Financial Institutions Law Alert

For the third time in as many years, the Florida Legislature is considering adding a provision to Chapter 517 of the Florida Statutes, the Florida Securities and Investor Act,  which is designed to protect vulnerable investors, including persons who are more than 65 years old. The provision, similar to hold and report laws adopted by many other states, applies to both distributions from and transactions in the account of a vulnerable investor.

Today, as in 2018 and 2019, the Florida House of Representatives approved the legislation.  Today’s vote, unlike prior years, was unanimous, with no Representative voting against the legislation.  The proposed legislation previously had moved swiftly through two subcommittees and the Commerce Committee of the Florida House of Representatives, again without a single Representative voting against the legislation.

The legislation currently is pending before the Rules Committee of the Florida Senate and must receive approval from that committee before it goes to the full Florida Senate for a vote.  Two committees of the Florida Senate already have reviewed the proposed legislation without a single Senator voting against the legislation.   

Under the legislation, a securities dealer or investment adviser may place a hold of up to 15 business days on a transaction or distribution if it reasonably believes that financial exploitation of a vulnerable adult has occurred or been attempted, or is occurring or will be attempted.  The legislation allows the firm to extend the hold for up to 10 business days if the firm’s review continues to support the hold.   The identical bills pending in the Florida House of Representatives and Florida Senate require the firm, within three business days, to report the initial hold to the Florida Office of Financial Regulation (OFR), as well as all persons authorized to transact business in, and any designated trusted contact for, the vulnerable investor’s account.  The firm also must notify OFR of any extension of the original hold.   

In 2018 and 2019, the Florida House of Representatives approved the vulnerable investor Legislation with less than a handful of Representatives voting against it.  Unfortunately, in 2018 and 2019, the legislation never made it to the floor of the Florida Senate for a vote.  Hopefully, this year will prove the old adage that “the third time is the charm,” and the Florida Senate will join the Florida House of Representatives in approving this significant and important legislation.

BAR will update this report as new developments occur.



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