Rules of Conduct, Prohibited Business Practices for Dealers and Their Associated Persons, Prohibited Business Practices for Investment Advisers and Their Associated Persons, Continuing Education Requirements

DEPARTMENT OF FINANCIAL SERVICES
Securities

Rule No.: RULE TITLE
69W-600.012: Rules of Conduct
69W-600.013: Prohibited Business Practices for Dealers and Their Associated Persons
69W-600.0131: Prohibited Business Practices for Investment Advisers and Their Associated Persons
69W-600.020: Continuing Education Requirements

NOTICE OF CHANGE

Notice is hereby given that the following changes have been made to the proposed rule in accordance with subparagraph 120.54(3)(d)1., F.S., published in Vol. 36 No. 33, August 20, 2010 issue of the Florida Administrative Weekly.

The rules have been changed to address comments from the staff of the Joint Administrative Procedures Committee. The changes include the following:

1) Effective dates have been added to materials incorporated by reference in Rule 69W-600.012(1)(d); 69W-600.013(1)(h)1. and (1)(h)5.; and Rule 69W-600.020(1)(a), (c), and (e).

2) Paragraphs 69W-600.012(5)(c), (d), (e), and (f) are changed as follows to clarify citations to federal regulations incorporated by reference:

(c) SEC Rules10b-1, 10b-3, 10b-5, 10b5-1, 10b5-2, 10b-9, 10b-10, 10b-16, 10b-17, 10b-18, and 10b-21 (17 CFR §§ 240.10b-1, 240.10b-3, 240.10b-5, 240.10b5-1, 240.10b5-2, 240.10b-9, 240.10b-10, 240.10b-16, 240.10b-17, 240.10b-18, and 240.10b-21 (2010));

(d) SEC Rules 15c1-1 through 15c1-3 and 15c1-5 through 15c1-9 (17 CFR §§ 240.15c1-1 through 240.15c1-3 and 240.15c1-5 through 240.15c1-9 (2010));

(e) SEC Rules 15c2-1, 15c2-4, 15c2-5, 15c2-7, 15c2-8, 15c2-11, and 15c2-12 (17 CFR §§ 240.15c2-1, 240.15c2-4, 240.15c2-5, 240.15c2-7, 240.15c2-8, 240.15c2-11, and 240.15c2-12 (2010));

(f) SEC Rules 15g-1 through 15g-6, 15g-8, and 15g-9 (17 CFR §§ 240.15g-1 through 240.15g-6, 240.15g-8 and 240.15g-9 (2010);

3) Rule 69W-600.013(1)(a), (1)(h)1., (1)(h)4., and (2)(a) are changed as follows to clarify citations to federal regulations, FINRA rules, and NASD rules:

(1) The following are deemed demonstrations of unworthiness by a dealer under Section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:

(a) Extending, arranging for, or participating in arranging for credit to a customer in violation of Regulation T, Credit by Brokers and Dealers, (12 C.F.R. §§ 220.1 through 220.12, 220.101, 220.103, 220.105, 220.108, 220.110, 220.111, 220.113, 220.117, 220.118, 220.119, 220.121, 220.122, 220.123, 220.124, 220.127, 220.128, 220.131, and 220.132 (2010) and 12 C.F.R. § 221.125 (2010)) 220.1-220.132 (2006), which is incorporated by reference.

(h) With respect to any customer, transaction or business in this state, violating any of the following:

1. Financial Industry Regulatory Authority (FINRA) rules contained in the Rule 2000 Series (Duties and Conflicts), Rule 3000 Series (Supervision and Responsibilities Relating to Associated Persons), Rule 4000 Series (Financial and Operational Rules), Rule 5000 Series (Securities Offering and Trading Standards and Practices), Rule 6000 Series (Quotation and Transaction Reporting Facilities), or Rule 7000 Series (Clearing, Transaction and Order Data Requirements, and Facility Charges), as such rules existed on June 28, 2010; National Association of Securities Dealers (NASD) Conduct Rules contained in the Rule 2000 Series (Business Conduct) or Rule 3000 Series (Responsibilities Relating to Associated Persons, Employees, and Others’ Employees), as such rules existed on June 28, 2010; or NASD Uniform Practice Code rules contained in the Rule 11000 Series, as such rules existed on June 28, 2010. Conduct Rules, Marketplace Rules, or the Uniform Practice Code of the National Association of Securities Dealers (NASD). The foregoing NASD regulations, along with the interpretive materials for those regulations, are published in the NASD manual dated March 2006, which is incorporated by reference.

4. Section 15(b)(4)(E) of the Securities Exchange Act of 1934, (15 U.S.C.A. § 78o(b)(4)(E) (2006 & Supp. III Thomson/West 2006 (current through P.L. 109-229)); Regulation SHO, Regulation of Short Sales, (17 C.F.R. §§ 242.200-242.203 (2010 2006)); or NASD Conduct Rule 3210, as it existed on June 28, 2010. The foregoing provisions of the Securities Exchange Act of 1934 and Regulation SHO, Regulation of Short Sales, are incorporated by reference. NASD Conduct Rule 3210, as it existed on July 3, 2006, is incorporated by reference.

(2) The following are deemed demonstrations of unworthiness by an associated person of a dealer under Section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:

(a) Borrowing money or securities from a customer, except when persons are in compliance with FINRA NASD Conduct Rule 32402370(a)(1), (a)(2)(A)-(C) only, and FINRA NASD Conduct Rule 32402370(b)-(c), as these rules existed on June 28, 2010 which are incorporated by reference in subparagraph (1)(h)1.;

4) Rule 69W-600.0131 has been changed to correct the citation to the National Securities Markets Improvement Act of 1996.