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IN THE MATTER OF: SKY WATCH MEDIA, INC. (Collectively "Respondents") * * * * * * * * * * * * * * * * * |
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ORDER TO CEASE AND DESIST ORDER TO MAKE RESTITUTION AND NOTICE OF RIGHT TO HEARING DOCKET NO. CRF-12-7989-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 Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies (“Regulations”) promulgated under the Act. |
| 2. |
Pursuant to Section 36b-26(a) of the Act, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking, has conducted an investigation into the activities of Respondents to determine if Respondents have violated, are violating or are about to violate provisions of the Act or Regulations (“Investigation”). |
| 3. | As a result of the Investigation, the Commissioner has reason to believe that Respondents have violated certain provisions of the Act. |
| 4. |
As a result of the Investigation, the Commissioner has the authority to issue a cease and desist order against Respondents pursuant to Section 36b-27(a) of the Act.
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| 5. |
As a result of the Investigation, the Commissioner has the authority to order that Respondents make restitution pursuant to Section 36b-27(b) of the Act. |
| 6. | As a result of the Investigation, the Commissioner has the authority to impose a fine upon Respondents pursuant to Section 36b-27(d) of the Act. |
II. RESPONDENTS
| 7. | SWM is a Connecticut corporation with its principal place of business last known to the Commissioner at 21 Grand Street, Greenwich, Connecticut 06830-6109. SWM was incorporated in Connecticut on July 20, 2009. |
| 8. | Duquesne is an individual whose address last known to the Commissioner is 32B Homestead Road, Greenwich, Connecticut, 06831. Duquesne founded SWM in July 2009. |
III. STATEMENT OF FACTS
| 9. | From at least December 10, 2009 to the present, SWM has been an issuer of securities in the form of stock (“SWM Stock”). |
| 10. | For all relevant periods, Duquesne was the President and Director of SWM. SWM purportedly holds the rights to three websites in the web astrology business. |
| 11. | From at least December 10, 2009 to the present, SWM and Duquesne offered and sold SWM Stock in or from Connecticut to at least one investor. |
| 12. | For example, on December 10, 2009, a Connecticut investor wrote two checks in the amount of $12,500 to “M. Duquesne” for a total investment of $25,000 for which the investor received a stock certificate for ten shares of SWM. |
| 13. |
The SWM Stock offered and sold by Respondents was never registered in Connecticut under Section 36b-16 of the Act, nor was it the subject of a filed exemption claim or claim of covered security status. |
| 14. | Duquesne has never been registered in Connecticut as an agent of SWM. |
| 15. | Respondents failed to disclose to purchasers and prospective purchasers of SWM Stock, inter alia, any risk factors related to the investment or any financial information on SWM or Duquesne. Each of these omitted items was material to investors and prospective investors of the SWM Stock. |
| 16. | In connection with the offer and/or sale of the SWM Stock, Respondents prepared an investment presentation which included business projections without any basis. The investment presentation was provided to at least one person in connection with the offer of SWM Stock. Respondents failed to disclose to the person who received the investment presentation, inter alia, any risk factors related to the investment or any financial information on SWM or Duquesne. Each of these omitted items was material to investors and prospective investors of the SWM Stock. |
IV. STATUTORY BASIS FOR ORDER TO CEASE AND DESIST,
ORDER TO MAKE RESTITUTION AND ORDER IMPOSING FINE
a. Violation of Section 36b-16 of the Act –
Offer and Sale of Unregistered Securities
| 17. | Paragraphs 1 through 16, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 18. |
Respondents offered and sold unregistered securities in or from Connecticut to at least one investor, as more fully described in paragraphs 9 through 16, inclusive, which securities were not registered in Connecticut under the Act, as more fully described in paragraph 13. 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 Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and an order imposing a fine upon Respondents under Section 36b-27(d) of the Act. |
b. Violation of Section 36b-4(a) of the Act –
Fraud in Connection with the Offer and Sale of any Security
| 19. | Paragraphs 1 through 18, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 20. |
The conduct of Respondents, as more fully described in paragraphs 9 through 16, inclusive, constitutes, in connection with the offer, sale or purchase of any security, directly or indirectly 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 Act, which forms a basis for an order to cease and desist to be issued against Respondents under Section 36b-27(a) of the Act, an order that Respondents make restitution under Section 36b-27(b) of the Act, and an order imposing a fine upon Respondents under Section 36b-27(d) of the Act. |
c. Violation of Section 36b-6 of the Act –
Unregistered Agent Activity
| 21. | Paragraphs 1 through 20, inclusive, are incorporated and made a part hereof as if more fully set forth herein. |
| 22. | Duquesne transacted business as agent of issuer in this state absent registration, as more fully described in paragraphs 9 through 16, inclusive. Such conduct constitutes a violation of Section 36b-6(a) of the Act, which forms a basis for an order to cease and desist to be issued against Duquesne under Section 36b-27(a) of the Act, and for the imposition of a fine upon Duquesne under Section 36b-27(d) of the Act. |
| 23. | SWM employed Duquesne as an unregistered agent of issuer in this state, as more fully described in paragraphs 9 through 16, inclusive. Such conduct constitutes a violation of Section 36b-6(b) of the Act, which forms a basis for an order to cease and desist to be issued against SWM under Section 36b-27(a) of the Act, and for the imposition of a fine upon SWM under Section 36b-27(d) of the Act. |
V. ORDER TO CEASE AND DESIST, ORDER TO MAKE RESTITUTION,
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, SWM has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act and at least one violation of Section 36b-6(b) of the Act;
WHEREAS, as a result of the Investigation, the Commissioner finds that, with respect to the activity described herein, Duquesne has committed at least one violation of Section 36b-16 of the Act, at least one violation of Section 36b-4(a) of the Act and at least one violation of Section 36b-6(a) of the Act;
WHEREAS, the Commissioner further finds that the issuance of an Order to Cease and Desist, Order to Make Restitution, and the imposition of a fine upon Respondents 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 Respondents that the Commissioner intends to impose a maximum fine not to exceed one hundred thousand dollars ($100,000) per violation;
WHEREAS, the Commissioner ORDERS that SWM CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation: (1) offering and selling unregistered securities, (2) in connection with the offer, sale or purchase of any security, directly or indirectly 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, and (3) employing an unregistered agent of issuer;
WHEREAS, the Commissioner ORDERS that Duquesne CEASE AND DESIST from directly or indirectly violating the provisions of the Act and Regulations, including without limitation: (1) offering and selling unregistered securities, (2) in connection with the offer, sale or purchase of any security, directly or indirectly 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, and (3) transacting business as an unregistered agent of issuer in or from this state;
WHEREAS, the Commissioner ORDERS that Respondents MAKE RESTITUTION of any sums obtained as a result of Respondents’ violations of Sections 36b-4(a) and 36b-16 of the Act, plus interest at the legal rate set forth in Section 37-1 of the General Statutes of Connecticut. Specifically, the Commissioner ORDERS that:
| 1. | Within thirty (30) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with a written disclosure which covers the period from July 20, 2009 to the date this Order to Make Restitution becomes permanent and which contains (a) the name and address of each investor, (b) the amount Respondents collected from each investor, and (c) the amount of any refunds of principal or purported dividend payments Respondents made to each investor; |
| 2. | Within forty-five (45) days from the date this Order to Make Restitution becomes permanent, Respondents shall reimburse each investor the amount of funds collected from the investor plus interest, less funds returned in the form of purported refunds of principal and purported dividend payments made to the investor, with respect to all transactions effected from July 20, 2009 to the date this Order to Make Restitution becomes permanent. Such restitution shall be made by certified check, and shall be sent by certified mail, return receipt requested, to each affected investor; and |
| 3. | Within ninety days (90) days from the date this Order to Make Restitution becomes permanent, Respondents shall provide the Division with proof in the form of copies of the certified checks and the return receipts required by paragraph 2 of Section V of this Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (collectively “Order”), that Respondents have reimbursed each investor the amount of funds collected from each such investor plus interest, less funds returned in the form of purported refunds of principal and purported dividend payments, with respect to all transactions effected from July 20, 2009 to the date this Order to Make Restitution becomes permanent. |
THE COMMISSIONER FURTHER ORDERS THAT, pursuant to subsections (a), (b) and (d) of Section 36b-27 of the Act, each Respondent will be afforded an opportunity for a hearing on the allegations set forth above if a written request for a hearing is received by the Department of Banking, Securities and Business Investments Division, 260 Constitution Plaza, Hartford, Connecticut 06103-1800 within fourteen (14) days following each Respondent’s receipt of this Order. The enclosed Appearance and Request for Hearing Form must be completed and mailed to the above address. If any 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 November 27, 2012, 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, each 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 any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
This Order to Make Restitution shall remain in effect and become permanent against any Respondent that 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 any Respondent that fails to request a hearing within the prescribed time period or fails to appear at any such hearing.
| Dated at Hartford, Connecticut, | ________/s/________ | |
| this 9th day of October 2012. | Howard F. Pitkin | |
| Banking Commissioner |
CERTIFICATION
I hereby certify that on this 9th day of October 2012, the foregoing Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing was sent by certified mail, return receipt requested, to Sky Watch Media, Inc., at 21 Grand Street, Greenwich, Connecticut 06830-6109, certified mail no. 7011 0470 0002 2573 4490; and Marie Meredith Duquesne a/k/a Meredith Duquesne, 32B Homestead Road, Greenwich, Connecticut 06831, certified mail no. 7011 0470 0002 2573 4506.
_______/s/_________
Paul A. Bobruff
Prosecuting Attorney