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WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”) and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies (the “Regulations”) promulgated under the Act;
WHEREAS, KJAYA, LLC. (“KJAYA”), a Connecticut limited liability company formed on May 4, 2005 and having its principal office at 35 Maple Tree Avenue, Unit 6, Stamford, Connecticut, is an issuer of securities, specifically limited liability company membership interests;
WHEREAS, Kovalan Muniandy (“Muniandy”) is the managing partner of KJAYA;
WHEREAS, commencing in late 2009, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking conducted an investigation (the “Investigation”) of KJAYA pursuant to Section 36b-26 of the Act;
WHEREAS, in connection with the Investigation, the Division issued a subpoena duces tecum to KJAYA and Muniandy to produce certain records and to have Muniandy appear and to testify under oath;
WHEREAS, on or about January 7, 2010, KJAYA complied with the subpoena duces tecum, and Muniandy appeared before the Division to answer questions under oath;
WHEREAS, in conjunction with the Investigation, the Division ascertained that KJAYA had sold securities in 2007, 2008 and 2009 at a time when such securities were not registered under Sections 36b-17, 36b-18 or 36b-19 of the Act nor the subject of an exemptive claim or claim of covered security status under Section 36b-21 of the Act;
WHEREAS, Section 36b-16 of the Act provides that: “No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-33, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21”;
WHEREAS, Section 36b-21(e) of the Act provides that: “Any person who offers or sells a security that is a covered security under Section 18(b)(4)(D) of the Securities Act of 1933 shall file a notice with the commissioner within fifteen days after the first sale of such a security in this state. Such notice shall contain such information as the commissioner may require and shall be accompanied by a consent to service of process as required by subsection (g) of section 36b-33 and a nonrefundable fee of one hundred fifty dollars”;
WHEREAS, on March 18, 2010, the Division received from KJAYA a Rule 506 notice filing (the “2010 Rule 506 Filing”) and associated fee pursuant to Section 36b-21(e) of the Act covering the sale of KJAYA membership interests. Such notice filing disclosed that, in connection with the subject offering, KJAYA had paid sales commissions to one James McMahon and Bally Capital, LLC of 222 Bloomingdale Road, Suite 104, White Plains, New York;
WHEREAS, the Division also ascertained that, in connection with the 2010 Rule 506 Filing, James McMahon was not registered as an agent of issuer and that Bally Capital, LLC was not registered as a broker-dealer under Section 36b-7 of the Act;
WHEREAS, Section 36b-6(b) of the Act provides that: “No issuer shall employ an agent unless such agent is registered under sections 36b-2 to 36b-33, inclusive”;
WHEREAS, on May 13, 2010, the Division received an application to register James McMahon as an agent of KJAYA under the Act;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, KJAYA desires to settle the matters described herein that were the subject of the Investigation and, without admitting or denying the allegations herein, voluntarily enters into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding against KJAYA, its Managing Partner, its members, employees, agents, representatives or successors in interest adjudicating any issue of fact or law on the specific matters described herein;
WHEREAS, KJAYA, through its execution of this Stipulation and Agreement, voluntarily waives any rights it may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
No later than the date this Stipulation and Agreement is executed by the Commissioner, KJAYA shall remit to the department via check made payable to “Treasurer, State of Connecticut” the sum of one thousand eight hundred dollars ($1,800) as an administrative fine;
Commencing on the date this Stipulation and Agreement is executed by the Commissioner and continuing for three years thereafter, prior to any issuance, offer or sale of securities in or from Connecticut by KJAYA or its successors in interest, KJAYA or its successors in interest shall (a) provide the Division Director with written advance notice of such issuance, offer or sale; (b) retain legal counsel experienced in Connecticut securities law to advise it on compliance with the securities laws of Connecticut and other jurisdictions (“Retained Counsel”); (c) identify Retained Counsel to the Division Director in writing; (d) direct Retained Counsel to prepare and submit any required registration or other required documents and fees to the Division, and provide the Division Director with a signed opinion of counsel setting forth the basis for any claim of exemption or covered security status under Section 36b-21 of the Act at least thirty (30) days prior to the commencement of the offering; and (e) refrain from issuing, offering or selling securities in or from Connecticut prior to receiving a written acknowledgement by Retained counsel that the Commissioner has declared such registration effective or that the Division Director has acknowledged the issuer’s claim of exemption or covered security status under 36b-21 of the Act;
|3)||KJAYA, its Managing Partner, its control persons, affiliates and successors in interest shall refrain from offering or selling securities in or from Connecticut absent compliance with Section 36b-16 of the Act, including timely compliance with any applicable filing requirements;|
|4)||KJAYA, its Managing Partner, its control persons, affiliates and successors in interest shall refrain from employing unregistered agents of issuer in contravention of Section 36b-6(b) of the Act or offering or selling securities through any broker-dealer that is not registered under the Act;|
|5)||Upon execution of this Stipulation and Agreement by the Commissioner, this matter will be resolved and the Commissioner will not take any future enforcement action against KJAYA or its successors in interest based upon the specific factual allegations contained herein; provided that the execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against KJAYA or its successors in interest based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof. Execution of this Stipulation and Agreement by the Commissioner shall not be deemed a waiver or estoppel on the part of the Commissioner from proceeding in individual actions against any person who may have violated the Act in any transaction not currently known to the Commissioner at the time the Stipulation and Agreement is executed; and|
|6)||This Stipulation and Agreement shall become binding when executed by KJAYA and the Commissioner.|
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
|Dated at Hartford, Connecticut||_______/s/_________|
|this 23rd day of November, 2010.||Howard F. Pitkin|
I, Kovalan Muniandy, state on behalf of KJAYA, LLC that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of KJAYA, LLC; that KJAYA, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
On this the 17 day of November, 2010, before me, the undersigned officer, personally appeared Kovalan Muniandy, who acknowledged himself to be the Managing Member of KJAYA, LLC, a limited liability company, and that he, in such capacity and being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Managing Member.
In witness whereof I hereunto set my hand.
Commissioner of Superior Court