WHEREAS, Waterfund LLC (“Waterfund”), Waterfund Energy Terminals I LLC (“WET I”) and Waterfund Energy Terminals II LLC (“WET II”) (collectively, “Waterfund Entities”) are Delaware limited liability companies formed on October 5, 2011, October 1, 2015 and April 20, 2016, respectively.  The Waterfund Entities’ primary place of business was 18 Great Island, Darien, Connecticut 06820 during the relevant period of time.  As of April 1, 2018, Waterfund’s primary place of business is 36 Maplewood Avenue, Portsmouth, New Hampshire 03801 and WET I and WET II’s primary place of business is 18 Great Island, Darien, Connecticut 06820;

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, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”) conducted an investigation of the Waterfund Entities pursuant to Section 36b-26 of the Act (“Investigation”);

WHEREAS, as a result of such Investigation, the Division obtained evidence that:  (i) in 2015 and 2016 Waterfund and WET I offered and sold securities to four Connecticut investors in a private placement; (ii) in 2016 WET II offered and sold securities to investors outside of Connecticut; (iii) on January 15, 2016, Waterfund LLC and WET I each filed a Form D (Notice of Exempt Offering of Securities) with the Securities and Exchange Commission pursuant to Rule 506(c) of Regulation D; (iv) on July 1, 2016, WET II filed a Form D (Notice of Exempt Offering of Securities) with the Securities and Exchange Commission pursuant to Rule 506(c) of Regulation D; (v) neither Waterfund LLC nor WET I nor WET II made a Rule 506 notice filing with the Commissioner within the time frame prescribed in Sections 36b-16 and 36b-21(e) of the Act;

WHEREAS, once the Division put the Waterfund Entities on notice of the above, they each made the respective corrective filing and paid the corresponding fees;

WHEREAS, Section 36b-16 of the Act reads “ No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-34, inclusive, (2) the security or transaction is exempted under section 36b-21, or (3) the security is a covered security provided such person complies with any applicable requirements in subsections (c), (d) and (e) of section 36b-21.”

WHEREAS, Section 36b-21(e) of the Act reads “Any person who offers or sells a security that is a covered security under Section 18(b)(4)(E) of the Securities Act of 1933 shall file a notice with the commissioner within fifteen days after the first sale of such a security in this state [Connecticut]. . .”; 

WHEREAS, Section 36b-33(a) reads “Sections 36b-4, 36b-5, 36b-6, 36b-16, 36b-24 and 36b-29 apply to persons who sell or offer to sell when an offer to sell is made in this state, or when an offer to buy is made and accepted in this state.”  Section 36b-33 (c) reads “For the purpose of [Section 36b-33 - Applicability of chapter to offers to buy or sell] an offer to sell or to buy is made in this state, whether or not either party is then present in this state, when the offer originates from this state or is directed by the offeror to this state and received at the place to which it is directed or at any post office in this state in the case of a mailed offer.”

WHEREAS, WET II maintains that its failure to file a Rule 506 notice filing with the Commissioner under Section 36b-21(e) of the Act was based on a belief that such filing was not required because WET II did not (i) sell securities to any investors in Connecticut or (ii) sell any securities deriving from an offer made from within Connecticut;

WHEREAS, the Commissioner believes that grounds exist to support administrative sanctions against the Waterfund Entities pursuant to Section 36b-27 of the 2018 Supplement to the General Statutes;

WHEREAS, an administrative proceeding initiated under Section 36b-27 of the 2018 Supplement to the General Statutes 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 provide that a contested case may be resolved by stipulation or agreed settlement, unless precluded by law; 

WHEREAS, the Waterfund Entities desire to resolve the matters described herein and voluntarily enter into this Stipulation and Agreement, without admitting or denying the allegations described herein and without the commencement of a formal administrative proceeding, and acknowledge  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 only the matters described herein;

WHEREAS, the Waterfund Entities expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Stipulation and Agreement;

WHEREAS, the Waterfund Entities, 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, the Waterfund Entities specifically assure the Commissioner that the violations alleged in this Stipulation and Agreement shall not occur in the future;

NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:

IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.

I, Michael Irving, state on behalf of Waterfund LLC, 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 Waterfund LLC; and that Waterfund LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

State of:  Connecticut

County of:  New Haven

On this the 12th day of June 2018, before me, the undersigned officer, personally appeared Michael Irving, who acknowledged himself to be the Corporate Secretary of Waterfund LLC, a limited liability company, and that he, as such Corporate Secretary, 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 Corporate Secretary.

In witness whereof I hereunto set my hand.

   
_____/s/__________________________
Notary Public
Date Commission Expires: 12/31/2018

  
I, Michael Irving, state on behalf of Waterfund Energy Terminals I LLC (“WET I”), 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 WET I; and that WET I agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.
 

State of:  Connecticut

County of:  New Haven


On this the 12th day of June 2018, before me, the undersigned officer, personally appeared Michael Irving, who acknowledged himself to be the Corporate Secretary of Waterfund Energy Terminals I LLC, a limited liability company, and that he, as such Corporate Secretary, 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 Corporate Secretary.

In witness whereof I hereunto set my hand.

_____/s/____________________________
Notary Public
Date Commission Expires:  12/31/2018


I, Michael Irving, state on behalf of Waterfund Energy Terminals II LLC (“WET II”), 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 WET II; and that WET II agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

County of:  New Haven


On this the 12th day of June 2018, before me, the undersigned officer, personally appeared Michael Irving, who acknowledged himself to be a Director of Waterfund Energy Terminals II LLC, a limited liability company, 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/____________________________
Notary Public
Date Commission Expires:  12/31/2018

Administrative Orders and Settlements