Securities Crimes

In Florida, state law enforcement authorities investigate securities crimes involving violations of the “Florida Securities and Investor Protection Act” found in Chapter 517. 

The most common charges include the following types of violations:

  • §517.07 for the registration or selling of securities
  • §517.12 for the registration of securities dealers
  • §517.301 for securities fraud

Most violations can be charged as a third degree felony. Each instance of selling a security might result in three separate violations so having one case with dozens of charges is not unusual.

Many prosecutions in criminal court are triggered by an administrative investigation of the Florida Department of Financial Services, Office of Financial Regulation (OFR) with the Bureau of Financial Investigations. If you receive correspondence about such an investigation, immediately seek an experienced criminal defense attorney who can handle the civil and criminal side of the investigation.

Attorneys for Securities Crimes in Florida

The attorneys at Sammis Law Firm protect clients facing prosecutes for various white-collar crimes, including securities crimes. Related offenses include aggravated white-collar crime, organized schemes to defraud, racketeering, and grand theft.

We are familiar with how securities crimes in Florida are investigated by financial investigators with the Florida Office of Financial Regulation (OFR) and the Bureau of Financial Investigations.

Defenses in these cases involve showings that the instrument is not a security or that a statutory exemption applies.

If you are under investigation for violations of Florida’s Securities and Investment Laws under Florida Statute Section 517, contact an experienced attorney in Tampa, FL, at Sammis Law Firm. 

Call 813-250-0500.

Definition of “Security” and Exemptions

All criminal securities prosecutions depend upon the existence of a “security,” as defined by statute and case law. The issue in many of these cases is whether the particular instrument in the case meets the statutory definition of “security.”

Florida Statute Section 517.021 defines a “security” to include stocks and bonds, as well as “notes” or “investment contracts.” Under the right conditions, even a promissory note might fall within the statutory definition of “security.”

The court might use the “Howey test” when defining a security. In Securities & Exchange Commission v. W.J. Howey Co., 328 U.S. 293 (1946) the United States Supreme Court identified the following factors to determine whether an investment is a security:

  1. an investment of money;
  2. in a common enterprise; and
  3. an expectation of profits to be derived solely from the efforts of another.

Numerous exceptions are found in the Florida Securities and Investor Protection Act. Exemptions include situations in which securities do not have to be registered o9r the person selling securities does not have to have a license.

Statute of Limitations for Violations of Securities Laws

The statutes of limitations for securities crimes in Florida is five-year as explained in Florida Statute §517.302(4) and §775.15(2)(e).

A two-year statute of limitations applies to most civil actions for securities fraud as provided in §95.11(4)(e).

Crimes for the Sale of Unregistered Securities

The sale of unregistered securities is governed by Florida Statute §517.07, which requires some securities to be registered with the Department of Financial Services. 

Any Florida Statute §517.07 violation is classified as a strict liability offense because the prosecutor must prove that the defendant sold, or offered to sell an unregistered security.

The intent to commit a crime is not an element of the crime. In many of these cases, the defendant claims that he or she did not know about the registration requirement or relied in good faith on the advice of an attorney. 

Under Florida Statute §517.07, no security may be sold, or offered for sale, unless it is:

  • exempt under F.S.§517.051; or 
  • sold in a transaction exempt under F.S.§517.061; or 
  • classified as a federally covered security; or 
  • registered under the terms of Ch. 517.16

The criminal penalties for violation of F.S. §517.07 are found in §517.302. Under  §517.302, any violation of any part of Ch. 517 is classified as a third-degree felony which is punishable by up to five years in prison.

The terms “sale” or “sell” are defined in F.S. §517.021(19).

“Offer to sell,” “offer for sale,” or “offer” means any attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, or investment or interest in an investment, for value. F.S.§517.021(15).

Although a single violation is rarely prosecuted, separate crimes can be charged under Florida Statute §517.07 each time a defendant sells an unregistered security.

Florida’s Prohibition on Selling Securities Without a License under §517.12

Crimes charged under Florida Statute §517.07 focus on the document or security being sold. On the other hand, crimes charged under Florida Statute §517.12 focus on the credentials of the person selling the security. 

Under §517.12, no “dealer, associated person, or issuer” may sell, or offer for sale, securities unless registered with the appropriate arm of the Department of Financial Services.

The terms “dealer, associated person, or issuer” include anyone who might endeavor to sell securities.

Under §517.302, any violation of §517.302 can be charged as a third-degree felony which is punishable by up to five years in prison.

Violations of section 517.12 are classified as a strict liability offenses because the intent to commit a crime is not required. The fact that the investment was safe is not a defense. Likewise, not knowing about the proper license requirements or relying on the advice of an attorney is not a defense.

Crimes for Securities Fraud under §517.301

Many criminal and civil securities fraud litigation involve security fraud. For crimes prosecuted under §517.301, the focus is on the statements, or material omissions, made by the person selling the security. 

A crime for securities fraud can occur even when no crime occurs for registration of securities under §517.07 or registration of securities dealers under §517.12.

Even if the defendant holds a valid securities license and sells a registered security, he can nonetheless be charged with securities fraud if he makes a material misrepresentation to persuade someone to purchase the security. 

A person commits securities fraud in violation of F.S.§517.301 by making an untrue statement of a material fact or omitting a material fact in connection with a sale of a security. 

Section 517.301(1) prohibits securities fraud and prohibits: 

(a) In connection with the rendering of any investment advice or in connection with the offer, sale, or purchase of any investment or security, including any security exempted under the provisions of s. 517.051 and including any security sold in a transaction exempted under the provisions of s. 517.061, directly or indirectly:

  1. To employ any device, scheme, or artifice to defraud;
  2. To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
  3. To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a person.

Defenses involve claims that the defendant never actually made the statement or that the statement is not untrue or that the untrue statements were not material. 

Violations of §517.301 are classified as a third-degree felony punishable by up to five years in prison as provided in §517.302. If there are five or more victims, and the aggregate damages exceed $50,000, then securities fraud can be charged as a first-degree felony punishable by up to 30 years in prison.

Finding Lawyers for Securities Fraud in Florida

If you are accused of a violation of F.S. §517.07 regarding the registration of securities, a violation of §517.12 regarding the registration of securities dealers, or a violation of F.S. §517.301 regarding securities fraud, then contact an experienced criminal defense attorney at Sammis Law Firm.

Many of these types of security crimes are classified as “strict liability” offenses. Defenses also revolve around whether the instrument is a security or whether an exception applies.

If you are the subject of an administrative or criminal investigation for violating Florida’s securities laws, contact an attorney in Tampa, FL, at Sammis Law Firm.

Call 813-250-0500.

This article was last updated on Tuesday, May 30, 2023.