6134685, 69W-600.013 - Florida Administrative Rules, Law, Code, Register

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Florida Department of State and Division of Library and Information Services

Notice: 6134685

Notice of Proposed Rule

Department:

DEPARTMENT OF FINANCIAL SERVICES

Division:

Securities

Chapter:

REGISTRATION OF DEALERS, INVESTMENT ADVISERS, ASSOCIATED PERSONS

Overview

RULE:

69W-600.013	Prohibited Business Practices for Dealers and Their Associated Persons
69W-600.0131	Prohibited Business Practices for Investment Advisers and Their Associated Persons
69W-600.0133	Use of Senior - Specific Certifications or Senior-Specific Professional Designations by Associated Persons and Investment Advisers

PURPOSE:

The use of a designation or a certification by associated persons or investment advisers confers an impression with senior citizens or retirees that the associated person or investment adviser has special qualifications or specialized education in particular areas of finance, financial planning, estate planning, or investing. The requirements to obtain designations and certifications vary greatly, as can the processes for monitoring compliance with a code of conduct or ethics, if any, adopted by the organization which awards the designation or certification. Investors often have insufficient information about the designation or certification when trying to determine which designation or certification represents meaningful educational achievement by the salesperson, or which designation or certification merely represents a marketing tool. This problem has been particularly pronounced in the area of so-called “senior designations.” Certain segments of the financial services industry have aggressively used designations and certifications that incorrectly imply expertise in the financial needs of seniors. Such aggressive use often results in unsuitable investments being sold to unsuspecting seniors by apparent “experts” who are little more than salespersons with little or no expertise in the individual, specific needs of the senior client or understanding of the product that they are selling. To address this issue, the National Association of Securities Administrators (NASAA) formed a task force to study this issue and develop a model rule for state regulators. The proposed rules adopt the model rule recommended by NASAA.

SUMMARY:

The proposed rules prohibit the misleading use by any person of senior and retiree designations while also providing a means by which the Office may recognize the use of certain designations which have been accredited. Rule 69W-600.0133, F.A.C., is being proposed to prohibit the use of a senior specific certification or designation in connection with the offer, sale or purchase of securities or the provision of advice as the advisability of investing in, purchasing or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a dishonest and unethical practice in the securities business in violation of Section 517.161(1)(d) or 517.161(1)(h), Florida Statutes. The Rule provides examples of misleading designations, including use of certifications unearned, nonexistent or self-conferred titles and use of titles that imply a certification or designation the person does not have. Also included in paragraph (1)(d) of the Rule with this category are use of certifications or designations from an organizations that: 1) is primarily engaged in the business of instruction in sales and /or marketing; 2) does not have reasonable standards or procedures for assuring the competency of its designees or certificants; 3) does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or 4) does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certification. In subsection (2) of the Proposed Rule, a rebuttable presumption is created that organizations accredited by the American National Standards Institute, National Commission for Certifying Agencies or any Organization on the U.S. Department of Education list entitled “Accrediting Agencies Recognized for Title IX Purposes” will not be disqualified under the terms of subparagraphs (1)(d)1. through 4. In determining whether words constitute a certification or professional designation indicating or implying a special expertise in advising or servicing senior citizens, use of the words such as “senior,” “elder,” “retirement,” combined with such words such as “certified,” “registered,” “chartered,” and like words will be considered. See text of Rule for complete index. Job titles within an organization are excluded. This Rule is based on the National Association of Securities Administrators Association (NASAA) Model Rule adopted March 20, 2008. Rule 69W-600.013 and Rule 69W-600.0131, F.A.C., are amended to add conforming amendments that provide that any unethical practice pursuant to Rule 69W-600.0133, F.A.C., shall constitute a demonstration of unworthiness by the dealers and their associated persons per Rule 69W-600.013, F.A.C., and investment advisers and their associated persons per Rule 69W-600.0131, F.A.C.

RULEMAKING AUTHORITY:

517.03(1), 517.1215(2), 517.1217 FS.

LAW:

517.081, 517.12, 517.1215, 517.1217, 517.161 FS.

PRINT PUBLISH DATE:

9/26/2008 Vol. 34/39

COMMENTS:

From 9/26/2008 To 10/17/2008 (21 Days)
The public comment period for this notice has already expired.

REFERENCE MATERIALS:

No reference(s).

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