DOB: Spring 2015 Securities Bulletin

Securities and Business Investments Division

Securities Bulletin

Vol. XXIX  No. 1
Spring 2015

Features

Enforcement and Other Highlights 
Contributors

Eric Wilder, Director
Cynthia Antanaitis, Assistant Director 


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

On March 31, 2015, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-15-8175-S) against James E. Neilsen of Norwalk, Connecticut.  Respondent Neilsen, a former broker-dealer agent, provided tax and accounting services and also did business under the name Neilsen Financial Services.  James E. Neilsen had been the subject of a November 13, 2014 Order of the Commissioner imposing a $25,000 fine and directing respondent Neilsen to pay restitution in connection with activities conducted through Ulysses Partners, LLC of which Neilsen was the founding member.  The fine and restitution remain unpaid.


The March 31, 2015 action alleged that, more recently, respondent Neilsen entered into investment agreements with at least two investors and represented to them that the investment would generate a 9% return with no risk of loss.  The investors invested at least $243,000 with respondent Neilsen.  The action also alleged that respondent Neilsen used investor monies to cover his personal expenses and that he failed to provide investors with written disclosure concerning the risks of the investment.  The action added that respondent Neilsen allegedly violated the antifraud provisions in Section 36b-4(a) of the Connecticut Uniform Securities Act; that respondent Neilsen sold unregistered securities in violation of Section 36b-16 of the Act; and that respondent Neilsen made a material misrepresentation to the agency in conjunction with an investigation.


Respondent Neilsen was afforded an opportunity to request a hearing on the allegations.


Poppin Kettle Franchising, Inc., Chris T. Gregoris and Yofresh Yogurts Franchising, Inc. - Order to Cease and Desist Made Permanent Post-Hearing; $85,000 in Fines Imposed

On February 27, 2015, following an administrative hearing, the Banking Commissioner issued Findings of Fact, Conclusions of Law and an Order in the matter of Poppin Kettle Franchising, Inc., Chris T. Gregoris and Yofresh Yogurts Franchising, Inc.  The respondents had been the subject of a June 12, 2014 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-14-886-B).  Poppin Kettle Franchising, Inc., now dissolved, and Yofresh Yogurts Franchising, Inc. were both located at 8 Faneuil Hall Marketplace, Boston, Massachusetts.  Respondent Gregoris was the sole officer and director of both entities.

Respondent Gregoris had also been the president of Java's Brewin Development, Inc. which was the subject of a May 30, 2008 Order to Cease and Desist and an October 8, 2008 Order Imposing Fine issued by the Commissioner under the Connecticut Business Opportunity Investment Act (Docket No. CF-2008-845-B).  The $30,000 fine levied by the October 8, 2008 Order remains unpaid.

The June 12, 2014 action had alleged that 1) the respondents offered and/or sold unregistered Poppin Kettle Franchising, Inc. franchises and unregistered Yofresh Yogurts Franchising, Inc. franchises in violation of Section 36b-67(1) of the Connecticut Business Opportunity Investment Act; and 2) respondents Poppin Kettle Franchising, Inc. and Gregoris violated the antifraud provisions in Section 36b-67(6) of the Act by failing to provide purchaser-investors with material disclosures including the risks involved in buying the business opportunity; financial information on the seller; litigation involving Gregoris and several New York purchasers of the Java's Brewin business opportunity; background information on the seller, its principals and affiliates; that Gregoris was a control person of Java's Brewin; that the Commissioner fined Java's Brewin $30,000 for violating the Act; and that the fine against Java’s Brewin remained unpaid.

The Commissioner found that the respondents violated Section 36b-67(1) of the Act by either offering, selling or both offering and selling unregistered popcorn and yogurt business opportunities.  The Commissioner also noted that the respondents represented that they would provide a sales program or marketing program to prospective business opportunity purchasers.

After reviewing the record, the Commissioner also concluded that respondents Poppin’ Kettle Franchising, Inc. and Chris T. Gregoris had violated the antifraud provisions in Section 36b-67(6) of the Act by omitting material information such as respondent Gregoris’ prior history with Java's Brewin Development, Inc., the 2008 Order to Cease and Desist and Order Imposing Fine issued by the Commissioner against Java's Brewin Development, Inc. and key risk factors associated with the Poppin Kettle Franchising, Inc. business opportunity.

The Commissioner directed that the June 12, 2014 Order to Cease and Desist against all respondents be made permanent.  In addition, the Commissioner ordered that 1) respondents Poppin Kettle Franchising, Inc. and Chris T. Gregoris pay a $75,000 fine, jointly and severally; and 2) respondent YoFresh Yogurts Franchising, Inc. be fined $10,000. 

Rosemarie Pokorski d/b/a Second Impression - Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine Issued

On February 26, 2015, the Banking Commissioner entered an Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine against Rosemarie Pokorski who did business under the name Second Impression.  The action alleged that from approximately February 1, 2012 to February 1, 2013, respondent Pokorski offered and sold unregistered securities in the form of investment agreements to at least four Connecticut residents.  Respondent Pokorski allegedly told investors that she was in the business of buying antiques and collectibles in bulk, and that she would use the invested funds to purchase the goods, sell them and divide the profits with each investor on a percentage basis.  The action also alleged that respondent Pokorski instead spent most, if not all, of the investment proceeds on personal expenses and, in so doing, violated the antifraud provisions in Section 36b-4(a) of the Connecticut Uniform Securities Act.

Respondent Pokorski was afforded an opportunity for a hearing on the allegations.


Meyers Associates, L.P. (CRD # 34171) and Bruce Meyers (CRD # 1045447) – Broker-dealer Registration Suspended; $50,000 Fine Imposed

On March 24, 2015, the Banking Commissioner entered a Consent Order (Docket No. CFNR-14-8132-S) with respect to Meyers Associates, L.P. and Bruce Meyers, Chief Executive Officer of the firm.  The firm maintains its principal office at 45 Broadway, Second Floor, New York.  Meyers Associates, L.P. and Bruce Meyers were the subject of a February 13, 2015 Amended and Restated Order to Cease and Desist, Amended and Restated Notice of Intent to Revoke Registration as a Broker-dealer and as a Broker-dealer Agent and Amended and Restated Notice of Intent to Fine. The action amended the Commissioner’s February 10, 2014 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 (Docket No. CFNR-14-8132-S).  As amended, the action had 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 failed to maintain complete and accurate books and records; 5) the firm failed to halt improper commission splitting by its agents; 6) the firm engaged in dishonest or unethical practices in the securities business; 7) prior sanctions entered by FINRA against the firm and Bruce Meyers provided additional grounds for the Connecticut revocation action; 8) the firm provided inaccurate, false or misleading information to the Commissioner; and 9) the firm employed at least one unregistered agent in violation of Section 36b-6(b) of the Connecticut Uniform Securities Act.

  
The Consent Order settled the matters alleged in the February 13, 2015 Amended and Restated Notice.

In addition to directing both respondents to cease and desist from regulatory violations, the Consent Order required that the respondents pay a $50,000 fine to the department.  In addition, the Consent Order suspended the firm's Connecticut broker-dealer registration for 60 days.  If, following that 60 day period, the fine remained unpaid, the suspension would remain in effect until the fine was paid in full.  The Consent Order also required that respondent Bruce Meyers withdraw his Connecticut registration as a broker-dealer agent of Meyers Associates, L.P.

  
The Consent Order also obligated Meyers Associates, L.P. to 1) retain an independent consultant to review the firm’s compliance procedures; and 2) notify the Division within seven business days of any  reportable disciplinary items, including, without limitation, pending regulatory investigations and inquiries initiated against Meyers Associates, L.P. or any of its officers, directors, control persons, agents, employees or representatives.

  
In addition, the Consent Order restricted the firm's Connecticut business activity for three years to transactions in investment company securities; governmental securities; exchange-listed options; and securities listed on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, and the NASDAQ Capital Market.  During the three year period, the firm would be prohibited from selling in Connecticut securities listed or traded on the OTC Bulletin Board, OTCQB marketplace or the OTC Pink marketplace.

Nicholas John Moniodes (CRD # 1826844) d/b/a Moniodes Investments

On February 23, 2015, the Banking Commissioner entered a Consent Order (Docket No. CO-15-8065-S) with respect to Nicholas John Moniodes.  Respondent Moniodes previously worked in the information technology department of broker-dealer Millenco LLC (CRD No. 33726) and did business under the name Moniodes Investments.  Respondent Moniodes had been the subject of a July 9, 2014 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing alleging that, from approximately 2004 to 2011, Moniodes entered into Investment Agreements with various investors, and represented that investor monies would be invested in the stock market, with interest payments being made based upon stock market gains.  The July 9, 2014 action had also alleged that respondent Moniodes used investor monies for his personal expenses, and that although respondent Moniodes had repaid some of the investors, one of the investors was still owed approximately $35,000.  The action had further alleged that, in addition to violating the antifraud provisions in Section 36b-4(a) of the Connecticut Uniform Securities Act, respondent Moniodes violated Section 36b-16 of the Act by offering and selling unregistered securities.


The Consent Order acknowledged that Moniodes had provided the agency with documentation that Moniodes had remitted $32,000 to the affected investor.  Moniodes also provided documentation indicating that he was financially unable to pay any fine that might have been ordered as a result of the administrative action or as a term of the Consent Order.  The Consent Order directed Moniodes to cease and desist from directly or indirectly violating Connecticut’s securities laws, including violations of the registration requirement in Section 36b-16 of the Act and the antifraud provisions in Section 36b-4 of the Act.

Andre Paul Young (CRD # 2901804) Barred from Connecticut Securities Business for Five Years

On January 16, 2015, the Banking Commissioner entered a Consent Order (Docket No. CO-14-8081-S) with respect to Andre Paul Young, a former broker-dealer agent and investment adviser agent of MetLife Securities Inc.  The respondent had been the subject of a November 26, 2014 Order to Cease and Desist and Notice of Right to Hearing (Docket No. CD-14-8081-S) alleging that respondent Young engaged in dishonest or unethical business practices by lending money to an investment advisory client of MetLife Securities Inc.  The November 26, 2014 action had also alleged that, while registered as a broker-dealer agent of MetLife Securities Inc., the respondent made improper use of two customers’ monies by not investing those monies in a stock fund but rather depositing customer monies into respondent’s personal bank account.  According to the Order to Cease and Desist, the respondent had admitted on the record that he had used the customers’ funds to pay his mortgage.  Ultimately, the respondent repaid the clients $45,000 of the $208,400 that the clients had tendered to the respondent.  On April 22, 2013, MetLife Securities Inc. entered into a settlement with the affected clients and reimbursed them $163,400 representing the unpaid balance of the funds they had tendered to respondent Young.
  

In lieu of an administrative hearing on the allegations in the Order to Cease and Desist, the respondent agreed to the entry of a Consent Order resolving the issues.  The Consent Order directed the respondent to cease and desist from regulatory violations.  In addition, the Consent Order barred the respondent for five years from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent.  The respondent was provided with an opportunity to request relief from the bar upon a showing of good cause once three years had elapsed from the entry of the Consent Order.

Mittler & Mercaldo Investment Advisors (CRD # 126033) Fined for Employing Unregistered Investment Adviser Agent

On January 5, 2015, the Banking Commissioner entered a Consent Order (No. CO-14-8188-S) with respect to Mittler & Mercaldo Investment Advisors, a Connecticut-registered investment adviser located at 42 Main Street, Danbury, Connecticut.  The Consent Order alleged that, between 2006 and 2014, the firm employed an unregistered investment adviser agent in contravention of Section 36b-6(c) of the Connecticut Uniform Securities Act.  The investment adviser agent subsequently became registered, and the firm represented to the Division that it had retained a consultant to assist with regulatory compliance.  The Consent Order required that the firm pay $5,600 to the department.  Of that amount, $5,000 constituted an administrative fine and $600 would be applied to reimburse the agency for past due registration fees.  The Consent Order also directed the firm to cease and desist from regulatory violations.
     
 


Carolina Financial Securities, LLC Fined $2,500 For Selling Unregistered Securities

On March 2, 2015, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-15-8178-S) with Carolina Financial Securities, LLC, a Connecticut-registered broker-dealer located at 185 West Main Street, Brevard, North Carolina 28712.  The Stipulation and Agreement alleged that the firm offered and sold unregistered securities in contravention of Section 36b-16 of the Connecticut Uniform Securities Act.   Pursuant to the Stipulation and Agreement, the firm agreed to refrain from regulatory violations and to pay a $2,500 fine to the agency.

K.C. Ward Financial, LLC Assessed $3,500 for Employing Unregistered Agent, Not Adhering to Securities Registration Requirements

On February 26, 2015, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-15-8201-S) with K.C. Ward Financial, LLC, a Connecticut-registered broker-dealer located at 4175 Veterans Memorial Highway, Suite 300, Ronkonkoma, New York 11779.  The Stipulation and Agreement alleged that, starting in September, 2012, the firm employed an unregistered broker-dealer agent in violation of Section 36b-6(b) of the Connecticut Uniform Securities Act.  The agent has since become registered in Connecticut.  In addition, the Stipulation and Agreement alleged that the firm offered and sold securities of Pegasi Energy Resources Corp. on a solicited basis in contravention of Section 36b-16 of the Act.

In resolution of the matter, the firm agreed to refrain from regulatory violations.  The Stipulation and Agreement also fined the firm $2,000, required that it reimburse the agency $1,000 for examination and investigative costs and assessed the firm $500 for past due registration fees.


STATISTICAL SUMMARY

Licensing At A Glance
at the end of the quarter

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Broker-dealers Registered 2,230  
 
 
Broker-dealer Agents Registered 158,467    
 
 
Broker-dealer Branch Offices Registered 2,698  
 
Investment Advisers Registered 524    
SEC Registered Advisers Filing Notice 2,074    
 
Investment Adviser Agents Registered 12,184    
Exempt Reporting Advisers
84
 
 
 
Agents of Issuer Registered 23    
 
Conditional Registrations
0
 
 
 
 
 

Securities and Business
Opportunity Filings

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Offerings Reviewed 32  
 
  32
Investment Company Notice Filings 540  
 
  540
Exemptions and Exemptive Notices 803       803
 
 
Examinations
     
Broker-dealers 15  
 
  15
Investment Advisers 35  
 
  35
 
 
Securities Investigations
 
Opened 25    
 
25
Closed 15    
 
15
Ongoing as of End of Quarter 97    
 
  
Subpoenas issued 18       18
Matters referred from Attorney General 3       3
Matters referred from Other Agencies 2       2
 
 
Business Opportunity Investigations
 
Investigations Opened 0       0
Investigations Closed 0  
 
  0
Ongoing as of End of Quarter 2           
 
 
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) 1  
 
 
1
Revocation Orders (Licensing) 0  
 
  0
Notices of Intent to Fine 3  
 
  3
Orders Imposing Fine 1  
 
  1
Cease and Desist Orders 3  
 
  3
Notices of Intent to Issue Stop Order 0  
 
 
0
Activity Restrictions/Bars 2  
 
 
2
Stop Orders 0       0
Vacating/Withdrawal/ Modification Orders 0       0
Restitutionary Orders 2  
 
  2
Injunctive Relief Obtained 0       0
 
 

Proceedings and Settlements

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

Monetary Relief*

1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
to Date
Monetary Sanctions Imposed
$146,600
 
 
  $146,600
Portion attributable to settlements
$61,600
 
$61,600
Attributable to Court-Ordered Penalties
   0
         
0
Restitution or Other Monetary Relief
(includes rescission offer amounts)
$3,277,280
 
 
  $3,277,280

*Cents eliminated

 

Securities Referrals

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



Securities Division