DOB: Desiderio, Stephen R - FINE

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IN THE MATTER OF:

STEPHEN ROY DESIDERIO
CRD NO. 2833627

    ("Respondent")

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ORDER IMPOSING FINE

DOCKET NO. CF-2006-7250-S


WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2, et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (“Regulations”);

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the 2006 Supplement to the General Statutes (“Supplement”), into the activities of Respondent, to determine whether Respondent had violated, was violating or was about to violate any provisions of the Act or Regulations;

WHEREAS, on April 27, 2006, the Commissioner, acting pursuant to Section 36b-27(a) and Section 36b-27(d) of the Supplement, issued an Order to Cease and Desist, Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against Respondent (collectively “Notice”), which Notice is incorporated by reference herein;

WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondent, that a hearing would be held on July 18, 2006 on the matters alleged in the Fine Notice, and that if the Respondent failed to appear at the hearing, the Commissioner may order a maximum fine of One Hundred Thousand Dollars ($100,000) on Respondent;

WHEREAS, on April 28, 2006, the Notice was sent by registered mail, return receipt requested to Respondent;

WHEREAS, the Notice sent to Respondent was returned to the Department marked “Return To Sender-Unclaimed”;

WHEREAS, on May 26, 2006, the Notice was served on the Commissioner, and on May 30, 2006, Notice of Service on the Banking Commissioner, dated May 30, 2006, was sent by registered mail, return receipt requested, to Respondent;

WHEREAS, on July 18, 2006, Respondent failed to appear at the Hearing;

WHEREAS, in the Notice the Commissioner alleged that from at least July 1, 2004 through May 24, 2005, Respondent was registered in Connecticut as an agent of Independent Securities Investors Corporation (“Independent”), a corporation whose principal place of business is in Chipley, Florida;

WHEREAS, in the Notice the Commissioner alleged that from at least July 2001, Independent has been registered as a broker-dealer in Connecticut;

WHEREAS, in the Notice the Commissioner alleged that on or about October 2004, Respondent participated in a private placement of Ionic Water Technologies (“Ionic”) stock by meeting with Ionic’s personnel, facilitating the consummation of an investment banking agreement between Ionic and Charter One Capital Holding, Inc. (“Charter One”), a holding company that owned and operated a branch of Independent located in New York (“NY Branch”), participating in a meeting of Ionic personnel and Independent’s agents at the NY Branch during which private placement memoranda were distributed, and attempting to find potential investors for Ionic;

WHEREAS, in the Notice the Commissioner alleged that no money was raised as a result of the agreement between Ionic and Charter One;

WHEREAS, in the Notice the Commissioner alleged that prior to commencing employment with Independent in June 2004, Respondent met with David R. Mortenson (“Mortenson”), the founder of O-2 Solutions, Inc., a company that was looking for funding;

WHEREAS, in the Notice the Commissioner alleged that Respondent subsequently introduced Mortensen to Steven Gray (“Gray”), the principal of Charter One, for the purpose of conducting a private placement and also so that Gray could talk to him about investing money in Charter One;

WHEREAS, in the Notice the Commissioner alleged that as a result of Respondent’s efforts, Charter One sold a security in the form of a promissory note (“Note”) to a company that Mortenson represented;

WHEREAS, in the Notice the Commissioner alleged that the sale of the Note was a transaction that was outside the regular course or scope of Respondent’s employment with Independent;

WHEREAS, in the Notice the Commissioner alleged that the transaction did not go through the books and records of Independent and Respondent did not provide Independent written notice describing in detail the proposed transaction, his proposed role in the transaction and stating whether he had received or would receive compensation in connection with the transaction;

WHEREAS, Section 36a-1-31(b) of the Regulations provides, in relevant part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted”;

WHEREAS, Section 36b-27(d)(2) of the Supplement, provides, in relevant part, that “[i]f such person . . . fail[s] to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding one hundred thousand dollars per violation be imposed upon such person”;

WHEREAS, Section 36b-15(f) of the Supplement provides, in pertinent part, that “[n]o order may be entered under this section except as provided in subsection (c) of this section without (1) appropriate prior notice to the applicant or registrant . . . , (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”;

WHEREAS, the facts as set forth in paragraphs 7 through 12, inclusive, of the Notice shall constitute findings of fact, and the statutory and regulatory basis for the imposition of a fine set forth in paragraphs 13 and 14 of the Notice shall constitute conclusions of law;

WHEREAS, the Commissioner has complied with the requirements of Section 36b-15(f) of the Supplement;

WHEREAS, the Commissioner finds that Respondent committed one violation of Section 36b-31-6e of the Regulations and engaged in a dishonest and unethical business practice under Section 36b-31-15b(a)(2) of the Regulations;

WHEREAS, the Commissioner finds that Respondent’s participation in the offer and sale of the Note, as more fully described in paragraphs 10 through 12 of the Notice, constitutes participation in a private transaction in violation of Section 36b-31-6e of the Regulations and a dishonest or unethical business practice under Section 36b-31-15b(a)(2) of the Regulations, which constitutes a basis for the imposition of a fine against Respondent under Section 36b-27(d) of the Supplement;

WHEREAS, the Commissioner finds that the facts require the imposition of a fine against Respondent;

WHEREAS, Section 36b-31(a) of the Supplement provides, in pertinent 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 36b-31(b) of the Supplement provides, in pertinent part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive”;

AND WHEREAS, the Commissioner finds that this order is necessary, appropriate in the public interest, for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive.


ORDER

Having read the record, I HEREBY ORDER, pursuant to Section 36b-27(d)(2) of the 2006 Supplement to the Connecticut General Statutes, that:

1.
A fine of One Hundred Thousand Dollars ($100,000) is hereby imposed against Respondent Stephen Roy Desiderio, to be remitted to the Department of Banking by certified check, made payable to “Treasurer, State of Connecticut”, no later than 21 days from the date this order is mailed.
 
2.
This Order shall become final when mailed.
 

                                                     
Dated at Hartford, Connecticut
this 14th day of August 2006.               ________/s/_________
                                                       John P. Burke
                                                       Banking Commissioner

 

This Order was mailed by registered
mail, return receipt requested, to
the Respondent on August 14th, 2006.

Stephen Roy Desiderio                         Registered Mail No. RB 028 033 105 US
64 Monahan Avenue
Staten Island, NY 10314


Administrative Orders and Settlements