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IN THE MATTER OF: JUSTIN MATTHEW DEVER ("Respondent") * * * * * * * * * * * * * * * |
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NOTICE OF INTENT TO REVOKE NOTICE OF INTENT TO FINE AND NOTICE OF RIGHT TO HEARING DOCKET NO. RF-2006-7155-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. |
| 4. |
As a result of the investigation by the Division, the Commissioner brings this administrative action pursuant to Section 36b-15 of the 2006 Supplement to the General Statutes, and Section 4-182(c) of the Connecticut General Statutes to revoke the agent registration of Respondent, as set forth herein. Section 36b-15(a) of the 2006 Supplement to the General Statutes, provides, in pertinent part:
The commissioner may, by order, . . . revoke any registration . . . if the commissioner finds that (1) the order is in the public interest, and (2) the . . . registrant . . . (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive, . . . or any regulation . . . under said sections . . . ; (H) has engaged in fraudulent, dishonest or unethical practices in the securities . . . business, . . . ; [or] (L) in connection with any investigation conducted pursuant to section 36b-26 . . . or any examination under subsection (d) of section 36b-14 . . . has withheld or concealed material information from . . . the commissioner . . . . |
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Section 4-182(c) of the Connecticut General Statutes provides, in pertinent part:
No revocation . . . of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail to the licensee of facts or conduct which warrant the intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license. | |
| 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 2006 Supplement to the General Statutes, which 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 23395 Carolwood Lane, Boca Raton, Florida 33428.
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III. STATEMENT OF FACTS | |
| 7. | From at least June 30, 2004 to May 24, 2005, Respondent has been registered in Connecticut under the Act as an agent of Independent Securities Investors Corporation (“Independent”), a corporation whose current principal place of business is in Chipley, Florida. |
| 8. | From at least July 2001, Independent has been registered in Connecticut under the Act as a broker-dealer. |
| 9. | From at least December 2004 through April 2005, Respondent made three sales of Bio-Solutions Manufacturing securities to at least two Connecticut customers. |
| 10. | The Bio-Solutions Manufacturing securities were never registered in Connecticut as required by Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they covered securities. |
| 11. | In at least November 2004, Respondent made three sales of Stake Technology securities to at least three Connecticut customers. |
| 12. | Stake Technology securities were never registered in Connecticut as required by Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they covered securities. |
| 13. | From at least November 2004 through April 2005, Respondent effected an aggregate of at least three unauthorized transactions on behalf of two Connecticut customers. Two of the transactions were effected on behalf of a Connecticut customer who was deceased at the time. |
| 14. | In 2004, Respondent participated in the sale of a security in the form of a promissory note issued by Charter One Capital Holding, Inc. (“Charter One”) to a Connecticut customer. Such transaction was outside the regular course or scope of Respondent’s employment with Independent. Such transaction did not go through the books and records of Independent and Respondent did not provide Independent written notice describing in detail the proposed transaction, his proposed role in such transaction and stating whether he had received or would receive compensation in connection with the transaction. |
| 15. | As part of its investigation, the Division requested Respondent to provide certain material documents. Respondent has not provided the Division with any of the requested documents. |
| 16. |
On January 6, 2006, the Commissioner gave Respondent written notice pursuant to Section 4-182(c) of the Connecticut General Statutes that he may have engaged in conduct which would provide a basis for the suspension or revocation of his agent registration in Connecticut and gave Respondent the opportunity to show compliance with all lawful requirements for the retention of his agent registration in Connecticut. To date, Respondent has failed to respond to such notice.
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IV. STATUTORY BASIS FOR REVOCATION OF AGENT REGISTRATION AND FINE | |
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a. Wilful Violation of Section 36b-16 of the Act –
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 effected at least six offers and sales of securities, which were not registered in Connecticut under the Act, to Connecticut customers, as more fully described in paragraphs 9 through 12, inclusive. Such offers and sales constitute wilful violations of Section 36b-16 of the Act, and such violations form a basis for the revocation of Respondent’s registration as an agent pursuant to Section 36b-15(a)(2)(B) of the 2006 Supplement to the General Statutes.
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b. Dishonest and Unethical Practices in the Securities Business –
Executing Transactions and Exercising Discretionary Power Without Authority | |
| 19. | Paragraphs 1 through 18, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 20. |
Respondent’s three unauthorized securities transactions, as more fully described in paragraph 13, constitutes dishonest or unethical practices in the securities business within the meaning of subdivisions (5) and (6) of subsection (a) of Section 36b-31-15a of the Regulations and Section 36b-4(b) of the Act. Such dishonest or unethical practices in the securities business by Respondent form a basis for the revocation of Respondent’s registration as an agent pursuant to Section 36b-15(a)(2)(H) of the 2006 Supplement to the General Statutes, and for the imposition of a fine for two violations of Section 36b-4(b) of the Act against Respondent pursuant to Section 36b-27(d) of the 2006 Supplement to the General Statutes.
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c. Wilful Violation of Section 36b-31-6e of the Regulations – Participation in a Private Securities Transaction | |
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. |
Respondent’s participation in the offer and sale of Charter One securities to a Connecticut customer, as more fully described in paragraph 14, constitutes a private transaction in violation of Section 36b-31-6e of the Regulations. Such violation forms a basis for the revocation of Respondent’s registration as an agent pursuant to Section 36b-15(a)(2)(B) of the 2006 Supplement to the General Statutes, and for the imposition of a fine for one violation against Respondent under Section 36b-27(d) of the 2006 Supplement to the General Statutes.
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d. Withholding of Material Information from the Commissioner | |
| 23. | Paragraphs 1 through 22, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 24. |
Respondent’s withholding of material information from the Commissioner, as more fully described in paragraph 15, forms a basis for the revocation of Respondent’s registration as an agent pursuant to Section 36b-15(a)(2)(L) of the 2006 Supplement to the General Statutes.
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V. NOTICE OF INTENT TO REVOKE AGENT REGISTRATION
AND NOTICE OF RIGHT TO HEARING
WHEREAS, the Commissioner has reason to believe that Respondent has engaged in acts or conduct that, pursuant to Section 36b-15(a) of the 2006 Supplement to the General Statutes, constitute grounds for revoking his registration as an agent in Connecticut;
WHEREAS, the Commissioner believes that the issuance of an order revoking registration would be in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act;
AND WHEREAS, Section 36b-15(f) of the 2006 Supplement to the General Statutes provides, in pertinent part, that “[n]o order may be entered under this section . . . without (1) appropriate prior notice to the . . . registrant and to the employer . . . if such . . . registrant is an agent . . . , (2) opportunity for hearing, and (3) written findings of fact and conclusions of law”.
NOW THEREFORE, notice is hereby given to Respondent that his registration as an agent shall be revoked, subject to his right to request a hearing on the allegations set forth above.
A hearing will be granted to Respondent 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 Notice. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If Respondent 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 25, 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, Respondent 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.
If Respondent does not request a hearing within the prescribed time period, the Commissioner shall issue an order revoking registration as an agent in Connecticut.
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-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 One Hundred Thousand Dollars ($100,000) per violation for a maximum fine of One Million Dollars ($300,000).
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 25, 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.
________/s/_________
John P. Burke
Banking Commissioner
Dated at Hartford, Connecticut
this 4th day of May 2006.
CERTIFICATION
________/s/_________
Nirja Savill
Prosecuting Attorney