Ralph Lambiase, Division Director
Cynthia Antanaitis, Assistant Director and Bulletin Editor
Eric Wilder, Assistant Director
Marge Kagan, Subscription Coordinator

John P. Burke
Banking Commissioner

Important Announcements

Image Arts Etc. - Order to Cease and Desist and Notice of Intent to Fine Issued for Unregistered Business Opportunity Sales

On September 10, 2003, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-2003-783-B) against Image Arts Etc. of 8340 Camino Santa Fe, Suite F, San Diego, California. The action alleged that Image Arts Etc. sold photographic printing business opportunities in Connecticut absent registration under the Connecticut Business Opportunity Investment Act. The action also claimed that Image Arts Etc., through its CEO, Bryan Burlison, had violated Section 36b-80 of the Connecticut Business Opportunity Investment Act by filing a misleading statement with the agency concerning the number of business opportunity purchasers in Connecticut. The respondent was afforded an opportunity to request a hearing on the Order to Cease and Desist. A hearing on the Notice of Intent to Fine has been scheduled for November 25, 2003.

Frederick Strong Moseley IV (CRD # 835684) - Notice of Intent to Deny Registration as Agent Issued; Notice of Intent to Fine Issued

On September 5, 2003, the Banking Commissioner issued a Notice of Intent to Deny (Docket No. NDF-2003-6841-S) the pending registration of Frederick Strong Moseley IV as a broker-dealer agent of Landers, Lane & Moseley Capital Partners LLC (CRD number 124349). On the same day, the Banking Commissioner issued a Notice of Intent to Fine with respect to respondent Moseley. Both the Notice of Intent to Deny Registration and the Notice of Intent to Fine were based on allegations that respondent Moseley, a control person of Triumph Capital Group, Inc. failed to disclose in his agent application that Triumph Capital Group, Inc. had been found guilty of racketeering for state-law bribery and obstruction of justice; racketeering conspiracy for state-law bribery and obstruction of justice; bribery concerning programs receiving federal funds; wire fraud/theft of honest services; and obstruction of justice. Respondent Moseley was afforded an opportunity to request a hearing on the Notice of Intent to Deny Registration as Agent. A hearing on the Notice of Intent to Fine has been set for November 18, 2003.

Landers, Lane & Moseley Capital Partners LLC (CRD # 124349) - Notice of Intent to Deny Registration as Broker-dealer Issued

On September 5, 2003, the Banking Commissioner issued a Notice of Intent to Deny (Docket No. ND-2003-6841-S) the pending broker-dealer registration of Landers, Lane & Moseley Capital Partners LLC. The firm maintains its principal office at 1177 High Ridge Road, Stamford, Connecticut. The Notice of Intent to Deny Registration as Broker-dealer was based on allegations that 1) Frederick Strong Moseley IV, a control person of respondent Landers, Lane & Moseley Capital Partners LLC, was also a control person of Triumph Capital Group, Inc.; and 2) Frederick Strong Moseley IV wilfully violated the Connecticut Uniform Securities Act by failing to disclose in his agent application that Triumph Capital Group, Inc. had been found guilty of racketeering for state-law bribery and obstruction of justice; racketeering conspiracy for state-law bribery and obstruction of justice; bribery concerning programs receiving federal funds; wire fraud/theft of honest services; and obstruction of justice. Respondent Landers, Lane & Moseley Capital Partners LLC was afforded an opportunity to request a hearing on the Notice of Intent to Deny Registration as Broker-dealer.

James Wilder Korth (CRD # 1091113) - Notice of Intent to Deny Registration as Broker-dealer Agent Issued

On September 4, 2003, the Banking Commissioner issued a Notice of Intent to Deny (Docket No. ND-2003-6851-S) the pending registration of James Wilder Korth as a broker-dealer agent of J.W. Korth & Company (CRD number 26455). The Notice of Intent to Deny alleged that, on January 21, 1998, the United States District Court for the Southern District of Florida found that James Wilder Korth had violated Sections 17(a)(1) and 17(b) of the Securities Exchange Act of 1934 as well as Rule 17a-4(j) thereunder in refusing to provide the SEC with access to books and records required by law, and that the court had permanently enjoined the respondent from violating the federal securities laws (Securities and Exchange Commission v. J.W. Korth & Co., et al., 991 F.Supp. 1468; 1473-1474 (1998)). Respondent Korth was provided with an opportunity to request a hearing on the Notice of Intent to Deny Registration as Agent.

J.W. Korth & Company (CRD # 26455) - Notice of Intent to Deny Registration as Broker-dealer Issued

On September 4, 2003, the Banking Commissioner issued a Notice of Intent to Deny the pending broker-dealer registration of J.W. Korth & Company (Docket No. ND-2003-6851-S). The firm maintains its principal office at 32841 Middlebelt Road, Suite 400, Farmington Hills, Michigan. The Notice of Intent to Deny alleged that, on January 21, 1998, the United States District Court for the Southern District of Florida found that the firm and its managing general partner, James Wilder Korth, violated Sections 17(a)(1) and 17(b) of the Securities Exchange Act of 1934 as well as Rule 17a-4(j) thereunder in refusing to provide the SEC with access to books and records required by law, and that the court had permanently enjoined J.W. Korth & Company from violating the federal securities laws (Securities and Exchange Commission v. J.W. Korth & Co., et al., 991 F.Supp. 1468; 1473-1474 (1998)). Respondent J.W. Korth & Company was provided with an opportunity to request a hearing on the Notice of Intent to Deny Registration as Broker-dealer.

Absolute Capital Management, LLC (CRD # 121484) - Notice of Intent to Deny Registration as Investment Adviser Issued

On September 4, 2003, the Banking Commissioner issued a Notice of Intent to Deny the pending investment adviser registration of Absolute Capital Management, LLC (Docket No. ND-2003-6778-S). The firm maintains its principal office at 101 Pennsylvania Boulevard, Pittsburgh, Pennsylvania. The Notice of Intent to Deny alleged that respondent's managing director, Phillip Brenden Gebben, had been ordered by the U.S. District Court for the Central District of Illinois to disgorge $10,208.50 in profits and to pay a $10,000 civil penalty for violating the antifraud provisions in Section 10(b) of the Securities Exchange Act of 1934 and Section 17(b) of the Securities Act of 1933 in conjunction with promotional Internet postings and the distribution of certain advisory literature (Securities and Exchange Commission v. Gorsek et al., 222 F.Supp. 2d 1124, 1126 (2002)). The Notice of Intent to Deny also claimed that such conduct constituted a dishonest or unethical practice in the securities business within the meaning of Section 36b-31-15a(a) of the Regulations under the Connecticut Uniform Securities Act and therefore a basis to deny the firm's investment adviser registration in Connecticut. The respondent was afforded an opportunity to request a hearing on the Notice of Intent to Deny Registration as Investment Adviser.

Sterling Advance Marketing Inc. (CRD # 74283) Ordered to Cease and Desist from Regulatory Violations; Notice of Intent to Fine Issued

On August 18, 2003, the Banking Commissioner entered an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Sterling Advance Marketing Inc., a division of Event Media, Inc. of 195 Carter Drive, Edison, New Jersey (Docket No. CF-2003-6553-S). The action alleged that, from at least March 2001 forward, the respondent sold unregistered, non-exempt securities in the form of Capital Contribution Agreements to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act. The action also claimed that the respondent violated the Act's antifraud provisions by misleading investors concerning the prospect of 1) quarterly dividends, 2) investors receiving a $500 gift in Enviro Foam, an affiliate of the respondent; and 3) gifts of unspecified value in "The Power to Dream, Inc." as well as in an unnamed affiliate of the respondent. The respondent was provided with an opportunity to request a hearing on the Order to Cease and Desist. A hearing on the Notice of Intent to Fine has been scheduled for October 15, 2003.

Barbara Alexis Blassingame (CRD # 11018956) Ordered to Cease and Desist from Regulatory Violations; Notice of Intent to Fine Issued

On August 18, 2003, the Banking Commissioner entered an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing against Barbara Alexis Blassingame, president of Sterling Advance Marketing Inc., a division of Event Media, Inc. (Docket No. CF-2003-6553-S). The company is located at 195 Carter Drive, Edison, New Jersey. The action alleged that, from at least March 2001 forward, respondent Blassingame unregistered, non-exempt securities in the form of Capital Contribution Agreements to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act. The action also claimed that respondent Blassingame violated the Act's antifraud provisions by misleading investors concerning the prospect of 1) quarterly dividends, 2) investors receiving a $500 gift in Enviro Foam, an affiliate of the respondent; and 3) gifts of unspecified value in "The Power to Dream, Inc." as well as in an unnamed affiliate of the respondent. The respondent was provided with an opportunity to request a hearing on the Order to Cease and Desist. A hearing on the Notice of Intent to Fine has been scheduled for October 15, 2003.

Fidelity International Securities, Inc. d/b/a Constitution Capital Corp. (CRD # 36485) - Order Vacating Registration Restrictions and Conditions Entered

On August 6, 2003, the Banking Commissioner entered an Order Vacating Registration Restrictions and Conditions (No. CL-2713-S) with respect to Fidelity International Securities, Inc. d/b/a Constitution Capital Corp. of 830 Post Road East, Westport, Connecticut. The firm, which is a registered broker-dealer under the Connecticut Uniform Securities Act, had been the subject of a February 27, 1995 Consent Order Conditioning Registration as a Broker-dealer and Investment Adviser. The 1995 order had been based on the January 1994 one-month suspension of Louis Francis Albanese (CRD number 703647), then the secretary/treasurer and director of the firm, by the New York Stock Exchange.

In entering the Order Vacating Registration Restrictions and Conditions, the Commissioner noted that Louis Francis Albanese was no longer associated with the firm in any capacity, that the firm's investment advisory activities were now subject to exclusive SEC oversight following passage of the National Securities Markets Improvement Act of 1996; and that four of the eight conditions and restrictions imposed by the earlier order had expired by their terms. The Order Vacating Registration Restrictions and Conditions vacated the remaining four restrictions and conditions.

Credit Suisse First Boston LLC f/k/a Credit Suisse First Boston Corporation (CRD # 816) Fined $787,208 for Failing to Maintain Analyst Independence

On September 12, 2003, the Banking Commissioner entered a Consent Order (Docket No. CO-2003-6796-S) with respect to Credit Suisse First Boston LLC of 11 Madison Avenue, New York, New York. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act. The agency investigation culminating in the entry of the Consent Order focused on the firm's research practices for the period 1998 through 2001, and was part of similar investigations conducted by a multi-state task force and a joint task force of the SEC, the New York Stock Exchange and the National Association of Securities Dealers. The global resolution capping the investigations resulted in $75 million allocated to the states; $75 million representing the disgorgement of commissions and fees; and $50 million to be earmarked for the procurement of independent research by the respondent. The respondent also agreed to abide by certain undertakings designed to separate investment banking and research functions.

In entering the Consent Order, the Commissioner found that the respondent had 1) violated Section 36b-4(a)(2) of the Act by issuing false and misleading research reports; 2) violated Section 36b-4(b) of the Act by engaging in dishonest or unethical business practices; and 3) failed to establish, enforce and maintain an adequate supervisory system to detect and prevent regulatory violations.

The Consent Order mandated that the respondent cease and desist from violating the Connecticut Uniform Securities Act and fined the respondent $787,208.

Bayou Securities, LLC (CRD # 39323) Fined $7,500 for Recordkeeping Deficiency

On September 10, 2003, the Banking Commissioner entered a Consent Order (File No. CO-03-6740-S) with respect to Bayou Securities, LLC of 40 Signal Road, Stamford, Connecticut. The Consent Order alleged that the firm, a Connecticut- registered broker-dealer, failed to keep the records required by Section 36b-31-14a(a) of the Regulations under the Connecticut Uniform Securities Act. The Consent Order required that the firm pay $7,500 to the department as an administrative fine and provide the Securities and Business Investments Division with copies of any customer complaints on a quarterly basis for two years.

Lehman Brothers Inc. (CRD # 7506) Fined for $262,402 for Failing to Maintain Analyst Independence

On September 2, 2003, the Banking Commissioner entered a Consent Order (Docket No. CO-2003-6799-S) with respect to Lehman Brothers Inc. of 745 Seventh Avenue, New York, New York. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act. The agency investigation leading up to the Consent Order focused on the firm's research practices for the period 1999 through 2001, and was part of similar investigations conducted by a multi-state task force and a joint task force of the SEC, the New York Stock Exchange and the National Association of Securities Dealers. The global resolution capping the investigations resulted in $25 million allocated to the states; $25 million representing the disgorgement of commissions and fees; $25 million to be earmarked for the procurement of independent research by the respondent; and $5 million to be used for investor education. The respondent also agreed to abide by certain undertakings designed to separate its investment banking and research functions.

In entering the Consent Order, the Commissioner found that the respondent had 1) violated Section 36b-4(b) of the Act by failing to ensure that analysts who issued research were adequately insulated from pressures and influence from covered companies and investment banking; 2) violated Section 36b-4(b) of the Act by issuing research reports that were not based on principles of fair dealing and good faith and that contained exaggerated or unwarranted claims and opinions; and 3) failed to establish, enforce and maintain an adequate supervisory system.

The Consent Order directed the respondent to cease and desist from regulatory violations and fined the respondent $262,402.

Morgan Stanley & Co., Incorporated (CRD # 8209) Fined for $262,402 for Failing to Maintain Analyst Independence

On September 2, 2003, the Banking Commissioner entered a Consent Order (Docket No. CO-2003-6800-S) with respect to Morgan Stanley & Co., Incorporated of 1585 Broadway, New York, New York. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act. The agency investigation culminating in the entry of the Consent Order focused on the firm's research practices for the period 1999 through 2001, and was part of similar investigations conducted by a multi-state task force and a joint task force of the SEC, the New York Stock Exchange and the National Association of Securities Dealers. The global resolution capping the investigations resulted in $25 million allocated to the states; $25 million representing the disgorgement of commissions and fees; and $75 million to be earmarked for the procurement of independent research by the respondent. The respondent also agreed to abide by certain undertakings designed to separate investment banking and research functions.

In entering the Consent Order, the Commissioner found that the respondent had 1) violated Section 36b-4(b) of the Act by failing to disclose that it paid other investment banks $2.7 million in underwriting fees at the direction of issuers to provide research coverage; and 2) failed to establish, enforce and maintain an adequate supervisory system to detect and prevent improper conflicts of interest.

The Consent Order mandated that the respondent cease and desist from regulatory violations and fined the respondent $262,402.

Vision Securities, Inc. (CRD # 35001) Fined $3,500, Activities Restricted, for Impeding State Examination and Employing Unregistered "Cold Callers"

On August 6, 2003, the Banking Commissioner entered a Consent Order (File No. CO-03-6720-S) with respect to Vision Securities, Inc. of 647 Franklin Avenue, Garden City, New York. The Consent Order alleged that, during a Securities and Business Investments Division examination, the firm, through its former compliance officer, Danielle Terzano and former president, Mark Eisenberg, prohibited Division staff from proceeding with the examination in violation of Section 36b-31-14f(b)(3) of the Regulations under the Connecticut Uniform Securities Act. The Consent Order also alleged that the firm engaged in dishonest or unethical practices by employing "cold callers" who were not registered with the NASD and failing to establish and enforce an adequate supervisory system.. The firm, previously owned by Lantern Investments, Inc., is now under new ownership.

The Consent Order fined the firm $3,500 and restricted its Connecticut securities business to investment company securities, governmental securities, exchange-listed and NASDAQ-NMS securities, annuities and non-securities insurance products. The Consent Order also required that the firm reimburse the agency up to $2,500 to cover the costs of a future examination of the firm's offices to be conducted within 24 months.

Todd R. Scully (CRD # 2139448) Permanently Barred from Securities Business in Connecticut; Ordered to Cease and Desist from Regulatory Violations

On July 8, 2003, the Banking Commissioner entered a Consent Order (No. CO-03-6627-S) with respect to Todd R. Scully of 4 East Trail, Darien, Connecticut. The Consent Order alleged that, commencing in March 1996, respondent Scully engaged in dishonest and unethical business practices by borrowing money and sharing in customer account profits or losses without the prior written consent of the customer or his employing broker-dealer, Merrill Lynch, Pierce, Fenner & Smith, Incorporated. The Consent Order also claimed that, commencing in August 1997, respondent Scully violated the antifraud provisions in Section 36b-4 of the Connecticut Uniform Securities Act by representing that investor funds would be invested in "Treasury Direct" securities or "Certificates of Deposit" when, in actuality, respondent retained the funds for his personal use.

The Consent Order permanently barred respondent Scully from transacting business in Connecticut as a broker-dealer, investment adviser, agent or investment adviser agent, and directed him to cease and desist from regulatory violations.

On May 23, 2003, respondent Scully had pled guilty in Stamford Superior Court to one count of securities fraud, one count of second degree forgery and two counts of first degree larceny in a case prosecuted by the Office of the Chief State's Attorney. The criminal action had focused on allegations that Todd Scully defrauded an elderly client of $1million by closing the victim's brokerage account without the victim's knowledge and transferring the proceeds to accounts that Scully controlled. Under the terms of the plea, Todd Scully would receive a prison term of 5 years, suspended after 18 months incarceration, and pay $1,008,732 in restitution.

Stephen P. Funk (CRD 2224312) Fined $25,000, Barred from Securities Business in Connecticut for 5 Years in Connection With Promissory Note Sales

On January 29, 2003, the Banking Commissioner entered a Consent Order (Docket No. CF-2002-6277-S) against Stephen P. Funk of 196 Fern Avenue, Litchfield, Connecticut. The respondent had been the subject of a September 25, 2002 Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-2002-6277-S) alleging that, from at least January 1999 to June 2001, the respondent offered and sold unregistered non-exempt promissory notes of Wellesley Services, LLC to Connecticut investors in violation of Section 36b-16 of the Connecticut Uniform Securities Act; and that, in so doing, the respondent transacted business as an unregistered agent of the issuer in violation of Section 36b-6(a) of the Act. The action had also alleged that the respondent violated Section 36b-23 of the Act by making a false statement during the course of the department's investigation with respect to the respondent's involvement in the promissory note sales.

In entering the Consent Order, the Commissioner found that the respondent had violated Sections 36b-16 and 36b-6(a) of the Act but withdrew the department's allegation that the respondent had violated Section 36b-23 of the Act. The Consent Order fined the respondent $25,000 and barred him from acting as a broker-dealer, agent, investment adviser or investment adviser agent in Connecticut for five years. In addition, the Consent Order rendered the September 25, 2002 Order to Cease and Desist permanent.

Investment Consulting Resources, LLC (CRD # 126165) Assessed $1,700 for Transacting Investment Advisory Business After Prior Registration Expired

On September 24, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6868-S) with Investment Consulting Resources, LLC of 29 Ten Acre Lane, West Hartford. The firm, whose business focuses exclusively on providing advice on the selection or retention of other investment managers, had been registered as an investment adviser under the Connecticut Uniform Securities Act for three years before its registration expired on December 31, 2001 and was not renewed for calendar year 2002. In reapplying for registration in 2003, the firm voluntarily disclosed that it had transacted business after its prior registration had expired.

Pursuant to the Stipulation and Agreement, the firm agreed to pay the department $1,700. Of that amount $1,500 constituted an administrative fine and $200 represented past due investment adviser and investment adviser agent registration fees.

Sentra Securities Corporation (CRD # 10249) Fined $1,000 for Transacting Business from Unregistered Broker-dealer Branch Office

On September 17, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6856-S) with Sentra Securities Corporation of 2800 North Central Avenue, Suite 2100, Phoenix, Arizona. The Stipulation and Agreement alleged that from approximately February, 2002 forward, the firm transacted business from 565 Washington Avenue, North Haven, Connecticut at a time when that location was not registered as a branch office under Section 36b-6(d) of the Connecticut Uniform Securities Act. Sentra Securities Corporation is a broker-dealer registered under the Act. The branch office has since been registered.

Pursuant to the Stipulation and Agreement, the firm agreed to pay a $1,000 fine and implement supervisory procedures designed to prevent violations of Connecticut's branch office registration requirements.

American Portfolios Financial Services, Inc. (CRD # 18487) Fined $500 for Transacting Business from Unregistered Broker-dealer Branch Office

On September 10, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6850-S) with American Portfolios Financial Services, Inc. of 4250 Veterans Memorial Highway, 4th Floor East, Holbrook, New York. The Stipulation and Agreement alleged that from approximately August 15, 2002 forward, the firm transacted business from 245 Brooklyn Road, Canterbury, Connecticut at a time when that location was not registered as a branch office under Section 36b-6(d) of the Connecticut Uniform Securities Act. American Portfolios Financial Services, Inc. is a broker-dealer registered under the Act. The branch office has since been registered.

Pursuant to the Stipulation and Agreement, the firm agreed to pay a $500 fine and implement supervisory procedures designed to prevent violations of Connecticut's branch office registration requirements.

Newsholme Financial Group, Inc. (CRD # 26165) Assessed $1,200 for Unregistered Investment Advisory Activity

On September 3, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6848-S) with Newsholme Financial Group, Inc. of 40 Triangle Center, Suite 215, Yorktown Heights, New York. The investment advisory firm became subject to SEC oversight on June 30, 2003 when its assets under management exceeded $25 million. The Stipulation and Agreement alleged that from approximately 2002 until June 30, 2003, Newsholme Financial Group, Inc. transacted business as an investment adviser in Connecticut absent registration under Section 36b-6(c) of the Connecticut Uniform Securities Act and engaged an unregistered investment adviser agent. In entering into the Stipulation and Agreement, the Commissioner noted that the firm had brought its unregistered activity to the department's attention in conjunction with an application for state registration that was filed prior to the time the firm became eligible for SEC registration.

The Stipulation and Agreement required that the firm pay $1,200 to the department. Of that amount, $1,000 constituted an administrative fine and $200 represented past due investment adviser and investment adviser agent registration fees.

Regal Discount Securities, Inc. (CRD # 7297) Fined $1,000 for Transacting Business from Unregistered Broker-dealer Branch Office

On August 6, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6835-S) with Regal Discount Securities, Inc. of 950 Milwaukee Avenue, Suite 102, Glenview, Illinois. The Stipulation and Agreement alleged that from approximately May 2002 forward, the firm transacted business from 131 Mountain Road, West Redding, Connecticut at a time when that location was not registered as a branch office under Section 36b-6(d) of the Connecticut Uniform Securities Act. Regal Discount Securities, Inc. is a broker-dealer registered under the Act.

Pursuant to the Stipulation and Agreement, the firm agreed to pay a $1,000 fine and implement supervisory procedures designed to prevent violations of Connecticut's branch office registration requirements.

Medical Media Systems, Inc. Fined $2,500 for Delinquent Rule 506 Notice Filings

On July 22, 2003, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-03-6831-S) with Medical Media Systems, Inc. of 12 Commerce Lane, West Lebanon, New Hampshire. The Stipulation and Agreement alleged that the company, an issuer of securities, had been two and three years late in making two Rule 506 notice filings under the Connecticut Uniform Securities Act. Section 36b-21(e) of the Act requires the filing of a Rule 506 notice within 15 days following the first sale of securities in this state. In resolution of the matter, the company agreed to pay a $2,500 fine to the department.