The Department of Banking News Bulletin
Bulletin # 2512
Week Ending April 13, 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.
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.
747 Farmington Avenue
New Britain, CT 06053
Main Office Relocation
On April 13, 2012, pursuant to Section 36a-81 of the Connecticut General Statutes, Quinnipiac Bank & Trust Company filed an application to relocate its main office from 2600 Dixwell Avenue, Hamden, Connecticut 06514 to 2704 Dixwell Avenue, Hamden, Connecticut 06518.
CONSUMER CREDIT DIVISION ACTIVITY
Notice of Declaratory Ruling Proceeding
Notice is hereby given that the Department of Banking, pursuant to Section 4 176(e)(2) of the Connecticut General Statutes, has initiated a comment period for a declaratory ruling regarding the interpretation of the exemption to debt negotiation regulatory requirements provided in Section 36a-671c of the 2012 Supplement to the General Statutes for “[a]ny attorney admitted to the practice of law in this state who engages or offers to engage in debt negotiation as an ancillary matter to such attorney’s representation of a client”. Comments regarding this declaratory ruling must be submitted in writing no later than May 24, 2012, to: Howard F. Pitkin, Banking Commissioner, State of Connecticut, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103, in the manner prescribed by Section 36a-1-87(c) of the Regulations of Connecticut State Agencies. A notice of the proceeding and the petition for declaratory ruling are available on the Department’s website, www.ct.gov/dob
SECURITIES AND BUSINESS INVESTMENTS DIVISION
Order Modifying Remedial Restrictions and Conditions Entered
On April 10, 2012, the Banking Commissioner entered an Order Modifying Remedial Restrictions and Conditions with respect to Wadsworth Investment Co., Inc., a Connecticut-registered broker-dealer, and William F. Wadsworth, Sr. Both had been the subject of Findings of Fact, Conclusions of Law and an Order entered on February 7, 2012 following an administrative hearing. While leaving intact the factual and legal findings contained in the February 7, 2012 Order, the April 10, 2012 Order adjusted certain remedial provisions relating to Wadsworth Investment Co., Inc.
Specifically, the April 10, 2012 Order allowed the firm to 1) engage one or more qualified compliance consultants on an interim basis if it was unable to hire a full-time Chief Compliance Officer within the time frame prescribed in the February 7, 2012 Order; 2) have William F. Wadsworth, Jr. serve as its president if it demonstrated that additional compliance personnel were retained to overcome any deficiencies in William F. Wadsworth, Jr.'s securities regulatory experience; and 3) permit William F. Wadsworth, Sr. to hold a minority ownership interest in the firm if he was otherwise in compliance with the February 7, 2012 Order.
In addition, the April 10, 2012 modifying Order required Wadsworth Investment Co., Inc. to refund to its customers by May 15, 2012 approximately $52,000 in contingent deferred sales charges referenced in paragraph 142 of the February 7, 2012 Order. Correspondingly, the modifying order reduced the fine assessed against the firm to $25,000.
On April 10, 2012, the Commissioner entered a Consent Order with respect to Prosper Marketplace, Inc., a California based securities issuer providing an online marketplace for peer to peer lending. Prosper Marketplace, Inc. had been the subject of two prior Consent Orders entered by the Commissioner on July 27, 2009 and October 13, 2010, respectively. Each of the prior Consent Orders had alleged that Prosper Marketplace, Inc. violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered loan notes. In executing the April 10, 2012 Consent Order, Prosper Marketplace, Inc. admitted that, from at least October 13, 2011 to November 17, 2011 it had sold unregistered securities in violation of Section 36b-16 of the Act and the 2010 Consent Order. The April 10, 2012 Consent Order also alleged that Prosper Marketplace, Inc. violated the antifraud provisions in Section 36b-4 of the Act by 1) misrepresenting to Connecticut investors that the State of Connecticut Department of Banking had asked Prosper Marketplace, Inc. to “pause” its activities until its state securities registration was renewed; and 2) misrepresenting to the public that the rate of return on its notes was the best within the P2P industry when no comparative analysis of any other issuer in the P2P industry had been done. Prosper Marketplace, Inc. neither admitted nor denied that it had engaged in fraudulent conduct.
In executing the 2012 Consent Order, Prosper Marketplace, Inc. represented to the agency that, on December 30, 2011 and in response to Prosper Marketplace, Inc.’s failure to renew its Connecticut securities registration on time, Prosper Marketplace, Inc. had paid to each Connecticut investor a rebate equal to 1% of the account balance in each investor’s account for a total payment of $16,238.52.
The Consent Order fined Prosper Marketplace, Inc. $40,000 and directed it to cease and desist from regulatory violations. The April 10, 2012 Consent Order also required Prosper Marketplace, Inc. to consult with Connecticut legal counsel for three years and file an annual sworn affidavit verifying that it had fully discussed its Connecticut compliance responsibilities with its Connecticut legal counsel. Contemporaneously with the Commissioner’s entry of the Consent Order, Prosper Marketplace, Inc.’s securities registration would be made effective under the Act.
Stipulation and Agreement
On April 11, 2012, the Commissioner entered into a Stipulation and Agreement with Laidlaw & Company (UK) Ltd., a Connecticut-registered broker-dealer having its principal office in London, England and a U.S. office at 750 East Main Street, Suite 502, Stamford, Connecticut. The Stipulation and Agreement alleged that the firm sold unregistered securities in contravention of Section 36b-16 of the Connecticut Uniform Securities Act. In resolution of the matter, the firm agreed to pay a $7,500 fine and to refrain from violative conduct.
Dated: Tuesday, April 17, 2012
Howard F. Pitkin