Sometime over the summer, broker-dealers and investment advisers will have an easier time setting up branch offices in Florida, thanks to legislation that appears likely to be enacted.
A bill that would replace the current registration process with one that grants instant approval once an application is filed has been approved by the financial committees in the Florida state House and Senate.
“We're expecting it to get out of both chambers in a few weeks and signed by the governor,” said Chris Paulitz, a spokesman for the Financial Services Institute Inc., which represents independent broker-dealers and has been working with Florida lawmakers and regulators on the bill.
Florida is one of eight jurisdictions – seven states and the U.S. Virgin Islands — that does not approve a branch office application immediately. Sixteen jurisdictions use notice filing and 29 require neither registration nor notice filing of branch offices.
Under current law, financial advisers who switch to a new company, change their office address or open a branch office in Florida have to register with Florida's Office of Financial Regulation.
The process can take five days on average for a broker and six days for an investment adviser, potentially resulting in business operations delays.
But with so many firms doing business — or wanting to do business — in Florida, the bottleneck there reverberates beyond the state's borders.
“This is a nationwide problem, even though it's based in Florida,” Mr. Paulitz said.
Under the proposed law, advisers could start conducting business the moment they submit their registration application and a $100 filing fee. The filing would have to be renewed annually.
Florida already was fairly quick in its branch-office approval process, according to Steven Thomas, director of compliance at Lexington Compliance, a division of RIA in a Box.
“I don't think it's going to make a whole lot of difference,” Mr. Thomas said. States “spend way more time on the [adviser-registration] side of it than they do on branch-office registration.”
Peter Chepucavage, general counsel at Plexus Consulting Group LLC, said that a broker-dealer or an investment adviser representative presumably already would be registered with the
Financial Industry Regulatory Authority Inc. or the Securities and Exchange Commission, so it's not as if Florida is throwing caution to the wind.
But he noted that Florida is unique in terms of the number of retirees it attracts.
“Florida is a state that is very sensitive to fraud on older people,” Mr. Chepucavage said. “If [the notice-filing legislation] constitutes a loosening up down there, that is significant.”
The bill would allow the Florida securities regulator to suspend a branch office if its filing is deficient and the adviser fails to make corrections within 30 days.
The Florida regulator originally was concerned that removing the current registration process could undermine its ability to slow down a firm's expansion if it found supervisory or other regulatory problems at the firm.
But the agency was persuaded that the consumer protections in the bills were adequate.
