The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/SB 180
INTRODUCER: Banking and Insurance Committee and Senator Gruters
SUBJECT: Regulation of Securities
DATE: April 24, 2023 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Johnson Knudson BI Fav/CS
2. Sanders Betta AEG Favorable
3. Johnson Yeatman FP Favorable
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 180 revises provisions of ch. 517, F.S., the Securities and Investor Protection Act (Act),
which regulates securities transactions. The Office of Financial Regulation (OFR) regulates and
registers the offer and sale of securities in, to, or from Florida by firms, branch offices, and
individuals associated with these firms in accordance with the act. The Division of Securities
within the OFR is responsible for administering the act.
The bill provides many technical, clarifying, and conforming changes to ch. 517, F.S. Many
provisions of ch. 517, F.S., are outdated or do not incorporate recent model acts or federal rule
changes, which are designed to promote capital formation for small businesses and provide more
investment opportunities for investors.
The bill decreases the $1,000 filing fee to $200 for offerings that do not exceed the maximum
amount provided in s. 3(b) of the Securities Act of 1933 (Act of 1933). The maximum amount
currently provided in s. 3(b) of the Act of 1933 is five million dollars.
The bill eliminates the requirement for an issuer to register with the OFR. Currently, issuers are
required to disclose all material facts about themselves when registering an offering of securities.
The bill incorporates provisions of the following model acts and rules:
BILL: CS/SB 180 Page 2
The North American Securities Administrators Association’s (NASAA’s) Model Rule to
Require Continuing Education by Investment Adviser Representatives. An associate or
representative would be required to complete 12 hours of continuing education content.
The Uniform Securities Act of the Uniform Law Commission.
The bill adds failure to pay, or attempting to avoid paying, certain final judgments, arbitration
awards, fines, and civil penalties, orders of restitution and disgorgement, or similar monetary
payment obligations as grounds for denying, suspending, or revoking a registration.
The bill has an insignificant negative impact on state revenues and expenditures. See Section V.
Fiscal Impact Statement.
The bill takes effect October 1, 2023.
II. Present Situation:
Federal Regulation of Securities
Securities Act of 1933 (Act of 1933)
Following the stock market crash of 1929, the Act of 19331 was enacted to regulate the offers
and sales of securities. The Act of 1933 requires issuers to disclose financial and other significant
information on securities offered for public sale and prohibits deceit, misrepresentations, and
other kinds of fraud in the sale of securities. The Act of 1933 requires issuers to disclose
information deemed germane to investors as part of the mandatory United States Securities and
Exchange Commission (SEC) registration of the securities that those companies offer for sale to
the public.2 For example, potential investors must be given an offering prospectus containing
registration data. Registered securities offerings, often called public offerings, are available to all
types of investors and have more rigorous disclosure requirements.
By contrast, securities offerings that are exempt from the SEC registration are referred to as
private offerings and are mainly available to more sophisticated investors. The SEC exempts
certain small offerings from registration requirements to foster capital formation by lowering the
cost of offering securities to the public. Examples of exempt offerings3 include:
Rule 506(b) Private Placement Offerings allow companies to raise unlimited capital from
investors with whom the company has a relationship and who meet certain wealth thresholds
or have certain professional credentials;4
Rule 506(c) General Solicitation Offerings allow companies to raise unlimited capital by
broadly soliciting investors who meet certain wealth thresholds or have certain professional
credentials;5
1
Public Law 73-22, as amended through P.L. 117-268, enacted December 23, 2022.
2
Id.
3
.Security offerings of municipal, state, and the federal government are exempt from registration. U.S. Securities and
Exchange Commission (SEC), The Laws That Govern the Securities Industry, https://www.sec.gov/about/about-securities-
laws (last visited April 12, 2023)
4
17 C.F.R. s. 230.506(b).
5
17 C.F.R. s. 230.506(c).
BILL: CS/SB 180 Page 3
Rule 504 Limited Offerings allow companies to raise up to $10 million in a 12-month period,
in many cases from investors with whom the company has a relationship;6
Regulation Crowdfunding Offerings allow eligible companies to raise up to five million
dollars in investment capital in a 12-month period from investors via an online portal;7
Intrastate offerings8 allow companies to raise capital within a single state according to state
law. Many states limit the offering to between one million dollars and five million dollars in
a 12-month period; and
Regulation A Offerings allow eligible companies to raise up to $20 million in a 12-month
period in a Tier I offering and up to $75 million through a similar, but less extensive
registered offering.9
Securities and Exchange Act of 1934 (Act of 1934)
The Act of 1934 created the SEC as an independent agency to enforce federal securities laws.10
The SEC oversees federal securities laws11 broadly aimed at (1) protecting investors; (2)
maintaining fair, orderly, and efficient markets; and (3) facilitating capital formation.12 The SEC
has broad regulatory authority over significant parts of the securities industry, including stock
exchanges, mutual funds, investment advisers, brokerage firms, as well as securities self-
regulatory organizations (SROs).
Besides regulating market participants, the SEC plays an important role in the regulation of other
regulatory bodies, such as the Financial Industry Regulatory Authority, Inc. (FINRA), which is a
SRO13 registered with the SEC as a national securities association, the Municipal Securities
Rulemaking Board (MSRB), the Securities Investor Protection Corporation, the Public Company
Accounting Oversight Board, and the Financial Accounting Standards Board. With regard to
broader marketplace regulation, the SEC coordinates with the Commodity Futures Trading
Commission (CFTC), a separate federal financial regulator overseeing derivatives and
commodities markets, regarding issues involving securities-based derivatives.14
Florida Regulation of Securities
The federal securities acts expressly allow for concurrent state regulation under blue sky laws,15
which are designed to protect investors against fraudulent sales practices and activities. Most
6
17 C.F.R. s. 230.504.
7
17 C.F.R. s. 227.100. Florida’s intrastate crowdfunding law, s. 517.0611, F.S., has not been updated since it was created to
reflect to reflect the increase in the maximum offering from one million dollars to five million dollars.
8
17 C.F.R. s. 230.147 and 17 C.F.R. s. 230.147A
9
17 C.F.R. s. 230.251, et seq.
10
Public Law 73-291, as amended through P.L. 117-328, enacted December 29, 2022.
11
Section 15, Securities and Exchange Act of 1934.
12
The SEC, What We Do, https://www.sec.gov/about/what-we-do (last visited April 12, 2023).
13
National securities exchanges (e.g., the New York Stock Exchange) and clearing and settlement systems may register as
self-regulatory organizations (SROs) with the SEC or Commodities Futures Trading Commission (CFTC), making them
subject to the SEC or the CFTC oversight. The SEC maintains a list of registered SROs. available at
https://www.sec.gov/rules/sro.shtml (last visited April 12, 2023).
14
The CFTC, The Commission, https://www.cftc.gov/About/AboutTheCommission (last visited April 12, 2023).
15
The term “blue sky” derives from the characterization of baseless and broad speculative investment schemes, which such
laws targeted. Cornell Law School, Blue Sky Laws,
BILL: CS/SB 180 Page 4
state laws typically require companies making offerings of securities to register their offerings
before they can be sold in a particular state, unless a specific state exemption is available. The
laws also license brokerage firms, their brokers, and investment adviser representatives.16
The Office of Financial Regulation (OFR) regulates and registers the offer and sale of securities
in, to, or from Florida by firms, branch offices, and individuals associated with these firms in
accordance with the Securities and Investor Protection Act (Act).17 The Division of Securities
(Division) within the OFR is responsible for administering the Act.18
The Act prohibits dealers, associated persons, and issuers from offering or selling securities in
this state unless registered with the OFR or specifically exempted.19 Additionally, all securities
in Florida must be registered with the OFR unless they meet one of the exemptions in
ss. 517.051 or 517.061, F.S., or are federally covered (i.e., under the exclusive jurisdiction of the
SEC).
The chart below provides the category and number of registrants registered with the Division as
of December 31, 2022.20
Registrant Category Number of Registrants
Dealers 2,421
Investment Advisers 8,096
Branches 11,435
Associated Persons 361,200
Model Acts and Model Rules
Uniform Securities Act21
The Uniform Law Commission (ULC, also known as the National Conference of Commissioners
on Uniform State Laws), established in 1892, provides states with non-partisan uniform model
acts.22 In 2002, the ULC updated the Uniform Securities Act,23 which provides basic investor
https://www.law.cornell.edu/wex/blue_sky_law#:~:text=In%20the%20early%201900s%2C%20decades,schemes%20which
%20such%20laws%20targeted (last visited April 12, 2023).
16
U.S. Securities and Exchange Commission, Blue Sky Laws, http://www.sec.gov/answers/bluesky.htm (last visited
Mar. 1, 2023).
17
Pursuant to s. 20.121(3)(a), F.S., the Financial Services Commission (commission), comprised of the Governor and
Cabinet, serves as the Office of Financial Regulation’s (OFR) agency head for purposes of rulemaking and appoints the
OFR’s commissioner, who serves as the agency head for purposes of final agency action for all areas within the OFR’s
regulatory authority.
18
Chapter 517, F.S.
19
Section 517.12, F.S.
20
Office of Financial Regulation, Senate Bill 180 Agency Legislative Bill Analysis (Jan. 25, 2023) (on file with Senate
Committee on Banking and Insurance).
21
Uniform Law Commission (ULC), Securities Act, https://www.uniformlaws.org/committees/community-
home?CommunityKey=8c3c2581-0fea-4e91-8a50-27eee58da1cf (last visited April 12, 2023).
22
The ULC, About Us, https://www.uniformlaws.org/aboutulc/overview (last visited April 12, 2023).
23
National Conference of Commissioners on Uniform State Laws, Uniform Securities Act, Approved by the American Bar
Association (Feb. 10, 2003), https://higherlogicdownload.s3-external-1.amazonaws.com/UNIFORMLAWS/2540665f-9320-
6d13-dda3-
BILL: CS/SB 180 Page 5
protection from securities fraud, complementing the federal Securities and Exchange Act, and
only applies to securities not regulated by the SEC.
Model Rule to Require Continuing Education by Investment Adviser Representatives
The North American Securities Administrators Association (NASAA) is a voluntary,
international, association whose membership consists of 67 state, provincial, and territorial
securities administrators in the 50 states, Puerto Rico, the District of Columbia, the U.S. Virgin
Islands, Canada and Mexico.24 The NASAA advocates on behalf of state securities agencies in
North America that are responsible for capital formation and investor protection.25 The NASAA
also coordinates training and education seminars for securities agency staff26 and creates model
rules for implementation amongst its members.27
In 2020, the North American Securities Administrators Association (NASAA) approved the
Model Rule to Require Continuing Education by Investment Adviser Representatives (Model
Rule).28 Twelve states have adopted the Model Rule.29 The Model Rule establishes parameters
for NASAA members to implement continuing education programs for investment adviser
representatives (IAR). The Model Rule incorporates a product and practices component and an
ethics component and is compatible with other continuing education programs.30
Under the Model Rule, IARs are responsible for ensuring completed continuing education credits
are reported to FINRA, the NASAA’s vendor for program tracking.31 The NASAA has instituted
a three dollar course reporting fee per credit hour.32 Individual course costs will vary depending
upon the course and provider selected.
Chapter 517 Task Force of The Florida Bar Business Law Section
In 2022, the Business Law Section of The Florida Bar created the Chapter 517 Task Force. The
Task Force is tasked with reviewing and making legislative recommendations to ch. 517, F.S. In
particular, the Task Force’s mission is to review Florida’s securities laws and to propose a
f31c7eac656d_file.pdf?AWSAccessKeyId=AKIAVRDO7IEREB57R7MT&Expires=1681304682&Signature=nr4k5xSDIA
%2BX9mu%2BBDpKuSJZvbQ%3D (last visited April 12, 2023).
24
North American Securities Administrators Association (NASAA), Welcome to NASAA, https://www.nasaa.org/about-us/
(last visited April 12, 2023).
25
Id.
26
Id.
27
NASAA Model Rule on Investment Adviser Representative Continuing Education, Model Rule 2002-411(h) or 1956-
204(b)(6)-CE (adopted November 24, 2020), available at https://www.nasaa.org/wp-content/uploads/2020/10/NASAA-IAR-
CE-Model-Rule.pdf (last visited April 12, 2023).
28
Id.
29
Arkansas, Colorado, Kentucky, Maryland, Michigan, Mississippi, Oklahoma, Oregon, South Carolina, Vermont,
Wisconsin, and the District of Columbia; NASAA, Jurisdictions, https://www.nasaa.org/industry-resources/investment-
advisers/investment-adviser-representative-continuing-education/iar-ce-map/ (last visited April 12, 2023).
30
NASSA, Frequently Asked Questions: Investment Adviser Representative Continuing Education,
https://www.nasaa.org/industry-resources/investment-advisers/resources/iar-ce-faq/ (last visited April 12, 2023).
31
Frequently Asked Questions: Investment Adviser Representative Continuing Education, General, Is there a reporting fee?
https://www.nasaa.org/industry-resources/investment-advisers/resources/iar-ce-faq/ (last visited April 12, 2023).
32
Frequently Asked Questions: Investment Adviser Representative Continuing Education, General, Who Reports Course
Completion? https://www.nasaa.org/industry-resources/investment-advisers/resources/iar-ce-faq/ (last visited April 12,
2023). The IAR continuing education reporting fee is also referred to as the roster fee.
BILL: CS/SB 180 Page 6
revision with the purpose of bringing Chapter 517 in line with the Uniform Securities Act and
address current issues presented by the existing statutes.
III. Effect of Proposed Changes:
Section 1 reorders and amends s. 517.021, F.S., to revise the following definitions:
“Accredited investor” is currently defined each time it is used throughout ch. 517, F.S. The
purpose of the change is to eliminate redundancy and maintain consistency. Subsection (1)
directs the Financial Services Commission to define by rule the definition of “accredited
investor” in accordance with the Securities and Exchange Commission Rule 501,
17 C.F.R. s. 230.501;
“Associated person” is clarified to define what “associated person” means as the term relates
to a dealer or to an investment