The Department of Banking News Bulletin
Bulletin # 1854
Week Ending September 3, 1999
This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Banking Commissioner, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to firstname.lastname@example.org. Written comments will be considered only if they are received within ten days from the date of this bulletin.
STATE BANK ACTIVITY
Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Bank Examination Division, (860) 240-8180.
Note: dates are listed in month/day/year format.
|1665 Ellington Road
South Windsor, CT 06074
*919 Meriden Waterbury Turnpike
Plantsville, CT 06479
|62 Hyde Avenue (Route 30)
Vernon, CT 06066
|250 Albany Turnpike
Canton, CT 06019
|* Limited Branch|
CREDIT UNION ACTIVITY
Pursuant to the provisions of Section 36a-437(g)(1) of the Connecticut General Statutes, on August 31, 1999, the United Credit Union of Norwalk, Inc. requested approval to amend its certificate of organization to change its name to Norwalk Educational Credit Union, Inc.
Pursuant to the provisions of Section 36a-437(g) and (h) of the Connecticut General Statutes, on August 31, 1999, the United Credit Union of Norwalk, Inc. requested approval to amend its bylaws and certificate of organization to expand its field of membership to include all students, education related associations, organizations, and their employees, in Fairfield County, Connecticut, excluding the towns of Bridgeport, Fairfield, Greenwich, Stamford, Westport, Weston, and Wilton.
ACQUISITION AND MERGER
On August 30, 1999, pursuant to Section 36a-184 of the Connecticut General Statutes, Webster Financial Corporation, a Delaware corporation, filed an application for the acquisition of New England Community Bancorp, Inc., and indirectly, New England Bank & Trust Company, The Equity Bank, and Community Bank, and the subsequent merger of New England Bank & Trust Company, The Equity Bank, and Community Bank, with and into Webster Bank. In connection with the application, Webster Bank also filed a community reinvestment plan which is available for public inspection and comment at the Department of Banking for a period of 30 days.
SECTION 36a-425 APPLICATIONS
On September 1, 1999, an application was filed by First Union Corporation, a North Carolina corporation, to establish an office of its subsidiary, TMS Mortgage Inc. d/b/a The Money Store, a New Jersey corporation, at 2080 Silas Deane Highway, Rocky Hill, Connecticut.
On September 2, 1999, an application was filed by Citigroup, Inc., a Delaware corporation, to establish an office of its subsidiary, Source One Mortgage Corporation, a Delaware corporation, at 1229 Winsted Road, Unit 129, Torrington, Connecticut.
SECTION 36a-425 APPROVAL
On September 3, 1999, approval was granted to Wells Fargo & Company, a Delaware corporation, to establish an office of its subsidiary, Norwest Mortgage, Inc., a California corporation, at 457 Main Street, Danbury, Connecticut.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Consent Order Addressing Misleading Internet Postings
On August 31, 1999, a Consent Order was entered into with respect to Mark Honigsfeld of 969 East End, Woodmere, New York. Honigsfeld was the chairman, chief executive officer and secretary of Compu-DAWN, Inc., an entity in whose stock the brokerage firm of Morgan Taylor and Associates, Inc. (f/k/a E.C. Capital, Inc.) made a market. The investigation alleged that Honigsfeld violated the antifraud provisions in Section 36b-4(a)(2) of the Connecticut Uniform Securities Act by failing to identify himself on securities-related Internet message board postings. Honigsfield had been the subject of a May 17, 1999 Order to Cease and Desist, Notice of Right to Hearing and Notice of Intent to Fine based on the same conduct. In informally resolving the matter, it was acknowledged that from April 1998 to November 1998, while a beneficial owner of securities of Compu-DAWN, Inc., Honigsfeld did not exercise a purchase or sales transaction in Compu-DAWN, Inc. securities.
The Consent Order fined Honigsfeld $100,000 and restricted his future activities for two years should he become employed by or affiliated with a publicly traded company. Specifically, the Consent Order required that, during that two year time frame, Honigsfeld 1) notify the publicly traded company that the Consent Order was issued; and 2) seek legal guidance before engaging in any securities-related activities that would impact the publicly held company's securities, including but not limited to, Internet postings and market maker contacts.
The Consent Order also vacated the May 17, 1999 Order to Cease and Desist and withdrew the May 17, 1999 Notice of Intent to Fine against Honigsfeld.
Order to Cease and Desist
On August 31, 1999, an Order to Cease and Desist and Notice of Right to Hearing was entered into against Empire Investment Group of 200 College Street, Suite 208, New Haven, Connecticut; Jeffrey Groppi of 7 Loop Road, Clinton, Connecticut and Antonio M. Minichino of 909 13th Court, Deerfield Beach, Florida. Minichino was the president of Empire Investment Group. It was claimed that from at least July 1998 to December 1998, Empire Investment Group effected transactions in unregistered foreign currency options contracts ("Forex Investments") for at least 37 clients; that the firm failed to register as a broker-dealer under the Connecticut Uniform Securities Act and that the firm employed at least eight unregistered agents, including Groppi. The Order to Cease and Desist also alleged that Empire Investment Group, Groppi and Minichino violated the Act's antifraud provisions by falsely representing that investor monies would be invested in Forex Investments when, in fact, those sums were used to pay the personal expenses of the firm's officers and agents, including Groppi. The Order to Cease and Desist also charged Empire Investment Group and Groppi with charging unreasonable commissions of at least 25 percent, a practice that the Commissioner deemed dishonest or unethical.
All three respondents were afforded an opportunity to request a hearing on the allegations in the Order to Cease and Desist.
Investment Adviser Sentenced
On August 31, 1999, Brian Lenihan of Stamford, Connecticut was sentenced in Norwalk Superior Court to 8 years imprisonment, with execution suspended after two years, followed by five years of probation. Lenihan, an investment adviser, had pled guilty to two violations of the antifraud provisions of the Connecticut Uniform Securities Act; three counts of Larceny in the First Degree; and one count of Forgery in the Third Degree. According to the arrest warrant affidavit, Lenihan, d/b/a Lenihan Investments, failed to disclose material information to his advisory clients, filed false documents, and forged clients' signatures in a scheme to embezzle over $100,000 in client funds. The matter was prosecuted by the Economic Crime Unit of the Chief State's Attorney's Office, with investigative assistance provided by the Enforcement Section of the Securities and Business Investments Division of the Department of Banking; the Chief State's Attorney's Office; the Stamford Police Department and the Norwalk Police Department. As part of his sentence, Lenihan was ordered to make restitution during his probationary period to affected investment advisory clients.
Lenihan had been the subject of a March 19, 1998 Order to Cease and Desist issued by the Banking Commissioner. That Order to Cease and Desist, which became permanent on May 1, 1998, had been based, in part, on claims that Lenihan violated the antifraud provisions of the Connecticut Uniform Securities Act by causing investment advisory fees to be paid from the account of at least one Connecticut client absent the client's authorization or knowledge.
John P. Burke