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.
486 Silas Deane Highway
Wethersfield, CT 06109
Naugatuck Savings Bank
3580 East Main Street
Waterbury, CT 06705
Main Office Relocation
On December 14, 2011, pursuant to Section 36a-81 of the Connecticut General Statutes, Bankers’ Bank Northeast filed an application to relocate its main office from 300 Winding Brook Drive, Glastonbury, Connecticut, to 43 Western Boulevard, Suite 125, Glastonbury, Connecticut.
CREDIT UNION ACTIVITY
On December 15, 2011, pursuant to Section 36a-437a of the Connecticut General Statutes, Hartford Courant Employees Credit Union, Inc., Hartford, received approval to amend its bylaws and Certificate of Incorporation to change its name to CT1 Media Credit Union, Inc.
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
Une Travel LLC
68 Connecticut Avenue
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 November 30, 2011, 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 (collectively, “Notice”) against Global Client Solutions, LLC (“Respondent”), Tulsa, Oklahoma. The Notice alleged that Respondent engaged in the business of money transmission without a license, in violation of Section 36a-597(a) of the Connecticut General Statutes; engaged in the business of debt adjustment without a license, in violation of Section 36a-656(a) of the Connecticut General Statutes, as amended by Public Act 11-216; failed to cooperate with the Commissioner, in violation of Section 36a 17(d) of the Connecticut General Statutes; made a statement to the Commissioner which was false or misleading in a material respect, in violation of Section 36a-53a of the Connecticut General Statutes; and made untrue statements of a material fact or omitted to state a material fact necessary in order to make the statements made not misleading, in violation of Section 36a-53b of the Connecticut General Statutes in effect prior to October 1, 2011, and Section 36a-53b of the Connecticut General Statutes, as amended by Public Act 11-216. Such allegations form the basis to issue an order to cease and desist and impose a civil penalty upon Respondent. The Commissioner also found that the public welfare required immediate action to issue a Temporary Order to Cease and Desist requiring Respondent to take and refrain from taking such actions that would effectuate the purposes of Section 36a-52(b) of the Connecticut General Statutes to mitigate potential harm to Connecticut consumers. Global was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Order to Cease and Desist, Notice of Intent to Fine
And Notice of Right to Hearing Issued
On December 12, 2011, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Point Stratford Development, LLC f/k/a Hollywood East/Area 51, LLC of Stratford, Connecticut; Hector Natera, its managing member; and Yvette Cuccaro. Hollywood East/Area 51, LLC was a purported digital media and real estate development company that sought investment capital to acquire a former military aircraft assembly plant in Stratford, Connecticut that was being auctioned off by the U.S. General Services Administration.
The action alleged that during 2007 and 2008, the respondents sold unregistered Hollywood East securities to investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that respondents Natera and Cuccaro transacted business as unregistered agents of issuer in violation of Section 36b-6 of the Act. The action also alleged that respondents Point Stratford Development, LLC and Natera violated the antifraud provisions in Section 36b-4(a) of the Act by failing to provide investors with any financial information concerning the respondents; failing to disclose the unregistered status of Hollywood East’s agents; failing to disclose that the Hollywood East securities would be sold to individuals who were not accredited investors; and failing to disclose the estimated cash proceeds of the securities offering. The action further alleged that respondents Point Stratford Development, LLC and Natera failed to disclose specific risks to investors, including risks related to the investment and acquisition of the proposed site from the federal government, including remediation costs; the risk that an economic development bond to fund the project might not be procured; the risk that Hollywood East’s property bid and deposit would be submitted in the name of an unrelated entity; and the risk that Hollywood East, if successful on the bid, would be unable to secure funds for the full purchase price, leading to a default and the forfeiture of Hollywood East’s $1 million deposit.
The respondents were afforded an opportunity for a hearing on the Order to Cease and Desist and Notice of Intent to Fine.
On December 13, 2011, the Banking Commissioner entered a Consent Order with respect to Morgan Asset Management, Inc., an investment adviser registered with the Securities and Exchange Commission, and Morgan Keegan & Company, Inc., a Connecticut-registered broker-dealer. Morgan Asset Management, Inc. maintains its principal office in Birmingham, Alabama. Morgan Keegan & Company, Inc. is located in Memphis, Tennessee. The Consent Order followed a multi-state investigation and related investigations conducted by the SEC and the Financial Industry Regulatory Authority (FINRA). The investigations focused on seven proprietary mutual funds sold by Morgan Keegan to more than 30,000 account holders. Approximately 55 investors were located in Connecticut. Nationwide, the seven mutual funds lost approximately $1.5 billion dollars from March 31, 2007, to March 31, 2008.
In addition to citing the respondents for alleged supervisory failures, the Connecticut consent order, like those of other settling states, alleged that the respondents misled investors by failing to disclose risks regarding the affected funds and providing misleading information about securities products. The consent order required the respondents to pay $200 million, split between an SEC Fair Fund and a States’ Fund, both for the benefit of investors. Under the multi-state settlement, investors must file a claim with the Fund Administrator to recover damages. The Fund Administrator (A.B. Data) may be contacted by phone (888-208-9083) or mail (Morgan Keegan Settlement Claims Administrator, c/o A.B. Data, Ltd., PO Box 170500, Milwaukee, Wisconsin 53217-8091). The Fund Administrator also maintains a website at www.abdataclassaction.com
The Connecticut Consent Order also 1) directed the respondents to cease and desist from regulatory violations; 2) fined the respondents $7,771 (Connecticut's share of the $10 million multi-state settlement); 3) prohibited the respondents from creating, offering or selling to non-institutional investors any proprietary fund for two years; 4) required Morgan Keegan & Company, Inc. to reimburse the department for the costs of a books and records examination to be conducted within 24 months; 5) required the respondents to provide their agents and investment adviser agents with compliance training for three years; and 6) incorporated the requirement from the multi-state settlement that the respondents retain an independent consultant to evaluate their supervisory and compliance procedures.
Dated: Tuesday, December 20, 2011