DOB: Spring 2002 Securities Bulletin

Securities and Business Investments Division

Securities Bulletin

Vol. XVI  No. 1 Spring 2002

Features:

Enforcement Highlights:

Contributors:

Ralph Lambiase, Division Director
Cynthia Antanaitis, Assistant Director and Bulletin Editor
Eric Wilder, Assistant Director
Marge Kagan, Subscription Coordinator

A WORD FROM THE BANKING COMMISSIONER

Six years ago, Congress, through the National Securities Markets Improvement Act, authorized a centralized and nationwide electronic system for registering investment advisers. In response, the Securities and Exchange Commission and the North American Securities Administrators Association ("NASAA") sponsored the Investment Adviser Registration Depository ("IARD"), which is maintained by NASD Regulation, Inc.

As a first step, the department in September 2000 required federally covered investment advisers to make their Connecticut notice filings electronically through the IARD. The second phase of electronic filing is now upon us, with investment advisers being able to register their agents on-line through the IARD effective March 2002. The Securities Division is busily working to "transition" hundreds of investment adviser agents to the system, and all Connecticut agents of federally covered advisers - some 4,000 or so - should be on the IARD by this coming October.

Congress is now considering legislation that would mandate a third phase of IARD use. The Financial Services Antifraud Network Act of 2001, passed by the House of Representatives last year and referred to the Senate, would safeguard the public by establishing a shared database of antifraud information among state and federal financial regulators. Under the bill, though, state securities regulators would be prohibited from accessing the antifraud network unless they first required state-registered investment advisers and their agents to file through the IARD.

If The Financial Services Antifraud Network Act of 2001 becomes law, Connecticut would, of necessity, need to respond to the legislation by requiring that state-registered investment advisers and their representatives file through the IARD just as federally covered advisers are now doing. To meet January 2004 renewal cycle deadlines, this potential requirement would need to be in place by October 2003.

To date, 63 of the 378 state-registered investment advisers in Connecticut have voluntarily chosen to file through the IARD system. These advisers have been able to reduce their paperwork through the system and take advantage of the Investment Adviser Public Disclosure ("IAPD") Web site that provides the public with convenient, helpful information about an adviser's business, services and fees.

You can learn more about developments that may affect investment adviser registration and receive an early copy of the Securities Bulletin through a new, free service offered by the Division. As described in this issue, a securities listserv will deliver the Bulletin and other compliance news directly to your desk or home via email. Follow the simple instructions to sign up today.


John P. Burke
Banking Commissioner


{Computer and Email Software} INSTANT DELIVERY OF
THE SECURITIES BULLETIN &
OTHER COMPLIANCE NEWS
NOW AVAILABLE!

The Securities Division now offers a free and convenient service to have compliance news automatically delivered to you by E-mail.

As a subscriber, you'll receive the Securities Bulletin right at your desk or at home each quarter - before it even goes to the printer. And you'll receive other timely announcements from the Division, such as newly issued policy orders and advance word of events like the department's annual Securities Forum conference.

You can conveniently sign up for the new Securities listserv by visiting the department's Web site. Simply follow the easy instructions found on the page to subscribe and you'll begin receiving compliance news via E-mail. Best of all, there are no subscription limits, so you can have as many subscribers from your organization as you wish.

Listserv subscribers who are currently receiving the Securities Bulletin in hard copy form can eliminate paper delivery entirely by sending an e-mail to marge.kagan@ct.gov. Otherwise, you will receive the Securities Bulletin both electronically and in paper form.

Note that the securities compliance listserv will not be an open forum. The only messages you'll receive will be from the Division. You will not receive any spam or advertisements as a listserv subscriber.

Of course, you could always peruse the Securities Bulletin on-line or stake out the mail. But why wait?

Sign up for E-mail delivery today!


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IN THE NEWS: PENDING CONGRESSIONAL LEGISLATION
COULD FORCE STATES TO MANDATE ELECTRONIC FILING THROUGH IARD

Congress is now considering H.R. 1408, the Financial Services Antifraud Network Act of 2001. This legislation would strengthen investor protection by promoting information sharing among financial services industry regulators through computer technology. The bill, however, prohibits state securities regulators from accessing the fraud network unless they both 1) participate in a centralized registration database for broker-dealers, broker-dealer agents, investment advisers and investment adviser representatives; and 2) require broker-dealers, broker-dealer agents, investment advisers and investment adviser representatives to file their registration applications, amendments and renewals through that database. The legislation gives state securities regulators three years from enactment of the bill to comply with this provision.

Since 1983, Connecticut has accepted broker-dealer and broker-dealer agent registration filings through the computerized Central Registration Depository ("CRD"), a multi-state filing depository administered by NASDR Regulation, Inc. In September 2000, the Commissioner expressed further confidence in on-line transactions by requiring SEC-registered investment advisers to make their Connecticut notice filings electronically through the multi-state Investment Adviser Registration Depository ("IARD"). Currently, IARD participation is optional for investment adviser agents and state-registered investment advisers.

Nearly 5000 investment adviser agents are now registered with the Division. The vast majority of these investment adviser agents are associated with SEC-registered investment advisory firms. In March of this year, the IARD began accepting electronic filing for investment adviser agents. Division staffers have been working busily to "transition" hundreds of investment adviser agent registrations to the electronic system.

Investment advisers filing electronically gain increased visibility through the Investment Adviser Public Disclosure (IAPD) web site which provides instant, free access to registration documents containing information about the adviser's business, advisory services, fees and disciplinary history. Of the 378 advisers registered in Connecticut, 63 have voluntarily filed through the IARD system. Potential clients seeking to learn more about an adviser that does not file electronically must contact the Securities and Business Investments Division by telephone or in writing.

To better serve the investing public, the department has listed on its web site the names and addresses of those investment advisers who are either Connecticut registered or, in the case of SEC-registered investment advisers, who have filed a notice with the Division. The listing includes the CRD numbers of electronic filers so users can easily access additional information from the IAPD web site.


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LICENSING FEES WAIVED FOR
CONNECTICUT RESIDENTS ON ACTIVE MILITARY DUTY

{United States flag}

Section 27-102a(a) of the Connecticut General Statutes provides that:

Notwithstanding any provisions of the general statutes with respect to annual or biennial license or registration fees or occupational taxes, any resident of Connecticut on active duty with the armed forces of the United States, shall be exempt from the payment of such fees or taxes during his period of active service and for one year following the date of his honorable discharge or the date of his release under honorable conditions, from such service.

Agents, investment adviser agents and other individual registrants wishing to take advantage of the exemption in Section 27-102a(a) should notify the Division in writing either through their employing firm or, if feasible, personally. The Division will make every effort to refund any licensing fees paid during the time the individual is on active duty.


Enforcement Highlights

 Administrative Actions

LH Ross & Company, Inc. (CRD # 37920) - Notice of Intent to Revoke Registration as Broker-dealer and Notice of Intent to Fine Issued

On February 25, 2002, the Banking Commissioner issued a Notice of Intent to Revoke Registration as Broker-dealer and Notice of Intent to Fine (Docket No. RF-2002-6467-S) with respect to LH Ross & Company, Inc. of 2255 Glades Road, Suite 425W. Boca Raton, Florida. The Notice of Intent to Revoke and Notice of Intent to Fine alleged that the respondent concealed material information from, and made false or misleading statements to, agency staff during the course of an investigation and examination by destroying an index card, replacing the card with another containing altered information and misrepresenting that the altered card was the original. The Commissioner also alleged that the respondent 1) engaged in dishonest or unethical practices by employing two "cold callers" who were not registered with the NASD; 2) wilfully violated Section 36b-6(b) of the Connecticut Uniform Securities Act by employing agents who were not registered under the Act; 3) sold unregistered non-exempt securities of Salient Cybertech, Inc. to Connecticut customers in violation of Section 36b-16 of the Act; and 4) wilfully violated Section 36b-31-6f(b) of the Regulations under the Act by failing to enforce and maintain adequate supervisory procedures.

The respondent was afforded an opportunity to request a hearing on the Notice of Intent to Revoke Registration as Broker-dealer. A hearing on the Notice of Intent to Fine has been scheduled for April 9, 2002.

Harry D. Finley, IV a/k/a H.D. Finley Company (CRD # 2280661) Fined $20,000 in Connection With Promissory Note Sales

On February 20, 2002, the Commissioner entered an Order Imposing Fine (Docket No. CF-2001-5575-S) against Harry D. Finley, IV a/k/a H.D. Finley Company of 105 Guernseytown Road, Watertown, Connecticut. In fining the respondent $20,000, the Commissioner found that, from at least April 1998 to February 1999, the respondent sold unregistered non-exempt promissory notes of Pacific Air Transport, Inc., Redbank Petroleum, Inc., Caffe Diva Group, Ltd., World Vision Entertainment, Inc. and Technical Support Services, Inc. in violation of Section 36b-16 of the Connecticut Uniform Securities Act, and that, in so doing, the respondent transacted business as an unregistered agent of issuer in violation of Section 36b-6(a) of the Act. The respondent had been the subject of a December 11, 2001 Order to Cease and Desist and Notice of Intent to Fine based upon the same conduct. The Order to Cease and Desist became permanent on January 29, 2002. The respondent did not contest the imposition of the fine.

Alpha Telcom, Inc. (a/k/a Alpha Tel-Com, Inc.) and American Telecommunications Company, Inc.( f/k/a ATC, Inc.) Ordered to Cease and Desist from Regulatory Violations in Connection with Payphone Investment Sales

On January 25, 2002, the Banking Commissioner entered an Order to Cease and Desist and Notice of Right to Hearing (Docket No. CD-2001-6421-S) against Alpha Telcom, Inc. of 2751 Highland Avenue, Grants Pass, Oregon and 1905 Washington Boulevard, Grants Pass, Oregon. Also named in the action was American Telecommunications Company, Inc. of 942 S.W. Sixth Street, Suite G, Grants Pass, Oregon. On August 27, 2001, a temporary receiver had been appointed for both respondents by the United States District Court for the District of Oregon.

In issuing the Order to Cease and Desist, The Commissioner alleged that Paul Rubera owned Alpha Telcom, Inc. and was the previous owner of American Telecommunications Company, Inc. The action claimed that from at least May 1999 forward, American Telecommunications Company, Inc. sold payphones to Connecticut investors, with Alpha Telcom, Inc. providing the accompanying payphone service contracts. The investments were allegedly not registered under Section 36b-16 of the Connecticut Uniform Securities Act. Connecticut residents purportedly invested approximately $2,960,000 in the venture. The venture also featured guaranteed returns and a buy back program purportedly insured by Northern & Western Insurance Company, an off-shore corporation controlled by Rubera, and reinsured by Lloyd's of London. The Order to Cease and Desist claimed that investors received no monthly revenue payments; that the respondents failed to honor the buy back program; that Northern & Western Insurance Company failed to honor the buy back program insurance; that Lloyd's of London never issued a reinsurance policy; and that the respondents had mislead investors by failing to disclose Rubera's insider status, the respondents' disciplinary record, the respondents' financial inability to honor the buy back program, and the investment's attendant risks.

Since neither respondent requested a hearing within the prescribed time period, the Order to Cease and Desist became permanent as to each respondent on February 19, 2002.

Anthony Brooks Fined $30,000 for Selling Bogus Investments

On December 12, 2001, the Commissioner entered an Order Imposing Fine against Anthony Brooks of Stamford, Connecticut. The respondent had been the subject of a July 25, 2001 Order to Cease and Desist which, being uncontested, became permanent on September 6, 2001.

In fining the respondent $30,000, the Commissioner found that from at least 1998 forward, respondent Brooks, acting on behalf of Integrated Financial Solutions, solicited investors to purchase non-existent shares of Venture Investments - Aggressive Growth A and of Decatur Daniels Investments; that the respondent used investor funds to benefit himself and his spouse, and that the respondent misrepresented to investors on their individual account summaries that their funds were invested in Venture Investments - Aggressive Growth A and Decatur Daniels Investments. The Commissioner determined that such conduct violated the antifraud provisions of the Connecticut Uniform Securities Act, that the respondent had transacted business as an unregistered broker-dealer agent of Integrated Financial Solutions, and that the bogus investments were not registered under the Connecticut Uniform Securities Act. Respondent Brooks did not contest the agency's action.

Integrated Financial Solutions Fined $40,000 for Selling Bogus Investments

On December 12, 2001, the Commissioner entered an Order Imposing Fine against Integrated Financial Solutions of 1450 Washington Boulevard, Stamford, Connecticut. Integrated Financial Solutions had been the subject of a July 25, 2001 Order to Cease and Desist based upon the same conduct; the Order to Cease and Desist, being uncontested, had become permanent on September 6, 2001. In fining the respondent $40,000, the Commissioner found that, from at least 1998 forward, the respondent, acting through one or more unregistered agents, solicited investors to purchase non-existent shares of Venture Investments - Aggressive Growth A and of Decatur Daniels Investments; that the respondent participated in a scheme whereby its agent used investor funds to benefit himself and his spouse, and that the respondent misrepresented to investors on their individual account summaries that their funds were invested in Venture Investments - Aggressive Growth A and Decatur Daniels Investments. The Commissioner determined that such conduct violated the antifraud provisions of the Connecticut Uniform Securities Act; that the respondent transacted business as an unregistered broker-dealer and employed unregistered agents, and that the bogus investments were not registered under the Connecticut Uniform Securities Act. The respondent did not contest the agency's action.

Tri-National Development Corp. Fined $20,000 for Unregistered Promissory Note Sales

On December 10, 2001, the Commissioner entered an Order Imposing Fine against Tri-National Development Corp. of 480 Camino Del Rio South, Suite 140, San Diego, California. The respondent had been the subject of a July 16, 2001 Order to Make Restitution and Notice of Right to Hearing and a July 16, 2001 Restated Order to Cease and Desist and Restated Notice of Intent to Fine that superseded an April 17, 2001 Order to Cease and Desist and Notice of Intent to Fine based upon the same conduct. Both the Restated Order to Cease and Desist and the Order to Make Restitution, being uncontested, had become permanent on October 9, 2001. In fining the firm $20,000, the Commissioner found that, from at least April 1999 forward, the respondent sold unregistered non-exempt promissory notes to at least seventeen Connecticut investors through at least four unregistered agents of issuer in violation of Sections 36b-16 and 36b-6(b) of the Connecticut Uniform Securities Act. The respondent did not contest the Commissioner's imposition of the $20,000 fine.

Settlements

Consent Orders

Donald R. Bisson (CRD # 817246) Permanently Barred from Securities Industry; Fined $3,500 in Connection With Promissory Note Sales

On March 11, 2002, the Banking Commissioner entered a Consent Order (Docket No. CF-2001-6110-S) resolving allegations made in a November 7, 2001 Order to Cease and Desist and Notice of Intent to Fine against Donald R. Bisson of Windsor, Connecticut. The Consent Order found that, while acting as a broker-dealer agent, Donald Bisson sold promissory notes issued by Pacific Air Transport, Inc., Corlogic Corporation, Quality Automotive Enterprises, LLC and Technical Support Services, Inc. without notice to his employing firm in violation of Section 36b-31-6e of the Regulations under the Connecticut Uniform Securities Act. The Consent Order also found that, in selling the notes, the respondent 1) transacted business as an unregistered agent of the issuers involved in violation of Section 36b-6(a) of the Act; and 2) violated Section 36b-16 of the Act by offering and selling unregistered, non-exempt securities.

The Consent Order permanently barred Donald Bisson from transacting business in Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent. In addition, the Consent Order fined the respondent $3,500, and rendered the November 7, 2001 Order to Cease and Desist permanent as of March 11, 2002.

Cybertrader, Inc. (CRD # 44523) Fined $7,500 for Unregistered Broker-dealer Activity

On February 1, 2002, the Banking Commissioner entered a Consent Order (No. CO-01-6414-S) with respect to Cybertrader, Inc., a Connecticut-registered broker-dealer having its principal office at 115 Wild Basin Road, Suite 100, Austin, Texas. The Consent Order alleged that, during the three-month period immediately preceding its November 11, 1999 registration as a broker-dealer under the Connecticut Uniform Securities Act, the firm effected securities transactions for the accounts of individuals having a Connecticut address in violation of Section 36b-6(a) of the Act.

The Consent Order fined the firm $7,500 and directed it to cease and desist from regulatory violations. In addition, the Consent Order required that the firm implement revised supervisory and compliance procedures designed to improve regulatory compliance. The Consent Order also mandated that, for two years, the firm file quarterly reports with the agency concerning any securities-related complaints, actions or proceedings involving Connecticut residents.

Paul A. Golub (CRD # 1001665) Permanently Barred From Securities Business Following Unregistered Promissory Note Sales

On January 25, 2002, the Banking Commissioner entered a Consent Order (Docket No. CF-2001-6114-S) with respect to Paul A. Golub of Middlefield, Connecticut. The Consent Order obviated the need for a hearing on the Commissioner's October 9, 2001 Order to Cease and Desist and Notice of Intent to Fine (Docket No. CF-2001-6114-S) issued against the respondent. In entering the Consent Order, the Commissioner found that the respondent sold unregistered non-exempt promissory notes of Lifeblood Biomedical, Inc., Canko Environmental Technologies, Inc., Ameritech Petroleum, Inc. and ALumaLex, Inc. f/k/a Auto Shutter, Inc. in violation of Section 36b-16 of the Connecticut Uniform Securities Act and without registering as an agent of the issuers under the Act. In addition, the Commissioner found that the respondent violated the Act by selling unregistered non-exempt shares of Palm Beach Investment Group, Inc. preferred stock in Connecticut; by transacting business as an unregistered broker-dealer in connection with the preferred stock sales; and by employing unregistered broker-dealer agents.

The Consent Order permanently barred the respondent from transacting business as a broker-dealer, agent, investment adviser or investment adviser agent in Connecticut. In addition, the Consent Order provided that the October 9, 2001 Order to Cease and Desist would be made permanent as of January 25, 2002.

Larry Alan Freed d/b/a Larry A. Freed & Associates (CRD # 213551) Assessed $3,500 for Unregistered Investment Advisory Activity

On January 16, 2002, the Banking Commissioner entered a Consent Order (File No. CO-01-6394-S) with respect to Larry Alan Freed, a sole proprietor applicant for investment adviser registration under the Connecticut Uniform Securities Act. Freed maintains his principal place of business at 180 Denslow Road, Suite7, East Longmeadow, Massachusetts. The Commissioner alleged that from at least May 11, 2001 forward, Freed transacted business as an investment adviser absent registration under the Act.

The Consent Order directed Freed to cease and desist from regulatory violations and required that he remit $3,500 to the department. Of that amount, $3,000 constituted an administrative fine and $500 represented reimbursement for agency investigative costs. The Consent Order also required that, for one year, Freed provide the department with quarterly reports concerning any securities-related complaints, actions or proceedings involving Connecticut residents.

Freed became registered as an investment adviser in Connecticut on January 16, 2002.

Pacific Continental Securities Corporation (CRD # 2398) Assessed $7,500 for Unregistered Stock Sales; Offers $70,000 in Rescission to Affected Connecticut Investors

On January 2, 2002, the Banking Commissioner entered a Consent Order (File No. CO-01-6141-S) with respect to Pacific Continental Securities Corporation, a Connecticut-registered broker-dealer having offices at 8484 Wilshire Boulevard, Suite 450, Beverly Hills, California and 2 Rector Street, 13th Floor, New York, New York. The Consent Order was based on allegations that, at various times from July 1998 through July 1999, the firm sold unregistered, non-exempt common stock of Uniforms for America (OTC BB: UNIF) to Connecticut residents in violation of Section 36b-16 of the Connecticut Uniform Securities Act. In furtherance of its desire to informally resolve the matter with the department, the firm furnished proof that it had extended a $70,000 rescission offer to affected Connecticut purchasers of the UNIF stock and that those investors electing rescission were repaid.

Pursuant to the Consent Order, the firm paid $7,500 to the department. Of that amount, $6,000 constituted an administrative fine and $1,500 represented reimbursement for agency investigative costs. In addition, the Consent Order directed the firm to implement revised supervisory and compliance procedures; and provide quarterly reports to the department for two years describing any securities-related complaints, actions or proceedings involving Connecticut residents. The Consent Order also restricted the firm's business for two years to the purchase, sale and redemption of securities issued by investment companies regulated under the Investment Company Act of 1940; government securities; exchange-listed options; and securities listed on the New York Stock Exchange, the American Stock Exchange and the National Market System of NASDAQ. Finally, the Consent Order required that the firm pay the expenses, not to exceed $1,500 in the aggregate, of one or more examinations to be conducted by the department within eighteen months.

The firm has, since commencement of negotiations on the Consent Order, filed to voluntarily withdraw its broker-dealer registration nationwide.

Stipulation and Agreements

Henderson Global Investors (North America) Inc. (CRD # 107300; SEC File No. 801-47202) Assessed $1,450 for Delinquent Investment Advisory Notice Filing

On March 19, 2002, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-02-6448-S) with Henderson Global Investors (North America) Inc., an SEC-regulated investment adviser located at One Financial Plaza, 19th Floor, Hartford, Connecticut. The Stipulation and Agreement alleged that, from April 1999 until February 28, 2001, the firm failed to make the notice filing required of SEC-regulated investment advisers by Section 36b-6(e) of the Connecticut Uniform Securities Act.

Pursuant to the Stipulation and Agreement, the firm agreed to implement such supervisory and compliance procedures as were necessary to ensure compliance with state notice filing requirements. In addition, Henderson Global Investors (North America) Inc. agreed to pay $1,450 to the department. Of that amount, $1,000 constituted an administrative fine and $450 represented reimbursement for past due notice filing fees.

Bridgewater Associates Inc. (CRD # 105129; SEC File No. 801-35875) Assessed $2,100 for Failing to Make Investment Advisory Notice Filing

On March 19, 2002, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-02-6489-S) with respect to Bridgewater Associates Inc., an SEC-regulated investment adviser located at One Glendinning Place, Westport, Connecticut. The Stipulation and Agreement was based on allegations that, from 1997 until February 12, 2002, the firm failed to make the notice filing required of SEC-regulated investment advisers by Section 36b-6(e) of the Connecticut Uniform Securities Act.

Pursuant to the Stipulation and Agreement, the firm agreed to remit $2,100 to the agency. Of that amount, $1,500 constituted an administrative fine and $600 represented reimbursement for past due notice filing fees.

Touchstone Capital, LLC (CRD # 112564; SEC File No. 801-56300) Assessed $4,550 for Failure to Make Investment Advisory Notice Filing

On March 19, 2002, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-01-6313-S) with Touchstone Capital, LLC of 411 West Putnam Page Avenue, Greenwich, Connecticut. The firm had been registered as an investment adviser with the Securities and Exchange Commission from February 24, 1999 until June 29, 2001, and had applied for registration under the Connecticut Uniform Securities Act when the amount of its assets under management no longer met federal eligibility requirements. The Commissioner alleged that, between February 24, 1999 and June 29, 2001, the firm failed to make the notice filing required of SEC-regulated investment advisers by Section 36b-6(e) of the Act, and failed to remit the associated fees.

Pursuant to the Stipulation and Agreement, the firm agreed to pay $4,550 to the department. Of that amount, $3,500 constituted an administrative fine, $500 represented reimbursement for agency investigative costs and $550 represented reimbursement for past due notice filing fees for calendar years 1999, 2000 and 2001.

Touchstone Capital, LLC became registered as an investment adviser under the Act on March 19, 2002.

Atlantic Asset Management, L.L.C. (CRD # 111037; SEC File No. 801-52575) Assessed $2,100 for Lapse in Filing Investment Advisory Notice

On March 12, 2002, the Banking Commissioner executed a Stipulation and Agreement (No. ST-02-6423-S) with respect to Atlantic Asset Management, L.L.C., an SEC-regulated investment adviser located at 2187 Atlantic Street, Stamford, Connecticut. The Stipulation and Agreement claimed that from 1997 until June 26, 2001, when a notice filing was made with the department, the firm was remiss in making the investment advisory notice filing required by Section 36b-6(e) of the Connecticut Uniform Securities Act.

In entering into the Stipulation and Agreement, the Commissioner acknowledged the firm's representations that it had no individual clients in Connecticut; that its client base was primarily institutional; and that it had been unaware of 1997 statutory changes requiring that a notice be filed and a fee remitted. Pursuant to the Stipulation and Agreement, the firm agreed to pay $2,100 to the department; of that amount $1,500 constituted an administrative fine and $600 represented reimbursement for past due notice filing fees.

T.H. Fitzgerald & Co., L.L.C. (CRD # 104641; SEC File No. 801-12196) Assessed $5,100 for Failing to Register as Investment Adviser, Make Investment Advisory Notice Filing

On March 12, 2002, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-02-6474-S) with respect to T.H. Fitzgerald & Co., L.L.C., an SEC-regulated investment adviser located at 180 Church Street, Naugatuck, Connecticut. The Stipulation and Agreement alleged that from at least 1989 until Page 13

1997, the firm transacted business as an investment adviser from Connecticut without being registered under Section 36b-6(c) of the Connecticut Uniform Securities Act; and that, from 1997 until February 26, 2002, the firm failed to make the notice filing required of SEC-regulated investment advisers by Section 36b-6(e) of the Act.

In entering into the Stipulation and Agreement, the Commissioner acknowledged the firm's representations that its client base was confined to corporate, governmental and institutional accounts none of which were located in Connecticut. Pursuant to the Stipulation and Agreement, the firm agreed to pay $5,100 to the department; of that amount $1,500 constituted an administrative fine for failing to file the notice required by Section 36b-6(e) of the Act; $3,000 constituted a fine for transacting business as an investment adviser absent registration from 1989 until 1997; and $600 represented reimbursement for past due notice filing fees.

Weeden & Co., L.P. (CRD # 16835; SEC File No. 801-57163) Assessed $1,850 for Investment Advisory Notice Filing Delinquency

On February 13, 2002, the Banking Commissioner executed a Stipulation and Agreement (No. ST-02-6431-S) with respect to Weeden & Co., L.P., an applicant for investment adviser registration under the Connecticut Uniform Securities Act. The firm, which is located at 145 Mason Street, Greenwich, Connecticut, deregistered with the Securities and Exchange Commission in June 2001. The Stipulation and Agreement alleged that from January 20, 2000 until March 29, 2001, when a notice filing was made with the department, the firm had failed to make the investment advisory notice filing required of SEC-registered investment advisers under Section 36b-6(e) of the Connecticut Uniform Securities Act.

The Stipulation and Agreement assessed the firm $1,850. Of that amount, $1,500 constituted an administrative fine and $350 constituted reimbursement for past due notice filing fees for calendar years 2000 and 2001.

Weeden & Co., L.P. became registered as an investment adviser on February 13, 2002.

PIMCO Specialty Markets LLC (CRD # 108056; SEC File No. 801-57842) Assessed $2,400 for Investment Advisory Notice Filing Delinquency

On February 5, 2002, the Banking Commissioner executed a Stipulation and Agreement (No. ST-01-6380-S) with respect to PIMCO Specialty Markets LLC, an SEC-regulated investment adviser located at 55 Greens Farms Road, Westport Connecticut. The Stipulation and Agreement alleged that from August 10, 2000, when PIMCO Specialty Markets LLC became subject to SEC regulation, until August 29, 2001, when a notice filing was made with the department, the firm failed to make the investment advisory notice filing required by Section 36b-6(e) of the Connecticut Uniform Securities Act.

In entering into the Stipulation and Agreement, the Commissioner acknowledged the firm's representations that it had been formed to service large institutional accounts; that none of the firm's clients were principally domiciled in Connecticut; and that no general solicitation of investment advisory business had occurred in Connecticut. In furtherance of its desire to settle the matter informally, the firm represented that, after receiving notice of the filing deficiency from the Division, the firm had reviewed, revised and implemented supervisory and compliance procedures necessary to ensure regulatory compliance.

The Stipulation and Agreement fined the firm $2,000 and required that it reimburse the department $400 for investigative costs.

AFA Management Partners, L.P. (CRD # 108161; SEC File No. 801-57172)) Assessed $2,150 for Investment Advisory Notice Filing Delinquency

On January 22, 2002, the Banking Commissioner executed a Stipulation and Agreement (No. ST-01-6424-S) with respect to AFA Management Partners, L.P., an SEC-regulated investment adviser located at 289 Greenwich Avenue, Second Floor, Greenwich, Connecticut. The Stipulation and Agreement alleged that from February 23, 2000, when AFA Management Partners, L.P. became subject to SEC regulation, until March 30, 2001, when a notice filing was made with the department, the firm failed to make the investment advisory notice filing required by Section 36b-6(e) of the Connecticut Uniform Securities Act.

In entering into the Stipulation and Agreement, the Commissioner acknowledged that the firm had retained legal counsel to advise it concerning compliance with state notice filing requirements. Pursuant to the Stipulation and Agreement, the firm agreed to 1) review, revise and implement such supervisory and compliance procedures as were necessary to ensure compliance with state notice filing requirements; and 2) remit $2,150 to the department, $2,000 of which constituted an administrative fine and $150 of which represented reimbursement for past due notice filing fees.


STATISTICAL SUMMARY

Licensing At A Glance
March 31, 2002
Broker-dealers Registered 2,570
Broker-dealer Agents Registered 113,444
Broker-dealer Branch Offices Registered 1,716
Investment Advisers Registered 378
SEC Registered Advisers Filing Notice 1,125
Investment Adviser Agents Registered 4,863
Investment Advisory Branch Offices Registered 150
Agents of Issuer Registered 118
 

  1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Securities Investigations
Opened 91       91
Closed 78       78
Ongoing as of March 31, 2002 106      
Subpoenas issued 15       15
Cases referred from Attorney General 2       2
Cases referred from Other Agencies 4       4
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Securities Enforcement: Remedies and Sanctions
Notices of Intent to Deny (Licensing) 0       0
Notices of Intent to Suspend (Licensing) 0       0
Notices of Intent to Revoke (Licensing) 1       1
Denial Orders (Licensing) 0       0
Suspension Orders (Licensing) 0       0
Revocation Orders (Licensing) 0       0
Notices of Intent to Fine 1       1
Orders Imposing Fine 4       4
Cease and Desist Orders 4       4
Notices of Intent to Issue Stop Order 0       0
Activity Restrictions/Bars 3       3
Stop Orders 0        0
Vacating/Withdrawal Orders 0       0
Censures 0       0
Formal Orders of Restitution 0       0
{ }
Proceedings and Settlements
Administrative Actions 6       6
Consent Orders 5       5
Stipulation and Agreements 8       8
{ }
Monetary Relief
Monetary Sanctions Imposed $153,700       $153,700
Restitution or Other Monetary Relief $200,226       $200,226
{ }  
Securities Referrals
Criminal (Chief State's Attorney) 2   2
Criminal (Other) 0   0
Civil (Attorney General) 0   0
Other Agency Referrals 2   2
{ }  
Examinations
Broker-dealers 23       23
Investment Advisers 12       12

The Securities and Business Investments Division is also charged with
administering the Connecticut Business Opportunity Investment Act.

  1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Business Opportunities
Investigations Opened 1       1
Investigations Closed 0       0
Investigations ongoing as of March 31, 2002 3      
Cases referred by Attorney General 0       0
Cases referred by Other Agencies 0       0
Subpoenas issued 0       0
Cease and Desist Orders 0       0
Notices of Intent to Issue Stop Order 0       0
Stop Orders 0       0
Notices of Intent to Fine 0       0
Orders Imposing Fine 0       0
Consent Orders 0       0
Monetary Sanctions Imposed 0       0
Restitution or Other Monetary Relief 0       0
Criminal Referrals 0       0
Civil Referrals (Attorney General) 0        0
Other Agency Referrals 0       0

Securities Division