DOB: News Bulletin 1931 - February 23, 2001

The Department of Banking News Bulletin 

Bulletin # 1931
Week Ending February 23, 2001

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
2/20/01 Southington Savings Bank
Southington
67 Chamberlain Highway
Kensington, CT 06037
approved
2/20/01 Union Savings Bank
Danbury
FROM:  20 Church Hill Rd.
           Newtown, CT 06470
TO:      1A Commerce Rd.
           Newtown, CT 06470
relocation
effective
date
3/24/01 Farmington Savings Bank
Farmington
117 East Main Street
Plainville, CT 06062
opening
date

CREDIT UNION DIVISION ACTIVITY
Application to Convert

On February 16, 2001, pursuant to Section 36a-469 of the Connecticut General Statutes, Mutual Security Federal Credit Union filed an application to convert from a federal credit union to a Connecticut credit union. The proposed field of membership of the converted credit union is Persons who live, work, attend school or worship in Fairfield County and Litchfield County as well as any and all businesses, corporations, organizations, or associations located in such counties. Also to include persons within the immediate family of a member, or surviving persons within the immediate family of a deceased member, retirees, pensioners or annuitants and surviving spouses of any groups eligible for this credit union.

On February 21, 2001, pursuant to Section 36a-469 of the Connecticut General Statutes, Fairfield County Federal Credit Union filed an application to convert from a federal credit union to a Connecticut credit union. The proposed field of membership of the converted credit union is Persons who live, work, attend school, or worship in Fairfield County as well as any and all businesses, corporations, organizations or associations located in such county. Also to include persons within the immediate family of a member, or surviving persons within the immediate family of a deceased member, retirees, pensioners or annuitants and surviving spouses of any groups eligible for this credit union.

CHECK CASHING SERVICE LICENSE ACTIVITY

On February 21, 2001, pursuant to Section 36a-581 of the Connecticut General Statutes, Connecticut State Check Cashing Services, Inc. received approval to operate check cashing service general facilities at 751 Park Street, Hartford, Connecticut, and 309 Grand Avenue, New Haven, Connecticut.

MONEY ORDER AND TRAVELERS CHECK LICENSE ACTIVITY

On February 20, 2001, pursuant to Section 36a-600 of the Connecticut General Statutes, American Payment Systems, Inc. received approval to engage in the business of receiving money for transmitting the same.

FOREIGN BANK ACTIVITY

On February 21, 2001, Abbey National Treasury Services plc, a foreign bank duly organized and existing under the laws of England and Wales, filed an application pursuant to Section 36a-428a of the Connecticut General Statutes, to establish and maintain a state branch at 400 Atlantic Street, 2nd Floor, Stamford, Connecticut.

SECTION 36a-425 APPLICATION

On February 20, 2001, FMR Corp., a Delaware corporation, filed an application to establish an office of its subsidiaries, Fidelity Brokerage Services LLC, a Massachusetts limited liability company, and Strategic Advisers, Inc., d/b/a Fidelity Personal Advisory Services, a Massachusetts corporation, at 100 Pearl Street, Hartford; and filed applications to maintain Connecticut offices of such subsidiaries at the following locations: 265 Church Street, New Haven; 300 Atlantic Street, Stamford; 29 South Main Street, West Hartford; and 48 West Putnam Avenue, Greenwich, as a result of the merger of FMR Corp., a Massachusetts corporation, with and into FMR Corp., a Delaware corporation.

ACQUISITION

On February 23, 2001, pursuant to Section 36a-185 of the Connecticut General Statutes, the Banking Commissioner issued a notice of intent not to disapprove the acquisition by Urban Financial Group, Inc., of 100 percent of the voting securities of The Community's Bank, and by Peter F. Hurst, Jr. and Louis A. DeNaples of more than 25 percent of the voting securities or securities convertible into voting securities of Urban Financial Group, Inc., and indirectly, The Community's Bank.

ORDER GOVERNING INSURANCE COMPANY
DEMUTUALIZATION TRANSACTIONS

On February 20, 2001, the Banking Commissioner issued an Order Governing Insurance Company Demutualization Transactions. The Order (copy attached) relieved insurers and their affiliates from having to comply with certain securities registration and licensing requirements under the Connecticut Uniform Securities Act in conjunction with their conversion from mutual to stock form of ownership.

Dated: Tuesday, February 27, 2001

John P. Burke
Banking Commissioner


ORDER GOVERNING INSURANCE COMPANY DEMUTUALIZATION TRANSACTIONS
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WHEREAS the Commissioner of Banking (the "Commissioner") is charged with administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act, as amended by P.A. 00-61, (the "Act") and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies (the "Regulations") promulgated under the Act;

WHEREAS Section 36b-31(a) of the Act provides that "[t]he commissioner may from time to time make ... such ... orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive, including ... orders governing registration statements, applications, and reports, and defining any terms, whether or not used in said sections, insofar as the definitions are not inconsistent with the provisions of said sections. For the purpose of ... orders, the commissioner may classify securities, persons and matters within his jurisdiction, and prescribe different requirements for different classes.";

WHEREAS Section 36b-31(b) of the Act adds that "[n]o ... order may be made ... unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive. In prescribing ... orders the commissioner may cooperate with the securities administrators of the other states and the Securities and Exchange Commission with a view to effectuating the policy of said sections to achieve maximum uniformity in the form and content of registration statements, applications and reports wherever practicable";

WHEREAS Section 36b-3(15) of the Act provides, in part, that:

As used in sections 36b-2 to 36b-33, inclusive, unless the context otherwise requires ... (15)(A) 'Sale' or 'sell' includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value. (B) 'Offer' or 'offer to sell' includes every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value ... (G) The terms defined in this subdivision do not include ... (iii) any act incident to a class vote by security holders on a merger, exchange of securities for securities, consolidation, reclassification of securities, or sale of assets in consideration of the issuance of securities or securities and cash of another person other than an individual; or (iv) any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved by any state or federal court.

WHEREAS Section 36b-16 of the Act provides that: "No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-33, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21";

WHEREAS Section 36b-6 of the Act states, in part, that: "(a) No person shall transact business in this state as a broker-dealer unless he is registered under sections 36b-2 to 36b-33, inclusive. No individual shall transact business as an agent in this state unless he is (1) registered as an agent of the broker-dealer or issuer whom he represents in transacting such business or (2) an associated person who represents a broker-dealer in effecting transactions described in subdivisions (2) and (3) of section 15(h) of the Securities Exchange Act of 1934 ... (b) No issuer shall employ an agent unless such agent is registered under sections 36b-2 to 36b-33, inclusive ...."

WHEREAS demutualization is a reorganizational process by which a mutual insurance company or mutual insurance holding company converts to a stock form of ownership, and may include the merger of one or more affiliated entities;

WHEREAS a demutualization is typically characterized by 1) eligible policyholders (as defined in the Plan of Conversion) exchanging their membership interests in the mutual insurance company or mutual insurance holding company for stock of a newly formed entity; 2) approval of the reorganization by a state insurance regulator; and 3) a required vote by affected policyholders;

WHEREAS were it not for the fact that membership interests are not technically "securities", the offer and sale of stock to eligible policyholders would be excluded from the definitions of "offer" and "sale" as an act incident to a class vote by security holders on an exchange of securities for securities under Section 36b-3(15)(G)(iii) of the Act;

WHEREAS such exchange would also otherwise be excluded from the definitions of "offer" and "sale" under Section 36b-3(15)(G)(iv) of the Act had the exchange been accompanied by judicial, rather than state agency, approval;

WHEREAS the Commissioner acknowledges that other state securities regulators as well as the federal Securities and Exchange Commission have taken a no enforcement action position vis-a-vis registration of the securities offered in conjunction with a demutualization and the registration as broker-dealers and agents of individuals involved in implementing the demutualization plan;

WHEREAS the Commissioner finds that the entry of this Order, which recognizes the high level of scrutiny given to demutualizations by insurance regulators, is necessary or appropriate in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;

NOW THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:

1. The offer or sale of stock or other securities in conjunction with the demutualization of an insurance company or insurance holding company falls within Sections 36b-3(15)(G)(iii) and 36b-3(15)(G)(iv) of the Act and shall not require registration of the securities involved pursuant to Section 36b-16 of the Act, provided the terms and conditions of the demutualization are approved by the state insurance regulator of the state of domicile of the converting mutual and a vote of affected policyholders;
2. Individuals who disseminate information to policyholders, including, without limitation, representatives of the insurance company or insurance holding company and call center personnel, shall not be required to register as broker-dealers or agents pursuant to Sections 36b-6(a) or 36b-6(b) of the Act solely by virtue of their participation in the demutualization transactions as long as they a) do not receive any compensation transactionally related to the demutualization other than a straight salary; and b) in communicating with policyholders, refrain from making any investment recommendations or value judgments concerning the merits of the demutualization;
3. Any initial public offering of securities following the demutualization shall continue to be subject to 1) the broker-dealer and agent registration requirements contained in Sections 36b-6(a) and 36b-6(b) of the Act; and 2) the registration requirement in Section 36b-16 of the Act unless the securities involved are covered securities under Section 18(b) of the Securities Act of 1933 or the offering is otherwise exempt under Section 36b-21 of the Act; and
4. This Order shall remain in effect until vacated, modified or superseded by the Commissioner or other legal authority.
So ordered at Hartford, Connecticut
this 20th day of February, 2001
John P. Burke
Banking Commissioner