Bulletin # 3068 - Week Ending December 9, 2022

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.

CONSUMER CREDIT ACTIVITY 

Order to Cease and Desist and Order Imposing Civil Penalty

On December 1, 2022, the Commissioner issued an Order to Cease and Desist and Order Imposing Civil Penalty (“Order”) in the Matter of: Law Offices of David M. Katz, P.C. (“Katz”), Suffern and New York, New York. The basis of the Order was that that Katz acted within this state as a consumer collection agency without a consumer collection agency license, constituting a violation of Section 36a-801(a) of the Connecticut General Statutes in effect at such time. The Commissioner ordered Katz to cease and desist from violating Section 36a-801(a) of the 2022 Supplement to the General Statutes and imposed a civil penalty in the amount of $100,000 upon Katz.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Heron Bay Capital, LLC (IARD No. 311176)

On December 7, 2022, the Banking Commissioner entered a Consent Order (No. CO-22-202237-S) with respect to Heron Bay Capital, LLC of 112 Southfield Avenue, Apt. PH01, Stamford, Connecticut 06902. The firm was previously registered as an investment adviser with the Securities and Exchange Commission from November 12, 2020 to March 4, 2021. The Consent Order alleged that 1) prior to its SEC registration, the firm violated Section 36b-6(c)(1) of the Connecticut Uniform Securities Act by transacting business as an investment adviser absent state registration; 2) during the period when it was SEC-registered, the firm violated Section 36b-6(e) of the Act by failing to make the notice filing required of SEC-registered investment advisers; and 3) following the 2021 termination of its SEC registration, the firm continued to transact business as an investment adviser in Connecticut at a time when no Connecticut investment adviser registration was in effect. The Consent Order acknowledged the firm’s representation that, effective August 31, 2022, it had ceased conducting advisory activities.

The Consent Order directed Heron Bay Capital, LLC to cease and desist from regulatory violations and to pay $6,005 to the department. Of that amount, $5,000 constituted an administrative fine and $1,005 represented reimbursement for past due registration and notice filing fees.

NYPPEX, LLC (CRD No. 47654) and Laurence Geoffrey Allen (CRD No. 1063970)

On December 7, 2022, the Banking Commissioner issued an Amended Notice of Intent to Deny Registration as Broker-dealer, Amended Notice of Intent to Deny Registration as a Broker-dealer Agent and Amended Notice of Right to Hearing (Docket No. NDR-20-14445-S) with respect to NYPPEX, LLC, an applicant for broker-dealer registration, and Laurence Geoffrey Allen, managing member of the firm. The firm, formerly located at 55 Old Field Point Road, Greenwich, Connecticut, is now based at 120 N. Washington Square, Suite 200, Lansing, Michigan 48933. Allen had been registered as a broker-dealer agent of NYPPEX, LLC under the Connecticut Uniform Securities Act from November 29, 1999 to December 31, 2019 when his broker-dealer agent registration was terminated for failing to renew. On October 30, 2020, Allen reapplied to be a broker-dealer agent under the Act, but then (the same day) filed to withdraw his pending broker-dealer agent application. Both applications remain pending.

The December 7, 2022 action had been preceded by a February 21, 2020 Notice of Intent to Deny Registration as Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent and Notice of Right to Hearing (Docket No. NDR-20-14445-S). The Amended Notice reflected Allen’s updated application status as well as additional disciplinary events relating to the respondents.

The Commissioner’s amended action alleged that on February 4, 2020, in a proceeding brought by the Attorney General of the State of New York, the Supreme Court of the State of New York entered a preliminary injunction enjoining NYPPEX, LLC, Allen and others from, inter alia, engaging in fraudulent, deceptive and illegal acts in conjunction with limited partnership investments (People v. Allen, Laurence G., No. 2378/2019 (Supreme Ct. N.Y. Cnty. 2019). On February 4, 2021, the court in the New York action issued a Decision After Trial wherein the court entered a permanent injunction enjoining NYPPEX and Allen from, among other things, making any distributions from ACPX (the underlying investment fund) except to investors. People v. Allen, Laurence, No. 452378/2019 (Supreme Ct. N.Y. Cnty. 2021) (NYSCEF Doc. No. 538). The Decision After Trial also found that Allen made frequent, material misrepresentations and misleading omissions in communications to the investors and made false and misleading reports on the value of ACPX’s interest in NYPPEX to the investors and caused ACPX to purchase NYPPEX stock at wildly inflated prices. NYPPEX appealed the Decision After Trial to the Supreme Court Appellate Division, First Judicial Department, which decided on October 21, 2021 to uphold the Decision After Trial in full. James, AG SNY v Allen, N.Y. App. Div., 198 A.D.3d 531 (1st Dep’t 2021). In July 2022, NYPPEX and Allen appealed the First Judicial Department Decision to the New York Court of Appeals, which appeal was denied on October 20, 2022. People of State of New York, by Letitia James, etc. v Laurence G. Allen, Slip Opinion No: 2022 NY Slip Op. 73209, October 20, 2022.

The Commissioner’s amended action also noted that the respondents had been the subject of the several additional regulatory proceedings which included: 1) an August 26, 2022 Financial Industry Regulatory Authority (“FINRA”) Extended Hearing Panel Decision, currently on appeal, expelling NYPPEX from FINRA membership and barring Allen from association with any FINRA member firm in any capacity based on allegations of securities fraud (FINRA Disciplinary Proceeding No. 2019064813801); and 2) a May 13, 2022 Final Order of Default entered by the State of Kentucky revoking NYPPEX’s broker-dealer registration in that state. The amended action alleged that the New York, FINRA and Kentucky disciplinary actions supported denial proceedings against the respondents under the Connecticut Uniform Securities Act.

Both respondents were afforded an opportunity to request a hearing on the allegations in the amended action.