House Bill 3239e2

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                                     HB 3239, Second Engrossed/ntc



  1                      A bill to be entitled

  2         An act relating to securities transactions;

  3         amending s. 517.021, F.S.; revising certain

  4         definitions; amending s. 517.051, F.S.;

  5         specifying additional securities as exempt from

  6         certain registration requirements; specifying

  7         priority of application; amending s. 517.061,

  8         F.S.; clarifying the exemption of certain

  9         securities in certain transactions from

10         registration requirements; specifying

11         additional transactions as exempt from certain

12         registration requirements; amending ss.

13         517.081, 517.082, and 517.12, F.S.; authorizing

14         the Department of Banking and Finance to adopt

15         certain rules for electronic deposits and

16         filings; correcting a cross reference;

17         including certain notice filing requirements

18         within application of certain registration

19         provisions; requiring certain dealers to comply

20         with net capital and ratio requirements;

21         providing application; creating s. 517.1201,

22         F.S.; specifying notice filing requirements for

23         federal covered advisers; prohibiting certain

24         activities; providing for certain fees;

25         authorizing the Department of Banking and

26         Finance to adopt rules; providing for permits

27         for certain purposes; amending ss. 517.1205 and

28         517.131, F.S.; including federal covered

29         advisers within application of certain

30         registration requirements; amending s. 517.161,

31         F.S.; specifying additional conditions for


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                                     HB 3239, Second Engrossed/ntc



  1         denial, revocation, restriction, or suspension

  2         of certain registrations; amending s. 517.302,

  3         F.S.; providing for additional uses of moneys

  4         in the Anti-Fraud Trust Fund; amending s.

  5         517.311, F.S.; clarifying application of false

  6         representation and deceptive words

  7         proscriptions to notice filings; providing an

  8         appropriation; providing an effective date.

  9

10  Be It Enacted by the Legislature of the State of Florida:

11

12         Section 1.  Subsections (8)-(19) of section 517.021,

13  Florida Statutes, are renumbered as subsections (9)-(20),

14  respectively, a new subsection (8) is added to said section,

15  and subsection (2) and paragraph (b) of renumbered subsection

16  (12) of said section are amended, to read:

17         517.021  Definitions.--When used in this chapter,

18  unless the context otherwise indicates, the following terms

19  have the following respective meanings:

20         (2)  "Associated person" means:

21         (a)  With respect to a dealer or investment adviser,

22  any of the following:

23         1.(a)  Any partner, officer, director, or branch

24  manager of a dealer or investment adviser or any person

25  occupying a similar status or performing similar functions;

26         2.(b)  Any natural person directly or indirectly

27  controlling or controlled by such dealer or investment

28  adviser, other than an employee whose function is only

29  clerical or ministerial; or

30         3.(c)  Any natural person, other than a dealer,

31  employed, appointed, or authorized by a dealer, investment


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                                     HB 3239, Second Engrossed/ntc



  1  adviser, or issuer to sell securities in any manner or act as

  2  an investment adviser as defined in this section.

  3

  4  The partners of a partnership and the executive officers of a

  5  corporation or other association registered as a dealer, and

  6  any person whose transactions in this state are limited to

  7  those transactions described in s. 15(h)(2) of the Securities

  8  Exchange Act of 1934, are not "associated persons" within the

  9  meaning of this definition.

10         (b)  With respect to a federal covered adviser, any

11  person who is an investment adviser representative and who has

12  a place of business in this state, as such terms are defined

13  in Rule 203A-3 of the Securities and Exchange Commission

14  adopted under the Investment Advisers Act of 1940.

15         (8)  "Federal covered adviser" means a person who is

16  registered or required to be registered under s. 203 of the

17  Investment Advisers Act of 1940. The term "federal covered

18  adviser" does not include any person who is excluded from the

19  definition of investment adviser under subparagraphs

20  (12)(b)1.-8.

21         (12)(11)

22         (b)  The term "investment adviser" does not include the

23  following:

24         1.  Any licensed practicing attorney whose performance

25  of such services is solely incidental to the practice of her

26  or his profession;

27         2.  Any licensed certified public accountant whose

28  performance of such services is solely incidental to the

29  practice of his profession;

30         3.  Any bank authorized to do business in this state;

31


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                                     HB 3239, Second Engrossed/ntc



  1         4.  Any bank holding company as defined in the Bank

  2  Holding Company Act of 1956, as amended, authorized to do

  3  business in this state;

  4         5.  Any trust company having trust powers which it is

  5  authorized to exercise in the state, which trust company

  6  renders or performs services in a fiduciary capacity

  7  incidental to the exercise of its trust powers;

  8         6.  Any person who renders investment advice

  9  exclusively to insurance or investment companies;

10         7.  Any person who does not hold herself or himself out

11  to the general public as an investment adviser and has at

12  least 6 but no more than 15 clients within 12 consecutive

13  months in this state; or

14         8.  Any person whose transactions in this state are

15  limited to those transactions described in s. 222(d) of the

16  Investment Advisers Act of 1940. Those clients listed in

17  subparagraph 5. may not be included when determining the

18  number of clients of an investment adviser for purposes of s.

19  222(d) of the Investment Advisers Act of 1940; or.

20         9.  A federal covered adviser.

21         Section 2.  Subsection (9) of section 517.051, Florida

22  Statutes, is amended to read:

23         517.051  Exempt securities.--The exemptions provided

24  herein from the registration requirements of s. 517.07 are

25  self-executing and do not require any filing with the

26  department prior to claiming such exemption.  Any person who

27  claims entitlement to any of these exemptions bears the burden

28  of proving such entitlement in any proceeding brought under

29  this chapter.  The registration provisions of s. 517.07 do not

30  apply to any of the following securities:

31


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                                     HB 3239, Second Engrossed/ntc



  1         (9)  A security issued by a corporation organized and

  2  operated exclusively for religious, educational, benevolent,

  3  fraternal, charitable, or reformatory purposes and not for

  4  pecuniary profit, no part of the net earnings of which

  5  corporation inures to the benefit of any private stockholder

  6  or individual, or any security of a fund that is excluded from

  7  the definition of an investment company under s. 3(c)(10)(B)

  8  of the Investment Company Act of 1940; provided that no person

  9  shall directly or indirectly offer or sell securities under

10  this subsection except by an offering circular containing full

11  and fair disclosure, as prescribed by the rules of the

12  department, of all material information, including, but not

13  limited to, a description of the securities offered and terms

14  of the offering, a description of the nature of the issuer's

15  business, a statement of the purpose of the offering and the

16  intended application by the issuer of the proceeds thereof,

17  and financial statements of the issuer prepared in conformance

18  with generally accepted accounting principles. Section 6(c) of

19  the Philanthropy Protection Act of 1995, P.L. 104-62, shall

20  not preempt any provision of this chapter.

21         Section 3.  Subsection (17) of section 517.061, Florida

22  Statutes, is amended, and subsection (20) is added to said

23  section, to read:

24         517.061  Exempt transactions.--The exemption for each

25  transaction listed below is self-executing and does not

26  require any filing with the department prior to claiming such

27  exemption.  Any person who claims entitlement to any of the

28  exemptions bears the burden of proving such entitlement in any

29  proceeding brought under this chapter.  The registration

30  provisions of s. 517.07 do not apply to any of the following

31


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                                     HB 3239, Second Engrossed/ntc



  1  transactions; however, such transactions are subject to the

  2  provisions of ss. 517.301, 517.311, and 517.312:

  3         (17)(a)  The offer or sale of securities, as agent or

  4  principal, by a dealer registered pursuant to s. 517.12, when

  5  such securities are offered or sold at a price reasonably

  6  related to the current market price of such securities,

  7  provided such securities are:

  8         1.  Securities of an issuer for which reports are

  9  required to be filed by s. 13 or s. 15(d) of the Securities

10  Exchange Act of 1934, as amended;

11         2.  Securities of a company registered under the

12  Investment Company Act of 1940, as amended;

13         3.  Securities of an insurance company, as that term is

14  defined in s. 2(a)(17) of the Investment Company Act of 1940,

15  as amended;

16         4.  Securities, other than any security that is a

17  federal covered security pursuant to s. 18(b)(1) of the

18  Securities Act of 1933 and is not subject to any registration

19  or filing requirements under this act, which appear in any

20  list of securities dealt in on any stock exchange registered

21  pursuant to the Securities Exchange Act of 1934, as amended,

22  and which securities have been listed or approved for listing

23  upon notice of issuance by such exchange, and also all

24  securities senior to any securities so listed or approved for

25  listing upon notice of issuance, or represented by

26  subscription rights which have been so listed or approved for

27  listing upon notice of issuance, or evidences of indebtedness

28  guaranteed by companies any stock of which is so listed or

29  approved for listing upon notice of issuance, such securities

30  to be exempt only so long as such listings or approvals remain

31  in effect.  The exemption provided for herein does not apply


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                                     HB 3239, Second Engrossed/ntc



  1  when the securities are suspended from listing approval for

  2  listing or trading; or

  3         5.  Securities as to which the following information is

  4  published in a recognized manual of securities for a period of

  5  not less than 90 days prior to the transaction:

  6         a.  A balance sheet as of a date not more than 18

  7  months prior to the date of the sale; and

  8         b.  Profit and loss statements for a period of not less

  9  than 2 years next prior to the date of the balance sheet or

10  for the period as of the date of the balance sheet if the

11  period of existence is less than 2 years.

12         (b)  The exemption provided in this subsection does not

13  apply if the sale is made for the direct or indirect benefit

14  of an issuer or controlling persons of such issuer or if such

15  securities constitute the whole or part of an unsold allotment

16  to, or subscription or participation by, a dealer as an

17  underwriter of such securities.

18         (c)  This exemption shall not be available for any

19  securities which have been denied registration by the

20  department pursuant to s. 517.111. Additionally, the

21  department may deny this exemption with reference to any

22  particular security, other than a federal covered security, by

23  order published in such manner as the department finds proper.

24         (20)  Any nonissuer transaction by a registered

25  associated person of a registered dealer, and any resale

26  transaction by a sponsor of a unit investment trust registered

27  under the Investment Company Act of 1940, in a security of a

28  class that has been outstanding in the hands of the public for

29  at least 90 days provided, at the time of the transaction:

30         (a)  The issuer of the security is actually engaged in

31  business and is not in the organization stage or in bankruptcy


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                                     HB 3239, Second Engrossed/ntc



  1  or receivership and is not a blank check, blind pool, or shell

  2  company whose primary plan of business is to engage in a

  3  merger or combination of the business with, or an acquisition

  4  of, any unidentified person;

  5         (b)  The security is sold at a price reasonably related

  6  to the current market price of the security;

  7         (c)  The security does not constitute the whole or part

  8  of an unsold allotment to, or a subscription or participation

  9  by, the broker-dealer as an underwriter of the security;

10         (d)  A nationally recognized securities manual

11  designated by rule or order of the department or a document

12  filed with the Securities and Exchange Commission that is

13  publicly available through the commission's electronic data

14  gathering and retrieval system contains:

15         1.  A description of the business and operations of the

16  issuer;

17         2.  The names of the issuer's officers and directors,

18  if any, or, in the case of an issuer not domiciled in the

19  United States, the corporate equivalents of such persons in

20  the issuer's country of domicile;

21         3.  An audited balance sheet of the issuer as of a date

22  within 18 months before such transaction or, in the case of a

23  reorganization or merger in which parties to the

24  reorganization or merger had such audited balance sheet, a pro

25  forma balance sheet; and

26         4.  An audited income statement for each of the

27  issuer's immediately preceding 2 fiscal years, or for the

28  period of existence of the issuer, if in existence for less

29  than 2 years or, in the case of a reorganization or merger in

30  which the parties to the reorganization or merger had such

31  audited income statement, a pro forma income statement; and


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                                     HB 3239, Second Engrossed/ntc



  1         (e)  The issuer of the security has a class of equity

  2  securities listed on a national securities exchange registered

  3  under the Securities Exchange Act of 1934 or designated for

  4  trading on the National Association of Securities Dealers

  5  Automated Quotation System, unless:

  6         1.  The issuer of the security is a unit investment

  7  trust registered under the Investment Company Act of 1940;

  8         2.  The issuer of the security has been engaged in

  9  continuous business, including predecessors, for at least 3

10  years; or

11         3.  The issuer of the security has total assets of at

12  least $2 million based on an audited balance sheet as of a

13  date within 18 months before such transaction or, in the case

14  of a reorganization or merger in which parties to the

15  reorganization or merger had such audited balance sheet, a pro

16  forma balance sheet.

17         Section 4.  Subsection (2) and paragraph (g) of

18  subsection (3) of section 517.081, Florida Statutes, are

19  amended to read:

20         517.081  Registration procedure.--

21         (2)  The department shall receive and act upon

22  applications to have securities registered and may prescribe

23  forms on which it may require such applications to be

24  submitted. Applications shall be duly signed by the applicant,

25  sworn to by any person having knowledge of the facts, and

26  filed with the department. The department may establish, by

27  rule, procedures for depositing fees and filing documents by

28  electronic means provided such procedures provide the

29  department with the information and data required by this

30  section. An application may be made either by the issuer of

31


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                                     HB 3239, Second Engrossed/ntc



  1  the securities for which registration is applied or by any

  2  registered dealer desiring to sell the same within the state.

  3         (3)  The department may require the applicant to submit

  4  to the department the following information concerning the

  5  issuer and such other relevant information as the department

  6  may in its judgment deem necessary to enable it to ascertain

  7  whether such securities shall be registered pursuant to the

  8  provisions of this section:

  9         (g)1.  A specimen copy of the security and a copy of

10  any circular, prospectus, advertisement, or other description

11  of such securities.

12         2.  The department shall adopt a form for a simplified

13  offering circular to be used solely by corporations to

14  register, under this section, securities of the corporation

15  that are sold in offerings in which the aggregate offering

16  price in any consecutive 12-month period does not exceed the

17  amount provided in s. 3(b) of the Securities Act of 1933

18  lesser of the aggregate offering price in 17 C.F.R. s. 230.251

19  or $5 million.  The following issuers shall not be eligible to

20  submit a simplified offering circular adopted pursuant to this

21  subparagraph:

22         a.  An issuer seeking to register securities for resale

23  by persons other than the issuer.

24         b.  An issuer who is subject to any of the

25  disqualifications described in 17 C.F.R. s. 230.262, adopted

26  pursuant to the Securities Act of 1933, or who has been or is

27  engaged or is about to engage in an activity that would be

28  grounds for denial, revocation, or suspension under s.

29  517.111. For purposes of this subparagraph, an issuer includes

30  an issuer's director, officer, shareholder who owns at least

31  10 percent of the shares of the issuer, promoter, or selling


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                                     HB 3239, Second Engrossed/ntc



  1  agent of the securities to be offered or any officer,

  2  director, or partner of such selling agent.

  3         c.  An issuer who is a development-stage company that

  4  either has no specific business plan or purpose or has

  5  indicated that its business plan is to merge with an

  6  unidentified company or companies.

  7         d.  An issuer of offerings in which the specific

  8  business or properties cannot be described.

  9         e.  Any issuer the department determines is ineligible

10  if the form would not provide full and fair disclosure of

11  material information for the type of offering to be registered

12  by the issuer.

13         f.  Any corporation which has failed to provide the

14  department the reports required for a previous offering

15  registered pursuant to this subparagraph.

16

17  As a condition precedent to qualifying for use of the

18  simplified offering circular, a corporation shall agree to

19  provide the department with an annual financial report

20  containing a balance sheet as of the end of the issuer's

21  fiscal year and a statement of income for such year, prepared

22  in accordance with generally accepted accounting principles

23  and accompanied by an independent accountant's report.  If the

24  issuer has more than 100 security holders at the end of a

25  fiscal year, the financial statements must be audited. Annual

26  financial reports must be filed with the department within 90

27  days after the close of the issuer's fiscal year for each of

28  the first 5 years following the effective date of the

29  registration.

30         Section 5.  Subsections (1), (3), and (4) of section

31  517.082, Florida Statutes, are amended to read:


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                                     HB 3239, Second Engrossed/ntc



  1         517.082  Notification registration.--

  2         (1)  Except as provided in subsection (3), securities

  3  offered or sold pursuant to a registration statement filed

  4  under the Securities Act of 1933 or the Investment Company Act

  5  of 1940 shall be entitled to registration by notification in

  6  the manner provided in subsection (2), provided that prior to

  7  the offer or sale the registration statement has become

  8  effective.

  9         (3)  Except for securities offered or sold pursuant to

10  a registration statement filed under the Investment Company

11  Act of 1940, units of limited partnership interests, or such

12  other securities as the department describes by rule as exempt

13  from this subsection due to high investment quality, the

14  provisions of this section may not be used to register

15  securities if the offering price at the time of effectiveness

16  with the Securities and Exchange Commission is $5 or less per

17  share, unless such securities are listed or designated, or

18  approved for listing or designation upon notice of issuance,

19  on a stock exchange registered pursuant to the Securities

20  Exchange Act of 1934 or on the National Association of

21  Securities Dealers Automated Quotation (NASDAQ) System, or

22  unless such securities are of the same issuer and of senior or

23  substantially equal rank to securities so listed or

24  designated.

25         (4)  In lieu of filing with the department the

26  application, fees, and documents for registration required by

27  subsection (2), the department may establish, by rule,

28  procedures for depositing the deposit of fees and the filing

29  of documents by electronic means to be made through the

30  Securities Registration Depository as developed under contract

31  with the North American Securities Administrators Association,


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                                     HB 3239, Second Engrossed/ntc



  1  Inc., provided such procedures shall provide the department

  2  with the information and data required by this section.

  3  Should a filer be unable to use the Securities Registration

  4  Depository, such filings, including the statutory fee, may be

  5  made directly with the department.

  6         Section 6.  Subsections (1), (4), (6), and (9) and

  7  paragraph (b) of subsection (12) of section 517.12, Florida

  8  Statutes, are amended to read:

  9         517.12  Registration of dealers, associated persons,

10  investment advisers, and branch offices.--

11         (1)  No dealer, associated person, or issuer of

12  securities shall sell or offer for sale any securities in or

13  from offices in this state, or sell securities to persons in

14  this state from offices outside this state, by mail or

15  otherwise, unless the person has been registered with the

16  department pursuant to the provisions of this section.  The

17  department shall not register any person as an associated

18  person of a dealer or investment adviser unless the dealer or

19  investment adviser with which the applicant seeks registration

20  is lawfully registered with the department pursuant to this

21  chapter.

22         (4)  No investment adviser or associated person of an

23  investment adviser or federal covered adviser shall engage in

24  business from offices in this state, or render investment

25  advice to persons of this state, by mail or otherwise, unless

26  the federal covered adviser has made a notice filing with the

27  department pursuant to s. 517.1201 or the investment adviser

28  is registered pursuant to the provisions of this chapter and

29  associated persons of the federal covered adviser or

30  investment adviser have been registered with the department

31  pursuant to this section. The department shall not register


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                                     HB 3239, Second Engrossed/ntc



  1  any person or an associated person of a federal covered

  2  adviser or an investment adviser unless the federal covered

  3  adviser or investment adviser with which the applicant seeks

  4  registration is in compliance with the notice filing

  5  requirements of s. 517.1201 or is lawfully registered with the

  6  department pursuant to this chapter. A dealer or associated

  7  person who is registered pursuant to this section may render

  8  investment advice upon notification to and approval from the

  9  department.

10         (6)  A dealer, associated person, investment adviser,

11  or branch office, in order to obtain registration, must file

12  with the department a written application, on in a form which

13  the department may by rule prescribe, verified under oath. The

14  department may establish, by rule, procedures for depositing

15  fees and filing documents by electronic means provided such

16  procedures provide the department with the information and

17  data required by this section. Each dealer or investment

18  adviser must also file an irrevocable written consent to

19  service of civil process similar to that provided for in s.

20  517.101.  The application shall contain such information as

21  the department may require concerning such matters as:

22         (a)  The name of the applicant and the address of its

23  principal office and each office in this state.

24         (b)  The applicant's form and place of organization;

25  and, if the applicant is a corporation, a copy of its articles

26  of incorporation and amendments to the articles of

27  incorporation or, if a partnership, a copy of the partnership

28  agreement.

29         (c)  The applicant's proposed method of doing business

30  and financial condition and history, including a certified

31  financial statement showing all assets and all liabilities,


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                                     HB 3239, Second Engrossed/ntc



  1  including contingent liabilities of the applicant as of a date

  2  not more than 90 days prior to the filing of the application.

  3         (d)  The names and addresses of all associated persons

  4  of the applicant to be employed in this state and the offices

  5  to which they will be assigned.

  6         (9)(a)  All dealers, except securities dealers who are

  7  designated by the Federal Reserve Bank of New York as primary

  8  government securities dealers or securities dealers registered

  9  as issuers of securities, shall comply with the net capital

10  and ratio requirements imposed pursuant to the Securities

11  Exchange Act of 1934. The department may by rule require a

12  dealer to file with the department any financial or

13  operational information that is required to be filed by the

14  Securities Exchange Act of 1934 or any rules adopted under

15  such act.

16         (b)  The department may by rule require the maintenance

17  of a minimum net capital for securities registered dealers who

18  are designated by the Federal Reserve Bank of New York as

19  primary government securities dealers and securities dealers

20  registered as issuers of securities and investment advisers,

21  or prescribe a ratio between net capital and aggregate

22  indebtedness, to assure adequate protection for the investing

23  public. The provisions of this section shall not apply to any

24  investment adviser that maintains its principal place of

25  business in a state other than this state, provided such

26  investment adviser is registered in the state where it

27  maintains its principal place of business and is in compliance

28  with such state's net capital requirements.

29         (12)

30         (b)  Every dealer, or investment adviser, or federal

31  covered adviser shall promptly file with the department, as


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  1  prescribed by rules adopted by the department, notice as to

  2  the termination of employment of any associated person

  3  registered for such dealer or investment adviser in this state

  4  and shall also furnish the reason or reasons for such

  5  termination.

  6         Section 7.  Section 517.1201, Florida Statutes, is

  7  created to read:

  8         517.1201  Notice filing requirements for federal

  9  covered advisers.--

10         (1)  It is unlawful for a person to transact business

11  in this state as a federal covered adviser unless such person

12  has made a notice filing with the department.  A notice filing

13  under this section shall consist of a copy of those documents

14  that have been filed or are required to be filed by the

15  federal covered adviser with the Securities and Exchange

16  Commission that the department by rule requires to be filed,

17  together with a consent to service of process and a filing fee

18  of $200. The department may establish by rule procedures for

19  the deposit of fees and the filing of documents to be made

20  through electronic means, if the procedures provide to the

21  department the information and data required by this section.

22         (2)  A notice filing shall be effective upon receipt.

23  A notice filing shall expire on December 31 of the year in

24  which the filing became effective unless the federal covered

25  adviser has renewed the filing on or before that date. A

26  federal covered adviser may renew a notice filing by

27  furnishing to the department such information that has been

28  filed or is required to be filed with the Securities and

29  Exchange Commission, as the department may require, together

30  with a renewal fee of $200 and the payment of any amount due

31  and owing the department pursuant to any agreement with the


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                                     HB 3239, Second Engrossed/ntc



  1  department. Any federal covered adviser who has not renewed a

  2  notice filing by the time a current notice filing expires may

  3  request reinstatement of such notice filing by filing with the

  4  department, on or before January 31 of the year following the

  5  year the notice filing expires, such information that has been

  6  filed or is required to be filed with the Securities and

  7  Exchange Commission as may be required by the department,

  8  together with the payment of $200 and a late fee equal to

  9  $200. Any reinstatement of a notice filing granted by the

10  department during the month of January shall be deemed

11  effective retroactive to January 1 of that year.

12         (3)  The department may require, by rule, a federal

13  covered adviser who has made a notice filing pursuant to this

14  section to file with the department copies of any amendments

15  filed or required to be filed with the Securities and Exchange

16  Commission.

17         (4)  The department may issue a permit to evidence the

18  effectiveness of a notice filing for a federal covered

19  adviser.

20         (5)  A notice filing may be terminated by filing notice

21  of such termination with the department.  Unless another date

22  is specified by the federal covered adviser, such notice shall

23  be effective upon its receipt by the department.

24         (6)  All fees collected under this section become the

25  revenue of the state, except for those assessments provided

26  for under s. 517.131(1) until such time as the Securities

27  Guaranty Fund satisfies the statutory limits, and are not

28  returnable in the event that a notice filing is withdrawn.

29         Section 8.  Section 517.1205, Florida Statutes, is

30  amended to read:

31


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                                     HB 3239, Second Engrossed/ntc



  1         517.1205  Registration of associated persons specific

  2  as to securities dealer, or investment adviser, or federal

  3  covered adviser identified at time of registration

  4  approval.--Inasmuch as this chapter is intended to protect

  5  investors in securities offerings and other investment

  6  transactions regulated by that chapter, its provisions are to

  7  be construed to require full and fair disclosure of all, but

  8  only, those matters material to the investor's evaluation of

  9  the offering or other transaction.  It should, furthermore, be

10  construed to impose the standards provided by law on all those

11  seeking to participate in the state's securities industry

12  through registration as a securities dealer dealers,

13  investment adviser advisers, or their associated person.  To

14  this end, it is declared to be the intent of the Legislature

15  that the registration of associated persons required by law is

16  specific to the securities dealer, or investment adviser, or

17  federal covered adviser identified at the time such

18  registration is approved. Notwithstanding any interpretation

19  of law to the contrary, the historical practice of the

20  Department of Banking and Finance, reflected in its rules,

21  that requires a new application for registration from a

22  previously registered associated person when that person seeks

23  to be associated with a new securities dealer or investment

24  adviser is hereby ratified and approved as consistent with

25  legislative intent.  It is, finally, declared to be the intent

26  of the Legislature that while approval of an application for

27  registration of a securities dealer, investment adviser,

28  associated person, or branch office requires a finding of the

29  applicant's good repute and character, such finding is

30  precluded by a determination that the applicant may be denied

31  registration on grounds provided by law.


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  1         Section 9.  Paragraph (a) of subsection (1) of section

  2  517.131, Florida Statutes, is amended to read:

  3         517.131  Securities Guaranty Fund.--

  4         (1)(a)  The Treasurer shall establish a Securities

  5  Guaranty Fund.  An amount not exceeding 20 percent of all

  6  revenues received as assessment fees pursuant to s. 517.12(10)

  7  and (11) for dealers and investment advisers or s. 517.1201

  8  for federal covered advisers and an amount not exceeding 10

  9  percent of all revenues received as assessment fees pursuant

10  to s. 517.12(10) and (11) for associated persons shall be

11  allocated to the fund.  An additional amount not exceeding 3.5

12  percent of all revenues received as assessment fees for

13  associated persons pursuant to s. 517.12(10) and (11) shall be

14  allocated to the Securities Guaranty Fund upon a

15  determination, by final order of the department, that

16  sufficient funds have been allocated to the fund pursuant to

17  s. 517.1203 to satisfy all valid claims filed in accordance

18  with s. 517.1203(2). This assessment fee shall be part of the

19  regular license fee and shall be transferred to or deposited

20  in the Securities Guaranty Fund.

21         Section 10.  Paragraph (m) of subsection (1) of section

22  517.161, Florida Statutes, is amended to read:

23         517.161  Revocation, denial, or suspension of

24  registration of dealer, investment adviser, associated person,

25  or branch office.--

26         (1)  Registration under s. 517.12 may be denied or any

27  registration granted may be revoked, restricted, or suspended

28  by the department if the department determines that such

29  applicant or registrant:

30         (m)  Has been the subject of any decision, finding,

31  injunction, suspension, prohibition, revocation, denial,


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                                     HB 3239, Second Engrossed/ntc



  1  judgment, or administrative order by any court of competent

  2  jurisdiction, administrative law judge, or by any state or

  3  federal agency, national securities, commodities, or option

  4  exchange, or national securities, commodities, or option

  5  association, involving a violation of any federal or state

  6  securities or commodities law or any rule or regulation

  7  promulgated thereunder, or any rule or regulation of any

  8  national securities, commodities, or options exchange or

  9  national securities, commodities, or options association, or

10  has been the subject of any injunction or adverse

11  administrative order by a state or federal agency regulating

12  banking, insurance, finance or small loan companies, real

13  estate, mortgage brokers, or other related or similar

14  industries.  For purposes of this subsection, the department

15  may not deny registration to any applicant who has been

16  continuously registered with the department for 5 years from

17  the entry of such decision, finding, injunction, suspension,

18  prohibition, revocation, denial, judgment, or administrative

19  order provided such decision, finding, injunction, suspension,

20  prohibition, revocation, denial, judgment, or administrative

21  order has been timely reported to the department pursuant to

22  the department's rules and regulations.

23         Section 11.  Paragraph (a) of subsection (3) of section

24  517.302, Florida Statutes, is amended to read:

25         517.302  Criminal penalties; alternative fine;

26  Anti-Fraud Trust Fund; time limitation for criminal

27  prosecution.--

28         (3)  In lieu of a fine otherwise authorized by law, a

29  person who has been convicted of or who has pleaded guilty or

30  no contest to having engaged in conduct in violation of the

31  provisions of this chapter may be sentenced to pay a fine that


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                                     HB 3239, Second Engrossed/ntc



  1  does not exceed the greater of three times the gross value

  2  gained or three times the gross loss caused by such conduct,

  3  plus court costs and the costs of investigation and

  4  prosecution reasonably incurred.

  5         (a)  There is created within the department a trust

  6  fund to be known as the Anti-Fraud Trust Fund.  Any amounts

  7  assessed as costs of investigation and prosecution under this

  8  subsection shall be deposited in the trust fund. Funds

  9  deposited in such trust fund shall be used, when authorized by

10  appropriation, for investigation and prosecution of

11  administrative, civil, and criminal actions arising under the

12  provisions of this chapter. Funds may also be used to improve

13  the public's awareness and understanding of prudent investing.

14         Section 12.  Subsection (2) and paragraph (a) of

15  subsection (4) of section 517.311, Florida Statutes, are

16  amended to read:

17         517.311  False representations; deceptive words;

18  enforcement.--

19         (2)  It is unlawful for any person registered or

20  required to be registered, or subject to the notice

21  requirements, under any section of this chapter, including

22  such persons and issuers within the purview of ss. 517.051 and

23  517.061, to misrepresent that such person has been sponsored,

24  recommended, or approved, or that her or his abilities or

25  qualifications have in any respect been passed upon, by the

26  state or any agency or officer of the state or by the United

27  States or any agency or officer of the United States.

28         (4)(a)  No provision of subsection (1) or subsection

29  (2) shall be construed to prohibit a statement that a person

30  or security is registered or has made a notice filing under

31  this chapter if such statement of registration is required by


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                                     HB 3239, Second Engrossed/ntc



  1  the provisions of this chapter or rules promulgated

  2  thereunder, if such statement is true in fact, and if the

  3  effect of such statement of registration is not

  4  misrepresented.

  5         Section 13.  The sum of $75,000 is hereby appropriated

  6  from the Anti-Fraud Trust Fund in the Department of Banking

  7  and Finance, to the department, for fiscal year 1998-1999, to

  8  be used to improve the public's awareness and understanding of

  9  prudent investing.

10         Section 14.  This act shall take effect upon becoming a

11  law.

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