DOB: News Bulletin 2137 - February 4, 2005

The Department of Banking News Bulletin

Bulletin # 2137
Week Ending February 4, 2005

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.


BRANCH ACTIVITY
State Bank 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 Financial Institutions Division, (860) 240-8180.

Date Bank Location Activity
1/31/05 Salisbury Bank and Trust
   Company
73-89 Main Street
Sheffield, MA
approved

FIDUCIARY POWERS

On January 31, 2005, pursuant to Section 36a-70(n) of the Connecticut General Statutes, approval was granted to The Guilford Savings Bank to exercise fiduciary powers.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Broker-dealer Assessed $8,000 for Unregistered
Broker-dealer and Agent Activity

On January 31, 2005, the Commissioner entered a Consent Order with respect to Morgan Wilshire Securities, Inc., an applicant for broker-dealer registration located at 1400 Old Country Road, Suite 106, Westbury, New York. The Consent Order was based on allegations that, between November 1998 and December 2001, the firm 1) violated Section 36b-6(a) of the Connecticut Uniform Securities Act by effecting securities transactions for four Connecticut customers at a time when the firm was not registered as a broker-dealer; and 2) employed four unregistered agents in contravention of Section 36b-6(b) of the Act. The Consent Order also alleged that, on or about April 13, 2004, the NASD censured the firm and directed it to pay $175,000 in restitution based on claims that the firm charged its customers excessive markups, markdowns and commissions in violation of NASD Conduct Rules 2110, 2440 and 3010(A), and that the firm failed to implement a supervisory system for the review of markups, markdowns and commissions that was reasonably designed to achieve compliance with NASD rules. In addition, the Consent Order alleged that on or about August 14, 2000, the NASD fined the firm $8,500 based on allegations that the firm failed to timely file statistical and summary report information regarding customers complaints, failed to obtain best execution for customers in several transactions and failed to report 24 out of 134 transactions in a timely manner to the Automated Confirmation Transaction (ACT) system. According to the Consent Order, the NASD sanctions would have provided a basis for denying the firm's registration or restricting its securities activities under Section 36b-15(a) of the Act. In its defense, the firm had maintained that its unregistered Connecticut activity occurred while the firm was under previous management, and that the NASD sanctions occurred while the former president of the firm had overall responsibility of the firm.

The Consent Order directed Morgan Wilshire Securities, Inc. to cease and desist from violative conduct and to implement revised supervisory and compliance procedures providing, at a minimum, for the enhanced monitoring of state broker-dealer and agent licensing requirements. In addition, the Consent Order required that the firm pay $8,000 to the department. Of that amount, $6,000 constituted an administrative fine, $1,500 represented past due registration fees for the firm and its unregistered agents and $500 constituted reimbursement for agency investigative costs. The Consent Order also required that the firm furnish the department with quarterly reports for two years concerning any securities-related complaints, actions or proceedings involving Connecticut residents.

The firm became registered as a broker-dealer in Connecticut on January 31, 2005.

CONSUMER CREDIT DIVISION ACTIVITY
First Mortgage Lender/Broker and
Secondary Mortgage Lender/Broker Licenses Denied

On January 24, 2005, the Commissioner denied the applications for First Mortgage Lender/Broker and Secondary Mortgage Lender/Broker Licenses filed by Ameriquest Mortgage Company ("Applicant") for the following location: 3800 American Boulevard West, # 800, Bloomington, Minnesota ("Application"). The action was based upon the fact that the Applicant, in violation of Section 36a-498a of the Connecticut General Statutes, as amended by Public Act 04-69, imposed prepaid finance charges in connection with the refinancing of at least 53 first mortgage loans that the Applicant or an affiliate of the Applicant had previously made to Connecticut consumers, which prepaid finance charges, when aggregated with the prepaid finance charges imposed by the Applicant or its affiliate for such previous financings, exceeded the greater of five percent of the principal amount of the initial loan or $2,000. Moreover, on January 22, 2004, the Applicant entered into a Settlement Agreement with this department imposing sanctions, including a civil penalty, for repeated violations of Section 36a-498a of the Connecticut General Statutes, for loans that occurred prior to August 1, 2003. The Commissioner was unable to find that the financial responsibility, character, reputation, integrity and general fitness of the Applicant and of its officers, directors and principal employees was such as to warrant belief that the Applicant's business will be operated soundly and efficiently, in the public interest and consistent with the purposes of Sections 36a-485 to 36a-498a, inclusive and Sections 36a-510 to 36a-524, inclusive, of the Connecticut General Statutes.

Dated: Tuesday, February 8, 2005

John P. Burke
Commissioner