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DANIEL CHARLES ALLEGRINI ("Respondent") * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-2009-7603-S |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and the regulations promulgated thereunder (Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies) (“Regulations”). |
| 2. |
Pursuant to Section 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation into the activities of Respondent to determine if he has violated, is violating or is about to violate provisions of the Act or Regulations. Section 36b-26(a) of the Act provides, in pertinent part:
The commissioner may, subject to the provisions of the Freedom of Information Act . . . (1) [m]ake such public or private investigations within or outside of this state as the commissioner deems necessary to determine whether any person has violated, is violating or is about to violate any provision of sections 36b-2 to 36b-33, inclusive, or any regulation or order thereunder . . . . |
| 3. | As a result of the investigation by the Division, the Commissioner has reason to believe that Respondent has violated certain provisions of the Act and Regulations. |
| 4. |
As a result of the investigation by the Division, the Commissioner has the authority to issue a cease and desist order against Respondent pursuant to Section 36b-27(a) of the Act, which provides, in pertinent part:
Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation . . . adopted . . . under said sections, or that the further sale or offer to sell securities would constitute a violation of said sections or any such regulation, . . . the commissioner may, in the commissioner’s discretion, order (1) the person . . . to cease and desist from the violations . . . of the provisions of said sections or of the regulations . . . thereunder, or from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections or of the regulations . . . thereunder . . . . After such an order is issued, the person named in the order may, within fourteen days after receipt of the order, file a written request for a hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. |
| 5. |
As a result of the investigation by the Division, the Commissioner has the authority to impose a fine on Respondent pursuant to Section 36b-27(d) of the Act, which prior to October 1, 2003, provided, in pertinent part:
(1) Whenever the commissioner finds as the result of an investigation that any person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation . . . adopted . . . under said sections, the commissioner may send a notice to such person or persons by registered mail, return receipt requested . . . . Any such notice shall include: (A) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (B) a short and plain statement of the matter asserted or charged; (C) the maximum fine that may be imposed for such violation; and (D) the time and place for the hearing. Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.
(2) The commissioner shall hold a hearing upon the charges made unless such person or persons fail to appear at the hearing. Said hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation . . . adopted . . . under said sections, the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person or persons. If such person or persons fail to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person or persons. The commissioner shall send a copy of any order issued pursuant to this subsection by registered mail, return receipt requested . . . to any person or persons named in such order. |
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Section 36b-27(d) of the Act currently provides, in pertinent part:
(1) Whenever the commissioner finds as the result of an investigation that any person has violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation . . . adopted . . . under said sections, the commissioner may send a notice to (A) such person . . . by registered mail, return receipt requested . . . . Any such notice shall include: (i) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (ii) a short and plain statement of the matter asserted or charged; (iii) the maximum fine that may be imposed for such violation; and (iv) the time and place for the hearing. Any such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.
(2) The commissioner shall hold a hearing upon the charges made unless such person fails to appear at the hearing. Any such hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person has violated . . . any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation . . . adopted . . . under said sections, the commissioner may, in the commissioner’s discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding one hundred thousand dollars per violation be imposed upon such person. If such person fails to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding one hundred thousand dollars per violation be imposed upon such person. The commissioner shall send a copy of any order issued pursuant to this subsection by registered mail, return receipt requested . . . to any person named in such order. | |
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II. RESPONDENT | |
| 6. |
Respondent is an individual whose address last known to the Commissioner is 21-6 Lisa Court, Waterbury, Connecticut 06704. |
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III. STATEMENT OF FACTS | |
| 7. | From at least October 1, 2000 through at least February 3, 2004, Respondent was registered in Connecticut as an agent of Wachovia Securities, LLC (“Wachovia”), a broker-dealer registered in Connecticut under the Act. |
| 8. | From at least November 2002 to at least February 2004, Respondent engaged in the business of advising others as to the value of securities and as to the advisability of investing in securities to at least four Connecticut residents from a Connecticut office of Wachovia. Respondent received compensation, directly or indirectly, for providing such advisory services. |
| 9. | At no time has Respondent been registered as an investment adviser in Connecticut, nor does he qualify for any exemption or exclusion from registration as such under the Act. |
| 10. |
From at least May 1, 2003, to the present, Respondent has been an issuer of securities in the form of promissory notes (“Notes”). |
| 11. | On or about May 1, May 19, September 1 and November 18, 2003, Respondent effected the sale of at least four Notes to at least one Connecticut investor for a total of at least Seventeen Thousand Seven Hundred Dollars ($17,700). |
| 12. | The Notes that were offered and sold by Respondent were never registered in Connecticut, nor were they exempt from registration, nor were they a covered security. |
| 13. | The Notes failed to disclose, inter alia, any risk factors of the investment, any financial information about Respondent or the fact that Respondent had personally filed for bankruptcy. |
| 14. | The offer and sale of the Notes were transactions that were outside the regular course or scope of Respondent’s employment with Wachovia, inasmuch as the transactions did not go through the books and records of Wachovia, and Respondent did not provide Wachovia with prior written notice describing in detail the proposed transactions and his proposed role therein and stating whether he has received or may receive selling compensation in connection with the transactions. |
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IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AND ORDER IMPOSING FINE AGAINST RESPONDENT a. Violation of Section 36b-6(c) of the Act – Unregistered Investment Adviser Activity | |
| 15. | Paragraphs 1 through 14, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 16. | Respondent’s engaging in the business of advising others as to the value of securities and as to the advisability of investing in securities within Connecticut absent registration as an investment adviser in Connecticut, as more fully described in paragraphs 8 and 9, constitutes a violation of Section 36b-6(c)(1) of the Act, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the Act, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act in effect prior to October 1, 2003, and Section 36b-27(d) of the Act as it exists presently. |
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b. Violation of Section 36b-16 of the Act – Offer and Sale of Unregistered Securities | |
| 17. | Paragraphs 1 through 16, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 18. | Respondent offered and sold at least four securities to at least one Connecticut investor, as more fully described in paragraphs 10 and 11, such securities were not registered in Connecticut under the Act, as more fully described in paragraph 12. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the Act, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act in effect prior to October 1, 2003, and Section 36b-27(d) of the Act as it exists presently. |
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c. Violation of Section 36b-4(a) of the Act – Fraud in Connection with the Offer and Sale of any Security | |
| 19. | Paragraphs 1 through 18, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 20. | The conduct of Respondent, as more fully described in paragraphs 10, 11 and 13, constitutes, in connection with the offer, sale or purchase of any security, employing devices, schemes or artifices to defraud, making untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in acts, practices or courses of business which operate as a fraud or deceit upon any person. Such conduct constitutes a violation of Section 36b-4(a) of the Act, as amended by Public Act 09-174, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the Act, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act in effect prior to October 1, 2003, and Section 36b-27(d) of the Act as it exists presently. |
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d. Violation of Section 36b-31-6(e) of the Regulations – Engaging in Private Securities Transactions Without Prior Written Notice to Employing Broker-dealer (Selling Away) | |
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. | Respondent, through his sale of at least four Notes, as more fully described in paragraph 11, participated in private securities transactions without providing prior written notice to his employing broker-dealer describing in detail the proposed transactions and his proposed role therein and stating whether he has received or may receive selling compensation in connection with such transactions, as more fully described in paragraph 14, in violation of Section 36b-31-6(e) of the Regulations. Such violations of Section 36b-31-6(e) of the Regulations form a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the Act, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act in effect prior to October 1, 2003, and Section 36b-27(d) of the Act as it exists presently. |
V. ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING
AS A RESULT OF THE INVESTIGATION BY THE DIVISION, THE COMMISSIONER FINDS that, with respect to the activity described herein, Daniel Charles Allegrini has violated Sections 36b-6, 36b-16 of the Act and Section 36b-4 of the Act, as amended, and Section 36b-31-6(e) of the Regulations;
THE COMMISSIONER FURTHER FINDS that the issuance of this Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policies and provisions of the Act.
THE COMMISSIONER THEREFORE ORDERS that Daniel Charles Allegrini CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, (1) transacting business as an investment adviser in Connecticut absent registration, (2) offering and selling unregistered securities in Connecticut, (3) in connection with the offer, sale or purchase of any security, employing devices, schemes or artifices to defraud, making untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engaging in acts, practices or courses of business which operate as a fraud or deceit upon any person, and (4) participating in private securities transactions without providing prior written notice to his employing broker-dealer;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the Act, Daniel Charles Allegrini will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Daniel Charles Allegrini if a written request for a hearing is received by the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following his receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Daniel Charles Allegrini will not be represented by an attorney at the hearing, please complete the Appearance and Request for Hearing Form as “pro se”. Once a written request for a hearing is received, the Commissioner may issue a notification of hearing and designation of hearing officer that acknowledges receipt of a request for a hearing, designates a presiding officer and sets the date of the hearing in accordance with Section 4-177 of the General Statutes of Connecticut and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on September 24, 2009, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut. The hearing will be held in accordance with the provisions of Chapter 54 of the General Statutes of Connecticut. At such hearing, Daniel Charles Allegrini will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law to be considered by the Commissioner.
This Order shall remain in effect and become permanent against Daniel Charles Allegrini if he does not request a hearing within the prescribed time period.
VI. NOTICE OF INTENT TO FINE RESPONDENT AND NOTICE OF HEARING
WHEREAS, the Commissioner finds as a result of an investigation by the Division that Respondent committed at least four violations of Section 36b-6 of the Act prior to October 1, 2003, at least three violations of Section 36b-16 of the Act prior to October 1, 2003, at least one violation of Section 36b-16 of the Act subsequent to October 1, 2003, at least three violations of Section 36b-4 of the Act prior to October 1, 2003, at least one violation of Section 36b-4 of the Act subsequent to October 1, 2003, at least three violations of Section 36b-31-6(e) of the Regulations prior to October 1, 2003, and at least one violation of Section 36b-31-6(e) of the Regulations subsequent to October 1, 2003;
WHEREAS, the Commissioner believes that the imposition of a fine upon Respondent would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, notice is hereby given to Respondent that the Commissioner intends to impose a fine not to exceed Ten Thousand Dollars ($10,000) per violation that occurred prior to October 1, 2003, and a fine not to exceed One Hundred Thousand Dollars ($100,000) per violation that occurred subsequent to October 1, 2003, or a maximum fine against Respondent of Four Hundred Thirty Thousand Dollars ($430,000).
NOW THEREFORE, a hearing will be held on September 24, 2009, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut, in accordance with Section 36b 27(d)(2) of the Act and Chapter 54 of the General Statutes of Connecticut. At the hearing, Respondent will have the right to appear and present evidence, rebuttal evidence and argument on all issues of fact and law relating to the allegations stated herein. If Respondent fails to appear at such hearing, the Commissioner may order that the maximum fine be imposed upon Respondent.
Dated at Hartford, Connecticut,
this 19th day of August 2009. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 19th day of August 2009, the foregoing Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing was sent by registered mail, return receipt requested, to Daniel Charles Allegrini, 21-6 Lisa Court, Waterbury, Connecticut 06704, registered mail no. RB028020725US.
________/s/_________
Jesse B. Silverman
Prosecuting Attorney