69W-600.0145. Requirements for Florida Intrastate Crowdfunding Intermediaries

(1) Requirements of intermediaries to reduce risk of fraud. Pursuant to Section 517.0611(13)(a), F.S., an intermediary must take measures to reduce the risk of fraud with respect to transactions. Such measures include denying or removing an issuer’s access to the intermediary’s platform if:

(a) The issuer fails to either provide the intermediary, or to potential investors through the intermediary’s platform, the disclosure statement required under Section 517.0611(7), F.S.;

(b) The issuer fails to have an escrow agreement with a financial institution as required under paragraph 517.0611(4)(f) and subsection 517.0611(8), F.S., in order for the intermediary to comply with its duties under paragraphs 517.0611(13)(f) and (g) and subsection 517.0611(15), F.S.;

(c) The intermediary has knowledge that the issuer is disqualified from conducting an offering under Section 517.0611, F.S., pursuant to paragraphs 517.0611(4)(a), (c), (d), or (e), F.S.; or

(d) The intermediary has knowledge that the issuer has made material false statements or material omissions to investors or potential investors through the intermediary’s platform.

(2) Books and records requirements.

(a) Generally. An intermediary shall make and preserve the following records for five years, the first two years in an easily accessible place:

1. All records related to an investor who purchases or attempts to purchase securities through the intermediary;

2. All records related to issuers who offer and sell or attempt to offer and sell securities through the intermediary and the control persons of such issuers;

3. Records of all communications that occur on or through its platform;

4. All records related to persons that use communication channels provided by the intermediary to promote an issuer’s securities or communicate with potential investors;

5. All records required to demonstrate compliance with the requirements of this rule;

6. All notices provided by the intermediary to issuers and investors generally through the intermediary’s platform or otherwise, including, but not limited to, notices addressing hours of the intermediary’s operations (if any), intermediary malfunctions, changes to intermediary procedures, maintenance of hardware and software, instructions pertaining to access to the intermediary’s platform and denials of, or limitations on, access to the intermediary’s platform;

7. All written agreements (or copies thereof) entered into by the intermediary relating to its business as such;

8. All daily, monthly and quarterly summaries of transactions effected through the intermediary’s platform, including:

a. Issuers for which the target offering amount has been reached and funds distributed; and,

b. Transaction volume, expressed in: number of transactions; number of securities involved in a transaction; total amounts raised by, and distributed to, issuers; and total dollar amounts raised across all issuers, expressed in U.S. dollars; and,

9. A log reflecting the progress of each issuer who offers or sells securities through the intermediary’s platform toward meeting the target offering amount.

(b) Organizational Documents. An intermediary shall make and preserve during the operation of the intermediary and of any successor intermediary, all organizational documents relating to the intermediary, including but not limited to, partnership agreements, articles of incorporation or charter, minute books and stock certificate books (or other similar type documents).

(c) Format. The records required to be maintained and preserved pursuant to paragraph (9)(a) of this rule must be produced, reproduced, and maintained in the original, non-alterable format in which they were created.

(d) Third Parties. The records required to be made and preserved pursuant to this section may be prepared or maintained by a third party on behalf of an intermediary. An agreement with an intermediary shall not relieve an intermediary from the responsibility to prepare and maintain records as specified in this rule.

(e) Review of Records. All records of an intermediary are subject at any time, or from time to time, to reasonable periodic, special, or other examination by the representatives of the Office.

(f) Financial Recordkeeping and Reporting of Currency and Foreign Transactions. Every intermediary, as it is subject to the requirements of the Currency and Foreign Transactions Reporting Act of 1970 (15 U.S.C. 5311 et seq.), shall comply with the reporting, recordkeeping and record retention requirements of 31 CFR chapter X. Where 31 CFR chapter X and §§ 227.404(a) and 404(b) require the same records or reports to be preserved for different periods of time, such records or reports shall be preserved for the longer period of time.

(3) Additional forms of identification; verification of investors. An intermediary shall obtain evidence of residency within Florida from each investor before the purchase of a security. An affirmative representation made by a prospective investor that the prospective investor is a Florida resident and proof of at least one of the following would be considered sufficient evidence that the individual is a resident of this state:

(a) A valid Florida driver license or official personal identification card issued by the State of Florida;

(b) A current Florida voter registration; or

(c) General property tax records showing the individual owns and occupies property in this state as his or her principal residence.

The intermediary shall verify the evidence of residency through an independent or governmental source. A record of the method used to verify Florida residency is required to be maintained by the intermediary.

Rulemaking Authority 517.03(1), 517.121, 517.1611 FS. Law Implemented 517.121, 517.1611 FS. History–New 12-29-15.