Bulletin # 3103 - Week Ending August 11, 2023

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.

BANK ACTIVITY 

On May 19, 2023, Berkshire Bank, a Massachusetts-chartered bank, filed an application pursuant to Section 36a-412(d) of the Connecticut General Statutes, seeking approval to establish a loan production office at 140 Woodland Street in Hartford, Connecticut. The proposed opening date is on or around September 1, 2023.

CONSUMER CREDIT ACTIVITY

Notice of Automatic 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 August 3, 2023, the Commissioner issued a Notice of Automatic 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: West Realm Shires Services Inc. d/b/a FTX US (NMLS # 1957771) (“Respondent”), Chicago, Illinois. The Notice was the result of an investigation by the Consumer Credit Division. The Commissioner alleges in the Notice that: (1) Respondent’s failure to transmit monetary value received from Connecticut purchasers is conduct that is likely to materially prejudice the interests of purchasers, which constitutes an unsafe or unsound practice within the meaning of Section 36a-608(a) of the Connecticut General Statutes, and forms the basis to issue an order to cease and desist pursuant to Sections 36a-608(c) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-608(c) and 36a-50(a) of the Connecticut General Statutes; and (2) Respondent’s failure to maintain a surety bond that runs concurrently with the period of its money transmission license, as required pursuant to Section 36a-602(a) of the Connecticut General Statutes, constitutes sufficient grounds for the Commissioner to deny an initial license under Section 36a-598 of the Connecticut General Statutes and constitutes sufficient grounds for the Commissioner to revoke Respondent’s license to engage in the business of money transmission in Connecticut pursuant to Sections 36a-602(c) and 36a-608(b) of the Connecticut General Statutes and subsections (a) and (b) of Section 36a-51 of the Connecticut General Statutes. Respondent was afforded an opportunity to request a hearing with regard to the allegations set forth in the Notice.

Consent Order

On August 7, 2023, the Commissioner entered into a Consent Order with Barrett Financial Group, L.L.C. (NMLS # 181106) (“Barrett”), Gilbert, Arizona. The Commissioner alleged that Barrett failed to file with the Nationwide Multistate Licensing System and Registry a change of address of its main office at least thirty (30) calendar days prior to such change and 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)(2) of the Connecticut General Statutes. As part of the Consent Order, Barrett paid $500 as a civil penalty.

Consent Order

On June 23, 2023, the Commissioner entered into a Consent Order with FTL Capital Partners, LLC d/b/a FTL Finance (NMLS # 2133635) (“FTL”), Saint Charles, Missouri. The Consent Order was based on an examination by the Consumer Credit Division. As a result of such examination, the Commissioner alleged that FTL engaged in the business of receiving payments of principal and interest in connection to small loans made to Connecticut borrowers without first having obtained a small loan license, in violation of Section 36a-556(a)(4) of the Connecticut General Statutes. As part of the Consent Order, FTL paid $10,000 as a civil penalty, $400 as back licensing fees and restitution to all identified Connecticut borrowers.

Findings of Fact, Conclusions of Law and Order

On August 8, 2023, following an administrative hearing, the Commissioner issued Findings of Fact, Conclusions of Law and Order in the matter of: Legal Funding, LLC d/b/a Crash Advance (“Respondent”), East Haven, Connecticut.

The hearing considered allegations brought by the Commissioner on September 16, 2022, through a Temporary Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty and Notice of Right to Hearing issued against Respondent (“Order and Notice”). In the Order and Notice, the Commissioner alleged that Respondent’s making at least two small loans for a Connecticut borrower without the required license constitutes a violation of Section 36a-556(a)(1) of the Connecticut General Statutes, and enforcement and collection of monies in connection with at least two small loans against a Connecticut borrower without the required license constitutes a violation of Section 36a 558(c)(1) of the Connecticut General Statutes, which violations form the basis to issue an order to make restitution pursuant to Section 36a-570(b) of the Connecticut General Statutes and Section 36a 50(c) of the 2022 Supplement to the General Statutes, issue an order to cease and desist pursuant to Section 36a-570(b) of the Connecticut General Statutes and Section 36a-52(a) of the 2022 Supplement to the General Statutes, and impose a civil penalty pursuant to Section 36a 570(b) of the Connecticut General Statutes and Section 36a 50(a) of the 2022 Supplement to the General Statutes. The Commissioner also alleged that Respondent’s failure to provide information requested during the investigation constitutes a violation of Section 36a-17(e) of the Connecticut General Statutes in effect at such time, which forms the basis to issue an order to cease and desist against pursuant to Section 36a-52(a) of the 2022 Supplement to the General Statutes, and impose a civil penalty pursuant to Section 36a 50(a) of the 2022 Supplement to the General Statutes.

The hearing decision concluded that Respondent’s activities were in violation Sections 36a 556(a)(1), 36a 558(c)(1) and 36a 17(e) and, among other things, Respondent was ordered to pay $25,000 as a civil penalty and restitution to Connecticut borrowers.

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY 

Robinhood Financial LLC (CRD No. 165998)

On August 10, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-202024-S) with respect to Robinhood Financial LLC, a Connecticut-registered broker-dealer located at 500 Colonial Center Parkway, Suite 100, Lake Mary, Florida 32746. The Consent Order was an outgrowth of a multistate investigation into the firm's retail securities market activities between October 1, 2019 and March 2021. Specifically, the investigation focused on platform outages, deficiencies in the supervision of options and margin trading eligibility and approval processes, and deficiencies relating to the firm's operational structure for controls and customer service.

The Consent Order alleged that the firm violated Section 36b-31-6f(b) of the Regulations under the Connecticut Uniform Securities Act by failing to establish, enforce and maintain an adequate supervisory system that would ensure compliance with applicable securities laws. In particular, Robinhood Financial LLC 1) failed to maintain adequate oversight of its trading technology, resulting in significant platform outages during times of historic market volatility; 2) failed to maintain an adequate customer response system while it was experiencing platform outages; 3) failed to exercise due diligence when evaluating Connecticut customers' qualifications for options and margin trading; 4) negligently misrepresented risks associated with multi-leg spread options; 5) failed to report thousands of complaints to the Financial Industry Regulatory Authority (FINRA); and 6) failed to provide reasonable customer support.

The Consent Order ordered the firm to cease and desist from violating Section 36b-31-6f(b) of the Regulations and directed that it pay a $200,000 fine to the department, representing Connecticut's proportionate share of the multistate settlement.