|
Department Takes Administrative Action
Against Broker-Dealer
October 31, 1997
State Banking Commissioner John P. Burke today announced that administrative action taken by the Connecticut Department of Banking has shut down a Connecticut broker-dealer after the firm refused to let securities examiners conduct an examination at its main office in Stamford. The failure by registered broker-dealers to allow state securities examiners to inspect office books and records is a violation of the Connecticut Uniform Securities Act.
Burke said he issued an administrative order Oct. 24 notifying Hampton Capital Management Corp. of 100 Prospect Street, Stamford, that its registration as a broker-dealer was in jeopardy and then ordered the firm to immediately suspend operations until a hearing could be scheduled to address the state’s allegations of wrongdoing. Burke’s order also called for Hampton Capital to cease and desist from unlawful conduct in preventing his examination of company records, and stated the agency’s intent to impose a fine of up to $10,000 against the firm for not doing so.
"Our responsibility to protect state investors required me to take emergency action in ordering the company to suspend operations," Burke explained. "We will not tolerate any registrants’ attempt to limit or restrict our ability to conduct examinations or have access to their books and records."
The Securities Division continues to focus its resources on broker-dealers who engage in aggressive, high-pressure telephone sales of small or micro cap securities and Hampton Capital was targeted for an examination as part of this effort. In May, the Securities Division participated with other state securities regulators as part of what was then the biggest nationwide crackdown ever against telemarketers who sell small cap stock to investors. At that time, Connecticut filed several actions against broker-dealers and their representatives alleging numerous sales practice abuses. The Connecticut registrations for two of those firms, Nationwide Securities Corporation, which was based in Florida, and Investors Associates of New Jersey, were revoked and the companies have since gone out of business. A third firm, First United Equities Corporation, whose principal place of business is located in Garden City, New Jersey, requested a hearing and a decision as to whether its Connecticut registration as a broker-dealer will be revoked is due later next month.
"At a time when some have called for less securities regulation, Connecticut continues to actively address problems in the marketplace to protect the investing public," Burke said. "The Department believes complete access to a broker-dealer’s books and records is critical to its ability to conduct an effective examination and enforcement program. We will strongly respond whenever the agency’s ability to conduct a timely and thorough investigation to safeguard the public is obstructed."