In addition to federal securities laws, there are also state securities laws, generally referred to as “blue sky laws.” Like federal laws, blue sky laws provide for registration of brokers and dealers, require information to be made available about securities open for trading, and also mandate penalties for fraudulent or deceptive practices.
The Florida securities laws are administered by the Florida Department of Banking and Finance and are codified in Florida Statutes Chapter 517, otherwise known as the Florida Securities Act.
Violation of state securities laws can result in cease and desist orders, administrative and civil fines, and, if the violation involves in excess of $50,000 from five or more individuals, criminal felony penalties. There are several provisions of the Florida Securities Act which are significant.
Registration of Securities
Sale of securities, unless exempt, is unlawful unless the securities are properly registered. The Florida Department of Banking and Finance oversees the registration process. Registration may be denied or revoked if the terms of the offer or sale are not “fair, just or equitable.” Registration typically requires filing a written application detailing information regarding the issuer of the securities and any other amendments or applications requested by the Department. Often, the Department requires that the issuer provide supplemental statements, exhibits, and documents within 30 days of the effective registration. In Florida , except for issuer dealers and primary governmental securities dealers, issuers also are required to register with the federal SEC.
Issuers of securities always must provide prospective investors with a copy of the current prospectus prior to consummating a sale of securities. The prospectus must detail the business dealings and identify whether the issuers do business with anyone in Cuba or the Cuban government. Certain ventures in gas, oil, petroleum, or mineral titles or leases will not be allowed. All real estate securities registrations must have specific provisions in the declaration of trust and have an offering price not to exceed the established market price.
The State of Florida requires a nonrefundable registration fee of $1,000 per application. Investment companies are charged a filing fee of $1,000. National Association of Securities Dealers (n/k/a FINRA) broker-dealers and financial advisors must file licensing applications with the Department of Securities and Investor Protection and pay related annual assessment fees. Significantly, if a financial advisor is not registered in the State of Florida , he or she cannot sell securities to residents of the State.
The Florida Securities Act does provide for attorneys’ fees to the prevailing party. Specifically, Fla. Stat. Section 517.211(6), provides, “[i]n any action brought under this section, including an appeal, the court shall award reasonable attorneys’ fees to the prevailing party unless the court finds that the award of such fees would be unjust.” Although the Florida Securities Act does provide for attorney’s fees to the prevailing party, for an investor bringing a claim against his/her brokerage firm, this application is not without its risks as the Florida Securities Act can also be used by the brokerage firm to get an award of attorney’s fee against the investor if it is able to prevail (i.e. if the investor is unable to prove that the brokerage firm has committed some form of securities fraud covered by the statute, the brokerage firm may be entitled to its attorneys’ fees in defending against the investor’s claim).
Often the best result possible for an investor is to have the sale or purchase of the security or securities rescinded. The Florida Securities Act does provide for such a remedy. Specifically, Florida Statute Section 517.211(1) provides that “[e]very sale made in violation of either s. 517.07 or s. 517.12(1), (4), (5), (9), (11), (13), (16), or (18) may be rescinded at the election of the purchaser….”
Pursuant to the statute, if rescission damages are awarded, a purchaser may recover the consideration paid for the security or investment, plus interest thereon at the legal rate, less the amount of any income received by the purchaser on the security or investment upon tender of the security or investment. Similarly, if it is the sale of a security that is being rescinded, a seller may recover the security upon tender of the consideration paid for the security, plus interest at the legal rate, less the amount of any income received by the defendant on the security.
Pursuant to Florida Statutes section 517.301, the falsification or concealment of certain facts related to a particular investment is fraudulent.. Specifically, section 517.301 of the Florida Securities Act provides the following:
It is unlawful for a person:
(a) In connection with the rendering of any investment advice or in connection with the offer, sale, or purchase of any investment or security, including any security exempted under the provisions of s. 517.051 and including any security sold in a transaction exempted under the provisions of s. 517.061, directly or indirectly:
1. To employ any device, scheme, or artifice to defraud;
2. To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
3. To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a person.
(b) To publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, communication, or broadcast which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received directly or indirectly from an issuer, underwriter, or dealer, or from an agent or employee of an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount of the consideration.
(c) In any matter within the jurisdiction of the office, to knowingly and willfully falsify, conceal, or cover up, by any trick, scheme, or device, a material fact, make any false, fictitious, or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false, fictitious, or fraudulent statement or entry.
If you have questions about whether the Florida Securities Act can be applied to your case, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
To learn more about The White Law Group, visit http://www.whitesecuritieslaw.com.
Tags: broker fraud, Chapter 517, FINRA, Florida Securities Act, investment losses, investor protection, NASD, SEC, securities arbitration, Securities Attorney, Securities Fraud, Securities Lawyer