Summer 2023 Securities Bulletin

State of Connecticut
Department of Banking

Securities and Business Investments Division
Securities Bulletin

Vol. XXXVII No. 2 - Summer 2023

Features

COVID-Related Deferral of Annual Financial Reporting Requirement for Connecticut-Registered Investment Advisers No Longer in Effect

Quarterly Statistical Summaries

Enforcement and Other Highlights

Administrative Actions

Consent Orders

Stipulation and Agreements

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COVID-Related Deferral of Annual Financial Reporting Requirement for Connecticut-Registered Investment Advisers No Longer in Effect

On April 9, 2020, the Securities and Business Investments Division of the Department of Banking issued an advisory granting Connecticut-registered investment advisers an interim deferral of annual financial reporting requirements. The advisory was issued in response to the coronavirus (COVID) pandemic.

The national Public Health Emergency relating to COVID expired on May 11, 2023, and the State of Connecticut Department of Public Health followed suit on June 13, 2023.

Accordingly, the Division is rescinding the April 9, 2020 advisory.

Section 36b-14(b)(1) of the Connecticut Uniform Securities Act provides that: “Every registered investment adviser shall file such financial reports as the commissioner by regulation prescribes.” Section 36b-31-14d(a) of the Regulations under the Act states that: “[e]ach registered investment adviser shall, within 90 days following the end of its fiscal or calendar year, file with the commissioner a report of its financial condition as of the end of its fiscal year.” The financial reporting obligation applies to 1) registered investment advisers with a Connecticut principal place of business; and 2) advisers with an out-of-state principal place of business who are not registered or licensed in their home state but registered in Connecticut.

Going forward, all Connecticut-registered investment advisers should file their report of financial condition in a timely manner within 90 days following the close of their fiscal or calendar year, and include an Investment Advisory Registrant's Certificate with the financial report.

Administrative Actions

Blackstone Wealth Solutions LLC, Paul Brian Kopman (CRD No. 2482456) and Matthew Craig Hults (CRD No. 3196510)

On May 23, 2023, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Right to Hearing (Matter No. CRF-23-202114-S) with respect to Blackstone Wealth Solutions LLC, a purported precious metals dealer located 1t 13750 West Colonial Drive, Suite 360, Winter Garden, Florida 34787. Also named in the action were Paul Brian Kopman, Chief Executive Officer of the firm, and Matthew Craig Hults, the firm’s President. Blackstone Wealth Solutions LLC is currently inactive.

The action alleged that beginning in 2019, Kopman and Hults convinced an elderly Connecticut investor to entrust the investor’s funds to them for the purpose of investing. Ultimately, without the investor's knowledge or authorization, over $300,000 of the investor's money was transferred from the investor’s securities brokerage account to a business account under the control of Blackstone Wealth Solutions LLC. Kopman purportedly impersonated the investor in facilitating the transfer of funds from the brokerage firm. When the investor later confronted Kopman, Kopman claimed that he had invested the withdrawn sums in silver, but was unable to provide the investor with proof that such investments had, in fact, been made. In addition, Respondents allegedly failed to return the investor’s funds.

The action alleged that the Respondents violated the antifraud provisions in Section 36b-5(a) of the Connecticut Uniform Securities Act; that the Respondents engaged in dishonest or unethical practices in contravention of Section 36b-5(f) of the Act; that Blackstone Wealth Solutions LLC transacted business as an unregistered investment adviser in violation of Section 36b-6(c)(1) of the Act; and that Kopman and Hults violated Section 36b-6(c)(2) of the Act by transacting business as unregistered investment adviser agents.

The Respondents were afforded an opportunity to request a hearing on the allegations in the Order to Cease and Desist, Order to Make Restitution and Notice of Intent to Fine.

Consent Orders

Black Diamond Lifeplan Fund, Limited Partnership, Evergreen II Lifeplan Fund, Limited Partnership, Evergreen III Fund Management, LLC, Blue Diamond Fund, LLC and Michael Gissas

On June 20, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-20216-S) with respect to investment funds Black Diamond Lifeplan Fund, Limited Partnership, Evergreen II Lifeplan Fund, Limited Partnership and Evergreen III Fund Management LLC, all of 3990 E SR 44, Suite 202, Wildwood, Florida 34785. Also named were Florida-based Blue Diamond Fund, LLC, general partner of the funds, and Michael Gissas of Bristol, Connecticut who was the manager of Blue Diamond Fund, LLC as well as a control person of the three investment funds.

The Consent Order alleged that, from June 2012 to January 2016, Michael Gissas sold interests in the three funds to multiple investors at a time when such interests were not registered under Section 36b-16 of the Connecticut Uniform Securities Act. The Consent Order further alleged that Michael Gissas violated Section 36b-23 of the Act by making materially false or misleading statements to the Commissioner during an investigation. Such statements concerned Michael Gissas' involvement in the activities of nonparty Retirement Evolution Group, LLC and its efforts to raise investment funds for Complete Business Solutions Group, Inc. d/b/a Par Funding, also a nonparty.

The Consent Order directed the respondents to cease and desist from regulatory violations. In addition, the Consent Order fined Michael Gissas $15,000 and barred him for seven years from offering or selling securities in or from Connecticut, transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent and acting in any other capacity requiring a license or registration from the Commissioner.

Clipper Capital Group LLC, T&T Capital Partners LLC and Steven Alan Tavares (CRD No. 3102434)

On June 7, 2023, the Banking Commissioner entered a Consent Order (No. CO-22- 202022-S) with respect to Clipper Capital Group LLC of 6 Williams Street, Mystic, Connecticut 06355, T&T Capital Partners LLC of 735 Broad Street Extension, Waterford, Connecticut 06385, and Steven Alan Tavares, managing member and control person of Clipper Capital Group LLC and managing partner of T&T Capital Partners LLC. Clipper Capital Group LLC was first formed for the purpose of buying, refurbishing and selling properties, and later transitioned into a lending business. T&T Capital Partners LLC was in the business of commercial lending, and Tavares was involved in “flipping” real estate and engaging in commercial lending.

The Consent Order followed a May 2, 2023 Amended and Restated Order to Cease and Desist, Amended and Restated Order to Make Restitution, Amended and Restated Notice of Intent to Fine and Amended and Restated Notice of Right to Hearing (No. CRF-22-202022-S) against the Respondents. The May 2, 2023 action had alleged that Respondents violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities in the form of promissory notes to investors in Connecticut and Florida. In addition, the action had alleged that the Respondents violated the antifraud provisions in Section 36b-4(a) of the Act by, among other things, 1) failing to disclose that the terms of the promissory notes could be unilaterally extended by Respondents without the affected investor's approval or consent; and 2) participating in a course of conduct resulting in the affected investors receiving inflated and misleading account statements concerning the value of the securities. The action also alleged that Tavares violated Section 36b-23 of the Act by making materially misleading statements or omissions to the agency in connection with a Division investigation.

The June 7, 2023 Consent Order resolved the allegations in the May 2, 2023 action without the need for an administrative hearing. Acknowledging that Respondent Tavares had paid $192,766 in restitution to the affected promissory note investors, the Consent Order fined Respondents $10,000 and directed them to cease and desist from regulatory violations.

Greenfield Financial Services, LLC (CRD No. 166095)

On June 6, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-202122-S) with respect to Greenfield Financial Services, LLC, a Connecticut-registered investment adviser located at 335 Shore Drive, Coventry, Connecticut 06238.

The Consent Order alleged that, in conjunction with an agency examination and investigation of the firm, the firm violated Section 36b-23 of the Connecticut Uniform Securities Act by making a false or misleading statement to the Commissioner concerning the extent of trading in a specific stock and also violated Section 36b-14(d) of the Act by failing to provide the Commissioner with all of the requested copies of client monthly brokerage account statements.

The Consent Order fined the firm $10,000 and directed that it refrain from regulatory violations.

Terrascheduler LLC and Richard Craig Hamar

On May 8, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-202210-S) with respect to Terrascheduler LLC, a now dissolved Connecticut software development company, and Richard Craig Hamar of Norwich, Connecticut, Chief Executive Officer of the company. The Consent Order alleged that in 2021, the Respondents violated Section 36b-16 of the Connecticut Uniform Securities Act by selling an unregistered security to a California investor. The security consisted of a percentage interest in Terrascheduler LLC for which the investor paid $10,000. Following the investment, the Respondents privately agreed to pay back the investor in six installments by July 8, 2023. Acknowledging this arrangement, the Consent Order fined the Respondents $1,750, but provided that a failure to repay the investor as represented would result in a $10,000 fine and an order of restitution issued by the agency. The Consent Order also directed the Respondents to refrain from regulatory violations.

Pratik KC a/k/a Pratik Chand KC

On May 3, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-202135-S) with respect to Pratik KC a/k/a Pratik Chand KC of Mansfield Center, Connecticut.

The Consent Order alleged that, from approximately 2017 to 2021, the Respondent sold “Investment/Loan Agreement” securities to at least thirteen Connecticut investors, promising to invest the proceeds in a cryptocurrency or technology business the Respondent owned. The Respondent allegedly represented that investors would receive a minimum return on their investment and that investors could obtain a return of their funds upon request. Investors purportedly were not told that at least one earlier investor had sued the Respondent for failing to return a $10,000 investment.

The Consent Order further alleged that the Respondent violated the antifraud provisions in Section 36b-4 of the Connecticut Uniform Securities Act as well as Section 36b-16 of the Act prohibiting the sale of unregistered securities.

The Consent Order permanently barred the Respondent from selling securities in or from Connecticut, transacting business in or from Connecticut as a broker-dealer, agent, investment adviser or investment adviser agent and acting in any other capacity requiring a license or registration with the Commissioner. Given the Respondent’s demonstrated inability to pay the $41,500 restitutionary amount and the $50,000 fine that otherwise would have been imposed against him, the Consent Order stayed the imposition of those amounts for three years, following which the fine, although not the order of restitution, would be waived if the Respondent remained unable to pay the fine.

Stipulation and Agreements

Parnassus Funds and The Parnassus Income Funds

On June 29, 2023, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-23-20213-S) with Parnassus Funds and The Parnassus Income Funds, both of One Market Street, Suite 1600, San Francisco, California. Each of the funds is an open-end management investment company. The Stipulation and Agreement alleged that the funds failed to file renewal notices for calendar years 2019, 2020 and 2021. Section 36b-21(c) of the Connecticut Uniform Securities Act prohibits the sale of investment company shares absent the filing of a notice. The Stipulation and Agreement acknowledged the funds' representation that they had relied on a third party service provider to make the filings, and that the third party service provider had terminated notice filings for the affected portfolios without authorization from the funds.

In resolution of the matter, the funds agreed to refrain from regulatory violations. The funds also agreed to pay $8,500 to the department, $5,000 of which constituted reimbursement for past due notice filing fees and $3,500 of which constituted an administrative fine.

A.G.P./Alliance Global Partners, LLC (CRD No. 8361)

On May 3, 2023, the Banking Commissioner entered into a Stipulation and Agreement (No. ST-23-202312-S) with A.G.P./Alliance Global Partners, LLC of 88 Post Road West, Westport, Connecticut. The firm is registered as a broker-dealer under the Connecticut Uniform Securities Act.

The Stipulation and Agreement alleged that from approximately January 1, 2018 through December 31, 2019, the firm, through its broker-dealer agents, effected secondary market sales of PetroChina Co., Ltd., Spark Infrastructure Group, and Goldmoney, Inc. to eight Connecticut investors at a time when the securities were not registered as required by Section 36b-16 of the Act. The affected Connecticut investors no longer hold the securities, and the firm extended a $21,775.34 voluntary reimbursement offer to those investors who sold the securities at a loss.

In resolution of the matter, the firm agreed to refrain from violative conduct and to pay a $2,500 fine to the department.

Statistical Summary

Licensing At A Glance

at the end of the quarter

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Broker-dealers Registered

2,020

2,013

Broker-dealer Agents Registered

203,752

206,403

Broker-dealer Branch Offices Registered

2,314

2,357

Investment Advisers Registered

429

430

SEC Registered Advisers Filing Notice

2,476

2,484

Investment Adviser Agents Registered

15,400

15,260

Exempt Reporting Advisers

180

186

Agents of Issuer Registered

1

1

Conditional Registrations

0

0

Securities and Business
Opportunity Filings

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Offerings Reviewed

27

19

46

Investment Company Notice Filings

430

405

835

Exemptions and Exemptive Notices

1,376

1,425

2,801

Examinations

Broker-dealers

17

15

32

Investment Advisers

13

11

24

Securities Investigations

Opened

9

8

17

Closed

2

9

11

Ongoing as of End of Quarter

94

95

Subpoenas issued

13

7

20

Matters referred from Attorney General

0

0

0

Matters referred from Other Agencies

0

0

0

Business Opportunity Investigations

Investigations Opened

0

0

0

Investigations Closed

0

0

0

Ongoing as of End of Quarter

1

1

Enforcement: Remedies and Sanctions

Notices of Intent to Deny (Licensing)

0

0

0

Notices of Intent to Suspend (Licensing)

0

0

0

Notices of Intent to Revoke (Licensing)

0

0

0

Denial Orders (Licensing)

0

0

0

Suspension Orders (Licensing)

0

0

0

Revocation Orders (Licensing)

0

0

0

Notices of Intent to Fine

0

2

2

Orders Imposing Fine

0

0

0

Cease and Desist Orders

0

2

2

Notices of Intent to Issue Stop Order

0

0

0

Activity Restrictions/Bars

3

2

5

Stop Orders

0

0

0

Vacating/Withdrawal/ Modification Orders

0

0

0

Restitutionary Orders and Disgorgement Orders

1

2

3

Injunctive Relief Obtained

0

0

0

Proceedings and Settlements

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Administrative Actions

0

2

2

Consent Orders

4

5

9

Stipulation and Agreements

1

2

3

Monetary Relief*

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Monetary Sanctions Imposed

$629,868

$47,750

$677,618

Portion attributable to settlements

$629,868

$47,750

$677,618

Attributable to Court-Ordered Penalties

0

0

0

Financial Literacy Contribution

0

0

0

Restitution or Other Monetary Relief
( includes rescission offer amounts
)

$551,959

$224,541

$776,500

Cents eliminated

Securities Referrals

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Year to Date

Criminal Matters

0

0

0

Civil (Attorney General)

1

0

1

Other Agency Referrals

0

0

0