The Department of Banking News Bulletin
Bulletin # 2901 - Week Ending September 27, 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
Interstate Loan Production Office
On September 24, 2019, the Commissioner approved the application of Investors Bank, a New Jersey-chartered savings bank and wholly-owned subsidiary of Investors Bancorp, Inc., Short Hills, New Jersey, to establish a loan production office in Connecticut pursuant to Section 36a-412(d) of the Connecticut General Statutes. The office will be located at 100 Mill Plain Road, 3rd Floor, in Danbury, Connecticut.
CONSUMER CREDIT DIVISION ACTIVITY
On September 17, 2019, the Commissioner entered into a Consent Order with Account Discovery Systems, LLC (NMLS # 937608) (“ADS”), and Payment Management Services USA, LLC (“PMS”) (collectively, “Respondents”), Amherst, New York. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, on February 21, 2019, the Commissioner issued a Notice of Intent to Revoke Consumer Collection Agency License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against Respondents. The Commissioner alleged that: (1) PMS acted as consumer collection agency within Connecticut without the required license, in violation of Section 36a-801(a) of the Connecticut General Statutes, in effect prior to October 1, 2016; (2) PMS engaged in the business of money transmission in Connecticut without the required license, in violation of Section 36a-597(a) of the Connecticut General Statutes in effect prior to October 1, 2018; (3) ADS collected or received payments on at least one small loan made by a person who had not obtained a small loan license, in violation of Section 36a-573 of the Connecticut General Statutes effective June 19, 2015; (4) ADS failed to deposit and maintain monies from Connecticut consumer debtors in a separate trust account, and commingled such funds with other funds of ADS, in violation of Section 36a-811(b) of the Connecticut General Statutes in effect prior to October 1, 2016; (5) ADS charged Connecticut consumer debtors convenience fees, in violation of Section 36a-805(a)(12) of the Connecticut General Statutes in effect prior to October 1, 2016; (6) ADS failed to update its application on NMLS in violation of Section 36a-801(e) of the Connecticut General Statutes in effect prior to October 1, 2018; and (7) ADS’ conduct renders the Commissioner unable to determine that the financial responsibility, character, reputation, integrity and general fitness of ADS are such to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a‑800 to 36a-814, inclusive, as required pursuant to Section 36a-801(c)(2) of the Connecticut General Statutes.
As part of the Consent Order, among other things, Respondents agreed to pay $50,000 as a civil penalty. In addition, ADS and PMS’ President and sole owner, John H. Chebat, is prohibited for a period of five years from acting as a director, manager, owner, supervisor, control person or qualified individual of any entity acting directly as a consumer collection agency in Connecticut, or acting indirectly in such capacity through a third-party entity or being involved, directly or indirectly, in the collection of any consumer debt in Connecticut.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
On September 27, 2019, the Banking Commissioner entered a Consent Order (No. CO-19-8416-S) with respect to Safe Harbour LLC, an applicant for investment adviser registration located at 1000 Bridgeport Avenue, Suite 2D, Shelton, Connecticut 06484. Also named in the Consent Order was Robert William Brinkman, president of the firm and an applicant for investment adviser agent registration under the Connecticut Uniform Securities Act.
The Consent Order alleged that from approximately January 2016 to January 2019, Brinkman violated Section 36b-6(c) of the Act by transacting business as an investment adviser agent of Horter Investment Management, LLC while unregistered. Horter Investment Management, LLC is an investment adviser registered with the Securities and Exchange Commission. The Consent Order noted that Brinkman received significant compensation in connection with that activity, and that the payments were channeled through Safe Harbor Retirement LLC, an entity headed by Brinkman's spouse. The Consent Order also alleged that, from approximately January 2016 to July 2019, Brinkman violated Section 36b-5 of the Act by falsely holding himself out as an “Advisor for 31 years” and by failing to disclose to the clients he solicited for Horter Investment Management, LLC that he was receiving significant compensation for the solicitation activity.
The Consent Order directed Brinkman to cease and desist from regulatory violations, fined Brinkman $20,000 and required that he pay an additional $450 to the agency as reimbursement for past due registration fees. In addition, the Consent Order placed the following conditions on the registrations of Safe Harbour LLC and Brinkman: 1) for two years, the firm would retain a regulatory consultant to conduct on-site compliance reviews of the firm's operations; 2) for two years, the firm and Brinkman would notify the agency of any securities-related complaints, actions or proceedings (including arbitrations) and furnish the agency with appropriate updates; 3) within 30 days following the entry of the Consent Order, Brinkman would notify his investment advisory clients in writing concerning the existence of the Consent Order; and 4) for two years, neither the firm nor Brinkman would exercise discretionary trading authority over client accounts or maintain custody or control of client funds or securities.
Safe Harbour LLC became registered as an investment adviser in Connecticut on September 27, 2019. On the same day, Robert William Brinkman became registered as an investment adviser agent of Safe Harbour LLC under the Act.