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Petitioner’s Introduction to Madison
In 1982, petitioner continued to be employed by and receive
wages from Halcon. During 1982, petitioner knew that his income
for that year would be substantial.
Also during 1982, Mr. Cole joined the staff of Hamilton
Gregg & Co. (HG&C), a personal financial planning firm. After
joining HG&C, Mr. Cole proposed the Madison investment to
petitioner in part because Mr. Cole thought it would appeal to
petitioner given his background.
On or about December 6, 1982, petitioner became a client of
HG&C. Hamilton S. Gregg II was the chairman and chief executive
officer of HG&C. Hamilton Gregg Securities Corp. (HGSC), an SEC
registered broker/dealer, and Hamilton Gregg Capital Corp.
(HGCC), an SEC registered investment adviser, were affiliated
with HG&C.12 Mr. Cole was petitioner’s financial adviser and
primary contact person at HG&C during 1982.
12On or about Dec. 6, 1982, petitioner received and reviewed
a document entitled “Hamilton Gregg & Company, Inc. SEC/ADV
Brochure”. The brochure informed petitioner that when an HG&C
client’s financial situation warranted advice concerning
securities or private placement investments, HG&C would rely upon
the advice of HGCC and HGSC and that such advice from an
affiliated company would be disclosed to the client. The
brochure also informed petitioner that HGSC was owned by the
Gregg Group, Inc., that Hamilton S. Gregg II and the officers of
HG&C were dually registered as investment adviser agents with
HG&C and as registered representatives of HGSC, that proper
disclosure was given to the client when an agent was acting in
dual capacity, and that all of the affiliated subsidiaries shared
some principals and employees with HG&C.
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