The Department of Banking News Bulletin
Bulletin # 2260
Week Ending June 15, 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.
*FROM: 710 Main Street
Southington, CT 06489
TO: 681 Main street
Southington, CT 06489
*681 Main Street
Southington, CT 06489
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Stipulations and Agreements
On June 6, 2007, the Commissioner entered into a Stipulation and Agreement with York Stockbrokers, Inc., an applicant for broker-dealer registration located at 610 Fifth Avenue, 6th Floor, New York, New York. The Stipulation and Agreement claimed that from at least January 2005 through January 2007, the firm had 1) transacted business as a broker-dealer absent registration in contravention of Section 36b-6(a) of the Connecticut Uniform Securities Act; and 2) at various times employed at least three unregistered broker-dealer agents in contravention of Section 36b-6(b) of the Act. The Stipulation and Agreement acknowledged that the firm had no reported disciplinary history and that it had provided the department with documentation showing that it had relied on the advice of outside compliance consultants in not pursuing Connecticut broker-dealer registration during the period in question. Pursuant to the Stipulation and Agreement, the firm agreed to 1) refrain from violative conduct; 2) implement revised supervisory and compliance procedures providing for enhanced monitoring of state broker-dealer and agent licensing requirements; 3) file quarterly reports for two years describing any securities-related complaints, actions or proceedings involving Connecticut residents; and 4) pay $4,500 to the department. Of that amount, $2,500 constituted an administrative fine, $600 represented past due broker-dealer and agent registration fees and $1,400 would be applied to defray the Division’s costs of investigation. York Stockbrokers, Inc. became registered as a broker-dealer in Connecticut on June 6, 2007.
On June 12, 2007, the Commissioner entered into a Stipulation and Agreement with GDC Securities, LLC, a Connecticut-registered broker-dealer located at 929 Kings Highway East, Fairfield, Connecticut. The Stipulation and Agreement alleged that 1) from August 2004 to approximately October 2005, the firm employed Vincent W. Spera as an agent when that individual was not registered under Section 36b-6(a) of the Connecticut Uniform Securities Act; 2) from approximately July 2004 to February 2005, the firm employed Robert Vitale (CRD number 2332412) as an agent at a time when that individual was not registered under Section 36b-6(a) of the Act; and 3) from approximately July 2004 to January 17, 2007, the firm transacted business from an unregistered branch office located at 420 Center Street, Wallingford, Connecticut in contravention of Section 36b-6(d) of the Act. Robert Vitale became registered as an agent of the firm on February 24, 2005, and the Wallingford location became registered as a branch office on January 17, 2007. The Stipulation and Agreement also recited that the firm had represented to the Division that Vincent W. Spera would not transact business as an agent until he was registered under Section 36b-6(a) of the Act.
Pursuant to the Stipulation and Agreement, the firm agreed to pay $1,200 to the department. Of that amount, $1,000 constituted an administrative fine and $200 constituted reimbursement for past due agent registration fees. The firm also agreed to comply with all statutory requirements governing branch office registration and the registration of affected personnel as broker-dealer agents, and to review, revise and implement such supervisory and compliance procedures as would be necessary to ensure such compliance.
Broker-dealer Registration Conditioned
On June 12, 2007, the Commissioner entered a Consent Order Conditioning Registration as a Broker-dealer with respect to Charles Morgan Securities, Inc. of 120 Wall Street, 16th Floor, New York, New York. The action was based on 2004 and 2001 sanctions levied by the National Association of Securities Dealers, Inc. against Paul Eric Taboada, the firm’s president, chief executive officer and control person; and Barry Morton Ferrari (CRD number 848024), chief compliance person and control person of the firm. The Consent Order Conditioning Registration as a Broker-dealer required that the firm 1) file quarterly reports with the department for three years describing any securities-related complaints, actions or proceedings involving Connecticut entities and individuals; 2) reimburse the agency up to $3,500 for the costs of one or more future examinations of the firm’s offices to be conducted within 36 months; 3) for three years, restrict its Connecticut business to transactions in exchange-listed securities, federally regulated investment companies, governmental securities, exchange-listed options and, where the customer qualified as an “accredited investor”, private offerings; 4) designate a full-time employee, preapproved by the Division Director, to act as Connecticut Compliance Supervisor; 5) maintain such electronic surveillance systems as necessary to maintain proper supervisory controls over the firm’s trading activities; 6) remit $2,500 to the department to defray the costs associated with the department’s investigation of the firm; and 7) refrain from engaging in violative conduct. Charles Morgan Securities, Inc. became registered as a broker-dealer in Connecticut on June 12, 2007.
On June 13, 2007, the Commissioner entered a Consent Order with respect to The Private Mortgage Fund, LLC, a Connecticut-licensed first mortgage lender located at 765 Straits Turnpike, Crossroads West II, Suite 2002, Middlebury, Connecticut, and its managing member, Joseph A. Antonios. The Consent Order alleged that from approximately 2000 to 2006, The Private Mortgage Fund, LLC and Joseph A. Antonios sold over $5.5 million in unregistered securities consisting of promissory notes in violation of Section 36b-16 of the Connecticut Uniform Securities Act. The proceeds of the note sales would be used to fund the making of mortgage loans by The Private Mortgage Fund, LLC. The Consent Order directed The Private Mortgage Fund, LLC to 1) extend a rescission offer to the affected note investors; 2) restrict future offers or sales of securities to “accredited investors” as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933; and 3) remit $20,000 to the department, $15,000 of which constituted an administrative fine and $5,000 of which would defray costs incurred by the department in investigating the matter. The Consent Order also directed The Private Mortgage Fund, LLC and Joseph A. Antonios to cease and desist from regulatory violations.
Dated: Tuesday, June 19, 2007
Howard F. Pitkin