Substitute House Bill No. 6130

Public Act No. 01-48

AN ACT CONCERNING THE CONNECTICUT UNIFORM SECURITIES ACT AND NOTICES ISSUED BY THE DEPARTMENT OF BANKING.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (5) of section 36b-3 of the general statutes is repealed and the following is substituted in lieu thereof:

(5) "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for [his] such person's own account. "Broker-dealer" does not include (A) an agent, (B) an issuer, (C) [a bank and trust company, a national banking association, a savings bank, a savings and loan association, a federal savings and loan association, a credit union, a federal credit union, or a trust company] a bank, as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, when conducting activities that would except it from the definitions of "broker" or "dealer" under Sections 3(a)(4) or 3(a)(5) of the Securities Exchange Act of 1934, (D) a person who has no place of business in this state if [he] such person effects transactions in this state exclusively with or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, or (iii) a bank and trust company, a national banking association, a savings bank, a savings and loan association, a federal savings and loan association, a credit union, a federal credit union, a trust company, an insurance company, an investment company as defined in the Investment Company Act of 1940, a pension or profit-sharing trust, or other financial institution or institutional buyer, whether acting for itself or as trustee, or (E) such other persons not within the intent of this subdivision as the commissioner may by regulation or order determine.

Sec. 2. Subdivision (10) of section 36b-3 of the general statutes is repealed and the following is substituted in lieu thereof:

(10) "Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" does not include (A) an investment [advisor] adviser agent; (B) [a bank and trust company, a national banking association, a savings bank, a savings and loan association, a federal savings and loan association, a credit union, a federal credit union or a trust company] a bank, as defined in Section 202(a)(2) of the Investment Advisers Act of 1940, or a bank holding company, as defined in the Bank Holding Company Act of 1956, that is excepted from the definition of "investment adviser" in Section 202(a)(11) of the Investment Advisers Act of 1940; (C) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of [his] such person's profession; (D) a broker-dealer whose performance of these services is solely incidental to the conduct of [his] such person's business as a broker-dealer and who receives no special compensation for them; (E) a publisher of any bona fide newspaper, news magazine, or business or financial publication of general, regular, and paid circulation; (F) a person whose advice, analyses or reports relate only to securities exempted by subdivision (1) of subsection (a) of section 36b-21; (G) any insurance company under the supervision of the Insurance Commissioner or any affiliate thereof, as defined in subsection (b) of section 38a-129, when providing services to separate accounts of that insurance company or registered investment companies all of whose shares are owned by such insurance company or its insurance company affiliates or by the separate accounts of that insurance company or its insurance company affiliates; and (H) such other persons not within the intent of this subdivision as the commissioner may by regulation or order designate.

Sec. 3. Subdivision (1) of subsection (e) of section 36b-15 of the general statutes is repealed and the following is substituted in lieu thereof:

(e) (1) Withdrawal from registration as a broker-dealer, agent, investment adviser or investment adviser agent, or withdrawal of an application for registration as a broker-dealer, agent, investment adviser or investment adviser agent, becomes effective ninety days after receipt of an application to withdraw such registration or a notice of intent to withdraw such application for registration or within such shorter period of time as the commissioner may determine, unless a denial, revocation or suspension proceeding is pending when the application or notice is filed or a proceeding to deny, revoke, [or] suspend or to impose conditions upon the withdrawal is instituted within ninety days after the application or notice is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the commissioner by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the commissioner may nevertheless institute a denial, revocation or suspension proceeding under subsection (a) of this section within one year after withdrawal became effective.

Sec. 4. Section 36b-27 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Whenever it appears to the commissioner after an investigation that any person or persons have violated, are violating or are about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, 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, or that any person or persons have engaged in a dishonest or unethical practice in the securities or commodities business within the meaning of sections 36b-31-15a to 36b-31-15d, inclusive, of the regulations of Connecticut state agencies, the commissioner may in [his] the commissioner's discretion order the person or persons to cease and desist from 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, or from further engaging in such dishonest or unethical practice. After such an order is issued, the person or persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. Said hearing shall be held in accordance with the provisions of chapter 54.

(b) Whenever it appears to the commissioner, after an investigation, that any person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, 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, or that such person or persons have engaged in a dishonest or unethical practice in the securities or commodities business within the meaning of sections 36b-31-15a to 36b-31-15d, inclusive, of the regulations of Connecticut state agencies, the commissioner may, in addition to any other remedy under this section, (1) order the person or persons to make restitution of any sums shown to have been obtained in violation of any of the provisions of said sections or any such regulation, rule or order or as a result of such dishonest or unethical practice plus interest at the legal rate set forth in section 37-1, and (2) order the person or persons to provide disgorgement of any sums shown to have been obtained in violation of any of the provisions of said sections or any such regulation, rule or order or as a result of such dishonest or unethical practice. After such an order is issued, the person or persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. Said hearing shall be held in accordance with the provisions of chapter 54.

(c) The commissioner, in the commissioner's discretion, may order any person who directly or indirectly controls a person liable under subsection (b) of this section to make restitution or to provide disgorgement of any sums shown to have been obtained as a result of a dishonest or unethical practice or in violation of any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, or any regulation, rule or order adopted or issued under said sections. Such controlling person shall be liable jointly and severally with and to the same extent as the person liable under subsection (b) of this section, unless such controlling person allegedly liable under this subsection sustains the burden of proof that such person did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist. After such an order is issued, the person or persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. Said hearing shall be held in accordance with the provisions of chapter 54. There shall be contribution as in cases of contract among the several persons so liable under this subsection.

(d) (1) Whenever the commissioner finds as the result of an investigation that any person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, or any regulation, rule or order adopted or issued under said sections, the commissioner may send a notice to such person or persons by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. Any such notice shall include: (A) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (B) a short and plain statement of the matter asserted or charged; (C) the maximum fine that may be imposed for such violation; and (D) the time and place for the hearing. Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.

(2) The commissioner shall hold a hearing upon the charges made unless such person or persons fail to appear at the hearing. Said hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, or any regulation, rule or order adopted or issued under said sections, the commissioner may, in [his] the commissioner's discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding ten thousand dollars per violation be imposed upon such person or persons. If such person or persons fail 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 or persons. The commissioner shall send a copy of any order issued pursuant to this subsection by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to any person or persons named in such order.

(e) Whenever it appears to the commissioner that any person or persons have violated, are violating or are about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, 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, the commissioner may, in [his] the commissioner's discretion and in addition to any other remedy authorized by this section: (1) Bring an action in the superior court for the judicial district of Hartford to enjoin the acts or practices and to enforce compliance with sections 36b-2 to 36b-33, inclusive, as amended by this act, or any such regulation, rule or order. Upon a proper showing a permanent or temporary injunction, restraining order or writ of mandamus shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. The court shall not require the commissioner to post a bond; (2) seek a court order imposing a fine not to exceed ten thousand dollars per violation against any person found to have violated any order issued by the commissioner; or (3) apply to the superior court for the judicial district of Hartford for an order of restitution whereby the defendants in such action shall be ordered to make restitution of those sums shown by the commissioner to have been obtained by them in violation of any of the provisions of sections 36b-2 to 36b-33, inclusive, as amended by this act, plus interest at the rate set forth in section 37-3a. Such restitution shall, at the option of the court, be payable to the receiver or conservator appointed pursuant to this subsection, or directly to the persons whose assets were obtained in violation of any provision of sections 36b-2 to 36b-33, inclusive, as amended by this act.

(f) Any time after the issuance of an order or notice provided for in subsection (a), (b) or (c) or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing. The acceptance of a consent order shall be within the complete discretion of the commissioner. The consent order provided for in this subsection shall contain (1) an express waiver of the right to seek judicial review or otherwise challenge or contest the validity of the order or notice; (2) a provision that the order or notice may be used in construing the terms of the consent order; (3) a statement that the consent order shall become final when issued; (4) a specific assurance that none of the violations or dishonest or unethical practices alleged in the order or notice shall occur in the future; (5) such other terms and conditions as are necessary to further the purposes and policies of sections 36b-2 to 36b-33, inclusive, as amended by this act; (6) the signature of each of the individual respondents evidencing such respondent's consent; and (7) the signature of the commissioner or of the commissioner's authorized representative.

Sec. 5. Subsection (b) of section 36b-72 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) (1) Whenever it appears to the commissioner that any person or persons have violated any of the provisions of sections 36b-60 to 36b-80, inclusive, or any regulation, rule or order adopted or issued under said sections, the commissioner may send a notice to such person or persons by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. Any such notice shall include: (A) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (B) a short and plain statement of the matter asserted or charged; (C) the maximum fine that may be imposed for such violation; and (D) the time and place for the hearing. Such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.

(2) The commissioner shall hold a hearing upon the charges made unless such person or persons fail to appear at the hearing. Such hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person or persons have violated any of the provisions of sections 36b-60 to 36b-80, inclusive, or any regulation, rule or order adopted or issued under said sections, the commissioner may, in [his] the commissioner's discretion and in addition to any other remedy authorized by said sections, order that a [civil penalty] fine not exceeding ten thousand dollars per violation be imposed upon such person or persons. If such person or persons fail to appear at the hearing, the commissioner may, as the facts require, order that a [civil penalty] fine not exceeding ten thousand dollars per violation be imposed upon such person or persons. The commissioner shall send a copy of any order issued pursuant to this subsection by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to any person or persons named in such order.

Sec. 6. Section 36b-33 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) 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.

(b) Sections 36b-4, 36b-5, 36b-6 and 36b-24 apply to persons who buy or offer to buy when an offer to buy is made in this state, or when an offer to sell is made and accepted in this state.

(c) For the purpose of this section, 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.

(d) For the purpose of this section, an offer to buy or to sell is accepted in this state when acceptance is communicated to the offeror in this state and has not previously been communicated to the offeror, orally or in writing, outside this state; and acceptance is communicated to the offeror in this state, whether or not either party is then present in this state, when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed or any post office in this state in the case of a mailed acceptance.

(e) An offer to sell or to buy is not made in this state when the publisher circulates or there is circulated on [his] the publisher's behalf in this state any bona fide newspaper or other publication of general, regular, and paid circulation which is not published in this state, or which is published in this state but has had more than two-thirds of its circulation outside this state during the past twelve months, or a radio or television program originating outside this state is received in this state.

(f) Sections 36b-5, 36b-6 and 36b-24, so far as they apply to investment advisers and investment adviser agents, apply when any act instrumental in effecting prohibited conduct is done in this state, whether or not either party is then present in this state.

(g) Every applicant for registration under sections 36b-2 to 36b-33, inclusive, as amended by this act, every investment adviser exempt under subsection (e) of section 36b-6, and every issuer, other than the United States, any state, Canada, any other foreign government with which the United States currently maintains diplomatic relations, or any issuer of covered securities under Section 18(b)(1) of the Securities Act of 1933, which proposes to offer a security in this state through any person acting on an agency basis in the common-law sense shall file with the commissioner, in such form as [he] the commissioner by regulation prescribes, an irrevocable consent appointing the commissioner or [his] the commissioner's successor in office to be his or her attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against him or her or his or her successor executor or administrator which arises under sections 36b-2 to 36b-33, inclusive, as amended by this act, or any regulation or order thereunder after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed such a consent in connection with a previous registration need not file another. Service may be made by leaving a copy of the process in the office of the commissioner, but it is not effective unless (1) the plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the defendant or respondent at [his] the defendant's or respondent's last address on file with the commissioner, and (2) the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

(h) When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by sections 36b-2 to 36b-33, inclusive, as amended by this act, or any regulation or order thereunder, and [he] such person has not filed a consent to service of process under subsection (g) of this section and personal jurisdiction over [him] such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to [his] such person's appointment of the commissioner or [his] the commissioner's successor in office to be [his] such person's attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against [him] such person or [his] such person's successor executor or administrator 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 [him] such person personally. Service may be made by leaving a copy of the process in the office of the commissioner, and it is not effective unless (1) the plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the defendant or respondent at [his] the defendant's or respondent's last known address or takes other steps which are reasonably calculated to give actual notice, and (2) the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

Sec. 7. Section 36b-62 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Prior to the sale or offer for sale of a business opportunity the seller shall register said business opportunity with the commissioner by: (1) Filing a copy of the disclosure statement required by section 36b-63; (2) furnishing a bond in accordance with the provisions of section 36b-64; (3) providing a sworn to and certified statement containing the information required by section 36b-65; (4) providing the commissioner in accordance with subsection (b) of this section with an irrevocable consent appointing the commissioner or [his] the commissioner's successor in office to be [his] such seller's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding which arises under sections 36b-60 to 36b-80, inclusive, or any regulation or order adopted or issued under the provisions of said sections; and (5) submitting a nonrefundable registration fee of four hundred dollars.

(b) Every seller proposing to sell or offer for sale a business opportunity in this state or from this state through any person acting on an agency basis as determined by reference to principles of common law shall file with the commissioner, in such form as [he] the commissioner by regulation or order prescribes, an irrevocable consent appointing [said] the commissioner or [his] the commissioner's successor in office to be [his] the seller's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding against [him] the seller or [his] the seller's successor executor or administrator which arises under sections 36b-60 to 36b-80, inclusive, or any regulation or order adopted or issued under said sections after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. Service may be made by leaving a copy of the process in the office of the commissioner, but such service shall not be effective unless (1) the plaintiff, who may be the commissioner in a suit, action or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the defendant or respondent at [his] the defendant's or respondent's last address on file with the commissioner, and (2) the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

(c) When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by sections 36b-60 to 36b-80, inclusive, or any regulation or order adopted or issued under said sections, and [he] such person has not filed a consent to service of process under subsection (b) of this section and personal jurisdiction over [him] such person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to [his] such person's appointment of the commissioner or [his] the commissioner's successor in office to be [his] such person's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding against [him] such person or [his] such person's successor executor or administrator which grows out of that conduct and which is brought under said sections or any regulation or order adopted or issued under said sections, with the same force and validity as if served on [him] such person personally. Service may be made by leaving a copy of the process in the office of the commissioner, but such service shall not be effective unless (1) the plaintiff, who may be the commissioner in a suit, action or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the defendant or respondent at [his] the defendant's or respondent's last known address, and (2) the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

(d) The registration of a business opportunity under this section shall become effective on order of the commissioner.

(e) (1) When any business opportunities have been sold or offered for sale without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, the seller thereof may apply in writing on forms designated by the commissioner for the postsale registration of such business opportunities.

(2) A seller who seeks to register a business opportunity which has been sold or offered for sale without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, shall submit the following to the commissioner:

(A) The documents, information and registration fee required by subsection (a) of this section;

(B) A single document, signed and sworn to by an executive officer of the seller, which contains an explanatory statement and a statement of nonprejudice;

(i) The explanatory statement shall include the following information:

(aa) A statement that business opportunities were sold or offered for sale without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive;

(bb) A statement that, to induce each purchaser-investor to whom a business opportunity has been sold in violation of sections 36b-60 to 36b-80, inclusive, to sign the statement of nonprejudice, the document is being prepared for presentation to that purchaser-investor;

(cc) A full and complete statement of the remedies provided to the purchaser-investor under section 36b-74;

(dd) A statement containing any other material facts relating to the sale or offer for sale of the unregistered business opportunities; and

(ee) The most recent balance sheet and income statement of the seller.

(ii) The statement of nonprejudice shall provide:

(aa) That the purchaser-investor to whom a business opportunity was sold without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, has read the explanatory statement;

(bb) That the purchaser-investor to whom a business opportunity was sold without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, is satisfied that he or she will not be defrauded, damaged or prejudiced by the postsale registration of the business opportunity; and

(cc) That each purchaser-investor to whom a business opportunity has been sold without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, has not waived any of his or her rights under said sections by signing the statement.

(3) The seller shall file the document containing both the explanatory statement and the statement of nonprejudice with the commissioner for review before the seller mails the document to each purchaser-investor to whom an unregistered business opportunity has been sold. The commissioner may object to the content of the document but shall in no way pass upon its truthfulness. Following review by the commissioner, the seller shall send the document by certified mail, return receipt requested, to each purchaser-investor to whom an unregistered business opportunity has been sold and shall submit copies of all return receipts to the commissioner. The seller shall certify that each purchaser-investor to whom an unregistered business opportunity was sold has signed the document, and shall return the signed documents to the commissioner. The seller shall also furnish the commissioner with a list of the names, addresses and telephone numbers of those purchaser-investors to whom business opportunities have been sold without compliance with the registration provisions of sections 36b-60 to 36b-80, inclusive, and the amount of payment furnished by each purchaser-investor for the business opportunity.

(4) If it appears to the commissioner that no person has been defrauded, prejudiced or damaged by such noncompliance or sale and that no persons will be defrauded, prejudiced or damaged by such postsale registration, the commissioner may permit those business opportunities to be registered upon the payment of fifty dollars plus the fees prescribed in section 36b-65. Registration under the provisions of this subsection shall not affect the prosecution of a violation of any provision of sections 36b-60 to 36b-80, inclusive.

Sec. 8. Subdivision (1) of subsection (a) of section 36a-50 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes, regulations, rules or orders alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.

Sec. 9. Subsection (a) of section 36a-51 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The commissioner may suspend, revoke or refuse to renew any license issued by the commissioner under any provision of the general statutes by sending a notice to the licensee by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the licensee on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes, regulations, rules or orders involved; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that the licensee may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.

Sec. 10. Subsection (a) of section 36a-52 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule, or order adopted or issued thereunder, the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt, or seven days after mailing or sending. Any such notice shall include: (1) A statement of the time, place, and nature of the hearing; (2) a statement of the legal authority and jurisdiction under which the hearing is to be held; (3) a reference to the particular sections of the general statutes, regulations, rules or orders alleged to have been violated; (4) a short and plain statement of the matters asserted; and (5) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unless the person fails to appear at the hearing. After the hearing, the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice. If the person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner shall issue an order to cease and desist against the person. No such order shall be issued except in accordance with the provisions of chapter 54.

Sec. 11. Subsection (a) of section 36a-53 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Whenever the commissioner finds as the result of an investigation that any officer or director of any Connecticut bank or Connecticut credit union (1) has violated or is violating any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition imposed in writing by the commissioner, (2) has breached or is breaching any written agreement with the commissioner, (3) has engaged or participated in or is engaging or participating in any unsafe or unsound practice in connection with any bank, Connecticut credit union or federal credit union, (4) has been or is charged in any information, indictment or complaint with the commission of or participation in a crime which is punishable by imprisonment for a term exceeding one year under state or federal law, and continued service or participation by such officer or director may pose a threat to the interests of depositors or members, or threatens to impair public confidence in any bank, Connecticut credit union or federal credit union, (5) has used or is using such officer's or director's official position in a manner contrary to the interest of any bank, Connecticut credit union or federal credit union or its depositors or members, or (6) has been or is negligent in the performance of such officer's or director's duties, after having been warned in writing by the commissioner to discontinue any such continuing delinquency, the commissioner may send notice to such officer or director by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the officer or director on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (A) A statement of the time, place and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes, regulations, rules or orders alleged to have been violated; (D) a short and plain statement of the matters asserted; and (E) a statement indicating that such officer or director may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such officer or director fails to appear at the hearing. After the hearing, if the commissioner finds that any of the grounds set forth in subdivisions (1) to (6), inclusive, of this subsection exist with respect to such officer or director, the commissioner shall order the removal of such officer or director from office and from any participation in the management of the Connecticut bank or Connecticut credit union. If such officer or director fails to appear at the hearing, the commissioner shall order the removal of such officer or director from office and from any participation in the management of the Connecticut bank or Connecticut credit union. If the commissioner finds that the protection of the Connecticut bank or Connecticut credit union or the interest of its depositors or members requires immediate action, the commissioner may suspend any such officer or director from office and from further participation in the management of the Connecticut bank or Connecticut credit union, by incorporating a finding to that effect in such notice. The suspension or prohibition shall become effective upon receipt of such notice and, unless stayed by a court, shall remain in effect until the entry of a permanent order or the dismissal of the matters asserted.

Sec. 12. Subdivision (1) of subsection (h) of section 36a-428n of the general statutes is repealed and the following is substituted in lieu thereof:

(h) (1) The commissioner shall, after taking possession of the business and property in this state of a foreign bank, cause to be mailed or sent to each person claiming to be, or appearing upon the books of such foreign bank to be (A) the owner of any personal property in the custody or possession of such foreign bank as bailee or depositary for hire or otherwise, including securities, whether held in custody directly or in book-entry form by such foreign bank, its nominee, subcustodian, clearing corporation or similar entity, and the contents of any safe, vault or box opened for nonpayment of rental in accordance with the provisions of this subsection, or (B) the lessee of any safe, vault or box, a notice in writing sent by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to such person at such person's last address as it appears on the books of such foreign bank or at such person's last known address if no address appears on such books, notifying such person to remove all such property or the contents of any such safe, vault or box, within a period stated in such notice, which period shall be not less than sixty days from the date of such notice, and further notifying such person of the terms and provisions of this subsection and any regulations that may be adopted under this section by the commissioner pursuant to chapter 54. The contract of bailment or of deposit for hire, or the lease of such safe, vault or box, if any, between the person to whom such notice is mailed and such foreign bank shall terminate upon the date for removal fixed in such notice. Such person shall have a claim against such foreign bank for the amount of unearned rent or charges, if any, paid by such person from the date fixed in such notice if the property or contents are removed on or before such date, or from the date of actual removal if the property or contents are removed after such date.

Sec. 13. Section 36a-718 of the general statutes is repealed and the following is substituted in lieu thereof:

If the commissioner determines that any mortgage servicing company has violated any provision of section 36a-716, the commissioner may, in accordance with section 36a-52, as amended by this act, order the mortgage servicing company to cease and desist from such violation. The commissioner may also order the mortgage servicing company to make restitution to the mortgagor upon fourteen days notice in writing. Such notice shall be sent by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the principal place of business of the mortgage servicing company and shall state the grounds for the contemplated action. Within fourteen days of receipt of the notice, the mortgage servicing company may file a written request for a hearing. If a hearing is requested, the commissioner shall not issue an order to make restitution until after such hearing is held. Such hearing shall be conducted in accordance with the provisions of chapter 54.

Approved May 31, 2001