The Department of Banking News Bulletin
Bulletin # 2822 - Week Ending March 23, 2018
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 business days from the date of this bulletin.
STATE BANK ACTIVITY
Branch Activity
Section 361-145 of the Connecticut General Statutes requires certain applications for a branch, of 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.
DATE: March 22, 2018
BANK: Farmington Bank, Farmington
LOCATION: 299 Middle Turnpike West, Manchester, CT 06040
ACTIVITY-BRANCH TYPE: Opening Date - Full Service
CREDIT UNION ACTIVITY
Branch Activity
DATE: March 19, 2018
BANK: Nutmeg State Financial Credit Union, Inc., Rocky Hill
LOCATION: 977 Boston Post Road, Milford, CT 06460
ACTIVITY-BRANCH TYPE: Filed to Open Full Service Branch
CONSUMER CREDIT DIVISION ACTIVITY
Consent Orders
On March 15, 2018, the Commissioner entered into a Consent Order with Allied Collection Services of California, LLC (“Allied Collection Services”), Chatsworth, California. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Allied Collection Services acted within this state as a consumer collection agency without the requisite license, in violation of Section 36a 801(a) of the Connecticut General Statutes. To resolve the matter, Allied Collection Services agreed to pay $10,000 as a civil penalty and to cease and desist from acting as a consumer collection agency in this state without a license.
On March 15, 2018, the Commissioner entered into a Consent Order with Servion, Inc.(NMLS # 1037) (“Servion”), New Brighton, Minnesota. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Servion failed to file with the Nationwide Multistate Licensing System and Registry a change of its name at least 30 calendar days prior to such change and, in connection with such name change, failed to provide a bond rider or endorsement, or addendum, as applicable, to the surety bond on file with the Commissioner, in violation of Section 36a 490(b) of the Connecticut General Statutes. As part of the Consent Order, Servion paid $500 as a civil penalty.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
Augment Securities Inc. (CRD No. 28373) - Stipulation and Agreement Entered
On March 19, 2018, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-18-8377-S) with Augment Securities Inc. The firm maintains its principal office at 1140 Avenue of the Americas, 9th Floor, New York, New York 10036. The Stipulation and Agreement alleged that the firm 1) violated Section 36b-6(b) of the Connecticut Uniform Securities Act by failing to promptly file a Form U5 for a terminated agent; 2) violated Section 36b-31-14e of the Regulations under the Act by not ensuring consistency between Form BD and Form U4 with respect to an officer's title; 3) failed to sufficiently verify the accuracy of an agent's Form U4 with respect to a civil judgment entered against the agent; and 4) failed to timely renew its 2018 broker-dealer registration.
On March 19, 2018, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-18-8409-S) with Pearson and Associates, LLC, an investment adviser having its principal office at 586 Main Street, Dennis, Massachusetts 02638. The firm was restructured under new ownership in 2015, and applied for registration as an investment adviser in Connecticut in 2017. The Stipulation and Agreement noted that the firm's registration application indicated that, for several years, it had transacted business as an investment adviser in the state while unregistered and had employed an unregistered investment adviser agent.
In resolution of the matter, the firm agreed to pay $6,110 to the department and to refrain from regulatory violations. Of the amount assessed, $2,610 represented reimbursement for past due investment adviser and investment adviser agent registration fees and $3,500 constituted an administrative fine.
Pearson and Associates, LLC became registered as an investment adviser in Connecticut on March 19, 2018.
SF Investments, Inc. (CRD No. 6564) - Stipulation and Agreement Entered
On March 21, 2018, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-18-8367-S) with SF Investments, Inc., a Connecticut registered broker-dealer. The firm maintains its principal office at 799 Central Avenue, Highland Park, Illinois 60035. The Stipulation and Agreement alleged that, in violation of Section 36b-6(b) of the Connecticut Uniform Securities Act, the firm employed an unregistered agent who effected sales of securities issued by St. Teresa Medical, Inc. The agent has since become registered in Connecticut.
The Stipulation and Agreement acknowledged that the firm had extended a $25,000 rescission offer to the affected Connecticut investor, and that the investor had opted not to accept the offer but to retain his investment in St. Teresa Medical, Inc.
In resolution of the matter, the firm agreed to refrain from regulatory violations and to pay $1,800 to the department. Of that amount, $1,500 constituted an administrative fine and $300 represented reimbursement for past due agent registration fees.
Matthew Charles Woodard (CRD No. 5699485) and Toppikgink 539, LLC d/b/a Titan Brokerage Services - Consent Order Entered
On March 23, 2018, the Banking Commissioner entered a Consent Order (No. CO-17-8279-S) with respect to Matthew Charles Woodard, a former broker-dealer agent of ProEquities, Inc. Woodard was also associated with First Allied Securities, Inc. in an unregistered capacity. Also named in the Consent Order was Toppikgink, a Texas limited liability company and insurance brokerage agency located at 1031 Farmington Avenue, Floor 3, Farmington, Connecticut 06032. Woodard was a founding member and the treasurer of Toppikgink.
The Consent Order alleged that, while he was associated with ProEquities, Inc., Woodard offered or sold unregistered Series A Preferred Debt securities of Toppikgink to a ProEquities, Inc. client without notice to ProEquities, Inc. Although the accompanying offering documents stated that the offering proceeds would be used to invest in private distressed debt opportunities, Woodard and Toppikgink actually used the investor’s monies to pay a portion of Woodard’s personal expenses and Toppikgink’s business expenses. In addition, the Consent Order alleged that Woodard, on behalf of Toppikgink, borrowed approximately $220,000 from the investor and that, between investments and loans, the amount the investor tendered to Woodard was $325,000. Ultimately, the investor moved his account to First Allied where Walter J. Dubiel (CRD No. 4234689), who shared office space with Woodard, exercised discretionary trading authority over the account. The Consent Order alleged that Dubiel shared his First Allied confidential client account log-in credentials with Woodard who then used the credentials to access the investor’s account and place several liquidating securities transactions without the investor’s knowledge or consent.
The Consent Order alleged that both Woodard and Toppikgink violated Section 36b-16 of the Connecticut Uniform Securities Act and the antifraud provisions in Section 36b-4(a) of the Act. In addition, the Consent Order alleged that Woodard 1) violated Section 36b-6(c)(2) of the Act by transacting business as an unregistered investment adviser agent of First Allied; 2) engaged in dishonest or unethical practices within the meaning of Section 36b-4(b) of the Act and Sections 36b-31-15b(a)(2) and 36b-31-15b(c) of the Regulations thereunder; and 3) violated Section 36b-31-6e of the Regulations by participating in private securities transactions without providing prior written notice to his employing broker-dealer.
The Consent Order acknowledged that, under the oversight of Woodard’s legal counsel, Woodard had partially repaid the investor $58,000 and that Woodard had forwarded to his legal counsel $267,000 in good funds to be deposited into the attorney's client funds account for the purpose of repaying the balance Woodard owed to the investor.
The Consent Order directed Woodard and Toppikgink to cease and desist from regulatory violations, and directed Woodard, through his legal counsel, to repay the investor the balance due no later than the date the Consent Order was entered. The Consent Order also fined Woodard $20,000 and permanently barred him from 1) transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent; 2) acting in any other capacity requiring a license or registration from the Commissioner; 3) serving as an officer, director or control person of a broker-dealer, investment adviser, issuer and/or any other entity requiring a license or registration from the Commissioner; and 4) soliciting or accepting funds for investment purposes from public or private investors in or from Connecticut.
Dated: Tuesday, March 27, 2018
Jorge L. Perez
Banking Commissioner