The Department of Banking News Bulletin
Bulletin # 2245
Week Ending March 2, 2007
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.
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.
660 Enfield Street
Enfield, CT 06082
CONSUMER CREDIT DIVISION ACTIVITY
On January 10, 2007, the Commissioner entered into a Settlement Agreement with Platinum Mortgage, LLC (“Platinum Mortgage”). The Settlement Agreement was based on an examination by the Consumer Credit Division. As a result of such examination, the Commissioner alleged that Platinum Mortgage employed or retained at least one originator without registering such originator, in violation of Section 36a-486(b) and Section 36a-511(b) of the Connecticut General Statutes. Pursuant to the Settlement Agreement, Platinum Mortgage agreed to remit to the Department of Banking $1,000 as a civil penalty.
On February 5, 2007, the Commissioner entered into a Settlement Agreement with Progressive Mortgage, LLC (“Progressive Mortgage”). The Settlement Agreement was based on an examination by the Consumer Credit Division. As a result of such examination, the Commissioner alleged that Progressive Mortgage employed or retained at least twelve originators without registering them, in violation of Section 36a-486(b) and Section 36a-511(b) of the Connecticut General Statutes. Pursuant to the Settlement Agreement, Progressive Mortgage agreed to remit to the Department of Banking $12,000 as a civil penalty.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Broker-Dealer Assessed $750,000 for Supervisory Deficiencies
On February 26, 2007, the Commissioner entered a Consent Order with respect to Royal Alliance Associates, Inc., a broker-dealer registered under the Connecticut Uniform Securities Act and having its principal office at 733 Third Avenue, New York, New York. The Consent Order alleged that the firm failed to adequately supervise the activities of Kevin O. Kelley, an ex-agent of the firm who, among other things, purportedly misappropriated client funds and prepared fraudulent statements that improperly inflated the value of client holdings. In late 2006, Kelley had been sentenced in Manhattan federal court to 170 months in prison for defrauding senior citizen clients of approximately $4.2 million. Kelley had been permanently barred by the department from conducting securities business in Connecticut on August 23, 2005.
The Consent Order acknowledged that Royal Alliance Associates, Inc. had compensated those individuals harmed by Kelley’s wrongdoing at the firm’s Stamford offices, and that such restitution exceeded $9.2 million to date, including interest. The Consent Order also recited that the firm had offered to make a $250,000 contribution to the agency’s Securities Investor Education Fund to finance Connecticut investor education and regulatory efforts.
The Consent Order assessed a $750,000 administrative penalty against the firm, adding that $250,000 of this amount would be forgiven if the firm provided satisfactory documentary evidence that it had earmarked $125,000 per year for the next two years to hire additional specialized personnel to improve its supervisory and compliance systems.
Dated: Tuesday, March 6, 2007
Howard F. Pitkin