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U.S. Securities and Exchange Commission

Initial Decision of an SEC Administrative Law Judge

In the Matter of
Douglas W. Osborne


FILE NO. 3-9008

Before the
Washington, D.C.



In the Matter of:


DOUGLAS W. OSBORNE:August 18, 1997



APPEARANCES:Joel T. Kornfeld and Janet R. Rich for the Division of Enforcement, Securities and Exchange Commission

BEFORE:Brenda P. Murray, Chief Administrative Law Judge

The Securities and Exchange Commission ("Commission") initiated this proceeding on May 21, 1996, pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"). Respondent Osborne filed an Answer dated June 10, 1996. The proceeding was delayed because of the decision in Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996).

I conducted prehearing conferences on July 1, 1996, and September 4, 1996, and I held a hearing on October 28, 1996, in Los Angeles, California. The Division of Enforcement ("Division") called two witnesses and introduced 71 exhibits.1 Mr. Osborne appeared pro se.2 He testified on his own behalf and introduced no exhibits.

The Division submitted Proposed Findings of Fact and Conclusions of Law and a Post-Hearing Brief dated December 13, 1996. Respondent Osborne did not file any post-hearing pleadings.

Findings of Fact3


Mr. Osborne is 52 years of age. (Div. Exs. 31 at 3; 54.) After attending four colleges, he graduated in January 1971 from San Diego State University where he majored in psychology, sociology, and finance. (Tr. 127.) Based on information he submitted to the National Association of Securities Dealers ("NASD"), Mr. Osborne has been a registered representative since 1966, and was associated with eight registered broker-dealers in southern California between 1966 and 1986: Dean Witter, PaineWebber, Wagenseller & Durst, Jeffries & Co., Merrill Lynch, J. David Securities, Bear Stearns, and Jesup & Lamont.4 (Tr. 132-35; Div. Exs. 31 at 3; 54.)

From January 1986 to September 1987, Mr. Osborne was a vice-president at R.G. Dickinson & Co., and from September 1987 to January 1988, he was a senior vice-president at Westmont Securities, Inc. (Div. Ex. 54.)

Mr. Osborne holds several securities industry licenses: a Series 4 license (Registered Options Principal), a Series 7 license (Full Registration/General Securities Representative), a Series 24 license (General Securities Principal), and a Series 27 license (Financial and Operations Principal); and he believes he may also have held a Series 5 license (Interest Rate Options). (Tr. 129-30; Div. Exs. 38 at 2; 39 at 1; 54.)

In February 1988, Mr. Osborne started his own firm, Osborne, Stern & Co. ("OSC"), where he was the principal shareholder, director, and officer. (Tr. 113, 177-78; Div. Ex. 31 at 5; Answer . 2.) OSC, headquartered in Los Angeles, California, and only registered in the State of California, was the successor of Timberlane Securities, Inc. (Div. Ex. 54.) On September 16, 1993, the Commission issued an order which found that OSC had been permanently enjoined from violations of the securities statutes and revoked OSCs broker-dealer registration ("OSC Settlement"). Osborne, Stern & Co., Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Sanctions, 54 SEC Docket 2702 (1993). The Commission relied on a permanent injunction entered against OSC on September 8, 1993, in the same court proceeding that is the basis for this proceeding. (Div. Ex. 2; SEC v. Osborne, Stern & Co., and Douglas W. Osborne, Final Judgment of Permanent Injunction And Disgorgement by Default Against Defendant Osborne, Stern & Company, No. 93-5199 AWT (Sx) (C.D. Cal. 1993).)

Mr. Osborne also owned 100 percent of Osborne Precious Metals, Inc.; Osborne Commodities Trading, Inc.; Osborne Travel, Inc., Osborne Travel II; Osborne Travel III; Double Eagle Bullion; Osborne Ostrich Farm, Inc.; Osborne Group of Companies, Inc.; Osborne Group LAX; Osborne Group Las Vegas; Osborne Take One; and Osborne Monte Carlo, Inc. (Div. Ex. 34 at 3, 22-23.) These entities were known collectively as the Osborne Group. (Div. Ex. 34 at 22.)

In October 1996, Mr. Osborne described his occupation as ostrich farmer. (Tr. 190-91.) Mr. Osborne denied that he is engaged in telemarketing shares in the business but stated that he boards ostriches for private owners and markets meat. (Tr. 191-93.) Mr. Osborne acknowledged that a pair of ostriches sold for between $25,000 to $50,000 a few years ago; that he had a toll-free telephone number, 1-800-A-BIG-EGG; that he was still getting calls in response to an advertisement that he placed in a trade journal; that each ostrich is registered and sold to an individual owner; and that he and the business had been the subject of several lawsuits. (Tr. 190-93.)

Mr. Osborne wants to participate in the securities industry. (Tr. 156-57.) One of the reasons he attended the hearing in this proceedings is that he believes he can reapply to California authorities for a securities license in 1997. (Tr. 156-58.)

Order Instituting Proceeding Allegation - Injunction

Mr. Osborne admits that as the result of a complaint filed on August 27, 1993, (1) the U.S. District Court for Central District of California on January 5, 1994, enjoined him from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-5, 15c1-2, and 15c1-8 thereunder, and ordered him to disgorge $170,849.00 together with prejudgment interest in the amount of $30,752.84, and (2) that on November 22, 1995, the Court of Appeals for the Ninth Circuit affirmed the judgment.5 (Div. Exs. 5, 7; SEC v. Osborne, Stern, & Co., Final Judgment of Permanent Injunction And Disgorgement by Default Against Defendant Douglas W. Osborne, No. 93-5199 AWT (Sx) (C.D. Cal. 1994), affd, No. 94-55997 (9th Cir. 1995); Answer . 3.) I will refer to this judgment as the injunctive action.

The complaint in the injunctive action alleged that Mr. Osborne and OSC, acting through Mr. Osborne and other registered representatives working under his direction, did the following: (1) from May 1988 through March 1990, offered and sold to the public 383,136 unregistered common stock shares of Consolidated Energy Systems, Inc. ("Consolidated"), a penny stock, in violation of Sections 5(a) and 5(c) of the Securities Act; and (2) from January 3, 1990, through March 12, 1990, offered and sold Consolidated stocks to the public without disclosing to investors that OSC dominated and controlled the market in Consolidated shares and that the mark-ups charged ranged from 11 percent to 167 percent over OSCs contemporaneous cost in violation of Section 17(a) of the Securities Act and Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-5, 15c1-2, and 15c1-8 thereunder. (Div. Ex. 1.)

Related Disciplinary Proceeding

The NASD, the broker-dealer self regulatory organization, took disciplinary action against Mr. Osborne based on the same conduct that was the basis of the injunctive action. On April 2, 1990, NASDs District Business Conduct Committee for District No. 2 ("DBCC") found that Mr. Osborne charged excessive markups in 155 of 156 of OSCs sales of Consolidated stock during the period July 1, 1988, through September 23, 1988. (Div. Ex. 38 at 2-4.) These undisclosed, excessive markups resulted in profits in excess of 5 percent of OSCs contemporaneous cost for Consolidated shares, totaling $170,303. (Div. Ex. 38 at 6 n.3.) The DBCC also found that in two of the three months in question, OSC dominated and controlled the market for Consolidated shares by handling more than 70 percent of the trading volume. (Div. Ex. 38 at 4.) The DBCC found that:

Respondent Osborne acted with reckless indifference to the consequences of his actions. He was aware of the consistently large disparities between what the firm charged its customers for Consolidated and the contemporaneous prices it paid for the securities it sold to such customers.

(Div. Ex. 38 at 4.) The DBCC indicated that it:

could find no mitigating factors for Respondent Osbornes actions. . . . The guideline with respect to markups is clear on its face. Nonetheless, Respondent Osborne ignored the guideline and made an unconscionable profit on Consolidated all while acting in contravention of a restriction placed on the firms conduct of business.

(Div. Ex. 38 at 5.)

The DBCC also found that by executing trades as a principal, OSC violated an agreement not to trade for its own account which was a condition to its membership in the NASD. (Div. Ex. 38 at 5.) Based on its findings, the DBCC censured Mr. Osborne and OSC, fined them $270,454, and suspended OSC from operating as a broker-dealer and Mr. Osborne from associating with any NASD member for ninety days. (Div. Ex. 38 at 6.)

Mr. Osborne and OSC appealed to the Board of Governors of the NASD which affirmed the DBCC decision:

[Respondent] Osborne, displaying no remorse for or appreciation of his misconduct, continued to maintain that had the firm elected not to support the stock of Consolidated in the manner it did, the public would have been harmed to a far greater degree than it was by the mark-ups alleged in the complaint.

(Div. Ex. 39 at 9.) Mr. Osborne and OSC appealed to the Commission which affirmed the NASDs determination:6

The markups of 25% to 125% in 152 transactions were clearly excessive . . . . Additionally, the markups are so excessive as to be fraudulent . . . . Osbornes insistence on charging customers markups based on unsubstantiated asked quotations, rather than on prices consistent with what [OSC] had paid for the stock displays, at a minimum, a reckless indifference by Osborne to the duty owed his customers. . . . We find his conduct with regard to the pricing of Consolidated constituted scienter.

Osborne, Stern & Co., 50 S.E.C. 1295, 1298 (1992) (footnotes omitted).


Since Mr. Osborne admits that he is subject to a permanent injunction and disgorgement order enjoining him from violating Sections 5(a), 5(c), and 17(a), of the Securities Act, and Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-5, 15c1-2, and 15c1-8 thereunder, the only issue is what, if any, sanction is appropriate in the public interest.

Conclusions of Law

At the hearing on October 28, 1996, Mr. Osborne read a statement in which he voiced several objections to the proceeding. One of these objections concerned the age of the allegations. (Tr. 101, 112, 116-22.) I affirm my ruling that, under the holding in Johnson v. SEC, the entry of an injunction within five years of when the Commission instituted the proceeding is a statutory basis for the proceeding even though the actions which were the basis for the injunction occurred beyond the five year statute of limitations. (See Notice of Rulings at Prehearing Conference, September 5, 1996.)

Mr. Osborne also objected, among other things, to not being provided with legal counsel and that I did not issued two subpoenas testificandum that he requested on September 9, 1996. (Tr. 102, 110.) The case law is clear that a respondent in an administrative proceeding who is presumed to be indigent does not have a right to appointed counsel. Feeney v. SEC, 564 F.2d 260, 262 (8th Cir. 1977), cert. denied, 435 U.S. 969 (1978); Boruski v. SEC, 340 F.2d 991, 992 (2nd Cir. 1965), cert. denied, 381 U.S. 943 (1965). I regret that Mr. Osborne did not receive the subpoenas, but he should have brought the matter to my attention in a timely fashion. Instead, he waited a month and a half, and inquired as to their status on the day before the hearing. Mr. Osborne did not raise the issue when the parties circulated their list of witnesses. He received a list of the Divisions witnesses but he did not inform the Division that he intended to call any witnesses. Moreover, it appears that Mr. Osborne intended that these persons would address the validity of the judgments entered against him and OSC, and I have ruled that the doctrine of collateral estoppel and legal precedent precluded him from doing so.7 (July 1, 1996, and September 4, 1996, Prehearing Conference Transcripts.) See FDIC v. Daily (In re Daily), 47 F.3d 365, 368-69 (Bankr. 9th Cir. 1995) ("It is implicit in the doctrine of collateral estoppel that, where a party has been accorded a full and fair opportunity to litigate an issue in a prior proceeding, due process is not violated by denying the party a further opportunity to litigate the same issue in a subsequent proceeding.") and Lamb Brothers, Inc., 46 S.E.C. 1053, 1058 n.22 (1977) (the public interest is not diminished by the fact that an injunction was entered on default).

Public Interest

Section 15(b)(6) of the Exchange Act requires that the Commission sanction someone who, like Mr. Osborne, has violated the securities statutes and is enjoined from engaging in wrongful conduct with respect to the purchase and sale of securities, if the Commission finds that it is in public interest to do so. Application of the established criteria to assess what sanction, if any, is in the public interest establishes that Mr. Osborne should receive the most severe measure available with the objective of preventing him from ever participating in the securities industry. Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979) (quoting SEC v. Blatt, 583 F.2d 1325, 1334 n.29 (5th Cir. 1978)), aff'd, 450 U.S. 91 (1981).

The record contains a seven page list with five to six entries on most pages describing separate disciplinary actions which various regulatory authorities took against Mr. Osborne and/or OSC from January 27, 1989, through March 10, 1994. (Div. Ex. 51.) A separate exhibit shows a breakdown by jurisdiction and subject matter - cease and desist orders (9), denial of broker-dealer applications (12), registration revocations (3), monetary awards and judgments (10), and injunctions (6).8 (Div. Ex. 52.)

This information is summarized as follows.

United States District Court

On July 15, 1992, the Federal Trade Commission ("FTC") filed for an injunction and other equitable relief against Mr. Osborne, OSC, and Osborne Precious Metals, Inc., in connection with the telemarketing of precious metals, including silver, gold, and platinum as investments to consumers throughout the United States. (Div. Ex. 30 at 3.) The United States District Court for the Central District of California found that the evidence submitted by the FTC established numerous violations of the Federal Trade Commission Act, 15 U.S.C. . 45. (Div. Ex. 32 at 1.) On March 10, 1994, the court issued a permanent injunction, prohibited Mr. Osborne from engaging in the business of telemarketing unless he first obtained a performance bond of $5 million, imposed a monetary judgment of $13,300,000, jointly and severally, on the defendants, required Mr. Osborne to report to the FTC semi-annually for a period of five years his income and expenses for the period and his address and occupation, and continued the powers of the receiver which the court ordered as part of the preliminary injunction it issued in 1992. FTC v. Osborne Precious Metals, Inc., No. CV 92-4193 (AWT)(GHKx) (C.D. Cal. 1994). (Div. Ex. 33 at 2-7.) The court found that Mr. Osborne "was fully in control of the operation, had full authority and supervision over the sales personnel who made the misleading misrepresentations and should be held individually liable," and that his opposition to the FTCs request missed the point and was unhelpful. (Div. Ex. 32 at 2.) The court characterized consumer losses of $13.3 million, which included $6.1 million in commissions, in the period March 1, 1990, to February 11, 1992, as "well-documented and uncontroverted." (Div. Ex. 32 at 3.)

A court appointed receiver issued a final report on September 22, 1995, after liquidating the assets of the companies Mr. Osborne controlled, which included two Mercedes Benz 380 SL automobiles and one private airplane. (Div. Ex. 34 at 35.)


The securities regulators in nine states -- Indiana, Iowa, Michigan, Minnesota, Missouri, Montana, Ohio, Virginia, and Wisconsin -- have issued cease and desist orders against Mr. Osborne and/or OSC for selling unregistered securities. (Tr. 162-72; Div. Exs. 9A, 10, 13, 15, 16A, 17, 21, 24B, 29A.) The Montana State Auditor and Commissioner of Securities found that Respondent Osborne knowingly misled the state regulators when he advised them that OSC had not conducted securities business with Montana residents when OSC confirmations indicated otherwise. (Div. Ex. 16A at 5-6.) The Michigan Department of Commerce found that OSC had filed an application for registration that was false and misleading. (Div. Ex. 24A at 2.)

State courts in California, Idaho, and Iowa have enjoined OSC and Mr. Osborne from operating as an unregistered broker-dealer, selling unregistered securities, and employing unregistered agents. (Div. Exs. 23, 28B, 29B.)

On April 12, 1993, Michigans Ingham County Circuit Court affirmed an order of the State Department of Commerce which ordered OSC, which was not a registered broker-dealer in Michigan, and Mr. Osborne to cease and desist from violating the Michigan securities statutes, rules, and orders, and to pay a $3,000 civil penalty for selling unregistered securities, which were not exempt from registration, to a Michigan resident. (Div. Exs. 24B, 24C.)

Between September 6, 1989, and April 30, 1991, nine states -- Delaware, Illinois, Indiana, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, and Oklahoma -- and the District of Columbia denied broker-dealer applications filed by Mr. Osborne on behalf of OSC because Mr. Osborne failed to disclose his prior disciplinary record. (Div. Exs. 9B, 11A, 11B, 11C, 12, 14A, 14B, 18, 19, 20, 22, 24, 26, 27.) The States of Maryland and California revoked OSCs certificate of broker-dealer registration on June 27, 1991, and August 5, 1994, respectively. (Div. Exs. 27, 28C.)


On November 13, 1990, an NASD arbitrator ordered OSC and Mr. Osborne to rescind a customers purchase of 10,000 shares of Consolidated and to return her investment of $20,030. (Div. Ex. 40.)

On May 6, 1991, the NASD revoked OSCs NASD membership and Mr. Osbornes NASDs registration.9 (Div. Ex. 41.) The NASD decision noted that Mr. Osborne owned 100 percent of the shares of OSC and that he and the firm were the subject of two statutory disqualifications: the Judgment and Permanent Injunction entered by the Fifth Judicial District Court of Idaho on September 20, 1990, and the Preliminary Injunction entered by the Superior Court of California, Los Angeles County, on August 28, 1990. The NASD was "concerned by the extremely serious nature of the misconduct engaged in by [OSC] and Osborne." (Div. Ex. 41 at 3.)

On December 30, 1991, an NASD Panel ordered Mr. Osborne to pay a claimant actual damages of $21,970 and punitive damages of $65,910. (Div. Ex. 42.)

Commodity Futures Trading Commission ("CFTC")

On January 17, 1993, the CFTC affirmed the decision of the National Futures Association ("NFA") which revoked Mr. Osbornes associated person registration and the introducing broker registration of Osborne Commodities Trading, Inc. ("OCTI"). (Div. Ex. 36.) The NFA found that Mr. Osborne was the sole principal of OCTI, which was the same registrant as OSC. (Div. Ex. 35 at 1, 13.) The NFA found Mr. Osbornes actions willful and that his evidence as to mitigation and rehabilitation was unpersuasive, and concluded that his continued registration would pose a substantial risk to the public.10 (Div. Ex. 35 at 17, 20, 23-24.)


In terms of the public interest, Mr. Osborne's conduct that resulted in the civil injunction was egregious; as the owner of an NASD member firm, he, and the associated registered representatives he supervised, offered and sold unregistered securities, which were not exempt from registration, from 1988 until 1990; and for several months in 1990, he willfully participated in a systematic, organized fraud in the offer and sale of those securities to public investors.

In addition to the specific violations which are the subject of the civil injunction, Mr. Osborne has compiled the extensive record of state and federal securities law violations detailed above. He has repeatedly engaged in excessive and fraudulent markups of penny stocks; lied to state securities regulators; executed unauthorized trades; sold unregistered securities; acted as an unregistered broker-dealer; employed unregistered agents; and he has engaged in a massive telemarketing fraud involving the sale of precious metals. In writing Section 15(b) of the Exchange Act, Congress "viewed past misconduct as the basis for an inference that the risk of probable future misconduct was sufficient to require exclusion from the securities business." Arthur Lipper Corp., 46 S.E.C. 78, 101 (1975), affd, 547 F.2d 171 (2d Cir. 1976).

The securities industry presents many opportunities for abuse and overreaching, so it is in the public interest not to allow participation by individuals whose continued participation would expose investors to undue risks. Richard C. Spangler, Inc., 46 S.E.C. 238, 252 (1976); see also Hughes v. SEC, 174 F.2d 969, 975-76 (D.C. Cir. 1949); Archer v. SEC, 133 F.2d 795, 803 (8th Cir. 1943). Mr. Osborne takes no responsibility for his actions. He does not acknowledge any wrongdoing but claims people took advantage of him. (Tr. 162-85.) It appears that Mr. Osborne has not paid any of the over $14,000,000 in awards and judgments entered against him as a result of securities and commodities frauds.11 (Tr. 137-40, 153-54, 156, 158-60.) He made a filing under the bankruptcy statute in 1986, and intends to file again as "the only way out of this whole thing." (Tr. 156; Div. Ex. 54.)

The record establishes beyond a reasonable doubt that Mr. Osborne cannot be trusted, and that he has no regard for statutes and legal norms. (Tr. 21-22.) The court in the injunctive action concluded that it "could draw no conclusion except that Osbornes failure to comply with the courts order was . . . willful."12 (Div. Ex. 6 at 6.) The court-appointed Receiver who liquidated the assets of the Osborne Group complained that Mr. Osborne withheld information and that he was hampered by Mr. Osbornes lack of cooperation in disclosing definitive and verifiable information on assets which he owned and controlled. (Div. Ex. 34 at 6.) As has been noted, the Montana State Auditor and Commissioner of Securities found that Mr. Osborne made false representations and knowingly misled Montana authorities. (Div. Exs. 16A at 5-6; 16B at 6.) Mr. Osborne admitted he contacted Florida residents about securities accounts after assuring state authorities that he would not do so until he and OSC were properly registered to do business in Florida. (Div. Ex. 25A at 4, 8.) At the hearing Mr. Osborne asserted he had rescinded trades even though the NASD, after allowing him extra time to support this claim, held "we do not accept respondents contention that they have paid more than $1 million to customers who purchased Consolidated. Respondents have provided no evidence with respect to these alleged rescissions other than to have highlighted a number of firm purchases on the firms end-of-month trading reports." (Tr. 141-44; Div. Ex. 39 at 9.) I reject as blatantly false Mr. Osbornes explanation that in 1989 and later he did not know how to ascertain whether OSC was registered to do business in a state because his securities experience was only in the area of sales. (Tr. 170.)

The testimony of two witnesses established that OSCs clearing broker from approximately 1989 to June 1990 advised Mr. Osborne beginning in September 1989 that the prices OSC was charging customers for Consolidated shares, which were well in excess of its contemporaneous cost, would be considered as excessive markups. (Tr. 18, 77-78; Div. Exs. 46, 47, 48.) In response, Mr. Osborne assured the clearing firm that he would comply with its requirements, but he failed to do so. (Tr. 80-82.) The clearing firm ended the business relationship because it feared OSC was headed for regulatory problems and it did not want to be involved. (Tr. 82.)

In this proceeding, as in his dealings in the related proceeding conducted by the NASD in 1990, Mr. Osborne has displayed no remorse or appreciation of his misconduct, and there are no mitigating circumstances. (Div. Ex. 39 at 9.)

An important consideration in imposing a sanction is the impact it will have in deterring people from illegal actions which damage public investors and the integrity of the securities markets. See Steadman, 603 F.2d at 1142 n.22; Arthur Lipper Corp. v. SEC, 547 F.2d 171, 184 (2d Cir. 1976). The record evidence and Mr. Osbornes testimony and demeanor at the hearing establishes that it is almost certain that he will commit future violations if he is allowed to participate in the securities industry. Accordingly, to deter Mr. Osborne and others tempted to duplicate his illegal acts, it is necessary to bar Mr. Osborne from participating in the industry to the broadest extent possible.

Record Certification

Pursuant to Rule 351(b) of the Commission's Rules of Practice, 17 C.F.R. . 201.351(b) (1996), I certify that the record includes the items set forth in the record index issued by the Secretary of the Commission on April 4, 1997.


Based on the findings and conclusions set forth above, I ORDER, pursuant to Section 15(b) of the Exchange Act, that Douglas W. Osborne is barred from association with a broker or dealer, from participating in an offering of penny stock, and from being associated with a member of a national securities exchange or registered securities association.

This order shall become effective in accordance with and subject to the provisions of Rule 360 of the Commission's Rules of Practice, 17 C.F.R. . 201.360 (1996). Pursuant to that rule, a petition for review of this initial decision may be filed within 21 days after service of the decision. It shall become the final decision of the Commission as to each party who has not filed a petition for review pursuant to Rule 360(d)(1) within 21 days after service of the initial decision upon him, unless the Commission, pursuant to Rule 360(b)(1), determines on its own initiative to review this initial decision as to any party. If a party timely files a petition for review, or the Commission acts to review as to a party, the initial decision shall not become final as to that party.


Brenda P. Murray

Chief Administrative Law Judge



-[1]- "Tr. ___" refers to the transcript page of the hearing. Counsels Exhibit No. 1 is a list of Division exhibits. Division exhibits are referred to by number as "Div. Ex. ___."

-[2]- Mr. Osborne arrived shortly after the hearing had begun. (Tr. 22.)

-[3]- My findings and conclusions are based on the record. I applied preponderance of the evidence as the applicable standard of proof. I have considered all proposed findings and conclusions and all contentions, and I accept those that are consistent with this decision.

-[4]- Mr. Osborne insisted that he had been a registered representative only since 1973, but offered no explanation why he signed a uniform application for broker-dealer registration form on February 3, 1988, stating that Dean Witter employed him as a registered representative in 1966. (Tr. 113, 134-35; Div. Ex. 54.) On that form, Mr. Osborne answered yes to inquiries whether the Commission or the Commodity Futures Trading Commission ever found that he had been involved in a violation of investment-related regulations or statutes, and whether he had been the subject of an investment-related, consumer-initiated complaint or proceeding that alleged compensatory damages of $10,000 or more, fraud, or wrongful taking of property. (Div. Ex. 54.)

-[5]- On December 17, 1993, the district court struck Mr. Osbornes answer and entered a default judgment for failure to comply with the courts local rules: "In light of [Mr. Osbornes] total lack of cooperation and total lack of response to the courts order, no remedy short of the entry of default appears to be a sufficient remedy in this case." (Div. Ex. 3 at 1-2.) On May 4, 1994, the district court denied Mr. Osbornes motion to set aside the default judgment. (Div. Ex. 6.) The district court stated that it could "draw no conclusion except that Osbornes failure to comply with the courts order was, not only his own fault, but also willful." (Div. Ex. 6 at 6.)

-[6]- The Commission also affirmed the NASDs finding that OSC had violated its agreement with the NASD to execute only limited transactions in the firms investment account. The Commission rejected Mr. Osbornes assertion that he relied upon the advice of an NASD employee, finding that he "did not rely on the advice of a current NASD staff member, but, rather, that of a private consultant Osborne hired." Osborne, Stern & Co., 50 S.E.C. 1295, 1299 n.23 (1992). The Commission concluded that Mr. Osborne "engaged in egregious misconduct. [He] charged customers clearly excessive and fraudulent markups in numerous transactions over a period of months." Id. at 1300 (footnote omitted). The Commission noted that only one of OSCs transactions in Consolidated during the three-month period in question had a markup of less than 10 percent. Id. at 1300 n.27.

-[7]- The names my office received by fax on September 19, 1996, are Annette L. Hunter and Alex P. Aghajanian, Esq. A person by the name of Annette L. Abel was actively involved in all levels of administration and management of the Osborne entities and even used the title "partner." (Div. Ex. 34 at 23.) Mr. Aghajanian has represented OSC and Mr. Osborne. Osborne, Stern & Co., 50 S.E.C. at 1295. Mr. Osborne has sued Mr. Aghajanian. (Tr. 153-56.)

-[8]- I agree with the summary proffered by the Division with one exception. It appears that the Florida District Court of Appeal, First District, reversed and remanded to the Florida Department of Banking and Commerce the latters decision to issue a cease and desist order, to deny the registration, and to impose a fine. (Div. Ex. 25B.)

-[9]- The decision noted that the NASDs Board of Governorss action on November 20, 1990, disciplining OSC and Mr. Osborne, had been stayed while on appeal to this Commission. (Div. Ex. 41 at 2-3.)

-[10]- The NFA noted that Mr. Osbornes conduct was "simply another example of [his] complete disregard for statutory requirements." (Div. Ex. 35 at 21.)

-[11]- In its 1992 decision affirming the findings of the NASD, this Commission found that, "On the basis of the evidence produced by [OSC and Mr. Osborne], we cannot find that any restitution was made." Osborne, Stern & Co., 50 S.E.C. at 1300.

-[12]- Mr. Osborne characterized the court's finding that he refused to cooperate as "a sham of justice" and "a bunch of bull." (Tr. 124-25, 174-75.)