RIA Compliance Blog
The Florida Legislature has recently passed a law which imposes harsher penalties for those who sell unregistered securities. The bill, HB 777, was signed into law by Governor Rick Scott on April 6, 2012. The bill will take effect July 1, 2012. As a result, the lowest permissible sentence for violations is increased.
The bill provides that all those who do not register securities offerings with the state’s Office of Financial Regulation may be charged with a third-degree felony at a higher level than previously allowed. A third-degree felony in the state of Florida carries up to a five year prison sentence. Broker-dealers, appointed persons, and issuers of securities who do not register with the Office of Financial Regulation are also subject to the same penalty.
Previously, unregistered securities have been a third-degree felony, but their levels have changed. Failure to register securities previously was a level 2 offense carrying 10 sentencing points, but it increased to a Level 4 offense which equates to 22 sentencing points. Failure of dealers, associated person, or issuers of securities to register previously was a level 1 offense which equates to 4 sentencing points and now it is changed to be a level 4 offense. A defendant’s sentence is calculated using the points, and it includes both the defendant’s prior record and other aggravating factors. If the total sentence points equals or is less than 44 points, the lowest permissible jail sentence is in county jail. If it exceeds 44 points then the sentence must be served in a state prison. Florida uses a statutory calculation to determine the minimum prison sentence when the sentence points equal more than 44. In addition, there may be a fine imposed of up to $5,000.
The bill passed both the Florida House and Senate unanimously with a 114-0 vote in the House and 40-0 vote in the Senate. It was sponsored by two Republicans, Rep. Eric Eisnaugle of Orlando and Sen. Joe Negron of Stuart. The former Commissioner of the Office of Financial Regulation, Tom Grady, said, “This bill will help build trust by enhancing penalties for people who sell unregistered securities or who fail to register as securities brokers and dealers.”
Parker MacIntyre provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds and issuers of securities, among others. Our regulatory practice group assists financial service providers with the complex issues that arise in the course of their businesses, including compliance with federal and state laws and rules.