The Department of Banking News Bulletin
Bulletin # 2391
Week Ending December 18, 2009
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 certain applications 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.
Essex Savings Bank
99 Durham Road
Madison, CT 06443
Limited Branch Application
On December 3, 2009, UPS Capital Business Credit notified the Commissioner that its proposed limited branch at Carrera 9 #74-08 (705), Bogota, D.C., Colombia, South America, approved on November 25, 2009, pursuant to Section 36a-145(j) of the Connecticut General Statutes, will be established at a different location. On December 15, 2009, the Commissioner rescinded the November 25, 2009 approval and, pursuant to Section 36a-145(j), granted UPS Capital Business Credit approval to establish a limited branch to be located at Carrera 7, No. 74-56, Oficina 508, Bogota, D.C., Colombia, South America.
On November 25, 2009, the acquisition statement filed by Alcar LLC for the acquisition of approximately 91% of the voting securities of Darien Rowayton Bank on August 7, 2009, and amended on August 14 and September 14, 2009, was amended to indicate that Gary Lieberman proposes to increase his membership interest in Alcar LLC to over 30% resulting in his indirect acquisition of the beneficial ownership of more than 25% of the voting securities of Darien Rowayton Bank.
New Bank Application Amended
The application to organize Sachem Bank, Madison, Connecticut, pursuant to Section 36a-70 of the Connecticut General Statutes, has been amended to add John L. Foggle, John W. James, Sr., David E. Karas, and Suzanne C. Sack as organizers of Sachem Bank (In Organization). Additional organizers were previously identified in Bulletin #2356, dated April 21, 2009, and Bulletin #2358, dated May 5, 2009.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
CT Equity Partners, LLC and John A. Gilroy
Fined $5,000 for Unregistered Activity
On December 16, 2009, the Banking Commissioner entered into a Stipulation and Agreement with CT Equity Partners, LLC of 401 Carroll Road, Fairfield, Connecticut and its managing member, John A. Gilroy. The Stipulation and Agreement alleged that CT Equity Partners, LLC was retained by iMedX, Inc., a Shelton, Connecticut-based issuer of securities, to provide certain services, including the identification of investors, and that CT Equity Partners, LLC introduced a financial entity investor to the issuer for compensation. At the time of the transaction, John A. Gilroy was not registered as an agent of issuer or in any other capacity under the Connecticut Uniform Securities Act nor was CT Equity Partners, LLC registered as a broker-dealer or in any other capacity. Pursuant to the Stipulation and Agreement, John A. Gilroy agreed to refrain from offering or selling securities on behalf of any issuer unless those transactions were effected within the scope of Gilroy’s employment with a Connecticut-registered broker-dealer. CT Equity Partners, LLC agreed not to transact business as a broker-dealer or investment adviser in Connecticut absent registration under the Act. In addition, John Gilroy agreed to retain legal counsel experienced in securities law and to consult with such attorney on an annual basis for three years. The Stipulation and Agreement also required that CT Equity Partners, LLC and John A. Gilroy remit $5,000, jointly and severally, to the department as an administrative fine.
Perennial Investment Partners (U.S.) Inc. Assessed $2,500
for Unregistered Investment Advisory Activity
On December 16, 2009, the Banking Commissioner entered into a Stipulation and Agreement with Perennial Investment Partners (U.S.) Inc., an investment adviser having its principal office at 1010 Washington Boulevard, Stamford, Connecticut. The Stipulation and Agreement alleged that, in contravention of Section 36b-6(c)(1) of the Connecticut Uniform Securities Act, from at least September 26, 2008 forward, the firm rendered investment advisory services to an institutional client while not registered as an investment adviser under Connecticut’s securities law. The firm had registered with the Securities and Exchange Commission in 2007, expecting that, within 120 days, its assets under management would meet the $25 million threshold required to maintain its federal registration. However, the firm's assets under management did not surpass $25 million, and the firm failed to withdraw its federal registration as required by SEC Rule 203A-2(d) under the Investment Advisers Act of 1940. Perennial Investment Partners (U.S.) Inc. applied for investment adviser registration in Connecticut in June 2009. The firm submitted documentation to the department indicating that it had relied upon a third party filing service to make its federal and state registration filings.
In furtherance of its desire to resolve the matter informally with the department, the firm represented that it would retain a Connecticut licensed attorney experienced in state and federal investment advisory legal and compliance issues and consult with such counsel annually for a period of three years.
Pursuant to the Stipulation and Agreement, the firm agreed to refrain from regulatory violations and to remit $2,500 to the department. Of that amount, $1,700 constituted an administrative fine, $300 represented reimbursement for past due registration fees and $500 would be applied to defray the Division's investigative costs.
CONSUMER CREDIT DIVISION ACTIVITY
On December 1, 2009, the Commissioner entered into a Settlement Agreement with Hourglass Capital Group, LLC d/b/a Hourglass Mortgage
(“Hourglass Capital Group”). The Settlement Agreement was based on an examination by the Consumer Credit Division. As a result of such examination, the Commissioner alleged that Hourglass Capital Group paid, during the period of February 2009 through June 2009, a “Co-Broker Fee” to another mortgage broker for two loans and failed to properly disclose such fees on the HUD-1 Settlement Statements in violation of Section 36a-493(a)(6) of the Connecticut General Statutes and 24 CFR 3500.14(a) and 24 CFR 3500.14(b), which are regulations applicable to the conduct of Hourglass Capital Group’s business. As part of the Settlement Agreement, Hourglass Capital Group paid a civil penalty in the amount of $6,000. A copy of the Settlement Agreement can be obtained from the Department’s website
On December 1, 2009, the Commissioner entered into a Settlement Agreement with Vernick Finance Company d/b/a Vernick Financial Services
(“Vernick Financial Services”). The Settlement Agreement was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Vernick Financial Services engaged in the business of a sales finance company without having obtained the required license, in violation of Section 36a-536 of the Connecticut General Statutes. As part of the Settlement Agreement, Vernick Financial Services paid a civil penalty in the amount of $4,000. A copy of the Settlement Agreement can be obtained from the Department’s website
On December 4, 2009, the Commissioner entered into a Settlement Agreement with Fidelity Mortgage Services, Inc.
(“Fidelity Mortgage”). The Settlement Agreement was based on an examination by the Consumer Credit Division. As a result of such examination, the Commissioner alleged that Fidelity Mortgage employed or retained, during the period of June 8, 2007 through November 13, 2007, two individuals as originators without registering them, in violation of Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes. Fidelity Mortgage agreed to voluntarily make a contribution to the State Regulatory Registry LLC, a wholly-owned subsidiary of the Conference of State Bank Supervisors (“CSBS”), in the amount of $2,000 to support the Nationwide Mortgage Licensing System and Registry, jointly developed by CSBS and the American Association of Residential Mortgage Regulators. A copy of the Settlement Agreement can be obtained from the Department’s website
Dated: Tuesday, December 22, 2009
Howard F. Pitkin