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Banking Department Issues Cease and Desist Order Against Continental Stock Transfer and Trust Company
Former Company President Pleads Guilty In Manhattan Supreme Court, Fines Total $2 Million


November 8, 2001

THE SUPERINTENDENT OF BANKS OF THE
STATE OF NEW YORK 

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In The Matter of
CONTINENTAL STOCK TRANSFER
and TRUST COMPANY

(a subsidiary of MARKAN, INCORPORATED)

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Order to Cease and Desist and
Imposition of Monetary Penalty
Issued Upon Consent

 WHEREAS, Continental Stock Transfer and Trust Company ("Continental") is a trust company organized pursuant to Article III of the New York Banking Law, and is a wholly-owned subsidiary of Markan, Incorporated ("Markan"); and

WHEREAS, this Order is issued by the Superintendent of Banks of the State of New York ("Superintendent") upon the findings of unsafe and unsound banking practices, recklessly committed as part of a pattern of misconduct likely to result in more than minimal loss to Continental, that have resulted in: (1) the improper maintenance of Continental’s books and records; (2) the conduct of improper activities by Continental; and (3) the failure to detect such improper activities for a protracted period of time. These findings are the result of examinations performed by the New York State Banking Department ("Department") and certain consultants retained by Continental; and

WHEREAS, a Cease & Desist Order was issued by the Superintendent based on the same subject matter on October 20, 2000;

WHEREAS, pursuant to New York Banking Law § 44, the Banking Department is assessing a monetary penalty of $1 million on behalf of the people of the State of New York based on Continental’s (1) failure to maintain processes and procedures reasonably designed to ensure the detection and reporting of suspicious activity as required by 3 N.Y.C.R.R. Part §300, (2) maintenance of entries and balances on its books and records that did not accurately reflect amounts held in trust for certain clients, in violation of New York Banking Law ("NYBL") § 100-b.a, and (3) failure to comply with NYBL § 100.5;

WHEREAS, Continental has represented to the Department that Steven G. Nelson has the authority, delegated by the Board of Directors, to consent to this Order and the payment of the monetary penalty assessed hereunder on behalf of Continental;

WHEREAS, on behalf of Continental and pursuant to such authority, Nelson hereby:

1. Waives Continental’s right to the issuance of a notice of assessment of monetary penalty with respect to any and all matters set forth in this Order;

2. Waives Continental’s right to a hearing for the purpose of taking evidence on any and all matters set forth in this Order;

3. Waives Continental’s right to judicial review of this Order; and

4. Waives Continental’s right to challenge or contest the validity, effectiveness, terms or enforceability of the provisions of this Order.

NOW, THEREFORE, before the taking of testimony or the making of any findings of fact or conclusions of law, and without this Order constituting an admission of wrongdoing or an adoption, approval or admission of any allegation made or implied by the Department in connection with this proceeding, and solely for the purpose of settling the instant proceeding without protracted or extended hearings, and pursuant to the authority vested in Steven G. Nelson to bind Continental,

IT IS HEREBY ORDERED, pursuant to NYBL §§ 39 and 44, that Continental shall cease and desist from committing any further violations of the nature described herein, and shall take the following affirmative actions:

  1. Continental shall make a monetary payment in the sum of $1 million to the Department, pursuant to New York Banking Law § 44, for the violations described above. The monetary penalty assessed by this Order shall be remitted to the Department by wire transfer in immediately available funds to the Department’s account at Chase Manhattan Bank.
  2. Continental shall maintain its capital, at a minimum, in an amount equal to its present level less the amount of the penalty assessed pursuant to this Order.
  3. All communications regarding this Order shall be sent to:

(a) Mr. P. Vincent Conlon
Deputy Superintendent of Banks
New York State Banking Department
2 Rector Street
New York, NY 10006

(b) Mr. Steven G. Nelson
Chairman of the Board and President
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004 

  1. Each provision of this Order shall remain effective and enforceable until stayed, modified, terminated or suspended in writing by the Department.
  2. Except as provided by the immediately preceding paragraph 2, this Order shall not be deemed to alter, amend or, in any way affect the terms and conditions of the Cease & Desist Order issued on October 20, 2000.
  3. Notwithstanding any provision of this Order, the Department may, in its sole discretion, grant written extensions of time to Continental to comply with any provision of this Order.
  4. The provisions of this Order shall not bar, stop or otherwise prevent the Department or any federal or state agency from taking any further or other action affecting Continental.

By order of the Superintendent of Banks of the State of New York, effective this ___ day of November, 2001.

NEW YORK STATE BANKING

By:_______________________

Elizabeth McCaul
Superintendent of Banks

CONTINENTAL STOCK TRANSFER DEPARTMENT and TRUST 

By:___________________

Steven G. Nelson
Chairman of the Board & President