DOB: S&E Investment Group Consent Order

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IN THE MATTER OF:

S&E INVESTMENT GROUP


("Respondent")



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CONSENT ORDER

DOCKET NO. CF-2010-7660-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 Sections 36b-31-2 to 36b-31-33, inclusive, 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 Act, as amended by Public Act 10-141, into the activities of Respondent to determine if it had violated, was violating or was about to violate provisions of the Act or Regulations;
 
WHEREAS, on June 24, 2010, the Commissioner, acting pursuant to Section 36b-27 of the 2010 Supplement to the General Statutes (“2010 Supplement”), as amended by Public Act 10-141, and Section 36b-27(d) of the Act as it existed prior to October 1, 2003, issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Notice”) against Respondent, which Notice is incorporated by reference herein;
 
WHEREAS, the Notice alleged that, in violation of Section 36b-16 of the Act, as amended by Public Act 10-141, Respondent offered and sold securities in the form of partnership interests to at least one Connecticut investor absent registration;
 
WHEREAS, the Notice also alleged that, in violation of Section 36b-4(a) of the 2010 Supplement, Respondent failed to disclose certain material items to investors and prospective investors, including, inter alia, the risk of loss of the entire investment, any risk factors related to the investment, any financial information on Respondent or its businesses, and any description as to how the funds would be invested;
 
WHEREAS, the Notice stated that the Commissioner found that the issuance of an Order to Cease and Desist and the imposition of a fine was necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act;
 
WHEREAS, the Notice stated that the Commissioner intended to impose a maximum fine not to exceed Ten Thousand Dollars ($10,000) per violation;
 
WHEREAS, Respondent requested a hearing on the matters alleged in the Notice (“Hearing”);
 
WHEREAS, Respondent and the Division requested continuances of the Hearing;
 
WHEREAS, the Hearing has been continued so that the parties may engage in settlement discussions;
 
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-34, inclusive”;
 
WHEREAS, Section 36b-31(b) of the Act 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”;
 
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act and Section 36b-27(d) of the Act, as it existed prior to October 1, 2003, would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;

WHEREAS, Section 36b-27(f) of the Act provides, in relevant part, that “[a]ny time after the issuance of an order or notice provided for in subsection (a) . . . or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing”;
 
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;
 
WHEREAS, Respondent and the Commissioner now desire to resolve the matters alleged in the Notice without the need for further administrative proceedings;
 
WHEREAS, Respondent agrees that the Notice may be used in construing the terms of this Consent Order, and agrees to the language in this Consent Order;
 
WHEREAS, Respondent has provided documentation to the Division evidencing its financial inability to pay the fine that otherwise would have been assessed against it pursuant to the Notice and this Consent Order;
 
AND WHEREAS, to further facilitate the resolution of this matter, Stefanie DeLuca (“DeLuca”), Managing General Partner of Respondent, consents to the sanctions contained in paragraph 3 of Section IV of this Consent Order.

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, Respondent, through its execution of this Consent Order, voluntarily waives the following rights:

1. To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut;
2. To present evidence and argument and to otherwise avail itself of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present its position in a hearing in which it 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.

III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS

WHEREAS, Respondent, through its execution of this Consent Order, acknowledges the following allegations of the Commissioner, without admitting or denying them, yet admits sufficient evidence exists for the Commissioner to enter an order to cease and desist and an order imposing a maximum administrative fine of Ten Thousand Dollars ($10,000) per violation against it:

1. The entry of this Consent Order 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 the Act;
2. Respondent offered and sold securities in Connecticut, absent registration, in violation of Section 36b-16 of the Act, as amended; and
3. Respondent failed to disclose certain material items to investors and prospective investors, including, inter alia, the risk of loss of the entire investment, any risk factors related to the investment, any financial information on Respondent or its businesses, and any description as to how the funds would be invested in violation of Section 36b-4(a) of the 2010 Supplement.

WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondent an opportunity for a hearing;

WHEREAS, Respondent acknowledges the possible consequences of an administrative hearing and voluntarily consents to the entry of the sanctions described below;

AND WHEREAS, Respondent specifically assures the Commissioner that none of the violations alleged in the Notice or this Consent Order shall occur in the future.

IV. CONSENT TO ENTRY OF SANCTIONS

WHEREAS, Respondent, through its execution of this Consent Order, consents to the Commissioner’s entry of a Consent Order imposing the following sanctions:

1. For a period of ten (10) years commencing on the date this Consent Order is entered by the Commissioner, Respondent is barred from transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent, as such terms are defined in the Act;
2. Respondent shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act; and
3. For a period of five (5) years commencing on the date this Consent Order is entered by the Commissioner, DeLuca and any entity under her control shall refrain from directly or indirectly soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut without compliance with this paragraph.  DeLuca shall (a) provide the Division Director with at least thirty (30) days advance written advance [sic] notice of the proposed issuance, offer or sale of securities to public or private investors; (b) retain legal counsel experienced in the area of state securities registration and regulation under the Act and not unacceptable to the Division Director to advise her on compliance with the securities laws of Connecticut and other jurisdictions (“Retained Counsel”), including compliance with agent of issuer registration requirements; (c) direct Retained Counsel to prepare and submit all required registration statements and other required documents and fees to the Commissioner and to provide the Division Director with a signed opinion of counsel setting forth the basis for any claim of exemption or covered security status under Section 36b-21 of the Act, as amended by Public Act 10-141, at least thirty (30) days prior to the commencement of the offering; and (d) refrain from offering or selling securities in or from Connecticut to public or private investors prior to receiving a written acknowledgement by Retained Counsel that the Commissioner has declared the registration of such securities effective or that the Division Director has acknowledged the issuer’s claim of exemption or covered security status under Section 36b-21 of the Act, as amended.

V. 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 action against Respondent and DeLuca 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.



Issued at Hartford, Connecticut,       _______/s/____________
this 17th day of February 2011.      Howard F. Pitkin 
         Banking Commissioner 
 

CONSENT TO ENTRY OF ORDER

I, Stephania DeLuca, state on behalf of S&E Investment Group, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of S&E Investment Group; that S&E Investment Group agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that S&E Investment Group consents to the issuance of this Consent Order.


       S&E Investment Group
  
  
By: ______/s/_____________
    Stephania DeLuca
     Managing General Partner


State of:  FL
 
County of:  Broward

On this the 11th day of Feb 2011, before me, [blank in original], the undersigned officer, personally appeared Stephania DeLuca, who acknowledged herself to be the Managing General Partner of S&E Investment Group, a general partnership, and that she, as such Managing General Partner, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company [sic] by herself as Managing General Partner.
 
In witness whereof I hereunto set my hand.



_______________/s/________________________
Notary Public/Commissioner of the Superior Court
Date Commission Expires:  August 11, 2012


CONSENT TO ENTRY OF ORDER

I, Stephania DeLuca, 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 issuance of this Consent Order, expressly waiving any right to challenge or contest the validity of this Consent Order.


______/s/_______
Stephania DeLuca


State of:  FL

County of:  Broward

On this the 11th day of Feb 2011, before me, [blank in original], the undersigned officer, personally appeared Stephania DeLuca, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that she executed the same for the purposes therein contained.

In witness whereof I hereunto set my hand.


___________/s/____________________________
Notary Public/Commissioner of the Superior Court
Date Commission Expires:  August 11, 2012


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