DOB: Bulletin 2503 - Feb. 10, 2012

The Department of Banking News Bulletin 

Bulletin # 2503
Week Ending February 10, 2012

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.


 
CONSUMER CREDIT DIVISION ACTIVITY
Check Cashing Service License Activity
 
Date Check Casher Location Activity
2/07/12 Newington Financial, LLC
190 Farmington Avenue
Hartford, CT  06105
approved
 
Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of
Intent to Revoke and Refuse to Renew Consumer Collection Agency License, Notice of
Intent to Issue Order to Cease and Desist and Notice of Intent to Impose Civil Penalty
 
On February 1, 2012, the Commissioner issued a Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke and Refuse to Renew Consumer Collection Agency License, 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:  InChek, LLC (“Respondent”), New Haven, Connecticut.  The Notice was the result of an investigation by the Consumer Credit Division.  The Notice alleged that Respondent failed to grant access to its place of business to examiners who were attempting to conduct an examination of Respondent and failed to provide information requested by such examiners, in violation of Section 36a 17(d) of the 2012 Supplement to the General Statutes.  The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist and that public welfare and safety required the issuance of an Order of Summary Suspension of Respondent’s consumer collection agency license in Connecticut.  Respondent was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.
 

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Sanctions Imposed Following Administrative Hearing
 
On February 7, 2012, the Banking Commissioner entered Findings of Fact, Conclusions of Law and an Order against Wadsworth Investment Co., Inc., a registered broker-dealer located at 879 Church Street, Route 68, Wallingford, Connecticut, and William F. Wadsworth, a control person of the firm.  The Respondents, together with Portfolio Timing Service d/b/a PTS Asset Management and William F. Wadsworth, Jr., had been the subject of a June 1, 2011 Amended and Restated Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent, Notice of Intent to Revoke Registration as an Investment Adviser Agent and Notice of Intent to Fine.
 
The allegations relating to Respondents Portfolio Timing Service d/b/a PTS Asset Management and William F. Wadsworth, Jr. were resolved in two separate consent orders entered on September 19, 2011.
 
In the February 7, 2012 action, the Commissioner determined that Wadsworth Investment Co., Inc. 1) failed to maintain books and records, particularly e-mail records, in wilful violation of Section 36b-14(a) of the Connecticut Uniform Securities Act and Section 36b-31-14a of the Regulations under the Act; 2) wilfully violated Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations by failing to make required books and records, particularly corporate records, available to the Commissioner; 3) wilfully violated Section 36b-31-6f of the Regulations by failing to establish, enforcement and maintain an adequate supervisory system, notably with respect to the firm's use of signature guarantees, allowing an unregistered individual to act as principal and failing to establish a policy to monitor electronic communications; 4) together with William F. Wadsworth, wilfully violated the antifraud provisions in Section 36b-4(a) of the Act by omitting material information in encouraging clients to switch from Oppenheimer funds to AIM funds; 5) together with William F. Wadsworth, wilfully engaged in dishonest or unethical practices by using signature guarantees in a manner that was inconsistent with industry standards, including guaranteeing the signature of a deceased individual; 6) engaged in dishonest or unethical practices by maintaining blank pre-signed forms and utilizing false names to mutual fund companies; 7) wilfully violated Section 36b-31-14e(a) of the Regulations by failing to update its registration to reflect a change in ownership of the firm; and 8) wilfully violated Section 36b-31-15e of the Regulations by failing to provide the agency with evidence that one of the firm's managers had passed the principal's examination.  The Commissioner also found that William F. Wadsworth wilfully violated Section 36b-23 of the Act by misrepresenting to the department that there had never been a complaint against him.
 
The February 7, 2012 Order directed that Wadsworth Investment Co., Inc.'s broker-dealer registration be revoked ninety days following entry of the Order, subject to the firm complying with certain restrictions, in which case revocation would be forestalled.  Specifically, the Order required the firm to take the following measures within the 90 day time frame:  1) designate a new president and full-time chief compliance officer to replace William F. Wadsworth.  For a three year period, the Commissioner's approval would be required to appoint any successor president or chief compliance officer; 2) submit to the department a plan permanently divesting William F. Wadsworth's ownership interest in the firm, permanently relocating the firm's offices to a location other than William F. Wadsworth's residence and notifying clients of changes to the firm's organizational structure and the existence of the February 7, 2012 Order; and 3) supply the department with evidence that the firm had complied with all requirements of the Order and had remedied all underlying conduct causing or contributing to the violations described in the Order.  After the expiration of the 90 day period, the Order directed the firm to ensure that William F. Wadsworth no longer 1) acted in any capacity for the firm, whether on a compensated or uncompensated basis; and 2) exercised direct or indirect control of the firm, including participating in corporate governance matters, training personnel and supervising the firm's daily operations, sales practices and compliance aspects.
 
The February 7, 2012 Order also revoked William F. Wadsworth's registrations as a broker-dealer agent and an investment adviser agent under the Act.  William F. Wadsworth, however, would be permitted, for a period of 60 days, to wind down his Connecticut business by liquidating transactions, transferring accounts, forwarding received checks, responding to regulatory inquiries and otherwise fielding client telephone calls for account servicing or document requests.
 
In addition, the February 7, 2012 Order fined Wadsworth Investment Co., Inc. $250,000 and also imposed a $200,000 fine against William F. Wadsworth, with payments due no later than 45 days following entry of the Order.
 
Finally, the Order rendered permanent the Amended and Restated Order to Cease and Desist issued against Wadsworth Investment Co., Inc. and William F. Wadsworth.
 
 
       Dated:  Wednesday, February 15, 2012
 
 
       Howard F. Pitkin
       Banking Commissioner