PURPOSE AND EFFECT: The rule is amended to reflect the most current version of federal regulations and federal statutes referenced in the rule. The rule is also amended to replace references to the National Association of Securities Dealers with the Financial Industry Regulatory Authority (FINRA). FINRA was created in July 2007 through the consolidation of National Association of Securities Dealers and the member regulation, enforcement and arbitration functions of the New York Stock Exchange. The rule corrects cross-references.
SUBJECT AREA TO BE ADDRESSED: Securities Regulation.
SPECIFIC AUTHORITY: 517.03(1) FS.
LAW IMPLEMENTED: 517.07, 517.12, 517.021, 517.061, 517.051, 517.081, 517.161 FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE NOTICED IN THE NEXT AVAILABLE FLORIDA ADMINISTRATIVE WEEKLY.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Pam Epting, Chief, Bureau of Regulatory Review, Division of Securities, Office of Financial Regulation, The Fletcher Building, 200 East Gaines Street, Tallahassee, Florida 32399-0375, (850)410-9500, firstname.lastname@example.org
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
As used in the Rules and Regulations of the Financial Services Commission and Office of Financial Regulation, pursuant to Chapter 517, F.S., unless the context otherwise specifically requires:
(1) “Accredited Investor” shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:
(a) Any bank as defined in section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. § 77c-(a)(2) (2006)), or any savings and loan association or other institution as defined in section 3(a)(5)(A) of that Act (15 U.S.C. § 77c-(a)(5)(A) (2006)) whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934 (15 U.S.C. § 78o (2006)); any insurance company as defined in section 2(13) of the Securities Act of 1933 (15 U.S.C. § 77m (2006)); any investment company registered under the Investment Company Act of 1940 (15 U.S.C. §§ 80a-1 through 80a-64 (2006)) or a business development company as defined in section 2(a)(48) of that Act (15 U.S.C. § 80a-2(a)(48) (2006)); Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958 (15 U.S.C. § 681(c) (2006)); any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (29 U.S.C. §§ 1001 through 1461 (2006)) if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act (29 U.S.C. § 1002(21) (2006)), which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
(b) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-2(a)(22) (2006));
(c) Any organization described in section 501(c)(3) of the Internal Revenue Code (I.R.C. § 501(c)(3) (2006)), corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(d) through (f) No change.
(g) Any trust, with total assets in excess of $5,000,000, not formed for the purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Securities and Exchange Commission Regulation 230.506(b)(2) (ii) (17 C.F.R. § 230.506(b)(2)(ii) (2009)); and
(h) No change.
(2) No change.
(3) “Aggregate Indebtedness” is defined pursuant to S.E.C. Rule 15c3-1 (17 C.F.R.
CFR § 240.15c3-1 (2009)).
(4) “Allowable Assets” is defined pursuant to S.E.C. Rule 15c3-1 (17 C.F.R.
CFR § 240.15c3-1 (2009)).
(5) through (6) No change.
(7)(a) “Associated person” as defined in Section 517.021(2), F.S., shall include any person who for compensation refers, solicits, offers, or negotiates for the purchase or sale of securities and/or of investment advisory services. A person whose activities fall within this definition is required to register with the Office of Financial Regulation as an associated person pursuant to Sections 517.12(1) or (4), F.S.
(b) Notwithstanding the provisions of paragraph (a), an associated person registered with the Office of Financial Regulation and operating in compliance with subsection 69W-600.003(3)
69W-600.003(2), F.A.C., shall not be deemed an associated person of any investment adviser other than the investment adviser or dually registered dealer/investment adviser with which such associated person is registered.
(c) Any person acting in compliance with S.E.C. Rule 206(4)-3 (17 C.F.R.
CFR § 275.206(4)-3 (2009)), as it existed on July 1, 2003, shall not be deemed an associated person of an investment adviser.
(8) through (16) No change.
(17) “Independent Director” shall be defined as a member of the Issuer’s Board of Directors who:
(a) Is not an officer or employee of the Issuer, its subsidiaries, or their affiliates or associates and has not been an officer or employee of the Issuer, its subsidiaries or their affiliates or associates within the last two years; and
(b) Is not a promoter as defined in Section 517.021(18)(b)
517.021(15)(b), F.S.; and
(c) Does not have a material business or professional relationship with the issuer or any of its affiliates or associates. For purposes of determining whether or not a business or professional relationship is material, the gross revenue derived by the Independent Director from the Issuer, its affiliates and associates shall be deemed material if it exceeds 5% of the Independent Director’s;
1. Annual gross revenue, derived from all sources, during either of the last two years; or
2. Net worth, on a fair market value basis.
(18) and (19) No change.
(20) “Issuers” Within the Meaning of Section 517.021(14)
(a) For the purposes of determining whether a person is an issuer within the meaning of Section 517.021(14)
517.021(11), F.S., the term “promoter” shall be deemed to include:
1. Any person who, acting alone or in conjunction with one or more other persons, directly or indirectly initiates the founding or organizing of the business or enterprise of an issuer; or
2. Any person who, in connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services, or a combination of services and property, 10% or more of any class of securities of the issuer or 10% or more of the proceeds from the sale of any class of securities of the issuer; provided that any person who receives securities or proceeds from the sale of securities either solely as underwriting commissions or solely in consideration of property shall not be deemed a promoter if such person does not otherwise take part in founding and organizing the enterprise of the issuer.
(b) Notwithstanding the provisions of subsection (1) of this rule, no person shall be deemed to be a promoter with respect to any issuer which is duly qualified to transact business under the laws of the jurisdiction in which it is organized and which has actively been engaged in business for a continuous period of one year.
(21) through (24) No change.
(25) “Qualified Institutional Buyer” for purposes of Section 517.061(7), F.S., shall be defined as provided in Securities and Exchange Commission rule 144A(a) (
i.e., 17 C.F.R. § s. 230.144A(a) (2009)), as such rule existed on November 1, 1992.
(26) and (27) No change.
(28) “Reportable Act” shall mean:
(a) Having exercised management or policy control over or owned 10 percent or more of the securities of any dealer or investment adviser for which a Securities Investor Protection Corporation (“SIPC”) trustee was appointed pursuant to the Securities Investor Protection Act or which is insolvent;
(b) Conviction of or entry of a plea of guilty or no contest to any criminal act, excluding traffic violations or other minor offenses;
(c) Having been the subject of any decision, finding, injunction, suspension, prohibition, revocation, denial, judgment, or order by any court of competent jurisdiction, administrative law judge, or by any state or federal agency, national securities, commodities, or option exchange, or national securities, commodities, or option association, involving a violation of any federal or state securities or commodities law or any rule or regulation promulgated thereunder, or any rule or regulation of any national securities, commodities or options exchange or national securities, commodities, or options association, or having been the subject of any injunction or adverse order by a state or federal agency or court of competent jurisdiction regulating banking, insurance, finance or small loan companies, real estate, mortgage brokers, or other related or similar industries;
(d) Being charged, in a pending enforcement action or pending criminal prosecution, with any conduct that if proven and not subsequently reversed, suspended, or vacated, would be deemed a reportable act under paragraphs (a) through (c) of this rule.
1. For purposes of this rule, “enforcement action” means any judicial proceeding or any administrative proceeding where such judicial or administrative proceeding is brought by an agency of the United States or of any state to enforce or restrain violation of any state or federal law, or any disciplinary proceeding maintained by the Financial Industry Regulatory Authority (formerly known as the National Association of Securities Dealers), the National Futures Association, the New York Stock Exchange, or any other similar self-regulatory organization.
2. An enforcement action is pending at any time after notice to the respondent of such action and is terminated at any time after entry of final judgment or decree in the case of judicial proceedings, final agency action in the case of administrative proceedings, and final disposition by a self-regulatory organization in the case of disciplinary proceedings.
3. A criminal prosecution is pending at any time after criminal charges are filed and is terminated at any time after conviction, acquittal, or dismissal.
(29) “Renewal Applicant” shall mean an applicant who is a registrant who seeks a timely renewal of the license.
(30) “Securities Act of 1933” (15 U.S.C. §§ 77a through 77mm (2006)), “Securities Exchange Act of 1934” (15 U.S.C. §§ 78a through 78oo (2006)), “Investment Company Act of 1940” (15 U.S.C. §§ 80a-1 through 80a-64 (2006)), “Investment Advisers Act of 1940” (15 U.S.C. §§ 80b-1 through 80b-21 (2006)), and “Internal Revenue Code” (Title 26 U.S.C. (2006)), mean the federal statutes of those names as amended.
(31) through (33) No change.
(34) The federal regulations and federal statutes referenced in this rule are hereby incorporated by reference and may be obtained by mail from the Florida Office of Financial Regulation, Division of Securities, 200 E. Gaines Street, Tallahassee, Florida 32399.
Specific Authority 517.03(1) FS. Law Implemented 517.07, 517.12, 517.021, 517.061, 517.051, 517.081, 517.161 FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-200.01, Amended 12-8-87, 10-14-90, 7-31-91, 6-16-92, 1-10-93, 5-5-94, 10-20-97, 8-9-98, 8-19-99, 10-30-03, Formerly 3E-200.001, Amended 5-15-07,________.