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SOVEREIGN STATE * * * * * * * * * * * * * * * * * * |
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STIPULATION AND
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WHEREAS, Sovereign State Depository Inc. (“Sovereign”) is a now defunct Delaware corporation formed on February 16, 2010. Sovereign’s last corporate address of record was 1201 North Orange Street, Suite 7016, Wilmington, Delaware 19801. Sovereign’s business purpose was to develop a new monetary and depository system where users would deposit gold and silver as a medium of exchange, as opposed to the monetary system facilitated by the Federal Reserve System. At no time has Sovereign been registered in any capacity under Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”);
WHEREAS, Walter B. Reddy, III (“Reddy”) is an individual residing at 16 Briar Oak Drive, Weston, Connecticut 19801. At all times relevant hereto, Reddy was the Chief Executive Officer and President of Sovereign. At no time was Reddy registered in any capacity under the Act;
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of the 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 (“Division”) of the Department of Banking (“Department”) conducted an investigation of Respondents (“Investigation”) pursuant to Section 36b-26 of the Act;
WHEREAS, as a result of the Investigation, the Division obtained evidence that at various times in 2010, Sovereign and Reddy, as Sovereign’s agent, offered and sold securities through the issuance of promissory notes to at least one Connecticut investor, which securities were not registered in Connecticut 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 believes that the foregoing evidence would support the imposition of administrative sanctions against Respondents including the entry of an order to cease and desist and/or the imposition of an administrative penalty pursuant to Section 36b-27 of the Act;
WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(4) 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 of the Connecticut State Agencies provide that a contested case may be resolved by stipulation or agreed settlement, unless precluded by law;
WHEREAS, Respondents desire to settle the matters described herein and voluntarily enter into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein and is being made to settle the matters described herein;
WHEREAS, this Stipulation and Agreement and administrative fine set forth below are solely to settle the matters described herein;
WHEREAS, Respondents expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Stipulation and Agreement;
WHEREAS, Respondents, through their execution of this Stipulation and Agreement, voluntarily waive any rights they may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;
AND WHEREAS, Respondents specifically assure the Commissioner that none of the violations alleged in this Stipulation and Agreement shall occur in the future.
NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:
| 1. |
No later than the date this Stipulation and Agreement is executed by the Commissioner, Respondents shall remit to the Department by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut” the sum of five hundred dollars ($500) which shall constitute an administrative fine; |
| 2. |
Commencing on the date this Stipulation and Agreement is executed by the Commissioner and continuing for three (3) years thereafter, prior to any issuance, offer or sale of securities in or from Connecticut by Respondents and/or their affiliates and successors in interest, Respondents shall: (a) retain legal counsel experienced in Connecticut securities law and not unacceptable to the Division Director to advise each of them on compliance with the securities laws of Connecticut and other jurisdictions (“Retained Counsel”); (b) direct Retained Counsel to prepare and submit any required registration or other required documents and fees to the Division, and provide the Division Director with a signed opinion of Retained Counsel setting forth the basis for any claim of exemption or covered security status under Section 36b-21 of the Act at least thirty (30) days prior to the commencement of the offering; and (c) refrain from issuing, offering or selling securities in or from Connecticut prior to receiving a written acknowledgement from Retained Counsel that the Commissioner has declared any such registration effective or acknowledged receipt of Respondent’s claim of exemption; |
| 3. | Respondents shall refrain from offering or selling securities in or from Connecticut absent compliance with Section 36b-16 of the Act, including timely compliance with any applicable filing requirements; |
| 4. | Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against either Respondent based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof; and |
| 5. | This Stipulation and Agreement shall become binding when executed by Respondents and the Commissioner. |
IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.
| Dated at Hartford, Connecticut, | _____/s/__________________ | |
| this 18th day of July 2017. | Jorge L. Perez | |
| Banking Commissioner |
I, Walter B. Reddy, III, state on behalf of Sovereign State Depository, Inc., that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Sovereign State Depository, Inc.; and that Sovereign State Depository, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
| Sovereign State Depository, Inc. | ||
| By: | ______/s/____________________ | |
| Walter B. Reddy, III | ||
| President |
State of: Connecticut
County of: Fairfield
On this the 14th day of July 2017, before me, the undersigned officer, personally appeared Walter B. Reddy, III, who acknowledged himself to be the President of Sovereign State Depository, Inc., a corporation, and that he, as such President, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as President.
In witness whereof I hereunto set my hand.
_____/s/___________________________
Notary Public
Date Commission Expires: April 30, 2019
I, Walter B. Reddy, III, state that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; and that I agree freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
| ______/s/__________ | |
| Walter B. Reddy, III |
State of: Connecticut
County of: Fairfield
On this the 14th day of July 2017, before me, the undersigned officer, personally appeared Walter B. Reddy, III, know 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/____________________________
Notary Public
Date Commission Expires: April 30, 2019