Proposed Legislation Seeks to Create New Law Enforcement Powers, Stiffen Penalties for Broker/Dealers
- United States
- 01/28/2009
In the wake of several high profile securities fraud matters, including the $50 billion Ponzi scheme perpetrated by Bernard Madoff, a bill has been introduced in the Florida House of Representatives which proposes significant changes to Florida’s securities statute, the “Florida Securities and Investor Protection Act,” Chapter 517. (HB 483) The bill would give Florida’s securities regulators and other law enforcement agencies new powers, and would authorize significant new penalties on both primary actors and “control persons” for violations of Chapter 517.
Among other provisions, the bill would: (1) authorize the Florida Office of Statewide Prosecution to investigate and prosecute any criminal violations of Chapter 517; (2) authorize the Office of Financial Regulation (“OFR”) to “immediately suspend” the registration of any broker/dealer, investment advisor, or associated person who fails to comply with a request for books and records within 30 days; (3) authorize OFR to deny, revoke, restrict, or suspend the license of any broker/dealer or associated person who is the subject of an adverse arbitration award by a national dispute resolution forum; (4) authorize OFR to bar, temporarily or permanently, any person found to have violated Chapter 517, any rule or order of OFR or the Financial Services Commission, or any written agreement with OFR, from submitting an application for a license or registration; (5) eliminate the application of any statute of limitation to any enforcement actions by OFR; (6) authorize OFR to deny, revoke, restrict, or suspend the license of any “control person” of a person who has been sanctioned by OFR, including partners, members, officers, and directors of broker/dealers and investment advisors employing such persons; (7) direct OFR to establish new sanctions guidelines for violations of Chapter 517, and adopt rules containing “disqualifying periods” for licensees, determined by the severity of prior criminal convictions, ranging from five to fifteen years; (8) authorize OFR to seek restitution for victims of securities fraud, even in the absence of a receiver or administrator, and to impose civil penalties up to $50,000 for individuals and $250,000 for entities, or the gross amount of pecuniary gain for each violation of F.S. 517.301; and (9) authorize the State Attorney General to investigate and prosecute violations of Chapter 517, and to recover its costs and attorneys’ fees.
If passed by the Legislature, this bill will have serious implications for everyone conducting securities or investment advisory business in Florida.
