Judges: LINDA M. RIGOT
Agency: Department of Financial Services
Latest Update: Apr. 25, 1988
Summary: Pet claim for payment from the securities guaranty fund denied since they had not dealt with a registrant and did not have required judgment.
87-3829STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WILLIAM J. BEISWANGER and ) JANE G. BEISWANGER, )
)
Petitioners, )
)
vs. ) CASE NO. 87-3829
) DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF )
SECURITIES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on January 25, 1988, in West Palm Beach, Florida.
Petitioners William J. Beiswanger and Jane G. Beiswanger were represented by Richard Q. Breithart, Esquire, North Palm Beach, Florida; and Respondent Department of Banking and Finance, Division of Securities was represented by Charles E. Scarlett, Esquire, Tallahassee, Florida.
Respondent denied Petitioners' claim for payment from the Securities Guaranty Fund, and Petitioners timely requested a formal hearing. Accordingly, the issue for determination herein is whether Petitioners' claim for reimbursement should be approved.
Petitioner William J. Beiswanger and Brian Walker testified on behalf of the Petitioners, and Respondent presented the testimony of Don Saxon by way of deposition. Additionally, Petitioners' Exhibit numbered 1 and Respondent's Exhibits numbered 1-4 were admitted in evidence.
Although the Petitioners and the Respondent requested leave to file post- hearing proposed findings of fact, only the Respondent did so. Each of Respondent's proposed findings of fact has been adopted either verbatim or in substance in this Recommended Order.
FINDINGS OF FACT
In 1981, Barry Kandel, an employee of Allied Publishing Group, Inc., solicited Petitioners to purchase stock in Allied, a Florida Corporation. On May 1, 1981, Petitioners purchased one share of stock in Allied for $13,500.
By mid-1982, Allied had gone out of business. Petitioners made unsuccessful demands for the return of their money on Brian E. Walker, the Secretary of Allied; on Thomas W. Kuncl, the President of Allied; and on Kandel.
On November 19, 1984, Petitioners filed suit against Kandel, Kuncl, Walker, and Allied. The Civil Complaint filed in Case No. 84-6932 in the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County, contained general allegations of fraud.
On February 20, 1985, Petitioners obtained a default judgment against Allied only. No evidence was offered in this cause regarding the disposition of the litigation as to the individual defendants. The default judgment contains no factual determinations and does not specify a violation of either section
517.07 or section 517.301, Florida Statutes.
Kandel currently resides in Fort Lauderdale, Florida, and Kuncl currently resides in the Gainesville, Florida, area. Kuncl was the last known person to have custody of and control over Allied's books and records.
Petitioners filed a claim with Respondent, seeking reimbursement for
$10,000 from the Securities Guaranty Fund, pursuant to sections 517.131 and 517.141, Florida Statutes. Their claim was denied by letter dated July 8, 1987, for failure to meet the statutory conditions.
Neither Allied nor any individual associated with Allied who dealt with Petitioners was registered or licensed by the State of Florida pursuant to chapter 517, Florida Statutes, in any capacity.
Petitioners did not cause a writ of execution to be issued against Allied nor the individuals associated with Allied.
Petitioners did not attempt a reasonable search as to whether Allied possessed real or personal property or other assets which may be set off against a proposed claim to the Securities Guarantee Fund.
Don Saxon, Director of the Division of Securities and Former Assistant Director, has been the only individual responsible for administering the Securities Guaranty Fund since 1983.
The Department's interpretation of section 517.131(2), Florida Statutes, is that it requires a claimant to demonstrate findings of a violation of section 517.07 and/or section 517.301, Florida Statutes, by a licensed dealer, a licensed investment adviser or a licensed associated person.
The Department's interpretation of section 517.131(3)(a), Florida Statutes, is that it requires a claimant to provide the Department with a certified copy of a judgment demonstrating a violation of section 517.07 and/or section 517.301, Florida Statutes.
The Department's interpretation of section 517.131(3)(b), Florida Statutes, is that it requires a claimant to submit a copy of the writ of execution to the Department.
During Saxon's tenure in administering the Securities Guaranty Fund, the Department has not waived any of the statutory requirements for claiming monies from the Fund.
Section 517.131 and section 517.141, Florida Statutes, were enacted in 1978 and have remained virtually intact. The legislature did substitute the term "associated person" in place of the term "salesman" in section 517.131(2), Florida Statutes, without comment, although the order of licensed entities in that section was altered.
The legislative intent behind the establishment of section 517.131, Florida Statutes, was to eliminate the bonding requirement for "individuals registered to be broker/dealers or investment advisers ... substituting therefor, a 'Security Guaranty Fund' to be funded through an assessment imposed upon them."
The legislative intent behind section 517.141, Florida Statutes, was that disbursement from the Securities Guaranty Fund would be made to any person suffering monetary damages as a result of "some violation by a registrant."
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. Section 120.57(1), Florida Statutes.
Section 517.131(2), Florida Statutes, requires the Department to disburse monies from the Securities Guaranty Fund to any person suffering monetary damages as a result of acts committed by a licensee or registrant. The Fund protects customers dealing with the regulated industry and replaced the earlier requirement that licensees be bonded for the protection of customers. Inasmuch as Petitioners did not deal with a registrant, they are not entitled to payment from the Securities Guaranty Fund. Petitioners' argument that only an "associated person" and not a "dealer" or "investment adviser" need be registered or licensed is without merit. A statute should be construed in light of the manifest purpose to be achieved by the legislation and will be interpreted to avoid an absurd result.
Section 517.131(2) and (3), Florida Statutes, require a claimant to demonstrate that an adjudication from a court of competent jurisdiction has been obtained regarding a violation of section 517.07 and/or section 517.301, Florida Statutes. Inasmuch as Petitioners failed to obtain a judgment designating either section 517.07 or section 517.301, Florida Statutes, Petitioners are unable to obtain payment from the Fund.
Section 517.131(3)(b), Florida Statutes, requires a claimant to have caused to be issued a writ of execution upon his judgment, in order to obtain payment from the Securities Guaranty Fund. Inasmuch as Petitioners have failed to demonstrate that a writ of execution was issued upon their judgment, Petitioners are not entitled to payment from the Fund.
Petitioners have failed to establish any authority for waiver of the requirements contained in section 517.131, Florida Statutes, or that the Department has adopted an incipient policy to do so at any time.
RECOMMENDATION
Based upon the foregoing Findings of Fact and Conclusions of Law, it is,
RECOMMENDED that a Final Order be entered denying Petitioners' claim for payment from the Securities Guaranty Fund.
DONE and RECOMMENDED this 25th day of April, 1988, at Tallahassee, Florida.
LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 25th day of April, 1988.
COPIES FURNISHED:
Gerald Lewis, Comptroller Department of Banking
and Finance The Capitol
Tallahassee, Florida 32399-0350
Charles E. Scarlett, Esquire Office of the Comptroller Suite 1302, The Capitol
Tallahassee, Florida 32399-0350
Richard O. Breithart, Esquire 818 U.S. Highway One, Suite 8 North Palm Beach, Florida 33408
Charles L. Stutts, Esquire Office of the Comptroller Department of Banking
and Finance
The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Docket for Case No: 87-003829
Orders for Case No: 87-003829
| Issue Date |
Document |
Summary |
|
May 20, 1988 |
Agency Final Order
|
|
|
Apr. 25, 1988 |
Recommended Order
|
Pet claim for payment from the securities guaranty fund denied since they had not dealt with a registrant and did not have required judgment.
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