STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GLENN D. WHALEY, )

)

Petitioner, )

)

vs. ) CASE NO. 90-6262

) DEPARTMENT OF BANKING ) AND FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, on January 9, 1991, in Tallahassee, Florida.

APPEARANCES

For Petitioner: No Appearance

For Respondent: Margaret Karniewicz, Esquire

Department of Banking and Finance The Capitol, Legal Section Tallahassee, Florida 32399-0350

STATEMENT OF THE ISSUE

The issue is whether the Petitioner's application for registration as an associated person of Koch Capital, Inc. should be denied.

PRELIMINARY STATEMENT

On August 27, 1990, the Department notified Mr. Whaley that his application for registration as an associated person of Koch Capital, Inc. was denied. On September 17, 1990, he petitioned for a formal administrative hearing and the matter was referred to the Division of Administrative Hearings. The matter was noticed and set for hearing on January 7, 1991, and was heard as scheduled.

At the hearing, Mr. Whaley did not appear, although the record reflects that a Notice of Hearing was duly mailed to him. The Department presented the testimony of Michael Blaker, an area financial manager with the agency. The Department's exhibits 1 through 10 were accepted in evidence. The Department filed a proposed recommended order. The proposed findings of fact have been accepted.

FINDINGS OF FACT

1. Petitioner, Glenn D. Whaley submitted a Form U-4, Uniform Application for Securities Industry Registration, seeking registration as an associated person of Koch Capital, Inc. One of the states in which Petitioner sought registration was the State of Florida.

   
   

2. The Department of Banking and Finance (Department) is the Florida agency charged with the administration and enforcement of Chapter 517, Florida Statutes, the Florida Securities and Investor Protection Act (the Act), and its implementing rules.

   
   

3. The Department denied Mr. Whaley's application for registration as an associated person in a letter dated August 27, 1990, based upon its determination that he had violated the Act, that he had filed an application for registration which contained a material false statement; and that his disciplinary history within the securities industry constituted prima facie evidence of his unworthiness to transact the business of an associated person.

   
   

4. Mr. Whaley has been employed in the securities industry since approximately 1984, and has been employed with several different securities dealers, including Rothschild Equity Management Group, Inc. (Rothschild), Fitzgerald Talman, Inc., and H. T. Fletcher Securities, Inc.

   
   

5. The effective date for Mr. Whaley's registration as an associated person of Rothschild in the State of Florida was April 18, 1985.

   
   

6. In October 1985, Department examiner Michael Blaker, conducted an examination of the books and records of Rothschild. The examination revealed violations of the provisions of the Act, including the sale of securities by unlicensed representatives. The commission reports and sales journals prepared by Rothschild revealed that Mr. Whaley, while unregistered with the Department, had effectuated approximately sixteen (16) sales of securities during the period of April 1 through 17, 1985.

   
   

7. On May 15, 1989, the State of Missouri Commissioner of Securities issued a cease and desist order against Fitzgerald Talman, Inc. and Glenn D. Whaley. The order found that Mr. Whaley had offered for sale and sold securities on behalf of Fitzgerald Talman, Inc. in the State of Missouri without benefit of registration for himself or the securities.

   
   

8. On or about November 8, 1989, the Department issued an Administrative Charges and Complaint against Mr. Whaley seeking revocation of his registration as an associated person of H. T. Fletcher Securities, Inc. based on his failed to timely notify the Department of the Missouri Cease and Desist Order, as required by Rule 3E-600.010(1)(a), Florida Administrative Code. The Administrative Charges and Complaint were served on November 13, 1989.

   
   

9. On or about December 12, 1989, the Department issued a Default Final Order revoking Mr. Whaley's registration with H. T. Fletcher Securities, Inc., based upon his failure to request a hearing regarding the Administrative Charges and Complaint.

   
   

10. The Form U-4 requires the applicant to swear and affirm that the information on the application is true and complete to the best of his knowledge and that false or misleading answers will subject him to administrative

    penalties. The Form U-4 application contains no disclosure of the Department's December 1989, revocation of Petitioner's registration with H. T. Fletcher Securities, Inc., as required by Question 22E.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes (1989).

    
    

12. Section 517.161, Florida Statutes (1989), provides in part:

    
    

    1. Registration under s. 517.12 may be denied or any registration granted may be revoked, restricted, or suspended by the department if the department determines that such applicant or registrant:

       
       

       1. Has violated any provision of this chapter or any rule or order made under this chapter;

          
          

       2. Has made a material false statement in the application for registration;

          
          

          * * *

          
          

          (h) Has demonstrated his unworthiness to transact the business of dealer, investment advisor, or associated person;

          
          

          * * *

          
          

13. Section 517.12(1), Florida Statutes (1985), provided in part:

    
    

    1. No dealer, associated person, or issuer of securities shall sell or offer for sale any securities in or from offices in this state

       . . . unless the person has been registered with the department pursuant to the provisions of this section. . . .

       
       

14. Section 517.301(1)(c), Florida Statutes (1989), provides in part:

    
    

    1. It is unlawful and a violation of the provisions of this chapter for a person:

       
       

       * * *

       
       

       (c) In any matter within the jurisdiction of the department, to . . . make any false, fictitious, or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false, fictitious, or fraudulent statement or entry.

15. Rule 3E-600.011, Florida Administrative Code, provides in part:

    
    

    Prima Facie evidence of unworthiness to transact the business of a dealer, investment advisor, principal, or agent in the State of Florida shall include, but not be limited to:

    
    

    * * *

    
    

    (2) Any injunction, suspension, prohibition, revocation, denial or administrative order by any state or federal agency . . . involving a violation of any federal or state securities law or any rule or regulation promulgated thereunder. . . .

    
    

16. Mr. Whaley violated the provisions of Section 517.12(1), Florida Statutes (1985), by selling securities on approximately sixteen (16) occasions in the State of Florida before he was registered with the Department as an associated person of Rothschild. This is a sufficient reason to deny his application for registration pursuant to Section 517.161(1)(a), Florida Statutes (1989).

    
    

17. By signing the Form U-4, Mr. Whaley swore or affirmed that the information provided on the application was true and complete to the best of his knowledge. He had been served with the Revocation Order, but this Form U-4 did not disclose the Department's December 1989 revocation of his registration as an associated person of H. T. Fletcher Securities, Inc. in response to Question 22E. This constitutes a violation of Section 517.301(1)(c), Florida Statutes (1989).

    
    

18. Mr. Whaley's failure to disclose the revocation of his registration as an associated person of H. T. Fletcher Securities, Inc., by the Department in December of 1989 on his Form U-4 application constitutes a material false statement, which is grounds for the denial of his application pursuant to Section 517.161(1)(b), Florida Statutes (1989).

    
    

19. The administrative orders entered by the States of Missouri and Florida finding violations of state securities laws by Mr. Whaley constitute prima facie evidence of his unworthiness to transact the business of an association person in Florida pursuant to Rule 3E-600.011(2), Florida Administrative Code. He failed to appear at the formal hearing, and therefore, did not meet his burden of going forward with evidence explaining or rebutting that presumption. See, Castlemen v. Office of Comptroller, 538 So.2d 1365 (Fla. 1st DCA 1989). Accordingly, Mr. Whaley's past conduct demonstrates his unworthiness to transact the business of an associated person in the State of Florida. This also is a sufficient reason to deny his application pursuant to Section 517.161(1)(h), Florida Statutes (1989).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Banking and Finance enter a Final Order denying the application of Mr. Whaley for registration as an associated person of Koch Capital, Inc., in the State of Florida.

RECOMMENDED this 25th day of January, 1991, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

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 25th day of January, 1991.

COPIES FURNISHED:

Margaret Karniewicz, Esquire Department of Banking and Finance The Capitol, Legal Section Tallahassee, Florida 32399-0350

Glenn D. Whaley

5400 Northwest Fifth Avenue Boca Raton, Florida 33487

Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol

Tallahassee, Florida 32399-0350

William G. Reeves, General Counsel Department of Banking and Finance The Capitol

Plaza Level, Room 1302 Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 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: 90-006262

Orders for Case No: 90-006262