The Connecticut Department of Banking has penalized the brokerage subsidiary of the state bankers association for violating state securities laws.
The department accused Connecticut Association Securities Inc. of conducting securities business from seven unregistered offices and failing to supervise its agents adequately.
The Willimantic Chronicle has also reported that Connecticut Association Securities, known as CTAS, was being investigated by the National Association of Securities Dealers. But NASD officials firmly denied there is any such investigation.
CTAS is owned by the Connecticut Bankers Association and a group of the state's banks. The three-year-old brokerage sells securities to customers through bank offices.
"We've asked them to take remedial steps and other obligations to correct the problems," said David Tedeschi, spokesman for the state banking agency. "From that standpoint, it's a pretty strong stipulation and agreement."
Under the agreement to which CTAS has consented, the state required that the brokerage develop policies to correct the problems and ensure that its agents don't sell securities without passing appropriate exams. The state demanded that CTAS hire an independent consultant to review its internal procedures, then report to the state.
The firm must also update the state every quarter on any complaints against it or its employees and must ensure that each branch manager passes a securities exam.
In addition, CTAS agreed to pay a $500 fine, plus another $500 to cover the state's investigation costs. Because CTAS consented to the penalties, it avoided the possibility of a revocation of its broker-dealer license.
CTAS president Robert F. Brawders Jr. said the violations stemmed from a 1994 revision of state law governing supervision of offices. This change created requirements that differed from those set by the NASD.
CTAS is not appealing the fine or the state's decision.
"We certainly viewed one way as being a reasonable approach, and the department viewed it differently," said Mr. Brawders. "We have to make sure we comply with both."
