The Department of Banking News Bulletin
Bulletin # 2185
Week Ending January 6, 2006
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 firstname.lastname@example.org. Written comments will be considered only if they are received within ten days from the date of this bulletin.
ACQUISITION AND MERGER
On January 2, 2006, the merger of Cornerstone Bank with and into NewAlliance Bank and the acquisition by New Alliance Bancshares, Inc. of Cornerstone Bancorp, Inc. and indirectly, Cornerstone Bank, were consummated.
NEW BANK APPLICATION WITHDRAWN
On January 4, 2006, Southern Connecticut Bancorp, Inc., New Haven Connecticut, and parent company of Bank of Southern Connecticut, New Haven Connecticut, formally withdrew its application with the State of Connecticut Department of Banking to organize The Bank of Southeastern Connecticut, with proposed headquarters in New London Connecticut. This withdrawal is in connection with the application for a branch received December 22, 2005, to now open the New London location as a branch of Bank of Southern Connecticut.
CREDIT UNION ACTIVITY
Field of Membership
On January 5, 2006, pursuant to Section 36a-462b(d) of the Connecticut General Statutes, Corporate America Family Credit Union, Inc., Elgin, Illinois, received approval to expand its field of membership in the State of Connecticut to include employees of Connecticut Spring and Stamping, Farmington, and Mulberry Gardens, Southington.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Broker-dealer Fined $100,000
On December 14, 2005, the Commissioner entered an Order Imposing Fine against Geek Securities, Inc., a broker-dealer having its principal office at 999 Yamato Road, Suite 100, Boca Raton, Florida. The firm had also been the subject of an August 4, 2005 Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer and Notice of Intent to Fine. The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2005.
In fining the firm $100,000, the Commissioner found that Geek Securities, Inc. violated Section 36b-31-14e(a) of the Regulations under the Connecticut Uniform Securities Act by failing to disclose the criminal conviction of the firm’s president and control person, Kautilya Sharma, on the firm’s amendment to its Uniform Application for Broker-dealer Registration (Form BD). The conviction, obtained in the U.S. District Court for the Southern District of Florida, followed federal felony charges that Sharma conspired to sell unregistered securities and conspired to commit securities fraud (United States v. Kautilya Sharma, Case No. 03-80146-CR-Marra). Geek Securities, Inc. did not appear or contest the imposition of the fine.
Florida Man Fined $100,000
On December 14, 2005, the Commissioner entered an Order Imposing Fine against Kautilya (“Tony”) Sharma of 7363 Sedona Way, Delray Beach, Florida. The respondent was the president and a control person of Geek Securities, Inc., a broker-dealer having its principal office at 999 Yamato Road, Suite 100, Boca Raton, Florida. The respondent had also been the subject of an August 4, 2005 Order to Cease and Desist, Notice of Intent to Revoke Registration as Agent and Notice of Intent to Fine. The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2005.
In fining the respondent $100,000, the Commissioner found that Kautilya Sharma violated Section 36b-31-14e(a) of the Regulations under the Connecticut Uniform Securities Act by failing to disclose his criminal conviction on his amended Uniform Application for Securities Industry Registration or Transfer (Form U-4). The conviction, obtained in the U.S. District Court for the Southern District of Florida, followed federal felony charges that respondent Sharma conspired to sell unregistered securities and conspired to commit securities fraud (United States v. Kautilya Sharma, Case No. 03-80146-CR-Marra). Kautilya Sharma did not appear or contest the imposition of the fine.
Unregistered “Finder” Activity Prompts
$102,400 Rescission Offer, $10,500 in Penalties
On January 4, 2006, the Commissioner entered into a Stipulation and Agreement with CHF Technologies, Inc., an issuer of securities located at 4135 Blackhawk Plaza Circle, Suite 280, Danville, California. Other parties to the Stipulation and Agreement were: 1) Gerald Grayson, a director of the issuer and a principal of Grayson & Associates, Inc. of One Tabor Center, Suite 980, 1200 Seventeenth Street, Denver, Colorado; and 2) Douglas Miscoll, a principal of Ravello Partners, LLC of 1197 Broadway, New York, New York. The Stipulation and Agreement alleged that Gerald Grayson and Douglas Miscoll each received $4,096 in finder’s fees plus warrants for introducing certain Connecticut investors to the issuer; and that no agent of issuer or broker-dealer registration was in effect for Gerald Grayson, Douglas Miscoll or their related entities.
Upon learning of the agency’s regulatory concerns, the issuer extended a $102,400 rescission offer to the affected Connecticut investors, each of whom represented himself as “accredited under Rule 501(a) of federal Regulation D.
Without admitting or denying the department’s allegations, 1) Gerald Grayson and Grayson & Associates, Inc. agreed to refrain from transacting business as an agent or a broker-dealer in Connecticut absent registration or an applicable exclusion and to pay a $4,000 fine reflecting the disgorgement of finder’s fees earned; 2) Douglas Miscoll and Ravello Partners agreed to refrain from transacting business as an agent or a broker-dealer in Connecticut absent registration or an applicable exclusion and to pay a $4,000 fine reflecting the disgorgement of finder’s fees earned; and 3) CHF Technologies, Inc. agreed to refrain from employing an unregistered agent of issuer or engaging an unregistered broker-dealer in connection with future securities sales in Connecticut and to pay a $2,500 fine.
Wilton Man Assessed $2,500 for Transacting Business
as an Unregistered Agent of Issuer
On January 4, 2006, the Commissioner entered a Consent Order with respect to Dennis Michael Quirk d/b/a United Resources Group of Wilton, Connecticut. The Consent Order alleged that, from December 2002 through January 2004, Dennis Quirk transacted business as an unregistered agent of issuer in violation of Section 36b-6(a) of the Connecticut Uniform Securities Act in conjunction with securities sales of Ambient Corporation, a Newton, Massachusetts-based issuer. The Consent Order directed Dennis Quirk to 1) pay $2,500 to the department, representing a monetary fine and reimbursement for agency investigative costs; 2) for thirty months, consult with securities legal counsel on a quarterly basis concerning any business activities conducted or contemplated by Dennis Quirk in the financial services industry, and file quarterly affidavits with the Commissioner verifying that Quirk is complying with the advice of counsel; and 3) file an affidavit verifying that, from February 2004 until the entry of the Consent Order, Dennis Quirk had not effected securities transactions with any Connecticut residents in violation of the Connecticut Uniform Securities Act or its regulations. In addition, the Consent Order required that Dennis Quirk notify the department concerning any change in the identity of his legal counsel and the reasons behind the change.
Notice of Intent to Revoke Registration as Broker-dealer
and Notice of Intent to Fine Issued
On January 6, 2006, the Commissioner issued a Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing with respect to Independent Securities Investors Corporation, a Connecticut-registered broker-dealer located at 795 Main Street, Chipley, Florida. The action alleged that the respondent engaged in dishonest or unethical practices in the securities business by 1) employing as “cold callers” at least two individuals who were not registered with the NASD; 2) paying commissions to Charter One Capital Holding, Inc., an entity that was not registered with the NASD; 3) exceeding the number of associated persons permitted under the firm’s Membership Agreement with the NASD; and 4) engaging in unauthorized trading. The action also claimed that the respondent wilfully violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered, non-exempt securities of Advanced Optics Electronics, Bio-Solutions Manufacturing, Deltagen Inc., GoAmerica Inc., Hop-On.com, Loudeye Technologies, Paradigm Med Inds, Peregrine Pharmaceuticals Inc., Predictive Systems, Inc., Robotic Vision Systems Inc., Sagent Tech Inc., Skyway Communications, Stake Technology, Tellium Inc., Valicert Inc. and Vodavi Technology.
In addition, the action alleged that the respondent employed at least two unregistered agents in violation of Section 36b-6(b) of the Act; withheld material information from the Commissioner; failed to maintain required books and records; and failed to enforce and maintain adequate supervisory procedures.
The respondent was afforded an opportunity to request a hearing on the Notice of Intent to Revoke Registration as Broker-dealer. A hearing on the Notice of Intent to Fine has been scheduled for February 23, 2006.
Dated: Tuesday, January 10, 2006
John P. Burke