STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BANKING AND FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-7833

)

CHRISTOPHER LINDSEY, )

)

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 November 20, 1991, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Deborah Guller, Esquire

Assistant General Counsel Office of the Comptroller Suite 211

111 Georgia Avenue

West Palm Beach, Florida 33401

For Respondent: Richard Doggett, Esquire

808 Northeast 3rd Avenue

Fort Lauderdale, Florida 33304 STATEMENT OF THE ISSUES

The issues presented are (1) whether Respondent is guilty of the allegations contained within the Administrative Complaint, with Notice of Intent to Enter Cease and Desist Order, Denial of Registration and Notice of Rights, and, if so, what disciplinary action should be taken against Respondent, if any, and (2) whether Respondent's application for registration as an associated person with Shamrock Partners, Ltd., should be granted.

PRELIMINARY STATEMENT

On November 16, 1990, Petitioner issued its Administrative Complaint, with Notice of Intent to Enter Cease and Desist Order, Denial of Registration and Notice of Rights seeking to take action against Respondent for alleged violations of Chapter 517, Florida Statutes, the Florida Securities and Investor Protection Act, and further advising Respondent that his application for registration as an associated person with Shamrock Partners, Ltd., was denied based upon the same allegations. Respondent timely requested a formal hearing, and this cause was subsequently transferred to the Division of Administrative Hearings for the conduct of that formal proceeding.

Petitioner presented the testimony of Respondent and of Saunder James Ressler, Jerry C. Sawyer, and Tamara Cain. Respondent also testified on his own behalf and presented the testimony of Thomas G. Harrington and Donald O'Shea.

Additionally, Petitioner's Exhibits numbered 1-13 and Respondent's Exhibit numbered 1 were admitted in evidence.

Although both parties requested leave to file post-hearing proposed findings of fact in the form of proposed recommended orders, only Petitioner did so. A specific ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent has been employed in the securities industry since approximately 1957. He has worked for a number of broker/dealers over the years and is familiar with the procedures involved in transferring employment from one broker to another.

   
   

2. It is the custom in the securities industry that when a securities salesperson changes employment, forms U-4 and U-5 are filed with the National Association of Securities Dealers. As registration is approved by that organization and by the various states involved, the states give that information to the National Association of Securities Dealers, which in turn gives that information to the securities firm which employs the associated person seeking registration, and that brokerage firm in turn notifies the applicant.

   
   

3. Respondent began to work at Alison Baer Securities, Inc., in September, 1988, and remained employed there until February, 1989. When he associated himself with Alison Baer, Respondent applied for registration as an associated person with that company. As is the proper procedure, he submitted a U

   to the National Association of Securities Dealers.

   
   

4. While waiting for his registration to be approved, Respondent maintained telephone and personal contact with his own clients. He did not, however, sell or offer to sell securities until after he was sure his registration was approved.

   
   

5. Respondent's application for registration as an associated person with Alison Baer Securities, Inc., was approved by the National Association of Securities Dealers and was also approved by the states of New York, Texas, Georgia, Florida, and Oklahoma.

   
   

6. In late October of 1988, Jeffrey Britz, the President and Chief Executive Officer of Alison Baer Securities, told Respondent that his registration as an associated person with Alison Baer Securities had been approved by the state of Florida. In fact, Respondent was not registered as an associated person by the state of Florida until December 7, 1988.

   
   

7. Respondent did not attempt to directly confirm with the Department of Banking and Finance his registration as an associated person with Alison Baer Securities.

8. Respondent has applied for registration with the Department as an associated person with Shamrock Partners, Ltd. The Department denied that application based solely on the allegations which are the subject matter of this proceeding.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Section 120.57(1), Florida Statutes.

   
   

10. The Administrative Complaint, with Notice of Intent to Enter Cease and Desist Order, Denial of Registration and Notice of Rights filed in this cause alleges that Respondent engaged in the sale of securities prior to his registration effective date, in violation of Section 517.12(1) and that Respondent subsequently concealed his sale of securities while unregistered, in violation of Section 517.301(1)(c), Florida Statutes. Petitioner has failed to prove that Respondent engaged in the sale of securities prior to his registration and, a fortiori, has failed to prove that Respondent concealed such sales.

    
    

11. Petitioner's evidence in this cause was primarily uncorroborated hearsay evidence. Petitioner's investigator testified as to statements made to him by persons other than the Respondent. Petitioner offered lists prepared by persons other than Respondent, prepared by persons other than the witnesses who testified in this proceeding, and offered only hearsay evidence involving the preparation of those lists. The only direct evidence Petitioner offered in support of its allegations consists of copies of four trade tickets reflecting two trades made by Jeffrey Britz on October 27, 1988, and two trades made by Jeffrey Britz on November 9, 1988. Those documents carry the name of Jeffrey Britz and carry Britz' registered representative account number. On those tickets some unknown person at an unknown time has written the letters "CL." Petitioner's witness suggests that one possible interpretation is that Respondent actually performed those trades. There are also other interpretations that can be given to the presence of those letters on those documents, and even Petitioner's witness admitted that he never interviewed Respondent regarding the allegations against Respondent and that it is possible that Respondent did not know anything about those trades or the records from those trades. On the other hand, Respondent testified that he did not sell or offer to sell securities prior to the time that his registration became effective.

    
    

12. Testimony was presented that it is the "custom and courtesy" within the securities industry that the Department does not communicate directly with an applicant for registration as an associated person, that the Department only communicates with the employing securities firm, and that Respondent was, therefore, entitled to rely on the information he received from Britz as to the effective date of his registration. Although Petitioner offered testimony of one of its employees allegedly in rebuttal of that contention, that witness's testimony regarding the process at one securities firm where he worked at least five years ago supported Respondent's contention that the Department communicates with the employing firm and the employing firm then advises the applicant for registration that the applicant's registration is effective. In any event, it is not necessary to resolve this conflict since Petitioner's evidence that Respondent sold securities prior to the effective date of his registration is not persuasive.

13. At the final hearing, the parties agreed that the only barrier to the Department's approval of Respondent's application for registration as an associated person with Shamrock Partners, Ltd., was the Department's allegations in this proceeding that Respondent sold securities prior to his registration and then concealed that fact. The parties agreed that but for that alleged conduct, Respondent was entitled to registration. Since the Department has failed to prove that Respondent is guilty of the conduct alleged by the Department, there is no remaining barrier to Respondent's application being approved.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent not guilty of

the allegations contained in the Administrative Complaint, dismissing the

Administrative Complaint filed against him in this cause, and granting his application for registration with the Department as an associated person with Shamrock Partners, Ltd.

DONE and ENTERED this 14th day of February, 1992, at Tallahassee, Florida.

LINDA M. RIGOT

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 14th day of February, 1992.

APPENDIX TO RECOMMENDED ORDER

1. Petitioner's proposed finding of fact numbered 27 has been adopted in this Recommended Order.

   
   

2. Petitioner's proposed findings of fact numbered 1-5, 11-14, 16-18, 23- 26, 28, 29, and 31-34 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony.

   
   

3. Petitioner's proposed findings of fact numbered 6-10, 15, 19, and 30 have been rejected as being subordinate to the issues involved in this proceeding.

   
   

4. Petitioner's proposed findings of fact numbered 20-22 have been rejected as not being supported by any competent evidence.

COPIES FURNISHED:

Deborah Guller, Esquire Assistant General Counsel Office of the Comptroller Suite 211

111 Georgia Avenue

West Palm Beach, Florida 33401

Richard Doggett, Esquire 808 Northeast 3rd Avenue

Fort Lauderdale, Florida 33304

Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol 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: 90-007833

Orders for Case No: 90-007833