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/CS/SB 532
INTRODUCER: Fiscal Policy Committee; Banking and Insurance Committee and Senator Brodeur
SUBJECT: Securities
DATE: February 16, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Johnson Knudson BI Fav/CS
2. Sanders Betta AEG Favorable
3. Johnson Yeatman FP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 532 substantially revises ch. 517, F.S., the “Securities and Investor Protection Act”
(Act). The Office of Financial Regulation (OFR) is responsible for administering the provisions
of this chapter. The bill is based on the recommendations contained in the report issued by the
Chapter 517 Task Force of the Business Law Section of The Florida Bar in coordination with the
OFR.1 The impetus for the task force is to increase the ability of small and developing Florida
businesses to raise capital, while at the same time assuring and improving investor protections
and enforcement measures to guard against abuse.2 Since ch. 517, F.S., has not been substantially
updated in many years, the bill also incorporates many small business financing provisions
consistent with recently adopted federal rules or legislation adopted in other states. The bill
includes the following changes:
Investor Protections
 Revises eligibility and recovery provisions relating to the Securities Guaranty Fund (Fund),
which was created to provide relief to victims of securities violations under ch. 517, F.S.,
who are entitled to monetary damages or restitution but cannot recover the full amount of
such damages or restitution from the wrongdoer;
1
Report of the Chapter 517 Task Force of the Business Law Section of The Florida Bar, Recommendations and Analysis of
Proposed Amendments to the Florida Securities and Investor Protection Act (Nov. 2023). The report is on file with the
Florida Senate Committee on Banking and Insurance staff.
2
Id.
BILL: CS/CS/SB 532 Page 2
o The bill removes a requirement that an investor who has received a final judgement that
is unsatisfied must make searches and inquires to ascertain the assets of the judgment
debtor, which may result in delays. Further, the bill removes a two-year waiting period
for payment;
 The bill increases the amount an eligible person may recover from the Fund from
$10,000 to $15,000, adds an exception allowing recovery of up to $25,000 if the
person is a specified vulnerable or older adult, and increasing the aggregate limit on
claims from $100,000 to $250,000;
 Eliminates a registration exemption for short-term notes of $25,000 or more, which have a
maturity date of nine months or less. This type of offering is often the subject of abusive
efforts by persons trying to evade registration requirements through the issuance of short-
term notes to non-accredited investors. There is no comparable provision in the Uniform
Securities Act and currently such notes cannot be sold under federal exemptions that preempt
state registration;
 Excludes certain industrial revenue bonds and commercial development bonds issued by the
United States or a state or local government from a registration exemption unless the bonds
are guaranteed by a publicly traded entity. This exclusion is based on the increased risk to
investors under such bonds, which depend upon revenue streams for their funding; and
 Requires a person who has six or more clients, rather than 15 or more clients, to register with
the OFR as an investment adviser.
Access to Capital Formation and Investment Options
 Revises the regulatory provisions relating to the intrastate crowdfunding exemption. These
changes include increasing the maximum offering limit from one million to five million
dollars, which is consistent with the federal crowdfunding rules and reducing the technical
and regulatory requirements for issuers;
 Creates the “Florida Invest Local Exemption,” a micro-offering exemption that allows an
issuer to offer up to $500,000 in securities to residents of Florida in reliance upon the
exemption. An issuer may not accept more than $10,000 from any single purchaser, unless
the purchaser is an accredited investor or other specified group, for which there are no sale
limits. The issuer may engage in general advertising and general solicitation of the offering;
 Revises the limited offering exemption to require a disclosure regarding a purchaser’s right
of void the transaction within three days from the date of purchase, and to allow additional
eligible purchasers that would be excluded for purposes of the 35 purchaser limit, consistent
with the Securities and Exchange Commission rules; and
 Creates an exemption for a nonissuer transaction with a federal covered adviser managing
investments in excess of $100 million, which is consistent with the provisions of the Uniform
Securities Act.
Modernization of Chapter 517, F.S.
 Adopts provisions consistent with federal rules that allow issuers to have greater access to
potential investors through “demo-day” presentations and the pre-offering “testing the
waters” solicitations and communications, which allows an issuer to determine whether there
is any interest in a contemplated offering of exempt securities prior to incurring the expense
of preparing and conducting an offering;
BILL: CS/CS/SB 532 Page 3
 Eliminates the requirement that issuers of simplified securities offerings that use the Small
Company Offering Registration (SCOR) must submit annual financial reports for five years;
 Adopts provisions consistent with the integration of offering federal rule that provides offers
and sales of securities will not be integrated if, based on the particular facts and
circumstances, the issuer can establish each offering either complies with the registration
requirements of the Securities Act of 1933, or that an exemption from registration is
available for the particular offering;
 Adopts an exemption for accredited investors, which is consistent with the North American
Securities Administrators Association accredited investor exemption model. The provision
exempts offers and sales from registration if the offers and sales are made only to persons in
Florida who are, or the issuer reasonably believes are, accredited investors. This exemption is
an important option for small businesses attempting to raise capital; and
 Clarifies, consolidates, and reorganizes provisions within ch. 517, F.S., and adopts provisions
consistent with the Uniform Securities Act.
State Enforcement Authority
 Increases the amount of civil penalties the OFR may petition the court to impose against a
defendant and authorizes the imposition of a civil penalty of twice the amount that would
otherwise be imposed if a specified adult is the victim of a violation of ch. 517, F.S.
 Establishes joint and several liability for any control person who is found to have violated
any provision of the Act;
 Provides a person who knowingly and recklessly provides substantial assistance to another
person in violation of a provision of the Act is deemed to violate the provision to the same
extent as the person to whom such assistance was provided;
 Allows the OFR to issue and serve upon a person a cease and desist order if the OFR has
reason to believe the person violates any provision of the Act, as well as an emergency cease
and desist order under certain circumstances; and
 Grants the OFR the authority to impose and collect an administrative fine against any person
found to have violated any provision of the Act, which must also be deposited into the Anti-
Fraud Trust Fund.
The bill has an indeterminate impact on state revenues and expenditures. See Section V. Fiscal
Impact Statement below.
II. Present Situation:
Federal Regulation of Securities
Securities Act of 1933
Following the stock market crash of 1929, the Securities Act of 19333 (Act of 1933) was enacted
to regulate the offers and sales of securities. The Act of 1933 requires every offer and sale of
securities be registered with the Securities and Exchange Commission (SEC), unless an
exemption from registration is available. The Act of 1933 requires issuers to disclose financial
and other significant information regarding securities offered for public sale and prohibits deceit,
3
Public Law 73-22, as amended through P.L. 117-268, enacted December 23, 2022.
BILL: CS/CS/SB 532 Page 4
misrepresentations, and other kinds of fraud in the sale of securities. The Act of 1933 requires
issuers to disclose information deemed relevant to investors as part of the mandatory SEC
registration of the securities that those companies offer for sale to the public.4
Registered securities offerings, often called public offerings, are available to all types of
investors and have more rigorous disclosure requirements. Initial public offerings (IPOs) provide
an initial pathway for companies to raise unlimited capital from the general public through a
registered offering. After its IPO, the company will be a public company with ongoing public
reporting requirements.5
By contrast, securities offerings that are exempt from 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 offerings6 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;7
 Rule 506(c) of Regulation D. General Solicitation Offerings allow companies to raise
unlimited capital by broadly soliciting investors who meet certain wealth thresholds or have
certain professional credentials;8
 Rule 504 of Regulation D, 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;9
 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;10
 Intrastate offerings11 allow companies to raise capital within a single state according to state
law. Many states limit the offering to between one million and five million dollars in a 12-
month period; and12
 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.13
4
Id.
5
U.S. Securities and Exchange Commission (SEC), What does it mean to be a public company?
https://www.sec.gov/education/capitalraising/building-blocks/what-does-it-mean-be-a-public-company (last visited Jan. 28,
2024).
6
SEC, The Laws That Govern the Securities Industry, https://www.sec.gov/about/about-securities-laws (last visited Jan. 28,
2024). Security offerings of municipal, state, and the federal government are exempt from registration.
7
17 C.F.R. s. 230.506(b).
8
17 C.F.R. s. 230.506(c).
9
17 C.F.R. s. 230.504.
10
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 to five million dollars pursuant to federal rules.
11
Section (3)(a)(11) of the Securities Act of 1933, 17 C.F.R. s. 230.147 and 17 C.F.R. s. 230.147A
12
SEC, 17 CFR Parts 227, 229, 230, 239, 249, 270 and 274; RIN-3235-AM27, Final rule: Facilitating Capital Formation and
Expanding Investment Opportunities by Improving Access to Capital in Private Markets,
https://www.sec.gov/files/rules/final/2020/33-10884.pdf (last visited Jan. 28, 2024).
13
17 C.F.R. s. 230.251.
BILL: CS/CS/SB 532 Page 5
Securities and Exchange Act of 1934
The Securities and Exchange Act of 1934 created the SEC as an independent agency to enforce
federal securities laws.14 The SEC oversees federal securities laws15 broadly aimed at protecting
investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. 16
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), such as the Financial Industry Regulatory
Authority, Inc. (FINRA).17
Federal Crowdfunding Regulations
The Jumpstart Our Business Startups Act (the “JOBS Act”),18 establishes a regulatory structure
for startups and small businesses to raise capital through exempt crowdfunded securities
offerings using a funding portal.19 Title III of the JOBS Act created a new registration exemption
from federal securities law to permit the issuance, offer, and sale of up to one million dollars of
crowdfunding securities per year initially, subject to specified requirements for issuers and
intermediaries, and is not limited to accredited investors. However, national or interstate equity
crowdfunding under Title III was not permitted until the SEC implemented Title III by final rule,
which was not completed until November 16, 2015.20 In response to the delay, a number of
states, including Florida, enacted intrastate crowdfunding exemptions, which combine some
elements of Title III of JOBS with s. 3(a)(11) of the Securities Act of 1933.
The final rule, Regulation Crowdfunding,21 implements the interstate crowdfunding provisions of
the JOBS Act. The regulations permit individuals to invest in securities-based crowdfunding
transactions subject to certain thresholds, limits the amount of money an issuer can raise under
the crowdfunding exemption at five million dollars, requires issuers to disclose certain
information about their offers, and creates a regulatory framework for the intermediaries that
facilitate the crowdfunding transactions. Transactions must be conducted through an
intermediary registered as either a broker-dealer or a “funding portal.”22 The rules require
intermediaries to:
 Provide investors with educational materials;
 Take measures to reduce the risk of fraud;
 Make available information about the issuer and the offering;
 Provide communication channels to permit discussions about offerings on the platform; and
 Facilitate the offer and sale of crowdfunded securities.23
14
Public Law 73-291, as amended through P.L. 117-328, enacted December 29, 2022.
15
Section 15, Securities and Exchange Act of 1934.
16
Securities and Exchange Commission, Mission, https://www.sec.gov/about/mission (last visited Jan. 28, 2024).
17
National securities exchanges (e.g., the New York Stock Exchange) and clearing and settlement systems may register as
SROs with the SEC or CFTC, making them subject to SEC or CFTC oversight. See https://www.sec.gov/rules/sro for a list of
self-regulatory organizations (SROs) registered with the SEC (last visited Jan. 28, 2024).
18
Pub. L. 112-106, 126 Stat. 306 (2012).
19
Title III of the JOBS Act (“Title III”) added new Securities Act Section 4(a)(6), which provides an exemption from the
registration requirements of Securities Act Section 5. 15 U.S.C. 77e.
20
80 FR 71387.
21
17 CFR Part 200.
22
17 CFR Part 227.
23
Id.
BILL: CS/CS/SB 532 Page 6
In addition, Regulation Crowdfunding limits the amount a non-accredited, individual investor is
allowed to invest in Regulat