DOB: News Bulletin 2231 - November 24, 2006

The Department of Banking News Bulletin 

Bulletin # 2231
Week Ending November 24, 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 Howard F. Pitkin, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail. 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
11/14/06
NewAlliance Bank
New Haven
350 Bridgeport Avenue
Shelton, CT  06484
approved
11/20/06
Dime Bank
Norwich
351 North Frontage Road
New London, CT  06320
opening
date

NOTICE OF SPECIAL MEETING
 
Pursuant to Sections 1-225 and 36a-70(i) of the 2006 Supplement to the General Statutes, on December 12, 2006, a special meeting will be held for the purpose of considering the application of the organizer of Higher One Bank, New Haven, Connecticut, for a six-month extension of the Temporary Certificate of Authority.  The meeting is scheduled to be held at 10:00 a.m., at the Department of Banking, Room 50, 260 Constitution Plaza, Hartford, Connecticut.
 
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Order to Cease and Desist, Notice of Intent to Fine
and Notice of Right to Hearing Issued
 
On November 21, 2006, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Crystal Sky Enterprises, LLC of 238 Raritan Street, Keyport, New Jersey and its managing member, Connecticut-based Christina E. Foster.  The action alleged that the respondents sold unregistered securities consisting of promissory notes in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that Christina E. Foster was not registered as an agent of issuer under the Act.  The note investment would finance the purchase of real property and the related redevelopment of a New Jersey former middle school building.  The action also alleged that the respondents violated the antifraud provision in Section 36b-4 of the Act by failing to disclose in the issuerís prospectus risk factors, financial information on the issuer and the work histories of the issuerís managing members.  The prospectus represented that investors would receive a guaranteed 20 percent return if the real estate project, purportedly financed by commercial lenders, did not move forward to loan settlement and a guaranteed 100 percent return if loan settlement occurred.  The respondents were afforded an opportunity to request a hearing on the Order to Cease and Desist.  A hearing on the Notice of Intent to Fine has been scheduled for January 18, 2007.
 
Consent Order
 
On November 22, 2006, the Commissioner entered a Consent Order with respect to Merrill Lynch, Pierce, Fenner & Smith Incorporated, a broker-dealer registered under the Connecticut Uniform Securities Act.  The Consent Order alleged that the firm failed to maintain certain books and records relating to trade execution in accounts maintained at mutual fund companies for the purpose of facilitating market timing by a hedge fund client of the firm.  The trades were handled by agents of the firmís Fort Lee, New Jersey branch office.  The Consent Order also claimed that the firm failed to exercise adequate supervisory controls over the Fort Lee, New Jersey agents who circumvented the firmís policy against market timing mutual funds.  The firm ultimately terminated the agentsí employment and instituted internal remedial measures.
 
The Consent Order fined the firm $1 million.  The Consent Order also required that the firm contribute an additional $1.5 million over a three year period to the Merrill Lynch & Co. Foundation Inc., and earmark that amount to promote financial literacy in public schools in all member jurisdictions of the North American Securities Administrators Association.  In addition, the Consent Order directed the firm to 1) pay the State of Connecticut Department of Education $500,000 over three years to promote financial literacy initiatives in Connecticut public schools as determined by the Commissioner of Education; and 2) pay $500,000 over three years to the National White Collar Crime Center to train Connecticut regulatory and law enforcement personnel in investigating and prosecuting violations of financial, banking, corporate and securities laws.
 
Order to Cease and Desist, Notice of Intent to Fine
and Notice of Right to Hearing Issued
 
On November 22, 2006, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Oxford Micro Devices, Inc. of Lantern Ridge Office Park, 731 Main Street, Building 2, Suite B3, Monroe, Connecticut, and its president Steven G. Morton.  The action alleged that the respondents violated Section 36b-16 of the Connecticut Uniform Securities Act by selling over $1.2 in unregistered stock and warrants to investors in Connecticut and other states.  The action also alleged that the respondents violated the antifraud provision in Section 36b-4 of the Act by failing to disclose the market risks of investing in the Oxford Micro Devices, Inc. securities; making income forecasts without providing a reasonable basis for the projections; and falsely representing to investors that the issuer had signed a deal with a company that made security systems for casinos.  The respondents were afforded an opportunity to request a hearing on the Order to Cease and Desist.  A hearing on the Notice of Intent to Fine has been scheduled for January 23, 2007.
 
 
       Dated:  Tuesday, November 28, 2006
 
       Howard F. Pitkin
       Banking Commissioner