STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF ) SECURITIES AND INVESTOR ) PROTECTION, )

)

Petitioner, )

)

vs. ) CASE NO. 94-1266

)

JOHN E. PHILLIPS, JR., )

)

Respondent. )

) DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF ) SECURITIES AND INVESTOR ) PROTECTION, )

)

Petitioner, )

)

vs. ) CASE NO. 94-1358

)

BRUCE M. WALKER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matters were heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on June 27, 1994, in Pensacola, Florida.

APPEARANCES

For Petitioner: Margaret S. Karniewicz, Esquire

Suite 1302, The Capitol Tallahassee, Florida 32399-0350

For Respondent: J. Lofton Westmoreland, Esquire (Case No. 94-1266) Post Office Box 1792

Pensacola, Florida 32598-1792

For Respondent: Paul R. Miller, Esquire (Case No. 94-1358) 201 East Government Street

Pensacola, Florida 32501 STATEMENT OF THE ISSUES

The issues in these cases are whether respondents should cease and desist certain activities, whether their registrations previously granted should be

disciplined, whether an administrative fine should be imposed, and whether the application of John E. Phillips, Jr. for registration as an associated person should be denied for the reasons given in the administrative charges and complaint, denial of registration and notice of rights issued on February 4, 1994.

PRELIMINARY STATEMENT

These cases began on February 4, 1994, when petitioner, Department of Banking and Finance, Division of Security and Investor Protection, issued an administrative charges and complaint, denial of registration and notice of rights. The complaint alleged that respondents, John E. Phillips, Jr. and Bruce

1. Walker, both registered with the agency as associated persons, had violated various provisions within Sections 517.161 and 517.301, Florida Statutes, in connection with their dealings with a consumer that began in May 1988. Walker was further charged with violating two statutes and an agency rule by failing to initially disclose certain adverse information on an application for registration as an associated person filed with the agency in 1990, and then failing to timely update the same application. Walker was also charged with making a false statement to the Division in violation of a statute. Finally, the complaint proposed to deny a pending application by Phillips for registration as an associated person on the ground he had violated Rule 3E- 600.010, Florida Administrative Code, by virtue of the foregoing conduct. Respondents disputed these charges and requested an administrative hearing. The case involving John E. Phillips, Jr. was forwarded by petitioner to the Division of Administrative Hearings on March 10, 1994, and was assigned Case No. 94-1266. The case involving Bruce M. Walker was forwarded on March 14, 1994, and was assigned Case No. 94-1358. Over the objection of Phillips, the two cases were consolidated by order dated May 3, 1994.

   
   

   By notice of hearing dated April 8, 1994, the matters were scheduled for hearing on June 27, 1994, in Pensacola, Florida. On June 21, 1994, the cases were transferred from Hearing Officer P. Michael Ruff to the undersigned. At final hearing, petitioner presented the testimony of Sandra Ray, Jane V. Hubbard, Robert R. Kynoch, and M. Gail Ohler. Also, it offered petitioner's exhibits 1-3 which were received in evidence. Respondents testified on their own behalf and offered respondents' exhibits 1-4. All exhibits were received in evidence.

   
   

   On June 13, 1994, respondents filed a motion for summary judgment. The motion was denied at the outset of hearing. Also, an ore tenus motion by Phillips to sever the two cases was denied. Finally, a ruling was reserved on both respondents' ore tenus motion to dismiss the complaint on the ground their due process rights had been violated.

   
   

   The transcript of hearing was filed on August 4, 1994. Proposed findings of fact and conclusions of law were filed by petitioner, Phillips and Walker on August 15, 16, and 22, 1994, respectively. A ruling on each proposed finding of fact has been made in the Appendix attached to this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   Based upon all of the evidence, the following findings of fact have been determined:

   
   

   1. These cases involve allegations of misconduct by respondents, John E. Phillips, Jr. (Phillips) and Bruce M. Walker (Walker), both registered as

      associated persons with Aragon Financial Services, Inc. (Aragon) by petitioner, Department of Banking and Finance, Division of Securities and Investor Protection (Division). The Division alleges that in May 1988 respondents induced a consumer, Jane Hubbard, to make an "investment" of $50,000 in their business by making untrue statements or omitting material facts and then failed to account to her for the monies. For these reasons, the Division also proposes to deny an application by Phillips for registration as an associated person with a new firm. It is further alleged that Walker violated two statutes and a Division rule by failing to disclose certain adverse information on his 1990 application for registration as an associated person with Aragon, and by not timely amending his application to make such disclosure. Finally, it is charged that during the course of the Division's investigation in October 1991, Walker made a false statement to the Division. After the charging document was issued on February 4, 1994, respondents timely requested a hearing.

      
      

   2. In 1986, respondents formed a Subchapter S corporation known as Phillips, Walker & Associates, Inc. (PWA). Each owned 50 percent of the stock and was a director in the corporation. In addition, Walker served as president while Phillips served as vice president. The business was created for the purpose of selling insurance products. Respondents had previously worked together as agents for Prudential Insurance Company (Prudential).

      
      

   3. Respondents were promised financial help from Mutual of New York (MONY), an insurance company, in starting up their new insurance firm. When MONY did not provide the promised capital, and Walker saw financial "difficulties looming," he contacted a former insurance client, Jane Hubbard, a Gulf Breeze realtor, whose husband had recently died, to see if she would be interested in providing capital to the firm. The two had previously met when Walker was associated with Prudential, and he had assisted her in collecting more than $400,000 in proceeds from her deceased husband's life insurance policies. Walker also sold Hubbard a prepaid $50,000 whole life insurance policy.

      
      

   4. Walker talked to Hubbard by telephone on three occasions in late April and early May 1988 ostensibly about arranging a meeting to discuss the money. Hubbard did not recall these conversations. In any event, a meeting was arranged at Walker's office on the morning of May 4, 1988. At the meeting, which lasted more than an hour, Walker did virtually all of the talking while Phillips was "in and out" while attending to other business. This was Phillips' first and only meeting with Hubbard.

      
      

   5. The facts surrounding the substance of the conversations at the meeting are in sharp dispute. Hubbard could not recall Phillips saying anything at the meeting, but she did recall Walker representing that PWA was in "solid" financial condition and that by investing $50,000, she could make "some real money." She understood that the money was to be used to expand the business and viewed the transaction as an investment. She was also offered the opportunity to purchase 20 percent or 25 percent of PWA's stock later on, an offer that never materialized.

      
      

   6. Instead of characterizing the transaction as an investment, both respondents view the transaction as a loan. Walker says he told Hubbard that while he was "positive" or upbeat as to the firm's future, he saw difficulties ahead for the firm since a loan application with a bank had been denied, and PWA needed cash to work through this difficult period. Phillips confirmed that while he was in the meeting, Walker stressed the fact that there was some risk in Hubbard providing capital for the firm, that the firm was experiencing some

      "cash-flow" problems, and that the money was needed to sustain the business until revenues were increased. This testimony is accepted as being credible. Walker agrees, however, that he spoke in "generalities" when describing PWA's financial condition, and that he described his personal financial situation in "only a general sense." Phillips was not asked for, nor did he volunteer, details on his own financial condition. In actuality, Walker described his financial condition in 1988 as "fair but deteriorating," while Phillips said his condition was "good" early on but "deteriorating" as the year progressed.

      Copies of PWA's financial statements were not requested by Hubbard nor volunteered by respondents.

      
      

   7. Although Hubbard did not seek collateral for her money, Walker advised her a Subchapter S corporation had no assets of value, but he offered her the then highest legal rate of interest he could give, 18 percent, and for both he and Phillips to personally co-sign on a promissory note. Hubbard accepted this offer and, later on that day, wrote a check for $50,000 to PWA and delivered it to Walker. On the check, she noted it was for a "1 yr loan Int. only mo. 18 percent." She says she used the word "loan" instead of "investment" due to a lack of space on the face of the check.

      
      

   8. According to the offer presented by Walker, PWA agreed to pay Hubbard the entire principal amount ($50,000) at the end of one year, or on May 1, 1989, and beginning on June 1, 1988, to pay $750 in interest each month until the principal was due. Thereafter, on May 8, 1988, a promissory note reflecting these terms was executed by both Walker and Phillips and was given to Hubbard. In summarizing the transaction, it is fair to say that while Hubbard was not a securities customer of PWA or respondents, she made a commitment of money that was principally induced by respondents' representation that an economic benefit would be derived from her commitment.

      
      

   9. The money obtained from Hubbard was used by PWA to pay salaries, utilities, rent and other office expenses. According to Phillips, it was used up within 4 to 6 months. By the end of the year, Phillips left the firm to find other employment because the business could not sustain both he and Walker. Although he did not make any formal arrangement concerning the disposition of his interest in the corporation, Phillips says he basically "turned everything over to (Walker) . . . and went and looked for a job." In the words of Walker, at that time the company was just "milling around." Walker, however, stayed on trying to make a go of it.

      
      

   10. Hubbard received $750 each month for the remainder of 1988 as provided by the note. In early 1989, the payments began to "slow," and they continued in that fashion until mid-1989. At that time, Walker told her he could not repay the principal when it was due. Consequently, Hubbard agreed to allow respondents to execute a second promissory note calling for another year of interest only payments with the principal due on July 1, 1990. The new note was executed on July 1, 1989. The interest payments stopped within a few months and Hubbard received no further repayment of her loan. She reported the interest payments as "interest income" on her income tax returns.

       
       

   11. In January 1990, Phillips filed a chapter 7 bankruptcy proceeding. Hubbard did not file a claim in that proceeding because Walker had told her that he had assumed the assets and liabilities of PWA when it was dissolved and that he would personally see that she was paid in full. Thereafter, Phillips' personal obligation to Hubbard was discharged by the bankruptcy court.

   12. In May 1990, PWA ceased doing business. In August 1992, Walker filed for bankruptcy. In December 1992, Hubbard filed a civil action against PWA and Walker (but not Phillips) seeking to recover her $50,000. Because of the pending bankruptcy filing, and PWA's lack of assets, her suit was unsuccessful, and in May 1993, Walker's personal obligation to Hubbard was discharged by the bankruptcy court. To date, Hubbard has never been repaid her principal by either respondent. The failure to repay the money was due wholly to PWA's steadily deteriorating financial condition and concomitant lack of resources rather than a conscious effort by respondents to defraud Hubbard of her money. Indeed, all of the money was used for its intended purpose, namely, to provide an infusion of capital for PWA until revenues hopefully increased.

       
       

   13. Both respondents are charged with failing to make adequate disclosures regarding the true financial condition of PWA when they obtained the money. Although the meeting occurred some six years before the hearing, and Hubbard could not recall many of the details, she did not deny respondents' assertions that Walker told her that the loan was "risky," a bank had turned down PWA for a loan, and cash was needed since MONY had not followed through on its promise.

       At the same time, it is undisputed that Hubbard did not request a copy of PWA's financial statements. Accordingly, it is found that respondents made reasonably adequate disclosures regarding the condition of PWA, and they did not make untrue statements or omit material facts in that respect.

       
       

   14. Respondents are also charged with failing to disclose other material financial facts to Hubbard while seeking her money. Since these facts pertain to personal debts incurred by Walker during a nine-year period prior to 1988, knowledge of such facts cannot be imputed to Phillips, and he cannot be held accountable for this omission. Two such debts involved Sandra Ray, a friend of Walker's former wife, from whom Walker borrowed $5,000 in 1979 or 1980 to purchase a sailboat, and another $10,000 in 1981 or 1982. Except for $2,000 or

       $3,000 repaid on the first loan, the balance owed remains unpaid. As to the second loan, Walker approached Ray to offer her an opportunity to make a "tax- free investment" of $10,000. As it turned out, the monies were used by Walker to pay off outstanding federal taxes owed by he and his wife. This loan remains unpaid. It was also established that Walker obtained $25,000 from the cash value of his then sister-in-law's whole life insurance policy in December 1987. The policy had been sold to her by Walker, and as such, she was a former customer. The sister-in-law, Gail Ohler, had been widowed in 1982 when her husband, a Marine, was killed in Beirut, Lebanon. Walker claims he had Ohler's consent to obtain the money. Ohler denies this assertion and says she signed a blank form believing it was merely a credit recommendation for Walker, but that later a check was sent by the insurance company to her sister, who was then Walker's wife. In any event, Ohler later filed a civil action in January 1992 against Walker and MONY seeking to recover her money on the basis of fraud. A judgment was issued against Walker in Ohler's favor for the amount borrowed plus interest. MONY then agreed to repay the principal amount owed in return for Ohler subrogating to MONY her claim against Walker, its former agent. None of these transactions were reported to Hubbard during the meeting on May 8, 1988.

       Whether such personal information dating back some nine years is normally disclosed to an investor as a matter of practice or custom when soliciting an investment, or is required to be disclosed under agency policy, is not of record. According to Hubbard, had she known of these matters, it would have affected her decision to give Walker the money.

       
       

   15. During the course of the Division's investigation of this matter, the Division requested by letter dated October 4, 1991, that Walker provide the following information:

       A list of all customers in which you have directly or on behalf of a business have entered into loan agreements, promissory notes or trust agreements from January 1, 1987 to present.

       
       

       In response to this inquiry, Walker listed only the Hubbard transaction. At the end of his response, Walker noted that he had "tried to be as complete as possible, based upon your letter and our subsequent telephone conversation," and if any further information was required, to "please call and it will be provided." Since Ray was not a customer, and her loans occurred prior to 1987, there was no need for Walker to disclose the two Ray transactions. As to Ohler, she was a former customer, but Walker did not enter into a formal agreement with her, and thus disclosure was not required under the terms of the Division's inquiry. Even if it was required, there was no evidence to establish that such nondisclosure was intentional, or that Walker intended to deceive the Division.

       
       

   16. Since October 25, 1993, Phillips has had an application pending with the Division for registration as an associated person with Meeder Advisory Services, Inc. Based on the alleged misconduct associated with the Hubbard transaction, the Division proposes to deny this application. Since Phillips has not been found to have made misrepresentations in procuring the money from Hubbard, and the money was not repaid because of a business failure and personal bankruptcy (but not fraud), there is no basis upon which to deny his new application.

       
       

   17. In 1990, Walker filed an application (Form U-4) to become an associated person with Aragon. This application was later approved. According to Division Rule 3E-600.010(1)(a), Florida Administrative Code, an applicant or registrant is required to notify the Division within thirty days after any charges are filed against the applicant or registrant which pertain, either directly or indirectly, to his activities as a registrant or "any other activity in which he was involved where a breach of a fiduciary trust is alleged." It may be fairly inferred that information of this nature must be disclosed on the initial application. When such events occur after an application has been filed, a registrant (or applicant) notifies the Division by filing an amended Form U-4. On June 8, 1993, and presumably at the Division's request, Walker filed an amended Form U-4 to reflect that (a) he had sought bankruptcy protection in August 1992, (b) a civil action was filed against him by Jane Hubbard in August 1992, (c) another civil action was filed against him by Jane Hubbard's son, Van Hubbard, in September 1991, (d) a third civil action was filed against him by Gail Ohler in January 1992, and (e) in 1987 the Internal Revenue Service had placed a lien on his house and garnished his family's wages for failing to pay income taxes. When the original Form U-4 was filed in 1990, Hubbard, her son and Ohler had not yet filed suit against Walker, and no bankruptcy proceeding had been filed. Therefore, those items could not have been disclosed on the original form. As to the IRS lien, there is no evidence that it involved an activity where "a breach of a fiduciary trust is alleged" as required by the rule. Therefore, there was no need to make such a disclosure on the application. As to the amended Form U-4, it was clearly not filed within thirty days after the reported events occurred. Even so, none of the transactions pertained to his registration with Aragon, and thus they could not relate, directly or indirectly, to Walker's activities as a registrant. As to the remaining items, there is no proof concerning the nature of Van Hubbard's suit and whether it falls within the perameters of the rule, and the personal bankruptcy filing is not identified in the rule as an item requiring disclosure.

       The Hubbard and Ohler lawsuits arguably represent "civil . . . charges filed against him . . . where a breach of fiduciary trust is alleged," and thus they should have disclosed in a timely fashion. There is no evidence, however, that Walker intentionally violated the rule.

       
       

   18. The Division commenced its investigation of respondents in late 1991 after Hubbard had lodged a complaint seeking assistance in collecting her money. Although the adminstrative complaint was not issued until February 4, 1994, or more than two years later, there was no showing that the agency violated any procedural time limitation during the investigative phase, or that respondents were otherwise seriously prejudiced by this delay.

       
       

       CONCLUSIONS OF LAW

       
       

   19. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Subsection 120.57(1), Florida Statutes.

       
       

   20. Because respondents' registrations as associated persons are at risk, petitioner bears the burden of proving by clear and convincing evidence that the allegations in the complaint are true. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

       
       

   21. In a charge-laden complaint, respondents are alleged to have violated a variety of provisions within the Florida Securities and Investor Protection Act in conjunction with the Hubbard transaction. First, they are charged with obtaining Hubbard's money by making untrue statements of material fact or omitting material facts in violation of Subsection 517.301(1)(a), Florida Statutes (1987). Next, by failing to account to Hubbard for all money received from her and demonstrating their unworthiness to transact the business of an associated person in violation of subsection 517.301(1)(a), respondents are charged with violating Subsections 517.161(1)(a),(e) and (h), Florida Statutes (1989). The complaint further alleges that Walker violated Subsections 517.161(1)(b) and 517.301(1)(c), Florida Statutes (1989), and Rule 3E-600.010, Florida Administrative Code, by failing to disclose certain adverse information on his Form U-4 and by not timely filing an amended form as required by Rule 3E- 600.010, Florida Administrative Code. Walker is also charged with violating Subsection 517.301(1)(c), Florida Statutes (1991), by making a false statement in response to a Division inquiry in October 1991 regarding the names of customers with whom he had entered into a loan agreement. Finally, the Division proposes to deny Phillips' pending application for registration as an associated person with Meeder Advisory Services, Inc. "for the reasons more specifically set forth in the (complaint)." These charges will be dealt with separately.

       
       

   22. As a predicate to most of the charges, the Division contends that the Hubbard transaction constituted an "investment" within the meaning of Subsections 517.301(1)(a) and (2), Florida Statutes (1987). The former subsection makes unlawful certain activities in connection with the "offer, sale, or purchase of any investment," including the making of "untrue statements" or the "omission" of a "material fact." The latter subsection defines an "investment" in pertinent part as follows:

       
       

       (2) For purposes of . . . this section, the term "investment" means any commitment of money or property principally induced

       by a representation that an economic benefit may be derived from such commitment. . .

       In arguing that the definition applies to the Hubbard transaction, petitioner emphasizes the point that respondents are not charged with the sale of a "security" within the meaning of the law, and thus the myriad of cases cited by respondents, which deal with whether a transaction constitutes a sale of a security or an investment contract, are not relevant to this controversy.

       
       

   23. Given the extremely broad definition of the term, the agency's construction of the statute so as to include the Hubbard transaction is not unreasonable or clearly erroneous and should be given deference in these cases. See, e. g., PW Ventures, Inc. v. Nichols, 533 So.2d 281 (Fla. 1988)(an agency's construction of a statute that it is charged with enforcing will not be disturbed by the courts unless it is clearly unauthorized or erroneous). Therefore, it is concluded that the transaction falls within the purview of subsection 517.301(2), and the provisions of chapter 517 apply. In reaching this conclusion, the undersigned has considered the established fact that Hubbard made a "commitment of money (that was) principally induced by a representation (from respondents) that an economic benefit (18 percent return on her money) may be derived from such commitment." The cases cited by respondents are not deemed to be controlling.

       
       

   24. There is less than clear and convincing evidence that respondents failed to disclose the true financial condition of PWA. As previously cited in the findings, the more persuasive evidence shows that Walker, who did all of the talking, advised Hubbard that the investment was risky, the firm had been turned down for a bank loan, and an insurance company would not provide an infusion of needed capital. As a part of this allegation, it is charged that Walker failed to disclose three personal debts incurred by him over the prior nine year period. In the absence of any evidentiary showing that such disclosure is made as a matter of practice or policy, this charge should also be dismissed. Petitioner also argues in its proposed order that respondents failed to provide Hubbard with information regarding "their personal financial troubles," but the administrative complaint does not charge respondents with that omission.

       
       

   25. Next, the contention in petitioner's proposed order that Walker "also violated Section 517.161(1)(e), Florida Statutes, by continuing to misrepresent the financial condition of his company to Mrs. Hubbard after the payments started to come late" must fail since this allegation is not contained in the administrative complaint.

       
       

   26. Respondents are next charged with failing to account to Hubbard for all money received from her in violation of Subsections 517.161(1)(e), Florida Statutes (1989). Although none of the principal was repaid, and only a year or so of interest payments were made, the statute logically contemplates that in order for a violation to lie, a failure to account for an investment must be due to such things as an intent by the licensee to defraud the investor, a failure to use the money for the purpose for which it was intended, or other similar conduct, none of which are present here. Otherwise, a licensee would violate the law whenever an investment went sour, no matter what the circumstances. The allegation must accordingly fail.

       
       

   27. Respondents are next charged with demonstrating a lack of trustworthiness to transact the business of an associated person in violation of Subsection 517.161(1)(h), Florida Statutes (1987). Since this allegation is based on the premise that respondents likewise violated subsection 517.301(1)(a)2., an allegation previously found to be without merit in paragraph 24, this charge must also fail.

   28. In conjunction with his registration as an associated person in 1990, Walker is charged with violating Rule 3E-600.010(1)(a), Florida Adminstrative Code, by failing to disclose on his Form U-4 various lawsuits, a bankruptcy filing and an IRS tax lien. The cited rule requires that an applicant or registrant notify the Division

       
       

       within thirty (30) calendar days of the date a complaint is served, of any civil, criminal or administrative charges filed against him which directly or indirectly

       relate to the registration or sale of secur- ities, or which directly or indirectly relate to his activities as a dealer, investment adviser, principal or agent, or any other activity in which he was involved where a breach of fiduciary trust is alleged.

       
       

       As noted in the findings, except for the tax lien, all of these events occurred after the filing was made and thus no initial disclosure was required for those events. As to the tax lien, it was not shown to fall within the purview of the rule. On the charge that the amended U-4 was not timely filed, only the Ohler and Hubbard lawsuits arguably relate to an "other activity in which he was involved where a breach of fiduciary trust is alleged." This being so, in that limited respect the rule has been contravened. By doing so, Walker has also violated subsection 517.161(1)(a), which makes it unlawful for a registrant to violate an agency rule.

       
       

   29. Walker is next charged with giving a false statement to the Division in October 1991 in violation of Subsection 517.301(1)(c), Florida Statutes (1991). That statute makes it unlawful for any person:

       
       

       1. n any matter within the jurisdiction of the department, to knowingly and willfully . . . make any false . . . statement or representation. . . (Emphasis added)

          
          

          Even if Walker was required to disclose the Ohler transaction in response to a Division inquiry, there was no evidence that he knowingly and willfully failed to make such disclosure. This being so, the charge must fail.

          
          

   30. As a part of these proceedings, petitioner also proposes to deny Phillips' application for registration as an associated person with Meeder Advisory Services, Inc. under the authority of Subsection 517.161(1), Florida Statutes. Since the undersigned has recommended that all charges against Phillips be dismissed, there is no basis for denying the application, and it should be approved.

       
       

   31. Finally, at hearing both respondents moved to dismiss this proceeding on the ground the charges were not timely filed and they have suffered prejudice because of this delay. They do not, however, contend that the doctrine of laches applies. Section 517.201, Florida Statutes, which governs the investigative powers of the Division for possible violations of that chapter, does not contain any time limitations for completing such investigations. Moreover, there is no record basis to demonstrate prejudice occasioned by the

       delay that would rise to the level of warranting a dismissal of the complaints, if indeed such relief could be granted. The motions are hereby denied.

       
       

   32. In its proposed order, petitioner has recommended a penalty based upon the notion that all charges have been sustained. Since only one minor violation has been established as to Walker, that being a violation of rule 3E- 600.010(1)(a), a thirty day suspension of his registration is appropriate.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Banking and Finance enter a final order

dismissing all charges against John E. Phillips, Jr. and approving his

application for registration as an associated person with Meeder Advisory Services, Inc., and that Bruce M. Walker be found guilty of failing to timely update his Form U-4 in two respects for which his registration should be suspended for thirty days.

DONE AND ENTERED this 13th day of September, 1994, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 13th day of September, 1994.

APPENDIX TO RECOMMENDED ORDER

Petitioner:

1. Partially accepted in findings of fact 7 and 8.

2. Partially accepted in finding of fact 10.

3. Partially accepted in finding of fact 11. 25-26. Partially accepted in finding of fact 12.

27. Rejected as being contrary to the more persuasive and credible evidence or irrelevant.

28-29. Partially accepted in finding of fact 14.

1. Partially accepted in finding of fact 5.

2. Partially accepted in finding of fact 14.

3. Partially accepted in finding of fact 17.

4. Partially accepted in finding of fact 15.

Respondent (Phillips):

1. Partially accepted in findings of fact 5 and 7.

2. Partially accepted in finding of fact 5.

3. Partially accepted in finding of fact 8.

4. Partially accepted in finding of fact 6. 21-22. Rejected as being unnecessary.

23-24. Partially accepted in finding of fact 8.

1. Partially accepted in finding of fact 6.

2. Partially accepted in finding of fact 7.

3. Partially accepted in finding of fact 6. 28-29. Partially accepted in finding of fact 7.

1. Rejected as being unnecessary.

2. Partially accepted in finding of fact 7. 32-36. Rejected as being unnecessary.

1. Partially accepted in finding of fact 5.

2. Partially accepted in finding of fact 10.

3. Partially accepted in finding of fact 8.

4. Partially accepted in finding of fact 10.

5. Partially accepted in finding of fact 7.

6. Partially accepted in finding of fact 7.

7. Partially accepted in finding of fact 5. 44-45. Partially accepted in finding of fact 10.

46. Rejected as being unnecessary.

47-48. Partially accepted in finding of fact 9.

1. Partially accepted in finding of fact 11.

2. Partially accepted in finding of fact 18.

3. Rejected as being unnecessary.

52-55. Partially accepted in finding of fact 13. 56-73. Rejected as being unnecessary.

74-75. Partially accepted in finding of fact 14.

1. Partially accepted in finding of fact 16.

2. Rejected as being being contrary to the evidence.

   
   

   Respondent (Walker):

   
   

   1-77. These findings are identical to those submitted by Phillips and the same rulings are hereby made.

3. Partially accepted in finding of fact 6.

4. Rejected as being irrelevant.

5. Partially accepted in finding of fact 8.

6. Partially accepted in finding of fact 6. 82-83. Partially accepted in finding of fact 17.

84. Rejected as being irrelevant.

Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being unnecessary, irrelevant, cumulative, not supported by the evidence, a conclusion of law, or subordinate.

COPIES FURNISHED:

Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, FL 32399-0350

William G. Reeves, Esquire General Counsel

Department of Banking and Finance The Capitol, Room 1302 Tallahassee, FL 32399-0350

Margaret S. Karniewicz, Esquire Suite 1302, The Capitol Tallahassee, FL 32399-0350

J. Lofton Westmoreland, Esquire Post Office Box 1792

Pensacola, FL 32598-1792

Paul R. Miller, Esquire

201 East Government Street Pensacola, FL 32501

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the Final Order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 94-001266

Orders for Case No: 94-001266