STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF SECURITIES AND INVESTOR PROTECTION

DEPARTMENT OF BANKING Administrative Proceeding

AND FINANCE, No. 1164-S-10/89

vs.

Petitioner, Florida Supreme Court Case No. 84,827

First District Court of

OSBERNE STERN AND CO., INC. Appeal Case No. 91-488 and DOUGLAS W. OSBORNE, et. al.,

DOAH Case Nos. 90-0873,

Respondents. 90-4584

/

FINAL ORDER CLOSING PROCEEDING

1. The Department of Banking and Finance, Division of Securities and Investor Protection ("Department"), is the state agency charged with the administration and enforcement of Chapter 517, Florida Statutes, and Chapter 3E, Florida Administrative Code. The Department has jurisdiction over the above named Respondents pursuant to Chapter 517, Florida Statutes, and pursuant to the mandate of the Florida Supreme Court and First District Court or Appeal.

2. On or about May 17, 1989, the Department received Douglas W. Osborne's ("Osborne") application for registration as an associated person/principal of Osborne Stern and Co., Inc. ("Osborne Stern") and Osborne Stern's application for registration as a broker/dealer with the State of Florida.

   Statutes. On February 14, 1991, the Department issued its Amended Final Order which denied the applications for registration, imposed a $20,000 administrative fine and ordered the Respondents to cease and desist all violations of Chapter 517, Florida Statutes.

3. By letter dated December 5, 1989, the Department denied both applications for registration based upon its finding that Respondents had violated Sections 517.12(1), 517.07, 517.301(1)(a)2. and 517.301(1)(c), Florida Statutes. Osborne and Osborne Stern timely requested a formal hearing to contest the denial and the matter was referred to the Division of Administrative Hearings.

4. On May 3, 1990, the Department issued a notice of intent to issue a cease and desist order and impose administrative fines against the Respondents, among others, pursuant to Section 517.221, Florida Statutes. This notice of intent was based on the same facts and circumstances alleged in the denial letter. Respondents timely requested a formal hearing and the matter was referred to the Division of Administrative Hearings.

5. The proceedings were consolidated and on October 23, 1990, a formal hearing was held before a Hearing Officer from the Division of Administrative Hearings in West Palm Beach, Florida. Osborne appeared at the hearing pro se and testified.

   The Hearing Officer submitted his Recommended Order on Decomber 5, 1990 recommending that the Department enter a Final Order denying the Respondents' applications for registration and imposing an administrative fine of $5,000 for each violation of Section 517.12(1), 517.07, 517.301(1)(a)2. and 517.301(1)(c),

   Florida Statutes. On February 14, 1991, the Department issued its Amended Final Order which denied the applications for registration, imposed a $20,000 administrative fine and ordered the Respondents to cease and desist all violations of Chapter 517, Florida Statutes.

6. Osborne and Osborne Stern appealed the Department's Final Order to the First District Court of Appeal. A divided appellate court reversed the Final Order and remanded for further proceedings based on its determination that the Hearing Officer erred in excluding evidence of mitigating circumstances and because the Hearing Officer failed to require the Department to prove the Respondents' violations of securities laws by clear and convincing evidence.

7. The Department appealed to the Florida Supreme Court.

   
   

   Respondents and his counsel made no appearance before the Florida Supreme Court. On March 28, 1996, the Florida Supreme Court approved the district court's finding that the Hearing Officer erred by (1) refusing to allow Respondents to offer evidence of mitigating circumstances as to their alleged

   violations of securities law, and (2) failing to require the Department to prove Respondents' alleged violations of securities law by clear and convincing evidence before imposing fines under Section 517.221(3), Florida Statutes. The Florida Supreme Court remanded this proceeding back to the Department

   1. to allow the Respondents to present mitigating evidence and

      
      

   2. to require the Department, as a prerequisite to the imposition of substantial fines, to prove the Respondents' alleged violations of securities laws by clear and convincing evidence.

8. The Department has spent the interim time attempting to locate Osborne and Osborne Stern. Both Respondents terminated their securities registrations with the NASD in 1991. Despite repeated attempts, the Department has been unable to contact either Osborne and Osborne Stern since they terminated their registrations in the securities industry.

9. The Department located an address of 5729 Temple City Boulevard, Temple City, California 91780 for Osborne based upon his Social Security Number. Correspondence sent to Osborne at that address has been returned by the U. S. Post Office as "Attempted - Not Known."

10. Since the Department has been unable to locate either of the Respondents and has not been contacted over a period of

several years, the Department hereby closes this proceeding. This matter may be reopened upon request of the Respondents.

IT IS ACCORDINGLY ORDERED:

The above styled proceeding is hereby closed.

DONE and ORDERED this 12th day of February, 1998, in Tallahassee, Leon County, Florida.

ROBERT F. MILLIGAN, as Comptroller

of the State of Florida and Head of the Department of Banking and Finance

Copies Furnished:

Don B. Saxon, Director Division of Securities

Harry Hooper, General Counsel

NOTICE OF RIGHT TO JUDICIAL REVIEW

ANY PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK, DEPARTMENT OF BANKING AND FINANCE, SUITE 526, FLETCHER BUILDING,

101 EAST GAINES STREET, TALLAHASSEE, FLORIDA 32399-0350, AND A SECOND COPY, ACCOMPANIED BY THE FILING FEES PRESCRIBED BY SECTION 35.22(3), FLORIDA STATUTES, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, 300 MARTIN L. KING, JR., BOULEVARD, TALLAHASSEE, FLORIDA 32399-1850, OR IN THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY (30) DAYS OF RENDITION OF THE FINAL ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing Final Order was sent by regular U. S. Mail to Douglas W. Osborne, 5729 Temple City Boulevard, Temple City, California 91780 and to Osborne Stern and Co., Inc., c/o Douglas W. Osborne, President, 5729 Temple City Boulevard, Temple City, California 91780; and to Clerk, Florida Supreme Court, Supreme Court Building, 500 South

Duval Street, Tallahassee, Florida 32399-1295; Clerk, First District Court of Appeal, 301 Martin L. King, Jr., Blvd., Tallahassee, Florida 32399-1850; and to Clerk, Division of Administrative Hearings, The DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida 32399-3060, this 12th day of February, 1998.

Margaret S. Karniewicz Assistant Genera1 Counsel

Department of Banking and Finance Suite 526, Fletcher Building

101 East Gaines Street Tallahassee, Florida 32399-0350 Telephone (850) 488-9896 Facsimile (850) 922-6386

Docket for Case No: 90-000873

Orders for Case No: 90-000873