| * * * * * * * * * * * * * * * * * * *
ANDREW SAVVAS CONSTANTINOU ("Respondent")
|
*
* * * * * * * * * * * |
ORDER TO CEASE AND DESIST NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-2006-6176-S |
I. PRELIMINARY STATEMENT
| 1. | The Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, 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 2006 Supplement to the General Statutes, 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 2006 Supplement to the General Statutes 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 of the 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 2006 Supplement to the General Statutes, 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 . . . issued 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. |
II. RESPONDENT
| 6. | Respondent is an individual whose address last known to the Commissioner is 2 Serra Drive, Farmington, Connecticut 06032. |
III. STATEMENT OF FACTS
| 7. | From at least February 1, 1999 to April 28, 2000, Respondent was registered in Connecticut as an agent of Metlife Securities Inc. (“Metlife”). |
| 8. | From at least March 27, 2000 to November 20, 2001, Respondent was registered in Connecticut as an agent of A. CH. Securities, Inc. (“ACH”). |
| 9. | From at least February 1, 1999 to April 28, 2000, Metlife was registered as a broker-dealer in Connecticut. |
| 10. | From at least March 27, 2000 to November 20, 2001, ACH was registered as a broker-dealer in Connecticut. |
| 11. | From at least May 1999 to January 25, 2002, Alpha Telcom, Inc., a/k/a Alpha Tel-Com, Inc. (“Alpha”) and American Telecommunications Company, Inc., f/k/a ATC, Inc. (“ATCI”) (collectively “Issuers”) were issuers of securities in the form of simultaneous sales of payphones by ATCI and payphone service contracts by Alpha (“Payphone Securities”). |
| 12. | On several occasions between July 1999 and November 2001, Respondent, on behalf of Issuers, offered and sold Payphone Securities to at least 40 Connecticut investors for a total of approximately $1,000,000. |
| 13. | The Payphone Securities were never registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b 21 of the 2006 Supplement to the General Statutes, nor were they covered securities. |
| 14. | At no time relevant hereto was Respondent registered in Connecticut as an agent of Alpha or ATCI, nor was Respondent an associated person representing a broker-dealer in effecting transactions described in subdivisions (2) and (3) of Section 15(h) of the Securities Exchange Act of 1934, nor was he excluded from the definition of “agent” under Section 36b-3(1) of the Act. |
| 15. | The offer and sale of the Payphone Securities were transactions that were outside the regular course or scope of Respondent’s employment with Metlife and ACH, inasmuch as the transactions did not go through the books and records of Metlife or ACH, and Respondent did not provide Metlife or ACH written notice describing in detail the proposed transactions, his proposed role in the transactions and stating whether he had received or would receive selling compensation in connection with the transactions. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST AND
ORDER IMPOSING FINE AGAINST RESPONDENT
a. Violation of Section 36b-6(a) of the Act – Unregistered Agent Activity
ORDER IMPOSING FINE AGAINST RESPONDENT
| 16. | Paragraphs 1 through 15, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 17. | Respondent acted as an agent of issuer on at least two occasions, as more fully described in paragraphs 11 and 12, absent registration, as more fully described in paragraph 14. Such conduct constitutes two violations of Section 36b-6(a) of the 2006 Supplement to the General Statutes, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2006 Supplement to the General Statutes, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act that was in effect prior to October 1, 2003. |
b. Violation of Section 36b-16 of the Act – Offer and Sale
of Unregistered Securities by an Agent
| 18. | Paragraphs 1 through 17, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 19. | Respondent offered and sold unregistered securities to at least 40 Connecticut investors, as more fully described in paragraphs 12 and 13. The offer and sale of such securities absent registration constitutes two violations 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 2006 Supplement to the General Statutes, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act that was in effect prior to October 1, 2003. |
c. Wilful Violation of Section 36b-31-6e of the Regulations –
Participation in a Private Securities Transaction
Participation in a Private Securities Transaction
| 20. | Paragraphs 1 through 19, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 21. | Respondent’s participation in the offer and sale of the Payphone Securities, as more fully described in paragraph 12, constitutes participation in two private transactions in violation of Section 36b-31-6e of the Regulations and a dishonest or unethical business practice under Section 36b-31-15b(a)(2) of the Regulations, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2006 Supplement to the General Statutes, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act that was in effect prior to October 1, 2003. |
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, Andrew Savvas Constantinou has violated Sections 36b-6(a) and 36b-16 of the Act, and Section 36b-31-6e 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 Andrew Savvas Constantinou CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) acting as an agent in Connecticut absent registration, (2) offering and selling unregistered securities, and (3) participating in private securities transactions, except in accordance with Section 36b 31-6e of the Regulations;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the 2006 Supplement to the General Statutes, Andrew Savvas Constantinou will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Andrew Savvas Constantinou if a written request for a hearing is received by the Department of Banking, Legal Division, 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 Andrew Savvas Constantinou 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 Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on July 6, 2006, 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 Connecticut General Statutes. At such hearing, Andrew Savvas Constantinou 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 if Andrew Savvas Constantinou does not request a hearing within the prescribed time period.
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 Andrew Savvas Constantinou CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation: (1) acting as an agent in Connecticut absent registration, (2) offering and selling unregistered securities, and (3) participating in private securities transactions, except in accordance with Section 36b 31-6e of the Regulations;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the 2006 Supplement to the General Statutes, Andrew Savvas Constantinou will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Andrew Savvas Constantinou if a written request for a hearing is received by the Department of Banking, Legal Division, 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 Andrew Savvas Constantinou 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 Connecticut General Statutes and Section 36a-1-21 of the Regulations of Connecticut State Agencies. If a hearing is requested, the hearing will be held on July 6, 2006, 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 Connecticut General Statutes. At such hearing, Andrew Savvas Constantinou 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 if Andrew Savvas Constantinou 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 has violated Section 36b-6(a) of the 2006 Supplement to the General Statutes, Section 36b-16 of the Act and Section 36b-31-6e of the Regulations;
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 or a maximum fine of Sixty Thousand Dollars ($60,000).
NOW THEREFORE, a hearing will be held in accordance with Section 36b-27(d)(2) of the 2006 Supplement to the General Statutes, and Chapter 54 of the Connecticut General Statutes.
The hearing will be held on July 6, 2006, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, 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.
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 or a maximum fine of Sixty Thousand Dollars ($60,000).
NOW THEREFORE, a hearing will be held in accordance with Section 36b-27(d)(2) of the 2006 Supplement to the General Statutes, and Chapter 54 of the Connecticut General Statutes.
The hearing will be held on July 6, 2006, at 10 a.m., at the Department of Banking, 260 Constitution Plaza, Hartford, 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 May 2006. ________/s/_________
John P. Burke
Banking Commissioner
this 19th day of May 2006. ________/s/_________
John P. Burke
Banking Commissioner
CERTIFICATION
I hereby certify that on this 22nd day of May 2006, 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 Andrew Savvas Constantinou, 2 Serra Drive, Farmington, Connecticut 06032, registered mail no. RB028032989US.
________/s/_________
Jesse B. Silverman
Prosecuting Attorney