Officials from the Florida Office of Financial Regulation (“OFR”) met with representatives of the securities industry last month to discuss reform of regulations applicable to state-covered investment advisers. The meeting focused on several issues OFR intends to propose to the Florida Governor and Cabinet sitting as the Financial Services Commission (“Commission”). Nothing, however, is expected to occur before Florida’s general election on November 4, 2014, which will determine makeup of the Commission.

Meanwhile, registered investment advisers (“RIAs”) have joined under the leadership of Gainesville, Florida-based consultant eAdvisor Compliance, Inc. to form Investment Advisers Association of Florida, Inc. The trade association will advocate for RIAs, especially with regard to regulations enforced by OFR and the Florida Statutes those regulations implement.

Representatives of industry were told on August 13 that OFR is considering proposing the Commission initiate rulemaking for RIAs not to be treated as if they had custody of their customers’ assets and, therefore, subject to heightened regulatory requirements, as result of receiving advisory fees of more than $500 more than six months in advance.

OFR is also considering approaching the Commission about seeking amendment of Chapter 517, Florida Statutes, in the upcoming session of the Florida Legislature to give the Commission express authority to adopt rules defining net capital requirements for RIAs. Current regulations subject RIAs to federal rules specifically designed for calculation of net capital of securities broker-dealers. The regulators acknowledge this is a “square peg in a round hole issue” they need to remedy.

After the November election OFR expects to request the Commission issue a Notice of Rule Development, which would permit public discussion of regulations under the Florida “Blue Sky” law, Chapter 517, Florida Statutes. RIAs hope these discussions will include a possible revision of the rules enforced against them by OFR. The scope and timing of the Commission’s possible Notice of Rule Development, however, is unclear at this time.

Discussion of the issues leading up to the meeting of industry representatives with OFR is here. The current rules of OFR’s Division of Securities can be found here.