealer,
Amended Order Summarily Suspending Registration as Broker-dealer and
Amended Notice Of Intent to Fine Issued

On April 17, 2000, an Amended Notice of Intent to Revoke Registration as Broker-dealer; Amended Order Summarily Suspending Registration as Broker-dealer and Amended Notice of Intent to Fine were issued in the matter of First Providence Financial Group, LLC of 90 Broad Street, 10th Floor, New York, New York. The amended Notices and Order superseded the agency's December 14, 1999 Notice of Intent to Revoke Registration as Broker-dealer, Order Summarily Suspending Registration as Broker-dealer and Notice of Intent to Fine with respect to the firm. During the pendency of proceedings on the revocation issue, the respondent's broker-dealer registration was summarily suspended in Connecticut.

The amended Notices and Order alleged that during the course of an agency examination and investigation, the firm, through its Chief Executive Officer Kenneth Klein, concealed material information from department staff by deleting approximately 20 files from its computer system after receiving a request to maintain the integrity of the information. The amended Notices and Order also claimed that the firm had engaged in dishonest or unethical practices by employing "cold callers" who were not registered with the National Association of Securities Dealers. In addition, the amended Notices and Order alleged that the firm employed at least two unregistered agents in violation of Section 36b-6(b) of the Connecticut Uniform Securities Act; allegedly violated the antifraud provisions of the Act by misrepresenting or omitting material information in telephone conversations and through the use of sales scripts; refused to provide the agency with access to its books and records during the course of a department examination; and failed to enforce and maintain adequate supervisory procedures reasonably designed to achieve regulatory compliance.

A hearing on the amended Notices and the Order commenced on May 9, 2000.

Broker-dealer Fined $50,000;
Assessed Costs of $10,000 for Violating Agency Consent Order

On May 26, 2000, a Consent Order was entered with respect to Gilford Securities, Inc., a securities broker-dealer located at 850 Third Avenue, 14th Floor, New York, New York. The Consent Order resolved allegations in the agency's January 5, 2000 Notice of Intent to Suspend Registration as a Broker-dealer, Notice of Intent to Impose Conditions on Broker-dealer Activities and Notice of Intent to Fine issued against the firm. The Notices had claimed that the firm violated a July 10, 1996 department Consent Order by selling securities of C2i Solutions, Inc. to the public without distributing at least 30 percent of the issue to one or more unaffiliated selling groups. Gilford Securities, Inc. had served as sole underwriter for the initial public offering of C2i Solutions, Inc. securities as well as market maker.

The May 26, 2000 Consent Order fined the firm $50,000 and required that it reimburse the agency an additional $10,000 for investigative costs. The Consent Order also mandated that, for three years, the firm not sell to any Connecticut client any new issue for which the firm acted as sole underwriter and market maker in an initial public offering occurring after the date of the Consent Order unless 1) the firm distributed at least 30 percent of the issue to one or more unaffiliated selling groups or 2) the security or transaction was exempt from registration under the Connecticut Uniform Securities Act and the exemptive claim was supported by an opinion of counsel. The Consent Order also required that the firm file quarterly complaints for two years describing any securities-related complaints, actions or proceedings involving Connecticut residents, and that the firm pay the costs, not to exceed $3,500, of one or more examinations to be conducted by the agency within 24 months. In entering the Consent Order, the department acknowledged that the firm had agreed not to execute solicited Connecticut orders for Bulletin Board or Pink Sheet securities, and that the firm had voluntarily contributed an additional $15,000 to the agency's enforcement activities and investor education programs.

EFFECTIVE REGULATIONS

Attached to this issue of the Bulletin is a copy of amended regulations concerning assets required to be kept on deposit by foreign banks with a licensed state branch or licensed state agency. Such regulations became effective on May 26, 2000.

Dated: Wednesday, May 31, 2000

John P. Burke
Banking Commissioner


Assets Required to be Kept on Deposit by
Foreign Banks with a Licensed State Branch or Licensed State Agency

The Regulations of Connecticut State Agencies are amended by adding Subsection (d) of Section 36a-428c-4 to read as follows:

(NEW) (d) For purposes of this section, liabilities arising from securities repurchase agreements may be excluded from the calculation of adjusted liabilities, to the extent such liabilities are secured by collateral within the meaning of Section 36a-428n(i)(2)(D) of the Connecticut General Statutes unless the licensed state branch or licensed state agency has been notified otherwise by the Commissioner.