Rules of Conduct, Prohibited Business Practices for Dealers and Their Associated Persons, Prohibited Business Practices for Investment Advisers and Their Associated Persons, Books and Records Requirements
DEPARTMENT OF FINANCIAL SERVICES
RULE NOS.: RULE TITLES:
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-600.014: Books and Records Requirements
NOTICE OF CORRECTION
Notice is hereby given that the following correction has been made to the proposed rule in Vol. 42 No. 151, August 4, 2016 issue of the Florida Administrative Register.
The Notice of Proposed Rule filed on August 4, 2016, incorrectly lists the following rules for proposal:
69W-600.0012: Application for Registration as a Dealer (Non-FINRA)
69W-600.0013: Application for Registration as an Issuer/Dealer
69W-600.0131: Prohibited Business Practices for Investment Advisers and Their Associated Persons
69W-600.014: Books and Records Requirements
The Notice of Proposed Rule should correctly reflect the following rules for proposal:
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-600.014: Books and Records Requirements
The full text of the Proposed Rule is:
69W-600.012 Rules of Conduct.
(1) through (2) No change.
(3) No dealer or investment adviser shall permit or effect a withdrawal of any part of its net worth, including subordinated indebtedness, whether by redemption, retirement, repurchase, repayment or otherwise, that would cause its net capital or its aggregate indebtedness to violate any provisions of Office of Financial Regulation Rules 69W-600.0151 and 69W-600.0161 Rule 69W-600.016, F.A.C., without prior written approval of the Office of Financial Regulation.
(4) through (5) No change.
Rulemaking Authority 517.03(1) FS. Law Implemented 517.121, 517.301(1) FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.12, Amended 12-25-89, 10-14-90, 8-1-91, 6-16-92, 1-11-93, 4-11-94, 1-3-99, 8-19-99, 10-30-03, Formerly 3E-600.012, Amended 11-22-10, 9-22-14, .
69W-600.013 Prohibited Business Practices for Dealers and Their Associated Persons.
(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) through (k) No change.
(l) Recommending to a customer that the customer engage the services of an investment adviser in connection with which the dealer receives a fee or remuneration (other than directed business) from the investment adviser, unless the dealer is registered with the Office as an investment adviser pursuant to Rule 69W-600.0016, F.A.C. or notice-filed pursuant to Rule 69W-600.0017, F.A.C., except as permitted in Rule 69W-600.003, F.A.C.
(m) through (o) No change.
(2) No change.
Rulemaking Authority 517.03(1), 517.1217 FS. Law Implemented 517.081, 517.1217, 517.161(1) FS. History–New 12-5-79, Amended 9-20-82, Formerly 3E-600.13, Amended 8-1-91, 6-16-92, 1-11-93, 11-7-93, 5-5-94, 9-9-96, 10-20-97, 1-25-00, 10-30-03, Formerly 3E-600.013, Amended 10-23-06, 1-18-09, 11-22-10, 9-22-14, .
69W-600.0131 Prohibited Business Practices for Investment Advisers and Their Associated Persons.
(1) The following are prohibited business practices for investment advisers and associated persons pursuant to Section 517.1215(2), F.S., and are deemed demonstrations of unworthiness by an investment adviser or an associated person of an investment adviser under Section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:
(a) through (m) No change.
(n) Recommending to a customer that the customer engage the services of a dealer in connection with which the investment adviser receives a fee or remuneration from the dealer, except as permitted in Rule 69W-600.0024(4), F.A.C. 69W-600.003, F.A.C.
(o) through (w) No change.
(x) Charging a customer an advisory fee greater than the amount authorized in the written investment advisory contract between the customer and the investment adviser.
(2) No change.
Rulemaking Authority 517.03(1), 517.1215 FS. Law Implemented 517.12(4), 517.1215, 517.161(1) FS. History–New 1-25-00, Amended 10-30-03, Formerly 3E-600.0131, Amended 10-23-06, 1-18-09, 11-22-10, 9-22-14, 5-6-15, .
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 branch office notice-filed in this state shall be exempt from the provisions of this rule.
(1) through (2) 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), which is incorporated by reference in Rule 69W-200.002, F.A.C.; 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-600.0161, F.A.C. 69W-300.002, F.A.C.
(b) through (k) No change.
(l) A copy of each invoice the investment adviser sends to its clients each time an advisory fee is deducted from clients’ accounts.
(4) through (6) No change.
(7) All books and records described in this rule shall be preserved in accordance with the following:
(a) Those records required under subsection (1) of this rule shall be preserved for such periods of time as specified in either SEC Rule 17a-4, (17 C.F.R. § 240.17a), or MSRB Rule G-9.
(b) Those records required under subsection (2) of this rule shall be preserved for a period of not less than five (5) years while effectively registered with the Office of Financial Regulation, nor for less than five (5) years after withdrawal or expiration of registration in this State.
(c) Books and records required to be prepared under the provisions of subsection (3) shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in the principal office of the investment adviser.
(d) Every investment adviser and associated person conducting business in this state shall preserve for the life of the client’s account, and not less than 5 years after the closing of the client’s account, documents required to be prepared and maintained in accordance with paragraphs (3)(c) and (3)(i).
(d) Books and records required to be made under the provisions of subsection (3), shall be maintained and preserved for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record or for the time period during which the investment adviser was registered or required to be registered in the state, if registered less than five years.
(e) Each investment adviser registered or required to be registered in this state and which has a business location in this state shall maintain at such business location:
1. through 3. No change.
(8) No change.
Rulemaking 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, 5-15-07, 11-22-10, 11-11-13, 9-22-14, 5-6-15, .
