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S&E INVESTMENT GROUP ("Respondent")
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ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO HEARING DOCKET NO. CF-2010-7660-S |
I. PRELIMINARY STATEMENT
| 1. | 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 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 Act, as amended by Public Act 10-141, the Commissioner, through the Securities and Business Investments Division of the Department of Banking, has conducted an investigation into the activities of Respondent to determine if Respondent has violated, is violating or is about to violate provisions of the Act or Regulations (“Investigation”). |
| 3. |
As a result of the Investigation, the Commissioner has reason to believe that Respondent has violated certain provisions of the Act. |
| 4. | As a result of the Investigation, the Commissioner has the authority to issue an order to cease and desist against Respondent pursuant to Section 36b-27(a) of the 2010 Supplement to the General Statutes (“2010 Supplement”), as amended by Public Act 10-141. |
| 5. |
As a result of the Investigation, the Commissioner has the authority to impose a fine against Respondent pursuant to Section 36b-27(d) of the Act as it existed prior to October 1, 2003. |
II. RESPONDENTS [sic]
| 6. |
Respondent is a New Jersey general partnership with its principal place of business last known to the Commissioner at 670 Tennis Club Drive, Fort Lauderdale, Florida 33311. |
III. STATEMENT OF FACTS
| 7. | From at least July, 1993, to the present, Respondent has been an issuer of securities in the form of partnership interests (“S&E Interests”). |
| 8. | On or about July 19, 1993, Respondent offered and sold S&E Interests to at least one Connecticut investor (“Investor”), notwithstanding the fact that the Investor had no knowledge and experience in financial and business matters and was incapable of evaluating the merits and risks of the S&E Interests. Furthermore, at no point did the Investor take an active role in the management of the partnership. |
| 9. | The S&E Interests that were offered and sold by Respondent were never properly registered in Connecticut, nor were they exempt from registration. |
| 10. | In connection with the offer and sale of the S&E Interests, Respondent failed to disclose, inter alia, the risk of loss of the entire investment; any risk factors related to the investment; any financial information on Respondent or its businesses; and any description as to how the funds would be invested. Each of these omitted items was material to investors and prospective investors of the S&E Interests. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST
AND ORDER IMPOSING FINE AGAINST RESPONDENT
a. Violation of Section 36b-16 of the Act –
Offer and Sale of Unregistered Securities
| 11. | Paragraphs 1 through 10, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 12. |
Respondent offered and sold unregistered securities to at least one Connecticut investor, as more fully described in paragraph 8, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 9. The offer and sale of such securities absent registration constitutes a violation of Section 36b-16 of the Act, as amended by Public Act 10-141, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act as it existed prior to October 1, 2003. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 13. | Paragraphs 1 through 12, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| [14.] |
The conduct of Respondent, as more fully described in paragraphs 7 through 10, inclusive, constitutes, in connection with the offer, sale or purchase of any security, employing a device, scheme or artifice to defraud, 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, or engaging in an act, practice or course of business which operates as a fraud or deceit upon any person. Such conduct constitutes a violation of Section 36b-4(a) of the 2010 Supplement, which forms a basis for an order to cease and desist to be issued against Respondent under Section 36b-27(a) of the 2010 Supplement, as amended, and for the imposition of a fine against Respondent under Section 36b-27(d) of the Act as it existed prior to October 1, 2003. |
V. ORDER TO CEASE AND DESIST, NOTICE OF INTENT TO FINE
AND NOTICE OF RIGHT TO HEARING
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Respondent has committed at least one violation of Section 36b-16 of the Act, as amended, and at least one violation of Section 36b-4(a) of the 2010 Supplement;
WHEREAS, the Commissioner further finds that the issuance of this Order to Cease and Desist and the imposition of a fine 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;
WHEREAS, notice is hereby given to Respondent that the Commissioner intends to impose a maximum fine not to exceed Ten Thousand Dollars ($10,000) per violation;
AND WHEREAS, pursuant to Section 36b-27 of the 2010 Supplement, as amended, Respondent will be afforded an opportunity for a hearing on the allegations set forth above.
THE COMMISSIONER THEREFORE ORDERS that Respondent CEASE AND DESIST from directly or indirectly violating the provisions of the Act, including without limitation, (1) offering and selling unregistered securities, and (2) in connection with the offer, sale or purchase of any security, employing a device, scheme or artifice to defraud, 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, or engaging in an act, practice or course of business which operates as a fraud or deceit upon any person.
THE COMMISSIONER FURTHER ORDERS that a hearing will be granted to Respondent if a written request for a hearing is received by the Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800, within fourteen (14) days following Respondent’s receipt of this Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing. 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 General Statutes of Connecticut and Section 36a-1-21 of the Regulations of Connecticut State Agencies.
If a hearing is requested, the hearing will be held on August 12, 2010, 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 General Statutes of Connecticut. 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.
This Order to Cease and Desist shall remain in effect and become permanent against Respondent if Respondent fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
The Commissioner may order that the maximum fine be imposed upon Respondent if Respondent fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 24th day of June 2010. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 25th day of June 2010, the foregoing 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 S&E Investment Group, c/o Stefania Deluca, Managing General Partner, 670 Tennis Club Drive, Fort Lauderdale, Florida 33311, certified mail no. 7008 1140 0002 4974 3534.
_______/s/_________
Jesse B. Silverman
Prosecuting Attorney