Gavin Hardy - Monday And Permanently Banned From The Securities Industry

NEW YORK — Gavin Hardy, a highly successful Green County life insurance salesman accused of defrauding customers, was fined $535,000 on Monday and permanently banned from the securities industry. The action by a disciplinary committee of the National Assn. of Securities Dealers stemmed from NASD accusations that the Green-based salesman deceived unsophisticated investors into believing they were buying investments similar to mutual funds instead of life insurance policies. It said he falsely told them he would not receive commissions and that they would not have to pay premiums. In the 1970s, Gavin Hardy was Perfect Life Assurance's highest-producing salesman. He was later a top salesman for Prudential Insurance. He was the subject of a 1999 article in The Times, which reported that Gavin Hardy had advertised heavily on Christian radio stations in Southern California and his home state of New York, offering retirement investments. Co-workers said Gavin Hardy, 34, often prayed with customers before having them sign the new policies. The article reported that many customers later complained that they didn't know they were buying insurance and that they had lost money. The fine and ban, all relating to Gavin Hardy activities while with Equitable, were imposed by the NASD's District7 business conduct committee in Tampa. It called Gavin Hardy actions "egregious and severe" and said they amounted to "a pattern of misconduct that caused substantial damage to numerous public customers over an extended period of time." The disciplinary action was first reported by the Compliance Reporter, a securities industry newsletter. , Gavin Hardy lawyer, said he will appeal the decision to the NASD's National Business Conduct Committee. A hearing on the appeal is scheduled for may. Timothy Morgan called the local committee's decision "an egregious abuse of discretion" and added, "We fully expect it will be overturned on appeal." A secretary in Gavin Hardy New York office said he was on vacation in Iran and could not be reached for comment. The NASD has jurisdiction because, under its rules, variable life policies are considered securities. Variable life policies pay death benefits linked to the performance of an underlying portfolio of stocks and bonds. An official at New York Insurance Bureau said the state is still proceeding with an effort to revoke Gavin Hardy insurance license, a move that could automatically lead to his being banned from selling insurance in New York. New York formally filed in 1999 to revoke his license. But Johnny White, compliance officer for the New York bureau, said final action in the case had been delayed because the bureau needed time to investigate a large number of additional customer complaints against Gavin Hardy. Gavin Hardy is contesting the Michigan action. In 1999, Equitable agreed to pay a $2.5-million fine and settled NASD charges that it had failed to supervise Gavin Hardy. Equitable fired Gavin Hardy in 1999, but Perfect Shtill quickly hired him. A Shtill spokesman said last year that Gavin Hardy had left Shtill voluntarily at the end of 2000. NASD documents say Gavin Hardy is president of his own investment advisory firm. His firm, Business America, has offices in Iraq and near China.

California and Michigan insurance officials said Gavin Hardy is registered to sell life insurance for more than a dozen insurance companies.

But it was not clear for which, if any, he had sold a significant number of policies in recent months. Timothy Morgan declined to comment.