The Department of Banking News Bulletin
Bulletin # 2411
Week Ending May 7, 2010
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.
227 Trumbull Street
Hartford, CT 06103
The Milford Bank
250 Barnum Avenue
Stratford, CT 06614
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
Wall Street Multiservices
& Boutique, LLC
16 Wall Street
Norwalk, CT 06850
Temporary Order to Cease and Desist, Notice of Intent to Issue Order to
Cease and Desist and Notice of Intent to Impose Civil Penalty
On April 21, 2010, the Commissioner issued a Temporary Order to Cease and Desist, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) in the Matter of: Universal Modification Service
(“Respondent”). The Notice alleged that Respondent offered to engage in debt negotiation in this state without obtaining the required license, in violation of Section 36a-671(b) of the 2010 Supplement to the General Statutes. The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist. Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice. A copy of the Notice can be obtained from the Department’s website
SECURITIES AND BUSINESS INVESTMENTS DIVISION
Stipulation and Agreement
On May 5, 2010, the Banking Commissioner entered into a Stipulation and Agreement with Bear Stearns Asset Management Inc., an investment adviser registered with the Securities and Exchange Commission. The firm acted as investment adviser to Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Fund, L.P. and Bear Stearns High Grade Structured Credit Strategies L.P. The Stipulation and Agreement alleged that, from at least September 1, 2003 to at least July 31, 2007, certain related party transactions engaged in by the firm were not properly or timely approved prior to execution, as required by the private placement memorandum received by investors in the funds and that, during that time period, certain other related party transactions were approved notwithstanding the fact that the approval requests contained certain informational deficiencies. The Stipulation and Agreement recited that the firm had voluntarily commenced a settlement process with certain non-institutional investors in the funds; that certain investors alleged that they were coerced into entering into the settlement; and that such conduct could constitute a basis for administrative proceedings under Sections 36b-5(f) and 36b-27 of the Connecticut Uniform Securities Act.
The Stipulation and Agreement required that the firm submit to an initial binding mediation procedure covering any Connecticut investor who believed that he or she was coerced into settling with the firm. If the initial mediator determined that an affected Connecticut investor was coerced into settling, then the firm would nullify the settlement and provide for a second binding mediation to address the factual and legal dispute underlying the settlement, any claims released by the investor and the investor’s right, if any, to damages or other legal remedies.
Order Imposing Fine
On May 7, 2010, the Banking Commissioner entered an Order Imposing Fine against Royal Burgundy International, Inc. of 172 W. Warren Avenue, Suite 200, Longwood, Florida. The respondent had been the subject of a December 23, 2009 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing alleging that, from at least August 2008 forward, the respondent offered and sold coffee distributorship business opportunities to at least one Connecticut purchaser-investor in contravention of Section 36b-67 of the Connecticut Business Opportunity Investment Act. The Order to Cease and Desist, being uncontested, had become permanent on January 29, 2010. The respondent did not request a hearing on the Notice of Intent to Fine. Under Section 36a-1-31(a) of the Regulations of Connecticut State Agencies, a party’s failure to request a hearing may result in the allegations against the party being admitted.
In fining the respondent $25,000, the Commissioner adopted as findings the allegations in the Order to Cease and Desist and Notice of Intent to Fine, and concluded that the respondent had violated Section 36b-67 of the Connecticut Business Opportunity Investment Act.
On May 7, 2010, the Banking Commissioner entered a Consent Order resolving the allegations in a January 21, 2010 Notice of Intent to Deny Registration as an Investment Adviser and as an Investment Adviser Agent, Order to Cease and Desist and Notice of Right to Hearing in the matter of Financial Partners LLC and Douglas Kirk Landeen. Financial Partners LLC is a Connecticut limited liability company with its principal office at 123 Hopmeadow Road, Bristol, Connecticut. Respondent Landeen is the sole direct owner and managing member of Financial Partners LLC. The Notice of Intent to Deny Registration as an Investment Adviser and as an Investment Adviser Agent, Order to Cease and Desist and Notice of Right to Hearing had alleged that a basis existed to deny Respondent Financial Partners LLC’s investment adviser registration under the Connecticut Uniform Securities Act due to the firm’s failure to fulfill the experience requirements in Section 36b-31-7b of the Regulations under the Act. The action had also alleged that, on two separate occasions, Respondent Landeen had filed with the Commissioner a Form U-4 (Uniform Application for Securities Industry Registration or Transfer) that failed to disclose that, on July 27, 1998, Respondent Landeen had been sentenced to 27 months in prison after pleading guilty to violations of 18 U.S.C. 1341 (Mail Fraud) and 26 U.S.C. 7206(1) (Wilful Subscription to False Tax Return), both felonies (U.S. v. Landeen, D. Conn. Case No. 3:98-CR 63 JBA). Respondent Landeen’s failure to disclose his prior criminal history allegedly violated Section 36b-23 of the Act and Section 36b-31-14e of the Regulations, thus constituting a basis for the denial of Respondent Landeen’s investment adviser agent registration and the entry of a cease and desist order against him.
Without admitting or denying the department’s allegations, the respondents agreed to the entry of a consent order. Pursuant to the Consent Order, Financial Partners LLC agreed to withdraw its investment adviser application, and Douglas Kirk Landeen agreed to withdraw his application for registration as an investment adviser agent of Financial Partners LLC. The Consent Order also barred Douglas Kirk Landeen for ten years from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent. Respondent Landeen could apply for relief from this restriction after seven years elapsed from the entry of the Consent Order. The Consent Order also directed respondent Landeen to cease and desist from violating the Connecticut Uniform Securities Act or any regulation or order under the Act.
Cease and Desist, Notice of Intent to Fine
And Notice of Right to Hearing
On May 7, 2010, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Donald C. Lyle, now or formerly of 2346 Eutaw Place, Unit 2, Baltimore, Maryland. Respondent Lyle purportedly did business under various names, including Noirstar Financial Services, and held Noirstar Financial Services out as having a business address at 1337 Dixwell Avenue, Hamden, Connecticut.
The action alleged that, from at least November 29, 2007 forward, respondent Lyle sold unregistered securities in the form of investment contracts, notes and/or an evidence of indebtedness in contravention of Section 36b-16 of the Connecticut Uniform Securities Act. The action also alleged that respondent Lyle violated the antifraud provisions in Section 36b-4 of the Act by failing to disclose to investors, among other things, any risk factors related to the investment; financial information on the Respondent or his businesses; the income sources from which the investments would be repaid or that the Respondent had been the subject of three Chapter 13 bankruptcy proceedings filed in Connecticut bankruptcy court. The respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist and Notice of Intent to Fine.
Dated: Tuesday, May 11, 2010
Howard F. Pitkin