| * * * * * * * * * * * * * * * * * * IN THE MATTER OF: QUINTIN GEOFFREY MARSHALL ARGYLE CAPITAL, LLC ("Argyle") (collectively "Respondents") * * * * * * * * * * * * * * * * * * |
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ORDER IMPOSING FINE DOCKET NO. CF-2007-7130-S |
WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the Connecticut General Statutes, 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 of the Department of Banking (“Department”), conducted an investigation into the activities of Respondents, pursuant to Section 36b-26(a) of the Act, to determine if Respondents had violated, were violating or were about to violate provisions of the Act or Regulations;
WHEREAS, on June 22, 2007, the Commissioner, acting pursuant to Section 36b-27(a) of the Act as amended by Public Act 07-91, Section 4-182(c) of the Connecticut General Statutes and Section 36b-27(d) of the Act as in effect prior to October 1, 2003, issued an Order to Cease and Desist (“Order”), Notice of Intent to Fine (“Fine Notice”), and Notice of Right to Hearing against Respondents (collectively “Notice”), which Notice is incorporated herein by reference;
WHEREAS, the Fine Notice stated that the Commissioner intended to impose a fine against Respondents, that a hearing would be held on the matters alleged in the Fine Notice on August 13, 2007 (“Fine Hearing”), and that if Respondents failed to appear at the Fine Hearing, the Commissioner may order that a maximum fine of Twenty Thousand Dollars ($20,000) be imposed upon Marshall and a maximum fine of Twenty Thousand Dollars ($20,000) be imposed upon Argyle;
WHEREAS, on June 25, 2007, the Notice was sent to by registered mail, return receipt requested, to Marshall (Registered Mail No. RB028034066US);
WHEREAS, on June 25, 2007, the Notice was sent to by registered mail, return receipt requested, to Argyle (Registered Mail No. RB028034070US);
WHEREAS, on July 9, 2007, the Notice sent to Marshall was returned to the Department marked “Return to Sender – Not Deliverable as Addressed Forwarding Order Expired”;
WHEREAS, on July 9, 2007, the Notice sent to Argyle was returned to the Department marked “Return to Sender”;
WHEREAS, on July 13, 2007, the Notice was served on the Commissioner, and on July 31, 2007, Notice of Service on the Banking Commissioner was sent to Marshall in accordance with Section 36b-33(h) of the Act;
WHEREAS, on July 13, 2007, the Notice was served on the Commissioner, and on July 31, 2007, Notice of Service on the Banking Commissioner was sent to Argyle in accordance with Section 36b-33(h) of the Act;
WHEREAS, Section 36b-33(h) of the Act provides, in relevant part, that “[w]hen any person . . . engages in conduct prohibited or made actionable by sections 36b-2 to 36b-33, inclusive, or any regulation or order thereunder, and such person has not filed a consent to service of process under subsection (g) of this section and personal jurisdiction over such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to such person’s appointment of the commissioner . . . to be such person’s attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against such person . . . which grows out of that conduct and which is brought under said sections or any regulation or order thereunder, with the same force and validity as if served on such person personally. Service may be made by leaving a copy of the process in the office of the commissioner”;
WHEREAS, the Commissioner alleged in the Notice that Respondents offered and sold unregistered securities to at least one Connecticut investor, which securities were not registered in Connecticut under the Act, in violation of Section 36b-16 of the Act, which forms a basis for the imposition of a fine against Respondents under Section 36b-27(d) of the Act as in effect prior to October 1, 2003;
WHEREAS, the Commissioner alleged in the Notice that the conduct of Respondents constitutes, in connection with the offer, sale or purchase of any security, directly or indirectly, making an untrue statement of material fact or omitting to state a material fact necessary in order to make the statement made, in the light of the circumstances under which they are made, not misleading, which constitutes a violation of Section 36b-4(a) of the Act and forms a basis for the imposition of a fine against Respondents under Section 36b-27(d) of the Act as in effect prior to October 1, 2003;
WHEREAS, Attorney Paul A. Bobruff, was appointed Hearing Officer in this matter;
WHEREAS, Attorney Stacey Serrano Sarlo represented the Department at the Fine Hearing;
WHEREAS, on August 13, 2007, Respondents failed to appear at the Fine Hearing;
WHEREAS, Section 36a-1-31(b) of the Regulations provides, in pertinent part, that “[w]hen a party fails to appear at a scheduled hearing, the allegations against the party may be deemed admitted”;
WHEREAS, Section 36b-27(d)(2) of the Act prior to October 1, 2003 provides, in pertinent part, that “[i]f such person fails to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person”;
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
| 1. | The facts as set forth in paragraphs 6 through 11, inclusive, of the Notice shall constitute findings of fact within the meaning of Section 4-180(c) of the Connecticut General Statutes, and the conclusions, set forth in paragraphs 12 through 15, inclusive, of the Notice, shall constitute conclusions of law within the meaning of Section 4-180(c) of the Connecticut General Statutes and Section 36a-1-52 of the Regulations of Connecticut State Agencies. |
| 2. | The Commissioner complied with the provisions of Section 36b-27(d) of the Act. |
| 3. | Section 36b-31(a) of the Act provides, in pertinent part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive”; and Section 36b-31(b) of the Act provides, in pertinent part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive.” |
| 4. |
Section 36b-31(b) of the Act requires that the Commissioner find that an order is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 33b-33, inclusive. Although the Commissioner is not required to make all these findings to make an order, since Section 36b-31(b) is clearly in the disjunctive, all of these elements are present in this case. While the term “public interest” is not defined in the Act, courts have determined that words of wide generality, like “public interest”, must take their meaning from the substantive provisions and purposes of the legislation and the words must be interpreted in the context of the regulatory scheme, see NAACP v. Federal Power Comm’n, 425 U.S. 662 (1975); N.Y. Central Sec. Corp. v. United States, 287 U.S. 12 (1932); and “it is for the legislature to determine what is in the public interest . . .”. Brosnan v. Sacred Heart Univ., 1997 Conn. Super. Lexis 2815, *47 (1997) (Internal quotation marks omitted.) (Quoting West v. Egan, 18 Conn. Supp. 447, 450 (1953)). “‘[T]he primary purpose behind . . . [the ACT] was to institute comprehensive registration requirements and thereby improve surveillance of securities trading.’ (Internal quotation marks omitted.) State v. Andresen, 256 Conn. 313, 329, 773 A.2d 328 (2001). ‘[S]tate securities laws, or “blue sky laws,” are remedial statutes . . . see also Securities & Exchange Commission v. C.M. Joiner Leasing Corp., 320 U.S. 344, 353, 64 S.Ct. 120, 88 L.Ed. 88 (1943) (noting that state securities laws have “dominating purpose to prevent and punish fraudulent floating of securities”); Connecticut National Bank v. Giacomi, 233 Conn. 304, 320, 659 A.2d 1166 (1995) (noting that state securities laws contain antifraud provisions, require registration of brokers and sellers of securities and registration of securities themselves); People v. Landes, 84 N.Y.2d 655, 660, 645 N.E.2d 716, 621 N.Y.S.2d 283 (1994) (“purpose of [New York securities] statute is remedial: to protect the public from fraudulent exploitation in the offering and sale of securities”). In 1977, the Connecticut legislature formally adopted the Uniform Securities Act (Uniform Act).” (Citation omitted; footnote omitted; internal quotation marks omitted.) State v. Andresen, supra, 256 Conn. 322-23.” Papic v. Burke, 2007 Conn. Super. LEXIS 820 (Conn. Super. Ct. 2007) Thus, the “public interest” as it relates to the purposes of the Act includes requiring registration of securities and protecting the public from fraudulent exploitation in the offering and sale of securities, which are both key elements in the network of safeguards the legislature has enacted to protect the public investor. In this case, Respondents’ actions in violation of the Act involved disregarding a regulatory prohibition on offering and selling unregistered securities, and in connection with the offer and sale of unregistered securities, directly or indirectly, making an untrue statement of material fact or omitting to state a material fact necessary in order to make the statement made, in light of the circumstances under which they are made, not misleading by guaranteeing a return of the monies invested and failing to disclose investment risks. In addition, an investor was harmed in connection with such offer and sale by Respondents’ failure to provide the investor the stated return on investment. Consequently, the Commissioner finds that based upon the nature of Respondents’ actions in violation of the Act, the facts require the imposition of a fine against Respondents for Respondents’ violations of Section 36b-16 of the Act and 36b-4(a) of the Act in an amount equal to the maximum permitted by Section 36a-27(d) of the Act as in effect prior to October 1, 2003 and that this order imposing fine against Respondents is necessary and appropriate in the public interest and for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of Sections 36b-2 to 36b-33, inclusive, of the Act.
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III. ORDER
Having read the record, I hereby ORDER, pursuant to Section 36b-27(a) of the Act, as amended, and Section 36b-27(d) of the Act, that:
| 1. | A fine of Twenty Thousand Dollars ($20,000) be imposed against Quintin Geoffrey Marshall, to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 30 days from the date the Order is mailed; |
| 2. | A fine of Twenty Thousand Dollars ($20,000) be imposed upon Argyle Capital, LLC, to be remitted to the Department of Banking by cashier’s check, certified check or money order, made payable to “Treasurer, State of Connecticut”, no later than 30 days from the date the Order is mailed; and |
| 3. | This Order shall become effective when mailed. |
Dated at Hartford, Connecticut
this 24th day of October 2007.
________/s/_________
Howard F. Pitkin
Banking Commissioner
This Order was mailed by registered mail,
return receipt requested, to Respondents
on October 24, 2007.
Quintin Geoffrey Marshall Registered Mail No. RB027866805US
150 Southfield Avenue, Apartment 2406
Stamford, CT 06902
Argyle Capital, LLC Registered Mail No. RB027866814US
239 Glenville Road, Suite 300
Greenwich, CT 06831