DOB: Berman, Michael S. Consent Order

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IN THE MATTER OF:

MICHAEL S. BERMAN d/b/a
FIRST CAPITAL UNLIMITED (F.C.U.)

    (CRD Number 8978317)

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CONSENT ORDER

File No. CO-06-7207-S

PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (the "Commissioner") is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the "Act"), and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the "Regulations");
 
WHEREAS, the Commissioner, acting pursuant to Section 36b-26 of the Act and through the Securities and Business Investments Division, conducted an investigation into the activities of Michael S. Berman (ďBermanĒ) d/b/a First Capital Unlimited (F.C.U.) to determine whether Berman had violated any provision of the Act or any regulation or order under the Act;
 
WHEREAS, the Commissioner ascertained, as a result of such investigation, that 1) in October 2002 and August 2003, Berman d/b/a First Capital Unlimited (F.C.U.) sold common stock and preferred stock of Auctiondiner.com to two Connecticut investors in a private placement and received commissions from the issuer in conjunction with such sales; and 2) at the time such sales were made, Berman d/b/a First Capital Unlimited (F.C.U.) was not registered as an agent of issuer or as a broker-dealer under the Act;
 
WHEREAS, as a result of such investigation, the Division alleges that Berman d/b/a First Capital Unlimited (F.C.U.) violated Section 36b-6(a) of the Act by effecting securities transactions in Connecticut business while neither registered as an agent of issuer nor as a broker-dealer under the Act;
 
WHEREAS, as a result of such investigation, the Commissioner also ascertained that, on December 12, 1996, the United States District Court for the Central District of California permanently enjoined Berman from offering or selling any investment unless Berman procured a $275,000 performance bond; that such bond would remain in full force and effect as long as Berman continued to engage in the activities triggering the bond requirement and for at least five years thereafter; and that, at the time the Connecticut sales of Auctiondiner.com stock were made, Berman had not procured the performance bond required by the court (FTC v. Bell Connections, Inc. et al. , U.S. District Court, D. Cal., Civ. No. 96-0455 KMW (SHx);
 
WHEREAS Berman denies that the California Courtís order in that FTC action enjoined Berman from offering or selling securities, and further denies that the performance bond condition was required for the offer and sale of securities;
 
WHEREAS the Commissioner believes that the department's allegations would support the initiation of enforcement proceedings against Berman, including, without limitation, the entry of an order to cease and desist against Berman under Section 36b-27(a) of the Act and the imposition of a fine of up to $100,000 per violation pursuant to Section 36b-27(d) of the Act after granting Berman an opportunity for a hearing;
 
WHEREAS, Section 36b-31(a) of the Act provides, in relevant part, that "[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive";
 
WHEREAS, Section 4-177(c) of the Connecticut General Statutes provides, in relevant part, that "[u]nless precluded by law, a contested case may be resolved by . . . consent order";
 
WHEREAS, the Commissioner finds that the entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
 
WHEREAS, without holding a hearing and without trial or adjudication of any issue of fact or law, the Commissioner and Berman d/b/a First Capital Unlimited (F.C.U.) have reached an agreement to resolve this matter through the entry of this Consent Order;
 
WHEREAS, Berman d/b/a First Capital Unlimited (F.C.U.) neither admits nor denies any of the Commissionerís findings of fact or conclusions of law;
 
WHEREAS, Berman d/b/a First Capital Unlimited (F.C.U.) expressly consents to the Commissionerís jurisdiction in this proceeding and to the entry of the sanctions in this Consent Order;
 
WHEREAS, Berman reserves the right to deny any findings of fact or conclusions of law reflected in this Consent Order in any other proceeding, litigation or arbitration against Berman in which the Commissioner is not a party;


CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Berman d/b/a First Capital Unlimited (F.C.U.), through his execution of this Consent Order, voluntarily waives the following rights:

1. To be afforded an opportunity for a hearing within the meaning of subsections (a) and (d) of Section 36b-27 of the Act and Section 4 177c(a) of the Connecticut General Statutes;
2. To present evidence and argument and to otherwise avail himself of Section 36b-27 of the Act and Section 4 177c(a) of the Connecticut General Statutes;
3. To present his position in a hearing in which he is represented by counsel;
4. To have a written record of the hearing made and a written decision issued by a hearing officer; and
5. To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order.


FINDINGS OF THE COMMISSIONER AS TO EVIDENTIARY SUFFICIENCY TO INITIATE ADMINISTRATIVE PROCEEDINGS

WHEREAS, the Commissioner finds that sufficient grounds would exist to initiate enforcement proceedings against Berman, including, without limitation, the entry of an order to cease and desist against Berman under Section 36b-27(a) of the Act and the imposition of a fine of up to $100,000 per violation pursuant to Section 36b-27(d) of the Act, based on the following, all of which are more fully described above, after granting Berman an opportunity for a hearing:

     That Berman d/b/a First Capital Unlimited (F.C.U.) violated Section 36b-6(a) of the Act by effecting securities transactions in Connecticut while neither registered as an agent of issuer nor as a broker-dealer under the Act.
 

CONSENT TO ENTRY OF SANCTIONS

WHEREAS Berman, through his execution of this Consent Order, acknowledges the possible consequences of an administrative hearing and voluntarily consents to the Commissioner issuing an order imposing on Berman the following sanctions:

1. Berman shall cease and desist from engaging, directly or indirectly, in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, including, without limitation, transacting business in or from this state as an agent of issuer or as a broker-dealer;
2. Effective on the date this Consent Order is entered by the Commissioner, Berman shall be BARRED for a period of seven (7) years from conducting the following activities within or from Connecticut: (1) acting as an agent by representing a broker-dealer or issuer in effecting or attempting to effect purchases or sales of any "security", as that term is defined in Section 36b-3(17) of the Act; (2) transacting business as a broker-dealer; (3) transacting business as an investment adviser; (4) transacting business as an investment adviser agent; or (5) acting as a finder for compensation, splitting commissions, or receiving referral fees, directly or indirectly, in connection with any recommendation, sale or purchase of securities, as defined in Section 36b 3(17) of the Act.  The provisions of this paragraph apply notwithstanding any otherwise applicable exclusion or exemption under the Act;
3. Nothing in this Order shall preclude Berman, upon a showing of good cause, from applying in writing for relief from the provisions of paragraph 2 of this Consent Order after five (5) years have elapsed from the entry of this Consent Order. The grant of such relief shall be in the sole discretion of the Commissioner and
4. No later than the date this Consent Order is entered by the Commissioner, Berman shall remit to the department by certified bank check payable to "Treasurer, State of Connecticut" the sum of five thousand dollars ($5,000) as an administrative fine;

CONSENT ORDER

NOW THEREFORE, the Commissioner enters the following:

1. The Sanctions set forth above be and are hereby entered;
2. Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement against Berman d/b/a First Capital Unlimited (F.C.U.) based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed; and
3. This Consent Order shall become final when issued.
 
 

               ________/s/_________
 John P. Burke
            Banking Commissioner

Dated at Hartford, Connecticut                 
this 19th day of April 2006.                         
 

CONSENT TO ENTRY OF ORDER

I, Michael S. Berman, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.


  ________/s/_______________
 Michael S. Berman 
 



[CALIFORNIA JURAT PROVIDED]


_______________/s/_______________________
Notary Public
My Commission Expires:  7-21-09

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