Securities Update: Florida Allows Notice Filing for Branch Offices

Under a new law aggressively advocated by the Florida Securities Dealers Association (“FSDA”) and Financial Services Institute (“FSI”) Florida recently streamlined its regulation of securities broker-dealers and state-covered investment advisers. Specifically, Florida will no longer require broker-dealers and investment advisers to obtain regulatory approval before conducting business from a new branch office in the state. On June 14, 2013, Governor Scott signed into law CS/HB 783 (See Ch. 2013-202, Laws of Fla.), which effectively strips the Office of Financial Regulation (“OFR”) of its authority to deny registration of branch offices.

Under previous regulations, Florida required securities broker-dealers and state-covered investment advisers to obtain OFR approval prior to conducting business from a new branch office in the state. Because of a quirk in the law SEC-covered investment advisers are not required to register branch offices. Effective on October 1, 2013, broker-dealers and state-covered investment advisers still must register, but can conduct business from Florida branch offices merely by filing a notice with OFR.

Florida’s branch office registration requirements are notorious not only for causing needless delay, but for creating civil liability to classes of customers who have purchased securities from unregistered Florida branch offices. The new law does not change this. It remains unlawful to conduct business from a branch office that has not been notice-filed. Nor does the new law clarify the definition of “branch office” that determines when the filing must be made.

For more information about securities broker-dealer or investment adviser regulation, please contact Michael Underwood or Ashley Bruce Trehan.