STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CLAUDIO A. SEVILLA, )

)

Petitioner, )

)

vs. ) CASE NO. 93-7158

) DEPARTMENT OF BANKING AND FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on July 8, 1994, at Miami, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. Appearances for the parties at the hearing were as follows:

APPEARANCES

For Petitioner: Mr. Claudio A. Sevilla, pro se

10800 Southwest 123rd Street Miami, Florida 33176-4635

For Respondent: Elise M. Greenbaum, Esquire

Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350 STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner's application for licensure as an associated person with Great Western Financial Securities Corporation should be granted or denied.

PRELIMINARY STATEMENT

By notice of denial dated November 5, 1993, the Department of Banking and Finance advised the Petitioner of its intent to deny his application for registration as an associated person of Great Western Financial Securities Corporation. The letter set forth several specific reasons for the denial. The Petitioner timely requested a formal hearing and the matter was referred to the Division of Administrative Hearings. Thereafter, the Department of Banking and Finance, with leave granted by the Hearing Officer, twice amended its notice of denial to assert additional grounds for the denial.

At the formal hearing on July 8, 1994, the Petitioner testified on his own behalf and offered one exhibit that was received in evidence. The Respondent presented the testimony of two witnesses and offered twenty exhibits, of which nineteen were received in evidence. (Respondent's Exhibit 18 was not received.) At the conclusion of the hearing the parties requested, and were granted, fourteen days from the filing of the transcript within which to submit their proposed recommended orders.

On July 20, 1994, the transcript of the formal hearing was filed with the Department of Banking and Finance. 1/ Thereafter, on July 29, 1994, and on August 8, 1994, the Petitioner and the Respondent, respectively, filed their proposed recommended orders containing proposed findings of fact and conclusions of law. The parties' proposals have been carefully considered during the preparation of this Recommended Order. Specific rulings on all proposed findings of fact submitted by all parties are contained in the Appendix hereto.

FINDINGS OF FACT

1. The Petitioner, Claudio A. Sevilla, submitted an application for licensure as an associated person with Great Western Financial Securities Corporation. At the time that application was submitted, the Petitioner was employed by, or had a contract for employment with, Great Western Financial Securities Corporation.

   
   

2. Shortly after issuance of the original notice of denial, Great Western Financial Securities Corporation terminated its employment relationship with the Petitioner. As a result of that action, the Petitioner is not currently seeking, and cannot currently seek, registration as an associated person with Great Western Financial Securities Corporation because he no longer has an employment relationship with that company.

   
   

3. In Florida, an individual must be employed by a dealer or investment adviser in order to become registered as an associated person. The Petitioner cannot become registered as an associated person with a dealer or investment adviser with which he does not have an employment relationship.

   
   

4. Prior to filing the subject application, the Petitioner was the subject of disciplinary proceedings regarding certain banking activities. Those disciplinary proceedings were resolved by a consent order, in which the Respondent was ordered to pay an administrative fine in the amount of five hundred dollars and to cease and desist from certain enumerated activities. The Respondent never paid the administrative fine. 2/

   
   

5. Item 22E(4) of the application form asks whether any state regulatory agency has ever "entered an order against you in connection with investment- related activity?" At the beginning of item 22 on the application form, the term "investment related" is defined as "Pertaining to securities, commodities, banking, insurance, or real estate including, but not limited to acting as or being associated with a broker-dealer, investment company, investment adviser, futures sponsor, bank, or savings and loan association." [Emphasis supplied.] The Petitioner checked the "No" box in response to item 22E(4) on his application. 3/

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. See, Section 120.57(1), Florida Statutes.

   
   

7. Section 517.021(2), Florida Statutes, includes the following definition:

   
   

   (2) "Associated person" means any of the following:

   1. Any partner, officer, director, or

      branch manager of a dealer or investment adviser or any person occupying a similar status or performing similar functions;

   2. Any natural person directly or indirectly controlling or controlled by such dealer or investment adviser, other than an employee

      whose function is only clerical or ministerial; or

   3. Any natural person, other than a dealer, employed, appointed, or authorized by a dealer, investment adviser, or issuer to sell securities in any manner or act as an investment adviser as defined in this section.

   
   

   The partners of a partnership and the executive officers of a corporation or other association registered as a dealer are not "associated persons" within the meaning of this definition.

   
   

8. Section 517.12(1), Florida Statutes, includes the following language:

   
   

   The department shall not register any person as an associated person of a dealer or invest- ment adviser unless the dealer or investment adviser with which the applicant seeks regist- ration is lawfully registered with the depart- ment pursuant to this chapter.

   
   

9. Section 517.1205, Florida Statutes, reads as follows:

   
   

   517.1205 Registration of associated persons specific as to securities dealer or investment adviser identified at time of registration approval.--Inasmuch as this chapter is intended to protect investors in securities offerings and other investment transactions regulated by

   that chapter, its provisions are to be construed to require full and fair disclosure of all, but only, those matters material to the investor's evaluation of the offering or other transaction.

   It should, furthermore, be construed to impose

   the standards provided by law on all those seeking to participate in the state's securities industry through registration as securities dealers, invest- ment advisers, or their associated person. To this end, it is declared to be the intent of the Legis- lature that the registration of associated persons

   required by law is specific to the securities dealer or investment adviser identified at the time such registration is approved. Notwith-standing any interpretation of law to the contrary, the historical practice of the Department of Banking and Finance, reflected in its rules, that requires a new appli- cation for registration from a previously registered associated person when that person seeks to be associated with a new securities dealer or investment adviser is hereby ratified and approved as consistent with legislative intent. It is, finally, declared to be the intent of the Legislature that while approval of an application for registration of a securities dealer, investment adviser, associated person, or branch office requires a finding of the applicant's good repute and character, such finding is precluded by a determination that the applicant may be denied registration on grounds provided by law.

   
   

10. Rule 3E-600.002(1), Florida Administrative Code, requires that all applications for registration as an associated person be filed on Form U-4, Uniform Application For Securities Industry Registration Or Transfer. Form U-4 clearly requires identification of the employer firm, the "employment date," and the "employment address." The subject rule also provides:

    
    

    As used on the Form U-4, the term "Office of Employment Address" shall mean the location where the person seeking registration will regularly conduct business on behalf of the dealer or investment adviser.

    
    

11. It is clear from the foregoing statutory and rule provisions that an employment relationship with a dealer or investment adviser is a necessary prerequisite to registration as an associated person. The Petitioner no longer has such a relationship and is, therefore, ineligible for licensure as an associated person with Great Western Financial Securities Corporation. Accordingly, the Petitioner's application must be denied. Such being the case, no useful purpose would be served by addressing the moot issue of whether the Petitioner would otherwise be eligible for the license he seeks. 4/

RECOMMENDATION

For all of the foregoing reasons, it is RECOMMENDED that the Department of Banking and Finance issue a Final Order in this case denying the Petitioner's application for licensure as an associated person with Great Western Financial Securities Corporation.

DONE AND ENTERED this 5th day of October 1994 in Tallahassee, Leon County, Florida.

MICHAEL M. PARRISH

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 5th day of October 1994.

ENDNOTES

1/ The transcript of the formal hearing was not filed with the Hearing Officer until October 4, 1994.

2/ Both parties submitted proposed findings of fact addressing many additional details regarding the consent order and regarding the Petitioner's banking activities that caused the Department to initiate disciplinary action. All of those details are subordinate, unnecessary, and irrelevant because an existing employment relationship with a dealer or investment adviser is an indispensable prerequisite to the licensure sought by the Petitioner. Without such a relationship, the question of whether the Petitioner is otherwise eligible for licensure is moot.

3/ Both parties submitted proposed findings of fact containing additional details regarding the motive for the Petitioner's incorrect answer to item 22E(4) on the application. Those details are subordinate, unnecessary, and irrelevant for the reasons mentioned in Endnote 2, above.

4/ Without intending to suggest how these moot issues might otherwise have been resolved, it is gratuitously noted that the likelihood of approval of any future application would be enhanced if all of the information on the application was correct and if the Petitioner had prior to that time fulfilled all of his obligations under the consent order regarding his banking activities.

APPENDIX

The following are the specific rulings on all proposed findings of fact submitted by the parties:

Findings proposed by the Petitioner:

Careful review of all of the proposed findings of fact in the Petitioner's proposal reveals that all of such proposed findings relate to one or the other of two moot issues. Such being the case, all of the proposed findings of fact submitted by the Petitioner have been rejected as subordinate and unnecessary details or as irrelevant in view of the dispositive issue which moots the other issues.

Findings proposed by the Respondent:

Paragraph 1: Accepted in substance with most details omitted as unnecessary.

Paragraphs 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15: Rejected as subordinate and unnecessary details or as irrelevant because the facts proposed in these paragraphs relate to a moot issue.

Paragraphs 16, 17, 18, 19, 20, and 21: Accepted in substance with most details omitted as unnecessary.

Paragraph 22: Rejected as irrelevant.

Paragraphs 23, 24, and 25: Accepted in substance.

Paragraph 26: Rejected as either argument or conclusion of law, rather than proposed finding of fact.

Paragraphs 27, 28, 29, 30, 31, 32, and 33: Rejected as subordinate and unnecessary details or as irrelevant because the facts proposed in these paragraphs relate to a moot issue.

Paragraphs 34, 35, and 36: Accepted in substance.

COPIES FURNISHED:

Elise M. Greenbaum, Esquire Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

Mr. Claudio A. Sevilla

10800 Southwest 123rd Street Miami, Florida 33176-4635

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 The Capitol, Room 1302 Tallahassee, Florida 32399

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 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: 93-007158

Orders for Case No: 93-007158