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IN THE MATTER OF: TERRY LEE FEIBUS ("Respondent") * * * * * * * * * * * * * * * |
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AMENDED AND RESTATED ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-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 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 that the further sale or offer to sell securities would constitute a violation of said sections . . . 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 from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections . . . . 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 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, . . . 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, . . . 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. |
| 6. | As a result of the investigation conducted by the Division, the Commissioner issued an Order to Cease and Desist (“C&D”), Notice of Intent to Fine (“Fine”) and Notice of Right to Hearing on June 6, 2006 (collectively, “Notices”), which Notices are hereby restated and superceded. |
| 7. |
The Notices provided that a hearing on the Fine would be held on August 1, 2006, and if Respondent requested a hearing on the C&D, such hearing would also be held on August 1, 2006. |
| 8. | Respondent requested a hearing concerning the C&D, and both hearings have been continued to November 7, 2006. |
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II. RESPONDENT | |
| 9. | Respondent is an individual whose address last known to the Commissioner is 18429 Old Princton Lane, Boca Raton, Florida 33498. |
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III. STATEMENT OF FACTS | |
| 10. | In at least May 2003, Respondent made five sales of Deltagen Inc. securities to at least one Connecticut customer. |
| 11. | Deltagen Inc. 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. |
| 12. | In at least July 2003, Respondent made six sales of GoAmerica Inc. securities to at least one Connecticut customer. |
| 13. | GoAmerica Inc. 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. |
| 14. | In at least October 2003, Respondent made four sales of Hop-On.com securities to at least one Connecticut customer. |
| 15. | Hop-On.com 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. |
| 16. | In at least May 2003, Respondent made two sales of Loudeye Technologies securities to at least one Connecticut customer. |
| 17. | Loudeye Technologies 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. |
| 18. | In at least June 2003, Respondent made two sales of Paradigm Med Inds securities to at least one Connecticut customer. |
| 19. | Paradigm Med Inds 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. |
| 20. | In at least May 2003, Respondent made two sales of Peregrine Pharmaceuticals Inc. securities to at least one Connecticut customer. |
| 21. | Peregrine Pharmaceuticals Inc. 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. |
| 22. | In at least June 2003, Respondent made two sales of Predictive Systems Inc. securities to at least one Connecticut customer. |
| 23. | Predictive Systems Inc. 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. |
| 24. | In at least June 2003, Respondent made two sales of Robotic Vision Systems Inc. securities to at least one Connecticut customer. |
| 25. | Robotic Vision Systems Inc. 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. |
| 26. | In at least June 2003, Respondent made one sale of Sagent Tech Inc. securities to at least one Connecticut customer. |
| 27. | Sagent Tech Inc. 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. |
| 28. | In at least 2003, Respondent made seven sales of Skyway Communications securities to at least one Connecticut customer, three in May and four in October. |
| 29. | Skyway Communications 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. |
| 30. | In at least September 2003, Respondent made three sales of Tellium Inc. securities to at least one Connecticut customer. |
| 31. | Tellium Inc. 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. |
| 32. | In at least June 2003, Respondent made five sales of Valicert Inc. securities to at least one Connecticut customer. |
| 33. | Valicert Inc. 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. |
| 34. | From at least March 2003 to October 2003, Respondent effected an aggregate of 82 purchases and 53 sales in the following securities for the account of at least one person located in Connecticut: 1st Investors Blue Chip FD-A, 1st Investors Growth & Inc. -A, 1st Investors Tot Return FD A, 1st Investors USA Midcap Opp A, Charter Communications CL A, Deltagen Inc., Federated Growth Strategy FD-B, Federated Hi Inc. BD FD CL-B, Federated Kaufmann B, GoAmerica Inc., Hop-On.com, Lantronix Inc., Loudeye Technologies, Lucent Technologies Inc., Paradigm Med Inds, Peregrine Pharmaceuticals Inc., Predictive Systems Inc., Prosoft I-net Solutions Inc., Radview Software Ltd., Redback Networks Inc., Robotic Vision Systems Inc., Sagent Tech Inc., Silicon Graphics Inc. (DE), Skyway Communications, Tellium Inc., Transwitch Corp., and Valicert Inc. At no time was Respondent registered in Connecticut under the Act as an agent. |
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IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST a. Violation of Section 36b-16 of the Act – Offer and Sale of Unregistered Securities | |
| 35. | Paragraphs 1 through 34, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 36. | Respondent effected 41 sales of securities to Connecticut investors, which securities were not registered in Connecticut under the Act, as more fully described in paragraphs 10 through 33, inclusive. 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 2006 Supplement to the General Statutes. |
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b. Violation of Section 36b-6(a) of the Act – Unregistered Agent | |
| 37. | Paragraphs 1 through 36, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 38. | Respondent effected an aggregate of 82 purchases and 53 sales of securities in the account of at least one customer in Connecticut without being registered as an agent in Connecticut, as more fully described in paragraph 34, was in violation 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 2006 Supplement to the General Statutes. |
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, Terry Lee Feibus has violated Section 36b-16 of the Act and Section 36b-6(a) of the 2006 Supplement to the General Statutes;
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 Terry Lee Feibus CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, offering unregistered securities;
THE COMMISSIONER FURTHER ORDERS that, pursuant to Section 36b-27(a) of the 2006 Supplement to the General Statutes, Terry Lee Feibus will be afforded an opportunity for a hearing on the allegations set forth above.
A hearing will be granted to Terry Lee Feibus 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 Terry Lee Feibus 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 November 7, 2006, at noon 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, Terry Lee Feibus 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 Terry Lee Feibus 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-16 of the Act and 36b-6(a) of the 2006 Supplement to the General Statutes;
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 or a maximum fine of One Hundred Thousand Dollars ($100,000).
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 November 7, 2006, at noon 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 6th day of November 2006. ________/s/_________
Howard F. Pitkin
Banking Commissioner
CERTIFICATION
I hereby certify that on this 7th day of November 2006, the foregoing Amended and Restated 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 Terry Lee Feibus, 18429 Old Princeton Lane, Boca Raton, Florida 33498, registered mail no. RB028033366US, and via facsimile to 561-541-3621; and hand delivered to William Nahas, Jr., Hearing Officer, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut.
________/s/_________
Stacey Serrano Sarlo
Prosecuting Attorney
Administrative Orders and Settlements