The Department of Banking News Bulletin

Bulletin # 2031
Week Ending January 24, 2003

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 John P. Burke, Commissioner of Banking, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.

BRANCH ACTIVITY

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Bank Examination Division, (860) 240-8180.
Note: dates are listed in month/day/year format.

State Bank Activity

On January 21, 2003, the Commissioner issued a Notice of Intent to Refuse to Renew First Mortgage Broker License and Notice of Right to Hearing, against American Family Mortgage Corporation, a first mortgage broker located at 603 Sumner Avenue, Springfield, Massachusetts. The agency's action is based on American Family Mortgage Corporation's material misstatement on its application regarding the criminal history of an officer of the company.

SECURITIES AND BUSINESS INVESTMENTS DIVISION Mandatory IARD
Participation Required of Investment Adviser Agents
and State-Registered Investment Advisers Effective April 1, 2003

On January 16, 2003, the Commissioner signed an order (http://www.ct.gov/dob/pages/IARD1-03.htm) requiring state-registered investment adviser agents and state-registered investment advisers to make their initial and renewal registration filings, as well as fee payments, through the Investment Adviser Registration Depository or "IARD." The order goes into effect on April 1, 2003. Issuance of the order represented completion of the agency's transition to electronic filing for investment advisory personnel. On September 29, 2000, the department had issued an order requiring SEC-registered investment advisers to make their Connecticut notice filings through the IARD effective January 1, 2001.

Belize Firm Ordered to Cease and Desist From Allegedly Fraudulent Sales
of Membership Units; Notice of Intent to Fine Issued

On January 23, 2003, the Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Tri-West Investment Club of 160 North Front Street, P.O. Box 354, Belize City, Belize. The action alleged that from at least June 2000 to December 2001, the firm violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered membership units through its Internet website at www.triwestinvest.com. The action also alleged that, in connection with the offering, the respondent violated Section 36b-4 of the Act by making false statements and omissions in connection with the offering. Specifically, the Order to Cease and Desist and Notice of Intent to Fine claimed that the respondent stated that it was selling memberships in a club that invested membership money in Prime Bank Notes, Prime Bank Debenture Forfeitures, Leveraged Bond Purchases and Bank Debentures when, in reality, 1) the respondent made no such investments; and 2) Prime Banks did not exist and, accordingly, could not issue any type of note, debenture or bond. The action also alleged that the respondent represented that 1) membership investments were of minimal risk, when such investments were highly risky; and 2) respondent would pay a ten percent rate of return per month, when, in actuality, the respondent never paid such returns to investors.

The respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist. A hearing on the Notice of Intent to Fine has been scheduled for March 11, 2003.

Investment Adviser Assessed $3,100 for Engaging Unregistered
Investment Adviser Agents

On January 22, 2003, the Commissioner entered into a Stipulation and Agreement with Fahnestock & Co. Inc., an investment adviser registered with the Securities and Exchange Commission and having its principal office at 125 Broad Street, New York, New York. The Stipulation and Agreement alleged that from April 1999, the firm engaged unregistered investment adviser agents in violation of Section 36b-6(c) of the Connecticut Uniform Securities Act.

Pursuant to the Stipulation and Agreement, the firm agreed to review its supervisory and compliance procedures relating to investment adviser agent registration and modify those procedures to ensure prompt and accurate renewal processing. In addition, the firm agreed to pay $3,100 to the department. Of that amount $2,500 constituted an administrative fine and $600 represented reimbursement for past due registration fees.