Bulletin # 2642 - Week Ending October 10, 2014

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 Howard F. Pitkin, Banking Commissioner, at the above address.  Written comments will be considered only if they are received within ten days from the date of this bulletin.

STATE BANK ACTIVITY

Branch Activity

Section 36a-145 of the Connecticut General Statutes requires certain applications 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 Financial Institutions Division, (860) 240-8180.

CONSUMER CREDIT DIVISION ACTIVITY

Consent Order

On September 30, 2014, the Commissioner entered into a Consent Order with 6717381 Canada Inc. d/b/a SolidTrust Pay (“SolidTrustPay”), Bobcaygeon, Ontario, Canada.  The Consent Order was based on an investigation by the Consumer Credit Division.  As a result of such investigation, on April 7, 2014, the Commissioner issued a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing against SolidTrust Pay.  The Commissioner alleged that SolidTrustPay engaged in the business of money transmission in Connecticut without a license, in violation of Section 36a-597(a) of the 2014 Supplement to the General Statutes.  As part of the Consent Order, SolidTrustPay paid $25,000 as a civil penalty and $7,625 as payment for back licensing fees.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Consent Order

On October 8, 2014, the Banking Commissioner entered a Consent Order (No. CO-14-7988A-S) with respect to Vanderbilt Securities, LLC, a Connecticut-registered broker-dealer located in Woodbury, New York.  From 2006 to 2011, the firm maintained a branch office at 152 Deer Hill Avenue, Suite 203, Danbury, Connecticut, and employed Stephen Burton Blankenship (CRD number 2234577) as a registered broker-dealer agent.  Blankenship, the sole managing member and control person of Deer Hill Financial Group, LLC, also conducted tax preparation, financial planning and investment advisory services from the Danbury location.  Following allegations of unregistered investment advisory activity, fraud and misappropriation, the Banking Commissioner entered a Consent Order (Docket No. CO-12-7988-S) with respect to Blankenship and Deer Hill Financial Group, LLC on August 31, 2012.  That consent order revoked Blankenship's registration as a broker-dealer agent and permanently barred both Blankenship and Deer Hill Financial Group, LLC from transacting securities business in or from Connecticut.  In addition, the U.S. District Court for the District of Connecticut fined Blankenship $7,500, directed Blankenship to make $607,516.81 in restitution and sentenced Blankenship to 41 months in prison following Blankenship’s guilty plea to one count of federal mail fraud and one count of federal securities fraud (United States of America v. Stephen Blankenship, D. Conn. Case No. 3:12CR197 (VLB)).

The Consent Order with Vanderbilt Securities, LLC alleged that, in contravention of Section 36b-31-6f of the Regulations under the Connecticut Uniform Securities Act, the firm failed to establish, enforce and maintain a system for supervising the activities of its agents and its Connecticut office operations reasonably designed to achieve compliance with applicable securities laws and regulations.

The Consent Order acknowledged that Vanderbilt Securities, LLC and another securities brokerage firm had reimbursed affected investors for 100% of the financial losses they incurred as a result of Blankenship's misconduct.   Specifically, Vanderbilt Securities, LLC repaid affected investors $303,758.20.

In resolution of the matter, the Consent Order directed the firm to refrain from regulatory violations.  In addition, the Consent Order required that the firm 1) retain a consultant to review the firm’s supervisory and compliance procedures; and 2) provide the agency with an implementational plan for recommendations made by the consultant.

Dated:  Wednesday, October 15, 2014

Howard F. Pitkin
Banking Commissioner