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IN THE MATTER OF: MILLBRAE NATURAL GAS * * * * * * * * * * * * * * * * * * |
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STIPULATION No. ST-10-7763-S |
WHEREAS, the Banking Commissioner (the “Commissioner”) is responsible for administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”) and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies (the “Regulations”) promulgated under the Act;
WHEREAS, Millbrae Natural Gas Development Fund 2005, L.P. (the “Millbrae Fund”), a Delaware limited partnership, was an issuer of securities, specifically limited partnership interests in developmental drilling operations, as well as currently existing and producing gas and oil wells;
WHEREAS, Millbrae Natural Gas 2005, L.L.C., a Delaware limited liability company, is the managing partner (the “Managing Partner”) of the Millbrae Fund and is located at 29 Upper Hook Road, Katonah, New York 10536;
WHEREAS, Millbrae Capital LLC, now known as Raine Securities LLC (CRD number 137873), has been registered as a broker-dealer under the Act since May 3, 2006;
WHEREAS, in April of 2009, the Securities and Business Investments Division (the “Division”) of the Department of Banking conducted an examination of Millbrae Capital LLC under the Act and, in the course of such examination, ascertained that there were five Connecticut investors in the Millbrae Fund;
WHEREAS, upon further inquiry, the Division also ascertained that the Connecticut sales activity associated with the Millbrae Fund occurred in 2005 and 2006, at a time when no registration, exemption or claim of covered security status filing had been made under Section 36b-21 of the Act for securities issued by the Millbrae Fund;
WHEREAS, the Division also uncovered evidence that sales of Millbrae Fund securities were effected by persons who, at the time of the transactions, were not registered as agents of issuer under Section 36b-6 of the Act;
WHEREAS, the Commissioner acknowledges Millbrae Capital, LLC’s representation that it was formed and registered under the Act to ensure compliance with agent registration requirements;
WHEREAS, the Commissioner acknowledges that, on March 1, 2010, a corrective Rule 506 notice filing was made under Section 36b-21(e) of the Act for the prior offering of securities of the Millbrae Fund;
WHEREAS, Section 4-177(c) of Chapter 54 of the Connecticut General Statutes permits the resolution of a contested case by stipulation or agreed settlement;
WHEREAS, the Millbrae Fund and its Managing Partner desire to settle the matters described herein and, without admitting or denying the allegations herein, voluntarily enter into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding against the Millbrae Fund, its Managing Partner, its limited partners, employees, agents, representatives or successors in interest adjudicating any issue of fact or law on the specific matters described herein;
WHEREAS, the Millbrae Fund and its Managing Partner, through their execution of this Stipulation and Agreement, voluntarily waive any rights each may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| 1) |
No later than the date this Stipulation and Agreement is executed by the Commissioner, the Millbrae Fund and its Managing Partner shall jointly and severally remit to the department via check made payable to “Treasurer, State of Connecticut” the total sum of two thousand three hundred dollars ($2,300) as an administrative fine; |
| 2) |
The Millbrae Fund, its Managing Partner, its control persons, affiliates and successors in interest shall refrain from offering or selling securities in or from Connecticut absent compliance with Section 36b-16 of the Act, including timely compliance with any applicable filing requirements; |
| 3) | The Millbrae Fund, its Managing Partner, its control persons, affiliates and successors in interest shall refrain from employing unregistered agents of issuer in contravention of Section 36b-6(b) of the Act; |
| 4) | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against the Millbrae Fund, its Managing Member, or its successors in interest based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof or if any representation made by or on behalf of the Millbrae Fund and its Managing Member and reflected herein is subsequently determined to be untrue; and |
| 5) | This Stipulation and Agreement shall become binding when executed by all parties hereto and the Commissioner. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
| Dated at Hartford, Connecticut | _______/s/_________ | |
| this 17th day of May 2010. | Howard F. Pitkin | |
| Banking Commissioner |
I, Stewart Mills Reid, state on behalf of Millbrae Natural Gas Development Fund 2005, L.P. and its managing partner, Millbrae Natural Gas 2005, L.L.C, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Millbrae Natural Gas Development Fund 2005, L.P. and Millbrae Natural Gas 2005, L.L.C.; and that both Millbrae Natural Gas Development Fund 2005, L.P. and Millbrae Natural Gas 2005, L.L.C. agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
| Millbrae Natural Gas Development Fund 2005, L.P. | |
| By | ______/s/_________________________________ |
| Stewart Mills Reid | |
| President of Millbrae Natural Gas 2005, L.L.C | |
| (Its Managing Partner) |
| Millbrae Natural Gas 2005, L.L.C. | |
| By | ______/s/____________________ |
| Stewart Mills Reid | |
| President |
On this the 13 day of April, 2010, before me, the undersigned officer, personally appeared Stewart M. Reid, who acknowledged himself to be the President of Millbrae Natural Gas 2005, L.L.C., a limited liability company, and that he, in such capacity and being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as President.
In witness whereof I hereunto set my hand.
_____/s/__________________________
Notary Public
Date Commission Expires: Oct. 31, 2013