Bill Text: FL S0914 | 2015 | Regular Session | Comm Sub
Bill Title: Intrastate Crowdfunding
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2015-04-28 - Laid on Table, companion bill(s) passed, see CS/CS/CS/HB 275 (Ch. 2015-171) [S0914 Detail]
Download: Florida-2015-S0914-Comm_Sub.html
Florida Senate - 2015 CS for CS for SB 914 By the Committees on Appropriations; and Banking and Insurance; and Senator Richter 576-04665A-15 2015914c2 1 A bill to be entitled 2 An act relating to intrastate crowdfunding; amending 3 s. 517.021, F.S.; conforming a cross-reference; 4 defining the term “intermediary” for purposes of the 5 Florida Securities and Investor Protection Act; 6 amending s. 517.061, F.S.; exempting offers or sales 7 of securities by certain issuers from registration 8 requirements; creating s. 517.0611, F.S.; providing a 9 short title; exempting the intrastate offering and 10 sale of certain securities from certain regulatory 11 requirements; providing applicability; providing 12 registration and reporting requirements for issuers 13 and intermediaries offering such securities; requiring 14 the issuer to provide to the office a copy of a 15 specified escrow agreement; limiting the aggregate 16 amount of sales of such securities within a specified 17 period; limiting the aggregate amount of sales to 18 specified investors; requiring an issuer to produce 19 and distribute an annual report to investors; 20 requiring a notice-filing to be suspended under 21 certain circumstances; specifying that fees collected 22 become revenue of the state; requiring a qualified 23 third party to hold certain funds in escrow; amending 24 s. 517.12, F.S.; providing registration requirements 25 for an intermediary; conforming a cross-reference; 26 amending s. 517.121, F.S.; requiring an intermediary 27 to comply with specified recordkeeping requirements; 28 amending s. 517.161, F.S.; including an intermediary 29 in the disciplinary provisions; amending s. 626.9911, 30 F.S.; conforming a cross-reference; providing an 31 appropriation; providing an effective date. 32 33 Be It Enacted by the Legislature of the State of Florida: 34 35 Section 1. Subsection (9) of section 517.021, Florida 36 Statutes, is amended, subsections (13) through (23) are 37 redesignated as subsections (14) through (24), respectively, and 38 a new subsection (13) is added to that section, to read: 39 517.021 Definitions.—When used in this chapter, unless the 40 context otherwise indicates, the following terms have the 41 following respective meanings: 42 (9) “Federal covered adviser” means a person who is 43 registered or required to be registered under s. 203 of the 44 Investment Advisers Act of 1940. The term “federal covered 45 adviser” does not include any person who is excluded from the 46 definition of investment adviser under subparagraphs (14)(b)1. 47 8.(13)(b)1.-8. 48 (13) “Intermediary” means a natural person residing in the 49 state or a corporation, trust, partnership, association, or 50 other legal entity registered with the Secretary of State to do 51 business in the state which represents an issuer in a 52 transaction involving the offer or sale of securities under s. 53 517.061. 54 Section 2. Section 517.061, Florida Statutes, is amended to 55 read: 56 517.061 Exempt transactions.—Except as otherwise provided 57 in s. 517.0611 for a transaction listed in subsection (21), the 58 exemption for each transaction listed below is self-executing 59 and does not require any filing with the office beforeprior to60 claiming thesuchexemption. Any person who claims entitlement 61 to any of the exemptions bears the burden of proving such 62 entitlement in any proceeding brought under this chapter. The 63 registration provisions of s. 517.07 do not apply to any of the 64 following transactions; however, such transactions are subject 65 to the provisions of ss. 517.301, 517.311, and 517.312: 66 (1) At any judicial, executor’s, administrator’s, 67 guardian’s, or conservator’s sale, or at any sale by a receiver 68 or trustee in insolvency or bankruptcy, or any transaction 69 incident to a judicially approved reorganization in which a 70 security is issued in exchange for one or more outstanding 71 securities, claims, or property interests. 72 (2) By or for the account of a pledgeholder or mortgagee 73 selling or offering for sale or delivery in the ordinary course 74 of business and not for the purposes of avoiding the provisions 75 of this chapter, to liquidate a bona fide debt, a security 76 pledged in good faith as security for such debt. 77 (3) The isolated sale or offer for sale of securities when 78 made by or on behalf of a vendor not the issuer or underwriter 79 of the securities, who, being the bona fide owner of such 80 securities, disposes of her or his own property for her or his 81 own account, and such sale is not made directly or indirectly 82 for the benefit of the issuer or an underwriter of such 83 securities or for the direct or indirect promotion of any scheme 84 or enterprise with the intent of violating or evading any 85 provision of this chapter. For purposes of this subsection, 86 isolated offers or sales include, but are not limited to, an 87 isolated offer or sale made by or on behalf of a vendor of 88 securities not the issuer or underwriter of the securities if: 89 (a) The offer or sale of securities is in a transaction 90 satisfying all of the requirements of subparagraphs (11)(a)1., 91 2., 3., and 4. and paragraph (11)(b); or 92 (b) The offer or sale of securities is in a transaction 93 exempt under s. 4(1) of the Securities Act of 1933, as amended. 94 95 For purposes of this subsection, any person, including, without 96 limitation, a promoter or affiliate of an issuer, shall not be 97 deemed an underwriter, an issuer, or a person acting for the 98 direct or indirect benefit of the issuer or an underwriter with 99 respect to any securities of the issuer which she or he has 100 owned beneficially for at least 1 year. 101 (4) The distribution by a corporation, trust, or 102 partnership, actively engaged in the business authorized by its 103 charter or other organizational articles or agreement, of 104 securities to its stockholders or other equity security holders, 105 partners, or beneficiaries as a stock dividend or other 106 distribution out of earnings or surplus. 107 (5) The issuance of securities to such equity security 108 holders or other creditors of a corporation, trust, or 109 partnership in the process of a reorganization of such 110 corporation or entity, made in good faith and not for the 111 purpose of avoiding the provisions of this chapter, either in 112 exchange for the securities of such equity security holders or 113 claims of such creditors or partly for cash and partly in 114 exchange for the securities or claims of such equity security 115 holders or creditors. 116 (6) Any transaction involving the distribution of the 117 securities of an issuer exclusively among its own security 118 holders, including any person who at the time of the transaction 119 is a holder of any convertible security, any nontransferable 120 warrant, or any transferable warrant which is exercisable within 121 not more than 90 days of issuance, when no commission or other 122 remuneration is paid or given directly or indirectly in 123 connection with the sale or distribution of such additional 124 securities. 125 (7) The offer or sale of securities to a bank, trust 126 company, savings institution, insurance company, dealer, 127 investment company as defined by the Investment Company Act of 128 1940, pension or profit-sharing trust, or qualified 129 institutional buyer as defined by rule of the commission in 130 accordance with Securities and Exchange Commission Rule 144A (17 131 C.F.R. s. 230.144(A)(a)), whether any of such entities is acting 132 in its individual or fiduciary capacity; provided that such 133 offer or sale of securities is not for the direct or indirect 134 promotion of any scheme or enterprise with the intent of 135 violating or evading any provision of this chapter. 136 (8) The sale of securities from one corporation to another 137 corporation provided that: 138 (a) The sale price of the securities is $50,000 or more; 139 and 140 (b) The buyer and seller corporations each have assets of 141 $500,000 or more. 142 (9) The offer or sale of securities from one corporation to 143 another corporation, or to security holders thereof, pursuant to 144 a vote or consent of such security holders as may be provided by 145 the articles of incorporation and the applicable corporate 146 statutes in connection with mergers, share exchanges, 147 consolidations, or sale of corporate assets. 148 (10) The issuance of notes or bonds in connection with the 149 acquisition of real property or renewals thereof, if such notes 150 or bonds are issued to the sellers of, and are secured by all or 151 part of, the real property so acquired. 152 (11)(a) The offer or sale, by or on behalf of an issuer, of 153 its own securities, which offer or sale is part of an offering 154 made in accordance with all of the following conditions: 155 1. There are no more than 35 purchasers, or the issuer 156 reasonably believes that there are no more than 35 purchasers, 157 of the securities of the issuer in this state during an offering 158 made in reliance upon this subsection or, if such offering 159 continues for a period in excess of 12 months, in any 160 consecutive 12-month period. 161 2. Neither the issuer nor any person acting on behalf of 162 the issuer offers or sells securities pursuant to this 163 subsection by means of any form of general solicitation or 164 general advertising in this state. 165 3. BeforePrior tothe sale, each purchaser or the 166 purchaser’s representative, if any, is provided with, or given 167 reasonable access to, full and fair disclosure of all material 168 information. 169 4. No person defined as a “dealer” in this chapter is paid 170 a commission or compensation for the sale of the issuer’s 171 securities unless such person is registered as a dealer under 172 this chapter. 173 5. When sales are made to five or more persons in this 174 state, any sale in this state made pursuant to this subsection 175 is voidable by the purchaser in such sale either within 3 days 176 after the first tender of consideration is made by such 177 purchaser to the issuer, an agent of the issuer, or an escrow 178 agent or within 3 days after the availability of that privilege 179 is communicated to such purchaser, whichever occurs later. 180 (b) The following purchasers are excluded from the 181 calculation of the number of purchasers under subparagraph 182 (a)1.: 183 1. Any relative or spouse, or relative of such spouse, of a 184 purchaser who has the same principal residence as such 185 purchaser. 186 2. Any trust or estate in which a purchaser, any of the 187 persons related to such purchaser specified in subparagraph 1., 188 and any corporation specified in subparagraph 3. collectively 189 have more than 50 percent of the beneficial interest (excluding 190 contingent interest). 191 3. Any corporation or other organization of which a 192 purchaser, any of the persons related to such purchaser 193 specified in subparagraph 1., and any trust or estate specified 194 in subparagraph 2. collectively are beneficial owners of more 195 than 50 percent of the equity securities or equity interest. 196 4. Any purchaser who makes a bona fide investment of 197 $100,000 or more, provided such purchaser or the purchaser’s 198 representative receives, or has access to, the information 199 required to be disclosed by subparagraph (a)3. 200 5. Any accredited investor, as defined by rule of the 201 commission in accordance with Securities and Exchange Commission 202 Regulation 230.501 (17 C.F.R. s. 230.501). 203 (c)1. For purposes of determining which offers and sales of 204 securities constitute part of the same offering under this 205 subsection and are therefore deemed to be integrated with one 206 another: 207 a. Offers or sales of securities occurring more than 6 208 months beforeprior toan offer or sale of securities made 209 pursuant to this subsection shall not be considered part of the 210 same offering, provided there are no offers or sales by or for 211 the issuer of the same or a similar class of securities during 212 such 6-month period. 213 b. Offers or sales of securities occurring at any time 214 after 6 months from an offer or sale made pursuant to this 215 subsection shall not be considered part of the same offering, 216 provided there are no offers or sales by or for the issuer of 217 the same or a similar class of securities during such 6-month 218 period. 219 2. Offers or sales which do not satisfy the conditions of 220 any of the provisions of subparagraph 1. may or may not be part 221 of the same offering, depending on the particular facts and 222 circumstances in each case. The commission may adopt a rule or 223 rules indicating what factors should be considered in 224 determining whether offers and sales not qualifying for the 225 provisions of subparagraph 1. are part of the same offering for 226 purposes of this subsection. 227 (d) Offers or sales of securities made pursuant to, and in 228 compliance with, any other subsection of this section or any 229 subsection of s. 517.051 shall not be considered part of an 230 offering pursuant to this subsection, regardless of when such 231 offers and sales are made. 232 (12) The sale of securities by a bank or trust company 233 organized or incorporated under the laws of the United States or 234 this state at a profit to such bank or trust company of not more 235 than 2 percent of the total sale price of such securities; 236 provided that there is no solicitation of this business by such 237 bank or trust company where such bank or trust company acts as 238 agent in the purchase or sale of such securities. 239 (13) An unsolicited purchase or sale of securities on order 240 of, and as the agent for, another by a dealer registered 241 pursuant to the provisions of s. 517.12; provided that this 242 exemption applies solely and exclusively to such registered 243 dealers and does not authorize or permit the purchase or sale of 244 securities on order of, and as agent for, another by any person 245 other than a dealer so registered; and provided, further, that 246 such purchase or sale is not directly or indirectly for the 247 benefit of the issuer or an underwriter of such securities or 248 for the direct or indirect promotion of any scheme or enterprise 249 with the intent of violation or evading any provision of this 250 chapter. 251 (14) The offer or sale of shares of a corporation which 252 represent ownership, or entitle the holders of the shares to 253 possession and occupancy, of specific apartment units in 254 property owned by such corporation and organized and operated on 255 a cooperative basis, solely for residential purposes. 256 (15) The offer or sale of securities under a bona fide 257 employer-sponsored stock option, stock purchase, pension, 258 profit-sharing, savings, or other benefit plan when offered only 259 to employees of the sponsoring organization or to employees of 260 its controlled subsidiaries. 261 (16) The sale by or through a registered dealer of any 262 securities option if at the time of the sale of the option: 263 (a) The performance of the terms of the option is 264 guaranteed by any dealer registered under the federal Securities 265 Exchange Act of 1934, as amended, which guaranty and dealer are 266 in compliance with such requirements or rules as may be approved 267 or adopted by the commission; or 268 (b) Such options transactions are cleared by the Options 269 Clearing Corporation or any other clearinghouse recognized by 270 the office; and 271 (c) The option is not sold by or for the benefit of the 272 issuer of the underlying security; and 273 (d) The underlying security may be purchased or sold on a 274 recognized securities exchange or is quoted on the National 275 Association of Securities Dealers Automated Quotation System; 276 and 277 (e) Such sale is not directly or indirectly for the purpose 278 of providing or furthering any scheme to violate or evade any 279 provisions of this chapter. 280 (17)(a) The offer or sale of securities, as agent or 281 principal, by a dealer registered pursuant to s. 517.12, when 282 such securities are offered or sold at a price reasonably 283 related to the current market price of such securities, provided 284 such securities are: 285 1. Securities of an issuer for which reports are required 286 to be filed by s. 13 or s. 15(d) of the Securities Exchange Act 287 of 1934, as amended; 288 2. Securities of a company registered under the Investment 289 Company Act of 1940, as amended; 290 3. Securities of an insurance company, as that term is 291 defined in s. 2(a)(17) of the Investment Company Act of 1940, as 292 amended; 293 4. Securities, other than any security that is a federal 294 covered security pursuant to s. 18(b)(1) of the Securities Act 295 of 1933 and is not subject to any registration or filing 296 requirements under this act, which appear in any list of 297 securities dealt in on any stock exchange registered pursuant to 298 the Securities Exchange Act of 1934, as amended, and which 299 securities have been listed or approved for listing upon notice 300 of issuance by such exchange, and also all securities senior to 301 any securities so listed or approved for listing upon notice of 302 issuance, or represented by subscription rights which have been 303 so listed or approved for listing upon notice of issuance, or 304 evidences of indebtedness guaranteed by companies any stock of 305 which is so listed or approved for listing upon notice of 306 issuance, such securities to be exempt only so long as such 307 listings or approvals remain in effect. The exemption provided 308 for herein does not apply when the securities are suspended from 309 listing approval for listing or trading. 310 (b) The exemption provided in this subsection does not 311 apply if the sale is made for the direct or indirect benefit of 312 an issuer or controlling persons of such issuer or if such 313 securities constitute the whole or part of an unsold allotment 314 to, or subscription or participation by, a dealer as an 315 underwriter of such securities. 316 (c) This exemption shall not be available for any 317 securities which have been denied registration pursuant to s. 318 517.111. Additionally, the office may deny this exemption with 319 reference to any particular security, other than a federal 320 covered security, by order published in such manner as the 321 office finds proper. 322 (18) The offer or sale of any security effected by or 323 through a person in compliance with s. 517.12(17). 324 (19) Other transactions defined by rules as transactions 325 exempted from the registration provisions of s. 517.07, which 326 rules the commission may adopt from time to time, but only after 327 a finding by the office that the application of the provisions 328 of s. 517.07 to a particular transaction is not necessary in the 329 public interest and for the protection of investors because of 330 the small dollar amount of securities involved or the limited 331 character of the offering. In conjunction with its adoption of 332 such rules, the commission may also provide in such rules that 333 persons selling or offering for sale the exempted securities are 334 exempt from the registration requirements of s. 517.12. No rule 335 so adopted may have the effect of narrowing or limiting any 336 exemption provided for by statute in the other subsections of 337 this section. 338 (20) Any nonissuer transaction by a registered associated 339 person of a registered dealer, and any resale transaction by a 340 sponsor of a unit investment trust registered under the 341 Investment Company Act of 1940, in a security of a class that 342 has been outstanding in the hands of the public for at least 90 343 days; provided, at the time of the transaction: 344 (a) The issuer of the security is actually engaged in 345 business and is not in the organization stage or in bankruptcy 346 or receivership and is not a blank check, blind pool, or shell 347 company whose primary plan of business is to engage in a merger 348 or combination of the business with, or an acquisition of, any 349 unidentified person; 350 (b) The security is sold at a price reasonably related to 351 the current market price of the security; 352 (c) The security does not constitute the whole or part of 353 an unsold allotment to, or a subscription or participation by, 354 the broker-dealer as an underwriter of the security; 355 (d) A nationally recognized securities manual designated by 356 rule of the commission or order of the office or a document 357 filed with the Securities and Exchange Commission that is 358 publicly available through the commission’s electronic data 359 gathering and retrieval system contains: 360 1. A description of the business and operations of the 361 issuer; 362 2. The names of the issuer’s officers and directors, if 363 any, or, in the case of an issuer not domiciled in the United 364 States, the corporate equivalents of such persons in the 365 issuer’s country of domicile; 366 3. An audited balance sheet of the issuer as of a date 367 within 18 months before such transaction or, in the case of a 368 reorganization or merger in which parties to the reorganization 369 or merger had such audited balance sheet, a pro forma balance 370 sheet; and 371 4. An audited income statement for each of the issuer’s 372 immediately preceding 2 fiscal years, or for the period of 373 existence of the issuer, if in existence for less than 2 years 374 or, in the case of a reorganization or merger in which the 375 parties to the reorganization or merger had such audited income 376 statement, a pro forma income statement; and 377 (e) The issuer of the security has a class of equity 378 securities listed on a national securities exchange registered 379 under the Securities Exchange Act of 1934 or designated for 380 trading on the National Association of Securities Dealers 381 Automated Quotation System, unless: 382 1. The issuer of the security is a unit investment trust 383 registered under the Investment Company Act of 1940; 384 2. The issuer of the security has been engaged in 385 continuous business, including predecessors, for at least 3 386 years; or 387 3. The issuer of the security has total assets of at least 388 $2 million based on an audited balance sheet as of a date within 389 18 months before such transaction or, in the case of a 390 reorganization or merger in which parties to the reorganization 391 or merger had such audited balance sheet, a pro forma balance 392 sheet. 393 (21) The offer or sale of a security by an issuer conducted 394 in accordance with s. 517.0611. 395 Section 3. Section 517.0611, Florida Statutes, is created 396 to read: 397 517.0611 Intrastate crowdfunding.— 398 (1) This section may be cited as the “Florida Intrastate 399 Crowdfunding Exemption.” 400 (2) Notwithstanding any other provision of this chapter, an 401 offer or sale of a security by an issuer is an exempt 402 transaction under s. 517.061 if the offer or sale is conducted 403 in accordance with this section. The exemption provided in this 404 section may not be used in conjunction with any other exemption 405 under s. 517.051 or s.517.061. 406 (3) The offer or sale of securities under this section must 407 be conducted in accordance with the requirements of the federal 408 exemption for intrastate offerings in s. 3(a)(11) of the 409 Securities Act of 1933, 15 U.S.C. s. 77c(a)(11), and United 410 States Securities and Exchange Commission Rule 147, 17 C.F.R. s. 411 230.147, adopted pursuant to the Securities Act of 1933. 412 (4) An issuer must: 413 (a) Be a for-profit business entity formed under the laws 414 of this state, be registered with the Secretary of State, 415 maintain its principal place of business in this state, and 416 derive its revenues primarily from operations in this state. 417 (b) Conduct transactions for the offering through a dealer 418 registered with the office or an intermediary registered under 419 s. 517.12(20). 420 (c) Not be, either before or as a result of the offering, 421 an investment company as defined in s. 3 of the Investment 422 Company Act of 1940, 15 U.S.C. s. 80a-3, or subject to the 423 reporting requirements of s. 13 or s. 15(d) of the Securities 424 Exchange Act of 1934, 15 U.S.C. s. 78m or s. 78o(d). 425 (d) Not be a company with an undefined business operation, 426 a company that lacks a business plan, a company that lacks a 427 stated investment goal for the funds being raised, or a company 428 that plans to engage in a merger or acquisition with an 429 unspecified business entity. 430 (e) Not be subject to a disqualification established by the 431 commission or office or a disqualification described in s. 432 517.1611 or United States Securities and Exchange Commission 433 Rule 506(d), 17 C.F.R. 230.506(d), adopted pursuant to the 434 Securities Act of 1933. Each director, officer, person occupying 435 a similar status or performing a similar function, or person 436 holding more than 20 percent of the shares of the issuer, is 437 subject to this requirement. 438 (f) Execute an escrow agreement with a federally insured 439 financial institution authorized to do business in this state 440 for the deposit of investor funds, and ensure that all offering 441 proceeds are provided to the issuer only when the aggregate 442 capital raised from all investors is equal to or greater than 443 the target offering amount. 444 (g) Allow investors to cancel a commitment to invest within 445 3 business days before the offering deadline, as stated in the 446 disclosure statement, and issue refunds to all investors if the 447 target offering amount is not reached by the offering deadline. 448 (5) The issuer must file a notice of the offering with the 449 office, in writing or in electronic form, in a format prescribed 450 by commission rule, together with a nonrefundable filing fee of 451 $200. The commission may adopt rules establishing procedures for 452 the deposit of fees and the filing of documents by electronic 453 means if the procedures provide the office with the information 454 and data required by this section. A notice is effective upon 455 receipt of the completed form, filing fee, and an irrevocable 456 written consent to service of civil process, as provided for in 457 s. 517.101, by the office. The notice may be terminated by 458 filing with the office a notice of termination. The notice and 459 offering expire 12 months after filing the notice with the 460 office and are not eligible for renewal. The notice must: 461 (a) Be filed with the office at least 10 days before the 462 issuer commences an offering of securities or the offering is 463 displayed on a website of an intermediary in reliance upon the 464 exemption provided by this section. 465 (b) Indicate that the issuer is conducting an offering in 466 reliance upon the exemption provided by this section. 467 (c) Contain the name and contact information of the issuer. 468 (d) Identify any predecessors, owners, officers, directors, 469 and control persons or any person occupying a similar status or 470 performing a similar function of the issuer, including that 471 person’s title, his or her status as a partner, trustee, sole 472 proprietor or similar role, and his or her ownership percentage. 473 (e) Identify the federally insured financial institution, 474 authorized to do business in this state, in which investor funds 475 will be deposited, in accordance with the escrow agreement. 476 (f) Require an attestation under oath that the issuer, its 477 predecessors, affiliated issuers, directors, officers, and 478 control persons, or any other person occupying a similar status 479 or performing a similar function, are not currently and have not 480 been within the past 10 years the subject of regulatory or 481 criminal actions involving fraud or deceit. 482 (g) Include documentation verifying that the issuer is 483 organized under the laws of this state and authorized to do 484 business in this state. 485 (h) Include the intermediary’s website address where the 486 issuer’s securities will be offered. 487 (i) Include the target offering amount. 488 (6) The issuer must amend the notice form within 30 days 489 after any information contained in the notice becomes inaccurate 490 for any reason. The commission may require, by rule, an issuer 491 who has filed a notice under this section to file amendments 492 with the office. 493 (7) The issuer must provide to investors and the dealer or 494 intermediary, along with a copy to the office at the time the 495 notice is filed, and make available to potential investors 496 through the dealer or intermediary, a disclosure statement 497 containing material information about the issuer and the 498 offering, including: 499 (a) The name, legal status, physical address, and website 500 address of the issuer. 501 (b) The names of the directors, officers, and any person 502 occupying a similar status or performing a similar function, and 503 the name of each person holding more than 20 percent of the 504 shares of the issuer. 505 (c) A description of the business of the issuer and the 506 anticipated business plan of the issuer. 507 (d) A description of the stated purpose and intended use of 508 the proceeds of the offering. 509 (e) The target offering amount, the deadline to reach the 510 target offering amount, and regular updates regarding the 511 progress of the issuer in meeting the target offering amount. 512 (f) The price to the public of the securities or the method 513 for determining the price, provided that before the sale each 514 investor receives in writing the final price and all required 515 disclosures, with an opportunity to rescind the commitment to 516 purchase the securities. 517 (g) A description of the ownership and capital structure of 518 the issuer, including: 519 1. Terms of the securities being offered and each class of 520 security of the issuer, including how those terms may be 521 modified, and a summary of the differences between such 522 securities, including how the rights of the securities being 523 offered may be materially limited, diluted, or qualified by 524 rights of any other class of security of the issuer; 525 2. A description of how the exercise of the rights held by 526 the principal shareholders of the issuer could negatively impact 527 the purchasers of the securities being offered; 528 3. The name and ownership level of each existing 529 shareholder who owns more than 20 percent of any class of the 530 securities of the issuer; 531 4. How the securities being offered are being valued, and 532 examples of methods of how such securities may be valued by the 533 issuer in the future, including during subsequent corporate 534 actions; and 535 5. The risks to purchasers of the securities relating to 536 minority ownership in the issuer, the risks associated with 537 corporate action, including additional issuances of shares, a 538 sale of the issuer or of assets of the issuer, or transactions 539 with related parties. 540 (h) A description of the financial condition of the issuer. 541 1. For offerings that, in combination with all other 542 offerings of the issuer within the preceding 12-month period, 543 have target offering amounts of $100,000 or less, the 544 description must include the most recent income tax return filed 545 by the issuer, if any, and a financial statement that must be 546 certified by the principal executive officer of the issuer as 547 true and complete in all material respects. 548 2. For offerings that, in combination with all other 549 offerings of the issuer within the preceding 12-month period, 550 have target offering amounts of more than $100,000, but not more 551 than $500,000, the description must include financial statements 552 prepared in accordance with generally accepted accounting 553 principles and reviewed by a certified public accountant, as 554 defined in s. 473.302, who is independent of the issuer, using 555 professional standards and procedures for such review or 556 standards and procedures established by the office, by rule, for 557 such purpose. 558 3. For offerings that, in combination with all other 559 offerings of the issuer within the preceding 12-month period, 560 have target offering amounts of more than $500,000, the 561 description must include audited financial statements prepared 562 in accordance with generally accepted accounting principles by a 563 certified public accountant, as defined in s. 473.302, who is 564 independent of the issuer, and other requirements as the 565 commission may establish by rule. 566 (i) The following statement in boldface, conspicuous type 567 on the front page of the disclosure statement: 568 569 These securities are offered under and will be sold in reliance 570 upon an exemption from the registration requirements of federal 571 and Florida securities laws. Consequently, neither the Federal 572 Government nor the State of Florida has reviewed the accuracy or 573 completeness of any offering materials. In making an investment 574 decision, investors must rely on their own examination of the 575 issuer and the terms of the offering, including the merits and 576 risks involved. These securities are subject to restrictions on 577 transferability and resale and may not be transferred or resold 578 except as specifically authorized by applicable federal and 579 state securities laws. Investing in these securities involves a 580 speculative risk, and investors should be able to bear the loss 581 of their entire investment. 582 (8) The issuer shall provide to the office a copy of the 583 escrow agreement with a financial institution authorized to 584 conduct business in this state. All investor funds must be 585 deposited in the escrow account. The escrow agreement must 586 require that all offering proceeds be released to the issuer 587 only when the aggregate capital raised from all investors is 588 equal to or greater than the minimum target offering amount 589 specified in the disclosure statement as necessary to implement 590 the business plan, and that all investors will receive a full 591 return of their investment commitment if that target offering 592 amount is not raised by the date stated in the disclosure 593 statement. 594 (9) The sum of all cash and other consideration received 595 for sales of a security under this section may not exceed $1 596 million, less the aggregate amount received for all sales of 597 securities by the issuer within the 12 months preceding the 598 first offer or sale made in reliance upon this exemption. Offers 599 or sales to a person owning 20 percent or more of the 600 outstanding shares of any class or classes of securities or to 601 an officer, director, partner, or trustee, or a person occupying 602 a similar status, do not count toward this limitation. 603 (10) Unless the investor is an accredited investor as 604 defined by Rule 501 of Regulation D, adopted pursuant to the 605 Securities Act of 1933, the aggregate amount sold by an issuer 606 to an investor in transactions exempt from registration 607 requirements under this subsection in a 12-month period may not 608 exceed: 609 (a) The greater of $2,000 or 5 percent of the annual income 610 or net worth of such investor, if the annual income or the net 611 worth of the investor is less than $100,000. 612 (b) Ten percent of the annual income or net worth of such 613 investor, not to exceed a maximum aggregate amount sold of 614 $100,000, if either the annual income or net worth of the 615 investor is equal to or exceeds $100,000. 616 (11) The issuer shall file with the office and provide to 617 investors free of charge an annual report of the results of 618 operations and financial statements of the issuer within 45 days 619 of its fiscal year end, until no securities under this offering 620 are outstanding. The annual reports must meet the following 621 requirements: 622 (a) Include an analysis by management of the issuer of the 623 business operations and the financial condition of the issuer, 624 and disclose the compensation received by each director, 625 executive officer, and person having an ownership interest of 20 626 percent or more of the issuer, including cash compensation 627 earned since the previous report and on an annual basis, and any 628 bonuses, stock options, other rights to receive securities of 629 the issuer, or any affiliate of the issuer, or other 630 compensation received. 631 (b) Disclose any material change to information contained 632 in the disclosure statements which was not disclosed in a 633 previous report. 634 (12)(a) A notice-filing under this section shall be 635 summarily suspended by the office if the payment for the filing 636 is dishonored by the financial institution upon which the funds 637 are drawn. For purposes of s. 120.60(6), failure to pay the 638 required notice filing fee constitutes an immediate and serious 639 danger to the public health, safety, and welfare. The office 640 shall enter a final order revoking a notice-filing in which the 641 payment for the filing is dishonored by the financial 642 institution upon which the funds are drawn. 643 (b) A notice-filing under this section shall be summarily 644 suspended by the office if the issuer made a material false 645 statement in the issuer’s notice-filing. The summary suspension 646 shall remain in effect until a final order is entered by the 647 office. For purposes of s. 120.60(6), a material false statement 648 made in the issuer’s notice-filing constitutes an immediate and 649 serious danger to the public health, safety, and welfare. If an 650 issuer made a material false statement in the issuer’s notice 651 filing, the office shall enter a final order revoking the 652 notice-filing, issue a fine as prescribed by s. 517.221(3), and 653 issue permanent bars under s. 517.221(4) to the issuer and all 654 owners, officers, directors, and control persons, or any person 655 occupying a similar status or performing a similar function of 656 the issuer, including titles; status as a partner, trustee, sole 657 proprietor, or similar roles; and ownership percentage. 658 (13) All fees collected under this section become the 659 revenue of the state, except for those assessments provided for 660 under s. 517.131(1) until such time as the Securities Guaranty 661 Fund satisfies the statutory limits, and are not returnable in 662 the event that a notice filing is withdrawn. 663 (14) An intermediary must: 664 (a) Take measures, as established by commission rule, to 665 reduce the risk of fraud with respect to transactions, including 666 verifying that the issuer is in compliance with the requirements 667 of this section and, if necessary, denying an issuer access to 668 its platform if the intermediary believes it is unable to 669 adequately assess the risk of fraud of the issuer or its 670 potential offering. 671 (b) Provide basic information on its website regarding the 672 high risk of investment in and limitation on the resale of 673 exempt securities and the potential for loss of an entire 674 investment. The basic information must include: 675 1. A description of the escrow agreement that the issuer 676 has executed and the conditions for release of such funds to the 677 issuer in accordance with the agreement and subsection (4). 678 2. A description of whether financial information provided 679 by the issuer has been audited by an independent certified 680 public accountant, as defined in s. 473.302. 681 (c) Obtain a zip code or residence address from each 682 potential investor who seeks to view information regarding 683 specific investment opportunities, in order to confirm that the 684 potential investor is a resident of this state. 685 (d) Obtain and verify, pursuant to commission rule, a valid 686 Florida driver license number or official identification card 687 number from each investor before purchase of a security or other 688 information, as defined by commission rule, to confirm that the 689 investor is a resident of the state. 690 (e) Obtain an affidavit from each investor stating that the 691 investment being made by the investor is consistent with the 692 income requirements of subsection (10). 693 (f) Direct the release of investor funds in escrow in 694 accordance with subsection (4). 695 (g) Direct investors to transmit funds directly to the 696 financial institution designated in the escrow agreement to hold 697 the funds for the benefit of the investor. 698 (h) Provide a monthly update for each offering, after the 699 first full month after the date of the offering. The update must 700 be accessible on the intermediary’s website and must display the 701 date and amount of each sale of securities, and each 702 cancellation of commitment to invest in the previous calendar 703 month. 704 (i) Require each investor to certify in writing, including 705 as part of such certification his or her signature and his or 706 her initials next to each paragraph of the certification, as 707 follows: 708 709 I understand and acknowledge that: 710 711 I am investing in a high-risk, speculative business venture. I 712 may lose all of my investment, and I can afford the loss of my 713 investment. 714 715 This offering has not been reviewed or approved by any state or 716 federal securities commission or other regulatory authority and 717 no regulatory authority has confirmed the accuracy or determined 718 the adequacy of any disclosure made to me relating to this 719 offering. 720 721 The securities I am acquiring in this offering are illiquid and 722 are subject to possible dilution. There is no ready market for 723 the sale of the securities. It may be difficult or impossible 724 for me to sell or otherwise dispose of the securities, and I may 725 be required to hold the securities indefinitely. 726 727 I may be subject to tax on my share of the taxable income and 728 losses of the issuer, whether or not I have sold or otherwise 729 disposed of my investment or received any dividends or other 730 distributions from the issuer. 731 732 By entering into this transaction with the issuer, I am 733 affirmatively representing myself as being a Florida resident at 734 the time this contract is formed, and if this representation is 735 subsequently shown to be false, the contract is void. 736 737 If I resell any of the securities I am acquiring in this 738 offering to a person that is not a Florida resident within 9 739 months after the closing of the offering, my contract with the 740 issuer for the purchase of these securities is void. 741 742 (j) Require each investor to answer questions demonstrating 743 an understanding of the level of risk generally applicable to 744 investments in startups, emerging businesses, and small issuers, 745 and an understanding of the risk of illiquidity. 746 (k) Take reasonable steps to protect personal information 747 collected from investors, as required by s. 501.171. 748 (l) Prohibit its directors and officers from having any 749 financial interest in the issuer using its services. 750 (m) Implement written policies and procedures that are 751 reasonably designed to achieve compliance with federal and state 752 securities laws; comply with anti-money laundering requirements 753 of 31 C.F.R. ch. X applicable to registered brokers; and comply 754 with the privacy requirements of 17 C.F.R. part 248 as they 755 apply to brokers. 756 (15) An intermediary not registered as a dealer under s. 757 517.12(6) may not: 758 (a) Offer investment advice or recommendations. A refusal 759 by an intermediary to post an offering that it deems not 760 credible or that represents a potential for fraud may not be 761 construed as an offer of investment advice or recommendation. 762 (b) Solicit purchases, sales, or offers to buy securities 763 offered or displayed on its website. 764 (c) Compensate employees, agents, or other persons for the 765 solicitation or based on the sale of securities offered or 766 displayed on its website. 767 (d) Hold, manage, possess, or otherwise handle investor 768 funds or securities. 769 (e) Compensate promoters, finders, or lead generators for 770 providing the intermediary with the personal identifying 771 information of any potential investor. 772 (f) Engage in any other activities set forth by commission 773 rule. 774 (16) All funds received from investors must be directed to 775 the financial institution designated in the escrow agreement to 776 hold the funds and must be used in accordance with 777 representations made to investors by the intermediary. If an 778 investor cancels a commitment to invest, the intermediary must 779 direct the financial institution designated to hold the funds to 780 promptly refund the funds of the investor. 781 Section 4. Section 517.12, Florida Statutes, is amended to 782 read: 783 517.12 Registration of dealers, associated persons, 784 intermediaries, and investment advisers.— 785 (1) No dealer, associated person, or issuer of securities 786 shall sell or offer for sale any securities in or from offices 787 in this state, or sell securities to persons in this state from 788 offices outside this state, by mail or otherwise, unless the 789 person has been registered with the office pursuant to the 790 provisions of this section. The office shall not register any 791 person as an associated person of a dealer unless the dealer 792 with which the applicant seeks registration is lawfully 793 registered with the office pursuant to this chapter. 794 (2) The registration requirements of this section do not 795 apply to the issuers of securities exempted by s. 517.051(1)-(8) 796 and (10). 797 (3) Except as otherwise provided in s. 517.061(11)(a)4., 798 (13), (16), (17), or (19), the registration requirements of this 799 section do not apply in a transaction exempted by s. 517.061(1) 800 (12), (14), and (15). 801 (4) No investment adviser or associated person of an 802 investment adviser or federal covered adviser shall engage in 803 business from offices in this state, or render investment advice 804 to persons of this state, by mail or otherwise, unless the 805 federal covered adviser has made a notice-filing with the office 806 pursuant to s. 517.1201 or the investment adviser is registered 807 pursuant to the provisions of this chapter and associated 808 persons of the federal covered adviser or investment adviser 809 have been registered with the office pursuant to this section. 810 The office shall not register any person or an associated person 811 of a federal covered adviser or an investment adviser unless the 812 federal covered adviser or investment adviser with which the 813 applicant seeks registration is in compliance with the notice 814 filing requirements of s. 517.1201 or is lawfully registered 815 with the office pursuant to this chapter. A dealer or associated 816 person who is registered pursuant to this section may render 817 investment advice upon notification to and approval from the 818 office. 819 (5) No dealer or investment adviser shall conduct business 820 from a branch office within this state unless the branch office 821 is notice-filed with the office pursuant to s. 517.1202. 822 (6) A dealer, associated person, or investment adviser, in 823 order to obtain registration, must file with the office a 824 written application, on a form which the commission may by rule 825 prescribe. The commission may establish, by rule, procedures for 826 depositing fees and filing documents by electronic means 827 provided such procedures provide the office with the information 828 and data required by this section. Each dealer or investment 829 adviser must also file an irrevocable written consent to service 830 of civil process similar to that provided for in s. 517.101. The 831 application shall contain such information as the commission or 832 office may require concerning such matters as: 833 (a) The name of the applicant and the address of its 834 principal office and each office in this state. 835 (b) The applicant’s form and place of organization; and, if 836 the applicant is a corporation, a copy of its articles of 837 incorporation and amendments to the articles of incorporation 838 or, if a partnership, a copy of the partnership agreement. 839 (c) The applicant’s proposed method of doing business and 840 financial condition and history, including a certified financial 841 statement showing all assets and all liabilities, including 842 contingent liabilities of the applicant as of a date not more 843 than 90 days prior to the filing of the application. 844 (d) The names and addresses of all associated persons of 845 the applicant to be employed in this state and the offices to 846 which they will be assigned. 847 (7) The application must also contain such information as 848 the commission or office may require about the applicant; any 849 member, principal, or director of the applicant or any person 850 having a similar status or performing similar functions; any 851 person directly or indirectly controlling the applicant; or any 852 employee of a dealer or of an investment adviser rendering 853 investment advisory services. Each applicant and any direct 854 owners, principals, or indirect owners that are required to be 855 reported on Form BD or Form ADV pursuant to subsection (15) 856 shall submit fingerprints for live-scan processing in accordance 857 with rules adopted by the commission. The fingerprints may be 858 submitted through a third-party vendor authorized by the 859 Department of Law Enforcement to provide live-scan 860 fingerprinting. The costs of fingerprint processing shall be 861 borne by the person subject to the background check. The 862 Department of Law Enforcement shall conduct a state criminal 863 history background check, and a federal criminal history 864 background check must be conducted through the Federal Bureau of 865 Investigation. The office shall review the results of the state 866 and federal criminal history background checks and determine 867 whether the applicant meets licensure requirements. The 868 commission may waive, by rule, the requirement that applicants, 869 including any direct owners, principals, or indirect owners that 870 are required to be reported on Form BD or Form ADV pursuant to 871 subsection (15), submit fingerprints or the requirement that 872 such fingerprints be processed by the Department of Law 873 Enforcement or the Federal Bureau of Investigation. The 874 commission or office may require information about any such 875 applicant or person concerning such matters as: 876 (a) His or her full name, and any other names by which he 877 or she may have been known, and his or her age, social security 878 number, photograph, qualifications, and educational and business 879 history. 880 (b) Any injunction or administrative order by a state or 881 federal agency, national securities exchange, or national 882 securities association involving a security or any aspect of the 883 securities business and any injunction or administrative order 884 by a state or federal agency regulating banking, insurance, 885 finance, or small loan companies, real estate, mortgage brokers, 886 or other related or similar industries, which injunctions or 887 administrative orders relate to such person. 888 (c) His or her conviction of, or plea of nolo contendere 889 to, a criminal offense or his or her commission of any acts 890 which would be grounds for refusal of an application under s. 891 517.161. 892 (d) The names and addresses of other persons of whom the 893 office may inquire as to his or her character, reputation, and 894 financial responsibility. 895 (8) The commission or office may require the applicant or 896 one or more principals or general partners, or natural persons 897 exercising similar functions, or any associated person applicant 898 to successfully pass oral or written examinations. Because any 899 principal, manager, supervisor, or person exercising similar 900 functions shall be responsible for the acts of the associated 901 persons affiliated with a dealer, the examination standards may 902 be higher for a dealer, office manager, principal, or person 903 exercising similar functions than for a nonsupervisory 904 associated person. The commission may waive the examination 905 process when it determines that such examinations are not in the 906 public interest. The office shall waive the examination 907 requirements for any person who has passed any tests as 908 prescribed in s. 15(b)(7) of the Securities Exchange Act of 1934 909 that relates to the position to be filled by the applicant. 910 (9)(a) All dealers, except securities dealers who are 911 designated by the Federal Reserve Bank of New York as primary 912 government securities dealers or securities dealers registered 913 as issuers of securities, shall comply with the net capital and 914 ratio requirements imposed pursuant to the Securities Exchange 915 Act of 1934. The commission may by rule require a dealer to file 916 with the office any financial or operational information that is 917 required to be filed by the Securities Exchange Act of 1934 or 918 any rules adopted under such act. 919 (b) The commission may by rule require the maintenance of a 920 minimum net capital for securities dealers who are designated by 921 the Federal Reserve Bank of New York as primary government 922 securities dealers and securities dealers registered as issuers 923 of securities and investment advisers, or prescribe a ratio 924 between net capital and aggregate indebtedness, to assure 925 adequate protection for the investing public. The provisions of 926 this section shall not apply to any investment adviser that 927 maintains its principal place of business in a state other than 928 this state, provided such investment adviser is registered in 929 the state where it maintains its principal place of business and 930 is in compliance with such state’s net capital requirements. 931 (10) An applicant for registration shall pay an assessment 932 fee of $200, in the case of a dealer or investment adviser, or 933 $50, in the case of an associated person. An associated person 934 may be assessed an additional fee to cover the cost for the 935 fingerprints to be processed by the office. Such fee shall be 936 determined by rule of the commission. Such fees become the 937 revenue of the state, except for those assessments provided for 938 under s. 517.131(1) until such time as the Securities Guaranty 939 Fund satisfies the statutory limits, and are not returnable in 940 the event that registration is withdrawn or not granted. 941 (11) If the office finds that the applicant is of good 942 repute and character and has complied with the provisions of 943 this chapter and the rules made pursuant hereto, it shall 944 register the applicant. The registration of each dealer, 945 investment adviser, and associated person expires on December 31 946 of the year the registration became effective unless the 947 registrant has renewed his or her registration on or before that 948 date. Registration may be renewed by furnishing such information 949 as the commission may require, together with payment of the fee 950 required in subsection (10) for dealers, investment advisers, or 951 associated persons and the payment of any amount lawfully due 952 and owing to the office pursuant to any order of the office or 953 pursuant to any agreement with the office. Any dealer, 954 investment adviser, or associated person who has not renewed a 955 registration by the time the current registration expires may 956 request reinstatement of such registration by filing with the 957 office, on or before January 31 of the year following the year 958 of expiration, such information as may be required by the 959 commission, together with payment of the fee required in 960 subsection (10) for dealers, investment advisers, or associated 961 persons and a late fee equal to the amount of such fee. Any 962 reinstatement of registration granted by the office during the 963 month of January shall be deemed effective retroactive to 964 January 1 of that year. 965 (12)(a) The office may issue a license to a dealer, 966 investment adviser, or associated person to evidence 967 registration under this chapter. The office may require the 968 return to the office of any license it may issue prior to 969 issuing a new license. 970 (b) Every dealer, investment adviser, or federal covered 971 adviser shall promptly file with the office, as prescribed by 972 rules adopted by the commission, notice as to the termination of 973 employment of any associated person registered for such dealer 974 or investment adviser in this state and shall also furnish the 975 reason or reasons for such termination. 976 (c) Each dealer or investment adviser shall designate in 977 writing to, and register with, the office a manager for each 978 office the dealer or investment adviser has in this state. 979 (13) Changes in registration occasioned by changes in 980 personnel of a partnership or in the principals, copartners, 981 officers, or directors of any dealer or investment adviser or by 982 changes of any material fact or method of doing business shall 983 be reported by written amendment in such form and at such time 984 as the commission may specify. In any case in which a person or 985 a group of persons, directly or indirectly or acting by or 986 through one or more persons, proposes to purchase or acquire a 987 controlling interest in a registered dealer or investment 988 adviser, such person or group shall submit an initial 989 application for registration as a dealer or investment adviser 990 prior to such purchase or acquisition. The commission shall 991 adopt rules providing for waiver of the application required by 992 this subsection where control of a registered dealer or 993 investment adviser is to be acquired by another dealer or 994 investment adviser registered under this chapter or where the 995 application is otherwise unnecessary in the public interest. 996 (14) Every dealer or investment adviser registered or 997 required to be registered or branch office notice-filed or 998 required to be notice-filed with the office shall keep records 999 of all currency transactions in excess of $10,000 and shall file 1000 reports, as prescribed under the financial recordkeeping 1001 regulations in 31 C.F.R. part 103, with the office when 1002 transactions occur in or from this state. All reports required 1003 by this subsection to be filed with the office shall be 1004 confidential and exempt from s. 119.07(1) except that any law 1005 enforcement agency or the Department of Revenue shall have 1006 access to, and shall be authorized to inspect and copy, such 1007 reports. 1008 (15)(a) In order to facilitate uniformity and streamline 1009 procedures for persons who are subject to registration or 1010 notification in multiple jurisdictions, the commission may adopt 1011 by rule uniform forms that have been approved by the Securities 1012 and Exchange Commission, and any subsequent amendments to such 1013 forms, if the forms are substantially consistent with the 1014 provisions of this chapter. Uniform forms that the commission 1015 may adopt to administer this section include, but are not 1016 limited to: 1017 1. Form BR, Uniform Branch Office Registration Form, 1018 adopted October 2005. 1019 2. Form U4, Uniform Application for Securities Industry 1020 Registration or Transfer, adopted October 2005. 1021 3. Form U5, Uniform Termination Notice for Securities 1022 Industry Registration, adopted October 2005. 1023 4. Form ADV, Uniform Application for Investment Adviser 1024 Registration, adopted October 2003. 1025 5. Form ADV-W, Notice of Withdrawal from Registration as an 1026 Investment Adviser, adopted October 2003. 1027 6. Form BD, Uniform Application for Broker-Dealer 1028 Registration, adopted July 1999. 1029 7. Form BDW, Uniform Request for Broker-Dealer Withdrawal, 1030 adopted August 1999. 1031 (b) In lieu of filing with the office the applications 1032 specified in subsection (6), the fees required by subsection 1033 (10), the renewals required by subsection (11), and the 1034 termination notices required by subsection (12), the commission 1035 may by rule establish procedures for the deposit of such fees 1036 and documents with the Central Registration Depository or the 1037 Investment Adviser Registration Depository of the Financial 1038 Industry Regulatory Authority, as developed under contract with 1039 the North American Securities Administrators Association, Inc. 1040 (16) Except for securities dealers who are designated by 1041 the Federal Reserve Bank of New York as primary government 1042 securities dealers or securities dealers registered as issuers 1043 of securities, every applicant for initial or renewal 1044 registration as a securities dealer and every person registered 1045 as a securities dealer shall be registered as a broker or dealer 1046 with the Securities and Exchange Commission and shall be subject 1047 to insurance coverage by the Securities Investor Protection 1048 Corporation. 1049 (17)(a) A dealer that is located in Canada, does not have 1050 an office or other physical presence in this state, and has made 1051 a notice-filing in accordance with this subsection is exempt 1052 from the registration requirements of this section and may 1053 effect transactions in securities with or for, or induce or 1054 attempt to induce the purchase or sale of any security by: 1055 1. A person from Canada who is present in this state and 1056 with whom the Canadian dealer had a bona fide dealer-client 1057 relationship before the person entered the United States; or 1058 2. A person from Canada who is present in this state and 1059 whose transactions are in a self-directed, tax-advantaged 1060 retirement plan in Canada of which the person is the holder or 1061 contributor. 1062 (b) A notice-filing under this subsection must consist of 1063 documents the commission by rule requires to be filed, together 1064 with a consent to service of process and a nonrefundable filing 1065 fee of $200. The commission may establish by rule procedures for 1066 the deposit of fees and the filing of documents to be made by 1067 electronic means, if such procedures provide the office with the 1068 information and data required by this section. 1069 (c) A Canadian dealer may make a notice-filing under this 1070 subsection if the dealer provides to the office: 1071 1. A notice-filing in the form the commission requires by 1072 rule. 1073 2. A consent to service of process. 1074 3. Evidence that the Canadian dealer is registered as a 1075 dealer in the jurisdiction in which the dealer’s main office is 1076 located. 1077 4. Evidence that the Canadian dealer is a member of a self 1078 regulatory organization or stock exchange in Canada. 1079 (d) The office may issue a permit to evidence the 1080 effectiveness of a notice-filing for a Canadian dealer. 1081 (e) A notice-filing is effective upon receipt by the 1082 office. A notice-filing expires on December 31 of the year in 1083 which the filing becomes effective unless the Canadian dealer 1084 has renewed the filing on or before that date. A Canadian dealer 1085 may annually renew a notice-filing by furnishing to the office 1086 such information as the office requires together with a renewal 1087 fee of $200 and the payment of any amount due and owing the 1088 office pursuant to any agreement with the office. Any Canadian 1089 dealer who has not renewed a notice-filing by the time a current 1090 notice-filing expires may request reinstatement of such notice 1091 filing by filing with the office, on or before January 31 of the 1092 year following the year the notice-filing expires, such 1093 information as the commission requires by rule, together with 1094 the payment of $200 and a late fee of $200. A reinstatement of a 1095 notice-filing granted by the office during the month of January 1096 is effective retroactively to January 1 of that year. 1097 (f) An associated person who represents a Canadian dealer 1098 who has made a notice-filing under this subsection is exempt 1099 from the registration requirements of this section and may 1100 effect transactions in securities in this state as permitted for 1101 a dealer under paragraph (a) if such person is registered in the 1102 jurisdiction from which he or she is effecting transactions into 1103 this state. 1104 (g) A Canadian dealer who has made a notice-filing under 1105 this subsection shall: 1106 1. Maintain its provincial or territorial registration and 1107 its membership in a self-regulatory organization or stock 1108 exchange in good standing. 1109 2. Provide the office upon request with its books and 1110 records relating to its business in this state as a dealer. 1111 3. Provide the office upon request notice of each civil, 1112 criminal, or administrative action initiated against the dealer. 1113 4. Disclose to its clients in this state that the dealer 1114 and its associated persons are not subject to the full 1115 regulatory requirements under this chapter. 1116 5. Correct any inaccurate information within 30 days after 1117 the information contained in the notice-filing becomes 1118 inaccurate for any reason. 1119 (h) An associated person representing a Canadian dealer who 1120 has made a notice-filing under this subsection shall: 1121 1. Maintain provincial or territorial registration in good 1122 standing. 1123 2. Provide the office upon request with notice of each 1124 civil, criminal, or administrative action initiated against such 1125 person. 1126 (i) A notice-filing may be terminated by filing notice of 1127 such termination with the office. Unless another date is 1128 specified by the Canadian dealer, such notice is effective upon 1129 receipt of the notice by the office. 1130 (j) All fees collected under this subsection become the 1131 revenue of the state, except those assessments provided for 1132 under s. 517.131(1), until the Securities Guaranty Fund has 1133 satisfied the statutory limits. Such fees are not returnable if 1134 a notice-filing is withdrawn. 1135 (18) Every dealer or associated person registered or 1136 required to be registered with the office shall satisfy any 1137 continuing education requirements established by rule pursuant 1138 to law. 1139 (19) The registration requirements of this section which 1140 apply to investment advisers and associated persons do not apply 1141 to a commodity trading adviser who: 1142 (a) Is registered as such with the Commodity Futures 1143 Trading Commission pursuant to the Commodity Exchange Act. 1144 (b) Advises or exercises trading discretion, with respect 1145 to foreign currency options listed and traded exclusively on the 1146 Philadelphia Stock Exchange, on behalf of an “appropriate 1147 person” as defined by the Commodity Exchange Act. 1148 1149 The exemption provided in this subsection does not apply to a 1150 commodity trading adviser who engages in other activities that 1151 require registration under this chapter. 1152 (20) An intermediary may not engage in business in this 1153 state unless the intermediary is registered as a dealer or as an 1154 intermediary with the office pursuant to this section to 1155 facilitate the offer or sale of securities in accordance with s. 1156 517.0611. An intermediary, in order to obtain registration, must 1157 file with the office a written application on a form prescribed 1158 by commission rule and pay a registration fee of $200. The 1159 commission may establish by rule procedures for depositing fees 1160 and filing documents by electronic means if such procedures 1161 provide the office with the information and data required by 1162 this section. Each intermediary must also file an irrevocable 1163 written consent to service of civil process, as provided for in 1164 s. 517.101. 1165 (a) The application must contain such information as the 1166 commission or office may require concerning: 1167 1. The name of the applicant and address of its principal 1168 office and each office in this state. 1169 2. The applicant’s form and place of organization; and if 1170 the applicant is a corporation, a copy of its articles of 1171 incorporation and amendments to the articles of incorporation 1172 or, if a partnership, a copy of the partnership agreement. 1173 3. The website address where securities of the issuer will 1174 be offered. 1175 4. Contact information. 1176 (b) The application must also contain such information as 1177 the commission may require by rule about the applicant; any 1178 member, principal, or director of the applicant or any person 1179 having a similar status or performing similar functions; or any 1180 persons directly or indirectly controlling the applicant. Each 1181 applicant and any direct owners, principals, or indirect owners 1182 that are required to be reported on a form adopted by commission 1183 rule shall submit fingerprints for live-scan processing in 1184 accordance with rules adopted by the commission. The 1185 fingerprints may be submitted through a third-party vendor 1186 authorized by the Department of Law Enforcement to provide live 1187 scan fingerprinting. The costs of fingerprint processing shall 1188 be borne by the person subject to the background check. The 1189 Department of Law Enforcement shall conduct a state criminal 1190 history background check, and a federal criminal history 1191 background check must be conducted through the Federal Bureau of 1192 Investigation. The office shall review the results of the state 1193 and federal criminal history background checks and determine 1194 whether the applicant meets licensure requirements. The 1195 commission may waive, by rule, the requirement that applicants, 1196 including any direct owners, principals, or indirect owners, 1197 that are required to be reported on a form adopted by commission 1198 rule submit fingerprints or the requirement that such 1199 fingerprints be processed by the Department of Law Enforcement 1200 or the Federal Bureau of Investigation. The commission, by rule, 1201 or the office may require information about any applicant or 1202 person concerning such matters as: 1203 1. His or her full name and any other names by which he or 1204 she may have been known and his or her age, social security 1205 number, photograph, qualifications, and educational and business 1206 history. 1207 2. Any injunction or administrative order by a state or 1208 federal agency, national securities exchange, or national 1209 securities association involving a security or any aspect of the 1210 securities business and any injunction or administrative order 1211 by a state or federal agency regulating banking, insurance, 1212 finance, or small loan companies, real estate, mortgage brokers, 1213 or other related or similar industries, which relate to such 1214 person. 1215 3. His or her conviction of, or plea of nolo contendere to, 1216 a criminal offense or his or her commission of any acts that 1217 would be grounds for refusal of an application under s. 517.161. 1218 (c) The application must be amended within 30 days if any 1219 information contained in the form becomes inaccurate for any 1220 reason. 1221 (d) An intermediary or persons affiliated with the 1222 intermediary may not be subject to any disqualification 1223 described in s. 517.1611 or the United States Securities and 1224 Exchange Commission Rule 506(d), 17 C.F.R. 230.506(d), adopted 1225 pursuant to the Securities Act of 1933. Each director, officer, 1226 control person of the issuer, any person occupying a similar 1227 status or performing a similar function, and each person holding 1228 more than 20 percent of the shares of the intermediary is 1229 subject to this requirement. 1230 (e) If the office finds that the applicant is of good 1231 repute and character and has complied with the provisions of 1232 this chapter and the rules made pursuant hereto, it shall 1233 register the applicant. The registration of each intermediary 1234 expires on December 31 of the year the registration became 1235 effective unless the registrant has renewed his or her 1236 registration on or before that date. Registration may be renewed 1237 by furnishing such information as the commission may require by 1238 rule, together with payment of the fee of $200 and the payment 1239 of any amount due to the office pursuant to any order of the 1240 office or pursuant to any agreement with the office. An 1241 intermediary who has not renewed a registration by filing with 1242 the office on or before January 31 of the year following the 1243 year of expiration must submit the information that may be 1244 required by the commission, together with payment of the $200 1245 fee and a late fee of $200. Any reinstatement of registration 1246 granted by the office during the month of January shall be 1247 deemed effective retroactive to January 1 of that year. 1248 (21)(20)The registration requirements of this section do 1249 not apply to any general lines insurance agent or life insurance 1250 agent licensed under chapter 626, for the sale of a security as 1251 defined in s. 517.021(22)(g)s. 517.021(21)(g), if the 1252 individual is directly authorized by the issuer to offer or sell 1253 the security on behalf of the issuer and the issuer is a 1254 federally chartered savings bank subject to regulation by the 1255 Federal Deposit Insurance Corporation. Actions under this 1256 subsection shall constitute activity under the insurance agent’s 1257 license for purposes of ss. 626.611 and 626.621. 1258 Section 5. Subsections (1) and (2) of section 517.121, 1259 Florida Statutes, are amended to read: 1260 517.121 Books and records requirements; examinations.— 1261 (1) A dealer, investment adviser, branch office, or 1262 associated person, or intermediary shall maintain such books and 1263 records as the commission may prescribe by rule. 1264 (2) The office shall, at intermittent periods, examine the 1265 affairs and books and records of each registered dealer, 1266 investment adviser, associated person, intermediary, or branch 1267 office notice-filed with the office, or require such records and 1268 reports to be submitted to it as required by rule of the 1269 commission, to determine compliance with this act. 1270 Section 6. Section 517.161, Florida Statutes, is amended to 1271 read: 1272 517.161 Revocation, denial, or suspension of registration 1273 of dealer, investment adviser, intermediary, or associated 1274 person.— 1275 (1) Registration under s. 517.12 may be denied or any 1276 registration granted may be revoked, restricted, or suspended by 1277 the office if the office determines that such applicant or 1278 registrant; any member, principal, or director of the applicant 1279 or registrant or any person having a similar status or 1280 performing similar functions; or any person directly or 1281 indirectly controlling the applicant or registrant: 1282 (a) Has violated any provision of this chapter or any rule 1283 or order made under this chapter; 1284 (b) Has made a material false statement in the application 1285 for registration; 1286 (c) Has been guilty of a fraudulent act in connection with 1287 rendering investment advice or in connection with any sale of 1288 securities, has been or is engaged or is about to engage in 1289 making fictitious or pretended sales or purchases of any such 1290 securities or in any practice involving the rendering of 1291 investment advice or the sale of securities which is fraudulent 1292 or in violation of the law; 1293 (d) Has made a misrepresentation or false statement to, or 1294 concealed any essential or material fact from, any person in the 1295 rendering of investment advice or the sale of a security to such 1296 person; 1297 (e) Has failed to account to persons interested for all 1298 money and property received; 1299 (f) Has not delivered, after a reasonable time, to persons 1300 entitled thereto securities held or agreed to be delivered by 1301 the dealer, broker, or investment adviser, as and when paid for, 1302 and due to be delivered; 1303 (g) Is rendering investment advice or selling or offering 1304 for sale securities through any associated person not registered 1305 in compliance with the provisions of this chapter; 1306 (h) Has demonstrated unworthiness to transact the business 1307 of dealer, investment adviser, intermediary, or associated 1308 person; 1309 (i) Has exercised management or policy control over or 1310 owned 10 percent or more of the securities of any dealer, 1311 intermediary, or investment adviser that has been declared 1312 bankrupt, or had a trustee appointed under the Securities 1313 Investor Protection Act; or is, in the case of a dealer, 1314 intermediary, or investment adviser, insolvent; 1315 (j) Has been convicted of, or has entered a plea of guilty 1316 or nolo contendere to, regardless of whether adjudication was 1317 withheld, a crime against the laws of this state or any other 1318 state or of the United States or of any other country or 1319 government which relates to registration as a dealer, investment 1320 adviser, issuer of securities, intermediary, or associated 1321 person; which relates to the application for such registration; 1322 or which involves moral turpitude or fraudulent or dishonest 1323 dealing; 1324 (k) Has had a final judgment entered against her or him in 1325 a civil action upon grounds of fraud, embezzlement, 1326 misrepresentation, or deceit; 1327 (l) Is of bad business repute; 1328 (m) Has been the subject of any decision, finding, 1329 injunction, suspension, prohibition, revocation, denial, 1330 judgment, or administrative order by any court of competent 1331 jurisdiction, administrative law judge, or by any state or 1332 federal agency, national securities, commodities, or option 1333 exchange, or national securities, commodities, or option 1334 association, involving a violation of any federal or state 1335 securities or commodities law or any rule or regulation 1336 promulgated thereunder, or any rule or regulation of any 1337 national securities, commodities, or options exchange or 1338 national securities, commodities, or options association, or has 1339 been the subject of any injunction or adverse administrative 1340 order by a state or federal agency regulating banking, 1341 insurance, finance or small loan companies, real estate, 1342 mortgage brokers or lenders, money transmitters, or other 1343 related or similar industries. For purposes of this subsection, 1344 the office may not deny registration to any applicant who has 1345 been continuously registered with the office for 5 years after 1346 the date of entry of such decision, finding, injunction, 1347 suspension, prohibition, revocation, denial, judgment, or 1348 administrative order provided such decision, finding, 1349 injunction, suspension, prohibition, revocation, denial, 1350 judgment, or administrative order has been timely reported to 1351 the office pursuant to the commission’s rules; or 1352 (n) Made payment to the office for a registration with a 1353 check or electronic transmission of funds that is dishonored by 1354 the applicant’s or registrant’s financial institution. 1355 (2) The payment or anticipated payment of any amount from 1356 the Securities Guaranty Fund in settlement of a claim or in 1357 satisfaction of a judgment against an applicant or registrant 1358 constitutes prima facie grounds for the denial of the 1359 applicant’s application for registration or the revocation of 1360 the registrant’s registration. 1361 (3) In the event the office determines to deny an 1362 application or revoke a registration, it shall enter a final 1363 order with its findings on the register of dealers and 1364 associated persons; and denial, suspension, or revocation of the 1365 registration of a dealer, intermediary, or investment adviser 1366 shall also deny, suspend, or revoke the registration of all her 1367 or his associated persons. 1368 (4) It shall be sufficient cause for denial of an 1369 application or revocation of registration, in the case of a 1370 partnership, corporation, or unincorporated association, if any 1371 member of the partnership or any officer, director, or ultimate 1372 equitable owner of the corporation or association has committed 1373 any act or omission which would be cause for denying, revoking, 1374 restricting, or suspending the registration of an individual 1375 dealer, investment adviser, intermediary, or associated person. 1376 As used in this subsection, the term “ultimate equitable owner” 1377 means a natural person who directly or indirectly owns or 1378 controls an ownership interest in the corporation, partnership, 1379 association, or other legal entity however organized, regardless 1380 of whether such natural person owns or controls such ownership 1381 interest through one or more proxies, powers of attorney, 1382 nominees, corporations, associations, partnerships, trusts, 1383 joint stock companies, or other entities or devices, or any 1384 combination thereof. 1385 (5) The office may deny any request to terminate or 1386 withdraw any application or registration if the office believes 1387 that an act which would be a ground for denial, suspension, 1388 restriction, or revocation under this chapter has been 1389 committed. 1390 (6) Registration under s. 517.12 may be denied or any 1391 registration granted may be suspended or restricted if an 1392 applicant or registrant is charged, in a pending enforcement 1393 action or pending criminal prosecution, with any conduct that 1394 would authorize denial or revocation under subsection (1). 1395 Registration under s. 517.12 may be suspended or restricted if a 1396 registrant is arrested for any conduct that would authorize 1397 revocation under subsection (1). 1398 (a) Any denial of registration ordered under this 1399 subsection shall be without prejudice to the applicant’s ability 1400 to reapply for registration. 1401 (b) Any order of suspension or restriction under this 1402 subsection shall: 1403 1. Take effect only after a hearing, unless no hearing is 1404 requested by the registrant or unless the suspension or 1405 restriction is made in accordance with s. 120.60(6). 1406 2. Contain a finding that evidence of a prima facie case 1407 supports the charge made in the enforcement action or criminal 1408 prosecution. 1409 3. Operate for no longer than 10 days beyond receipt of 1410 notice by the office of termination with respect to the 1411 registrant of the enforcement action or criminal prosecution. 1412 (c) For purposes of this subsection: 1413 1. The term “enforcement action” means any judicial 1414 proceeding or any administrative proceeding where such judicial 1415 or administrative proceeding is brought by an agency of the 1416 United States or of any state to enforce or restrain violation 1417 of any state or federal law, or any disciplinary proceeding 1418 maintained by the Financial Industry Regulatory Authority, the 1419 National Futures Association, or any other similar self 1420 regulatory organization. 1421 2. An enforcement action is pending at any time after 1422 notice to the applicant or registrant of such action and is 1423 terminated at any time after entry of final judgment or decree 1424 in the case of judicial proceedings, final agency action in the 1425 case of administrative proceedings, and final disposition by a 1426 self-regulatory organization in the case of disciplinary 1427 proceedings. 1428 3. A criminal prosecution is pending at any time after 1429 criminal charges are filed and is terminated at any time after 1430 conviction, acquittal, or dismissal. 1431 Section 7. Paragraph (b) of subsection (4) of section 1432 626.9911, Florida Statutes, is amended to read: 1433 626.9911 Definitions.—As used in this act, the term: 1434 (4) “Life expectancy provider” means a person who 1435 determines, or holds himself or herself out as determining, life 1436 expectancies or mortality ratings used to determine life 1437 expectancies: 1438 (b) In connection with a viatical settlement investment, 1439 pursuant to s. 517.021(24)s. 517.021(23); or 1440 Section 8. For the 2015-2016 fiscal year, the sum of 1441 $120,000 in nonrecurring funds from the Regulatory Trust Fund is 1442 appropriated to the Office of Financial Regulation for the 1443 purpose of implementing this act. 1444 Section 9. This act shall take effect October 1, 2015.