Bill Seeks to Strip Securities Regulator of Power to Deny New Branch Offices to Broker-Dealers and Investment Advisers

A hallmark of Florida's notoriously strict regulation of investment professions may soon be no more. Florida is one of only eight jurisdictions in the United States that require securities broker-dealers and investment advisers to obtain approval of the state securities regulator before conducting business from a new branch office in the state. Moreover, Florida is unique in providing investors a right to rescind otherwise lawful purchases of securities made through an unlicensed branch office. Class-action lawsuits on behalf of investors so "injured" are a bane for the national securities industry, which often expands into Florida unaware of the unusual law.

The Legislature gave the industry some relief in 2000 by taking away the right of rescission for securities purchases deemed unlawful only because the annual license for the branch office had not been renewed. This year a coalition lead by the Financial Services Institute and including the Florida Securities Dealers Association and the Securities Industry and Financial Markets Association pushed for further reform. With passage by the Florida House of Representatives this week of CS/HB 783, Florida may join the majority of jurisdictions that do not empower the regulator to disapprove new branch offices.

Should the bill become law, which now requires Senate passage and the Governor's approval, securities dealers and investment advisers required to register their Florida business locations would need only notify the Florida Office of Financial Regulation of the expansion.

For more information contact Mike Underwood in the Tallahassee Office of Fowler White Boggs P.A.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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