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A. SEARLE FIELD * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER NO. CO-13-7936-S |
I. PRELIMINARY STATEMENT
WHEREAS, 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 Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act;
WHEREAS, A. Searle Field (“Field”) is an individual whose address last known to the Commissioner is 133 River Road, Mystic, Connecticut 06355. Field is not and has not been registered in any capacity under the Act;
WHEREAS, Hollywood Next Holdings LLC (“HNH”), whose name was originally Hollywood East, LLC, is a Delaware limited liability company with a principal place of business at 225 Parkway North, Waterford, Connecticut 06385. HNH is a now defunct film production studio that has no known assets. HNH is not and has not been registered in any capacity under the Act;
WHEREAS, at all times relevant hereto, Field has been a director and control person of HNH;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of Respondents to determine whether they violated, have violated or were about to violate provisions of the Act or Regulations (“Investigation”);
WHEREAS, as a result of such Investigation, the Division obtained evidence that at various times from approximately April 2008 to approximately December 2008 Respondents: (1) offered and sold shares and/or units of HNH in and from Connecticut to at least one investor, which securities were not registered in Connecticut under Section 36b-16 of the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status; and (2) in connection with the offer, sale or purchase of such securities, directly or indirectly omitted 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;
WHEREAS, as a result of such Investigation, the Division also ascertained that: (1) Respondent Field signed as manager and was listed as a promoter on several filings made with the Securities and Exchange Commission pursuant to Rule 504 of federal Regulation D, to wit, filings for United Atlantic Film Fund No. 1, LLC, United Atlantic Film Equity Fund No. 2, LLC, United Atlantic Film Equity Fund No. 3, LLC, United Atlantic Film Equity Fund No. 4, LLC and United Atlantic Film Equity Fund No. 5, LLC (together, the “Funds”); (2) each of the Funds was located at 133 River Road, Mystic, Connecticut 06355; (3) at various times from approximately January 2010 to approximately November 2011, Respondent Field, alone and/or through United Atlantic Studios, LLC, a Connecticut limited liability company, offered and sold in and from Connecticut securities issued by the Funds; and (4) at the time of such offers and sales by Respondent Field, the securities issued by the Funds were not registered under Section 36b-16 of the Act, nor were they the subject of a filed exemption claim or claim of covered security status;
WHEREAS, the Commissioner has reason to believe that the foregoing conduct violates certain provisions of the Act, and would support administrative proceedings against Respondents under Section 36b 27 of the Act;
WHEREAS, subsequently on August 29, 2013, Respondent Field filed with the Division securities filings and required fees for each of the Funds pursuant to Section 36b-21(b)(10)(B) of the Act and Section 36b-31-21b-9b of the Regulations thereunder;
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-34, inclusive”;
WHEREAS, Section 36b-31(b) of the Act provides, in relevant part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-34, inclusive”;
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(2) of the General Statutes of Connecticut;
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations provide that a contested case may be resolved by consent order, unless precluded by law;
WHEREAS, Respondents expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Consent Order;
WHEREAS, the Commissioner finds that the entry of this Consent Order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of the Act;
WHEREAS, HNH has demonstrated that it is financially unable to pay the fine that otherwise would have been imposed against it pursuant to Section 36b-27(d) of the Act;
AND WHEREAS, Respondents, through their execution of this Consent Order, specifically assure the Commissioner that none of the violations alleged in this Consent Order shall occur in the future.
II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, Respondents, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To be afforded notice and an opportunity for a hearing within the meaning of Section 36b-27 of the Act and Section 4-177(a) of the General Statutes of Connecticut; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 36b-27 of the Act and Section 4-177c(a) of the General Statutes of Connecticut; |
| 3. | To present their respective positions in a hearing in which each 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. |
III. ACKNOWLEDGEMENT OF THE COMMISSIONER'S ALLEGATIONS
WHEREAS, Respondents, through their execution of this Consent Order, acknowledge the following allegations of the Commissioner and, without concurring with the Commissioner’s allegations, admit evidence exists for the Commissioner to issue an order to cease and desist, an order to make restitution, and an order imposing a maximum administrative fine of one hundred thousand dollars ($100,000) per violation of the Act, or any regulation, rule or order adopted or issued under the Act:
| 1. | Respondents violated Section 36b-16 of the Act through the offer and sale of securities in or from Connecticut to at least one investor, which securities were not registered in Connecticut under the Act, nor were they exempt from registration under Section 36b-21 of the Act, nor were they subject to an exemption claim or claim of covered security status; |
| 2. | Respondents violated Section 36b-4(a)(2) of the Act by, in connection with the offer, sale or purchase of any securities, directly or indirectly, making an untrue statement of a material fact 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; and |
| 3. | The foregoing conduct, if proven, forms a basis for the initiation of administrative proceedings against Respondents pursuant to Section 36b-27 of the Act; |
WHEREAS, the Commissioner would have the authority to enter findings of fact and conclusions of law after granting Respondents an opportunity for a hearing;
AND WHEREAS, Respondents acknowledge the possible consequences of an administrative hearing and voluntarily agree to consent to the entry of the sanctions described below.
IV. CONSENT TO ENTRY OF SANCTIONS
WHEREAS, Respondents, through their execution of this Consent Order, consent to the Commissioner’s entry of an order imposing on them the following sanctions:
| 1. | A. Searle Field, Hollywood Next Holdings LLC, and their affiliates and successors in interest shall cease and desist from directly or indirectly violating the provisions of the Act, including without limitation: offering and selling unregistered securities in and from Connecticut, and in connection with the offer, sale or purchase of any security, directly or indirectly, making an untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; |
| 2. | No later than November 1, 2013, Respondent Field shall pay to the Department by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut,” the sum of fifty thousand dollars ($50,000), which shall constitute an administrative fine; |
| 3. | In the event of nonperformance or violation by Respondents of any term or condition set forth in this Consent Order, including the payment of the administrative fine by Respondent Field, Respondents consent to the immediate entry and imposition of a one hundred thousand dollar ($100,000) fine, knowingly, willfully and voluntarily waiving their right to notice and an administrative hearing in conjunction therewith, provided that, prior to invoking this paragraph, the Commissioner shall provide Respondents with an informal opportunity to demonstrate their compliance with this Consent Order; and |
| 4. | In the event of nonperformance or violation by Respondents of any term or condition set forth in this Consent Order, including the payment of the administrative fine by Respondent Field, all of the allegations in Section III of this Consent Order (“Acknowledgment of the Commissioner’s Allegations”), are deemed admitted by Respondents, knowingly, willfully and voluntarily waiving their right to notice and an administrative hearing in conjunction therewith, provided that, prior to invoking this paragraph, the Commissioner shall provide Respondents with an informal opportunity to demonstrate their compliance with this Consent Order. |
V. CONSENT ORDER
NOW THEREFORE,
the Commissioner enters the following:| 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 Respondents based upon a violation of this Consent Order or the matters underlying its entry if the Commissioner determines that compliance with the terms herein is not being observed; |
| 3. | Nothing in this Consent Order shall be construed as limiting the Commissioner’s ability to take enforcement action against any Respondent based upon evidence of which the Division was unaware on the date hereof relating to a violation of the Act or any regulation or order under the Act; |
| 4. | Pursuant to Rule 506(d)(2)(iii) of federal Regulation D, the entry of this Consent Order by the Commissioner is not intended by virtue of its entry to give rise to a disqualification under Rule 506(d)(1) of federal Regulation D, 17 C.F.R. §230.506(d)(1); and |
| 5. | This Consent Order shall become final when entered. |
| So ordered at Hartford, Connecticut, | _______/s/_________ | |
| this 19th day of September 2013. | Howard F. Pitkin | |
| Banking Commissioner |
CONSENT TO ENTRY OF ORDER
I, A. Searle Field, state that I have read the foregoing Consent Order; that I know and fully understand its contents; that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that I consent to the entry of this Consent Order.
| ____/s/______ |
| A. Searle Field |
State of: Connecticut
County of: Hartford
On this the 18th day of September 2013, before me, Daniel Wenner, the undersigned officer, personally appeared A. Searle Field, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained.
In witness whereof I hereunto set my hand.
| ____/s/_______________________ |
| Daniel Wenner |
| Commissioner of the Superior Court |
CONSENT TO ENTRY OF ORDER
I, A. Searle Field, state on behalf of Hollywood Next Holdings, LLC (“HNH”), 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 HNH; that HNH agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that HNH consents to the entry of this Consent Order.
| Hollywood Next Holdings, LLC | |
| By: | ___/s/___________________ |
| A. Searle Field | |
| Director |
State of: Connecticut
County of: Hartford
On this the 18th day of September 2013, before [me], Daniel Wenner, the undersigned officer, personally appeared A. Searle Field, who acknowledged himself to be a Director of Hollywood Next Holdings, LLC, and that he, as such Director, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as Director.
In witness whereof I hereunto set my hand.
| ____/s/_______________________ |
| Daniel Wenner |
| Commissioner of the Superior Court |