The Department of Banking News Bulletin
Bulletin # 3055 - Week Ending September 9, 2022
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.
CONSUMER CREDIT DIVISION ACTIVITY
On August 31, 2022, the Commissioner entered into a Consent Order with Payward Ventures, Inc. d/b/a Kraken (NMLS # 2029266) (“Kraken”), San Francisco, California. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Kraken engaged in the business of money transmission in this state without the required license since at least 2019, in violation of Section 36a-597(a) of the Connecticut General Statutes. As part of the Consent Order, Kraken paid $10,000 as a civil penalty and $3,375 in back licensing fees.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
On September 7, 2022, the Banking Commissioner entered a Consent Order (No. NDCDF-17-8218-S) with respect to James Albert Pettit. Pettit was previously associated with Janney Montgomery Scott, LLC as a broker-dealer agent and an investment adviser agent.
The Consent Order had been preceded by a May 15, 2017 Notice of Intent to Deny Registrations as a Broker-dealer Agent and an Investment Adviser Agent, Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. NDCDF-17-8218-S). That action had alleged that Pettit engaged in certain improprieties rising to the level of dishonest or unethical practices in the securities business. These included 1) borrowing money from an account carried for a brokerage customer without the customer’s prior consent and without notice to Janney Montgomery Scott, LLC; 2) borrowing money from an advisory client of Janney Montgomery Scott, LLC; and 3) engaging in outside business activity involving a firm client absent notice to his employing firm. The action had also alleged that Pettit engaged in self-dealing in conjunction with a power of attorney he held over the account of an elderly client, since deceased. Pettit allegedly wrote checks to himself as remuneration, notwithstanding that the power of attorney did not provide for compensation. Following the client’s death, Pettit allegedly paid himself $69,000 for acting as executor of the client’s estate. The action had also alleged that Pettit violated Section 36b-23 of the Connecticut Uniform Securities Act by failing to provide the agency with accurate information concerning accounts over which he had signatory authority, and that Pettit allegedly violated Section 36b-31-14e of the Regulations under the Act by failing to amend his registration filings to disclose the existence of several tax liens.
On May 16, 2016, the Greater Windsor Probate Court issued a Decree ordering Pettit to repay $171,274.59 to the estate of the affected individual. A civil action to enforce the Decree brought by the executor in the Superior Court for the Judicial District of Hartford at Hartford is pending (Gostyla v. Pettit, HHD-CV17-6074354-S).
The Consent Order resolved the allegations in the May 15, 2017 action without a hearing. The Consent Order rendered the May 15, 2017 Order to Cease and Desist permanent; denied Pettit’s registrations as a broker-dealer agent and an investment adviser agent; and barred Pettit for ten years from transacting business in or from Connecticut as an agent, broker-dealer, investment adviser or investment adviser agent; maintaining a direct or indirect ownership interest in a broker-dealer or an investment adviser registered or required to be registered in Connecticut; and acting in any other capacity requiring a license or registration with the Commissioner. Acknowledging that Pettit provided written documentation that he was unable to pay the $25,000 administrative fine that otherwise would have been imposed against him, the Consent Order temporarily stayed imposition of the fine for three years. Following expiration of the three-year period, if Pettit remained unable to pay the fine, the fine would be waived.
Jorge L. Perez