Florida Regulations 69W-600.013: Prohibited Business Practices for Dealers and Their Associated Persons
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(1) The following are deemed demonstrations of unworthiness by a dealer under Section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:
(a) Extending, arranging for, or participating in arranging for credit to a customer in violation of Regulation T, Credit by Brokers and Dealers, (12 C.F.R. §§220.1 through 220.12, 220.101, 220.103, 220.105, 220.108, 220.110, 220.111, 220.113, 220.117, 220.118, 220.119, 220.121, 220.122, 220.123, 220.124, 220.127, 220.128, 220.131 and 220.132) and 12 C.F.R. § 221.125 of Regulation U. The foregoing rules are incorporated by reference in Fl. Admin. Code R. 69W-200.002
(b) Executing any transaction in a margin account without obtaining from its customer a written margin agreement prior to settlement date for the initial transaction in the account.
(c) Failing to segregate customers’ free securities or securities in safekeeping.
(d) Hypothecating a customer’s securities in violation of SEC Rule 8c-1, (17 C.F.R. § 240.8c-1), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
(e) Failing to execute a customer’s order.
(f) Executing orders for the purchase by a customer of securities not registered under Section 517.081 or 517.082, F.S., unless the securities are exempted under Florida Statutes § 517.051, or the transaction is exempted under Florida Statutes § 517.061
(g) Representing itself as a financial or investment planner, consultant, or advisers, when the representation does not fairly describe the nature of the services offered, the qualifications of the person offering the services, and the method of compensation for the services.
(h) With respect to any customer, transaction or business in this state, violating any of the following:
1. Financial Industry Regulatory Authority (FINRA) rules contained in the Rule 2000 Series (Duties and Conflicts), Rule 3000 Series (Supervision and Responsibilities Relating to Associated Persons), Rule 4000 Series (Financial and Operational Rules), Rule 5000 Series (Securities Offering and Trading Standards and Practices), Rule 6000 Series (Quotation and Transaction Reporting Facilities), Rule 7000 Series (Clearing, Transaction and Order Data Requirements, and Facility Charges), or Rule 11000 Series (Uniform Practice Code). The foregoing rules are incorporated by reference in Fl. Admin. Code R. 69W-200.002
2. For members of the New York Stock Exchange, Rule 412 or 435 of the New York Stock Exchange, which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
3. Section 2, 3, 4, 5 or 6 of the Securities Act of 1933, (15 U.S.C.A. §§77b, 77c, 77d, 77e or 77f), or SEC Rules 134, 134a, 135a, 144, 144A, 156, 419, 481 or 482, (17 C.F.R. §§230.134, 230.134a, 230.135a, 230.144, 230.144A, 230.156, 230.419, 230.481 or 230.482), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
4. Section 15(b)(4)(E) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(b)(4)(E)) or Regulation SHO (17 C.F.R. §§242.200-242.203), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
5. Section 15B of the Securities Exchange Act of 1934 (15 U.S.C. § 78o-4), or the following rules of the Municipal Securities Rulemaking Board (MSRB): MSRB Definitional Rules D-1 to D-15 and General Rules G-1 to G-48. The foregoing are incorporated by reference in Fl. Admin. Code R. 69W-200.002
6. Section 248.30 of Regulation S-P (17 C.F.R. § 248-30), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
7. To the extent that any of the rules described in subparagraphs 1. through 6. of this section or their interpretation by the FINRA, NYSE, MSRB, or SEC, as appropriate, conflict or are inconsistent with other provisions of the Florida Securities and Investor Protection Act or rules promulgated pursuant thereto, this paragraph of this rule shall not be deemed controlling.
(i) Failing to furnish to a customer purchasing securities in an offering, not later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which together include all information set forth in the final prospectus.
(j) Introducing customer transactions on a “”fully disclosed”” basis to another dealer that is not registered under Florida Statutes Chapter 517, unless the customer is a person described in Florida Statutes § 517.061(7)
(k) Recommending to a customer that the customer engage the services of an investment adviser that is not registered or exempt from registration under Florida Statutes Chapter 517, unless the customer is a person described in Florida Statutes § 517.061(7)
(l) Recommending to a customer that the customer engage the services of an investment adviser in connection with which the dealer receives a fee or remuneration (other than directed business) from the investment advise, runless the dealer is registered with the Office as an investment adviser pursuant to Fl. Admin. Code R. 69W-600.0016 or notice-filed pursuant to Fl. Admin. Code R. 69W-600.0017
(m) Selling or offering for sale any security in a transaction exempt from registration pursuant to Section 517.061(17)(a)1., F.S., where the issuer of such securities has not filed with the SEC within the specified period of time all reports required by Sections 13 or 15D of the Securities Exchange Act of 1934, (15 U.S.C. §§78m, 78o-6), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
(n) Giving false or otherwise misleading customer information to any financial institution or regulatory agency.
(o) Any unethical practice pursuant to Fl. Admin. Code R. 69W-600.0133
(p) Failing to deliver a current Form CRS to any retail investor in violation of SEC Rule 17a-14 (17 C.F.R. §240.17a-14), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
(2) The following are deemed demonstrations of unworthiness by an associated person of a dealer under section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:
(a) Borrowing money or securities from a customer, except when persons are in compliance with FINRA Rule 3240, which is incorporated by reference in Fl. Admin. Code R. 69W-200.002;
(b) Acting as a custodian for money, securities or an executed stock power of a customer;
(c) Effecting transactions in securities, or investments as defined by Florida Statutes § 517.301(2), not recorded on the regular books or records of the dealer, which the associated person represents, unless the transactions are disclosed to, and authorized in writing by, the dealer prior to execution of the transactions;
(d) Operating an account under a fictitious name, unless disclosed to the dealer, which the associated person represents;
(e) Sharing directly or indirectly in profits or losses in the account of any customer without the written authorization of the customer and the dealer, which the associated person represents;
(f) Dividing or otherwise splitting commissions, profits or other compensation in connection with the purchase or sale of securities in this state with any person not also licensed as an associated person for the same dealer, or for a dealer under direct or in indirect common control;
(g) Failing to furnish to each offeree of a Small Corporate Offering Registration (SCOR) a copy of the “”Florida Guide to Small Business Investments,”” OFR-S-13-97, effective 11-22-10, which is hereby incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-11278; and
(h) Engaging in any of the practices specified in paragraph (1)(a), (b), (e), (f), (g), (h), (i), (k), (l), (m), (n) or (o).
Rulemaking Authority 517.03(1), 517.1217 FS. Law Implemented 517.081, 517.1217, 517.161(1) FS. History-New 12-5-79, Amended 9-20-82, Formerly 3E-600.13, Amended 8-1-91, 6-16-92, 1-11-93, 11-7-93, 5-5-94, 9-9-96, 10-20-97, 1-25-00, 10-30-03, Formerly 3E-600.013, Amended 10-23-06, 1-18-09, 11-22-10, 9-22-14, 11-15-16, 11-26-19, 1-18-21.
Terms Used In Florida Regulations 69W-600.013
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(b) Executing any transaction in a margin account without obtaining from its customer a written margin agreement prior to settlement date for the initial transaction in the account.
(c) Failing to segregate customers’ free securities or securities in safekeeping.
(d) Hypothecating a customer’s securities in violation of SEC Rule 8c-1, (17 C.F.R. § 240.8c-1), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
(e) Failing to execute a customer’s order.
(f) Executing orders for the purchase by a customer of securities not registered under Section 517.081 or 517.082, F.S., unless the securities are exempted under Florida Statutes § 517.051, or the transaction is exempted under Florida Statutes § 517.061
(g) Representing itself as a financial or investment planner, consultant, or advisers, when the representation does not fairly describe the nature of the services offered, the qualifications of the person offering the services, and the method of compensation for the services.
(h) With respect to any customer, transaction or business in this state, violating any of the following:
1. Financial Industry Regulatory Authority (FINRA) rules contained in the Rule 2000 Series (Duties and Conflicts), Rule 3000 Series (Supervision and Responsibilities Relating to Associated Persons), Rule 4000 Series (Financial and Operational Rules), Rule 5000 Series (Securities Offering and Trading Standards and Practices), Rule 6000 Series (Quotation and Transaction Reporting Facilities), Rule 7000 Series (Clearing, Transaction and Order Data Requirements, and Facility Charges), or Rule 11000 Series (Uniform Practice Code). The foregoing rules are incorporated by reference in Fl. Admin. Code R. 69W-200.002
2. For members of the New York Stock Exchange, Rule 412 or 435 of the New York Stock Exchange, which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
3. Section 2, 3, 4, 5 or 6 of the Securities Act of 1933, (15 U.S.C.A. §§77b, 77c, 77d, 77e or 77f), or SEC Rules 134, 134a, 135a, 144, 144A, 156, 419, 481 or 482, (17 C.F.R. §§230.134, 230.134a, 230.135a, 230.144, 230.144A, 230.156, 230.419, 230.481 or 230.482), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
4. Section 15(b)(4)(E) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(b)(4)(E)) or Regulation SHO (17 C.F.R. §§242.200-242.203), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
5. Section 15B of the Securities Exchange Act of 1934 (15 U.S.C. § 78o-4), or the following rules of the Municipal Securities Rulemaking Board (MSRB): MSRB Definitional Rules D-1 to D-15 and General Rules G-1 to G-48. The foregoing are incorporated by reference in Fl. Admin. Code R. 69W-200.002
6. Section 248.30 of Regulation S-P (17 C.F.R. § 248-30), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
7. To the extent that any of the rules described in subparagraphs 1. through 6. of this section or their interpretation by the FINRA, NYSE, MSRB, or SEC, as appropriate, conflict or are inconsistent with other provisions of the Florida Securities and Investor Protection Act or rules promulgated pursuant thereto, this paragraph of this rule shall not be deemed controlling.
(i) Failing to furnish to a customer purchasing securities in an offering, not later than the date of confirmation of the transaction, either a final prospectus or a preliminary prospectus and an additional document, which together include all information set forth in the final prospectus.
(j) Introducing customer transactions on a “”fully disclosed”” basis to another dealer that is not registered under Florida Statutes Chapter 517, unless the customer is a person described in Florida Statutes § 517.061(7)
(k) Recommending to a customer that the customer engage the services of an investment adviser that is not registered or exempt from registration under Florida Statutes Chapter 517, unless the customer is a person described in Florida Statutes § 517.061(7)
(l) Recommending to a customer that the customer engage the services of an investment adviser in connection with which the dealer receives a fee or remuneration (other than directed business) from the investment advise, runless the dealer is registered with the Office as an investment adviser pursuant to Fl. Admin. Code R. 69W-600.0016 or notice-filed pursuant to Fl. Admin. Code R. 69W-600.0017
(m) Selling or offering for sale any security in a transaction exempt from registration pursuant to Section 517.061(17)(a)1., F.S., where the issuer of such securities has not filed with the SEC within the specified period of time all reports required by Sections 13 or 15D of the Securities Exchange Act of 1934, (15 U.S.C. §§78m, 78o-6), which are incorporated by reference in Fl. Admin. Code R. 69W-200.002
(n) Giving false or otherwise misleading customer information to any financial institution or regulatory agency.
(o) Any unethical practice pursuant to Fl. Admin. Code R. 69W-600.0133
(p) Failing to deliver a current Form CRS to any retail investor in violation of SEC Rule 17a-14 (17 C.F.R. §240.17a-14), which is incorporated by reference in Fl. Admin. Code R. 69W-200.002
(2) The following are deemed demonstrations of unworthiness by an associated person of a dealer under section 517.161(1)(h), F.S., without limiting that term to the practices specified herein:
(a) Borrowing money or securities from a customer, except when persons are in compliance with FINRA Rule 3240, which is incorporated by reference in Fl. Admin. Code R. 69W-200.002;
(b) Acting as a custodian for money, securities or an executed stock power of a customer;
(c) Effecting transactions in securities, or investments as defined by Florida Statutes § 517.301(2), not recorded on the regular books or records of the dealer, which the associated person represents, unless the transactions are disclosed to, and authorized in writing by, the dealer prior to execution of the transactions;
(d) Operating an account under a fictitious name, unless disclosed to the dealer, which the associated person represents;
(e) Sharing directly or indirectly in profits or losses in the account of any customer without the written authorization of the customer and the dealer, which the associated person represents;
(f) Dividing or otherwise splitting commissions, profits or other compensation in connection with the purchase or sale of securities in this state with any person not also licensed as an associated person for the same dealer, or for a dealer under direct or in indirect common control;
(g) Failing to furnish to each offeree of a Small Corporate Offering Registration (SCOR) a copy of the “”Florida Guide to Small Business Investments,”” OFR-S-13-97, effective 11-22-10, which is hereby incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-11278; and
(h) Engaging in any of the practices specified in paragraph (1)(a), (b), (e), (f), (g), (h), (i), (k), (l), (m), (n) or (o).
Rulemaking Authority 517.03(1), 517.1217 FS. Law Implemented 517.081, 517.1217, 517.161(1) FS. History-New 12-5-79, Amended 9-20-82, Formerly 3E-600.13, Amended 8-1-91, 6-16-92, 1-11-93, 11-7-93, 5-5-94, 9-9-96, 10-20-97, 1-25-00, 10-30-03, Formerly 3E-600.013, Amended 10-23-06, 1-18-09, 11-22-10, 9-22-14, 11-15-16, 11-26-19, 1-18-21.