The Department of Banking News Bulletin
Bulletin # 1904
Week Ending August 18, 2000
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 email@example.com. 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.
|8/18/00||Farmington Savings Bank
|117 East Street
Plainville, CT 06062
|59 Main Street South
Woodbury, CT 06798
|1 Village Street
Southbury, CT 06488
FROM: 400 Middlebury Rd.
Middlebury, CT 06762
TO: 503 Middlebury Road
Middlebury, CT 06762
STATE CREDIT UNION ACTIVITY
|8/15/00||Connecticut State Employees
Credit Union, Inc., Hartford
|2434 Berlin Turnpike
Newington, CT 06111
SECURITIES AND BUSINESS INVESTMENTS DIVISION
Broker-dealer Assessed $5,300 for Unregistered Activity
On August 15, 2000, a Consent Order was entered with respect to Pacific Crest Securities, Inc. of 111 SW Fifth Avenue, 42nd Floor, Portland, Oregon. The Consent Order alleged that from approximately January 1995 through October 1999, the firm 1) transacted business as a broker-dealer absent registration, in violation of Section 36b-6(a) of the Connecticut Uniform Securities Act, by effecting securities transactions for individual clients and for broker-dealer affiliated accounts of an independent investment adviser; and 2) employed unregistered agents in violation of Section 36b-6(b) of the Act.
The Consent Order required that the firm cease and desist from regulatory violations; implement revised supervisory and compliance procedures; and provide quarterly written reports to the agency for two years concerning any securities-related complaints, actions or proceedings involving Connecticut residents. In addition, the Consent Order assessed the firm $5,300. Of that amount, $3,500 constituted an administrative fine, $1,300 represented reimbursement of past due registration fees and $500 represented reimbursement for agency investigative costs. The firm became registered as a broker-dealer in Connecticut on August 15, 2000.
Permanent Injunction Entered; Receiver Appointed
On August 14, 2000, Corlogic Corporation a/k/a Corlogix Corporation and Theodore William Russell agreed to the entry of a permanent injunction by the Superior Court for the Judicial District of Hartford barring them from violating any provision of the Connecticut Uniform Securities Act. The defendants also stipulated to the entry of a court order appointing a receiver to take possession of the corporation's property and assets and to carry on corporate business to the extent feasible. The receivership would terminate upon court approval if sufficient capital financing were obtained to render the corporation financially viable.
Corlogic Corporation and Russell had been the subject of a March 31, 2000 Stipulation for Order entered by the court in conjunction with civil proceedings brought by the Banking Commissioner through the Office of the Attorney General for violations of the state's securities laws. Among other things, the Stipulation for Order contemplated that the defendants obtain equity or debt financing within a prescribed time period, and that $829,966 be transferred to an escrow account. The defendants' failure to obtain the required equity or debt financing pursuant to the Stipulation for Order prompted the court to order injunctive relief and the appointment of the receiver. The receiver would also take possession of the escrow account established under the Stipulation for Order.
Defendant Corlogic Corporation is headquartered at 762 Boston Post Road, Madison, Connecticut. Theodore William Russell is the president of Corlogic Corporation. In initiating suit, the department claimed that Corlogic Corporation and Russell sold over $2 million in unregistered promissory notes and warrants. The department had further alleged that Corlogic Corporation violated the antifraud provisions of the Connecticut Uniform Securities Act by failing to disclose the unregistered status of the securities; the fact that there had been a material change in the number of shares being set aside for the warrant offering; the fact that financial projections reflecting the future value of Corlogic's common stock had changed; that Russell had filed for personal bankruptcy in 1995; and that no working prototype of the corporation's medical device product existed.
Waiver of Series 65 Examination
On August 15, 2000, an Order was entered allowing a waiver of the Series 65 examination for individuals holding the designation Chartered Financial Consultant ("ChFC") or Chartered Life Underwriter ("CLU") as awarded by the American College, Bryn Mawr, Pennsylvania. To be eligible for the waiver, the individuals must be subject to, and in compliance with, continuing education requirements prescribed by the American College and the Society of Financial Service Professionals.
The Series 65 examination is required of all investment adviser agent applicants under the Connecticut Uniform Securities Act.
Registration Not Required of Foreign Broker-dealers
On August 17, 2000, an Order was entered exempting from broker-dealer registration under the Connecticut Uniform Securities Act 1) foreign broker-dealers subject to Securities and Exchange Commission Rule 15a-6; and 2) Canadian broker-dealers servicing the retirement accounts of their customers who have moved to the U.S. Among other things, Rule 15a-6 covers foreign broker-dealers transacting business with foreign customers temporarily in the United States. To be eligible for the Canadian retirement account exemption, a Canadian broker-dealer would have to observe the requirements in Securities and Exchange Commission Release No. 34-42906.
The Order also exempted from state securities registration products exempt from federal registration under Rule 237 promulgated under the Securities Act of 1933.
SECTION 36a-425 APPROVAL
On August 15, 2000, approval was granted to The Advest Group, Inc., a Delaware corporation, to establish an office of its subsidiary, Advest, Inc., a Delaware corporation, at 200 Glastonbury Boulevard, Glastonbury, Connecticut.
SECTION 36a-425 APPLICATION
On August 18, 2000, Union Bankshares Corporation, a Virginia corporation, filed an application to establish an office of its subsidiary, Mortgage Capital Investors, Inc., a Virginia corporation, at 2600 Post Road, Southport, Connecticut.
Attached to this issue of the Bulletin is a copy of amended regulations concerning open-end loan annual fees imposed on borrowers by small loan licensees & collection practices of creditors. Such regulations became effective on August 16, 2000.
John P. Burke
Open-end Loan Annual Fees Imposed on Borrowers by Small Loan Licensees
Collection Practices of Creditors
Section 1. Subsection (n) of Section 36a-570-17 of the Regulations of Connecticut State Agencies is amended to read as follows:
(n) Open-end loan annual fee. In the case of an open-end loan made pursuant to this section, if the agreement between the lender and the borrower so provides, the lender may assess and collect an annual fee not to exceed fifty dollars for the privileges made available to the borrower under the open-end loan agreement.
Sec. 2. Section 36a-647-2 of the Regulations of Connecticut State Agencies is amended to read as follows:
Sec. 36a-647-2. Definitions
As used in sections 36a-647-1 to 36a-647-7, inclusive, of the Regulations of Connecticut State Agencies:
(1) "Commissioner" has the same meaning as set forth in section 36a-2 of the Connecticut General Statutes.
(2) "Communications" means any communication directly or indirectly to any person in person or through any medium and includes the conveyance of debt information.
(3) "Convey debt information" means the conveying of information regarding a debt directly or indirectly to any person in person or through any medium.
(4) "Consumer debtor" has the same meaning as set forth in section 36a-645 of the Connecticut General Statutes, provided as used in sections 36a-647-3 and 36a-647-4, "consumer debtor" also includes the consumer debtor's spouse (if such spouse resides with the consumer debtor), parent (if the consumer debtor is a minor), guardian, executor, and administrator.
(5) "Credit" means the right granted by a creditor to a consumer debtor to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment therefor.
(6) "Creditor" has the same meaning as set forth in section 36a-645 of the Connecticut General Statutes.
(7) "Debt" has the same meaning as set forth in section 36a-645 of the Connecticut General Statutes.
(8) "Location information" means a consumer debtor's place of abode or telephone number at such place, or the consumer debtor's place of employment.
(9) "Person" includes individuals, partnerships, associations and corporations.
(10) "Prospective creditor" means any person to whom a consumer debtor has applied for credit but who has not yet advised such consumer debtor if the application has been approved or denied.
(11) "Prior consent of the consumer debtor" shall not include consent obtained by virtue of any provision in any writing evidencing the debt or executed at the time the debt was incurred.