69W-200.001. Definitions  


Effective on Tuesday, November 15, 2016
  • 1As 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:

    29(1) “Accredited Investor” is defined pursuant to S.E.C. Rule 501(a) of Regulation D (4317 C.F.R. §230.501(a)46), which is incorporated by reference in rule 5469W-200.002, 55F.A.C.

    56(2) “Advertising” means any circular, prospectus, advertisement or other material or any communication by radio, television, Internet, pictures or similar means used in connection with a sale or purchase or an offer to sell or purchase any security.

    94(3) “Aggregate Indebtedness” is defined pursuant to S.E.C. Rule 15c3-1 (10517 C.F.R. §240.15c3-1108), which is incorporated by reference in rule 11669W-200.002, 117F.A.C.

    118(4) The term “Applicant” shall mean a person natural or otherwise, executing or submitting an application for registration.

    136(5) “Application” means all information required by the forms prescribed by the Financial Services Commission and any additional information required by the Financial Services Commission or Office of Financial Regulation together with all required statutory fees.

    172(6)(a) “Associated person” as defined in section 179517.021(2), F.S., 181shall 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 section 230517.12(1) 231or (4), F.S.

    234(b) Notwithstanding the provisions of paragraph (a), an associated person registered with the Office of Financial Regulation and operating in compliance with paragraph 69W-600.0034(4)(b), 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.

    287(c) Any person acting in compliance with S.E.C. Rule 206(4)-3 (29817 C.F.R. §275.206(4)-3301), which is incorporated by reference in rule 30969W-200.002, 310F.A.C., shall not be deemed an associated person of an investment adviser.

    322(7) “Bona Fide Employee” is deemed to be a partner, officer, director, or trustee of the issuer, or any employee of such partner, officer, director or trustee, who has not participated in the distribution or sale of any securities within the preceding twelve (12) months, and who primarily performs, or is intended to perform at the end of the distribution, substantial duties for, or on behalf of the issuer, other than in connection with transactions in securities.

    399(8)(a) 400Except as otherwise provided in this subsection, the term “Branch Office” shall mean any location in this state of a dealer or investment adviser at which one or more associated persons regularly conduct the business of rendering investment advice or effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security or any location that is held out as such. Pursuant to section 469517.021(4), F.S., 471the Financial Services Commission may adopt exceptions to this definition. The following locations shall not be deemed branch offices for purposes of section 494517.12(5), F.S., 496and are considered exceptions to the definition of a branch office under section 509517.021(4), F.S.511:

    5121. Any location that is established solely for customer service or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office;

    5462. Any location that is the associated person’s primary residence; provided that:

    558a. Only one associated person, or multiple associated persons, who reside at that location and are members of the same immediate family, conduct business at the location;

    585b. The location is not held out to the public as an office and the associated person does not meet with customers at the location;

    610c. Neither customer funds nor securities are handled at that location;

    621d. The associated person is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements and other communications to the public by such associated person;

    655e. The associated person’s correspondence and communications with the public are subject to the firm’s supervision in accordance with NASD Rule 3010, as incorporated in rule 68169W-200.002, 682F.A.C.;

    683f. Electronic communications (e.g., e-mail) are made through the registrant’s electronic system;

    695g. All orders are entered through the designated branch office or an electronic system established by the registrant that is reviewable at the branch office;

    720h. Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the registrant; and,

    740i. A list of the residence locations is maintained by the registrant;

    7523. Any location, other than a primary residence, that is used for securities business for less than 30 business days in any one calendar year, provided the registrant complies with the provisions of this rule in sub-subparagraphs (8)(a)2.a. through i., above;

    7934. Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, which is not held out to the public as an office;

    8205. Any location that is used primarily to engage in non-securities activities and from which the associated person(s) effects no more than 25 securities transactions in any one calendar year; provided that any advertisement or sales literature identifying such location also sets forth the address and telephone number of the location from which the associated person(s) conducting business at the non-branch locations are directly supervised;

    8856. The floor of a registered national securities exchange where a registrant conducts a direct access business with public customers; or

    9067. A temporary location established in response to the implementation of a business continuity plan.

    9218. The principal office and place of business of an investment adviser registered with the Office of Financial Regulation pursuant to section 943517.12(4), F.S.

    9459. Any location of an investment adviser that is notice-filed as a branch office of a dealer, provided the dealer and investment adviser use the same CRD number.

    973(b) Notwithstanding the exclusions provided in subparagraph (8)(a)2., above, any location of a dealer that is responsible for supervising the activities of persons associated with the registrant at one or more non-branch locations of the registrant is considered to be a branch office.

    1016(c) The term “business day” as used in subparagraph (8)(a)3., above, shall not include any partial business day provided that the associated person spends at least four hours on such business day at his or her designated branch office during the hours that such office is normally open for business.

    1066(9) “Carrying Dealer” means any dealer maintaining a fully/principally disclosed agreement/arrangement with an introducing dealer, whereby the carrying dealer is responsible for customer monies and securities, and confirms transactions to the customer accounts introduced; such dealer who carries accounts for Florida residents must be registered pursuant to the provisions of section 1117517.12, F.S.

    1119(10) “Developmental Stage Entities” shall be defined as those entities which are devoting substantially all of their efforts to establishing a new business and for which either of the following conditions exists:

    1151(a) Planned principal operations have not commenced; or

    1159(b) Planned principal operations have commenced but whose annual net earnings for each of the last two (2) consecutive fiscal years or whose average annual net earnings for the last five (5) fiscal years prior to the public offering have been less than five percent (5%) of the aggregate public offering.

    1210(11) “Dilution” for purposes of rules 121669W-700.008 1217and 121869W-700.015, 1219F.A.C., shall be determined by subtracting the maximum sales commissions and expenses set forth in the prospectus from the gross proceeds of the offering and adding the net worth prior to the offering. Divide this sum by the total number of shares to be outstanding at the conclusion of the offering to determine book value. Subtract the book value from the proposed offering price and divide the result by the proposed offering price to arrive at the percentage of dilution. For the purpose of calculating “dilution” or “book value,” intangible assets such as patents, copyrights, franchises, trademarks, operating rights and goodwill are deducted from total assets.

    1326Dilution Formula:

    1328NP = Gross Proceeds minus Maximum Sales Commissions and Expenses

    1338NW = Net Worth prior to the offering

    1346TS = Total Number of shares to be outstanding after a successful offering

    1359BV = Book Value

    1363OP = Offering Price

    1367Example:

    1368NP + NW

    1371________1372=1373BV

    1374TS

     

    1375OP – BV

    1378_________1379=1380Dilution

    1381OP

    1382(12) “Established Market Price” for purposes of rule 139069W-700.015, 1391F.A.C., shall be the price for a security published in The Wall Street Journal in the Over-The-Counter Markets Section, Quotations from the NASDAQ System of such publication or the price for a security published on any stock exchange registered pursuant to the Securities Exchange Act of 1934.

    1438(13) “Fair Value of the Equity Investment” for purposes of subsection 144969W-700.005(1), 1450F.A.C., of the promoters or insiders shall mean the total of all sums contributed to the issuer in cash together with the reasonable value of all tangible assets contributed to the issuer, and as adjusted by the earned surplus or deficit of the issuer subsequent to the dates of contribution. In determining the reasonable value of tangible assets contributed, the Office of Financial Regulation shall take into consideration any values as determined by independent appraisal.

    1525(14) “Independent Director” shall be defined as a member of the Issuer’s Board of Directors who:

    1541(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,

    1582(b) Is not a promoter as defined in section 1591517.021(18)(b), F.S.; 1593and,

    1594(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;

    16551. Annual gross revenue, derived from all sources, during either of the last two years; or

    16712. Net worth, on a fair market value basis.

    1680(15) “Introducing Dealer” means any dealer maintaining a formal agreement/arrangement with another dealer whereby the introducing dealer does not carry (i.e., holds funds or securities, or confirms transactions) customer accounts; such dealer who introduces Florida resident accounts must be registered pursuant to section 1723517.12, F.S.

    1725(16) “Issuer” in rules 172969W-400.001, 173069W-500.005, 173169W-500.006 1732and 173369W-500.008, 1734F.A.C., shall mean any person who proposes to issue or has issued or shall hereafter issue any securities. For purposes of this subsection only, the term “issuer” shall not include a promoter of the issuer for the purposes of these rules.

    1775(17) “Issuers” Within the Meaning of section 1782517.021(14), F.S.

    1784(a) For the purposes of determining whether a person is an issuer within the meaning of section 1801517.021(14), F.S., 1803the term “promoter” shall be deemed to include:

    18111. 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

    18432. 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.

    1954(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.

    2011(18) “Issuer/Dealer” means any issuer who through either persons directly or indirectly compensated or controlled by the issuer engages, either for all or part of his time, directly or indirectly, in the business of offering or selling securities which are issued or are proposed to be issued by said issuer.

    2061(19) “Principal Office” or “Home Office” shall mean the place where the chief or principal affairs and business of the applicant or registrant are transacted.

    2086(20) “Promotional Securities” for purposes of rule 209369W-700.015, 2094F.A.C., shall mean securities that are to be issued or were issued:

    2106(a) By an issuer which is a development stage company to promoters for cash or other consideration, including services rendered, patents, copyrights, and other intangibles, that will be or was less than eighty-five percent (85%) of the proposed offering price; or

    2147(b) Within three (3) years prior to the filing of an application to register securities with the Office of Financial Regulation by an issuer, which is not a development stage company, to promoters for cash or other considerations, including services rendered, patents, copyrights and other intangibles, that will be or was less than eighty-five percent (85%) of the proposed offering price. (Shares issued pursuant to conversion or exercise rights shall be included as promoters shares).

    2222(21) “Publication” means advertising printed in any newspaper, magazine, periodical or other publication and mailed or delivered to its subscribers or addresses, or communicated by radio, television or similar means.

    2252(22) “Qualified Institutional Buyer” for purposes of section 2260517.061(7), F.S., 2262shall be defined as provided in Securities and Exchange Commission rule 144A(a) (227517 C.F.R. §230.144A(a)2278), which is incorporated by reference in rule 228669W-200.002, 2287F.A.C.

    2288(23) “Reaffiliation” refers to those associated persons leaving one registered dealer or investment adviser and reaffiliating with another registered dealer or investment adviser.

    2311(24) “Registrant” shall mean an applicant for whom a registration has been declared effective by the Office of Financial Regulation.

    2331(25) “Reportable Act” shall mean:

    2336(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;

    2381(b) Conviction of or entry of a plea of guilty or no contest to any criminal act, excluding traffic violations or other minor offenses;

    2405(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;

    2530(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.

    25691. 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.

    26502. 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.

    27083. A criminal prosecution is pending at any time after criminal charges are filed and is terminated at any time after conviction, acquittal, or dismissal.

    2733(26) “Renewal Applicant” shall mean an applicant who is a registrant who seeks a timely renewal of the license.

    2752(27) “Securities Act of 1933,” 275815 U.S.C. §§77a 2761through 77mm, “Securities Exchange Act of 1934,” 276915 U.S.C. §§78a 2772through 78oo, “Investment Company Act of 1940,” 278015 U.S.C. §§80a-1 2783through 80a-64, “Investment Advisers Act of 1940,” 279115 U.S.C. §§80b-1 2794through 80b-21, and “Internal Revenue Code,” 26 U.S.C. Subtitles A through K, means the federal statutes of those names.

    2814(28) “State” means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.

    2833(29) “Total Equity Investment” for purposes of subsection 284169W-700.005(1), 2842F.A.C., shall mean the total of (1) par or stated values of all equity securities offered or proposed to be offered; and (2) the amount of surplus of any kind, regardless of description and whether or not restricted.

    2880(30) “Wholesaler” is defined as any dealer conducting business exclusively with other dealers in this State, and such dealer need not be registered as a dealer under section 2908517.12, F.S.

    2910Rulemaking Authority 2912517.03(1) FS. 2914Law Implemented 2916517.07, 2917517.12, 2918517.021, 2919517.051, 2920517.061, 2921517.081, 2922517.161 FS. 2924History–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, 9-30-10, 11-11-13, 9-22-14, 11-15-16.

     

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