A state ethics unit said it found that Thomas Gallagher, Florida's chief financial officer, violated the state's ethics code by trading in shares of insurance companies his department oversaw while he was insurance commissioner.

The Florida Commission On Ethics issued a report finding evidence that the infractions took place prior to Mr. Gallagher's election to the state's Department of Financial Services, which today regulates Florida's insurance industry.

According to the commission's records, Mr. Gallagher owned 3,000 shares of Conseco and as much as 7,000 shares in Penn Treaty American Corporation in 2002. In that year, he sold his holdings, losing $1,020 from the sale of Conseco and making a profit of $7,207 from his Penn Treaty sale.

Under Florida's law, officials are barred from having a "contractual relationship" with companies that have business before their departments.

His stock holdings in Nextel Communications and EMC Corporation were also held to be violations of the law, since the state was doing business with the companies at the time. But the commission said Mr. Gallagher's holdings in those company's was so small that the violation was not worth pursuing.

Allegations that he used state resources to pursue day trading activities and held stock interests in other companies in violation of the state's ethics law were dismissed, as were allegations that he used the influence of his office for his own gain.

Mr. Gallagher is currently seeking the Republican nomination for governor in Florida, which holds its primary on Sept. 5.

A spokesperson from Mr. Gallagher's campaign committee, Albert Martinez, said the candidate cooperated with the commission and was gratified to find that there was no finding of misuse of his position. "We will live with the commission's findings, though we disagree with them," said Mr. Martinez. Mr. Gallagher "always made his decisions with the best interests of Floridians in mind."

Mr. Gallagher could have fought the findings with a public hearing, but Mr. Martinez indicated he declined to do so.

Special Reports /

Fla. CFO Gallagher Violated Ethics Code

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