The Department of Banking News Bulletin
Bulletin # 2744
Week Ending September 23, 2016
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 Jorge L. Perez, Banking Commissioner, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800. Written comments will be considered only if they are received within ten days from the date of this bulletin.
STATE CREDIT UNION ACTIVITY
On September 20, 2016, the Commissioner approved the merger of MiddConn Federal Credit Union, a federally chartered credit union, with and into Dutch Point Credit Union, Inc., a Connecticut credit union. The merger was approved pursuant to Section 36a-468a of the Connecticut General Statues.
CONSUMER CREDIT DIVISION ACTIVITY
Notice of Automatic Suspension, Temporary Order to Cease and Desist,
Notice of Intent to Revoke Consumer Collection Agency License and
Notice of Intent to Issue Order to Cease and Desist
On September 15, 2016, the Commissioner issued a Notice of Automatic Suspension, Temporary Order to Cease and Desist, Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist and Notice of Right to Hearing (“Notice”) in the Matter of: Vision Financial Corp
(NMLS # 933185) (“Respondent”), Rockford, Illinois. The Notice was the result of an investigation by the Consumer Credit Division. The Commissioner alleges that Respondent failed to maintain a surety bond that runs concurrently with the period of its consumer collection agency license for its office located at 5301 East State Street, Lower Level, Rockford, Illinois, in violation of Section 36a 802(a) of the Connecticut General Statutes. The Commissioner also found that public welfare required the issuance of a Temporary Order to Cease and Desist. Respondent was afforded an opportunity to request a hearing with regard to the allegation set forth in the Notice.
On September 15, 2016, the Commissioner entered into a Consent Order with National Credit Adjusters, L.L.C.
(NMLS # 922821) (“National Credit Adjusters”), Hutchinson, Kansas. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that on or about October 1, 2013 to the present, National Credit Adjusters acted within this state as a consumer collection agency without the requisite license, in violation of Section 36a-801(a) of the 2016 Supplement to the General Statutes. In addition, National Credit Adjusters collected or attempted to collect on no less than 1,254 loans from Connecticut borrowers that contained interest rates in excess of 12% per annum computed on a daily basis on the respective unpaid balances, in violation of Section 36a-555 of the 2016 Supplement to the General Statutes in effect prior to July 1, 2016, and effective July 1, 2016, and Section 36a-558 of the Connecticut General Statutes, as amended by Public Act 16-65, which loans are void and unenforceable pursuant to that section. As part of the Consent Order, National Credit Adjusters, among other things, paid $40,000 as a civil penalty and will pay restitution and reduce outstanding balances to zero on certain accounts of Connecticut debtors.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Notice of Intent to Revoke Registration as a Broker-dealer Issued
On September 19, 2016, the Banking Commissioner issued a Notice of Intent to Revoke Registration as a Broker-dealer (Docket No. NR-16-8163-S) with respect to The Dratel Group, Inc.
of Southold, New York. The action was based on sanctions levied against the firm by the Financial Industry Regulatory Authority ("FINRA") as well as a revocation by the State of New Jersey.
More specifically, on September 28, 2012, a FINRA extended hearing panel barred the firm from day trading and fined it $185,000 based on allegations that the firm executed a fraudulent scheme involving allocation of profitable trades to a preferred account and less profitable trades to a non-preferred account such as that of a customer, and that the firm falsified and backdated order tickets (Extended Hearing Panel Decision No. 2008012925001). FINRA's National Adjudicatory Council affirmed the hearing panel decision on May 2, 2014, and increased the sanction from a day-trading bar to a full expulsion from membership. On appeal to the Securities and Exchange Commission, the SEC found on March 17, 2016 that the trade allocation scheme violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the firm also violated the recordkeeping provisions in Section 17(a)(1) of the Exchange Act as well as Rules 17a-3(a)(6) and 17a-3(a)(7) thereunder (Admin. Proc. File No. 3-15869). In addition, on March 21, 2016, FINRA expelled the firm from membership for failing to pay the fine and/or costs imposed in a prior matter involving reporting and recordkeeping violations (FINRA Case No. 2009016317701).
On May 3, 2016, the securities administrator of the State of New Jersey revoked the firm’s broker-dealer registration based on the FINRA expulsion and on claims that the firm engaged in dishonest or unethical practices in the securities business.
The Dratel Group, Inc. was afforded an opportunity to request a hearing on the allegations in the Notice of Intent to Revoke Registration as a Broker-dealer.
Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine Issued
On September 22, 2016, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRF-16-8209-S) against John W. Evans and Bonnie A. Evans
of Sharon, Connecticut. John W. Evans did business under the name Evans Technology Holding Company. According to the action, John W. Evans held himself out as having rights to certain intellectual property, including cooling system related patents, and that Evans Technology Holding Company, an unincorporated entity controlled by John Evans, was purportedly organized for the purpose of holding the intellectual property. Evans Technology Holding Company was variously described by John Evans as a limited liability company to be formed and as a general partnership.
The action alleged that the respondents, through two individuals, since deceased, offered and sold percentage interests in Evans Technology Holding Company to investors located in Connecticut and other states, and raised a total of $141,000. The investors had no special expertise in the Evans intellectual property and were passive and totally dependent on respondents in achieving an investment return. The action alleged that the respondents violated 1) Section 36b-16 of the Connecticut Uniform Securities Act by offering and selling unregistered securities; 2) the antifraud provisions in Section 36b-4 of the Act by, among other things, failing to disclose to investors the investment’s risks, the registration status of the securities and the basis for income projections; and 3) Section 36b-6(b) of the Act by employing unregistered agents of issuer.
The respondents were afforded an opportunity to request a hearing on the allegations in the action.
Dated: Tuesday, September 27, 2016
Jorge L. Perez