The Department of Banking News Bulletin
Bulletin # 2250
Week Ending April 6, 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.
On Wednesday, April 18, the Connecticut Department of Banking and the Connecticut Credit Union Association are hosting a UBIT Conference entitled Understanding Unrelated Business Income Tax (UBIT), Calculating UBIT and Filing Requirements
. The event will take place at Capital Community College in Hartford, Connecticut from 9:00 a.m. to 3:30 p.m. (Lunch provided.). The registration fee is $75, and the deadline to register
is Friday, April 13, 2007.
Credit Union CEOs, CFOs and other accounting staff, State Regulators and Credit Union Associations are encouraged to attend this informative event. Should you have any questions, please feel free to contact Mary Ellen O’Neill at firstname.lastname@example.org
or telephone 860-240-8185.
SECURITIES AND BUSINESS INVESTMENTS DIVISION
Broker-dealer Fined $227,240 Following
Conflict of Interest Claims Involving Research Analysts
On April 4, 2007, the Commissioner entered a Consent Order with respect to Wachovia Capital Markets, LLC, a broker-dealer registered under the Connecticut Uniform Securities Act and having its principal office at 301 South College Street, TW-8, Mail Code NC0602, Charlotte, North Carolina. The Consent Order followed a coordinated investigation into the firm’s research and investment banking activities between January 1, 1999 and December 31, 2002 conducted by a multi-state task force. According to the Consent Order, the firm failed to implement controls to manage conflicts of interest involving its research analysts and investment banking personnel and, in so doing, violated Section 36b-31-6f of the Regulations under the Act. The Consent Order also concluded that the firm violated Section 36b-14(a)(2) of the Act and Section 36b-31-14a(a) of the Regulations thereunder by failing to preserve the records required by law.
The Consent Order directed the firm to cease and desist from violating Section 36b-31-6f of the Regulations. In addition, the Consent Order fined the firm $227,240, and required that the firm remit an additional $31,488 to the department to promote the agency’s investor education efforts.
Order to Cease and Desist, Notice of Intent to Fine Withdrawn
On April 4, 2007, the Commissioner withdrew a November 21, 2006 Order to Cease and Desist and Notice of Intent to Fine against Christina E. Foster, managing member of Crystal Sky Enterprises, LLC of 238 Raritan Street, Keyport, New Jersey. The withdrawal was prompted by respondent Foster’s demise during the pendency of the proceeding. The Order to Cease and Desist and Notice of Intent to Fine had alleged that respondents Crystal Sky Enterprises, LLC and Foster sold unregistered securities consisting of promissory notes in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that respondent 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 had also alleged that the respondents violated the antifraud provisions in Section 36b-4 of the Act by failing to disclose in the issuer’s prospectus risk factors, financial information on the issuer and the work histories of the issuer’s 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. Since respondent Crystal Sky Enterprises, LLC did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent as to it on January 18, 2007. On March 21, 2007, the Commissioner fined respondent Crystal Sky Enterprises, LLC $300,000 after finding that the entity had violated Sections 36b-16, 36b-6(b) and 36b-4(a) of the Act. Crystal Sky Enterprises, LLC did not appear or contest the imposition of the fine.