Bulletin # 2750 - Week Ending November 4, 2016

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 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, address how the establishment of the branch will be consistent with safe and sound banking practices and promote the public convenience and advantage.  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

Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke Money Transmission License, Notice of Intent to Issue Order to Cease and Desist and Notice of Intent to Impose Civil Penalty

On October 24, 2016, the Commissioner issued a Temporary Order to Cease and Desist, Order of Summary Suspension, Notice of Intent to Revoke Money Transmission License, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing (“Notice”) in the Matter of:  Century Union Services, LLC (NMLS # 907743) (“Century Union”), Everett, Massachusetts, and Robes Barboza (NMLS # 908878) (“Barboza”) (collectively, “Respondents”).  The Notice was the result of an investigation by the Consumer Credit Division.  The Commissioner alleges that Century Union failed to transmit money or monetary value received from Connecticut consumers, constituting an unsafe or unsound practice, and engaged in fraud, intentional misrepresentations or negligence, constituting grounds to revoke Century Union’s license to engage in the business of money transmission in Connecticut and forming the basis to issue an order to cease and desist against Century Union and to impose a civil penalty upon Century Union not to exceed $100,000 per violation.  In addition, the Commissioner alleges that Barboza made statements to the Department which were false or misleading in a material respect, in violation of Section 36a 53a of the Connecticut General Statutes, which forms a basis to issue an order to cease and desist against Barboza and to impose a civil penalty upon Barboza not to exceed $100,000 per violation.  The Commissioner also alleges that such conduct by Barboza, as a member of Century Union, constitutes a basis to revoke Century Union’s license to engage in the business of money transmission in Connecticut.  The Commissioner found that public safety and welfare imperatively required emergency action to summarily suspend Century Union’s license to engage in the business of money transmission in Connecticut and to issue a temporary order requiring Century Union to immediately cease and desist from violating the laws cited within the Notice.  Respondents were afforded an opportunity to request a hearing on the allegations set forth in the Notice.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Broker-dealer Registration Revoked

On November 4, 2016, the Banking Commissioner issued an Order (Docket No. NR-16-8163-S) revoking the broker-dealer registration of The Dratel Group, Inc.  The firm is located in Southold, New York.  The action had been preceded by a September 19, 2016 Notice of Intent to Revoke Registration as a Broker-dealer based on sanctions levied against the firm by the Financial Industry Regulatory Authority ("FINRA") as well as a revocation by the State of New Jersey.  More specifically, on September 28, 2012, a FINRA extended hearing panel had barred the firm from day trading and fined it $185,000 based on allegations that the firm executed a fraudulent scheme involving allocation of profitable trades to a preferred account and less profitable trades to a non-preferred account such as that of a customer, and that the firm falsified and backdated order tickets (Extended Hearing Panel Decision No. 2008012925001).  FINRA's National Adjudicatory Council affirmed the hearing panel decision on May 2, 2014, and increased the sanction from a day-trading bar to a full expulsion from membership.   On appeal to the Securities and Exchange Commission, the SEC found on March 17, 2016 that the trade allocation scheme violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the firm also violated the recordkeeping provisions in Section 17(a)(1) of the Exchange Act as well as Rules 17a-3(a)(6) and 17a-3(a)(7) thereunder (Admin. Proc. File No. 3-15869).  In addition, on March 21, 2016, FINRA expelled the firm from membership for failing to pay the fine and/or costs imposed in a prior matter involving reporting and recordkeeping violations (FINRA Case No. 2009016317701).  On May 3, 2016, the securities administrator of the State of New Jersey revoked the firm’s broker-dealer registration based on the FINRA expulsion and on claims that the firm engaged in dishonest or unethical practices in the securities business.

Since The Dratel Group, Inc. did not request a hearing on the Notice of Intent to Revoke Registration as a Broker-dealer, the allegations in the Notice were deemed admitted, and the firm’s Connecticut registration was revoked effective November 4, 2016.