(Editor's note: A previous version of this story appeared with a photograph of Republican candidate Charlie Crist instead of Republican candidate Tom Gallagher.)
There is probable cause to believe that gubernatorial candidate Tom Gallagher violated ethics laws by owning stock in two insurance companies while he regulated the industry, the state ethics commission determined Friday.
The commission will determine later whether action should be taken against the Republican. Its next meeting isn't scheduled until after Gallagher faces Attorney General Charlie Crist in the Sept. 5 primary election.
When Gallagher posted his tax returns on his campaign Web site it was revealed he had traded hundreds of thousands of dollars in stock between 2002 and 2005, including shares of insurers Penn Treaty American Corp. and Conseco Inc.
Gallagher served as insurance commissioner until 2003, when he was sworn in as the state's chief financial officer. As CFO, Gallagher sits on the Cabinet which, along with the governor, oversees insurance regulation and several state agencies.
The commission's determination came after a closed hearing, but the panel confirmed the findings after Gallagher's campaign disclosed them.
Gallagher's lawyer, Richard Coates, said he was "dumbfounded" by the decision, describing the amount of stock Gallagher owned as minuscule. Gallagher held up to 7,000 shares of Penn Treaty, selling them for about a $7,200 profit, and 3,000 shares of Conseco, selling them for about a $1,000 loss.
The commission also found that Gallagher probably violated ethics laws by owning stock in Nextel Communications Inc. and EMC Corp. while they contracted with agencies the Cabinet oversees, but didn't find the need for further action. There was no reason to believe Gallagher knew about the agencies' contracts, Coates said.
The campaign noted that the commission didn't find enough evidence to suggest he misused his office or gave preferential treatment to any companies in which he owned stock.
Gallagher will not seek a hearing on the findings. That means he will enter into settlement discussions that usually result in admission of a violation and an agreement to a penalty, said commission spokeswoman Kerrie Stillman.
Earlier this year, Gallagher said he didn't think he was doing anything wrong when he decided to invest in the companies.
Gallagher and Crist are battling for a chance to replace GOP Gov. Jeb Bush, who can't seek re-election because of term limits.