Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69W - Securities › Chapter 69W-600 - REGISTRATION OF DEALERS, INVESTMENT ADVISERS, ASSOCIATED PERSONS › Section 69W-600.0131 - Prohibited Business Practices for Investment Advisers and Their Associated Persons

Current through Reg. 50, No. 138; July 16, 2024
(1) The following
				are prohibited business practices for investment advisers and associated
				persons pursuant to Section
				517.1215(2),
				F.S., and are deemed violations by an investment adviser or an associated
				person of an investment adviser under Section
				517.161(1)(a),
				F.S., without limiting that term to the practices specified herein:
(a) With respect to any client, transaction
				or business in, to or from this state, engaging in any conduct prohibited by,
				or failing to comply with the requirements of, the following, notwithstanding
				the fact that the investment adviser or associated person is not registered or
				required to be registered under the Investment Advisers Act of 1940:
Sections 204, 204A, 205, 206, 207, 208 of the Investment
				  Advisers Act of 1940, ( 15 U.S.C.A. §§80b -4, 80b-4a,
				  80b-5, 80b-6, 80b-7,
				  8 0b-8), or SEC Rules 204-1,
				  204-3, 205-1, 205-2, 205-3, 206(3)-1, 206(3)-2, 206(4)-1, (17 C.F.R.
				  §§275.204-1,
				  275.204-3,
				  275.205-1,
				  275.205-2,
				  275.205-3, 275.206(3)-1,
				  275.206(3)-2, 275.206(4)-1), which are incorporated by reference in Rule
				  69W-200.002,
				  F.A.C.
(b) Borrowing money
				or securities from a client unless the client is a dealer, an affiliate of the
				investment adviser, or a financial institution engaged in the business of
				loaning funds.
(c) Loaning money or
				securities to a client unless the investment adviser is a financial institution
				engaged in the business of making loans or the client is an affiliate of the
				investment adviser.
(d)
				Recommending to a client the purchase, sale or exchange of any security without
				reasonable grounds to believe that the recommendation is suitable for the
				client on the basis of information furnished by the client after reasonable
				inquiry concerning the client's investment objectives, financial situation and
				needs, and any other information known by the investment adviser.
(e) Exercising any discretionary power in
				placing an order for the purchase or sale of securities for a client's account
				without first obtaining written discretionary authority from the client, unless
				the discretionary power relates solely to the time or price for the execution
				of orders.
(f) Inducing trading in
				a client's account which is excessive in size or frequency in view of the
				financial resources, investment objectives, and character of the
				account.
(g) Placing an order to
				purchase or sell a security on behalf of a client without authority to do
				so.
(h) Placing an order to
				purchase or sell a security for a client's account upon instruction of a third
				party without first having obtained a written third-party trading authorization
				from the client.
(i)
				Misrepresenting the qualifications of the investment adviser or any employee of
				the investment adviser to a client or prospective client when the
				representation does not fairly describe the nature of the services offered, the
				qualifications of the person offering the services, and the method of
				compensation for the services or omitting to state a material fact.
(j) Charging a client an unreasonable
				advisory fee.
(k) Failing to
				disclose to clients in writing before any advice is rendered any material
				conflict of interest relating to the adviser or any of its employees which
				could reasonably be expected to impair the rendering of unbiased and objective
				advice including:
1. Compensation arrangements
				connected with advisory services to clients which are in addition to
				compensation from such clients for such services; and,
2. Charging a client an advisory fee for
				rendering advice when a commission for executing securities transactions
				pursuant to such advice will be received by the adviser or its
				employees.
(l)
				Guaranteeing a client that a specific result will be achieved with the advice
				to be rendered.
(m) Recommending to
				a client that the client engage the services of a dealer that is not registered
				or exempt from registration under Chapter 517, F.S., unless the client is a
				person described in Section
				517.061(7),
				F.S.
(n) Recommending to a client
				that the client engage the services of a dealer in connection with which the
				investment adviser receives a fee or remuneration from the dealer, except as
				permitted in subsection
				69W-600.0024(4),
				F.A.C.
(o) Disclosing the identity,
				affairs, or investments of any client unless required to do so by law or
				consented to in writing by the client.
(p) Giving false or otherwise misleading
				client information to any financial institution or regulatory agency.
(q) Entering into, extending or renewing any
				investment advisory contract unless such contract is in writing and discloses,
				in substance, the services to be provided, the term of the contract, the
				advisory fee, the formula for computing the fee, the amount of prepaid fee to
				be returned in the event of contract termination or non-performance, whether
				the contract grants discretionary power to the adviser and that no assignment
				of such contract shall be made by the investment adviser without the consent of
				the other party to the contract.
(r) Entering into, extending or renewing any
				investment advisory contract contrary to the provisions of Section 205 of the
				Investment Advisers Act of 1940,
				15 U.S.C. §
											80b-5. This provision shall apply to all
				advisers and associated persons of investment advisers registered or required
				to be registered under this Act, notwithstanding whether such adviser or
				associated person would be exempt from federal registration pursuant to Section
				203(b) of the Investment Advisers Act of 1940, ( 15 U.S.C. §80b
				-3(b)), which is
				incorporated by reference in Rule 69W-200.002, F.A.C.
(s) Including, in an advisory contract, any
				condition, stipulation, or provisions binding any person to waive compliance
				with any provision of Chapter 517, F.S., or with any provision of, or with any
				rule, regulation, or order issued under, the Investment Advisers Act of 1940
				(1 5 U.S.C. §80b-1 through
				80b -21), which is incorporated by
				reference in Rule 69W-200.002, F.A.C.
(t) Taking any action, directly or
				indirectly, with respect to those securities or funds in which any client has
				any beneficial interest, where the investment adviser has custody or possession
				of such securities or funds when the adviser's action is subject to and does
				not comply with the requirements of Rule
				69W-600.0132, F.A.C.
(u) Any unethical practice pursuant to Rule
				69W-600.0133, F.A.C.
(v) Failing to send a client an itemized
				invoice each time a fee is directly deducted from the client's account in
				accordance with the provisions of paragraph
				69W-600.0132(2)(i),
				F.A.C.
(w) Failing to establish,
				maintain, and enforce written policies and procedures reasonably designed to
				achieve compliance, by the investment adviser or its associated persons, with
				Chapter 517, F.S., and Division 69W, F.A.C.
(x) Charging a client an advisory fee greater
				than the amount authorized in the written investment advisory contract between
				the client and the investment adviser.