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IN THE MATTER OF: MARKLAND TECHNOLOGIES, INC. ("Respondent") * * * * * * * * * * * * * * * * * * * |
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ORDER IMPOSING FINE DOCKET NOS. CF-2008-7550-S |
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, 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, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (“Department”), conducted an investigation into the activities of Respondent, pursuant to Section 36b-26(a) of the Act, to determine if Respondent had violated, was violating or was about to violate provisions of the Act or Regulations;
WHEREAS, on August 15, 2008, the Commissioner, acting pursuant to Sections 36b-27(a) and 36b-27(d) of the 2008 Supplement to the General Statutes, issued an Order to Cease and Desist (“Order”), Notice of Intent to Fine (“Fine Notice”) and Notice of Right to Hearing against Respondent (collectively “Notice”), which Notice is incorporated by reference herein;
WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondent, that a hearing would be held on the matters alleged in the Fine Notice on October 14, 2008 (“Fine Hearing”), and that if Respondent failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of One Hundred Thousand Dollars ($100,000) be imposed upon Respondent;
WHEREAS, on August 18, 2008, the Notice was sent to by registered mail, return receipt requested, to Respondent (Registered Mail No. RB028035013US);
WHEREAS, on September 12, 2008, the Notice sent to Respondent was returned to the Department marked “Returned To Sender – Unclaimed”;
WHEREAS, on September 4, 2008, the Notice was served on the Commissioner, and on September 8, 2008, Notice of Service on the Banking Commissioner was sent to Respondent in accordance with Section 36b-33(h) of the Act;
WHEREAS, Section 36b-33(h) of the Act provides, in pertinent part, that “[w]hen any person, including any nonresident of this state, engages in conduct prohibited or made actionable by sections 36b-2 to 36b-33, inclusive, . . . and such person has not filed a consent to service of process under subsection (g) of this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person’s appointment of the commissioner or the commissioner’s successor in office to be such person’s attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against such person or such person’s successor executor or administrator which grows out of that conduct and which is brought under said sections . . . with the same force and validity as if served on such person personally. Service may be made by leaving a copy of the process in the office of the commissioner, and it is not effective unless (1) the plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by the commissioner, forthwith sends notice of the service and a copy of the process by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the defendant or respondent at the defendant’s or respondent’s last known address or takes other steps which are reasonably calculated to give actual notice, and (2) the plaintiff’s affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows”;
WHEREAS, the Commissioner alleged in the Notice that Respondent employed an agent of issuer on at least one occasion absent registration, in violation of Section 36b-6(b) 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 2008 Supplement to the General Statutes, and for the imposition of a fine against Respondent under Section 36b-27(d) of the 2008 Supplement to the General Statutes;
WHEREAS, on September 23, 2008, the Order issued against Respondent became permanent;
WHEREAS, the Commissioner found in the Order, with respect to the activity described therein, that Respondent violated Section 36b-6(b) of the Act;
WHEREAS, Attorney Paul A. Bobruff, was appointed Hearing Officer for the Fine Hearing;
WHEREAS, Attorney Jesse B. Silverman represented the Department at the Fine Hearing;
WHEREAS, on October 14, 2008, Respondent failed to appear at the Fine Hearing;
WHEREAS, Section 36a-1-31(b) of the Regulations of Connecticut State Agencies provides, in pertinent part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted. Without further proceedings or notice to the party, the presiding officer shall submit to the commissioner a proposed final decision containing the relief sought in the notice, provided the presiding officer may, if deemed necessary, receive evidence from the department, as part of the record, concerning the appropriateness of the amount of any . . . fine . . . sought in the notice”;
WHEREAS, Section 36b-27(d)(2) of the 2008 Supplement to the General Statutes provides, in pertinent part, that “[i]f 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”;
WHEREAS, Section 36b-31(a) of the Act provides, in pertinent 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-33, inclusive”;
AND WHEREAS, Section 36b-31(b) of the Act provides, in pertinent 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-33, inclusive.”
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
| 1. | The facts as set forth in paragraphs 6 through 12, inclusive, of the Notice shall constitute findings of fact within the meaning of Section 4-180(c) of the Connecticut General Statutes, and the conclusions set forth in paragraph 17 of the Notice shall constitute conclusions of law within the meaning of Section 4-180(c) of the Connecticut General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies. |
| 2. | Section 36b-31(b) of the Act requires that the Commissioner find that an 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 Sections 36b-2 to 36b-33, inclusive, of the Act. Although the Commissioner is not required to make all these findings to make an order, since Section 36b-31(b) of the Act is clearly in the disjunctive, all of these elements are present in this case. While the term “public interest” is not defined in the Act, courts have determined that words of wide generality, like “public interest”, must take their meaning from the substantive provisions and purposes of the legislation and the words must be interpreted in the context of the regulatory scheme. See NAACP v. Federal Power Comm’n, 425 U.S. 662 (1976); N.Y. Central Sec. Corp. v. United States, 287 U.S. 12 (1932). “[I]t is for the legislature to determine what is in the public interest . . .”. Brosnan v. Sacred Heart Univ., 1997 Conn. Super. Lexis 2815, *47 (1997) (internal quotation marks omitted) (quoting West v. Egan, 18 Conn. Supp. 447, 450 (1953)). “[T]he primary purpose behind . . . [the Act] was to institute comprehensive registration requirements and thereby improve surveillance of securities trading.” State v. Andresen, 256 Conn. 313, 329 (2001) (internal quotation marks omitted) (quoting Connecticut National Bank v. Giacomi, 233 Conn. 304, 320 (1995)). “[S]tate securities laws, or ‘blue sky laws,’ are remedial statutes.” Id. at 322-23 (footnote omitted); see also, Papic v. Burke, 2007 Conn. Super. LEXIS 820 (Conn. Super. Ct. 2007). State securities laws contain antifraud provisions, require registration of brokers and sellers of securities and registration of securities themselves. Connecticut National Bank v. Giacomi, 233 Conn. at 320. The dominating purpose of state securities laws is to protect the public and to prevent and punish the fraudulent floating of securities. Andresen, 256 Conn. at 323. Thus, the “public interest” as it relates to the purposes of the Act includes comprehensive registration requirements to improve surveillance of securities trading, and to protect the public from fraudulent exploitation in the offer and sale of securities, which are key elements in the network of safeguards the legislature has enacted to protect the public investor. In this case, Respondent’s actions in violation of the Act involved disregarding the regulatory prohibition on employing an agent of issuer absent registration. There were no mitigating factors in the record regarding Respondent’s violation of the Act that justify a lesser sanction in this case. Consequently, the Commissioner finds that based upon the nature of Respondent’s actions in violation of the Act, the facts require the imposition of a fine against Respondent in the amount of $100,000 for violation of Section 36b-6(b) of the Act and that this Order Imposing Fine against Respondent is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-33, inclusive, of the Act. |
| 3. |
The Commissioner finds that the Notice was given to Respondent in compliance with Section 36b-27(d) of the 2008 Supplement to the General Statutes and Section 4-177 of the Connecticut General Statutes.
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III. ORDER
Having read the record, I hereby ORDER, pursuant to Section 36b-27(d) of the 2008 Supplement to the General Statutes, that:
| 1. | A fine of One Hundred Thousand Dollars ($100,000) be imposed against Markland Technologies, Inc., to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 45 days from the date this Order is mailed; and |
| 2. |
This Order shall become effective when mailed.
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Dated at Hartford, Connecticut
this 2nd day of December 2008. ________/s/_________
Howard F. Pitkin
Banking Commissioner
This Order was sent by certified mail,
return receipt requested, to
Respondent on December 3, 2008.
Markland Technologies, Inc. Certified Mail No. 7099 3400 0009 0180 2826
222 Metro Center Boulevard
Warwick, RI 02886