DOB: Spring 2014 Securities Bulletin

Securities and Business Investments Division

Securities Bulletin

Vol. XXVIII  No. 1
Spring 2014

Features

Enforcement and Other Highlights 
Contributors

Eric Wilder, Director
Cynthia Antanaitis, Assistant Director 


Meyers Associates, L.P. (CRD # 34171) and Bruce Meyers (CRD # 1045447) – Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer and as a Broker-dealer Agent and Notice of Intent to Fine Issued

On February 10, 2014, the Banking Commissioner issued an Order to Cease and Desist and Notice of Intent to Fine (Docket No. CFNR-14-8132-S) against Meyers Associates, L.P., a Connecticut-registered broker-dealer located at 45 Broadway, Second Floor, New York, New York, and Bruce Meyers, Chief Executive Officer of the firm.  The action also sought to revoke the firm’s registration as a broker-dealer and to revoke the agent registration of Bruce Meyers.  Meyers Associates, L.P. had been the subject of a November 23, 2010 Order to Cease and Desist, Notice of Intent to Revoke Registration as a Broker-dealer and Notice of Intent to Fine (Docket No. RCF-10-7817-S) which was resolved via a June 14, 2011 Consent Order.


The instant action alleged that 1) both the firm and Bruce Meyers failed to discharge their supervisory responsibilities; 2) the firm violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered securities; 3) the firm, with the material assistance of Bruce Meyers, violated Section 36b-14(d) of the Act and Section 36b-31-14f of the Regulations thereunder by failing to make required books and records available to the Commissioner; 4) the firm engaged in dishonest or unethical practices in the securities business; and 5) prior sanctions entered by FINRA against the firm and Bruce Meyers provided additional grounds for the Connecticut revocation action.


Each of the respondents was afforded an opportunity to request a hearing on the 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 and Notice of Intent to Fine.


Ulysses Partners, LLC and James E. Neilsen (CRD # 4825841) – Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine Issued

On January 9, 2014, the Banking Commissioner entered an Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine (Docket No. CRF-13-8014-S) against Ulysses Partners, LLC, now or formerly of 124 East Avenue, Norwalk, Connecticut, and James E. Neilsen, founder, chief financial officer and treasurer of Ulysses Partners, LLC.  Respondent Neilsen, a former broker-dealer agent, is also a Certified Public Accountant.

The action alleged that Ulysses Partners, LLC was in the business of marketing hedge funds to financial institutions for compensation.  According to the action, from approximately November 2005, to finance the business operations of Ulysses Partners, LLC, respondent Neilsen sold approximately $10 million of securities in the form of notes and investment agreements to Connecticut investors, the majority of whom were accounting clients of respondent Neilsen.  Respondent Neilsen allegedly represented to would-be investors that the investment would generate a high rate of return.  Investors, however, allegedly did not receive key disclosures concerning, among other things, the risks involved, how the offering proceeds would be used or that the securities were not registered under the Connecticut Uniform Securities Act.

The action further alleged that Ulysses Partners, LLC transacted business as an unregistered broker-dealer; that respondent Neilsen transacted business as an unregistered broker-dealer agent; that the respondents sold unregistered securities in violation of Section 36b-16 of the Connecticut Uniform Securities Act; and that the respondents violated the antifraud provisions of the Act.

On February 18, 2014, the action was amended to change the end date of the alleged misconduct from December 2010 to September 2011.

Respondents Ulysses Partners, LLC and Neilsen were afforded an opportunity to request a hearing on the Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine, as amended.


Euro Group of Companies, Inc. – Consent Order Entered

On March 20, 2014, the Banking Commissioner entered a Consent Order (Docket No. CO-13-8022-S) with respect to Euro Group of Companies, Inc. now or formerly of 475 Whitney Avenue, New Haven, Connecticut.  Euro Group of Companies, Inc. had been the subject of an October 23, 2013 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-13-8022-S).


On February 10, 2014, an Amended and Restated Order to Cease and Desist and Amended and Restated Notice of Intent to Fine was issued.  The amended action added Vasilios Koutsobinas as a respondent.  As amended, the action alleged that Euro Group, with the material assistance of respondent Koutsobinas, violated Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered nonexempt securities, and that Euro violated Section 36b-6(b) of the Act by employing one Christos Christoforou as an unregistered agent of issuer.  In addition, the action alleged that Euro Group and respondent Koutsoubinas violated the antifraud provisions of the Act by 1) failing to disclose to affected investors, none of whom was a control person of Euro Group, that the investors could have purchased Euro Group shares in the open market for significantly less than what they paid in the issuer transactions; and 2) failing to provide investors with an offering document that disclosed the risks associated with purchasing Euro Group securities.  The action also alleged that public shares of Euro Group (OTC Bulletin Board symbol:  EGCO) were essentially low priced and thinly traded penny stocks.


The March 20, 2014 Consent Order only resolved the allegations against respondent Euro Group of Companies, Inc.

The Consent Order reflected Euro Group of Companies, Inc.’s representation that it was not presently conducting any business activities in Connecticut and had no known assets.  In addition, the Consent Order acknowledged that the respondent had demonstrated to the agency that it was financially unable to pay the fine that otherwise would have been imposed against it.  The Consent Order required Euro Group of Companies, Inc., its affiliates and successors in interest to cease and desist from violative conduct, including selling unregistered securities in and from Connecticut, engaging an unregistered agent of issuer and engaging in an act, practice or course of business which operates as a fraud or deceit.

Salt Wall Trading, Inc. and Drew R. Fraser – Consent Order Entered; Drew R. Fraser Barred from Connecticut Securities Business for Seven Years

On February 28, 2014, the Banking Commissioner entered a Consent Order (No. CO-14-8077-S) with respect to Salt Wall Trading, Inc. of 37 Fellows Road, Ipswich, Massachusetts and Drew R. Fraser, Chief Executive Officer and control person of Salt Wall Trading, Inc.  The Consent Order alleged that from approximately November 30, 2012 to January 25, 2013, 1) Salt Wall Trading, Inc. and Fraser violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities issued by Salt Wall Trading, Inc.; 2) Salt Wall Trading, Inc. employed one or more unregistered agents of issuer in contravention of Section 36b-6(b) of the Act; and 3) Fraser transacted business as an unregistered agent of issuer in violation of Section 36b-6(a) of the Act.
 

The Consent Order acknowledged that Salt Wall Trading, Inc. and Fraser had provided documentation to the agency showing that they had paid $23,250 in restitution to, and obtained releases from, the six Connecticut investors who purchased unregistered securities, and that, following the restitutionary payments, Salt Wall Trading, Inc. and Fraser were financially unable to pay the fine that otherwise would have been assessed against them pursuant to the Consent Order.


The Consent Order directed Salt Wall Trading, Inc. and Fraser to cease and desist from regulatory violations.  In addition, the Consent Order barred Drew R. Fraser for seven years from 1) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent; and 2) directly or indirectly soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut.

     
 


Opportunity Income Plus, LP Fined $1,300 for Late Rule 506 Notice Filing

On March 18, 2014, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-14-8142-S) with Opportunity Income Plus, LP, an issuer of securities located at Park 80 West, 250 Pehle Avenue, Suite 708, Saddle Brook, New Jersey.  The Stipulation and Agreement alleged that Opportunity Income Plus, LP had been delinquent in making a Regulation D Rule 506 notice filing under Section 36b-21(e) of the Connecticut Uniform Securities Act with respect to an offering of pooled investment fund interests made to Connecticut investors commencing on or about January 1, 2007.  After making the requisite filing, Opportunity Income Plus, LP agreed to pay a $1,300 fine and to refrain from offering or selling securities in or from Connecticut absent compliance with Section 36b-16 of the Act.


STATISTICAL SUMMARY

Licensing At A Glance
at the end of the quarter

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Broker-dealers Registered 2,799  
 
 
Broker-dealer Agents Registered 154,725    
 
 
Broker-dealer Branch Offices Registered 2,262  
 
Investment Advisers Registered 535    
SEC Registered Advisers Filing Notice 2,006    
 
Investment Adviser Agents Registered 11,765    
Exempt Reporting Advisers
84
 
 
 
Agents of Issuer Registered 22    
 
Conditional Registrations
0
 
 
 
 
 

Securities and Business
Opportunity Filings

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Offerings Reviewed 42  
 
  42
Investment Company Notice Filings 740  
 
  740
Exemptions and Exemptive Notices 858       858
 
 
Examinations
     
Broker-dealers 6  
 
  6
Investment Advisers 47  
 
  47
 
 
Securities Investigations
 
Opened 18    
 
18
Closed 22    
 
22
Ongoing as of End of Quarter 69    
 
  
Subpoenas issued 16       16
Matters referred from Attorney General 1       1
Matters referred from Other Agencies 3       3
 
 
Business Opportunity Investigations
 
Investigations Opened 1       1
Investigations Closed 1  
 
  1
Ongoing as of End of Quarter 4           
 
 
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 3  
 
  3
Orders Imposing Fine 0  
 
  0
Cease and Desist Orders 3  
 
  3
Notices of Intent to Issue Stop Order 0  
 
 
0
Activity Restrictions/Bars 1  
 
 
1
Stop Orders 0       0
Vacating/Withdrawal/ Modification Orders 0       0
Restitutionary Orders 1  
 
  1
Injunctive Relief Obtained 0       0
 
 

Proceedings and Settlements

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Administrative Actions
2
 
 
 
2
Consent Orders
2
 
 
 
2
Stipulation and Agreements
1
 
 
 
1
 
 

Monetary Relief*

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Monetary Sanctions Imposed
$1,300
 
 
  $1,300
Portion attributable to settlements
$1,300
 
$1,300
Attributable to Court-Ordered Penalties         
 
 
Restitution or Other Monetary Relief
(includes rescission offer amounts)
$43,250
 
 
  $43,250

*Cents eliminated

 

Securities Referrals

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Criminal (Chief State's Attorney)
0
 
 
 
0
Civil (Attorney General)
0
 
 
 
0
Other Agency Referrals
3
 
 
3



Securities Division