The Issue Whether petitioner's application for registration as a principal with Monvest Securities, Inc., should be granted by the Department of Banking and Finance, Division of Securities (Department).
Findings Of Fact The petitioner was registered with the Department as an associated person pursuant to Chapter 517, as follows: DATE COMPANY 9/22/82 to 9/19/83 Blinder, Robinson & Co. 11/23/83 to 6/26/84 First Interwest Securities Co. 9/4/84 to 12/27/84 Wall Street West, Inc. 3/11/85 to 10/3/85 R. H. Stewart & Co., Inc. 9/25/85 to 12/3/85 Allied Capital Group, Inc. Petitioner has not been registered with the Department in any capacity since December 3, 1985. The Department uses the forms adopted and approved by the National Association of Securities Dealers (N.A.S.D.) and filed with the Central Registration Depository (C.R.D.). Customarily, the registration application, Form U-4, is filled out by the applicant and given to the Broker-Dealer with whom the applicant is to be licensed. The Broker-Dealer then completes the form with the information concerning that Broker-Dealer and sends the completed form to the C.R.D. After Form U-4 has been filed with the C.R.D., the information is transmitted to the Department. The Broker-Dealer is advised when the applicant has been approved, and the Broker-Dealer informs the applicant that he can begin selling securities. It generally takes between one and two weeks for an applicant to be approved. No license or other paper is transmitted to the applicant from the Department to inform the applicant of his registration. However, the applicant can telephone the Department and determine his status. When an individual leaves the employ of a Broker-Dealer, the Broker- Dealer is required to send a Form U-5 to the C.R.D. within 30 days of termination. The individual never receives a copy of this form from either the C.R.D. or the Department or knows when it has been sent or received. Again, the associated person relies on the Broker-Dealer to advise him of his status. There is a procedure whereby an individual registered with one Broker- Dealer can transfer to another Broker-Dealer. This procedure, known as T.A.T., allows the individual to sell securities for 30 days while his application for registration with the new Broker-Dealer is pending. However, this procedure applies only to individuals who transfer their affiliation. It does not apply to individuals who terminate their affiliation with one company and then apply for registration with another company. Petitioner's registration as an associated person with Allied Capital terminated on December 3, 1985, and petitioner was advised by Allied Capital of his termination around December 1, 1985. Petitioner was terminated by Allied Capital due to insufficient business. On or about December 16, 1985, petitioner traveled to New York and spoke with representatives of Monvest Securities, Inc. (Monvest), regarding his registration through that company to open a branch office in Apopka, Florida. The same day he filled out a portion of a Form U-4 and gave it to the company for them to complete and send on to the C.R.D. Monvest also agreed to prepare the necessary documents to register the branch office in Apopka. Generally, the Broker-Dealer submits the application for the branch office. The application was submitted by Monvest on January 8, 1986. According to the application, petitioner was to be employed with Monvest in their office at 116-C East 5th Street, Apopka, Florida. There is no branch office of Monvest registered with the Department at that address. Petitioner stated in the employment history section of the application that from September of 1984 through November of 1984 he was unemployed. However, from September 4, 1984, until December 27, 1984, petitioner was registered as an associated person with Wall Street West. Petitioner made this error because he merely copied the employment history section from the previous application submitted for registration with Allied Capital. However, there was not a satisfactory explanation given as to why Wall Street West was omitted from the employment history listed on the Allied Capital application. Petitioner also stated in his employment history that he worked for R. H. Stewart & Company as a branch manager from December 1984 until August 1984. Petitioner was actually registered with R. H. Stewart from March 11, 1985 until October 3, 1985. However, because of the way the registration and termination systems work, it is not surprising that an individual's employment dates might be somewhat different from the dates of his official registration. When petitioner filled out the application form and left it with Monvest, he though that the application would be routinely processed, as all his others had been, and that approval would be forthcoming. In the meantime, petitioner had been involved in another business venture known as Global 2000 along with two other individuals. The group retained a law firm in Miami versed in securities regulations which prepared a document called "Confidential Private Placement Memorandum, Global 2000, Inc., and Global 2000 Securities Company" and a "Supplement to Private Offering". Petitioner is a principal in Global 2000, Inc., and Global 2000 Securities Company (collectively known as the Global 2000 Group). The number of investors in the Global 2000 Group is limited to no more than thirty-five, and the total offering is less than $500,000.00. Petitioner testified that the offering was a "Regulation D" offering, and therefore formal registration was not required. At the time of the hearing, petitioner was unaware of any sale of Global 2000 Group stock. On January 1, 1986, the Global 2000 Group published a "Supplement to Private Offering Memorandum, Global 2000, Inc., and Global 2000 Securities Corporation." The supplement had been sent to the printers on or about December 1, 1986, but was dated January 1, 1986. The last page of this supplement contains a picture of Woerz and the following: Melvin W. Woerz President Global 2000 Securities Company (Age 55) Licensed General Securities Principal and Registered Representative with the Division of Securities, Department of Banking and Finance, State of Florida; Securities and Exchange Commission, Washington, D.C.; NASD (National Association of Securities Dealers . . . In the bottom right corner of this page was the following: Global 2000 Securities Company 116-C East Fifth Street Apopka, Florida 32708 1-800-782-7710 This supplement was sent to all individuals who received the Private Placement Memorandum for Global 2000, Inc., and ten or fifteen other individuals. The Private Placement Memorandum and supplement were mailed shortly after January 1, 1986. At the time the supplement was mailed, petitioner was not registered with the Department nor was Global 2000 Securities Company. On or about January 22, 1986, petitioner mailed to forty or fifty individuals copies of a three page publication entitled "Our Recommendations." This publication advocates the purchase of various over the counter securities. The bottom of page three of this publication reads as follows: WE ARE WAITING TO HEAR FROM YOU!!! TAKE CARE MEL WOERZ AND ART BESCH SECURITIES BROKERS 116-C East Fifth Street Apopka, Florida 32703 PHONE: (305) 886-2288 COLLECT (800) 782-7710 IN FLORIDA (800) 423-0219 OUTSIDE FLORIDA There was no Broker-Dealer registered with the Department by the name of Mel Woerz and Art Besch. When "Our Recommendations" was mailed, petitioner was not sure whether his application for registration with Monvest had been approved in Florida. However, since Monvest had notified petitioner of his approval in six states, but not Florida, petitioner should have known that his application had not yet been approved in Florida. "Our Recommendations" was sent to prior clients of petitioner and Art Besch. Both Besch and petitioner stated that the intent of the communication was merely to keep in touch with their customers while awaiting approval. Petitioner has not sold any securities since leaving Allied Capital. On the application filed with the Department, petitioner agreed "to abide by, comply with, and adhere to all the provisions, conditions, and covenants of the statutes . . . and rules and regulationns of the states. "
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered denying petitioner's application for registration pursuant to Section 517.161(1)(a), Florida Statutes, in that petitioner has violated Sections 517.12(1) and 517.311(2), Florida Statutes, and pursuant to Section 517.161(1)(b), Florida Statutes, in that petitioner's application contains a material false statement. It is also recommended that petitioner's application be denied because it designates as petitioner's place of employment a branch office that has not been registered. DONE and ORDERED this 15th day of October 1986 in Tallahassee, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 15th day of October 1988. APPENDIX TO RECOMMENDED ORDER IN CASE No. 86-1785 Petitoner's Proposed Findings of Fact and Conclusions of Law 1 & 2. Accepted in Paragraph 3. Accepted in Paragraph 7. Accepted in Paragraph 3. Accepted in Paragraph 4. Accepted in Paragraph 3. Accepted in Paragraph 5. 8 & 9. Accepted that petitioner's employment history did not correlate with his registration in Paragraph 10. Remainder rejected as unnecessary. 10-12. Rejected as unnecessary. Accepted as stated in Paragraph 6. Accepted in Paragraph 1. Accepted, Paragraph 7. 16-18. Accepted in Paragraph 8. 19. Accepted in Paragraph 11. 20-22. Accepted generally in Paragraphs 12 and 13, last sentence and date of mailing rejected as not supported by competent evidence. Accepted generally in Paragraph 14. Accepted generally in Paragraph 17'. Accepted in Paragraph 15. Accepted in Paragraph 1. First sentence accepted in Paragraph 9, second sentence rejected for reason stated in Paragraph 9, last sentence rejected as irrelevant and not supported by credible evidence. Respondent's Proposed Findings of Fact and Conclusions of Law 1-3. Accepted in Paragraph 8, except date changed to January 8th because that is when Monvest signed application. Accepted in Paragraph 1. Accepted generally in Paragraph 13. 6 & 7. Accepted in Paragraph 1. 8. Accepted generally in Paragraphs 14 and 16. 9. Accepted in Paragraph 15. 10. Accepted in Paragraph 1. 11. Accepted in Paragraphs 9 and 10. 12. Accepted in Paragraph 1. 13. Accepted in Paragraph 3. 14. Accepted in Paragraph 5. 15. Accepted generally in Paragraphs 1 and 3. COPIES FURNISHED: Robert W. Kieffer, Esquire Post Office Box 2021 Orlando, Florida 32801 Robert K. Good, Esquire Office of the Comptroller 400 W. Robinson Street Suite 501 Orlando, Florida 32801 Honorable Gerald Lewis, Comptroller Department of Banking and Finance The Capitol Tallahassee, Florida 32301 Charles Stutts, Esquire General Counsel Department of Banking and Finance The Capitol Tallahassee, Florida 32301
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the administrative complaint filed against H. Ernest Morris, Sr. be DISMISSED with prejudice. DONE and ENTERED this 3rd day of May, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER 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 3rd day of May, 1984. COPIES FURNISHED: Tina Hipple, Esquire P. O. Box 1900 Orlando, Florida 32802 Carmine M. Bravo, Esquire 1450 State Road 434 Longwood, Florida 32750 Steven H. Coover, Esquire P. O. Drawer H Sanford, Florida 32771 Fred M. Roche, Secretary 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold R. Huff, Director Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION Petitioner, vs. CASE NO. 0034049 DOAH NO. 83-3273 H. ERNEST MORRIS, SR. Respondent. /
The Issue Whether Petitioner should be granted an equitable adjustment to increase the contract price in the amount of $337,714 for a mistake in bid on project No. BR-7702/8701, Library/Auditorium, Florida International University.
Findings Of Fact In April 1974, Respondent advertised for bids for the construction of a library-auditorium building at Florida International University, Miami, Florida, State Project No. B.R. 7702/8701. Respondent's representative for this project was the architectural firm of Ferendino/Grafton/Spillis/Candela, Coral Gables, Florida. The advertisement for bids specified that sealed bids would be received until 2:00 p.m. on May 16, 1974, at which time they would be publicly opened and read aloud. In fact, the advertised time period was extended until the same hour on May 23, 1974. The advertisement provided that bids must be submitted on the proposal form furnished by the architect/engineer and be accompanied by a bid bond or an equivalent cash amount in a sum not less than five per cent of the amount of the base bid as a guarantee that the bidder would enter into an agreement with the owner if this bid was accepted. It further provided that the bid would remain in force for thirty (30) days after the time of opening. The advertisement also contained the following statement: "The Department of General Services reserves the right to reject any and all bids and to waive informalities in any bid whenever such rejection or waiver is in the interest of the State of Florida." (Exhibit 1a, testimony of Williams) In preparing its bid on the project, Petitioner utilized two company forms. One included columns for the various portions of the work with blocks opposite each portion for the insertion of the names of subcontractors and the amounts of their bids. The other form was a recapitulation of the low subcontractors' bid by the various segments of the contract, and the form also included spaces and amounts for the work to be accomplished by the contractor itself. The normal procedure followed by Petitioner in this and prior projects was to enter subcontractors' bids on the subcontractor's bid tabulation form when received over the telephone and, when all such bids had been received shortly before the deadline for submission of bids by the prime contractors on the project, to enter each low subcontractor bid on the recapitulation form. This would then be totaled to arrive at Petitioner's bid to be submitted to Respondent. (Testimony of Kearns). The subcontractor tabulation form for the instant project listed an item for "PRECAST STRUCTURAL." Opposite this entry in blocks on the form had been printed the names of subcontractors from whom Petitioner expected to receive bids, including Pre-Stressed Systems, Inc. (P.S.I.), Meekins, Stresscon, and Houdaille. However, since there were two different pre-case structural items called for under the specification, i.e., joists under section 3-B and pre-case panels under section 3-C, the words and figures "3B Joists" and "3C panels" were penciled in above and below the printed words "PRE-CAST STRUCTURAL" to show the need for entering bid figures for both items. However, there was no separation of these items in the various blocks for subcontractor's bids. (Exhibits 1b, 1c, Testimony of Kearns) Usually bids of major subcontractors were not received until the morning of the final day for submission of the total bids, and many were not received until immediately prior to the time the bid must be tallied and submitted. On the morning of May 23, 1974, the day for bid opening, Petitioner's employee, Edward A. Kearns, Jr., an estimator, was responsible for preparing Petitioner's bid. The only bid Petitioner had received for precast joists was that submitted by P.S.I. in the base amount of $460,000. This sum was entered on the bid tabulation from in pencil under the printed name P.S.I. Bids for the pre-cast panels were received from two of the subcontractors whose names were printed on the form an the amounts were entered in pencil as follows: "Meekins - 399,800, Stresscon - 400,00." No bid was entered for Houdaille. About 11:00 a.m., a telephonic bid on the panels was received from Cast-Crete Corporation of Kissimmee. This bid was considerably lower than that of Meekins and, because Petitioner had not heard of or dealt with Cast-Crete in the past, it asked all three bidders on the panels to verify the requirements and prices. While awaiting the return of this information, the Cast-Crete bid was not entered on the bid tabulation form. Thereafter, Cast-Crete informed Petitioner that it was raising its bid somewhat and this information was placed on a separate subcontractor bid form for cast-Crete, but not entered on the tabulation form containing all bids. The final Cast-Crete bid was in the amount of $337,714. By this time, Petitioner's office was quite hectic in that other bids were coming in at a fast pace and the phone was ringing continuously. Many bidders sought clarification on items or had to give their bids to Kearns which was time-consuming. As the time for submission by Petitioner to Respondent drew near, Kearns took the low subcontractor bids from the bid tabulation form and transferred them for each category of work to the recapitulation form. On this form, there was a single line for "Precast structural" and, on that line, Kearns entered the bid that had been received from P.S.I. for precast joists, but forgot to include any bid for the precast panes. Since no breakdown for joists and panels was shown on the recapitulation form, he assumed that bids for all portions of the work hand been included. All items on the recapitulation form were added and Petitioner arrived at a total base bid of $3,999,259, which did not include the bid for precast panels in the amount of $337,714. (Testimony of Shafer, Sr., Kearns, Exhibits 1b, 1c, 1f) Petitioner's employee, Ron Shafer, Jr., previously had been sent to the place of bid opening at Florida International University with the formal bid letter with the amounts left blank. Shortly before 2:00 p.m., Petitioner provided him by telephone with the amounts to place on the be bid form and submit to the Respondent's representative. He submitted the formal bid just prior to the deadline. The bids were thereafter opened and, although Ron Shafer, Jr., noted that Petitioner's bid was some $400,000 lower than the next lowest bidder, he was unaware of the circumstances of the mistake and returned to the office. The representative of Respondent had opened the bids and an officer of the architectural firm, Freeman J. Williams, was also present. Nothing was said at the time concerning the large disparity between Petitioner's bid and the other bids, and Williams saw no need to ask Petitioner to verify its bid at that time. (Testimony of Shafer, Jr., Williams, Exhibits 1d, 1v) Meanwhile, after Kearns had tallied the final bid figures and they had been called in to the employee at Florida International University, Petitioner's personnel sat around the office and discussed the job for several minutes. They then started to gather up all the sub-bids to put in a folder when they discovered a "subcontractor's bid form" for Cast-Crete Corporation and realized that it had not been included on the tabulation sheet or on the final recap sheet. Immediate attempts were made to telephone the architect about the mistake. When Williams was reached at his office some thirty minutes after he had left Florida International University, Petitioner requested that its bid be withdrawn after explaining the circumstances. Williams suggested that Petitioner immediately send a telegram to Respondent explaining this situation. Petitioner did so in the following language: "In reviewing our bid, we discovered we had omitted the cost of precast panels manufacturers bid from our tabulation sheet, in the amount of $282,714. We, therefor, regretfully must with- draw our bid on the FIU library and auditorium building. We could, however, accept award of contract if this amount could be added to either of our base bids. Please advise. SHAFER AND MILLER, INC. R C Shafer" In the telegram, an additional mistake was made by using the figure of $282,714 which did not include the erection of the panels in the amount of $55,000 that had been the subject of a separate bid by Cast-Crete. After receipt of the telegram, Respondent's representatives requested that Petitioner come to Tallahassee with their pertinent documents relating to the bid to discuss the matter. They did so and thereafter heard nothing further until June 5, 1974, at which time a letter was received from the Department of General Services, dated May 31, 1974, advising that, subject to final approval by the Governor and the Cabinet, it was propose to recommend acceptance of Petitioner's low bid and award the contract to it in the amount of $4,122,000 for Base Bid 1 and Priority 1 Alternate A, Priority 2, Alternate C, and Priority 3, Alternate D. The meeting of the Cabinet at which the award was to be recommended was stated in the letter to be held on June 4, 1975. Since Petitioner did not receive the letter until June 5, it had no opportunity to be present at the time matter was considered. By separate letter of May 31, 1974, the Department of General Services enclosed four copies of a standard form of agreement and performance and payment bond to be executed and returned. (Testimony of Williams, Shafer, Sr., Kearns, Exhibits 1e, 1g, 1h) Petitioner contacted legal counsel, James E. Glass, on June 5. He checked into the matter and found that the contract had already been awarded on June 4 by the Cabinet. He then telephoned Arnold Greenfield, General Counsel for the Department of General Services, and asked if the state could rebid the job at which time Petitioner would submit its original intended bid. Greenfield stated that the project was critical from a budget standpoint and that the state would not rebid it, and insisted that the Petitioner proceed or else forfeit its bid bond and be subject to suit for any excess costs of performance. Glass reminded Greenfield that Petitioner proceed or else forfeit its bid bond and be subject to suit for any excess costs of performance. Glass reminded Greenfield that Petitioner could seek injunctive relief in the matter, and the latter then stated that if Petitioner would proceed with the contract, Respondent would acknowledge its right to claim a modification of the contract. This conversation was confirmed in a letter from Greenfield to Glass, dated June 7, 1974, wherein it was stated "We further understand that your client may wish to seek a modification of such contract, after execution." Glass, in a return letter dated June 12, returned the executed contracts and bonds, stating that Petitioner was doing so in order to act "equitably and in good faith", and was fully reserving its rights to contest the erroneous bid by judicial action for equitable relief. Thereafter, Petitioner received notice to proceed with the work and in due course satisfactorily completed the contract within the required period. This was evidenced by a certificate of acceptance of the building by the using agency, which was approved by Respondent on December 4, 1975. (Testimony of Glass, Exhibit 1e, 1g, 1h, 1i, 1j, 11, 1m, 1s) In December, 1974, Petitioner had submitted its claim for an equitable adjustment in the amount of $337,714 which was the amount of the omitted Cast- Crete bid. During the ensuing year Petitioner submitted audits of its expenses on the job to Respondent and in January, 1976, further audit information was provided at the request of Respondent. On May 6, 1976, Respondent informed Petitioner that it would not approve any increase in the contract amount. Thereafter, on June 11, Petitioner filed its petition herein seeking an equitable adjustment in the amount of $337,714. The petition was referred to the Division of Administrative Hearings by the Respondent on August 2, 1976, and the undersigned Hearing Officer was assigned to conduct the hearing therein. (Exhibit 1r, 2, 4, 5, 6) By a Motion to Abate, dated August 23, 1976, Respondent requested that the matter be held in abeyance pending the submission of the petition to the project architect and his rendering of a determination indicating whether the relief should be granted or denied, as a "condition precedent to the contractor obtaining consideration of said petition in any proceeding authorized by Chapter 120, Florida Statutes." Respondent stated in its motion that the contract clearly provided that nay and all claims or disputes should be first submitted to the architect for determination, and that thereafter, either party could obtain administrative review of the determination by filing a written appeal to the Department of General Services within thirty days. The motion further stated that since this prerequisite had not been accomplished, there was no basis for an administrative appeal at that time. On the same date, Respondent advised the architect of the situation and requested expeditious consideration of the matter. On August 27, the architect issued its determination stating "From our personal knowledge of the events during the bid opening process, and the subsequent events that led to the awarding of the bid, we concur in the contractor's request." In November 1976, Respondent's general counsel advised the Hearing Officer that settlement efforts were in progress but requested that the matter be scheduled for hearing nevertheless. Notice of hearing was issued on December 15, 1976, and the case was heard on January 27, 1977. (Exhibits 1t, 1u, Pleadings) Petitioner's intended total bid, including alternates, amounted to $4,459,714. A change order of $194 was issued during the course of the work, amounting to a total of $4,459,908. Petitioner's direct costs on the project were $4,094,890. Overhead was computed at 2.85 per cent of direct costs in the amount of $116,705, for a total cost of $4,211,595. Overhead was computed based on the ratio of total general and administrative expense to total direct costs incurred on all of Petitioner's jobs in process for the year ending May 31, 1975. However, the audit reports included payment in the amount of $335,634 to Cast-Crete Corporation. The actual amount paid to that firm was $325,234 - difference of $10,400, making Petitioner's actual costs $4,201,195. During the course of the contract, Respondent paid Petitioner $4,122,194, resulting in a net loss to Petitioner of $79,001. An anticipated profit for performance of the contract was computed on the basis of the average profit on other jobs of 4.4 per cent, amounting to the sum of $180,377. The latter two sums total $259,378, and it is found that figure is the reasonable amount of Petitioner's claim. (Exhibits 2-5)
Recommendation That Petitioner's claim for equitable adjustment under Project No. BR- 7702/8701 be granted and that a change order be issued increasing the contract price by $259,378.00. DONE and ENTERED this 21st day of March, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 388-9675 COPIES FURNISHED: Donna H. Stinson and Daniel S. Dearing, Esquires Post Office Box 1118 Tallahassee, Florida 32302 James E. Glass, Esquire 2600 First Federal Building 1 Southeast 3rd Avenue Miami, Florida 33131 John A. Barley, Esquire General Counsel Department of General Services Room 110 Larson Building Tallahassee, Florida 32301
Findings Of Fact Introduction Petitioners, Herman R. Staudt and L. Justin Jackman, are the owners of 1,900 and 5,600 shares of capital stock, respectively, in Intervenor-Respondent, Bank of Central Florida (Bank). This represents 9.1 percent of the outstanding shares of the Bank. The Bank is a state chartered commercial bank which began business in 1975. Its principal offices are located at 1401 Lee Road, Orlando, Florida. Petitioners were founders and original members of the board of directors of the Bank when it began operating in 1975. On September 9, 1981, the President of the Bank issued a notice of special meeting of shareholders to be held on September 21, 1981, for the purpose of "considering and determining by vote whether an agreement to merge said Bank with and into Second Bank of Central Florida...shall be approved, ratified and confirmed." Under the terms of the merger agreement, each shareholder was entitled to receive substitute shares of stock in the successor bank, or if that was unacceptable, he would receive $25 per share for each share of stock held by him, or he could dissent from the merger. The agreement was ultimately approved by a majority of the shareholders and applications were then filed with Respondent, Department of Banking and Finance, Division of Banking (Department), seeking formal state approval. The applications were approved by the Department on October 7, 1981, and the merger was actually consummated effective January 4, 1982. The Bank continues to operate under the corporate title "Bank of Central Florida". Petitioners initially objected to the plan of merger and requested that the Department conduct a hearing on the merger applications. The request was denied. Petitioners then availed themselves of their rights under Subsection 658.44(5), Florida Statutes, which provides that whenever a bank and its dissenting shareholders cannot agree on a value to be assigned the stock held by the dissenting shareholders, the Comptroller shall select an appraiser to make an "appraisal of such dissenting shares" which shall be final and binding on all parties. On September 7, 1982, the Comptroller selected Blackstock & Company, Inc., a Jacksonville, Florida registered broker-dealer and registered investment adviser, to appraise the value of the dissenting shares. In its letter selecting Blackstock, the director of the Division of Banking gave the following relevant instructions to Blackstock: Your appraisal should include the Bank of Central Florida's earnings history and the history of its stock sale prices. Characteristics of the Bank of Central Florida to be considered in your appraisal are, the stock is not widely traded, and the interest of the shareholders for whom this appraisal has been commissioned constitute a minority interest in Bank of Central Florida. Your appraisal shall include a determination expressed in dollars and cents per share of the-fair compensation to be paid for all outstanding minority shares. That final dollar and cent figure shall be based upon information readily available through public records and records of the bank, but shall not be based upon any con fidential records of the Department of Banking and Finance. According to the letter of engagement, Blackstock was to receive a maximum $2,000 fee for its services to be paid by the Bank. On September 9, 1982, Petitioners filed a complaint in circuit court for Leon County seeking a declaratory judgment concerning the constitutionality of the Department's actions. On November 2, 1982, the circuit court entered its order holding that, if any party was dissatisfied with the independent appraisal, it was entitled to a de novo hearing before the Division of Administrative Hearings pursuant to Subsection 120.57(1), Florida Statutes. On November 11, 1982, Blackstock submitted a report of appraisal to the Comptroller in which it expressed the opinion that the dissenters' stock should be valued at $27.63 per share. After certain communications with the Department, a revised report was prepared by Blackstock and forwarded to the Comptroller on December 30, 1982. On January 5, 1983, the Comptroller issued its notice of intent to adopt the report. That notice prompted the instant proceeding. The Bank's stock has not been traded publicly at any time. All stock exchanges prior to December 31, 1981, were between existing shareholders. Most involved the Bank's present majority shareholder and chairman of the board. The Bank is a closely held family corporation and its stock is not readily marketable. This was openly acknowledged in the plan of merger itself. The Bank paid no dividends from its inception through December 31, 1981. The Bank is considered to be well managed. It has produced excellent financial results, and is considered to be a "high-performing" bank. As of December 31, 1981, its return on equity and return on assets were 19.4 percent and 1.73 percent, respectively, which were higher than any publicly traded bank in the State of Florida. The Blackstock Report William C. Norton, vice-president of Blackstock and a registered securities dealer, assumed the initial responsibility for preparing the report on behalf of Blackstock. Without advising the Department, Norton contacted Terry A. Rodgers, a former co-worker in Orlando and a chartered financial analyst, and requested that Rodgers prepare the report. They agreed to split the $2,000 fee. Neither Norton or Rodgers had previously prepared an appraisal of dissenting shareholders' stock. Norton instructed Rodgers to "gather the financial information", prepare an "analysis" of that data, and then forward his results to Blackstock. Norton also "suggested the types of comparisons (he) felt would be appropriate in looking at it", the financial information Norton believed to be relevant, and "some of the valuation techniques (he) felt would be appropriate." However, it was not disclosed which of the four techniques used by Rodgers was recommended by Norton. Rodgers forwarded his report to Norton on October 18, 1982. After receiving Rodger's report, Norton reviewed the data, proofed the financial information, and rechecked Rodgers' calculations. The two also communicated by telephone on several occasions and once met briefly in Orlando. In all, Norton estimated he spent approximately six or seven days reviewing the data. He also requested that his partner review the data. Norton ultimately accepted the report almost verbatim, signed it, and sent it to the Department on November 11, 1982. After consultation with the Department, Norton made very slight revisions to the report and resubmitted it on December 30, 1982. Rodgers did not appear or testify at the final hearing in this cause. The report has been received in evidence as Respondent's Exhibit 1 and Intervenor's Exhibit 5. Data apparently relied upon by Rodgers, and in turn reviewed by Norton, included (a) all sales of stock of the Bank from its inception through December 31, 1981, (b) all purchases of bank stock by Donald Rogers (its current president) from 1975 through 1979, (c) the Bank's statement of condition as of December 31, 1981, (d) the Bank's Call Reports for the years 1977 through 1981, (e) the notice of special meeting of shareholders given on September 9, 1981, and (f) comparative data from the First Bankers' Corporation of Florida, Jefferson Bancorporation, Atlantic Bancorporation, and Great American Banks, Inc. The latter four banks are publicly traded Florida banks and were considered by Norton to be representative for comparative purposes because, like the Bank, two did not pay dividends one was controlled by a single family, and the remaining bank had undefined operating "characteristics" similar to that of Bank of Central Florida. However, because of the Bank's extremely small size in relation to the four, and the limited marketability of its shares, none were comparable in terms of size, market type or performance. Further, Norton conceded that a part of the 1901 earnings of one of the four (Jefferson) would normally be factored out for comparative purposes because they included extraordinary income. This in turn caused the composite price-earnings ratio to be substantially understated. By a subjective process, four valuation techniques were incorporated into the Blackstock report and were based upon data derived from a five year study period (1977-1981). These included (a) historical stock sale transactions, (b) industry price-earning ratio comparison, (c) industry price to book value ratio comparison, and (d) capitalization of expected future earnings. The four approaches produced the following valuations: $26.49, $30.38, $25.21 and 28.42. The sums were then divided by four to reach the recommended value of the stock, or $27.63 per share. Norton (and presumably Rodgers) did not attempt to assign a relative weight to each technique because such a process would require the use of subjective judgment, the four valuations arrived at were within a relatively narrow range ($25.21 to $30.38), and no single approach yielded a result substantially out of line with the others. Had the weighted average approach been used, Norton would have assigned a greater or lesser value or weight to the results of the various appraisal valuation techniques employed according to relevance. Despite his rejection of this methodology, Norton conceded that the weighted average method is the most applicable and best suited approach for valuing capital stock not having an active and continuous market, and that it is used by the U.S. Comptroller of the Currency in determining the value of dissenters' shares in federal bank merger cases. In this regard, he agreed that had the Bank been federally chartered, he would have used the same approach in valuing its stock. As noted earlier, Norton's industry price-earning ratio comparison was distorted because of the inclusion of a bank with extraordinary income due to the sale of a subsidiary and property. Had this non-recurring income been factored out, the value of the stock under this methodology would have exceeded $50 rather than the $30.38 reflected in the report. The historical sales approach, to which Norton gave equal weight, was also subject to criticism. This approach, which analyzed stock sales between 1977 and 1981, had the inherent weakness of failing to reflect the Bank as a going concern. The Goff Report A second valuation study was performed on behalf of Intervenor by Ronald W. Goff, a research analyst for Allen C. Ewing & Company, an investment banking firm in Tampa, Florida. That report has been received in evidence as Intervenor's Exhibit 9. Although Goff reviewed the Blackstock report and certain other financial information, he relied primarily upon previous stock exchanges as a basis for determining fair market value. In this regard, he used a major stock transaction between a former vice-chairman of the board (J.F. Cooper) and its present chairman of the board (J.E. Muroski) as the primary basis for arriving at his recommended valuation. The sale involved 12,525 shares, was negotiated in the fall of 1980 and consummated on January 6, 1981, and resulted in increasing Muroski's total stock outstanding in the Bank from 45.3 percent to 59.7 percent. The agreed upon price was $27.86 per share, and after "massaging" that number, Goff arrived at a recommended valuation of $27.34 per share. The circumstances underlying the sale included a falling out between Cooper and Muroski in the spring of 1980 and a request by Muroski that Cooper resign his position with the Bank in May of that year. Shortly afterwards, they began negotiations for Muroski to buy the stock, The deal was agreed upon in 1980 but was not consummated until January, 1981 for tax purposes. Although Goff did not consider the exchange to be an insider transaction, nonetheless it is found that it was because (a) no dividends had been paid from the inception of the Bank through 1981, and Cooper was accordingly receiving no return on his stock, (b) Cooper had terminated all involvement in the Bank's operations, (c) the exchange took place between current and former principal officers of the Bank, and (d) Muroski was an insider by definition of the Securities and Exchange Commission. Therefore, the transaction was not a reasonable basis to determine the fair market value of the stock. Goff himself acknowledged that it was an unusual valuation practice in preparing an appraisal of bank stock to determine market value on the basis of one or a very few transactions. The Perkins Report Marc I. Perkins, an investment banker with Raymond, James and Associates in St. Petersburg, Florida, prepared a valuation report for Petitioners. That report has been received in evidence as Petitioners' Exhibit Perkins had previously been engaged on a number of occasions to value bank stock where a dispute over its value had arisen in a proposed merger. Perkins utilized the weighted average methodology which generally employs, where applicable, five categories of analyses, and then requires that the appraiser assign a weight to each category. This method is identical to that used by the U.S. Comptroller of the Currency in valuing dissenting shareholders' stock and is endorsed in an authoritative text entitled "Security Analysis" by Graham and Dodd. The five approaches include (a) book value, (b) adjusted book value, (c) imputed market value, (d) market value, and (e) investment value. However, in the case at bar imputed market value was inapplicable since that method is used only where a subsidiary is merged into a larger holding company. By the same token, the market value criterion was excluded by Perkins since no stock exchanges occurred during the last eleven months of 1981 and those occurring prior to that date were more akin to insider exchanges. Accordingly, Perkins used the three remaining approaches, to wit, book value, adjusted book value and investment value from which he derived valuations of $35.51, $35.44 and $50.30, respectively. After assigning the appropriate relative weights to each sum, he arrived at a recommended valuation of $46.59 per share. Unlike the authors of the Blackstock report, Perkins found no publicly traded Florida banking companies to be comparable to the Bank, and because of this, used as broad a peer group as possible for comparative purposes in order to take in the maximum number of investor decisions. The comparative data was extracted from the Jerry Williams, Inc. report which is a compilation of financial data for twenty-one publicly traded banking institutions in Florida. The use of a broader base is more appropriate than the Blackstock peer group since it is virtually impossible to find other banking companies of the same size, market type and performance as the Bank of Central Florida. Perkins assigned the greatest weight (75 percent) to the results of the investment value approach since that approach is appropriate where market value does not exist or where the market is thin. Moreover, it provides an easy to understand and reasonable estimate of the value to investors of a share in the future earnings of the Bank. Then, too, that approach includes an analysis of price earnings ratios for the average publicly traded Florida bank, and takes into account a number of key factors that go into investors' perceptions about risk and estimated returns. The approach also considers historical earnings per share as a guide to earnings prospects. Perkins assigned only 25 percent weight to the results of the adjusted book value approach since it had less relevance than investment value. He gave no weight to book value since that approach is dependent on historical cost and fails to reflect the investors' perceptions of the value of the bank as a going concern. Perkins' study produces a more reliable and accurate result than the other suggested methodologies because of its well-accepted approaches, the use of relative weights, a broader and more representative peer group and its rejection of irrelevant and improper data. Miscellaneous From December 31, 1981 through July, 1983 the value of money left on deposit in commercial banks in 30-day certificates of deposit and reinvested was 18 percent. The Bank's average prime rate was 16 during 1982 and the average interest rate charged customers by the Bank was 12 percent.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioners L. Justin Jackman and Herman R. Staudt be paid $46.59 per share for each share of stock held in the Bank of Central Florida, said amount representing the fair market value of such stock as of December 31, 1981. It is further RECOMMENDED that Petitioners' request to receive interest from December 31, 1981 through July, 1983, post order interest, and costs incurred in this proceeding be DENIED. DONE and ENTERED this 23rd day of September, 1983, in Tallahassee, Florida. DONALD R. ALEXANDER 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 23rd day of September, 1983.
The Issue The issue presented is whether Respondents are guilty of the allegations contained in the Amended Administrative Complaint, and, if so, what action should be taken against them, if any.
Findings Of Fact At all times material hereto, Respondent Boca Insurance Lenders, Inc. (hereinafter "Boca"), has been a Florida corporation involved in the business of purchasing life insurance assignments. Some beneficiaries of insurance policies are unable to pay for the funeral of the friend or relative insured by that policy, and most funeral homes require payment in full for the funeral expenses at the time the funeral is scheduled. Under the arrangement that Boca has with certain funeral homes, the beneficiary of the life insurance policy of a decedent can assign the policy to the selected funeral home. The funeral home then assigns the policy to Respondent Boca, and Boca pays the funeral home the cost of the funeral. Respondent Boca's profit results from a 6 percent discount on the monies paid. Shares of preferred stock of Respondent Boca were sold for $1,000 a share. Respondent Boca ceased selling its preferred stock in March 1994, converted and/or re-acquired the outstanding shares, and began selling bonds issued by the company instead. Purchasers of preferred shares of the stock of Respondent Boca earned a return of 12 percent, 14 percent if their investment was held longer than one year. Purchasers of the bonds issued instead of the preferred shares of stock received the same return on their investment as was paid on the preferred shares. At all times material hereto, Respondent Equity Investment Club, Inc. (hereinafter "Equity"), has been a Florida corporation. The business purpose of Respondent Equity is to allow persons to deposit small amounts of money in a personal account akin to a Christmas Club, except that such persons can withdraw their money on 24-hours notice. Account owners earn a return of 6 percent on their deposits. The monies deposited in such accounts were "pooled" by Respondent Equity and used by Respondent Equity to purchase Respondent Boca's shares of preferred stock. At all times material hereto, Respondent Alec Shatz was the president and the director of both Respondent Boca and Respondent Equity. He was also the sole stockholder of Respondent Equity. Respondents admit that Respondent Shatz directed, controlled, supervised, managed, and participated in the acts, practices, and policies of Respondents Boca and Equity. In conjunction with commencing sales of its preferred shares, Respondent Boca filed with the United States Securities and Exchange Commission a Form D which is a Notice of Sale of Securities pursuant to Regulation D, Section 4(6), a Uniform Limited Offering Exemption. When Respondent Equity was formed, it also filed a Form D with the Securities and Exchange Commission under Rule 504. Filing a Form D notice that stock will be sold pursuant to an exemption from registration is not the same as registering a stock with the Securites and Exchange Commission. Respondents Boca and Shatz did not register the preferred shares of stock with the Department, and neither Respondent Boca nor Shatz is or has been registered with the Department to sell or offer for sale securities as a dealer, as an associated person, or as an issuer. One of the ways in which Respondent Boca marketed its preferred shares of stock was by advertising seminars which could be attended by members of the public. Advertisements appeared in newspapers and were aired on the radio. It was not necessary that a potential investor attend one of Respondent Boca's seminars in order to purchase Boca's preferred shares. Employees of Respondent Boca attended the seminars and gave presentations. They also answered questions from members of the public attending the seminars. Information about Respondent Boca, Respondent Equity, and Respondent Shatz' other companies was given out at the seminars. A prospectus for Respondent Boca was also given out. The seminar advertisement which appeared in The Palm Beach Post on February 22, 1993, on behalf of Respondent Boca represented that one could earn 12 percent interest on a "No Risk Return", that there was no penalty for withdrawal, that the investment was "liquid," and that interest was paid every 60 days. The advertisement also read: "Registered with S.E.C". (Part of the advertisement, which was admitted as Joint Exhibit numbered l, is illegible.) By September 27, 1993, the advertisement which appeared in The Palm Beach Post remained substantially the same except that the interest rate was 14 percent, the phrase "Your Money Guaranteed through Insurance Payments" had been added, and the ad read "Register [sic] under S.E.C. exemptions". An October 25, 1993, advertisement was the same except that the word "interest" now read "dividend". However, a February 14, 1994, advertisement used the word "interest" rather than "dividend". Respondent Boca's September 18, 1995, advertisement also used the word "interest", represented that "This is a Minimum Risk Return!", and stated that "Our Investment Involve [sic] Insurance Company". The advertisement contained no language as to any registration with either the S.E.C. or the Department. Although some persons purchasing Respondent Boca's preferred shares were "accredited investors", no purchasers were questioned by Respondents Boca or Shatz as to their financial ability or experience to determine if they were accredited investors prior to their purchase of Boca's preferred shares. At some of the seminars conducted by Respondents Boca and Shatz, attendees were also given information regarding the membership accounts offered by Respondent Equity. Between May 7, 1992, and March 14, 1994, Respondent Boca made 137 sales of its preferred shares of stock. In April 1993 Respondent Shatz announced the establishment of Respondent Equity as an investment club for the purpose of raising money for Respondent Boca by having the investment club purchase Respondent Boca's stock. In May 1993 five membership accounts in Respondent Equity were opened, and those members subsequently made additional deposits in their accounts. Once the accounts were opened, Respondent Equity became the sole manager of those funds. On July 2, 1993, Respondent Equity purchased five shares of Respondent Boca's stock with the combined monies from the membership accounts. Respondent Equity has not registered its securities with the Department, and neither Respondent Equity nor Respondent Shatz is registered with the Department to sell or offer to sell its membership accounts as an issuer, as a broker/dealer, or as an associated person. A pamphlet regarding Respondent Boca's offering, labeled "prospectus" but generally known as a private placement memorandum, was given to attendees who wanted one at each seminar. No prospectus was available regarding Respondent Equity's offering. As the advertisements placed by Respondents Boca and Shatz changed, so did the prospectus for Respondent Boca. Boca's February 1, 1993, prospectus carried a caveat on the cover page that the securities of Boca and its prospectus were neither approved or disapproved by the Securities and Exchange Commission. The September 1, 1993, prospectus carried the same caveat. However, the November 1, 1993, and the April l, 1994, prospectuses added to that caveat an additional statement that the securities of Respondent Boca were not registered with the Department but the firm was registered as an issuer/dealer to sell its own securities. Between June 15, 1993, and January 14, 1994, neither Respondent Boca nor Respondent Shatz had access to all of the corporate books and records for the time period prior to June 15, 1993, since those records were in the possession of Respondent Boca's accountant/escrow agent. Respondent Boca's September 1, 1993, prospectus, its September 1, 1993, revised prospectus, and its November 1, 1993, prospectus represented that any purchaser of Boca's preferred shares had the right of access upon reasonable notice to Boca's books and records. Further, the November 1, 1993, prospectus offered that right of access to potential purchasers. Respondent Boca's September 1, 1993, prospectus represents that Larry Rosenman was Boca's escrow agent possessing copies of all assignments of insurance policies. That information was also provided orally to those attending Respondent Boca's September 30, 1993, seminar. On October 7, 1993, Rosenman wrote a letter to Respondents Boca and Shatz denying that he had agreed to be Boca's escrow agent, demanding that Boca and Shatz cease any representations to the contrary, and demanding that Boca and Shatz notify anyone who had received the September 1, 1993, prospectus that the representation in the prospectus that Rosenman was the escrow agent was not accurate. By letter dated October 8, Respondent Shatz wrote Rosenman apologizing for the error, agreeing to remove Rosenman's name from Boca's prospectus, and agreeing to notify all persons who had received the prospectus that Rosenman's name should not have been listed. Respondents Shatz and Boca issued a revised September 1, 1993, prospectus deleting any reference to an escrow agent and, specifically, deleting Rosenman's name. They did not notify all persons who may have received the original September 1 prospectus. Thereafter, none of Respondent Boca's prospectuses represented that Boca had an escrow agent. Attorney Tina Talarchyk was Respondent Boca's "in-house counsel" from October 1, 1993, through December 1993. She denied at hearing that she was also Boca's escrow agent during that time period and that she had ever executed the temporary escrow agent agreement written on her letterhead and admitted in evidence in this cause. She offered no explanation for the other items of correspondence admitted in evidence which reflect she was the person handling the redemption of stock certificates when investors wished to withdraw their monies invested in Respondent Boca. As she appeared to be carrying out the duties of an escrow agent on her professional letterhead and as she represented herself to an investor to be Boca's escrow agent, she acted as an escrow agent on behalf of Respondent Boca during that time period. On October 7, 1994, Respondents Boca and Shatz directed a letter to all investors that incorrect statements had been made in the past. The letter specifically advised that Respondent Boca did not have an escrow agent at that time, that Respondent Boca had never been registered as an issuer/dealer to sell its own securities, and that, although any investor could examine the company's books and records, no audit had been performed at that time. The letter also offered to return any investor's money. No investor requested the return of any monies based upon the contents of that letter. No investor relied upon any misrepresentation or "incorrect statement" in investing in Respondent Boca. The investors who testified at the final hearing conducted their own "due diligence" inquiry before investing in Respondent Boca and discovered, as the Department's own investigators discovered, that there were no complaints regarding Respondents made to any local or state agency. On occasion, a former employee of Respondent Boca found that an entry in Boca's accounts receivable journal had not yet been deleted when he thought it should have been. From August 18 to August 25, 1993, one of Respondent Boca's bookkeepers gave Respondent Shatz a report that she prepared indicating that Respondent Boca had a negative bank balance. Respondent Boca never missed making timely any interest or dividend payment to any investor who purchased Boca's preferred shares and, later, Boca's bonds. Similarly, Respondent Equity never missed making timely any interest payment to any investor having a membership account. Every person who purchased preferred shares in Respondent Boca was able to redeem those certificates and receive back the money invested in Boca upon electing to do so. Similarly, every member of Respondent Equity was able to withdraw their monies upon electing to do so. The Department has never received a complaint from any investor in Respondent Boca regarding Boca's or Respondent Shatz' business practices. Similarly, the Department has never received a complaint from any member of Respondent Equity regarding Equity's or Respondent Shatz' business practices. Although the Department has examined and copied Respondents' business records at the corporate office on several occasions, and although the Department has interrogated investors in Respondent Boca and members of Respondent Equity, some of them on repeated occasions, the Department has not discovered any investor or member who has been injured by Respondents' business practices, by Respondents' failure to register with the Securities and Exchange Commission and the Department, or by any representations made by Respondent Shatz at Boca's seminars or by Respondents Shatz or Boca in any of Boca's prospectuses. Further, the Department has not discovered any investor or member who relied on any erroneous or inaccurate statement made by any Respondent in deciding to invest in Respondent Boca or open a membership account in Respondent Equity. A Department investigator attended the September 30, 1993, seminar after seeing the newspaper advertisement and ascertaining that Respondents Boca and Shatz and Boca's securities were not registered with the Department. He also attended the February 17, 1994, seminar. Fifty-five of the 137 sales made by Respondents Boca and Shatz occurred after the first seminar which he attended.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Finding Respondents Boca and Shatz not guilty of the allegations contained in counts 1-4 of the Amended Administrative Complaint filed against them; Finding Respondents Equity and Shatz guilty of the allegations against them contained in counts 5-19; Finding Respondents Boca and Shatz guilty of the allegations against them contained in counts 20-430; Ordering Respondents to cease and desist from the sale of unregistered securities by unregistered persons and entities; Imposing an administrative fine in the amount of $100 for each of the 137 transactions against Respondents Boca and Shatz, jointly and severally, for a total of $13,700; Imposing an administrative fine in the amount of $100 for each of the 5 membership accounts against Respondents Equity and Shatz, jointly and severally, for a total of $500. DONE and ENTERED this 30th day of July, 1996, at Tallahassee, Leon County, 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 30th day of July, 1996. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 94-6671 Petitioner's proposed findings of fact numbered 2-6, 8, 11, 13, 14, 16- 18, 22, 24, 25, 28, 29, and 33 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 1, 7, 9, 15, 19, and 20 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Petitioner's proposed findings of fact numbered 10, 21, 23, 27, and 31 have been rejected as not being supported by the weight of the evidence. Petitioner's proposed findings of fact numbered 12, 26, 30, 32, and 37- 40 have been rejected as being subordinate to the issues involved herein. Petitioner's proposed findings of fact numbered 34 and 36 have been rejected since they are illegible. Petitioner's proposed finding of fact numbered 35 has been rejected as being irrelevant. Respondents' proposed findings of fact numbered 1-3, 11, 13, 18, 23, 40, and 41 have been adopted either verbatim or in substance in this Recommended Order. Respondents' proposed findings of fact numbered 4, 6-10, 12, 19-21, 24, 29, 30, 32-34, 36-39, 42, and 43 have been rejected as not constituting findings of fact but rather as constituting conclusions of law, argument of counsel, or recitation of the testimony. Respondents' proposed findings of fact numbered 5, 14-17, and 35 have been rejected as being irrelevant to the issues herein. Respondents' proposed findings of fact numbered 22, 25, 28, and 31 have been rejected as being subordinate to the issues involved herein. Respondents' proposed findings of fact numbered 26 and 27 have been rejected as not being supported by the weight of the evidence. COPIES FURNISHED: John D. O'Neill, Esquire Department of Banking and Finance Division of Securities and Investor Protection The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Alec Shatz 5850 West Atlantic Avenue Suite 103 Delray Beach, Florida 33484 Hon. Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350
Findings Of Fact Joseph Rodriguez, Respondent's President, is a licensed dealer in agricultural products under the provisions of Sections 604.15 to 604.30, Florida Statutes, and acts as a negotiating broker between the producer and the buyer. Respondent is bonded through Aetna Casualty & Surety Company, co-Respondent in this case, as required by Section 604.19, Florida Statutes. Respondent acted as broker on thirty sales of Petitioner's cabbage between May 21 and June 7, 1984. On each occasion, Respondent provided Petitioner with a written confirmation of sale which specified the buyer, the place of delivery, the amount of cabbage sold and the terms of the sale, the name of the company supplying the truck to pick up the cabbage and who was supplying the truck. On several occasions, Respondent supplied the truck. However, on all written confirmations provided by Respondent, the following appears: BROKER ARRANGES TRUCK FOR GROWER FOR CONVENIENCE PURPOSES ONLY. On June 8, 1984, Respondent contacted Petitioner's salesman, Donald Waters and ordered 150 bags of cabbage to be sold to Harvey Kaiser, Inc. Respondent was acting as a broker in this transaction between the buyer and seller. Respondent contacted Patterson Truck Brokers and ordered a truck to pick up the cabbage at Petitioner's farm on June 9 and make delivery under the terms of the sale. Petitioner could only provide 121 bags of cabbage. Respondent agreed to this lesser amount and was invoiced accordingly by Petitioner on June 9 in the amount of $272.25. The truck from Patterson Truck Brokers never arrived to pick up the cabbage. Petitioner's father, Donald A. Dunn, Jr., testified that he contacted Joseph Rodriguez on two occasions by telephone to find out where the truck was, and was told that Patterson would be sending it. Rodriguez testified that Patterson Truck Brothers had agreed to provide a truck but when they were unable, he then contacted other trucking companies, as well as other buyers, in an attempt to get a truck on June 9 or 10, or to arrange another sale of Petitioner's cabbage. However, he was not successful and the cabbage went bad. Although there was no completed sale of this cabbage and therefore he earned no brokerage fee on the transaction, Respondent paid Petitioner one-third of the invoice amount for this cabbage, $86.21, on July 23, 1984, as an act of "good faith" and in recognition of the good business relationship they had. He also informed Petitioner that Patterson Truck Brothers and Donald Waters had each also agreed to pay one-third and Petitioner should contact them for payment. Petitioner contends that it should be Respondent's responsibility to pay the entire amount still owing, $172.43. Acting as a broker, Respondent earns no commission for making arrangements to supply a truck for the convenience of the seller. He invoices the buyer, collects the total amount due from the buyer, remits the freight charge to the shipping company, and pays the seller minus his brokerage fee.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Agriculture issue a Final Order dismissing the complaint. DONE and ORDERED this 30th day of May, 1985, in Tallahassee, Florida. DONALD D. CONN 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 30th day of May, 1985. COPIES FURNISHED: Joseph Rodriguez President Golden Touch Corporation 950 Colorado Avenue Stuart, FL 33497 The Aetna Casualty & Surety Company 151 Farmington Avenue Hartford, CT 06115 Robert A. Chastain, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee FL 32301 Donald A. Dunn, III Route 2, Box 68 Sanford, FL 32771 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, FL 32301
The Issue Whether Respondents committed the offenses described in the administrative complaint? If so, what disciplinary action should be taken against them?
Findings Of Fact Based upon the record evidence and the stipulations entered into by the parties, the following Findings of Fact are made: Murray Wieder (Respondent Wieder) is now, and was at all times material hereto, a real estate broker licensed in the State of Florida pursuant to license number 0303130. His last license was issued c/o Wieder Realty, Inc., 900 S. Pompano Parkway, Pompano Beach, Florida 33069. Wieder Realty, Inc. is now, and was at all times material hereto, a corporation licensed in the State of Florida as a real estate broker pursuant to license number 0254413. Its last license reflects its address as 900 S. Pompano Parkway, Pompano Beach, Florida 33069. Respondent Wieder is now, and was at all times material hereto, the President of Wieder Realty, Inc., and its qualifying broker. Margaret Hoskins has been an investigator with the Department of Professional Regulation for the past year and a half. As part of her responsibilities, she conducts audits of escrow accounts maintained by real estate brokers licensed in the State of Florida. On April 27, 1989, Hoskins conducted a routine audit of Respondents' escrow accounts. Her investigation revealed that, on that date, Respondents maintained at Bank Atlantic in Fort Lauderdale, Florida, a noninterest-bearing escrow account (number 005-50199 0-3) with a balance of $14,577.39 and an interest- bearing account (number 005-175922-1) with a balance of $32,955.50. Respondents' "trust liability" with respect to these two accounts was $41,856.50. The $5,676.39 difference between the total balance of these two escrow accounts and Respondents' "trust liability" represented accrued interest on the monies deposited in the interest-bearing account. Respondents used the accrued interest to cover their incidental operating expenses. Hoskins further discovered as a result of her investigation that on March 13, 1989, Respondents had deposited $50,000.00 into the noninterest- bearing account, which prior to the transaction had had a balance of $950.58, and that on March 30, 1989, Respondents had withdrawn $25,000.00 from the interest-bearing account and had deposited $25,000.00 in the noninterest-bearing account. During the course of her investigation, Hoskins spoke with Respondent Wieder, who indicated to her that it was his practice to transfer funds from one of the Bank Atlantic escrow accounts to the other. Of the fully executed sales contracts and lease agreements Respondents' had on file, only one, the Kutner-Fox contract, contained a provision authorizing Respondents to place escrow monies in the interest-bearing account and to use the accrued interest for incidental operating expenses. The remaining contracts and leases were silent regarding the matter. Hoskins, in her conversation with Respondent, therefore attempted to find out from him if the escrow monies in the interest-bearing account, other than those attributable to the Kutner-Fox contract, had been deposited in the account with the permission of all interested parties. Wieder, who was otherwise very cooperative, failed to provide Hoskins with a direct answer to her question. Hoskins did not thereafter make any effort to contact these parties and ask them if they had given Respondents permission to place monies held in escrow in an interest- bearing account and to use the accrued interest to cover incidental operating expenses. Later on April 27, 1989, after Hoskins had completed her visit to their office, Respondents withdrew all of the funds from the interest-bearing account and deposited them in the noninterest-bearing account. They then closed the interest- bearing account. Respondents then transferred from the noninterest- bearing account to their operating account $5,676.39, the amount of interest that had accrued on the monies that had been in the interest-bearing account.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Florida Real Estate Commission issue a final order in this matter finding the proof insufficient to establish Respondents' guilt of the offenses charged and dismissing the instant administrative complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of August, 1990. STUART M. LERNER 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 22nd day of August, 1990.
The Issue The issue is whether Respondents are guilty of dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in violation of Section 475.25(1)(b); failing to maintain trust accounts in an escrow account until disbursement is authorized, in violation of Section 475.25(1)(k); operating as a broker without holding a valid broker's license, in violation of Sections 475.42(1)(a) and 475.25(1)(e); failing to prepare the required written monthly escrow-statement reconciliations, as required by Rule 61J2-14.012(2) and (3), and thus Section 475.25(1)(e); failing to give written notice to a party to a transaction, before the party signs a contract, that the broker is a representative of another party, in violation of Rule 61J2-10.033 and Section 475.25(1)(q); failing to comply with Section 475.25(1)(q), and thus Section 475.25(1)(e); and, as to Respondent Dume, engaging for a second time in misconduct that warrants his suspension or engaging in conduct or practices that show he is so incompetent, negligent, dishonest, or untruthful that clients and their money cannot safely be entrusted to him, in violation of Section 475.25(1)(o). If either Respondent is guilty of any of these alleged violations, an additional issue is what penalty should be imposed.
Findings Of Fact Respondent Dume has been licensed in Florida as a real estate broker, and Respondent Southwest Florida Home Realty, Inc. has been licensed in Florida as a corporate broker. Petitioner did not file licensing documentation as an exhibit. Petitioner's witness testified that the licenses expired on September 30, 1995, for Respondent Dume and March 31, 1995, for Respondent Southwest Florida Home Realty. This testimony is hearsay and does not establish the licensing status of Respondents. In their proposed recommended order, Respondents propose a finding that they are now and have been at all material times licensed real estate brokers in Florida. The evidence does not support this assertion. However, the pleadings of the parties establish that Respondents were licensed at least up to the dates alleged by Petitioner. The Administrative Complaint alleges that Respondent Dume's license expired on September 30, 1995, and Respondent Southwest Florida Home Realty's license expired on March 31, 1995. The obvious inference from these allegations is that Respondents were licensed up to those dates. Combining these inferred allegations in the Administrative Complaint with the assertion of Respondents in their proposed recommended order that they are now and have been at all material times licensed, it is clear that the parties do not dispute that Respondents were licensed at least up to the dates set forth in the Administrative Complaint. The only real dispute as to licensing is whether Respondents were licensed after these dates, and the record supplies no answer to this question. By final order filed August 8, 1994, the Florida Real Estate Commission found both Respondents guilty of violating Sections 475.25(1)(b), (e), and (k) and Rule 61J2-14.012(2) and (3). The final order is based on an administrative complaint alleging, as of February 1 and 2, 1994, a shortage of about $6000 in one escrow account and an overage of about $400 in another escrow account. The administrative complaint alleges that Respondent Dume prepared written monthly escrow-account reconciliation statements. The final order reprimands each Respondent. As to Respondent Dume only, the final order imposes a $300 fine, suspends his license until the fine is paid, and places Respondent Dume's license on probation for one year, during which time he was required to "enroll in and satisfactorily complete a 30-hour broker management course." The final order states that a failure to complete all conditions of probation may result in the filing of a new complaint. The final order establishes that Respondents have been licensed brokers in Florida, but does not establish their licensing status as of anytime after the expiration of Respondent Dume's probation, which ended on September 8, 1995. In mid-September 1995, an investigator employed by Petitioner contacted Respondent Dume to determine whether he had complied with the final order of August 8, 1994. Respondent Dume admitted that he had not undertaken the required education. The investigator set up an office audit for November 1, 1995. On November 1, 1995, the investigator visited Respondents' office to conduct the audit. She had access to all relevant documents and found that Respondent Southwest Florida Home Realty, Inc. maintained an escrow account for real estate rental deposits. The investigator audited the period from January 31, 1995, through September 30, 1995. The investigator found that neither Respondent conducted written reconciliations of the escrow account during this period of time. The investigator found checks drawn on the escrow account improperly paid to another corporation owned by Respondent Dume and, in one case, paid to Respondent Dume personally. Two of the checks payable to the other corporation, which was not a licensed corporate broker, were dated September 30 and October 31, 1994. The investigator did not testify as to the date of the check paid personally to Respondent Dume. The investigator asked Respondent Dume about these disbursements. As to the check made to him personally, he explained that a bank would not cash his check and he needed funds. All of the checks paid to the other corporation or Respondent Dume personally were unauthorized and an improper use of escrow funds. Petitioner proved that the two checks to the corporation owned by Respondent Dume related to a time period not covered in the case resulting in the August 8 final order. When the investigator attempted to reconcile the escrow account for the period from January 31 through September 30, 1995, she found a shortage of about $31,500. Respondent Dume told her that he had repaid the escrow account about $20,000, but this was in January 1994. There is no evidence that any client has suffered any losses due to Respondents' failure to maintain the escrow account in the manner required by law. As already noted, the parties in effect agree that Respondents were licensed until certain dates in 1995, but the evidence fails to establish that Respondents' licenses expired after that time. But even if the evidence had proved the alleged expiration dates, the evidence would still be less than clear and convincing that Respondents conducted real estate business after those dates. There is even less evidence that Respondents failed to make required written disclosures in real estate transactions, as Petitioner has failed to prove any real estate transactions or the absence of any such disclosures.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order revoking the licenses of Respondent Dume and Respondent Southwest Florida Home Realty, Inc. ENTERED on December 2, 1996, in Tallahassee, Florida ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of December, 1996. COPIES FURNISHED: Steven D. Fieldman Chief Attorney Department of Business and Professional Regulation Division of Real Estate Hurston Building, North Tower 400 West Robinson Street Orlando, Florida 32801-1772 Frederick H. Wilsen Gillis and Wilsen 1415 East Robinson Street, Suite B Orlando, Florida 32801 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802-1900
The Issue The issues for determination in this proceeding are whether Respondent, by and through his employees: (a) sold unregistered securities in the secondary market which were marked up in excess of 10 percent of the prevailing market price and which were not exempt from registration; (b) permitted an agent to service accounts prior to the agent's effective date of registration in the State and concealed such action; and (c) failed to maintain minimum net capital requirements for his corporation; and (d) failed to properly supervise the activities of his employees and agents.
Findings Of Fact Respondent owned the stock of a holding company and was an officer in a wholly owned subsidiary of the holding company. Respondent and another individual owned the stock of Dean, Johnson and Burke Holding Company ("Holding"). Holding owned the stock of Dean, Johnson and Burke Securities, Inc. ("Securities"). Respondent was the Secretary of Securities. Respondent had ultimate responsibility for disbursements and profits for Holding and Securities. Respondent monitored the checkbooks and daily expenses for Securities. Respondent's accountant provided financial information to Respondent concerning the daily operations of both companies. The information was provided on forms supplied by Respondent. Respondent kept a daily record of how much each company made or lost, how much was owed, and other accounting information. Respondent made sure that the bills were paid and that the credit of each company remained good. Respondent also controlled the hiring of key personnel. Brent A. Peterson was a manager and principal for Securities. 2/ Mr. Peterson set prices for the firm. Mr. Peterson engaged in transactions in which prices were set for securities to be sold to customers in excess of 10 percent above and below the prevailing market price. Out of 457 trades, approximately 38 were sold at prices that exceeded a 10 percent markup (the "marked up securities"). The marked up securities were sold at prices in excess of 10 percent of the prevailing market rate. The National Association of Securities Dealers, Inc., ("NASD") determined that the securities were marked up in excess of 10 percent of the prevailing market price based upon Securities' contemporaneous costs. When a dealer is simultaneously making a market in a security (a "market maker"), the NASD looks to the prevailing market price for the purpose of determining if a markup exceeds 10 percent. The prevailing market price is the price at which dealers trade with one another, i.e., the "current inter-dealer market." 3/ When a dealer is not simultaneously making a market in a security (a "non-market maker"), the contemporaneous costs of the dealer are used for the purpose of determining if the securities have been marked up in excess of 10 percent. The contemporaneous costs reflect the prices paid for a security by a dealer in actual transactions closely related in time to the dealer's retail sales of that security. Such a standard is normally a reliable indication of prevailing market price in the absence of evidence to the contrary. Securities was not a market maker in the marked up securities. Even though securities may be sold at the same market price by one firm that is a market maker and one that is not a market maker, the latter may be deemed by the NASD to have marked up the security by more than 10 percent depending on the firm's contemporaneous costs. Many of the marked up securities were sold to customers at the same market price as that the customers would have paid other brokerage houses. 4/ Since Securities was not a market maker in the marked up securities, the standard used by the NASD to determine the amount of markup was the contemporaneous costs paid by Securities. The securities involved in the 38 trades were marked up more than 10 percent over Securities' contemporaneous costs. Respondent sold unregistered securities that were not exempt from registration. Unregistered securities may be sold if they are reasonably related to the current market price. The marked up securities were not reasonably related to the prevailing market price because they were marked up more than 10 percent over Securities' contemporaneous costs. Robert M. Long sold securities to customers as an employee of Securities prior to the effective date of his registration with Petitioner. Mr. Long was registered with Petitioner as a registered representative on May 18, 1988. Mr. Long was employed by Securities, from April 19, 1988, through September 20, 1989. Mr. Peterson advised Mr. Long that Mr. Long was authorized to trade securities. Pursuant to Mr. Paterson's advice, Mr. Long sold securities in Tel-optics prior to the effective date of his registration with Petitioner on May 18, 1988. Respondent concealed the sale of securities by Mr. Long prior to the effective date of his registration with Petitioner. Mr. Long's registered representative number was 34. Relevant order tickets showed Mr. Long as the person engaged in the sale of securities prior to May 18, 1988. Registered representative number 30 had been used on the order tickets at the time of the trades. After Mr. Long was registered with Petitioner, Mr. Long's number 34 was added to the order tickets and number 30 was crossed out. Securities operated with a net capital deficiency of approximately $30,000. The net capital deficiency resulted from the failure to accrue liabilities. The net capital deficiency was discovered by Mr. Long and Jeff Clark, an examiner for the NASD. The invoices for bills for the unaccrued liabilities were not filed where bills and invoices were normally filed and were found by Mr. Long concealed in drawers and other remote locations in the office. The net capital deficiency was discovered by Mr. Long on August 28, 1989, but not reported to Petitioner until September 19, 1989. Mr. Long did not notify Petitioner of the net capital deficiency at Securities until the deficiency could be verified by Mr. Clark.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding that Respondent is guilty of committing the acts alleged in the Administrative Complaint, requiring Respondent to cease and desist from all violations of Florida statutes and rules, and imposing a fine in the aggregate amount of $9,000. The fine should be imposed in the amount of $2,000 for selling securities in excess of a 10 percent markup and $3,500 for each of the other two acts that constituted violations of applicable statutes and rules. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of July, 1991. DANIEL MANRY 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 July, 1991.
The Issue The issues in this case are whether another state agency has suspended Respondent's securities license and whether Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction.
Findings Of Fact Respondent is a licensed real estate salesman in Florida, holding license number 0511690 since about February, 1988. He disclosed on his application the then-pending disciplinary proceedings that are discussed below. Shortly after receiving his license, Respondent began working in early 1989 as a sales associate with Schlott Realtors of Florida, where he has demonstrated good work habits and honesty. Respondent, who is 65 years old, began working in the securities industry in early 1961. From mid-1963 until April, 1985, Respondent worked with the brokerage firm of Shearson Lehman Brothers Inc. (or its predecessors). He then worked with Dean Witter from April, 1985, until February, 1988. During his career in the securities industry, Respondent proved himself honest, trustworthy, knowledgeable, and hard-working. Respondent's resignation from Dean Witter was necessitated by disciplinary proceedings that were pending before the New York Stock Exchange, Inc. (the Exchange). As a result of a stipulation between Respondent and the Exchange, an Exchange hearing panel, with the consent of Respondent, censured and suspended him for a period of eight years from membership with any member of the Exchange. The decision states that, without "admitting or denying guilt," Respondent consented to findings that, among other things, he: Exercised discretion on behalf of customers without prior written authorization; Made discretionary purchases and sales of securities that were excessive in size and or frequency in view of the financial resources of the customers; Traded options contracts without prior written authorization from the customers; Recommended that customers open transactions in options without having a reasonable basis to believe that the customers had the knowledge and experience in financial matters to be capable of evaluating the risks and the financial resources to bear such risks; and Engaged in related conduct that was "inconsistent with just and equitable principles of trade," including failing to follow customers' investment objectives, failing to follow customers' instructions as to the forwarding of account statements, and making "inaccurate and improper" entries on new account documentation. "For the sole purpose of settling the disciplinary proceeding," Respondent and the Exchange stipulated to specific facts, which provide the grounds for the above-described findings. The disciplinary proceeding before the Exchange involved two customers. Although experiencing net profits as a result of other trading on her account, the first customer lost $10,540 in options trading and paid $15,720 in commissions from September, 1981, through December, 1982. Much of this trading involved uncovered options. During this period of time, Respondent made numerous discretionary trades. He had her oral consent to do so, but never obtained her written authorization. Respondent made discretionary trades while she was out of the country from July through November, 1982, during which time Respondent failed to send the customer copies of the monthly account statements, despite her request that he do so. The other customer lost over $52,000 from September, 1982, through August, 1984. Respondent made numerous discretionary trades without first having obtained his written authorization, although he had received his oral approval. A large part of the trading involved uncovered options. Respondent has engaged in options trading since he entered the securities industry. Prior to the organization of the first options exchange in 1973, Respondent bought and sold over-the-counter covered options. An option may be either a call or a put. The seller of the option gives the buyer the right, within a certain period of time and at a specific price, to purchase from the seller a particular security or commodity (call) or to sell to the seller a particular security or commodity (put). A more speculative form of options trading involves uncovered options. The seller of a covered option owns the optioned security or commodity. The seller of an uncovered option does not own the optioned property. In the case of an uncovered call option, for instance, the seller's potential loss is theoretically unlimited. If the purchase price of the optioned property increases following the sale of the uncovered call option, the seller's loss can only be determined when he purchases the optioned property to cover the call. One important strategy used by Respondent was to sell covered and uncovered call options, especially of stocks out of the money at the time of the sale. Being out of the money means that the price at which the buyer is entitled to purchase the stock exceeds the price of the stock at the time that the option is sold. For almost ten years following the establishment of the first options exchange, market conditions were relatively stable. In Respondent's experience, the price of the optioned stock did not rise sufficiently during the term of the option to warrant the exercise of the option about 90% of the time. In such cases, the option expired worthless and the seller of the option made money. Using this strategy, Respondent consistently was one of Shearson's top producers in the country. In August, 1982, the market suddenly became volatile, increasing by about 150 points during a ten-day period. Respondent's customers using the above-described strategy generally were exposed to significant financial losses as a result of this unprecedented price surge. The August, 1982, rally coincided with the departure from the country of the first customer. Most of her losses took place during this timeframe. The circumstances were somewhat different in the case of the second customer. Respondent began risky uncovered options trading on his account in November, 1982, three months after the rally. The trading was especially heavy, in view of the customer's annual income of over $20,000, net worth of $100,000, and investment objective of preserving capital. In 1983 and 1984, Respondent made over 400 options transactions, mostly uncovered, on this customer's account. In addition to the two incidents described above, Respondent has received only two other complaints during his 27 years in the securities industry. These complaints, which were also disclosed on his application, were resolved informally and were apparently less serious than the incidents that led to his eight-year suspension.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that Petitioner enter a Final Order dismissing the Administrative Complaint. ENTERED this 11th day of September, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 11th day of September, 1989. APPENDIX Treatment Accorded Proposed Findings of Respondent 1-2. Adopted. Rejected as recitation of evidence and legal argument. Adopted in substance. 5-9. Rejected as recitation of evidence. COPIES FURNISHED: Lawrence A. Gonzalez, Secretary Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Arthur J. Shell, Jr. Department of Professional Regulation Division of Real Estate Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Howard S. Marks Graham, Clark, Pohl & Jones 369 North New York Avenue Post Office Drawer 1690 Winter Park, Florida 32790
