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VISION SECURITIES, INC. (CRD Number 35001) * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER File No. CO-06-7299-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of 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, Vision Securities, Inc. (“Vision”) is a broker-dealer registered under the Act and having its principal office located at 20 Broadhollow Road, Melville, New York;
WHEREAS, on August 6, 2003, the Commissioner entered a prior Consent Order (the “2003 Consent Order”) with respect to Vision (File No. CO-03-6720-S);
WHEREAS, the 2003 Consent Order limited the securities business of Vision in Connecticut to: (a) the purchase, sale, and redemption of securities issued by investment companies regulated under the Investment Company Act of 1940; (b) securities issued or guaranteed by the United States government, any state, any political subdivision of a state, or any agency or corporate or other instrumentality of the foregoing; (c) exchange-listed options; (d) securities listed on the New York Stock Exchange; (e) securities listed on the American Stock Exchange; (f) securities listed on the National Market System of NASDAQ; (g) corporate debt for which there is an established trading market; and (h) annuities and non-securities insurance products;
WHEREAS, the permissible securities activities described in the 2003 Consent Order did not include the sale of private placements or securities that were trading in the NASDAQ Small Cap market;
WHEREAS, Vision has not been relieved of the obligations imposed by the 2003 Consent Order, and such obligations remain in effect;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, has conducted an examination of Vision’s books and records pursuant to Section 36b-14(d) of the Act and an investigation of Vision pursuant to Section 36b-26(a) the Act;
WHEREAS, the Commissioner ascertained, as a result of such examination and investigation, that 1) in May 2005, Vision effected purchases and sales of Deltathree, Inc. on a solicited basis for the account of a Connecticut investor; 2) in June 2004, Vision effected a sale of NanoDynamics, Inc. securities in a private placement to a Connecticut investor; and 3) at the time of the foregoing transactions, the securities of Deltathree, Inc. and NanoDynamics, Inc. were not sold in compliance with Section 36b-16 of the Act;
WHEREAS, Deltathree, Inc. securities are traded in the NASDAQ Small Cap market, and the securities of NanoDynamics, Inc. were issued in a private placement;
WHEREAS, as a result of such examination and investigation, the Commissioner alleges that the foregoing transactions in the securities of Deltathree, Inc. and NanoDynamics, Inc. violated the 2003 Consent Order as well as Section 36b-16 of the Act;
WHEREAS, Section 36b-16 of the Act provides that:
No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-33, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21.
WHEREAS, Section 36b-15 of the Act provides, in part, that:
The commissioner may by order . . . suspend or revoke any registration or by order restrict or impose conditions on the securities or investment advisory activities that . . . [a] registrant may perform in this state if the commissioner finds that (1) the order is in the public interest, and (2) the . . . registrant or, in the case of a broker-dealer or investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser: (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive, or a predecessor statute or any regulation or order under said sections or a predecessor statute . . . .
WHEREAS, the Commissioner believes that the department's allegations would support the initiation of enforcement proceedings against Vision, including, without limitation, the entry of an order revoking or suspending Vision’s broker-dealer registration under Section 36-15(a)(2)(B) of the Act, an order to cease and desist under Section 36b-27(a) of the Act and the imposition of a fine of up to $100,000 per violation pursuant to Section 36b-27(d) of the Act after granting Vision an opportunity for a hearing;
WHEREAS, an administrative proceeding initiated under Sections 36b-15 or 36b-27 of the Act would constitute a "contested case" within the meaning of Section 4-166(2) of the Connecticut General Statutes;
WHEREAS, Section 36b-31(a) of the Act provides, in relevant part, that "[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive";
WHEREAS, Section 4-177(c) of the Connecticut General Statutes provides, in relevant part, that "[u]nless precluded by law, a contested case may be resolved by . . . consent order";
WHEREAS, the Commissioner finds that the entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
WHEREAS, without holding a hearing and without trial or adjudication of any issue of fact or law, the Commissioner and Vision have reached an agreement to resolve this matter through the entry of this Consent Order;
WHEREAS, Vision neither admits nor denies any of the Commissioner’s allegations;
WHEREAS, Vision expressly consents to the Commissioner’s jurisdiction in this proceeding and to the entry of the sanctions in this Consent Order;
WHEREAS, Vision, through its execution of this Consent Order, voluntarily waives the following rights:
| 1. | To be afforded an opportunity for a hearing within the meaning of subsection (f) of Section 36b-15 of the Act, subsections (a) and (d) of Section 36b-27 of the Act and Section 4-177c(a) of the Connecticut General Statutes; |
| 2. | To present evidence and argument and to otherwise avail itself of Sections 36b-15 and 36b-27 of the Act and Section 4-177c(a) of the Connecticut General Statutes; |
| 3. | To present its position in a hearing in which it is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order; |
FINDINGS BY THE COMMISSIONER AS TO EVIDENTIARY SUFFICIENCY TO INITIATE ADMINISTRATIVE PROCEEDINGS
WHEREAS, the Commissioner finds that sufficient grounds would exist to initiate enforcement proceedings against Vision, including, without limitation, the entry of an order revoking or suspending Vision’s broker-dealer registration under Section 36-15(a)(2)(B) of the Act, an order to cease and desist under Section 36b-27(a) of the Act and the imposition of a fine of up to $100,000 per violation pursuant to Section 36b-27(d) of the Act based on Vision’s wilful violation of Section 36b-16 of the Act and the 2003 Consent Order in connection with transactions in the securities of Deltathree, Inc. and Nanodynamics, Inc., after granting Vision an opportunity for a hearing;
WHEREAS, Vision, through its execution of this Consent Order, acknowledges the possible consequences of an administrative hearing and voluntarily consents to the Commissioner issuing an order imposing on Vision the following sanctions:
| 1. | No later than the date this Consent Order is entered by the Commissioner, Vision shall remit to the department by certified bank check payable to “Treasurer, State of Connecticut” the sum of fifteen thousand dollars ($15,000) as an administrative fine; |
| 2. | Commencing on the date this Consent Order is entered by the Commissioner, the securities business of Vision in Connecticut will be limited to effecting securities transactions for investors who are “accredited” as that term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended. In addition, the restrictions imposed by the 2003 Consent Order also remain in effect. With respect to any Connecticut customer who is not “accredited” as of the date of this Consent Order, Vision shall limit its securities activity for such customer to liquidating sell orders and implement procedures to assist such customer in transferring or closing such customer’s account no later than six (6) months following the Commissioner’s entry of this Consent Order; |
| 3. | The broker-dealer registration of Vision under the Act shall be SUSPENDED for thirty (30) days commencing five (5) business days after the date this Consent Order is entered by the Commissioner. Nothing in this paragraph shall preclude Vision from (1) effecting unsolicited sell orders or liquidating the positions of those Connecticut customers having accounts with Vision as of the date this Consent Order is entered by the Commissioner; and (2) effecting unsolicited purchase transactions for accredited investors, provided that Vision will supply the Division Director with a weekly report of such unsolicited purchases during the suspension period. During the suspension period, any commissions attributed to transactions expressly permitted under this paragraph shall not be paid to either Vision or its agents. Such commissions earned will be donated to the Memorial Sloan-Kettering Cancer Center and appropriate documentation will be maintained by Vision. Within thirty (30) days following the conclusion of the suspension, Vision shall provide the Division Director with evidence of all transactions (including commissions) effected during the suspension period; and |
| 4. | Vision shall reimburse the Department of Banking for the costs associated with one or more future examinations of any of Vision’s offices to be conducted by the Division within twenty-four (24) months following the Commissioner’s entry of this Consent Order, such amount not to exceed two thousand five hundred dollars ($2,500) in total. Amounts due under this paragraph shall be remitted to the Commissioner via check payable to “Treasurer, State of Connecticut” within thirty (30) days following the completion of the examination(s); and |
| 5. | In the event that Vision fails to abide by the terms and conditions of this Consent Order, Vision consents to the immediate revocation of its broker-dealer registration, knowingly, wilfully and voluntarily waiving its right to notice and an administrative hearing in conjunction therewith; provided that, prior to invoking this paragraph, the Commissioner shall provide Vision with an informal opportunity to demonstrate its compliance with this Consent Order; |
ORDER
NOW THEREFORE, THE COMMISSIONER ORDERS THAT:
| 1. | The Sanctions set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against Vision, its officers, directors, agents, employees or representatives based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance is not being observed with the terms hereof; and |
| 3. | This Consent Order shall become final when issued. |
________/s/_________
John P. Burke
Banking Commissioner
this 14th day of July 2006.
CONSENT TO ENTRY OF ORDER
I, Stewart Kalter, state on behalf of Vision Securities, Inc., that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Vision Securities, Inc.; that Vision Securities, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Vision Securities, Inc. voluntarily consents to the entry of this Consent Order expressly waiving any rights it may have to a hearing on the matters described herein.
Vision Securities, Inc.
By
_____ /s/_______________
Stewart Kalter
President
On this 10th day of July 2006 personally appeared Stewart Kalter, signer of the foregoing Consent Order, who, being duly sworn, did acknowledge to me that he was authorized to execute the same on behalf of Vision Securities, Inc., a corporation, and acknowledged the same to be his free act and deed, before me.
_______________/s/______________
Notary Public
My Commission Expires: Sept. 30, 2009