Features

• A Word from the Banking Commissioner
• Hurricane Katrina and Rita Relief Extended to June 30th
• Quarterly Statistical Summaries

Enforcement and Other Highlights

• Administrative Actions and Settlements

A WORD FROM THE BANKING COMMISSIONER

Over the past year, the Department has made great strides in the development of its website and in providing up-to-the-minute information to industry and consumers alike.  It is now possible, for example, to have automatic e-alerts delivered to your electronic mailbox the moment that the agency’s website is updated.  The e-alerts supplement the listserv now in place for electronic delivery of the quarterly Securities Bulletin.  Securities Bulletin readers are also reminded that summaries of securities-related enforcement actions are published weekly in the agency’s online News Bulletin (www.ct.gov/dob), that policy statements and orders are published to the web shortly after being signed and that the Securities Bulletin is also available for online viewing, regardless of whether you become a listserv participant or subscribe to e-alerts.  As a result, effective with this issue, the agency will be discontinuing the mailing of printed versions of the Securities Bulletin.  In making this change, we acknowledge that web-based delivery is far more effective and less costly in keeping securities industry professionals up-to-speed on current developments.  To sign up for the listserv, simply 1) send an e-mail to imailsrv@list.state.ct.us 2) leave the subject line blank; 3) in the body of the message type subscribe CT-Securities (there are no spaces in the list name CT-Securities); and 4) add your name to the body of the message.  You will receive an e-mail confirmation that your subscription request has been processed successfully.  To be automatically notified of website updates, go to www.ct.gov/dob/guestaccount/registration_form.asp
and follow the easy instructions.

Plans are underway for the agency’s annual Securities Forum.  This year, the event tentatively will be held on Thursday, October 26, 2006 at the Crowne Plaza Hotel and Conference Center in Cromwell, Connecticut.  Further details concerning the program and the keynote speaker will be provided to you as soon as they become available.  Interested parties are encouraged to contact us with any suggestions they may have on ways to enhance the program, both from a topical standpoint and otherwise.

From an enforcement standpoint, the final quarter of 2005 was marked by a significant settlement with Deutsche Bank Securities, Inc. stemming from conflicts of interest that undermined the independence of firm analysts.  Also featured in this issue is an extension to June 30, 2006 of the agency’s prior no-action position granting relief to securities industry personnel and their customers affected by Hurricanes Katrina and Rita.

As always, we welcome your comments.

John P. Burke
Banking Commissioner

John P. Burke
Banking Commissioner
January 19, 2006

ADMINISTRATIVE ACTIONS AND SETTLEMENTS

Geek Securities, Inc. (CRD # 14834) Fined $100,000

On December 14, 2005, the Banking Commissioner entered an Order Imposing Fine (Docket No. RCF-2005-7125-S) against Geek Securities, Inc., a broker-dealer having its principal office at 999 Yamato Road, Suite 100, Boca Raton, Florida.  The firm had also been the subject of an August 4, 2005 Order to Cease and Desist, Notice of Intent to Revoke Registration as Broker-dealer and Notice of Intent to Fine (Docket No. RCF-2005-7125-S).  The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2005.

In fining the firm $100,000, the Commissioner found that Geek Securities, Inc. violated Section 36b-31-14e(a) of the Regulations under the Connecticut Uniform Securities Act by failing to disclose the criminal conviction of the firm’s president and control person, Kautilya Sharma, on the firm’s amendment to its Uniform Application for Broker-dealer Registration (Form BD).  The conviction, obtained in the U.S. District Court for the Southern District of Florida, followed federal felony charges that Sharma conspired to sell unregistered securities and conspired to commit securities fraud (United States v. Kautilya Sharma, Case No. 03-80146-CR-Marra).  Geek Securities, Inc. did not appear or contest the imposition of the fine.

Kautilya (“Tony”) Sharma (CRD # 2124304) Fined $100,000

On December 14, 2005, the Banking Commissioner entered an Order Imposing Fine (Docket No. RCF-2005-7125-S) against Kautilya (“Tony”) Sharma of 7363 Sedona Way, Delray Beach, Florida.  The respondent was the president and a control person of Geek Securities, Inc., a broker-dealer having its principal office at 999 Yamato Road, Suite 100, Boca Raton, Florida.  The respondent had also been the subject of an August 4, 2005 Order to Cease and Desist, Notice of Intent to Revoke Registration as Agent and Notice of Intent to Fine (Docket No. RCF-2005-7125-S).  The Order to Cease and Desist, being uncontested, had become permanent on September 19, 2005.

In fining the respondent $100,000, the Commissioner found that Kautilya Sharma violated Section 36b-31-14e(a) of the Regulations under the Connecticut Uniform Securities Act by failing to disclose his criminal conviction on his amended Uniform Application for Securities Industry Registration or Transfer (Form U-4).  The conviction, obtained in the U.S. District Court for the Southern District of Florida, followed federal felony charges that respondent Sharma conspired to sell unregistered securities and conspired to commit securities fraud (United States v. Kautilya Sharma, Case No. 03-80146-CR-Marra).  Kautilya Sharma did not appear or contest the imposition of the fine.

Deutsche Bank Securities, Inc. (CRD # 2525) Fined $301,763 for Failing to Maintain Analyst Independence

On December 7, 2005, the Banking Commissioner entered a Consent Order (Docket No. CO-2005-7083-S) with respect to Deutsche Bank Securities, Inc., a broker-dealer registered under the Connecticut Uniform Securities Act and having its principal office in New York, New York.  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 by the SEC.  In entering the Consent Order, the Commissioner found, among other things, that the respondent had 1) violated Section 36b-4(b) of the Act by engaging in acts or practices that created or maintained inappropriate influence by the firm’s investment banking department over firm research analysts; 2) failed to establish, enforce and maintain an adequate supervisory system to detect and prevent regulatory violations; and 3) violated Section 36b-14 of the Act and Section 36b-31-14f of the Regulations thereunder by failing to timely produce all electronic mail requested by the Commissioner.

The Consent Order mandated that the respondent cease and desist from violating the Connecticut Uniform Securities Act and fined the respondent $301,763.  In addition, the Consent Order directed the respondent to abide by certain undertakings designed to separate investment banking and research functions.

PIPS Incorporated  (CRD # 76194) – Order to Cease and Desist and Notice of Intent to Fine Issued

On December 8, 2005, the Banking Commissioner issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-2005-7193-S) against PIPS Incorporated, a Panamanian corporation located at P.T. 7323, Second Floor, Jalan BBN ½ E, Bandar Baru Nilai, Negeri Sembilan 71800, Malaysia.  The action alleged that, in 2005, the respondent violated Section 36b-16 of the Connecticut Uniform Securities Act by offering, via the Internet, unregistered, non-exempt securities in the form of private loan agreements.  Since the respondent did not request a hearing on the Order to Cease and Desist, the Order to Cease and Desist became permanent on January 19, 2006.  A hearing on the Notice of Intent to Fine is pending.

Bayou Securities, LLC (CRD 39323) – Notice of Intent to Revoke and Cancel Registration as Broker-dealer Issued

On November 21, 2005, the Banking Commissioner issued a Notice of Intent to Revoke and Cancel Registration as Broker-dealer (Docket No. NRC-2005-7218-S) with respect to Bayou Securities, LLC of 40 Signal Road, Stamford, Connecticut.  The action was based on allegations that the firm had ceased doing business and had been the subject of a September 8, 2005 NASD suspension predicated on the firm’s failure to pay outstanding fees.  Bayou Securities, LLC was afforded an opportunity to request a hearing on the Notice of Intent to Revoke and Cancel Registration as Broker-dealer.

STATISTICAL SUMMARY