STATE BANK ACTIVITY
The Department of Banking News Bulletin
Bulletin # 2425
Week Ending August 13, 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.
Section 36a-145 of the 2010 Supplement to the 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.
Naugatuck Savings Bank
3580 East Main Street
Waterbury, CT 06705
On July 7, 2010, the Banking Commissioner issued a Consent Order with respect to Janice L. Zdun. The Consent Order alleged that, while an employee of Simsbury Bank & Trust Company, Janice Zdun engaged in unsafe and unsound practices and used her position in a manner contrary to the interest of Simsbury Bank & Trust Company and its depositors, and that such practices and use of her position caused financial loss to Simsbury Bank & Trust Company. The Consent Order prohibited Janice Zdun from holding any position with any bank, Connecticut credit union or federal credit union, as defined in Section 36a-2 of the Connecticut General Statues, or holding company that holds a subsidiary that is a bank, as defined in Section 36a-2, or as licensee or registrant under Titles 36a or 36b of the Connecticut General Statutes, while the Consent Order is in effect, without the consent of the Commissioner.
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
Speedy Gonzalez Multiservices LLC
2365 Main Street
Bridgeport, CT 06606
||Valley Pawn Shop LLC
61 Pershing Drive
Ansonia, CT 06401
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Department to Host Securities Forum 2010
The State of Connecticut Department of Banking is hosting Securities Forum 2010: Revolution in Reform, on Tuesday, October 19, 2010 at the New Haven Lawn Club in New Haven, Connecticut. The program runs from 10:00 a.m. to 4:00 p.m. The keynote speaker will be David B. Fein, United States Attorney for the District of Connecticut.
The program will highlight groundbreaking economic reforms enacted and proposed by the U.S. Congress as well as practical compliance tips for broker-dealers, investment advisers and securities law practitioners. The registration fee is $70 per person, and includes a luncheon; 2-4 attendees from the same firm pay a discounted fee of $65 per person; and 5 or more attendees from the same firm pay only $60 each. Don't miss out on this unique opportunity to hear about financial developments from the regulators themselves and to compare notes with other financial services industry professionals. You can download a registration form and read the agenda on the Department's website
Stipulation and Agreement
On August 9, 2010, the Banking Commissioner entered into a Stipulation and Agreement with Joseph P. Lucia & Associates, LLC, a New York investment adviser located at 888 Route Six Plaza, Mahopac, New York. The Stipulation and Agreement alleged that, in applying for Connecticut registration as an investment adviser, the firm disclosed that, commencing in 2009, it had rendered investment advisory services to Connecticut residents absent registration. The firm submitted documentation to the Division indicating that it had relied on a third party filing service in making its state registration filings. Pursuant to the Stipulation and Agreement, Joseph P. Lucia & Associates, LLC agreed to refrain from violative conduct and to remit $1,500 to the department. Of that amount, $700 constituted an administrative fine, $300 represented reimbursement for past due registration fees and $500 would be applied to defray the Divisionís investigative costs. In addition, the firm agreed to confer with an experienced securities compliance consultant periodically for two years to ensure that the firm remained in compliance with Connecticut law. The firm became registered as an investment adviser under the Connecticut Uniform Securities Act on August 9, 2010.
Order to Cease and Desist and Notice of Intent to Fine Issued
On August 11, 2010, the Banking Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine against Wadsworth Investment Co., Inc., a registered broker-dealer located at 879 Church Street, Route 68, Wallingford, Connecticut; Portfolio Timing Service d/b/a PTS Asset Management, an SEC-registered investment adviser sharing the same address as Wadsworth Investment Co., Inc.; William F. Wadsworth, a control person of both Wadsworth Investment Co., Inc. and Portfolio Timing Service; and William F. Wadsworth, Jr., the national sales manager for Portfolio Timing Service. The action also sought to revoke the registration of Wadsworth Investment Co., Inc. as a broker-dealer in Connecticut; the registrations of William F. Wadsworth as a broker-dealer agent and investment adviser agent; and the registration of William F. Wadsworth, Jr. as a broker-dealer agent.
The action alleged that Wadsworth Investment Co., Inc. and William F. Wadsworth, Jr. engaged in dishonest and unethical practices in the securities business by contacting a large mutual fund complex, which held assets of Wadsworth Investment Co., Inc. and Portfolio Timing Service clients, and posing, or permitting Wadsworth Investment Co., Inc. employees to pose, as employees of other registered firms in order to gain access to certain account information that otherwise would have been denied to them. The action also alleged that William F. Wadsworth, Jr. violated Section 36b-23 of the Connecticut Uniform Securities Act by misrepresenting his involvement in this activity to Division staff during an investigation. In addition, the action alleged that Wadsworth Investment Co., Inc. engaged in dishonest or unethical practices by maintaining in customer files pre-signed but otherwise blank securities liquidation forms and new account applications.
The action also alleged that Wadsworth Investment Co., Inc., William F. Wadsworth and Portfolio Timing Service violated the antifraud provisions in Section 36b-4 of the Act in recommending that clients transfer their Oppenheimer Fund Family holdings to the AIM Fund Family. The respondents allegedly told clients that 1) the Oppenheimer Funds forced Portfolio Timing Service to wait an entire day to implement client trading instructions; 2) the Oppenheimer Funds refused to implement a major buy instruction of Portfolio Timing Service; 3) all other clients had agreed to exit the Oppenheimer Funds and enter the AIM Funds; and 4) William F. Wadsworth and his family would be switching to the AIM Funds from Oppenheimer. According to the action, however, in reality 1) the Oppenheimer Funds were in the process of terminating their sales agreements with Wadsworth Investment Co., Inc. and Portfolio Timing Service due to troubling business practices at those entities; 2) the Oppenheimer Fundsí order procedure had been in use since 2002 and had often saved clients money; 3) the Oppenheimer Fund did not refuse to execute the buy instruction; 4) not every investor had signed documents to exit the Oppenheimer Funds and enter the AIM Funds; 6) investors would pay substantial fees to switch from the Oppenheimer Funds to the AIM Funds and 7) William F. Wadsworth and his family would not pay any fees to make the switch.
The action also alleged that 1) Wadsworth Investment Co., Inc., Portfolio Timing Service and William F. Wadsworth violated Section 36b-16 of the Act by selling unregistered securities of DECA ONE; and 2) Wadsworth Investment Co., Inc. failed to enforce and maintain adequate supervisory procedures and to maintain required books and records.
The respondents were afforded an opportunity to request a hearing on the matters alleged in the action.
Dated: Tuesday, August 17, 2010
Howard F. Pitkin