Opinion
C.A. No. 18675
Submitted: September 7, 2001.
Decided: December 10, 2001.
John L. Reed, Esquire, Thomas P. McGonigle, Esquire, DUANE, MORRIS HECKSCHER, LLP, Wilmington, Delaware, Attorneys for Appellants/Respondents Below.
Peter O. Jamison, III, Deputy Attorney General, Department of Justice, STATE OF DELAWARE, Attorneys for Appellees.
MEMORANDUM OPINION AND ORDER I.
This is an appeal from an Opinion and Order issued December 18, 2000 by an administrative hearing officer ("Hearing Officer") appointed to act in a matter filed before the Securities Commissioner of the State of Delaware. The Hearing Officer found that William N. Whelen, Jr., a broker-dealer agent with Simon Securities, Inc., violated various sections of the Delaware Securities Law. Furthermore, the Hearing Officer found that Simon Securities and its President, William J. Byrd, III, failed to supervise Whelen, in violation of 6 Del. C. § 7316(a)(10). As a result of these findings, the Hearing Officer imposed sanctions on Whelen, Byrd, and Simon Securities (collectively "Appellants") and ordered Byrd to make restitution payments.
In this Opinion, I will evaluate the scope of an arbitration agreement entered into between the parties and its effect on the Hearing Officer's power to award restitution. Further, I will determine whether there is enough evidence in the record to support the Hearing Officer's findings that the Appellants violated the Delaware Securities Act. Finally, I will determine whether the statute of limitations should have barred the proceeding below.
II.
The facts underlying the issues on this appeal date back to 1993. At that time, Emerson Pepper approached William N. Whelen, Jr., a broker-dealer agent with Simon Securities, Inc., seeking to raise capital for First State Poultry, Inc. Whelen agreed to help Pepper and began soliciting a number of potential investors, including Ronald and Donna Mitchell, who were Whelen's long time clients. The Mitchells agreed to invest $50,000 in First State Poultry in the form of a two-year debenture yielding 10% annually. On or about July 6, 1993, the Mitchells sent a check for $50,000 to the bank that was acting as an escrow agent for the debenture offering.
In August 1993, the National Association of Securities Dealers ("NASD") and the United States Securities and Exchange Commission ("SEC") conducted a review of Simon Securities. During the review, a NASD officer contacted persons who had invested in First State Poultry and determined that the investors were not adequately apprised of the risks associated with their investments.
In light of the NASD's findings, William J. Byrd, III, President of Simon Securities, contacted Whelen and ordered all of the investors' money returned. Byrd also summoned Whelen to a meeting with Byrd's attorney. At this meeting, Byrd testified, he instructed Whelen to engage in full disclosure with respect to any investments that Whelen offered to his clients. Byrd also testified that he told Whelen not to get involved with the First State Poultry offering "at this level." Byrd explained that he was leaving open the possibility that Simon Securities might, in the future, be willing to assist First State Poultry in obtaining financing through the Sussex County Industrial Revenue Authority. After the meeting, Byrd testified, he monitored Whelen's activities on a daily basis by talking to him on the telephone and reviewing his outgoing correspondence.
Byrd also sent a letter to Pepper informing him that an SEC audit brought to light serious concerns regarding the underwriting of First State Poultry. The letter went on to state that it was in the best interest of all the parties to return the money to the investors and suggested that Pepper direct the bank to do so. Pepper later instructed the bank to do so and the funds were returned.
Pepper also mailed a letter to each investor, that he claims was drafted by Whelen, falsely stating that their investments were being returned because First State Poultry was unable to obtain a mortgage commitment for the construction of its chicken processing facility.
Beginning sometime afterward, Pepper wrote to the Mitchells and others to re-solicit their investment in First State Poultry. At the hearing below, Pepper testified that, while he typed and mailed the letters, Whelen was the draftsman. Pepper also stated that he was not aware of any involvement by Byrd or Simon Securities in the attempt to resolicit investments in First State Poultry. Pepper's resolicitation proved successful. The Mitchells (among others) agreed to reinvest under the originally agreed upon terms.
In January 1994, Pepper allegedly sent the Mitchells a stock certificate indicating that they owned thirty shares of stock in First State Poultry. The stock was not registered with the Delaware Division of Securities. Mr. Mitchell, confused by the receipt of a stock certificate because he thought he had purchased debentures, contacted Pepper for an explanation. Unable to get any clarification from Pepper, Mr. Mitchell called Whelen and asked about the stock certificate. According to both Whelen and Mr. Mitchell, Whelen explained that he was not involved with the resolicitation and that Mr. Mitchell would need to resolve the issue with Pepper. Whelen's lack of knowledge of the stock issuance is contradicted by Pepper's testimony and by the fact that he drafted and signed a document captioned "proposal" that listed all the shareholders of First State Poultry and their respective ownership interests in the company. The "proposal" shows that Whelen and Pepper were to be the principal shareholders of First State Poultry.
The Mitchells let the issue go and over the next few years received and accepted dividend payments from First State Poultry totaling over $17,000. In September 1995, however, the Mitchells demanded that First State Poultry return their $50,000 principal investment in full, as originally promised. First State Poultry refused and, that same month, the Mitchells filed suit in the Superior Court claiming that they had been defrauded by Pepper and First State Poultry. On September 11, 1998, the Mitchells filed a second civil complaint in the Superior Court naming Whelen and Simon Securities as defendants and making the same allegations they had previously made against Pepper and First State Poultry. In May 1999, after reaching an agreement with Whelen and Simon Securities to submit their dispute to binding arbitration before the NASD, the Mitchells stipulated to the dismissal of their second Superior Court action.
Also on September 11, 1998, the Delaware Division of Securities (the "Division") filed an administrative complaint with the Hearing Officer for the State of Delaware against Pepper and the parties to this appeal, Whelen, Byrd, and Simon Securities (collectively "Appellants"). The Division alleged that the Appellants violated various provisions of the Delaware Securities Act, 6 Del. C. Ch. 73 (the "Act"), in obtaining financing for First State Poultry. On April 21, 1999, the Division filed a First Amended Complaint with the Hearing Officer that added a charge of fraud against Whelen. On September 14, 1999, the Division filed a Second Amended Complaint with the Hearing Officer that added allegations of dishonest and unethical conduct by Whelen. The Division claimed that Whelen's misconduct in connection with the resolicitation was hidden from the Division until May 6, 1999, when the Division learned of Whelen's misconduct during an interview of Pepper.
In March and August of 2000, Deputy Attorney General Richard Hubbard, who was designated initially by the Securities Commissioner and later by the Attorney General to act as Hearing Officer, conducted a hearing on the Division's complaint. The Hearing Officer issued a Default Order against Pepper requiring that he make restitution to the Mitchells and pay a fine of $70,000. A short time later, Pepper filed for bankruptcy in federal court. The Appellants then moved to stay the proceedings under the automatic stay provisions of federal bankruptcy law. The Hearing Officer denied the motion and the hearing continued, coming to a conclusion on August 23, 2000.
On December 18, 2000, the Hearing Officer issued an Opinion and Order making the following findings in connection with the resolicitation of investments in First State Poultry:
(i) Whelen was, in general, willfully dishonest in violation of 6 Del. C. § 7316(a)(7);
(ii) Whelen willfully caused the offer of an unregistered stock in violation of 6 Del. C. § 7304 and 7316(a)(2);
(iii) Whelen willfully violated 6 Del. C. § 7303 and 7316(a)(2) by omitting information as to the risks associated with the First State Poultry stock;
(iv) Whelen violated 6 Del. C. § 7316(a)(7) by selling a security that was unsuitable for his client;
(v) Simon Securities failed to supervise Whelen reasonably in violation of 6 Del. C. § 7316(a)(10); and
(vi) Byrd failed to supervise Whelen reasonably in violation of 6 Del. C. § 7316(a)(10).
As a result of these findings, the Hearing Officer:
(i) revoked Whelen's registration as a broker-dealer agent in Delaware;
(ii) ordered Whelen to pay a fine in the amount of $25,000;
(iii) ordered Simon Securities to pay a fine in the amount of $10,000;
(iv) suspended the broker-dealer license of Simon Securities for one hundred twenty (120) days;
(v) ordered Byrd to make restitution in the amount of $69,945.21;
(vi) suspended Byrd's broker-dealer agent license for sixty (60) days; and
(vii) fined Byrd $10,000 to be suspended upon full payment of restitution.
On February 15, 2001, Appellants filed a complaint in this court pursuant to 6 Del. C. § 7324 seeking to have the Hearing Officer's Opinion and Order set aside. They contend that the Hearing Officer's findings of fact are not supported by competent, material and substantial evidence in the record and the conclusions of law are erroneous. The matter was submitted to the court on the parties' briefs.
III.
A. The Standard of Review
The Act designates the Court of Chancery as the forum for judicial review. The Delaware Supreme Court has opined that assignment of jurisdiction to this court is due to "the area subject to regulation and the need for injunctive relief in enforcement." In reviewing such orders, the findings of the Commissioner as to the facts, if supported by competent, material and substantial evidence, are conclusive. The statute by its silence implicitly recognizes the authority of this court to determine questions of law de novo.
6 Del. C. § 7324(a).
Blinder Robinson Co. v. Bruton, Del. Supr., 552 A.2d 466, 470 (1989).
6 Del. C. § 7324(b).
Blinder Robinson Co., 552 A.2d at 470 (citing, DuPont v. DuPont, Del. Supr., 216 A.2d 674, 680 (1966)).
B. Review of the Hearing Officer's Factual Conclusions
Appellants argue that there is no document or other type of record evidence showing that Whelen engaged in a conspiracy to violate the Delaware Securities Act in connection with the resolicitation. Also, Appellants contend that assuming, arguendo, that the Division proved that Whelen engaged in a conspiracy to violate the Delaware Securities Act, there is no evidence to sustain a violation for failure to supervise by Simon Securities and/or Byrd.
1. Review of the Hearing Officer's conclusion that Whelen engaged in a conspiracy to violate the Delaware Securities Act.
Appellants claim that the sanctions imposed against Whelen should be overturned because the Hearing Officer's findings of fact are not supported by competent, material and substantial evidence. In support of this claim, they argue that that there is no single document or other type of record evidence showing that Whelen engaged in a conspiracy to violate the Delaware Securities Act. Relying on Weick v. State, Appellants contend that the Division is required to prove not only that Whelen agreed with Pepper to engage in conduct that violates the Act, but also that Whelen committed an overt act in furtherance of the agreement.
Del. Supr., 420 A.2d 159 (1980).
Appellants interpretation of Weick is incorrect. The Weick court interpreted 11 Del. C. § 512 and found that in order to obtain a conspiracy conviction the State must prove the existence of an unlawful agreement and that an overt act in furtherance of the agreement had been committed. The court did not state, as Appellants claim, that the person charged with the crime had to commit the overt act. Furthermore, the Weick court relied on the Delaware Criminal Code Commentary, a part of the legislative history of the conspiracy statute, for the proposition that "[am important change in the former law is a requirement that an overt act be committed in pursuance of the conspiracy. . . . It is sufficient that any of the conspirators has committed an overt act." Consequently, the Division did not have the burden of proving that Whelen committed an overt act in furtherance of the agreement. It only had to prove that an agreement had been made and either Whelen or Pepper committed an act in furtherance of the agreement.
That section provides as follows: "A person is guilty of conspiracy in the second degree when, intending to promote or facilitate the commission of a felony, the person: (1) Agrees with another person or persons that they or 1 or more of them will engage in conduct constituting the felony or an attempt or solicitation to commit the felony; or (2) Agrees to aid another person or persons in the planning or commission of the felony or an attempt or solicitation to commit the felony; and the person or another person with whom the person conspired commits an overt act in pursuance of the conspiracy."
Weick, 420 A.2d at 164-65.
I find that competent, material and substantial evidence exists that proves the existence of an agreement and an overt act in furtherance of the agreement. First, Pepper testified that he and Whelen met several times to discuss resoliciting investors for First State Poultry. Second, contrary to Appellants' claim that not one piece of paper exists evidencing an agreement between Pepper and Whelen, the record reveals a document entitled "proposal" that was drafted and signed by Whelen. The document states that Whelen and Pepper would be the principal shareholders of First State Poultry and lists the remaining shareholders and their stakes in the company. The meetings together with this documentary evidence clearly amounts to competent, material and substantial evidence that Pepper and Whelen had an agreement to resolicit funds from investors. Further, Pepper's testimony stating that he contacted investors and convinced them to reinvest satisfies the overt act requirement.
Based on the existence of the conspiracy between Whelen and Pepper, I affirm the Hearing Officer's conclusions that Whelen was, in general, willfully dishonest in violation of 6 Del. C. § 7316(a)(7); Whelen willfully violated 6 Del. C. § 7303 and 7316(a)(2) by omitting information as to the risk of First State Poultry stock; and Whelen violated 6 Del. C. § 731 6(a)(7) by selling a security that was unsuitable for his client.
2. Review of the Hearing Officer's conclusion that Byrd and/or Simon Securities failed to supervise Whelen in violation of 6 Del. C. § 7316(a)(10).
The Hearing Officer found that Byrd and Simon Securities failed to supervise Whelen in violation of 6 Del. C. § 7316(a)(10). The Appellants argue that assuming, arguendo, that the Division proved a violation of the Act by Whelen, no evidence exists to support the failure to supervise finding against Simon Securities and/or Byrd.
I have reviewed the record below and find that the Hearing Officer's conclusion that Byrd and/or Simon Securities violated 6 Del. C. § 7316(a)(10) by failing reasonably to supervise Whelen as to the second offering of First State Poultry is not supported by competent, material and substantial evidence. The Hearing Officer's findings were based entirely on the fact that Simon Securities and Byrd were aware of Whelen's misconduct in connection with the initial offering of First State Poultry and, while they took certain steps to increase Whelen's supervision, failed to prevent the second solicitation from occurring. Unlike the Hearing Officer, I refuse to infer from the fact that a second solicitation did occur a conclusion that Byrd and/or Simon Securities "failed reasonably to supervise" Whelen.
6 Del. C. § 7316(a)(10).
The evidence is uncontested that Byrd, upon learning of the findings by the SEC and the NASD, telephoned Whelen and ordered all the investors' money returned. In addition, Byrd promptly summoned Whelen to a meeting in Doylestown, Pennsylvania with Byrd and his attorney where Whelen was warned not to get involved in the First State Poultry offering "at this level." The Hearing Officer interpreted Byrd's comment to mean that, while Whelen should not directly solicit investments from Simon Securities' customers, Byrd had no objection to Pepper making the solicitations. The record indicates, however, that during the hearing, Byrd was asked to clarify what he meant by the phrase "at this level" and he stated that he told Whelen not to get involved at all unless the Industrial Revenue Authority in Sussex County was interested in funding the deal. Following the meeting, Byrd stepped-up his supervision of Whelen and began monitoring Whelen's activities on a daily basis by talking to him on the telephone and reviewing Whelen's out-going correspondence. All of these factors suggest that Byrd, in his supervisory capacity, took reasonable steps to monitor Whelen's conduct.
Further, there is not a single piece of paper, record, account form, telephone record, or any testimony in the record that indicates that the second solicitation on behalf of First State Poultry occurred on Simon Securities premises, with Simon Securities equipment, using Simon Securities letterhead, or that Simon Securities was otherwise involved with or even aware of the second solicitation. Even the Division's complaint alleges that the "conspiracy" between Whelen and Pepper was formed in Pepper's home. Simon Securities and/or Byrd cannot be held strictly accountable for Whelen's misconduct when it occurs at the home of a co-conspirator and outside the scope of his employment.
For these reasons, I reverse the Hearing Officer's findings of violations by Simon Securities and Byrd, together with the suspensions, fines and restitution imposed on them. It should be noted, however, that the Mitchells are free to pursue all claims against Simon Securities and Whelen in the arbitration proceeding.
C. Review of the Hearing Officer's Legal Conclusions.
The Appellants raise four arguments seeking to overturn the Hearing Officer's conclusions of law. First, the Appellants claim that the award of restitution against Byrd is void because the issue of restitution is subject to the binding arbitration agreement between the Mitchells and Simon Securities. Second, the Appellants contend that there can be no finding of a violation for the sale of unregistered securities because the securities at issue were exempt from registration pursuant to §§ 7304 and 7309(b)(9) of the Delaware Securities Act. Third, Appellants claim that the Hearing Officer's Opinion and Order is void ab initio because the proceeding below was stayed pursuant to federal bankruptcy law and no request for relief from the stay or severance of the non-debtor parties from the proceeding was sought. Finally, the Appellants maintain that all of the Division's claims are barred by the applicable statute of limitations. I will address these arguments in turn.
1. Review of the Hearing Officer's decision to exclude Byrd from the arbitration agreement.
On May 26, 1999, a Stipulation of Dismissal was entered into between the Mitchells and both Simon Securities and Whelen. It stated in pertinent part:
WHEREAS, the parties have agreed to submit this dispute to binding arbitration before the National Association of Securities Dealers.
Based on this agreement, the Hearing Officer held that the restitution remedy was unavailable as to Whelen and Simon Securities. Nevertheless, the Hearing Officer found that the restitution remedy could be pursued against Byrd since he is not listed as a party in the Stipulation of Dismissal.
I have already concluded that the Hearing Officer's factual conclusion that Byrd and Simon Securities failed to supervise Whelen is not supported by competent, material and substantial evidence. Nonetheless, I will consider whether the agreement to arbitrate between the Mitchells and Simon Securities precluded the Hearing Officer from awarding restitution against Byrd as a matter of law. Appellants claim that the Hearing Officer's decision to exclude Byrd from the arbitration agreement ignores the principles established in Olde Discount Corporation v. Tupman. Furthermore, Appellants argue that the Hearing Officer's decision contradicts strong public policy and case law of this State favoring arbitration of claims. For the reasons discussed below, I find that the Mitchells' agreement to arbitrate their claim for restitution against Simon Securities precluded the Hearing Officer from making an award of restitution in their favor against Byrd.
1 F.3d 202 (3d Cir. 1993).
It is obvious from the decision that Byrd's only source of potential liability to the Mitchells flows from his employment as President of Simon Securities. Indeed, under the Hearing Officer's order, Byrd's liability to pay restitution is based solely on a finding that he, as President of Simon Securities, failed to supervise Whelen. The Hearing Officer made the same finding as against Simon Securities but did not enter a restitution order against the corporation due to the existence of the arbitration agreement. In the circumstances, it is hard to see how the claim against Byrd is distinguishable from the claim the Mitchells agreed to arbitrate against Simon Securities. Indeed, it is only reasonable to assume that Simon Securities will be obliged to indemnify Byrd for any restitution he is ordered to make to the Mitchells.
This is particularly true because there is no finding that Byrd's "failure to supervise" was accompanied by any independent misconduct that made him part of the underlying conspiracy.
Simon Securities, however, agreed to arbitrate the Mitchells' claim for restitution and should not be threatened with the possibility of paying two such awards. Conversely, Simon Securities could win the arbitration claim, but, nevertheless, have to foot the bill for the restitution order against Byrd. Thus, allowing the Hearing Officer to award restitution against Byrd permits the Mitchells to "end run" the arbitration agreement by seeking the same relief in another proceeding.
Olde Discount Corporation, 1 F.3d 202.
Id.
Treating the claim against Byrd as within the scope of the arbitration agreement is also consistent with Delaware public policy, which favors resolving disputes through arbitration. Moreover, Delaware courts have found that an arbitration agreement ordinarily encompasses the disposition of the entire dispute between the parties on which an awarded judgment may be entered. Since liability against Byrd and Simon Securities for restitution would be based on the same facts and legal arguments, Delaware public policy dictates that both should be covered under the arbitration agreement.
Graham v. State Farm Mutual Automobile Insurance Co., Del. Super., 565 A.2d 908, 911 (1989).
Pullman Inc. v. Phoenix Steel Corp., Del. Super., 304 A.2d 334, 338 (1973).
2. Review of the Hearing Officer's conclusion that Whelen willfully violated 6 Del. C. §§ 7304 and 7316(a)(2) by offering unregistered stock in First State Poultry to the Mitchells.
Appellants argue that the stock offering in this case was exempt from registration pursuant to 6 Del. C. § 7309(b)(9) because the offerings were made to fewer than twenty-five persons. Under 6 Del. C. § 7309(d) the burden of proving an exemption is on the person claiming it. I find that the Appellants have failed to meet their burden and thus affirm the Hearing Officer's holding that Whelen willfully violated 6 Del. C. § 7304 and 7316(a)(2) by offering unregistered stock in First State Poultry.
The Hearing Officer, has, pursuant to regulation, conditioned the exemption created by 6 Del. C. § 7309(b)(9). Specifically, §§ 502(b)(3) and 502(b)(4) of the Rules and Regulations to the Act provide that issuers relying upon the exemption created by 6 Del. C. § 7309(b)(9) must make certain filings with the Delaware Securities Division. It is undisputed that the proper filings were never made with the Delaware Securities Division. Hence, Appellants cannot claim to be exempt from registration by § 309(b)(9) of the Act.
The Appellants also argue that the Hearing Officer's decision should be reversed because the Division's administrative complaint did not charge them with failing to comply with the exemption filing requirements of § 502(b). This argument misunderstands the securities registration scheme under the Delaware Securities Act. The unlawful conduct here was not the Appellants' failure to comply with the exemption filing requirements of § 502(b) of the Rules and Regulations, but rather the Appellants' sale of unregistered securities. The exemption filing requirements of § 502(b) become relevant in a proceeding under the Securities Act only when an issuer claims that its offering was exempt from registration under § 7309(b)(9) of the Act. As stated above, because the necessary filings were not made with the Delaware Securities Division as required by § 502(b) of the Rules and Regulations, Appellants failed to meet their burden of proving that the securities at issue were exempt from registration under § 7309(b)(9) of the Act. The Hearing Officer, therefore, did not err in finding that Whelen willfully violated 6 Del. C. § 7304 and 7316(a)(2) by offering unregistered stock in First State Poultry.
3. Review of the Hearing Officer's decision to continue the proceeding after Pepper filed a Chapter 7 bankruptcy petition and triggered the automatic stay provision of the United States Bankruptcy Code.
Appellants argue that Pepper's voluntary filing of a Chapter 7 bankruptcy petition triggered the automatic stay provisions articulated in § 362 of the United States Bankruptcy Code and, as a result, prevented any further action against any of the Appellants. In support of their argument, Appellants cite In re Related Asbestos Cases. There, the court held that an automatic stay does not apply to cases against non-debtors, and that proceedings against the debtors could be severed so as to permit the action to move forward against the non-debtor codefendants. Based on In re Asbestos, Appellants argue that, because no severance occurred, the Hearing Officer was not permitted to proceed and, as a result, his Opinion and Order is unenforceable and must be set aside as a matter of law.
9 Bankr. Ct. Dec. 874 (N.D.Cal. 1982).
The Division argues that the Hearing Officer correctly held that, to the extent there was a stay arising out of a bankruptcy proceeding initiated by Pepper, that stay would only apply to proceedings against Pepper. Alternatively, the Division argues that Pepper was effectively severed from the proceedings on January 27, 1999 when a final order of default was entered against him.
Delaware law is unclear with respect to Appellants' argument that the Division was required to formally sever Pepper from the proceedings before it could pursue claims against the non-debtor Appellants. Also, the Division cites no authority supporting its contention that Pepper was effectively severed from the proceedings when a final order of default was ordered against him. The fact that I have already reversed the Hearing Officer's decision to award the Mitchells restitution damages allows me to resolve this issue without addressing either argument.
In their opening brief, Appellants cite In re Mcorp for the proposition that 11 U.S.C. § 362(b)(4)'s "police or regulatory power" exception to the automatic stay does not apply when the regulatory agency is pursuing pecuniary damages. Nevertheless, governmental actions such as license suspensions are exempt from the automatic stay provisions articulated in § 362 of the United States Bankruptcy Code.
101 B.R. 483 (S.D. Tx. 1989).
Aside from the Division's award of restitution, its remaining claims against the Appellants arise from its regulatory and policing authority. These claims are, as Appellants concede, exempt from the automatic stay provisions articulated in § 362 of the United States Bankruptcy Code. As a result, I find that, putting to one side the Division's claim for restitution (which has already been reversed on other grounds), the Hearing Officer did not err in pursuing the Division's remaining claims because they all arise from the Security Commissioner's regulatory or policing authority.
4. Review of the Hearing Officer's conclusion that the Division's claims against Appellants were not time barred by 6 Del. C. § 7330.
Section 6 Del. C. § 7330, Title 6, of the Delaware Code ("Statute of Limitations") reads as follows:
a) In any administrative, civil or criminal action brought by the Commissioner seeking registration suspension or revocation, fines, costs, restitution or imprisonment, no more than 5 years shall have passed from the date of the violation to the date of the initiation of the proceeding.
b) This 5-year limit shall not apply to registration denial proceedings.
The Division filed its initial complaint on September 11, 1998. The record reveals that the Mitchells' second $50,000 check is dated September 14, 1993.
Appellants argue that, because the Division has set forth no evidence supporting that the alleged misconduct occurred between September 11, 1993 and September 14, 1993, all of the Division's claims regarding the second solicitation are barred by the 5-year statute of limitations articulated in 6 Del. C. § 7330(a). Furthermore, Appellants argue that 6 Del. C. § 7330(a) operates as a statute of repose, not a statute of limitations, and as a result is not tolled by fraudulent concealment.
I find it unnecessary to decide the question whether or not § 7330(a) is a statute of repose or, instead, is susceptible to principles of equitable tolling. I reach this conclusion because I am satisfied that there is evidence in the record from which the Hearing Officer could properly conclude that actions that constituted a part of the conspiracy between Whelen and Pepper to violate the securities laws in connection with the resolicitation occurred within 5 years of September 11, 1998. Specifically, the record reflects the fact that the Mitchells dated their check on September 14, 1993 and mailed it to Pepper who later negotiated it. Also, at some later time, Pepper caused First State Poultry to issue share certificates to the Mitchells and the other investors. These acts were all in furtherance of the second solicitation and were all squarely within the 5-year period of limitations. For that reason, it is immaterial whether the record shows expressly that the initial contact to resolicit the Mitchells or the other investors occurred before September 11, 1993.
V.
For the foregoing reasons, the Hearing Officer's findings as to Whelen are affirmed along with all sanctions imposed on him. Conversely, I reverse the Hearing Officer's findings of violations by Simon Securities and Byrd, together with the suspensions, fines and restitution imposed on them. IT IS SO ORDERED.