A hallmark of Florida's notoriously strict regulation of investment professionsmay soon be no more. Florida is one of only eight jurisdictions in the UnitedStates that require securities broker-dealers and investment advisers to obtainapproval of the state securities regulator before conducting business from a newbranch office in the state. Moreover, Florida is unique in providing investors aright to rescind otherwise lawful purchases of securities made through anunlicensed branch office. Class-action lawsuits on behalf of investors so"injured" are a bane for the national securities industry, which often expandsinto Florida unaware of the unusual law.
The Legislature gave the industry some relief in 2000 by taking away theright of rescission for securities purchases deemed unlawful only because theannual license for the branch office had not been renewed. This year a coalitionlead by the Financial Services Institute and including the Florida SecuritiesDealers Association and the Securities Industry and Financial MarketsAssociation pushed for further reform. With passage by the Florida House ofRepresentatives this week of CS/HB 783, Florida may join the majority of jurisdictions thatdo not empower the regulator to disapprove new branch offices.
Should the bill become law, which now requires Senate passage and theGovernor's approval, securities dealers and investment advisers required toregister their Florida business locations would need only notify the FloridaOffice of Financial Regulation of the expansion.