The Department of Banking News Bulletin
Bulletin # 2881 - Week Ending May 10, 2019
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 business days from the date of this bulletin.
STATE BANK ACTIVITY
Merger and Acquisition Statement
On May 10, 2019, pursuant to Section 36a-184 of the Connecticut General Statutes, Liberty Bank, a Connecticut-chartered, mutual savings bank headquartered in Middletown, Connecticut, filed an acquisition statement for the acquisition of SBT Bancorp, Inc., a Connecticut corporation, and indirectly Simsbury Bank & Trust Company, Inc. (“Simsbury Bank”), a Connecticut chartered stock bank and wholly-owned subsidiary of SBT Bancorp, Inc., headquartered in Simsbury, Connecticut. The acquisition will take place through the merger of an acquisition subsidiary, which will be formed as a Connecticut stock corporation and wholly-owned subsidiary of Liberty Bank, with and into SBT Bancorp, Inc. and immediately upon the merger, SBT Bancorp, Inc. will merge with and into Liberty Bank. Also on May 10, 2019, Liberty Bank and Simsbury Bank filed an application pursuant to Sections 36a-125 of the Connecticut General Statutes for the merger of Simsbury Bank with and into Liberty Bank.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Adam Westphalen (CRD No. 2821723) and Mosaic Financial Strategies LLC (CRD Numbers 288997 and 149364)
On May 10, 2019, the Banking Commissioner issued an Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Deny Registrations as an Investment Adviser and as an Investment Adviser Agent, Amended and Restated Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CRNDF-19-8408-S) against Mosaic Financial Strategies LLC (f/k/a Mosaic Portfolio Strategists LLC and doing business as Mosaic Advisory Partners) (“Mosaic”) of 40 Maple Road, Easton, Connecticut 06612 and Adam Westphalen, principal of the firm. Mosaic had previously been registered as an investment adviser in Connecticut until 2014, and reapplied for investment adviser registration under a different CRD number. Adam Westphalen also reapplied for registration as an investment adviser agent of Mosaic.
The original March 11, 2019 Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Deny Registrations as an Investment Adviser and as an Investment Adviser Agent and Notice of Intent to Fine had alleged that 1) from approximately 2004 forward, Westphalen was involved with various businesses, to wit, Triton Investment Partners LLC, Vista Financial Strategies LLC, Vista Investment Advisors LLC and Mosaic College Planners; and 2) Westphalen and Mosaic failed to amend their Connecticut registration filings to disclose their affiliations with Triton Investment Partners LLC, Vista Financial Strategies LLC and Mosaic College Planners in violation of Section 36b-31-14e of the Regulations under the Connecticut Uniform Securities Act. The original action had also alleged that, following the expirations of their prior registrations, Mosaic and Westphalen transacted business as an unregistered investment adviser and an unregistered investment adviser agent, respectively, in contravention of Sections 36b-6(c)(1) and 36b-6(c)(2) of the Act, and that Mosaic falsely represented on its reapplication that it had not rendered investment advisory services.
In addition, the original action alleged that Westphalen sold unregistered securities in violation of Section 36b-16 of the Act and violated the antifraud provisions in Section 36b-4(a) of the Act. More specifically, Westphalen purportedly solicited a Connecticut couple to invest $67,500 in Omni Oil and Gas Inc., a Texas based oil and gas concern whose securities were not registered under the Act. Westphalen also allegedly solicited multiple investors to invest in Triton Investment Partners LLC and failed to provide them with key disclosures. In neither offering was Westphalen registered as an agent of issuer as required by Section 36b-6(a) of the Act.
The amended action incorporated the previous allegations, and added a claim that Westphalen solicited additional investors to invest in Omni Oil and Gas Inc. Those investors received back only $7,600 of their original $67,500 investment.
The Respondents were afforded an opportunity to request a hearing on the Amended and Restated Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Deny Registrations as an Investment Adviser and as an Investment Adviser Agent and Notice of Intent to Fine.