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IN THE MATTER OF: WMD TASK FORCE, INC. * * * * * * * * * * * * * * * * * * |
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CONSENT ORDER File No. CO-2007-6918-S |
PRELIMINARY STATEMENT
WHEREAS, the Banking Commissioner (the “Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act (the “Act”), and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies promulgated under the Act (the “Regulations”);
WHEREAS, WMD Task Force, Inc. (“WMD”) of 340 Main Street North, Southbury, Connecticut is a Connecticut corporation organized in 2002;
WHEREAS, John A. Bucciarelli (“Bucciarelli”) is the president of WMD;
WHEREAS, the Commissioner, through the Securities and Business Investments Division (the “Division”) of the Department of Banking, conducted an investigation pursuant to Section 36b-26 of the Act into the activities of WMD, its officers, directors, agents and representatives to determine whether they, or any of them, had violated, were violating or were about to violate any provision of the Act or the Regulations thereunder (the “Investigation”);
WHEREAS, the Division believes that, between May 2002 and 2005, WMD and Bucciarelli violated Section 36b-16 of the Act by offering and selling common stock to one or more investors at a time when the shares of stock were not registered under Sections 36b-17, 36b-18 or 36b-19 of the Act nor the subject of an exemptive claim or claim of covered security status under Section 36b-21 of the Act;
WHEREAS, Section 36b-27 of the Act provides, in part, that: “Whenever it appears to the commissioner after an investigation that any person has violated, is violating or is about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, or that the further sale or offer to sell securities would constitute a violation of said sections or any such regulation, rule or order . . . (1) the person, (2) any other person that directly or indirectly controls such person and that is, was or would be a cause of the violation of such sections or any such regulation, rule or order, due to an act or omission such other person knew or should have known would contribute to such violation, or (3) any other person that has materially aided, is materially aiding or is about to materially aid in such violation, to cease and desist from the violations or the causing of or aiding in the violations of the provisions of said sections or of the regulations, rules or orders thereunder, or from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections or of the regulations, rules or orders thereunder . . . .”;
WHEREAS Section 36b-27(d) of the Act authorizes the Commissioner to impose a fine against any person who has violated, caused a violation or materially aided in the violation of the Act or any regulation, rule or order under the Act, the amount of such fine being $100,000 per violation for conduct occurring after the October 1, 2003 effective date of Public Act 03-259, and $10,000 per violation for conduct occurring prior to the effective date of Public Act 03-259;
WHEREAS an administrative proceeding initiated under Section 36b-27 of the Act would constitute a "contested case" within the meaning of Section 4-166(2) of the Connecticut General Statutes;
WHEREAS Section 36b-16 of the Act provides that: “No person shall offer or sell any security in this state unless (1) it is registered under sections 36b-2 to 36b-33, 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 4-177(c) of Chapter 54 of the Connecticut General Statutes provides that"[u]nless precluded by law, a contested case may be resolved by stipulation, agreed settlement, or consent order or by the default of a party";
WHEREAS Section 36b-31(a) of the Act provides, in part, that: "The commissioner may from time to time make, amend and rescind such . . . orders as are necessary to carry out the provisions of Sections 36b-2 to 36b-33, inclusive [of the Connecticut Uniform Securities Act]";
WHEREAS WMD and Bucciarelli have provided documentation to the Division evidencing that their financial resources are insufficient to pay the fine that otherwise would have been assessed against them pursuant to this Consent Order;
CONSENT TO WAIVER OF PROCEDURAL RIGHTS
WHEREAS, WMD and Bucciarelli, through their execution of this Consent Order, voluntarily waive the following rights:
| 1. | To be afforded an opportunity for a hearing within the meaning of Section 36b 27(d)(2) of the Act, and Section 4 177(a) of the Connecticut General Statutes; |
| 2. | To present evidence and argument and to otherwise avail themselves of Section 36b 27(d)(2) of the Act, and Section 4 177c(a) of the Connecticut General Statutes; |
| 3. | To present their respective positions in a hearing in which each is represented by counsel; |
| 4. | To have a written record of the hearing made and a written decision issued by a hearing officer; and |
| 5. | To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order. |
CONSENT TO ENTRY OF FINDINGS
WHEREAS, WMD and Bucciarelli through their execution of this Consent Order, accept and consent to the entry of the following Findings by the Commissioner:
| 1. | That the entry of this Consent Order is appropriate, in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act; |
| 2. | That in contravention of Section 36b-16 of the Act, between May 2002 and 2005, WMD and Bucciarelli offered and sold securities in or from Connecticut at a time when such securities were not registered under Sections 36b-17, 36b-18 or 36b-19 of the Act nor the subject of an exemptive claim or claim of covered security status under Section 36b-21 of the Act; |
| 3. | That the Division’s allegations would support the initiation of administrative proceedings against WMD and Bucciarelli pursuant to Section 36b-27 of the Act; |
CONSENT TO ENTRY OF SANCTIONS AND REMEDIAL MEASURES
WHEREAS, WMD and Bucciarelli, through their execution of this Consent Order, consent to the Commissioner issuing an order imposing on them the following sanctions and remedial measures:
| 1. | Bucciarelli and WMD, its officers, directors, affiliates, agents, employees, representatives and successors in interest shall cease and desist from engaging in conduct constituting or which would constitute a violation of the Act or any regulation or order under the Act, including, without limitation, offering or selling securities absent compliance with Section 36b-16 of the Act; |
| 2. | Prior to any future issuance, offer or sale of securities in or from Connecticut by WMD or its successors in interests, WMD or its successor shall (a) provide the Division Director with written advance notice of such issuance, offer or sale; (b) retain legal counsel experienced in the area of state securities registration and regulation under the Act to advise it on compliance with the securities laws of Connecticut and other jurisdictions ("Retained Counsel"); (c) direct Retained Counsel to prepare and submit all required registration statements and other required documents and fees to the Commissioner and to provide the Division Director with a signed opinion of 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 (d) refrain from issuing, offering or selling securities in or from Connecticut prior to receiving a written acknowledgement by Retained Counsel that the Commissioner has declared any such registration effective or that the Division Director has acknowledged the issuer’s claim of exemption or covered security status under Section 36b-21 of the Act; |
| 3. | WMD, its affiliates and successors in interest shall not offer or sell securities in Connecticut within the meaning of Section 36b-33 of the Act unless such offers or sales are effected through a registered broker-dealer or registered agent of issuer whose name is submitted to the Division in writing for approval at least thirty (30) days before the commencement of the offering; |
| 4. | Effective on the date this Consent Order is entered by the Commissioner, Bucciarelli shall refrain for five years from conducting the following activities in or from Connecticut, notwithstanding any otherwise applicable exclusion or exemption under the Act: (a) acting as an agent by representing a broker-dealer or issuer in effecting or attempting to effect purchases or sales of any “security” as that term is defined in Section 36b-3(17) of the Act; (b) transacting business as a broker-dealer; (c) transacting business as an investment adviser; (d) transacting business as an investment adviser agent; or (e) acting as a finder for compensation, splitting commissions or receiving referral fees, directly or indirectly, in connection with any recommendation, sale or purchase of securities, as defined in Section 36b-3(17) of the Act; and |
| 5. | Nothing in this Order shall preclude Bucciarelli or WMD, upon a showing of good cause, from applying in writing for relief from the provisions paragraphs (2), (3) and (4) of this Consent Order after three (3) years have elapsed from the entry hereof. The grant of such relief shall be in the sole discretion of the Commissioner; |
CONSENT ORDER
NOW THEREFORE, the Commissioner enters the following:
| 1. | The Sanctions and Remedial Measures set forth above be and are hereby entered; |
| 2. | Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against WMD, Bucciarelli or both based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed by the party to whom such terms relate or if any representations made by WMD or Bucciarelli and reflected herein are subsequently discovered to be untrue; |
| 3. | WMD and Bucciarelli agree not to take any action or to make or permit to be made any public statement denying, directly or indirectly, any finding in this Consent Order or creating the impression that this Consent Order is without factual basis; and |
| 3. | This Consent Order shall become final when issued. |
________/s/_________
Howard F. Pitkin
Banking Commissioner
So ordered at Hartford, Connecticut
this 6th day of February 2007.
this 6th day of February 2007.
CONSENT TO ENTRY OF ORDER
I, John A. Bucciarelli, state on behalf WMD Task Force, Inc. that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of WMD Task Force, Inc.; that WMD Task Force, Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that WMD Task Force, Inc. voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.
WMD Task Force, Inc.
By
________/s/_______________
John A. Bucciarelli
President
State of: Connecticut
County of: New Haven
On this the first day of February 2007, before me, the undersigned officer, personally appeared John A. Bucciarelli who acknowledged himself to be the president of WMD Task Force, Inc., a corporation, and that he, as such president, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herself as president.
In witness whereof I hereunto set my hand.
_______________/s/_____________
Notary Public
Date Commission Expires: 3/31/09
________/s/_______________
John A. Bucciarelli
(Individually)
Subscribed and sworn to before me this
1st day of Feb. 2007.
_______________/s/_____________
Notary Public
My Commission Expires: 3-31-09