Chapter 2006-213, Laws of Florida, contains amendments to Chapter 517, Florida Statutes, relating to the Florida Securities and Investors Protection Act. This law contains a number of provisions relating to the licensing and regulatory functions of ...

DEPARTMENT OF FINANCIAL SERVICES
Securities

RULE NO: RULE TITLE
69W-600.001: Application for Registration as a Dealer, Issuer/Dealer, or Investment Adviser
69W-600.0015: Application for Registration as a Canadian Dealer
69W-600.002: Application for Registration as Associated Person
69W-600.004: Registration of Issuer/Dealers, Principals and Branch Offices
69W-600.006: Associated Persons' Fingerprints
69W-600.009: Registration Renewals
69W-600.0091: Central Registration Depository System
69W-600.0092: Investment Adviser Registration Depository for Federal Covered Advisers
69W-600.0093: Investment Adviser Registration Depository for Investment Advisers
69W-600.014: Books and Records Requirements
69W-600.016: Net Capital Requirements for Dealers and Investment Advisers
PURPOSE AND EFFECT: Chapter 2006-213, Laws of Florida, contains amendments to Chapter 517, Florida Statutes, relating to the Florida Securities and Investors Protection Act. This law contains a number of provisions relating to the licensing and regulatory functions of the Office of Financial Regulation. Among other things, the law amends provisions concerning licensing, notice filings, and other regulatory provisions in the area of securities regulation. The proposed rules implement and reflect the statutory changes. The proposed rules also revise provisions regarding net capital requirements for dealers and investment advisers.
SUMMARY: Chapter 2006-213, Laws of Florida, contains amendments to Chapter 517, Florida Statutes, relating to the Florida Securities and Investors Protection Act. This law contains a number of provisions relating to the licensing and regulatory functions of the Office of Financial Regulation. Among other things, the law amends provisions concerning licensing, notice filings, and other regulatory provisions in the area of securities regulation. The proposed rules implement and reflect the statutory changes. The proposed rules also revise provisions regarding net capital requirements for dealers and investment advisers.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 517.03, 517.12, 517.121, 517.1215, 517.1201 FS.
LAW IMPLEMENTED: 517.12, 517.121, 517.1201, 517.1205, 517.1215 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN FAW.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Pam Epting, Bureau Chief, Office of Financial Regulation, 200 East Gaines Street, 6th Floor, The Fletcher Building, Tallahassee, Florida 32399-0375, [phone]

THE FULL TEXT OF THE PROPOSED RULE IS:

69W-600.001 Application for Registration as a Dealer, Issuer/Dealer, or Investment Adviser.

(1)(a) Applications for initial and renewal registration of dealers, issuer/dealers, and investment advisers shall be filed on the forms prescribed by the Financial Services Commission in subsection 69W-301.002(7), F.A.C., and shall include all information required by such forms, any other information the Financial Services Commission or Office of Financial Regulation may require, and payment of the statutory fees required by Sections 517.12(10) and 517.131, F.S. Except as otherwise provided in Rule 69W-600.0091 or 69W-600.0093, F.A.C., the Office of Financial Regulation shall deem an application to be received at such time as it and the appropriate fee have been date stamped by the cashier’s office of the Department of Financial Services Office of Financial Regulation. For dealers that are members of the National Association of Securities Dealers (NASD), such application shall be filed with the Office of Financial Regulation through the Central Registration Depository (CRD) of the NASD in accordance with Rule 69W-600.0091, F.A.C. For investment advisers, such application shall may be filed with the Office of Financial Regulation through the Investment Adviser Registration Depository (IARD) of the NASD in accordance with Rule 69W-600.0093, F.A.C.

(b) A complete application must include the following exhibits or forms that are appropriate for the type of registration requested:

1. For registration as a dealer or issuer/dealer, a Uniform Application for Broker-Dealer Registration, Form BD, which is incorporated by reference in subsection 69W-301.002(7), F.A.C. For dealers that are members of the NASD, such application shall be filed with the Office of Financial Regulation through the CRD in accordance with Rule 69W-600.0091, F.A.C. For registration as an investment adviser, a Uniform Application for Investment Adviser Registration, Form ADV, which is incorporated by reference in subsection 69W-301.002(7), F.A.C. shall be filed with the Office of Financial Regulation. Such application shall may be filed with the Office of Financial Regulation through the Investment Adviser Registration Depository (IARD) of the NASD in accordance with Rule 69W-600.0093, F.A.C.;

2. No change.

3. A Uniform Application for Securities Industry Registration or Transfer, Form U-4, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., to register at least one principal as set forth in Rule 69W-600.002, F.A.C. For any dealer that is a member of the NASD, or any investment adviser, the application for registration of any principal shall be filed through the CRD as set forth in Rule 69W-600.002, F.A.C.  In conjunction with filing its Form BD or Form ADV with the Office of Financial Regulation, the dealer, issuer/dealer, or investment adviser shall provide the Office of Financial Regulation written notification of the principal’s name, CRD number, and social security number; Evidence of current membership as a dealer with the NASD shall satisfy this requirement;

4. through 9. No change.

(2) No change.

(3) No change.

(4) It will not be the policy of the Office of Financial Regulation to issue verbal effectiveness or verbal up-dates on applications filed with the Office of Financial Regulation unless the Office of Financial Regulation deems it to be necessary to issue such verbal information.

Specific Authority 517.03(1), 517.12(6) FS. Law Implemented 517.12(6), (7), 517.1205 FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.01, Amended 7-29-90, 8-1-91, 6-16-92, 1-11-93, 11-14-93, 4-30-96, 6-22-98, 5-10-00, 9-19-00, 7-31-02, Formerly 3E-600.001, Amended 3-16-06,________.

 

69W-600.0015 Application for Registration as a Canadian Dealer.

All Canadian dealers making initial and renewal notice filing, or terminating a notice filing in this state shall file OFR Form CAN and the fee required by Section 517.12(17)(b), F.S., with the Office of Financial Regulation. Any notice filing made by a Canadian dealer with the Office of Financial Regulation shall be deemed received by the Office of Financial Regulation at such time as OFR Form CAN and the fee have been date stamped by the cashier’s office of the Department of Financial Services. When requested by the Office of Financial Regulation, OFR Form CAN and all responses to any other requests for additional information shall be filed directly with the Office of Financial Regulation. OFR Form CAN, Canadian Dealer Notification, is incorporated by reference in subsection 69W-301.002(7), F.A.C.

Specific Authority 517.03 FS. Law Implemented 517.12 FS.   History–New_________.

 

69W-600.002 Application for Registration as Associated Person.

(1)(a) Applications for initial, reaffiliation, and renewal registrations of a principal or associated person shall be filed on Form U-4, Uniform Application for Securities Industry Registration or Transfer, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., and shall include all information required by such form, any other information the Office of Financial Regulation may require, and payment of the statutory fees required by Section 517.12(10), F.S. Except as otherwise provided in Rule 69W-600.0091, 69W-600.0092, or 69W-600.0093, F.A.C., the Office of Financial Regulation shall deem an application to be received at such time as it and the appropriate fee have been date-stamped by the cashier’s office of the Department of Financial Services Office of Financial Regulation. For dealers that are member of the National Association of Securities Dealers (“NASD”), such application shall be filed with the Office of Financial Regulation through the Central Registration Depository (“CRD”) of the NASD in accordance with Rule 69W-600.0091, F.A.C. For federal covered advisers, such application shall be filed with the Office of Financial Regulation through the Central Registration Depository (“CRD”) of the NASD in accordance with Rule 69W-600.0092, F.A.C. For investment adviser applicants and registrants who file via the IARD, such application shall may be filed with the Office of Financial Regulation through the CRD of the NASD in accordance with Rule 69W-600.0093, F.A.C.

(b) A complete initial application must include the following exhibits or forms that are appropriate for the type of registration requested:

1. Uniform Application for Securities Industry Registration or Transfer, Form U-4., which is incorporated by reference in subsection 69W-301.002(7), F.A.C. As used on the Form U-4, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., the term “Office of Employment Address” shall mean the location where the person seeking registration will regularly conduct business on behalf of the dealer or investment adviser. For dealers that are members of the NASD, such application shall be filed with the Office of Financial Regulation through the CRD of the NASD. Form U-4, Uniform Application for Securities Industry Registration or Transfer, is incorporated by reference in subsection 69W-301.002(7), F.A.C.

2. Statutory fee in the amount of $30 $40, for each registration sought, as required by Section 517.12(10), F.S.

3. through 4. No change.

5. A complete Florida Fingerprint Card (FL92150Z) when required under Section 517.12(7), F.S., and Rule 69W-600.006, F.A.C., provided by the Office of Financial Regulation and taken by an authorized law enforcement agency and accompanied by a non-refundable $47 processing fee.  Form FL92150Z, Florida Fingerprint Card, is incorporated by reference in subsection 69W-301.002(7), F.A.C.

If the fingerprint card cannot be processed by the Federal Bureau of Investigation because of illegible fingerprints, a second card must be submitted. If that card also cannot be processed, it will be necessary to submit a third card along with a fee of $24 to cover the cost of processing the card charged by the FBI.

(c) If the information contained in any Form U-4, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., becomes inaccurate for any reason before or after the associated person becomes registered, the associated person through the dealer or investment adviser, as applicable, shall be responsible for correcting the inaccurate information within thirty (30) days. If the information being updated relates to the applicant’s or registrant’s disciplinary history, in addition to updating the Form U-4, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., the associated person through the dealer or investment adviser shall also provide the Office of Financial Regulation with notice and copies of each civil, criminal or administrative action initiated against the associated person as provided in Rule 69W-600.010, F.A.C. For associated persons who have filed by using the CRD of the NASD, such amendments shall be made through the CRD of the NASD. Form U-4, Uniform Application for Securities Industry Registration or Transfer, is incorporated by reference in subsection 69W-301.002(7), F.A.C.

(2) No change.

Specific Authority 517.03(1), 517.12(6) FS. Law Implemented 517.12(6), (7), (10), 517.1205 FS. History–New 9-20-82, Formerly 3E-301.02, Amended 10-15-86, 10-4-88, 6-24-90, 7-29-90, 10-14-90, 8-1-91, 6-16-92, 6-28-93, 11-14-93, 3-13-94, 4-30-96, 12-29-96, 6-22-98, 5-10-00, 9-19-00, 7-31-02, 12-11-03, Formerly 3E-600.002, Amended 3-16-06,_________.

 

69W-600.004 Registration of Issuer/Dealers, Principals and Branch Offices.

(1) through (2) No change.

(3)(a) Every branch office of a registered Florida dealer or investment adviser shall be registered with the Office of Financial Regulation prior to engaging in business therefrom. Such registration shall consist of an application filed with the Office of Financial Regulation on the forms prescribed by the Office of Financial Regulation and payment of the statutory fees required by Section 517.12(10), F.S. The Office of Financial Regulation shall deem an application to be received at such time as it and the appropriate fee have been date stamped by the cashier’s office of the Department of Financial Services Office of Financial Regulation. Such office may or may not be designated as an Office of Supervisory Jurisdiction (OSJ) at the discretion of the registrant. A manager for each branch office shall be designated and registered with the Office of Financial Regulation as a principal. For such offices not designated as an OSJ, the branch office manager need not be located at the office(s) for which he is delegated supervisory responsibility; however, in such cases, the registrant must specify in writing to the Office of Financial Regulation, the names of the associated persons designated as resident agent in charge as well as the branch office manager.  For any dealer that is a member of the NASD, or any investment adviser, the application for registration of any branch office shall be filed with the Office of Financial Regulation through the CRD.

(b) A complete application must include the following exhibits or forms that are appropriate for the type of registration requested:

1. Form BR, Uniform Branch Office Registration Form, which is incorporated by reference under subsection 69W-301.002(7), F.A.C.

2. through 3. No change.

4. Evidence of current registration or exemption from the regisration requirements of with the Florida Secretary of State as a foreign corporation.

(c) If the information contained in any branch office registration form becomes inaccurate or incomplete for any reason before or after the branch office becomes registered, including changing the location of the branch office or the supervisory personnel thereof, the dealer or investment adviser shall amend the information by filing a complete and originally executed Form BR, Uniform Branch Office Registration Form, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., with the Office of Financial Regulation within thirty (30) days of the change and denoting thereon that the information reported is an amendment to a previous filing. For any dealer that is a member of the NASD, or any investment adviser, the Form BR shall be filed with the Office of Financial Regulation through the CRD, as set forth in this rule. A non-NASD member registrant may amend the branch office registration information by submitting a Form BR directly with the Office of Financial Regulation. Form BR, Uniform Branch Office Registration Form, is incorporated by reference in subsection 69W-301.002(7), F.A.C. In lieu of filing Form BR, which is incorporated by reference in subsection 69W-301.002(7), F.A.C., a registrant may amend the branch office registration information electronically at the time of renewal by following the applicable instructions on the Office of Financial Regulation’s website (www.fldfs.com/ofr) on the Internet. Also, a registrant may change the address or terminate a branch office location by submission of the request in writing to the Office of Financial Regulation in lieu of filing Form BR, which is incorporated by reference in subsection 69W-301.002(7), F.A.C. Failure to file any amendment or written notification, as provided herein, shall be considered a violation of Section 517.12(13), F.S.

(d) No change.

Specific Authority 517.03(1), 517.12(6) FS. Law Implemented 517.12(5), (6), (10) FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.04, Amended 10-14-90, 6-16-92, 1-11-93, 11-7-93, 11-14-93, 12-29-96, 10-20-97, 6-10-99, 8-19-99, 5-27-01, 7-31-02, Formerly 3E-600.004, Amended 3-16-06,_________.

 

69W-600.006 Associated Persons’ Fingerprints.

Fingerprints filed in accordance with Section 517.12(7), Florida Statutes, shall be on fingerprint cards supplied by the Office of Financial Regulation (Form FL921250Z, (Revised 1/91) which is hereby incorporated by reference taken by an authorized law enforcement agency, and accompanied by a non-refundable $47 processing fee. Form FL921250Z, Florida Fingerprint Card, is incorporated by reference in subsection 69W-301.002(7), F.A.C. The Such fingerprint card requirement is waived cards are not required to be filed for those associated persons requesting registration with a dealer which is affiliated with a dealer or investment adviser registered with a national securities exchange or national securities association or the Securities and Exchange Commission, provided that fingerprints have been processed for such persons pursuant to the provisions of SEC. rule 17f-2 (17 C.F.R. 240.17f-2 2006), which is hereby incorporated by reference, by said person’s current employer.

Specific Authority 517.03 FS. Law Implemented 517.12(7) FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.06, Amended 8-1-91, Formerly 3E-600.006, Amended_________.

 

69W-600.009 Registration Renewals.

(1) No change.

(2) In addition to verifying registration with the Office of Financial Regulation as provided in subsection (1), to renew its registration and that of its branch offices and associated persons, each dealer or investment adviser shall pay all renewal fees as required by Section 517.12(11), F.S.

(a) Renewal fees for NASD member firms, associated persons of NASD member firms, and branch offices of NASD member firms, shall be submitted through the CRD by December 31 of the year the registration expires.

(b) Renewal fees for investment advisers shall be submitted through the IARD by December 31 of the year the registration expires. Renewal fees for associated persons of investment advisers, and branch offices of investment advisers, shall be submitted through the CRD by December 31 of the year the registration expires.

(c) Renewal fees for non-NASD member firms, associated persons of non-NASD member firms and all branch offices of non-NASD member firms shall be sent directly to the Office of Financial Regulation. The Office of Financial Regulation shall deem a fee received as payment at such time as it has been date stamped by the cashier's office of the Department of Financial Services. All renewal fees must be received by the Office of Financial Regulation by December 31 of the year the registration expires.  Renewal fees for non-NASD member firms, associated persons of non-NASD member firms and all branch offices shall be sent directly to the Office of Financial Regulation or may be paid electronically by following the applicable instructions on the Office of Financial Regulation’s website (www.dbf.state.fl.us) on the Internet. The Office of Financial Regulation shall deem a fee received as payment at such time as it has been date stamped by the cashier’s office of the Office of Financial Regulation or the date the renewal process has been completed on the Office of Financial Regulation’s website. All renewal fees for NASD member firms and for associated persons of NASD member firms shall be submitted through the CRD. All renewal fees must be received by the Office of Financial Regulation or the CRD by the last business day prior to January 1 of the year following the year the registration expires.

(3) Failure to submit the requisite amount of fees to the Office of Financial Regulation or to the NASD as appropriate and as provided for in subsection (2) of this rule by December 31 of the year of expiration of the registration shall result in such registration not being renewed. If December 31 falls on a Saturday, Sunday or legal holiday pursuant to Section 110.117, F.S., the renewals received on the next business day will be considered timely received. However, an expired registration may be reinstated in accordance with the provisions of Section 517.12(11), F.S., provided that all requisite information and fees are date stamped by the cashier's office of the Department of Financial Services filed with the Office of Financial Regulation on or before January 31 of the year following the year of expiration. Failure to submit the requisite amount of fees necessary to reinstate registration by January 31 of the year following the year of expiration shall result in such registration not being reinstated. If January 31 falls on a Saturday, Sunday, or legal holiday pursuant to Section 110.117, F.S., the reinstatement received on the next business day will be considered timely received. In the event that the renewal or reinstatement is withdrawn or not granted, any fees filed to renew or reinstate registration shall become the revenue of the state pursuant to Section 517.12(10), F.S., and shall not be returnable.

Specific Authority 517.03(1), 517.12(6), (15) FS. Law Implemented 517.12(6), (10), (11), (15) FS. History–New 12-5-79, Amended 9-20-82, 8-29-83, Formerly 3E-600.09, Amended 1-7-88, 6-16-92, 11-14-93, 2-5-01, 5-27-01, Formerly 3E-600.009, Amended_________.

 

69W-600.0091 Central Registration Depository System.

Wherever the rules of this Office of Financial Regulation require the filing of applications, fees, and other documents with the Office of Financial Regulation, in lieu thereof, all dealers who are members of the National Association of Securities Dealers, Inc. (NASD) shall file such items as hereinafter specifically provided:

(1) All NASD member dealers requesting initial registration, amendment renewal or termination of registration in this state shall file the appropriate Form BD or BDW, which are incorporated by reference in subsection 69W-301.002(7), F.A.C., and the assessment fee required by Section 517.12(10) or (11), F.S., with the Central Registration Depository System (“CRD”) of the NASD. However, responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation.   Any application for registration as a dealer filed with the Office of Financial Regulation through the CRD shall be deemed received by the Office of Financial Regulation upon receipt of the Form BD and the application fee. The application fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report.

(2) All NASD member dealers registered in this state requesting initial registration, amendment, or termination of a branch office of such member dealer shall file the appropriate Form BR and the application fee required by Section 517.12(10) or (11), F.S., with the CRD. However, responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Any application for registration as a branch office filed with the Office of Financial Regulation through the CRD shall be deemed received by the Office of Financial Regulation upon receipt of the Form BR and the application fee. The application fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report.

(3)(2) All NASD member dealers registered in this state requesting initial registration, amendment, renewal, reaffiliation or termination of an associated person of such member dealer shall file the appropriate Form U-4 or U-5, which are incorporated by reference in subsection 69W-301.002(7), F.A.C., and the assessment fee required by Section 517.12(10) or (11), F.S., with the CRD of the NASD. However, responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation.  Any application for registration as an associated person of an NASD member dealer filed with the Office of Financial Regulation through the CRD shall be deemed received by the Office of Financial Regulation on the date designated in the “Status Date” field on the line notated “FL” with a “Registration Status” of “pending” as indicated on the CRD “Registrations with Current Employers” screen.

(3) Any application for registration as an associated person of an NASD member dealer filed with the Office of Financial Regulation via the CRD shall be deemed received by the Office of Financial Regulation on the date designated in the “Status Date” field on the line notated “FL” with a “Registration Status” of “pending” as indicated on the CRD “Registrations with Current Employers” screen.

(4) Any application for registration as a dealer filed with the Office of Financial Regulation via the CRD shall be deemed received by the Office of Financial Regulation upon receipt of the Form BD and the application fee. The application fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report.

Specific Authority 517.03, 517.12(15) FS. Law Implemented 517.12(10), (11), (15) FS. History–New 8-29-83, Formerly 3E-600.091, Amended 8-1-91, 6-16-92, 4-30-96, 9-19-00, Formerly 3E-600.0091, Amended_________.

 

(Substantial rewording of Rule 69W-600.0092 follows. See Florida Administrative Code for present text)

 

69W-600.0092 Investment Adviser Registration Depository for Federal Covered Advisers.

(1) All federal covered advisers making, amending, or terminating a notice filing in this state shall file Form ADV or Form ADV-W and the assessment fee required by Section 517.1201(1) or (2), F.S., with the Investment Adviser Registration Depository (IARD) of the NASD. When requested by the Office of Financial Regulation, Form ADV, Part 2, and all responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Any notice filing made by a federal covered adviser with the Office of Financial Regulation through the IARD shall be deemed received by the Office of Financial Regulation upon receipt of the Form ADV and the filing fee. The filing fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report. Forms ADV and ADV-W are incorporated by reference in subsection 69W-301.002(7), F.A.C.

(2) All federal covered advisers who notice file in this state and who request initial registration, amendment, reaffiliation or termination of an associated person of such federal covered adviser shall file the Form U4 or Form U5, and the assessment fee required by Section 517.12(10) or (11), F.S. with the CRD of the NASD. However, responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Forms U4 and U5 are incorporated by reference in subsection 69W-301.002(7), F.A.C.

Specific Authority 517.03, 517.12(6), (15), 517.1201 FS. Law Implemented 517.1201(1), (2), (15) FS. History–New 7-31-02, Formerly 3E-600.0092, Amended 3-16-06,_________.

 

(Substantial rewording of Rule 69W-600.0093 follows. See Florida Administrative Code for present text)

 

69W-600.0093 Investment Adviser Registration Depository for Investment Advisers.

(1) All investment advisers requesting initial registration, amendment, or termination of registration in this state shall file the Form ADV or ADV-W and the assessment fee required by Section 517.12(10) or (11), F.S. with the Investment Adviser Registration Depository (IARD) of the NASD. Form ADV, Part 2, and all responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Investment advisers shall file Form ADV, Part 2 with the IARD at such time as the IARD develops the capability to process the form. Applications for registration as an investment adviser filed with the Office of Financial Regulation through the IARD shall be deemed received by the Office of Financial Regulation upon receipt of the Form ADV and the filing fee. The filing fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report. Forms ADVand ADV-W are incorporated by reference in subsection 69W-301.002(7), F.A.C.

(2) All investment advisers registered in this state through the IARD requesting initial registration, amendment, or termination of a branch of such investment adviser shall file Form BR and the assessment fee required by Section 517.12(10) or (11), F.S., with the CRD of the NASD. However, all responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Applications for registration as a branch office filed with the Office of Financial Regulation through the CRD shall be deemed received by the Office of Financial Regulation upon receipt of the Form BR and the application fee. The application fee shall be deemed received by the Office of Financial Regulation on the “payment date” reflected on the CRD “disbursement detail” report. Form BR is incorporated by reference in subsection 69W-301.002(7), F.A.C.

(3) All investment advisers registered in this state through the IARD requesting initial registration, amendment, reaffialitiation or termination of an associated person of such investment adviser may file Form U4 or Form U5 and the assessment fee required by Section 517.12(10) or (11), F.S., with the CRD of the NASD. However, all responses to requests by the Office of Financial Regulation for additional information shall be filed directly with the Office of Financial Regulation. Forms U4 and U5 are incorporated by reference in subsection 69W-301.002(7), F.A.C.

(4) All investment advisers currently registered with the Office of Financial Regulation shall transition their Florida registrations onto IARD of the NASD, and the Florida registrations of their associated person onto the CRD of the NASD, by June 30, 2007. All investment advisers who transition onto IARD of the NASD shall file a complete Form ADV through the IARD of the NASD within 30 days after the transition date.   All associated persons who transition onto the CRD of the NASD shall file a complete Form U4 through the CRD of the NASD within 30 days after the transition date. Form U4 and Form ADV are incorporated by reference in subsection 69W-301.002(7), F.A.C.

Specific Authority 517.03, 517.12(6), (15) FS. Law Implemented 517.12(10), (11), (15) FS. History–New 7-31-02, Formerly 3E-600.0093, Amended 3-16-06,________.

 

69W-600.014 Books and Records Requirements.

Except as otherwise provided herein, every dealer, investment adviser, branch office, and associated person conducting business in this state shall prepare and maintain on a current basis, and preserve for the periods of time specified, such records, prescribed herein, as are appropriate for said dealer’s, investment adviser’s, branch office’s, or associated person’s course of business, and are sufficient to provide an audit trail of all business transactions by said dealer, investment adviser, associated person, or branch office. Associated persons who conduct business from a registered branch office in this state shall be exempt from the provisions of this rule.

(1) No change.

(2) All issuer/dealers are required to maintain at least the following records:

(a) Ledgers, journals (or other records) reflecting all assets, liabilities, income and expenses, and capital accounts properly maintained in accordance with United States generally accepted accounting principles principals;

(b) through (e) No change.

(3) All investment advisers, notwithstanding the fact that the investment adviser is not registered or required to be registered under the Investment Advisers Act of 1940, shall prepare and maintain true, accurate and current records relating to their business as described in SEC Rule 204-2, 17 C.F.R. § 275.204-2(2006), which is incorporated by reference; and have available for the Office of Financial Regulation at least the following records;

(a) All trial balances, financial statements prepared in accordance with United States generally accepted accounting principles, and internal audit working papers relating to the investment adviser’s business as an investment adviser. For purposes of this paragraph, “financial statements” means balance sheets, income statements, cash flow statements and net worth computations as required by Rule 69W-300.002, F.A.C.

(b) through (k) No change.

(4) through (8) No change.

Specific Authority 517.03(1), 517.121(1), 517.1215 FS. Law Implemented 517.121(1), 517.1215 FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.14, Amended 10-14-90, 8-1-91, 6-16-92, 1-11-93, 9-9-96, 6-22-98, 1-25-00, 10-30-03, Formerly 3E-600.014, Amended 10-23-06,________.

 

69W-600.016 Net Capital Requirements for Dealers and Investment Advisers.

(1) No change.

(2) All dealer applicants and registrants shall meet and at all times maintain the net capital and ratio requirements as prescribed by SEC Rule 15c3-1 including appendices A through D any appendices thereto (17 C.F.R. 240.15c3-1, 240.15c3-1a, 240.15c3-1b, 240.15c3-1c and 240.15c3-1d (Thomson/West 2006 (current through 71 FR 69409)), computed in accordance with said rule, as such rule existed on January 1, 1993. The foregoing federal regulations are hereby incorporated by reference.

(a) All reporting requirements as specified in 17 C.F.R. 240.17a-11 (Thomson/West 2006 (current through 71 FR 69409)), as such rule existed on January 1, 1993, when such regulation is referred in SEC Rule 15c3-1 shall be applicable with the exception that such reports and notifications required by said rule shall be forwarded to the Office of Financial Regulation as well as the other regulatory agencies specified, if applicable. The foregoing federal regulations are hereby incorporated by reference.

(b) All references to 17 C.F.R. 240.17a-3 and 17 C.F.R. 240.17a-4, which are incorporated by reference in Rule 69W-600.014, F.A.C., as such provisions existed on January 1, 1993, in the foregoing and subsequent provisions of Office of Financial Regulation or SEC Rules as adopted by the Office of Financial Regulation, shall be read as to mean Office of Financial Regulation, Rule 69W-600.014, F.A.C.

(3) Issuer/dealer or investment adviser applicants or registrants shall meet the net capital requirements of this section:

(a) Investment advisers who have custody of client funds or securities or who receive payment of advisory fees six months or more in advance and in excess of $500 per client shall maintain net capital in the amount of $25,000 calculated as prescribed by SEC Rule 15c3-1 (17 CFR 240.15c3-1), including any ratio requirements and appendices thereto, as such provisions existed on January 1, 1993. The foregoing federal regulations are incorporated by reference in subsection (2).

(b) Investment advisers who do not have custody of client funds or securities or who do not receive payment for advisory services six months or more in advance and in excess of $500 per client shall maintain net capital: (1) in the amount of $5,000 calculated as prescribed by SEC Rule 15c3-1 (17 CFR 240.15c3-1), including any ratio requirements and appendices thereto, as such provisions existed on January 1, 1993; or (2) of at least $2,500. The foregoing federal regulations are incorporated by reference in subsection 2. For purposes of option (2) of this subsection, net capital shall be defined as assets minus liabilities in accordance with Generally Accepted Accounting Principles as adopted by the American Institute of Certified Public Accountants, as such provisions existed on June 1, 1992.

(c) Investment advisers who compute net capital in accordance with SEC Rule 15c3-1, as such rule existed on January 1, 1993, may exclude liabilities which are subordinated to the claims of creditors pursuant to a subordination agreement, provided such agreement complies with all terms and conditions specified in Appendix D to SEC Rule 15c3-1 (17 CFR 240.15c3-1d), as such provision existed on January 1, 1993, except for the requirement that such agreement be filed with and approved by the Securities and Exchange Commission. Those investment advisers who have subordination agreements in effect prior to the effective date of this subsection shall not be required to comply with the conditions specified in Appendix D to SEC Rule 15c3-1. Should the investment adviser renegotiate or enter into a new subordination agreement, the agreement must comply with the provisions of Appendix D of SEC Rule 15c3-1. The foregoing federal regulations are incorporated by reference in subsection (2).

(d) An issuer/dealer shall maintain net capital, defined as assets minus liabilities and computed in accordance with Generally Accepted Accounting Principles as adopted by the American Institute of Certified Public Accountants, as such provisions existed on June 1, 1992, of at least $5,000, unless required elsewhere by these rules to maintain a greater minimum net capital.

(e) For the purposes of (3)(b), (2) and (3)(d) above, “net capital’ means an excess of assets over liabilities, as determined by United States generally accepted accounting principles. Under these principles, assets do not include:

1. Prepaid expenses, other than items properly classified as current assets under United States generally accepted accounting principles;

2. Deferred charges;

3. Goodwill;

4. Franchise rights;

5. Organizational expenses;

6. Patents;

7. Copyrights;

8. Marketing rights

9. Un-amortized debt discount and expense;

10. Assets of an intangible nature;

11. A home, home furnishings, automobiles, and any other personal items not readily marketable, if the investment adviser is an individual;

12. A corporation’s advances or loans to shareholders or officers; and

13. A partnership’s advance or loans to partners.

(f) When liabilities can be shown to be collateralized by assets (including capital assets such as equipment, property, etc.) that are owned by the adviser, those liabilities are excluded from the computation. Likewise, liabilities owed to the owners or shareholders of the adviser are excluded. All other types of liabilities, including non-collateralized short and long term debt, must be included in the computation.

(g) To ensure compliance with Rule 69W-600.015, F.A.C., and this section, the Office of Financial Regulation may require, at the Office’s discretion, that a current appraisal be submitted in order to establish the value of any asset, including unsecured notes, accounts receivable, or advanced commissions due from a salesperson, officer, director, partner, or affiliate. Such appraisal shall be substantiated by an opinion of a bank, finance company, or other lending institution satisfactory to the Office of Financial Regulation.

(h) Investment advisers who are also registered with the Office of Financial Regulation as a dealer are exempt from the requirements of this rule if the net capital required of the dealer by this rule exceeds the net capital required of the adviser, as required by this rule. The adviser must provide, in accordance with Rule 69W-600.015, F.A.C., a notarized statement claiming this exemption.

(4) through (5) No change.

(6) All materials incorporated by reference in this rule may be obtained by mail from the Office of Financial Regulation, Bureau of Securities Regulation, 200 E. Gaines Street, Tallahassee, Florida 32399-0375.

Specific Authority 517.03(1) FS. Law Implemented 517.12(9), (16) FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.16, Amended 10-15-86, 8-1-91, 6-29-93, 11-22-93, Formerly 3E-600.016, Amended_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Pam Epting, Bureau Chief, Office of Financial Regulation, 200 East Gaines Street, 6th Floor, The Fletcher Building, Tallahassee, Florida 32399-0375, [phone]
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Financial Services Commission
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: February 13, 2007
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: December 22, 2006