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  • II.

    FINDINGS OF FACT AND CONCLUSIONS OF LAW

    • A.

      Facts

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).

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