DOB: CT Equity Partners-John Gilroy Stipulation

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IN THE MATTER OF:

CT EQUITY PARTNERS, LLC

JOHN A. GILROY

    

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STIPULATION
AND AGREEMENT

No. ST-09-7733-S

WHEREAS, the Banking Commissioner (the “Commissioner”) is responsible for administering 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 (the “Regulations”) promulgated under the Act;

WHEREAS, iMedX, Inc. of Four Corporate Drive, Shelton, Connecticut is an issuer of securities;

WHEREAS, CT Equity Partners, LLC (“CEP”) of 401 Carroll Road, Fairfield, Connecticut is a Connecticut limited liability company formed on November 6, 2002;

WHEREAS, John A. Gilroy (“Gilroy”) is the managing member of CEP;

WHEREAS, Gilroy has represented that, prior to forming CEP, he had over twenty years of strategic planning and mergers and acquisitions experience with a major accounting firm and a publicly held corporation;

WHEREAS, on July 15, 2009, the Securities and Business Investments Division (the “Division”) received from iMedX, Inc. a Rule 506 notice filing pursuant to Section 36b-21(e) of the Act.  Such notice filing disclosed that iMedX, Inc. had paid finder’s fees in connection with the subject offering;

WHEREAS, following an inquiry by the Division pursuant to Section 36b-26 of the Act, 1) iMedX., Inc. provided documentation that it had wired a “Broker Fee” to CEP in connection with the offering, and 2) CEP and Gilroy admitted that such fee had been received;

WHEREAS, the investor procured by CEP in conjunction with the transaction was a financial entity which was an “accredited investor” within the meaning of Rule 501(a) of federal Regulation D, 17 C.F.R. 230.501(a), under the Securities Act of 1933;

WHEREAS, the Division ascertained as a result of such inquiry that pursuant to a May 14, 2008 letter agreement, 1) CEP agreed to provide iMedX, Inc. with services that included identifying and contacting investors, marketing iMedX, Inc. to potential investors, organizing due diligence information, preparing a Confidential Memorandum suitable for potential investors and overseeing the closing of the investment transaction; and 2) in return for such services, CEP would receive a 2% transaction fee based upon the amount committed for investment as well as an additional success fee payable upon acceptance of the investment by iMedX, Inc.;

WHEREAS, the Commissioner alleges that at no time was Gilroy registered as an agent of issuer or in any other capacity under the Act nor was CEP registered as a broker-dealer or in any other capacity under the Act;

WHEREAS, Gilroy and CEP maintain that they were not represented by legal counsel in connection with their business activities on behalf of iMedX, Inc. or any other issuer of securities;

WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes provides that “[u]nless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party”;

WHEREAS, CEP and Gilroy desire to resolve the matters described herein informally, and, without either admitting or denying the truth of the Commissioner’s allegations set forth hereinabove, voluntarily enter into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein;

WHEREAS, CEP and Gilroy, through their execution of this Stipulation and Agreement, voluntarily waive any rights each has to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;

NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:

(1) Absent prior written approval from the Division Director, Gilroy shall not, alone or through any corporate, partnership or other device, offer or sell securities on behalf of any issuer within or from Connecticut unless such transactions are effected within the scope of Gilroy’s employment with a broker-dealer registered under the Act;
    
(2)
Gilroy shall not, within or from Connecticut, act as a finder for compensation, split commissions or receive referral fees, directly or indirectly, in conjunction with the offer, sale or purchase of securities or the rendering of investment advice on securities unless such activities are performed within the scope of Gilroy’s employment with a broker-dealer or investment adviser registered under the Act and in accordance with state and federal securities laws;
   
(3) Absent prior written permission from the Division Director, Gilroy shall represent only one securities broker-dealer or investment adviser at any one time in effecting or attempting to effect securities purchases or sales or in acting as an investment adviser agent;
   
(4) CEP represents and agrees that it shall refrain from transacting business as a broker-dealer or investment adviser in connection with the offer or sale of securities in or from Connecticut or the rendering of securities-related investment advisory services for compensation unless registered under Section 36b-6(a) of the Act, regardless of any exclusionary claim that might be asserted under Section 36b-3 of the Act;
   
(5) No later than the date this Stipulation and Agreement is executed by the Commissioner, Gilroy and CEP shall, jointly and severally, pay to the department by check made payable to “Treasurer, State of Connecticut” the sum of five thousand dollars ($5,000) as an administrative fine;
   
(6) No later than six months following the Commissioner’s execution of this Stipulation and Agreement, Gilroy shall consult with a Connecticut licensed attorney experienced in state and federal securities legal and compliance issues and not unacceptable to the Division Director to ensure that Gilroy and any entity directly or indirectly controlled by Gilroy is in compliance with this Stipulation and Agreement, the Act and the Regulations thereunder.  Gilroy shall identify such legal counsel in writing to the Division Director no later than the date this Stipulation and Agreement is signed by the Commissioner.  Following the initial consultation, Gilroy shall meet and confer with such attorney annually until three years have elapsed from the signing of this Stipulation and Agreement by the Commissioner.  By December 31st of each year to which this obligation extends, Gilroy shall file with the Division Director an annual sworn statement verifying that he has fully discussed his Connecticut compliance responsibilities with legal counsel and that, in connection therewith, he and any entity controlled by him are complying with this Stipulation and Agreement and with the advice of counsel;
   
(7) Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Gilroy, CEP, their officers, agents, employees, representatives and successors in interest based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by Gilroy or CEP and reflected herein is subsequently determined to be untrue; and
   
(8) This Stipulation and Agreement shall become binding when executed by all parties hereto.


IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.

Dated at Hartford, Connecticut               __________/s/__________________
this 16th day of December 2009.             Howard F. Pitkin
                                                         Banking Commissioner



I, John A. Gilroy, state individually and on behalf of CT Equity Partners, LLC, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of CT Equity Partners, LLC and that both I and CT Equity Partners, LLC agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

                                                        CT Equity Partners, LLC

                                                 By
                                                         ________/s/_______________
                                                         John A. Gilroy
                                                         Managing Member


On this 15th day of December 2009, personally appeared John A. Gilroy, signer of the foregoing Stipulation and Agreement, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of CT Equity Partners, LLC, a limited liability company, and acknowledged the same to be his free act and deed, before me.


_______________/s/_______________________
Notary Public/Commissioner of the Superior Court
My Commission Expires:  June 30, 2012

 

                                                           _____/s/______________
                                                           John A. Gilroy
                                                           (Individually)


Subscribed and sworn to before me this
15th day of December 2009.


_____________/s/__________________________
Notary Public/Commissioner of the Superior Court
My Commission Expires:  June 30, 2012

Administrative Orders and Settlements