Florida Rule 506(c) offerings and selling through a dealer

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Here is a long post about Florida and private Rule 506(c) offerings in my ongoing series about whether you must use a broker-dealer to sell securities in a Rule 506(c) offering.  For new readers, remember that issuers of securities must abide by both US federal and state securities laws.

Regarding the registration rules, Florida does not require any notice filing fee, or consent to service for Rule 506 offerings, whether it is a Rule 506(b) or Rule 506(c) offering.  See Chapter 517.07(1) of the Florida Statutes.

Now on to the issue of who may sell the securities?  Chapter 517.12(1) of the Florida Statutes provides that no issuer shall sell securities unless the person has been registered as a securities dealer with the State of Florida and its Office of Financial Regulation. Chapter 517.12(3), however, provides that the registration requirements do not apply, among other things, to transactions exempted by Chapter 517.016(19) of the Florida Statutes.  Under Chapter 517.016(19) (and also Chapter 517.021(6)(b)6 and Rule 69W-500.016 of Florida Administrative Code), an issuer may sell its securities without the use of a dealer provided that the sale is made by a bona fide employee of the issuer, and that employee has not participated in the distribution or sale of any securities within the preceding 12 months.  Also, the employee must primarily perform, or is intended to perform at the end of the distribution, substantial duties for, or on behalf of, the issuer other than in connection with transactions in securities.  Without this exemption, the use of advertising in a Rule 506(c) would have required that a private issuer only sell its securities through a registered broker-dealer.  See Chapter 517.016(11)(a) of the Florida Statutes which says “[n]either the issuer nor any person acting on behalf of the issuer offers or sells securities pursuant to this subsection by means of any form of general solicitation or general advertising in this state.”

Whew!  I think I have addressed New York, Texas, and Florida — now only 47 more to go!