Office of Financial Regulation

General Duties and Powers

Recall from earlier that while the OIR handles all things insurance, the OFR handles other areas of the financial services industry, such as banks, credit unions, financial institutions and the securities industry. Though we are not concerned with banks and credit unions in this course, we are concerned with the securities industry and how it's regulated at the state level because of the "variable contracts" aspect of the license. You may remember that variable contracts were introduced in chapter 2, and that an agent selling variable contracts was also required to have a Securities license. The following information also applies to those obtaining a health license because the laws in this chapter are considered to be applicable to all lines.

The OFR has many powers under the Florida statutes, but for licensing purposes we will be concerned with its abilities regarding:

• agency actions (penalties)
• cease and desist orders
• seeking injunctions
• investigations (within or outside of Florida)

The OFR's purpose is to

• provide for the safe conduct of financial institutions
• maintain public confidence in financial institutions
• preserve the financial institution system in Florida
• protect interests of depositors and creditors of financial institutions

Agency Actions

In imposing any administrative remedy or penalty, the office will take into account the appropriateness of the penalty with respect to the size of the financial resources and good faith of the person charged, the gravity of the violation, the history of previous violations, and other matters as justice may require.

Cease and desist orders

When the OFR receives a complaint about a financial institution, it may serve that complaint to the financial institution. The complaint issued must include a statement of facts and give the financial institution the opportunity for a hearing on the matter. If the financial institution does not respond to the complaint, or if it does not request a hearing, or if it does request a hearing and the OFR deems the complaint charges to be true, then the OFR may issue a cease and desist order regarding the activities of the complaint and require the company to take corrective action. (Cease and desist basically means stop doing what you are doing.)

If the OFR finds that the conduct in question is likely to cause insolvency or a substantial loss of assets, then the OFR may issue and emergency cease and desist order that remains in effect for 90 days.

The complaint in question is one that would give the OFR reason to believe that the financial institution is engaging in or has engaged in conduct that is a(n):

• unsafe or unsound practice
• violation of any law relating to the operation of a financial institution
• violation of any rule of the commission
• violation of any order of the office
• breach of any written agreement with the office
• willful failure to provide information or documents to the office or any appropriate federal agency upon written request

Injunctions

At the end of chapter 2 we discussed the Unfair Trade Practices Act, and we said that it allows the CFO to seek a court injunction. Well, the OFR also has the ability to seek a court injunction. A court injunction is issued by the circuit court and demands that a person do a certain thing or refrain from doing a certain thing. So, the OFR may file a complaint to the circuit court and the circuit court, upon hearing the complaint, may issue a court injunction. It's worth noting that it is the court that issues the injunction, and not the OFR.

Investigations

On the previous page during the discussion about the OIR, we said that the OIR may basically act like an attorney during an investigation and we listed several things the OIR could do during the investigation. The OFR has very similar abilities, and you will even see some of the same words used.

The OFR may conduct investigations, within or outside this state, to determine whether a person has violated or is about to violate any provision of the Florida codes or rules. During the investigation, the OFR has the power to:

• administer oaths and affirmations,
• take testimony and depositions, and to
• issue subpoenas to require persons to be or appear before the office at a specific time and place, and to bring books, records, and documents for inspection.

If a financial institution does not comply with a subpoena, the OFR may ask the circuit court for an order requiring the person subpoenaed to appear and testify and to bring with them the documents listed in the third bullet point. Failure to comply with the court order is contempt of court, and any expenses incurred by the OFR during the investigation will be assessed against the person or financial institution being investigated.