Florida Senate - 2015                                     SB 914
       
       
        
       By Senator Richter
       
       
       
       
       
       23-00756-15                                            2015914__
    1                        A bill to be entitled                      
    2         An act relating to the offer or sale of securities;
    3         amending s. 517.021, F.S.; defining the term
    4         “intermediary” for purposes of the Florida Securities
    5         and Investor Protection Act; amending s. 517.061,
    6         F.S.; exempting certain issuers and intermediaries
    7         from registration requirements relating to the offer
    8         or sale of certain securities; providing requirements
    9         for such issuers and intermediaries; providing
   10         limitations on offers or sales of securities;
   11         prohibiting the use of specified exemptions from
   12         registration requirements in conjunction with another
   13         exemption from registration requirements; providing
   14         exceptions; requiring the Office of Financial
   15         Regulation to provide certain information on its
   16         website; amending s. 517.12, F.S.; exempting certain
   17         intermediaries from registration requirements relating
   18         to the offer or sale of certain securities; conforming
   19         a cross-reference; amending s. 626.9911, F.S.;
   20         conforming a cross-reference; providing an effective
   21         date.
   22          
   23  Be It Enacted by the Legislature of the State of Florida:
   24  
   25         Section 1. Present subsections (13) through (23) of section
   26  517.021, Florida Statutes, are redesignated as subsections (14)
   27  through (24), respectively, and a new subsection (13) is added
   28  to that section, to read:
   29         517.021 Definitions.—When used in this chapter, unless the
   30  context otherwise indicates, the following terms have the
   31  following respective meanings:
   32         (13) “Intermediary” means a natural person residing in this
   33  state, or a corporation, trust, partnership, association, or any
   34  other legal entity registered with the Secretary of State to do
   35  business in this state, that represents an issuer in a
   36  transaction involving the offer or sale of securities under s.
   37  517.061.
   38         Section 2. Subsection (21) is added to section 517.061,
   39  Florida Statutes, to read:
   40         517.061 Exempt transactions.—The exemption for each
   41  transaction listed below is self-executing and does not require
   42  any filing with the office prior to claiming such exemption. Any
   43  person who claims entitlement to any of the exemptions bears the
   44  burden of proving such entitlement in any proceeding brought
   45  under this chapter. The registration provisions of s. 517.07 do
   46  not apply to any of the following transactions; however, such
   47  transactions are subject to the provisions of ss. 517.301,
   48  517.311, and 517.312:
   49         (21)(a) Notwithstanding any other provision of this
   50  section, the offer or sale of a security by an issuer is exempt
   51  from the registration requirements of s. 517.07, and each
   52  intermediary who represents an issuer in an offer or sale is
   53  exempt from the registration requirements of s. 517.12, if the
   54  offer or sale is conducted in accordance with this subsection.
   55         1. An issuer must:
   56         a. Be a for-profit business entity formed under the laws of
   57  this state and be registered with the Secretary of State.
   58         b. Be represented by an intermediary.
   59         c. Submit a nonrefundable filing fee of $200 and file a
   60  notice with the office in writing or in electronic form, in a
   61  format prescribed by commission rule, that:
   62         (I) Indicates that the issuer is conducting an offering in
   63  reliance upon this exemption.
   64         (II) Contains the names and addresses of the issuer, all
   65  persons who will be involved in the offer or sale of securities
   66  on behalf of the issuer, and the federally insured financial
   67  institution authorized to do business in this state in which
   68  investor funds will be deposited.
   69         (III) Includes documentation verifying that the issuer is
   70  organized under the laws of this state and authorized to do
   71  business in this state.
   72         d. Not be, either before or as a result of the offering, an
   73  investment company as defined in s. 3 of the Investment Company
   74  Act of 1940, 15 U.S.C. s. 80a-3, or subject to the reporting
   75  requirements of s. 13 or s. 15(d) of the Securities Exchange Act
   76  of 1934, 15 U.S.C. s. 78m or s. 78o(d).
   77         e. Execute an escrow agreement with a federally insured
   78  financial institution authorized to do business in this state
   79  for the deposit of investor funds.
   80         f. Not be subject to a disqualification established by the
   81  commission or office or a disqualification described in United
   82  States Securities and Exchange Commission Rule 262, 17 C.F.R. s.
   83  230.262, under the Securities Act of 1933.
   84         2.a. An intermediary must:
   85         (I) Comply with any notice or filing requirements for
   86  exemption from registration as a broker-dealer established by
   87  rule or order of the commission or office under this chapter,
   88  which shall include annual registration and submission of a
   89  nonrefundable $200 registration fee.
   90         (II) Facilitate the offer and sale of securities.
   91         (III) Provide basic information on its platform regarding
   92  the high risk of investment in and limitation on the resale of
   93  exempt securities and the potential for loss of an entire
   94  investment. The basic information shall include:
   95         (A) A description of the escrow agreement that the issuer
   96  has executed and the conditions for the release of such funds to
   97  the issuer in accordance with the agreement.
   98         (B) A description of whether financial information provided
   99  by the issuer has been audited by an independent certified
  100  public accountant.
  101         (IV) Maintain records of the offers and sales of securities
  102  made through its platform, as prescribed by commission rule, and
  103  provide access to such records upon request by the office.
  104         (V) Obtain evidence from each investor showing that the
  105  investor is a resident of this state. An investor that provides
  106  a legible copy of a Florida driver license has provided evidence
  107  of state residency.
  108         (VI) Obtain an affidavit from each investor stating that
  109  the investment being made by the investor is consistent with the
  110  income requirements of subparagraph (a)5.
  111         (VII) Deposit and release investor funds in escrow pursuant
  112  to the escrow agreement executed by the issuer.
  113         (VIII) Provide a monthly update for each offering, after
  114  the first full month following the date of the offering. The
  115  update must be accessible on the intermediary’s platform and
  116  must display the date and amount of each sale of securities in
  117  the previous calendar month.
  118         (IX) Not be subject to a disqualification established by
  119  the commission or office or a disqualification described in
  120  United States Securities and Exchange Commission Rule 262, 17
  121  C.F.R. s. 230.262, under the Securities Act of 1933.
  122         b. An intermediary may not:
  123         (I) Offer investment advice or recommendations. A refusal
  124  by an intermediary to post an offering that it deems not
  125  credible or representing a potential for fraud shall not be
  126  construed as an offer of investment advice or recommendation.
  127         (II) Solicit purchases, sales, or offers to buy securities
  128  offered or displayed on its platform.
  129         (III) Compensate employees, agents, or other persons for
  130  the solicitation of purchases, sales, or offers to buy the
  131  securities offered or displayed on its platform.
  132         (IV) Hold, manage, possess, or otherwise handle investor
  133  funds or securities.
  134         3. The transaction must meet the requirements of the
  135  federal exemption for intrastate offerings under s. 3(a)(11) of
  136  the Securities Act of 1933, 15 U.S.C. s. 77c(a)(11), and United
  137  States Securities and Exchange Commission Rule 147, 17 C.F.R. s.
  138  230.147, under the Securities Act of 1933.
  139         4. The sum of all cash and other consideration received for
  140  all sales of the security in reliance upon this exemption must
  141  not exceed $1 million, less the aggregate amount received for
  142  all sales of securities by the issuer within the 12 months
  143  preceding the first offer or sale made in reliance upon this
  144  exemption.
  145         5. Unless the investor is an accredited investor as defined
  146  by Rule 501 of Regulation D under the Securities Act of 1933,
  147  the aggregate amount sold by an issuer to an investor in
  148  transactions exempt from registration requirements under this
  149  subsection during a 12-month period may not exceed:
  150         a. If the investor’s annual income and net worth are less
  151  than $100,000, the greater of $2,000, 5 percent of the annual
  152  income of the investor, or 5 percent of the net worth of the
  153  investor.
  154         b. If the investor’s annual income or net worth is $100,000
  155  or more, the greater of $100,000, 10 percent of the annual
  156  income of the investor, or 10 percent of the net worth of the
  157  investor.
  158         6. All funds received from investors must be used in
  159  accordance with representations made to investors by the
  160  intermediary.
  161         7. All offering materials must prominently state in bold,
  162  conspicuous print:
  163         These securities are offered and will be sold in
  164         reliance on an exemption from the registration
  165         requirements of federal and State of Florida
  166         securities laws and consequently neither the federal
  167         government nor the State of Florida have reviewed the
  168         accuracy or completeness of any offering materials. In
  169         making an investment decision, investors must rely on
  170         their own examination of the issuer and the terms of
  171         the offering, including the merits and risks involved.
  172         These securities are subject to restrictions on
  173         transferability and resale and may not be transferred
  174         or resold except as specifically authorized by
  175         applicable federal and state securities laws.
  176         Investing in these securities involves a speculative
  177         risk, and investors should be able to bear the loss of
  178         their entire investment.
  179         (b) The exemptions from registration requirements provided
  180  in this subsection may not be used in conjunction with any other
  181  exemption from registration requirements under this chapter,
  182  except for offers and sales to a person owning 10 percent or
  183  more of the outstanding shares of any class or classes of
  184  securities or to an officer, director, partner, or trustee or a
  185  person occupying similar status or performing similar functions.
  186  Sales to such persons do not count toward the limitation
  187  provided in subparagraph (a)4.
  188         (c) The office shall create and maintain on its website a
  189  list of all intermediaries providing offerings under this
  190  section.
  191         Section 3. Subsection (20) of section 517.12, Florida
  192  Statutes, is amended to read:
  193         517.12 Registration of dealers, associated persons, and
  194  investment advisers.—
  195         (20) The registration requirements of this section do not
  196  apply to:
  197         (a) Any general lines insurance agent or life insurance
  198  agent licensed under chapter 626, for the sale of a security as
  199  defined in s. 517.021(22)(g) s. 517.021(21)(g), if the
  200  individual is directly authorized by the issuer to offer or sell
  201  the security on behalf of the issuer and the issuer is a
  202  federally chartered savings bank subject to regulation by the
  203  Federal Deposit Insurance Corporation. Actions under this
  204  subsection shall constitute activity under the insurance agent’s
  205  license for purposes of ss. 626.611 and 626.621.
  206         (b) An intermediary exempted from registration under s.
  207  517.061.
  208         Section 4. Paragraph (b) of subsection (4) of section
  209  626.9911, Florida Statutes, is amended to read:
  210         626.9911 Definitions.—As used in this act, the term:
  211         (4) “Life expectancy provider” means a person who
  212  determines, or holds himself or herself out as determining, life
  213  expectancies or mortality ratings used to determine life
  214  expectancies:
  215         (a) On behalf of a viatical settlement provider, viatical
  216  settlement broker, life agent, or person engaged in the business
  217  of viatical settlements;
  218         (b) In connection with a viatical settlement investment,
  219  pursuant to s. 517.021(24) s. 517.021(23); or
  220         (c) On residents of this state in connection with a
  221  viatical settlement contract or viatical settlement investment.
  222         Section 5. This act shall take effect July 1, 2015.