DOB: Itradedirect.com - Revocation-Fine

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IN THE MATTER OF:

ITRADEDIRECT.COM CORP.


("Respondent")


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ORDER REVOKING REGISTRATION
AS BROKER-DEALER

              AND

ORDER IMPOSING FINE

DOCKET NO. RCF-10-7699-S

I. PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”);

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

WHEREAS, as a result of the Investigation, on June 3, 2010, the Commissioner, acting pursuant to Sections 36b-15, 36b-27(a) and 36b-27(d) of the 2010 Supplement to the General Statutes (“2010 Supplement”) and Section 4-182(c) of the General Statutes of Connecticut, issued an Order to Cease and Desist (“Order”), Notice of Intent to Revoke Registration as Broker-dealer, Notice of Intent to Fine and Notice of Right to Hearing against Respondent (collectively “Notice”), which Notice is incorporated by reference herein;

WHEREAS, the Commissioner alleged in the Notice that the conduct of Respondent constituted, in connection with the offer, sale or purchase of any security, employing a device, scheme or artifice to defraud, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in an act, practice or course of business which operates as a fraud or deceit upon any person.  Such conduct constituted a wilful violation of Section 36b-4(a) of the 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2010 Supplement, the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(B) of the 2010 Supplement, and for the imposition of a fine against Respondent under Section 36b-27(d) of the 2010 Supplement;

WHEREAS, the Commissioner alleged in the Notice that the conduct of Respondent constituted, in connection with the offer, sale or purchase of any security, directly or indirectly engaging in a dishonest or unethical practice.  Such conduct constituted a wilful violation of Section 36b-4(b) of the 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2010 Supplement, the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Sections 36b-15(a)(2)(B) and 36b-15(a)(2)(H) of the 2010 Supplement, and for the imposition of a fine against Respondent under Section 36b-27(d) of the 2010 Supplement;

WHEREAS, the Commissioner alleged in the Notice that the conduct of Respondent is conduct proscribed by the Financial Industry Regulatory Authority (formerly NASD) Conduct Rules 2210 and 2440.  Such conduct constituted a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(b) of the Regulations, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2010 Supplement, and for the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(H) of the 2010 Supplement;

WHEREAS, the Commissioner alleged in the Notice that Respondent’s employment of at least five unregistered agents constituted a wilful violation of Section 36b-6(b) of the Act, which forms a basis for an order to cease and desist to be issued against Respondent pursuant to Section 36b-27(a) of the 2010 Supplement, the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Section 36b-15(a)(2)(B) of the 2010 Supplement, and for the imposition of a fine against Respondent under Section 36b-27(d) of the 2010 Supplement;

WHEREAS, the Commissioner alleged in the Notice that Respondent’s failure to monitor the use of scripts by individuals directly under its supervision to ensure that they were in compliance with all regulatory requirements, and that no scripts were utilized contrary to the requirements of the Respondent’s written supervisory policies and procedures manual constituted a wilful violation of Section 36b-31-6f of the Regulations, which forms a basis for an order to cease and desist to be issued against Respondent pursuant to Section 36b-27(a) of the 2010 Supplement, the revocation of Respondent’s registration as a broker-dealer in Connecticut pursuant to Sections 36b-15(a)(2)(B) and 36b-15(a)(2)(K) of the 2010 Supplement, and for the imposition of a fine against Respondent pursuant to Section 36b-27(d) of the 2010 Supplement;

WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Respondent has committed at least one violation of Section 36b-4(a) of the 2010 Supplement, at least one violation of Section 36b-4(b) of the 2010 Supplement, at least five violations of Section 36b-6(b) of the Act, and at least one violation of Section 36b-31-6f of the Regulations;

WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct that, pursuant to Section 36b-15 of the 2010 Supplement, constitute grounds for revoking Respondent’s registration as a broker-dealer in Connecticut;

WHEREAS, the Notice stated that Respondent’s registration as a broker-dealer in Connecticut shall be revoked, subject to Respondent’s right to request a hearing on the allegations;

WHEREAS, the Notice stated that the Commissioner intended to impose a maximum fine not to exceed One Hundred Thousand Dollars ($100,000) per violation on Respondent;

WHEREAS, the Notice stated that Respondent would be afforded an opportunity for a hearing on the allegations if a written request for a hearing was received by the Department within fourteen (14) days following Respondent’s receipt of the Notice;

WHEREAS, the Notice stated that the Commissioner shall issue an order revoking Respondent’s registration as a broker-dealer in Connecticut if Respondent failed to request a hearing within the prescribed time period or failed to appear at any such hearing;

WHEREAS, the Notice stated that the Commissioner may order that the maximum fine be imposed upon Respondent if Respondent failed to request a hearing within the prescribed time period or failed to appear at any such hearing;

WHEREAS, on June 3, 2010, the Notice was sent by certified mail, return receipt requested, to Respondent;

WHEREAS, on July 1, 2010, the Notice was returned to the Department of Banking marked “Return To Sender – Unclaimed – Unable to Forward”;

WHEREAS, on July 6, 2010, the Notice was served on the Commissioner, and on July 8, 2010, in accordance with 36b-33(g) of the Act, as amended by Public Act 10-141, Notice of Service on the Banking Commissioner In the Matter of:  Itradedirect.com Corp., dated July 8, 2010 (“Notice of Service”), was sent by registered mail, return receipt requested, to Respondent;

WHEREAS, Respondent has failed to request a hearing on the matters set forth in the Notice within 14 days of the date of the Notice of Service;

WHEREAS, on August 20, 2010, a Certification was issued rendering the Order permanent as of July 23, 2010, which Certification is incorporated by reference herein;

WHEREAS, Section 36a-1-31(a) of the Regulations of Connecticut State Agencies provides, in pertinent part, that:

When a party fails to request a hearing within the time specified in the notice, the allegations against the party may be deemed admitted.  Without further proceedings or notice to the party, the commissioner shall issue a final decision in accordance with section 4-180 of the Connecticut General Statutes and section 36a-1-52 of the Regulations of Connecticut State Agencies, provided the commissioner may, if deemed necessary, receive evidence from the department, as part of the record, concerning the appropriateness of the amount of any . . . fine . . . sought in the notice[;]

WHEREAS, Section 36b-15 of the 2010 Supplement, as amended by Public Act 10-141, provides, in pertinent part, that:

(a) The commissioner may, by order . . . revoke any registration . . . if the commissioner finds that (1) the order is in the public interest, and (2) the . . . registrant or, in the case of a broker-dealer . . . any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer . . . (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-34, inclusive, . . . or any regulation . . . under said sections . . . ; (H) has engaged in fraudulent, dishonest or unethical practices in the securities, commodities, investment, franchise, business opportunity, banking, finance or insurance business, including abusive sales practices in the business dealings of such . . . registrant . . . with current or prospective customers or clients; . . . (K) has failed reasonably to supervise:  (i) The agents . . . of such . . . registrant, if the . . . registrant is a broker-dealer . . . ; or (ii) the agents of a broker-dealer . . . if such . . . registrant . . . is or was an agent . . . or other person charged with exercising supervisory authority on behalf of a broker-dealer . . . .

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(f)  No 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 and to the employer or prospective employer if such applicant or registrant is an agent or investment adviser agent, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law[;]

WHEREAS, Section 36b-31(a) of the Act, as amended by Public Act 10-141, 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-34, inclusive”;

AND WHEREAS, Section 36b-31(b) of the Act, as amended by Public Act 10-141, provides, in relevant 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-34, inclusive.”

II.  FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. The Commissioner finds that the facts as set forth in paragraphs 7 through 16, inclusive, of the Notice shall constitute findings of fact within the meaning of Section 4-180(c) of the General Statutes of Connecticut and Section 36a-1-52 of the Regulations of Connecticut State Agencies; and that the Statutory and Regulatory Basis for Order to Cease and Desist, Revocation of Registration as Broker-dealer and Order Imposing Fine, set forth in paragraphs 17 through 26, inclusive, of the Notice, shall constitute conclusions of law within the meaning of Section 4-180(c) of the General Statutes of Connecticut and Section 36a-1-52 of the Regulations of Connecticut State Agencies.
2. The Commissioner finds that Respondent has committed at least one violation of Section 36b-4(a) of the 2010 Supplement, at least one violation of Section 36b-4(b) of the 2010 Supplement, at least five violations of Section 36b-6(b) of the Act, and at least one violation of Section 36b-31-6f of the Regulations;
3. The Commissioner finds that the facts require the issuance of an order revoking Respondent’s registration as a broker-dealer in Connecticut.
4.
The Commissioner finds that the facts require the imposition of a fine against Respondent.
5. The Commissioner finds that the Notice was given in compliance with the requirements of Sections 36b-15(f) and 36b-27 of the 2010 Supplement and Sections 4-177 and 4-182(c) of the General Statutes of Connecticut.
6. The Commissioner finds that the issuance of an order revoking Respondent’s registration as a broker-dealer in Connecticut and the imposition of a fine against Respondent is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-34, inclusive, of the Act.

III.  ORDER

Having read the record, I hereby ORDER, pursuant to Sections 36b-15 and 36b-27(d) of the 2010 Supplement, as amended by Public Act 10-141, that:

1. The registration of Itradedirect.com Corp., as a broker dealer in Connecticut is hereby REVOKED;
2.
A fine of Forty-five Thousand Dollars ($45,000) be imposed against Itradedirect.com Corp., to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than Forty-five (45) days from the date this Order is mailed; and
3. This Order shall become effective when mailed.


Dated at Hartford, Connecticut,        ______/s/__________ 
this 23rd day of August 2010.      Howard F. Pitkin 
      Banking Commissioner 



This Order was mailed by certified mail,
return receipt requested, to
Respondent on August 24, 2010.

Itradedirect.com Corp. 
1600 NW Boca Raton Boulevard, Suite 22
Boca Raton, FL 33432
Certified Mail No. 7010 0290 0002 7489 7785                          


Administrative Orders and Settlements