FINDINGS OF FACT AND CONCLUSIONS OF LAW
Respondent joined Penn Mutual as an agent in January 2001. (JX-1, p. 4).
Respondent was registered with Penn Mutual’s broker-dealer affiliate, HTK, in the
following capacities: (i) an investment company and variable contracts products
representative on May 22, 2001; (ii) a general securities representative on July 25, 2002;
and (iii) a general securities principal on August 21, 2002. (JX-1, p. 5).
At Penn Mutual and HTK, Respondent spent 95% of his time recruiting insurance
agents to sell Penn Mutual products as independent contractors, and helping them build
their business. (Tr. pp. 78-80, 84). In 2006, Respondent, based in Atlanta, GA, was Penn
Mutual’s regional director for Georgia, Tennessee, Alabama, North Carolina, and South
Carolina. (Tr. p. 82). He supervised approximately 30 registered representatives and
approximately 200 independent insurance agents. (Tr. pp. 83-84).
At the beginning of every month, Penn Mutual wired approximately $6,300 into a
bank account in the name of Respondent, as the regional director, to be used to pay the
expenses of the region. (Tr. pp. 88-90). Penn Mutual prepaid Respondent, giving
Respondent the authority to spend the money as he chose, as long as the money was used
for legitimate business expenses. (Tr. p. 89). Respondent’s office administrator
maintained the accounting for the expense reports. (Tr. p. 90). Upon receipt of
Respondent’s receipts and expense reports, the office manager prepared checks, signed
by Respondent, to pay charges on the company credit card and/or transferred cash
reimbursements to Respondent’s separate personal account. (Tr. pp. 90, 105, 143-144).