The purpose and effect is to amend the existing rules to incorporate by reference the current version of SEC Form X-17A-5, FOCUS Report, and other materials incorporated by reference, to clarify how applicants for registration ....

 

DEPARTMENT OF FINANCIAL SERVICES

Securities

RULE NOS.:RULE TITLES:

69W-600.001Application for Registration as a Dealer (FINRA)

69W-600.0011Effect of Law Enforcement Records on Applications for Registration as Dealer, Issuer/Dealer, or Investment Adviser

69W-600.0012Application for Registration as a Dealer (Non-FINRA)

69W-600.0013Application for Registration as an Issuer/Dealer

69W-600.0016Application for Registration as an Investment Adviser (State Registered)

69W-600.002Application for Registration as Associated Person (FINRA Dealer)

69W-600.0022Application for Registration as an Associated Person (Non-FINRA Dealer)

69W-600.0023Application for Registration as an Associated Person (Issuer/Dealer)

69W-600.0024Application for Registration as an Associated Person (Investment Adviser and Federal Covered Advisor)

69W-600.0031Notice-Filing of Branch Office (FINRA Dealer)

69W-600.0131Prohibited Business Practices for Investment Advisers and Their Associated Persons

69W-600.014Books and Records Requirements

69W-600.0151Net Capital and Financial Reporting Requirements for Dealers and Issuer/Dealers

69W-600.0161Net Capital and Financial Reporting Requirements for Investment Advisers

PURPOSE AND EFFECT: The purpose and effect is to amend the existing rules to incorporate by reference the current version of SEC Form X-17A-5, FOCUS Report, and other materials incorporated by reference, to clarify how applicants for registration as associated persons of investment advisers or federal covered advisers may satisfy exam requirements, to use consistent terminology throughout the rule chapter, to remove superfluous language, to correct a spelling error, to require financial statements to be submitted to the Office through an electronic portal, to allow associated persons of Financial Industry Regulatory Authority (FINRA) member firms who elect to participate in the FINRA Maintaining Qualifications Program (MQP) to satisfy exam requirements, to include intermediaries in the definition of “applicant” for purposes of general procedures regarding law enforcement records as such procedures relate to application review, and to add in missing language clarifying that for FINRA dealer branch offices not designated as an Office of Supervisory Jurisdiction (OSJ), FINRA dealers must specify the OSJ and the supervisor(s) at the specified OSJ that supervise(s) the branch office.

SUMMARY: The proposed amended rules amend the existing rules to incorporate by reference the current version of SEC Form X-17A-5, FOCUS Report, and other materials incorporated by reference, clarify how applicants for registration as associated persons of investment advisers or federal covered advisers may satisfy exam requirements, use consistent terminology throughout the rule chapter, remove superfluous language, correct a spelling error, require financial statements to be submitted to the Office through an electronic portal, include intermediaries in the definition of “applicant” for purposes of general procedures regarding law enforcement records as such procedures relate to application review, and add in missing language clarifying that for FINRA dealer branch offices not designated as an Office of Supervisory Jurisdiction (OSJ), FINRA dealers must specify the OSJ and the supervisor(s) at the specified OSJ that supervise(s) the branch office. The proposed amended rules also amend the existing rules to allow associated persons of Financial Industry Regulatory Authority (FINRA) member firms who elect to participate in the FINRA Maintaining Qualifications Program (MQP) to satisfy exam requirements. Individuals who terminate their registrations with FINRA member firms and elect to participate in the MQP may have a maximum of five years, instead of two years, in which to reregister with a firm without having to requalify by exam.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Agency expressly relies on an analysis of potential economic impact conducted by persons with subject matter knowledge of these rules.

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.

RULEMAKING AUTHORITY: 517.03(1), 517.12, 517.1202, 517.121, 517.1215, 517.1611(2), FS.

LAW IMPLEMENTED: 517.12, 517.1202, 517.121, 517.1215, 517.161, 517.201, FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Ryann White, Office of General Counsel [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69W-600.001 Application for Registration as a Dealer (FINRA).

(1) through (5) No change.

(6) Examinations/Qualifications Requirements.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of a dealer shall evidence securities general knowledge by:

1. through 3. No change.

4. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. No change.

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or .

5. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(7) through (11) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 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, 5-15-07, 11-22-10, 10-29-12, 11-11-13, 12-29-15, 11-26-19, 1-18-21,                 .

 

69W-600.0011 Effect of Law Enforcement Records on Applications for Registration as Dealer, Issuer/Dealer, Intermediary, or Investment Adviser.

(1) General Procedure Regarding Law Enforcement Records. For purposes of this rule, an “applicant” is any Dealer, Issuer/Dealer, Intermediary, or Investment Adviser seeking registration in Florida. Any member, principal, or director of the applicant or any person having similar status or performing similar functions; any person directly or indirectly controlling the applicant; direct owners, principals, or indirect owners that are required to be reported on behalf of the applicant on Form BD or Form ADV pursuant to Section 517.12(15), F.S. shall be referred to collectively as “relevant persons”. As part of the application review process for each Dealer, Issuer/Dealer, Intermediary, or Investment Adviser, submitted on Form BD, Form FL-INT (10/15), or Form ADV, the Office is required to consider all relevant persons’ respective law enforcement records when deciding whether to approve an application for registration. When conducting this review, the Office reviews the criminal history information derived from the fingerprint check, any responses made by the applicant or a relevant person, and information from other resources such as the Financial Industry Regulatory Authority. In the event of a question regarding the a relevant person’s criminal history, the Office may request additional information from the applicant to determine the status of a criminal event, the specific facts and circumstances surrounding a criminal event, or to address other issues determined relevant to the review of the law enforcement record. The Office will notify the applicant of any specific documents that it requires in order to complete its review of the a relevant person’s law enforcement record. Documentation that is typically requested includes:

(a) through (e) no change.

(2) through (17) no change.

Rulemaking Authority 517.1611(2) FS. Law Implemented 517.12, 517.161 FS. History–New 9-2-10, Amended 12-5-19,                 .

 

69W-600.0012 Application for Registration as a Dealer (Non-FINRA).

(1) through (5) No change.

(6) Examinations/Qualifications Requirements.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of a dealer shall evidence securities general knowledge by:

1. through 3. No change.

4. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. No change.

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or .

5. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(7) through (11) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 11-26-19, 1-18-21,            .

 

69W-600.0013 Application for Registration as an Issuer/Dealer.

(1) through (5) No change.

(6) Examinations/Qualifications Requirements.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of an issuer/dealer shall evidence securities general knowledge by:

1. through 4. No change.

5. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. Individuals whose registration as an associated person was terminated between October 1, 2014, and September 30, 2018, provided they re-register as an associated person within four years from the date of their last registration;

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or.

6. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(c) No change.

(7) through (11) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 11-26-19, 1-18-21,          .

 

69W-600.0016 Application for Registration as an Investment Adviser (State Registered).

(1) through (5) No change.

(6) Examinations/Qualifications Requirements.

(a) No change.

(b) Every associated person of an investment adviser designated as principal An individual applying to be registered as an investment adviser shall provide the Office with one of the following:

1. No change.

2. Proof of passing, within two years of the date of application for registration, the General Securities Representative Examination (Series 7), the Uniform Combined State Law Examination (Series 66), and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following principals individuals will be considered to have passed the SIE Examination:

a. Principals Individuals whose registration as an associated person was terminated between October 1, 2014, and September 30, 2018, provided they re-register as an associated person within four years from the date of their last registration;

b. Principals Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018.

(c) Principals who meet one of the following conditions satisfy the examination requirements of paragraph (6)(b) of this rule, except the Office may require additional examinations for any principals found to have violated any state or federal securities law:

1.a. Principals who passed either the Series 65 examination or both the Series 7 and Series 66 examinations; and

b. Have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration.

c. Periods of time during which a principal provides advisory services for compensation on behalf of a dealer, a federal covered adviser, or an investment adviser, in any jurisdiction in the United States that does not require such persons to register as an associated person of the dealer, federal covered adviser, or investment adviser on whose behalf such advisory services were performed, will not be considered a lapse in registration for purposes of this paragraph.

2.a. Principals who were previously registered with the Office as an associated person of an investment adviser or federal covered adviser; and

b. Have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration.

(d) (c) Grandfathering Provision Provisions: The examination requirements of paragraph (6)(b) of this rule shall not apply to principals who were registered as an associated person of an investment adviser or a federal covered adviser in any jurisdiction in the United States pursuant to a transition request submitted prior to January 1, 2005, and who have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration. The Office may require additional examinations for any applicant found to have violated any state or federal securities law.

1. Any individual who is or has been registered as an investment adviser or associated person of an investment adviser in any jurisdiction in the United States requiring examinations designated in paragraph (6)(b), within two years of the date of application for registration shall not be required to satisfy the examination requirements for continued registration except that the Office may require additional examinations for any individual found to have violated any state or federal securities law.

2. An individual who obtained registration as an associated person of an investment adviser or a federal covered adviser in any jurisdiction in the United States requiring examinations designated in paragraph (6)(b), by such jurisdiction waiving those examination requirements, shall be required to satisfy the examination requirements of this rule.

(e) (d) The examination requirement for an associated person of an investment adviser designated as principal an individual applying for registration as an investment adviser shall not apply to a principal an individual who currently holds one of the following professional designations:

1. through 5. No change.

(7) No change.

(8) Renewal Requirement.

(a) through (c) No change.

(d) Failure to submit the requisite amount of fees as provided for in paragraph (8)(b), by December 31 of the year of expiration of the registration shall result in the firm registration, associated person agent registration, or branch office notice-filing 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 shall be considered timely received. However, an expired registration or notice-filing may be reinstated in accordance with the provisions of Section 517.12(11) or 517.1202(3), F.S., provided that all requisite information and fees are date stamped by the cashier’s office of the Department of Financial Services 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 or notice-filing by January 31 of the year following the year of expiration shall result in such registration or notice-filing 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 shall 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 or notice-filing shall become the revenue of the state pursuant to the provisions of Section 517.12(10) or 517.1202(8), F.S., and shall not be returnable.

(9) Termination of Registration as an Investment Adviser, Associated Person Agent, or Notification of Branch Office.

(a) through (d) No change.

(10) No change.

(11) Notice of Civil, Criminal or Administrative Action. An investment adviser shall:

(a) Notify the Office within thirty (30) calendar days of the date a complaint is served, of any civil, criminal or administrative charges filed against the firm or owner which directly or indirectly relate to the registration or sale of securities, or which directly or indirectly relate to the activities as a dealer, investment adviser, principal or associated person agent, or any other activity where a breach of a fiduciary trust is alleged. This shall not include minor traffic violations; but shall include any notification of investigation by any recognized regulatory agency; and,

(b) through (c) No change.

(12) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 11-26-19, 1-18-21,          .

 

69W-600.002 Application for Registration as Associated Person (FINRA Dealer).

(1) through (5) No change.

(6) Examinations/Qualifications.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of a dealer shall evidence securities general knowledge by:

1. through 3. No change.

4. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. No change.

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or.

5. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(7) through (11) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 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, 5-15-07, 12-24-07, 12-25-08, 11-22-10, 5-29-12, 11-11-13, 12-29-15, 9-25-18, 11-26-19, 1-18-21,          .

 

69W-600.0022 Application for Registration as Associated Person (Non-FINRA Dealer).

(1) through (5) No change.

(6) Examinations/Qualifications.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of a dealer shall evidence securities general knowledge by:

1. through 3. No change.

4. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. No change.

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or .

5. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(7) through (10) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 9-25-18, 11-26-19, 1-18-21,            .

 

69W-600.0023 Application for Registration as Associated Person (Issuer/Dealer).

(1) through (5) No change.

(6) Examinations/Qualifications.

(a) No change.

(b) Every applicant for initial registration as a principal or agent of a dealer shall evidence securities general knowledge by:

1. through 4. No change.

5. Submitting to the Office proof of passing, within two years of the date of application for registration, an examination relating to the position to be filled administered by a national securities association and proof of passing, within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following individuals will be considered to have passed the SIE Examination:

a. No change.

b. Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018; or .

6. Submitting to the Office proof of participation in the FINRA Maintaining Qualification Program (MQP) as set forth in FINRA Rule 1240(c), which is incorporated by reference in Rule 69W-600.002, F.A.C., and maintenance of the validity of the examinations relating to the position to be filled administered by a national securities association to be demonstrated by meeting the conditions of participation in the MQP. Participation in the MQP shall not extend the validity period for the the Uniform Investment Adviser Law Examination (Series 65) or the Uniform Combined State Law Examination (Series 66) for purposes of associated person of an investment adviser or federal covered adviser registration.

(c) No Change.

(7) through (10) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 9-25-18, 11-26-19, 1-18-21;                     .

 

69W-600.0024 Application for Registration as Associated Person (Investment Adviser and Federal Covered Adviser).

(1) New Applications.

(a) No change.

(b) An application shall include the following:

1. through 5. No change.

(2) through (3) No change.

(4) Multiple Registration.

(a) No change.

(b) A person registered with the Office as an associated person under this rule of an investment adviser or federal covered adviser shall not be required to register as an associated person of any other investment adviser or federal covered adviser on whose behalf such person solicits, refers, offers or negotiates advisory services, provided each of the following conditions are met:

1. through 4. No change.

(5) No change.

(6) Examinations/Qualifications.

(a) No change.

(b) Every applicant for registration An individual applying to be registered as an associated person of an investment adviser or federal covered adviser shall provide the Office with one of the following:

1. No change.

2. Proof of passing, within two years of the date of application for registration, the General Securities Representative Examination (Series 7), the Uniform Combined State Law Examination (Series 66), and proof of passing within four years of the date of application for registration, the Securities Industry Essentials (SIE) Examination. The following ­applicants individuals will be considered to have passed the SIE Examination:

a. Applicants Individuals whose registration as an associated person was terminated between October 1, 2014, and September 30, 2018, provided they re-register as an associated person within four years from the date of their last registration;

b. Applicants Individuals who registered as an associated person prior to October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018.

(c) Applicants who meet one of the following conditions satisfy the examination requirements of paragraph (6)(b) of this rule, except the Office may require additional examinations for any applicants found to have violated any state or federal securities law:

1.a. Applicants who passed either the Series 65 examination or both the Series 7 and Series 66 examinations; and

b. Have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration.

c. Periods of time during which an applicant provides advisory services for compensation on behalf of a dealer, a federal covered adviser, or an investment adviser, in any jurisdiction in the United States that does not require such persons to register as an associated person of the dealer, federal covered adviser, or investment adviser on whose behalf such advisory services were performed, will not be considered a lapse in registration for purposes of this paragraph.  

3.a. Applicants who were previously registered with the Office as an associated person of an investment adviser or federal covered adviser; and

b. Have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration.

(d) (c) Grandfathering Provision Provisions: The examination requirements of paragraph (6)(b) of this rule shall not apply to applicants who were registered as an associated person of an investment adviser or a federal covered adviser in any jurisdiction in the United States pursuant to a transition request submitted prior to January 1, 2005, and who have not had a lapse in registration as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States for a period exceeding two years immediately preceding the date the Office receives the application for registration. The Office may require additional examinations for any applicant found to have violated any state or federal securities law.

1. Any individual who is or has been registered as an associated person of an investment adviser or federal covered adviser in any jurisdiction in the United States requiring examinations designated in paragraph (6)(b), within two years of the date of application for registration shall not be required to satisfy the examination requirements for continued registration except that the Office may require additional examinations for any individual found to have violated any state or federal securities law.

2. An individual who obtained registration as an associated person of an investment adviser or a federal covered adviser in any jurisdiction in the United States requiring examinations designated in paragraph (6)(b), by such jurisdiction waiving those examination requirements, shall be required to satisfy the examination requirements of this rule.

(e) (d) The examination requirement for associated persons of an investment adviser or federal covered adviser shall not apply to an applicant individual who currently holds one of the following professional designations:

1. thorugh 5. No change.

(7) Fingerprint Requirements.

(a) Fingerprints filed in accordance with Section Dection 517.12(7), F.S., shall be submitted to the Office through a live scan vendor approved by the Florida Department of Law Enforcement (FDLE) and published on FDLE’s website for submission to FDLE and the Federal Bureau of Investigation (FBI) for a state criminal background check and a federal criminal background check. The cost of fingerprint processing shall be borne by the applicant and paid directly to the live scan vendor.

(b) No change.

(8) Renewal Requirement.

(a) Renewal fees for associated persons of investment advisers and federal covered advisers shall be submitted by the firm through the CRD by December 31 of the year the registration expires as required by Section 517.12(11), F.S.

(b) through (c) No change.

(9) Termination of Registration of Principal or Associated Person Agent.

(a) through (b) No change.

(10) Notice of Civil, Criminal or Administrative Action. An associated person shall:

(a) Notify the Office within thirty (30) calendar days of the date a complaint is served, of any civil, criminal or administrative charges filed that directly or indirectly relate to the registration or sale of securities, or which directly or indirectly relate to activities as a principal or associated person agent, or any other activity in which a breach of a fiduciary trust is alleged. This shall not include minor traffic violations; but shall include any notification of investigation by any recognized regulatory agency; and

(b) though (c) No change.

Rulemaking Authority 517.03(1), 517.12 FS. Law Implemented 517.12 FS. History–New 12-29-15, Amended 9-25-18, 11-26-19, 1-18-21,               .

 

69W-600.0031 Notice-Filing of Branch Office (FINRA Dealer).

(1) No change.

(2) Branch Office Designation. A branch office may or may not be designated as an Office of Supervisory Jurisdiction (OSJ) at the discretion of the registrant. For each branch office designated as an OSJ, a supervisor shall be designated as a principal and registered with the Office. The designated principal shall have passed the examination(s), administered by a national securities association or a national securities exchange registered with the Securities and Exchange Commission, to supervise the activities of the branch office and its associated persons and be registered with the Office as set forth in Rule 69W-600.002, F.A.C. For offices not designated as an OSJ, the registrant must specify the OSJ and the supervisor(s) at as the specified OSJ that supervise(s) the branch office. Additionally, the registrant must specify the person(s)-in-charge physically located at the branch office. The person(s)-in-charge must be registered as set forth in Rule 69W-600.002, F.A.C.

(3) through (6) No change.

Rulemaking Authority 517.03(1), 517.1202 FS. Law Implemented 517.12(8), 517.1202 FS. History–New 12-29-15, Amended 11-26-19,                       .

 

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) With respect to any customer, transaction or business in, to or from this state, engaging in any conduct prohibited by, or failing to comply with the requirements of, the following, notwithstanding the fact that the investment adviser or associated person is not registered or required to be registered under the Investment Advisers Act of 1940:

Sections 204, 204A, 205, 206, 207, 208 of the Investment Advisers Act of 1940, (15 U.S.C.A. §§80b-4, 80b-4a, 80b-5, 80b-6, 80b-7, 80b-8), or SEC Rules 204-1, 204-3, 205-1, 205-2, 205-3, 206(3)-1, 206(3)-2, 206(4)-1, 206(4)-3, (17 C.F.R. §§275.204-1, 275.204-3, 275.205-1, 275.205-2, 275.205-3, 275.206(3)-1, 275.206(3)-2, 275.206(4)-1, 275.206(4)-3), which are incorporated by reference in Rule 69W-200.002, F.A.C.

(b) through (x) No change.

(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, 11-15-16, 11-26-19, 1-18-21,                .

 

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. Notwithstanding SEC Rule 204-2, (17 C.F.R. §275.204-2), investment adviser records requirements do not include Form CRS. Investment advisers shall have available for the Office of Financial Regulation at least the following records:

(a) through (e) No change.

(f) For each client that was obtained by the adviser by means of a solicitor to whom a cash fee was paid by the adviser, records required by SEC Rule 206(4)-1 206(4)-3, (17 C.F.R. §275.206(4)-1 §275.206(4)-3), which is incorporated by reference in Rule 69W-200.002, F.A.C.

(g) through (l) No change.

(4) through (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, 11-15-16, 11-26-19, 1-18-21,              .

 

69W-600.0151 Net Capital and Financial Reporting Requirements for Dealers and Issuer/Dealers.

(1) through (3) No change.

(4) Financial reporting requirements for dealers.

(a) Requirement for dealer applicants. Every dealer applicant, unless exempted under paragraph (4)(c) of this rule, shall file with the Office:

1. A completed SEC Form X-17A-5 Part IIA (FOCUS Report) (11-18 11-05), which is hereby incorporated by reference and accessible at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX http://www.flrules.org/Gateway/reference.asp?No=Ref-11279, or

2. No change.

(b) Requirement for dealers. Every dealer registered or required to be registered pursuant to Section 517.12, F.S., shall annually file with the Office of Financial Regulation audited financial statements as of the end of the dealer’s fiscal year within ninety (90) days after the conclusion of said fiscal year, unless exempted under paragraph (4)(c) of this rule. Financial statements required to be filed with the Office under this paragraph shall be filed by electronic means. Registrants who filed their original application through the REAL system shall file the documents required by this paragraph through the REAL system. All other registrants shall file the documents required by this subsection via the Office’s online portal at: https://www.flofr.gov/sitePages/WelcomeToOnlineServices.htm email at: [e-mail].

(c) through (d) No change.

(5) through (6) No change.

Rulemaking Authority 517.03(1), 517.12(9), 517.121(2) FS. Law Implemented 517.12(9), 517.121(2), 517.161(1), 517.201 FS. History–New 5-6-15, Amended 11-26-19, 3-3-21,                  .

 

69W-600.0161 Net Capital and Financial Reporting Requirements for Investment Advisers.

(1) No change.

(2) Financial reporting requirements for investment advisers. Documents required to be filed with the Office under this subsection shall be filed via the Office’s online portal at: https://www.flofr.gov/sitePages/WelcomeToOnlineServices.htm email at: [e-mail].

(a) through (d) No change.

(3) No change.

Rulemaking Authority 517.03(1), 517.12(9), 517.121(2) FS. Law Implemented 517.12(9), 517.121(2), 517.161(1), 517.201 FS. History–New 5-6-15, Amended 3-3-21,                            .

 

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Alisa G. Goldberg, Director, Division of Securities

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: August 23, 2022

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: September 12, 2022