As Introduced
136th General Assembly
Regular Session S. B. No. 115
2025-2026
Senators Lang, Wilson
Cosponsors: Senators Cirino, Wilkin
A B I L L
To amend sections 1707.01, 1707.03, 1707.09,
1707.091, 1707.092, 1707.13, 1707.23, and
1707.39 of the Revised Code to make changes to
the Securities Law.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1707.01, 1707.03, 1707.09,
1707.091, 1707.092, 1707.13, 1707.23, and 1707.39 of the Revised
Code be amended to read as follows:
Sec. 1707.01. As used in this chapter:
(A) Whenever the context requires it, "division" or
"division of securities" may be read as "director of commerce"
or as "commissioner of securities."
(B) "Security" means any certificate or instrument, or any
oral, written, or electronic agreement, understanding, or
opportunity, that represents title to or interest in, or is
secured by any lien or charge upon, the capital, assets,
profits, property, or credit of any person or of any public or
governmental body, subdivision, or agency. It includes shares of
stock, certificates for shares of stock, an uncertificated
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18 S. B. No. 115 Page 2
As Introduced
security, membership interests in limited liability companies,
voting-trust certificates, warrants and options to purchase
securities, subscription rights, interim receipts, interim
certificates, promissory notes, all forms of commercial paper,
evidences of indebtedness, bonds, debentures, land trust
certificates, fee certificates, leasehold certificates,
syndicate certificates, endowment certificates, interests in or
under profit-sharing or participation agreements, interests in
or under oil, gas, or mining leases, preorganization or
reorganization subscriptions, preorganization certificates,
reorganization certificates, interests in any trust or pretended
trust, any investment contract, any life settlement interest,
any instrument evidencing a promise or an agreement to pay
money, warehouse receipts for intoxicating liquor, and the
currency of any government other than those of the United States
and Canada, but sections 1707.01 to 1707.50 of the Revised Code
do not apply to the sale of real estate.
(C)(1) "Sale" has the full meaning of "sale" as applied by
or accepted in courts of law or equity, and includes every
disposition, or attempt to dispose, of a security or of an
interest in a security. "Sale" also includes a contract to sell,
an exchange, an attempt to sell, an option of sale, a
solicitation of a sale, a solicitation of an offer to buy, a
subscription, or an offer to sell, directly or indirectly, by
agent, circular, pamphlet, advertisement, or otherwise.
(2) "Sell" means any act by which a sale is made.
(3) The use of advertisements, circulars, or pamphlets in
connection with the sale of securities in this state exclusively
to the purchasers specified in division (D) of section 1707.03
of the Revised Code is not a sale when the advertisements,
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48 S. B. No. 115 Page 3
As Introduced
circulars, and pamphlets describing and offering those
securities bear a readily legible legend in substance as
follows: "This offer is made on behalf of dealers licensed under
sections 1707.01 to 1707.50 of the Revised Code, and is confined
in this state exclusively to institutional investors and
licensed dealers."
(4) The offering of securities by any person in
conjunction with a licensed dealer by use of advertisement,
circular, or pamphlet is not a sale if that person does not
otherwise attempt to sell securities in this state.
(5) Any security given with, or as a bonus on account of,
any purchase of securities is conclusively presumed to
constitute a part of the subject of that purchase and has been
"sold."
(6) "Sale" by an owner, pledgee, or mortgagee, or by a
person acting in a representative capacity, includes sale on
behalf of such party by an agent, including a licensed dealer or
salesperson.
(D) "Person," except as otherwise provided in this
chapter, means a natural person, firm, partnership, limited
partnership, partnership association, syndicate, joint-stock
company, unincorporated association, trust or trustee except
where the trust was created or the trustee designated by law or
judicial authority or by a will, and a corporation or limited
liability company organized under the laws of any state, any
foreign government, or any political subdivision of a state or
foreign government.
(E)(1) "Dealer," except as otherwise provided in this
chapter, means every person, other than a salesperson, who
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77 S. B. No. 115 Page 4
As Introduced
engages or professes to engage, in this state, for either all or
part of the person's time, directly or indirectly, either in the
business of the sale of securities for the person's own account,
or in the business of the purchase or sale of securities for the
account of others in the reasonable expectation of receiving a
commission, fee, or other remuneration as a result of engaging
in the purchase and sale of securities. "Dealer" does not mean
any of the following:
(a) Any issuer, including any officer, director, employee,
or trustee of, or member or manager of, or partner in, or any
general partner of, any issuer, that sells, offers for sale, or
does any act in furtherance of the sale of a security that
represents an economic interest in that issuer, provided no
commission, fee, or other similar remuneration is paid to or
received by the issuer for the sale;
(b) Any licensed attorney, public accountant, or firm of
such attorneys or accountants, whose activities are incidental
to the practice of the attorney's, accountant's, or firm's
profession;
(c) Any person that, for the account of others, engages in
the purchase or sale of securities that are issued and
outstanding before such purchase and sale, if a majority or more
of the equity interest of an issuer is sold in that transaction,
and if, in the case of a corporation, the securities sold in
that transaction represent a majority or more of the voting
power of the corporation in the election of directors;
(d) Any person that brings an issuer together with a
potential investor and whose compensation is not directly or
indirectly based on the sale of any securities by the issuer to
the investor;
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107 S. B. No. 115 Page 5
As Introduced
(e) Any bank;
(f) Any person that the division of securities by rule
exempts from the definition of "dealer" under division (E)(1) of
this section.
(2) "Licensed dealer" means a dealer licensed under this
chapter.
(F)(1) "Salesman" or "salesperson" means every natural
person, other than a dealer, who is employed, authorized, or
appointed by a dealer to sell securities within this state.
(2) The general partners of a partnership, and the
executive officers of a corporation or unincorporated
association, licensed as a dealer are not salespersons within
the meaning of this definition, nor are clerical or other
employees of an issuer or dealer that are employed for work to
which the sale of securities is secondary and incidental; but
the division of securities may require a license from any such
partner, executive officer, or employee if it determines that
protection of the public necessitates the licensing.
(3) "Licensed salesperson" means a salesperson licensed
under this chapter.
(G) "Issuer" means every person who has issued, proposes
to issue, or issues any security.
(H) "Director" means each director or trustee of a
corporation, each trustee of a trust, each general partner of a
partnership, except a partnership association, each manager of a
partnership association, and any person vested with managerial
or directory power over an issuer not having a board of
directors or trustees.
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135 S. B. No. 115 Page 6
As Introduced
(I) "Incorporator" means any incorporator of a corporation
and any organizer of, or any person participating, other than in
a representative or professional capacity, in the organization
of an unincorporated issuer.
(J) "Fraud," "fraudulent," "fraudulent acts," "fraudulent
practices," or "fraudulent transactions" means anything
recognized on or after July 22, 1929, as such in courts of law
or equity; any device, scheme, or artifice to defraud or to
obtain money or property by means of any false pretense,
representation, or promise; any fictitious or pretended purchase
or sale of securities; and any act, practice, transaction, or
course of business relating to the purchase or sale of
securities that is fraudulent or that has operated or would
operate as a fraud upon the seller or purchaser.
(K) Except as otherwise specifically provided, whenever
any classification or computation is based upon "par value," as
applied to securities without par value, the average of the
aggregate consideration received or to be received by the issuer
for each class of those securities shall be used as the basis
for that classification or computation.
(L)(1) "Intangible property" means patents, copyrights,
secret processes, formulas, services, good will, promotion and
organization fees and expenses, trademarks, trade brands, trade
names, licenses, franchises, any other assets treated as
intangible according to generally accepted accounting
principles, and securities, accounts receivable, or contract
rights having no readily determinable value.
(2) "Tangible property" means all property other than
intangible property and includes securities, accounts
receivable, and contract rights, when the securities, accounts
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165 S. B. No. 115 Page 7
As Introduced
receivable, or contract rights have a readily determinable
value.
(M) "Public utilities" means those utilities defined in
sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised
Code; in the case of a foreign corporation, it means those
utilities defined as public utilities by the laws of its
domicile; and in the case of any other foreign issuer, it means
those utilities defined as public utilities by the laws of the
situs of its principal place of business. The term always
includes railroads whether or not they are so defined as public
utilities.
(N) "State" means any state of the United States, any
territory or possession of the United States, the District of
Columbia, and any province of Canada.
(O) "Bank" means any bank, trust company, savings and loan
association, savings bank, or credit union that is incorporated
or organized under the laws of the United States, any state of
the United States, Canada, or any province of Canada and that is
subject to regulation or supervision by that country, state, or
province.
(P) "Include," when used in a definition, does not exclude
other things or persons otherwise within the meaning of the term
defined.
(Q)(1) "Registration by description" means that the
requirements of section 1707.08 of the Revised Code have been
complied with. "Registration by description" does not include
registration by coordination.
(2) "Registration by qualification" means that the
requirements of sections 1707.09 and 1707.11 of the Revised Code
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194 S. B. No. 115 Page 8
As Introduced
have been complied with. "Registration by qualification" does
not include registration by coordination.
(3) "Registration by coordination" means that there has
been compliance with section 1707.091 of the Revised Code.
Reference in this chapter to registration by qualification also
includes registration by coordination unless the context
otherwise indicates.
(R) "Intoxicating liquor" includes all liquids and
compounds that contain more than three and two-tenths per cent
of alcohol by weight and are fit for use for beverage purposes.
(S) "Institutional investor" means any of the following,
whether acting for itself or for others in a fiduciary capacity:
(1) A bank or international banking institution;
(2) An insurance company;
(3) A separate account of an insurance company;
(4) An investment company as defined in the "Investment
Company Act of 1940," 15 U.S.C. 80a-3;
(5) A broker-dealer registered under the "Securities
Exchange Act of 1934," 15 U.S.C. 78o, as amended, or licensed by
the division of securities as a dealer;
(6) An employee pension, profit-sharing, or benefit plan
if the plan has total assets in excess of ten million dollars or
its investment decisions are made by a named fiduciary, as
defined in the "Employee Retirement Income Security Act of
1974," 29 U.S.C. 1001, that is one of the following:
(a) A broker-dealer registered under the "Securities
Exchange Act of 1934," 15 U.S.C. 78o, as amended;
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221 S. B. No. 115 Page 9
As Introduced
(b) An investment adviser registered or exempt from
registration under the "Investment Advisers Act of 1940," 15
U.S.C. 80b-3;
(c) An investment adviser registered under this chapter, a
bank, or an insurance company.
(7) A plan established and maintained by a state, a
political subdivision of a state, or an agency or
instrumentality of a state or a political subdivision of a state
for the benefit of its employees, if the plan has total assets
in excess of ten million dollars or its investment decisions are
made by a duly designated public official or by a named
fiduciary, as defined in the "Employee Retirement Income
Security Act of 1974," 29 U.S.C. 1001, that is one of the
following:
(a) A broker-dealer registered under the "Securities
Exchange Act of 1934," 15 U.S.C. 78o, as amended;
(b) An investment adviser registered or exempt from
registration under the "Investment Advisers Act of 1940," 15
U.S.C. 80b-3;
(c) An investment adviser registered under this chapter, a
bank, or an insurance company.
(8) A trust, if it has total assets in excess of ten
million dollars, its trustee is a bank, and its participants are
exclusively plans of the types identified in division (S)(6) or
(7) of this section, regardless of the size of their assets,
except a trust that includes as participants self-directed
individual retirement accounts or similar self-directed plans;
(9) An organization described in section 501(c)(3) of the
"Internal Revenue Code of 1986," 26 U.S.C. 1, as amended,
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250 S. B. No. 115 Page 10
As Introduced
corporation, Massachusetts trust or similar business trust,
limited liability company, or partnership, not formed for the
specific purpose of acquiring the securities offered, with total
assets in excess of ten million dollars;
(10) A small business investment company licensed by the
small business administration under section 301(c) of the "Small
Business Investment Act of 1958," 15 U.S.C. 681(c), with total
assets in excess of ten million dollars;
(11) A private business development company as defined in
section 202(a)(22) of the "Investment Advisers Act of 1940," 15
U.S.C. 80b-2(a)(22), with total assets in excess of ten million
dollars;
(12) A federal covered investment adviser acting for its
own account;
(13) A "qualified institutional buyer" as defined in 17
C.F.R. 230.144A(a)(1), other than 17 C.F.R. 230.144A(a)(1)(H);
(14) A "major U.S. institutional investor" as defined in
17 C.F.R. 240.15a-6(b)(4)(i);
(15) Any other person, other than an individual, of
institutional character with total assets in excess of ten
million dollars not organized for the specific purpose of
evading this chapter;
(16) Any other person specified by rule adopted or order
issued under this chapter.
(T) A reference to a statute of the United States or to a
rule, regulation, or form promulgated by the securities and
exchange commission or by another federal agency means the
statute, rule, regulation, or form as it exists at the time of
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278 S. B. No. 115 Page 11
As Introduced
the act, omission, event, or transaction to which it is applied
under this chapter.
(U) "Securities and exchange commission" means the
securities and exchange commission established by the Securities
Exchange Act of 1934.
(V)(1) "Control bid" means the purchase of or offer to
purchase any equity security of a subject company from a
resident of this state if either of the following applies:
(a) After the purchase of that security, the offeror would
be directly or indirectly the beneficial owner of more than ten
per cent of any class of the issued and outstanding equity
securities of the issuer.
(b) The offeror is the subject company, there is a pending
control bid by a person other than the issuer, and the number of
the issued and outstanding shares of the subject company would
be reduced by more than ten per cent.
(2) For purposes of division (V)(1) of this section,
"control bid" does not include any of the following:
(a) A bid made by a dealer for the dealer's own account in
the ordinary course of business of buying and selling
securities;
(b) An offer to acquire any equity security solely in
exchange for any other security, or the acquisition of any
equity security pursuant to an offer, for the sole account of
the offeror, in good faith and not for the purpose of avoiding
the provisions of this chapter, and not involving any public
offering of the other security within the meaning of Section 4
of Title I of the "Securities Act of 1933," 48 Stat. 77, 15
U.S.C.A. 77d(2), as amended;
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
298
299
300
301
302
303
304
305
306
307 S. B. No. 115 Page 12
As Introduced
(c) Any other offer to acquire any equity security, or the
acquisition of any equity security pursuant to an offer, for the
sole account of the offeror, from not more than fifty persons,
in good faith and not for the purpose of avoiding the provisions
of this chapter.
(W) "Offeror" means a person who makes, or in any way
participates or aids in making, a control bid and includes
persons acting jointly or in concert, or who intend to exercise
jointly or in concert any voting rights attached to the
securities for which the control bid is made and also includes
any subject company making a control bid for its own securities.
(X)(1) "Investment adviser" means any person who, for
compensation, engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in,
purchasing, or selling securities, or who, for compensation and
as a part of regular business, issues or promulgates analyses or
reports concerning securities.
(2) "Investment adviser" does not mean any of the
following:
(a) Any attorney, accountant, engineer, or teacher, whose
performance of investment advisory services described in
division (X)(1) of this section is solely incidental to the
practice of the attorney's, accountant's, engineer's, or
teacher's profession;
(b) A publisher of any bona fide newspaper, news magazine,
or business or financial publication of general and regular
circulation;
(c) A person who acts solely as an investment adviser
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336 S. B. No. 115 Page 13
As Introduced
representative;
(d) A bank holding company, as defined in the "Bank
Holding Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that
is not an investment company;
(e) A bank, or any receiver, conservator, or other
liquidating agent of a bank;
(f) Any licensed dealer or licensed salesperson whose
performance of investment advisory services described in
division (X)(1) of this section is solely incidental to the
conduct of the dealer's or salesperson's business as a licensed
dealer or licensed salesperson and who receives no special
compensation for the services;
(g) Any person, the advice, analyses, or reports of which
do not relate to securities other than securities that are
direct obligations of, or obligations guaranteed as to principal
or interest by, the United States, or securities issued or
guaranteed by corporations in which the United States has a
direct or indirect interest, and that have been designated by
the secretary of the treasury as exempt securities as defined in
the "Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C.
78c;
(h) Any person that is excluded from the definition of
investment adviser pursuant to section 202(a)(11)(A) to (E) of
the "Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11),
or that has received an order from the securities and exchange
commission under section 202(a)(11)(F) of the "Investment
Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that
the person is not within the intent of section 202(a)(11) of the
Investment Advisers Act of 1940.
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
361
362
363
364
365 S. B. No. 115 Page 14
As Introduced
(i) A person who acts solely as a state retirement system
investment officer or as a bureau of workers' compensation chief
investment officer;
(j) Any other person that the division designates by rule,
if the division finds that the designation is necessary or
appropriate in the public interest or for the protection of
investors or clients and consistent with the purposes fairly
intended by the policy and provisions of this chapter.
(Y)(1) "Subject company" means an issuer that satisfies
both of the following:
(a) Its principal place of business or its principal
executive office is located in this state, or it owns or
controls assets located within this state that have a fair
market value of at least one million dollars.
(b) More than ten per cent of its beneficial or record
equity security holders are resident in this state, more than
ten per cent of its equity securities are owned beneficially or
of record by residents in this state, or more than one thousand
of its beneficial or record equity security holders are resident
in this state.
(2) The division of securities may adopt rules to
establish more specific application of the provisions set forth
in division (Y)(1) of this section. Notwithstanding the
provisions set forth in division (Y)(1) of this section and any
rules adopted under this division, the division, by rule or in
an adjudicatory proceeding, may make a determination that an
issuer does not constitute a "subject company" under division
(Y)(1) of this section if appropriate review of control bids
involving the issuer is to be made by any regulatory authority
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
388
389
390
391
392
393
394 S. B. No. 115 Page 15
As Introduced
of another jurisdiction.
(Z) "Beneficial owner" includes any person who directly or
indirectly through any contract, arrangement, understanding, or
relationship has or shares, or otherwise has or shares, the
power to vote or direct the voting of a security or the power to
dispose of, or direct the disposition of, the security.
"Beneficial ownership" includes the right, exercisable within
sixty days, to acquire any security through the exercise of any
option, warrant, or right, the conversion of any convertible
security, or otherwise. Any security subject to any such option,
warrant, right, or conversion privilege held by any person shall
be deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by that
person, but shall not be deemed to be outstanding for the
purpose of computing the percentage of the class owned by any
other person. A person shall be deemed the beneficial owner of
any security beneficially owned by any relative or spouse or
relative of the spouse residing in the home of that person, any
trust or estate in which that person owns ten per cent or more
of the total beneficial interest or serves as trustee or
executor, any corporation or entity in which that person owns
ten per cent or more of the equity, and any affiliate or
associate of that person.
(AA) "Offeree" means the beneficial or record owner of any
security that an offeror acquires or offers to acquire in
connection with a control bid.
(BB) "Equity security" means any share or similar
security, or any security convertible into any such security, or
carrying any warrant or right to subscribe to or purchase any
such security, or any such warrant or right, or any other
395
396
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
414
415
416
417
418
419
420
421
422
423
424 S. B. No. 115 Page 16
As Introduced
security that, for the protection of security holders, is
treated as an equity security pursuant to rules of the division
of securities.
(CC)(1) "Investment adviser representative" means a
supervised person of an investment adviser, provided that the
supervised person has more than five clients who are natural
persons other than excepted persons defined in division (EE) of
this section, and that more than ten per cent of the supervised
person's clients are natural persons other than excepted persons
defined in division (EE) of this section. "Investment adviser
representative" does not mean any of the following:
(a) A supervised person that does not on a regular basis
solicit, meet with, or otherwise communicate with clients of the
investment adviser;
(b) A supervised person that provides only investment
advisory services described in division (X)(1) of this section
by means of written materials or oral statements that do not
purport to meet the objectives or needs of specific individuals
or accounts;
(c) Any other person that the division designates by rule,
if the division finds that the designation is necessary or
appropriate in the public interest or for the protection of
investors or clients and is consistent with the provisions
fairly intended by the policy and provisions of this chapter.
(2) For the purpose of the calculation of clients in
division (CC)(1) of this section, a natural person and the
following persons are deemed a single client: Any minor child of
the natural person; any relative, spouse, or relative of the
spouse of the natural person who has the same principal
425
426
427
428
429
430
431
432
433
434
435
436
437
438
439
440
441
442
443
444
445
446
447
448
449
450
451
452
453 S. B. No. 115 Page 17
As Introduced
residence as the natural person; all accounts of which the
natural person or the persons referred to in division (CC)(2) of
this section are the only primary beneficiaries; and all trusts
of which the natural person or persons referred to in division
(CC)(2) of this section are the only primary beneficiaries.
Persons who are not residents of the United States need not be
included in the calculation of clients under division (CC)(1) of
this section.
(3) If subsequent to March 18, 1999, amendments are
enacted or adopted defining "investment adviser representative"
for purposes of the Investment Advisers Act of 1940 or
additional rules or regulations are promulgated by the
securities and exchange commission regarding the definition of
"investment adviser representative" for purposes of the
Investment Advisers Act of 1940, the division of securities
shall, by rule, adopt the substance of the amendments, rules, or
regulations, unless the division finds that the amendments,
rules, or regulations are not necessary for the protection of
investors or in the public interest.
(DD) "Supervised person" means a natural person who is any
of the following:
(1) A partner, officer, or director of an investment
adviser, or other person occupying a similar status or
performing similar functions with respect to an investment
adviser;
(2) An employee of an investment adviser;
(3) A person who provides investment advisory services
described in division (X)(1) of this section on behalf of the
investment adviser and is subject to the supervision and control
454
455
456
457
458
459
460
461
462
463
464
465
466
467
468
469
470
471
472
473
474
475
476
477
478
479
480
481
482 S. B. No. 115 Page 18
As Introduced
of the investment adviser.
(EE) "Excepted person" means a natural person to whom any
of the following applies:
(1) Immediately after entering into the investment
advisory contract with the investment adviser, the person has at
least seven hundred fifty thousand dollars under the management
of the investment adviser.
(2) The investment adviser reasonably believes either of
the following at the time the investment advisory contract is
entered into with the person:
(a) The person has a net worth, together with assets held
jointly with a spouse, of more than one million five hundred
thousand dollars.
(b) The person is a qualified purchaser as defined in
division (FF) of this section.
(3) Immediately prior to entering into an investment
advisory contract with the investment adviser, the person is
either of the following:
(a) An executive officer, director, trustee, general
partner, or person serving in a similar capacity, of the
investment adviser;
(b) An employee of the investment adviser, other than an
employee performing solely clerical, secretarial, or
administrative functions or duties for the investment adviser,
which employee, in connection with the employee's regular
functions or duties, participates in the investment activities
of the investment adviser, provided that, for at least twelve
months, the employee has been performing such nonclerical,
483
484
485
486
487
488
489
490
491
492
493
494
495
496
497
498
499
500
501
502
503
504
505
506
507
508
509
510 S. B. No. 115 Page 19
As Introduced
nonsecretarial, or nonadministrative functions or duties for or
on behalf of the investment adviser or performing substantially
similar functions or duties for or on behalf of another company.
If subsequent to March 18, 1999, amendments are enacted or
adopted defining "excepted person" for purposes of the
Investment Advisers Act of 1940 or additional rules or
regulations are promulgated by the securities and exchange
commission regarding the definition of "excepted person" for
purposes of the Investment Advisers Act of 1940, the division of
securities shall, by rule, adopt the substance of the
amendments, rules, or regulations, unless the division finds
that the amendments, rules, or regulations are not necessary for
the protection of investors or in the public interest.
(FF)(1) "Qualified purchaser" means either of the
following:
(a) A natural person who owns not less than five million
dollars in investments as defined by rule by the division of
securities;
(b) A natural person, acting for the person's own account
or accounts of other qualified purchasers, who in the aggregate
owns and invests on a discretionary basis, not less than twenty-
five million dollars in investments as defined by rule by the
division of securities.
(2) If subsequent to March 18, 1999, amendments are
enacted or adopted defining "qualified purchaser" for purposes
of the Investment Advisers Act of 1940 or additional rules or
regulations are promulgated by the securities and exchange
commission regarding the definition of "qualified purchaser" for
purposes of the Investment Advisers Act of 1940, the division of
511
512
513
514
515
516
517
518
519
520
521
522
523
524
525
526
527
528
529
530
531
532
533
534
535
536
537
538
539 S. B. No. 115 Page 20
As Introduced
securities shall, by rule, adopt the amendments, rules, or
regulations, unless the division finds that the amendments,
rules, or regulations are not necessary for the protection of
investors or in the public interest.
(GG)(1) "Purchase" has the full meaning of "purchase" as
applied by or accepted in courts of law or equity and includes
every acquisition of, or attempt to acquire, a security or an
interest in a security. "Purchase" also includes a contract to
purchase, an exchange, an attempt to purchase, an option to
purchase, a solicitation of a purchase, a solicitation of an
offer to sell, a subscription, or an offer to purchase, directly
or indirectly, by agent, circular, pamphlet, advertisement, or
otherwise.
(2) "Purchase" means any act by which a purchase is made.
(3) Any security given with, or as a bonus on account of,
any purchase of securities is conclusively presumed to
constitute a part of the subject of that purchase.
(HH) "Life settlement interest" means the entire interest
or any fractional interest in an insurance policy or certificate
of insurance, or in an insurance benefit under such a policy or
certificate, that is the subject of a life settlement contract.
For purposes of this division, "life settlement contract"
means an agreement for the purchase, sale, assignment, transfer,
devise, or bequest of any portion of the death benefit or
ownership of any life insurance policy or contract, in return
for consideration or any other thing of value that is less than
the expected death benefit of the life insurance policy or
contract. "Life settlement contract" includes a viatical
settlement contract as defined in section 3916.01 of the Revised
540
541
542
543
544
545
546
547
548
549
550
551
552
553
554
555
556
557
558
559
560
561
562
563
564
565
566
567
568 S. B. No. 115 Page 21
As Introduced
Code, but does not include any of the following:
(1) A loan by an insurer under the terms of a life
insurance policy, including, but not limited to, a loan secured
by the cash value of the policy;
(2) An agreement with a bank that takes an assignment of a
life insurance policy as collateral for a loan;
(3) The provision of accelerated benefits as defined in
section 3915.21 of the Revised Code;
(4) Any agreement between an insurer and a reinsurer;
(5) An agreement by an individual to purchase an existing
life insurance policy or contract from the original owner of the
policy or contract, if the individual does not enter into more
than one life settlement contract per calendar year;
(6) The initial purchase of an insurance policy or
certificate of insurance from its owner by a viatical settlement
provider, as defined in section 3916.01 of the Revised Code,
that is licensed under Chapter 3916. of the Revised Code.
(II) "State retirement system" means the public employees
retirement system, Ohio police and fire pension fund, state
teachers retirement system, school employees retirement system,
and state highway patrol retirement system.
(JJ) "State retirement system investment officer" means an
individual employed by a state retirement system as a chief
investment officer, assistant investment officer, or the person
in charge of a class of assets or in a position that is
substantially equivalent to chief investment officer, assistant
investment officer, or person in charge of a class of assets.
(KK) "Bureau of workers' compensation chief investment
569
570
571
572
573
574
575
576
577
578
579
580
581
582
583
584
585
586
587
588
589
590
591
592
593
594
595
596 S. B. No. 115 Page 22
As Introduced
officer" means an individual employed by the administrator of
workers' compensation as a chief investment officer or in a
position that is substantially equivalent to a chief investment
officer.
Sec. 1707.03. (A) As used in this section, "exempt" means
that, except in the case of securities the right to buy, sell,
or deal in which has been suspended or revoked under an existing
order of the division of securities under section 1707.13 of the
Revised Code or under a cease and desist order under division
(G) (A)(7) of section 1707.23 of the Revised Code, transactions
in securities may be carried on and completed without compliance
with sections 1707.08 to 1707.11 of the Revised Code.
(B) A sale of securities made by or on behalf of a bona
fide owner, neither the issuer nor a dealer, is exempt if the
sale is made in good faith and not for the purpose of avoiding
this chapter and is not made in the course of repeated and
successive transactions of a similar character. Any sale of
securities over a stock exchange that is lawfully conducted in
this state and regularly open for public patronage and that has
been established and operated for a period of at least five
years prior to the sale at a commission not exceeding the
commission regularly charged in such transactions also is
exempt.
(C) The sale of securities by executors, administrators,
receivers, trustees, or anyone acting in a fiduciary capacity is
exempt, where such relationship was created by law, by a will,
or by judicial authority, and where such sales are subject to
approval by, or are made in pursuance to authority granted by,
any court of competent jurisdiction or are otherwise authorized
and lawfully made by such fiduciary.
597
598
599
600
601
602
603
604
605
606
607
608
609
610
611
612
613
614
615
616
617
618
619
620
621
622
623
624
625
626 S. B. No. 115 Page 23
As Introduced
(D) A sale to the issuer, to a dealer, or to an
institutional investor is exempt.
(E) A sale in good faith, and not for the purpose of
avoiding this chapter, by a pledgee of a security pledged for a
bona fide debt is exempt.
(F) The sale at public auction by a corporation of shares
of its stock because of delinquency in payment for the shares is
exempt.
(G)(1) The giving of any conversion right with, or on
account of the purchase of, any security that is exempt, is the
subject matter of an exempt transaction, has been registered by
description, by coordination, or by qualification, or is the
subject matter of a transaction that has been registered by
description is exempt.
(2) The giving of any subscription right, warrant, or
option to purchase a security or right to receive a security
upon exchange, which security is exempt at the time the right,
warrant, or option to purchase or right to receive is given, is
the subject matter of an exempt transaction, is registered by
description, by coordination, or by qualification, or is the
subject matter of a transaction that has been registered by
description is exempt.
(3) The giving of any subscription right or any warrant or
option to purchase a security, which right, warrant, or option
expressly provides that it shall not be exercisable except for a
security that at the time of the exercise is exempt, is the
subject matter of an exempt transaction, is registered by
description, by coordination, or by qualification, or at such
time is the subject matter of a transaction that has been
627
628
629
630
631
632
633
634
635
636
637
638
639
640
641
642
643
644
645
646
647
648
649
650
651
652
653
654
655 S. B. No. 115 Page 24
As Introduced
registered by description is exempt.
(H) The sale of notes, bonds, or other evidences of
indebtedness that are secured by a mortgage lien upon real
estate, leasehold estate other than oil, gas, or mining
leasehold, or tangible personal property, or which evidence of
indebtedness is due under or based upon a conditional-sale
contract, if all such notes, bonds, or other evidences of
indebtedness are sold to a single purchaser at a single sale, is
exempt.
(I) The delivery of securities by the issuer on the
exercise of conversion rights, the sale of securities by the
issuer on exercise of subscription rights or of warrants or
options to purchase securities, the delivery of voting-trust
certificates for securities deposited under a voting-trust
agreement, the delivery of deposited securities on surrender of
voting-trust certificates, and the delivery of final
certificates on surrender of interim certificates are exempt;
but the sale of securities on exercise of subscription rights,
warrants, or options is not an exempt transaction unless those
rights, warrants, or options when granted were the subject
matter of an exempt transaction under division (G) of this
section or were registered by description, by coordination, or
by qualification.
(J) The sale of securities by a bank, savings and loan
association, savings bank, or credit union organized under the
laws of the United States or of this state is exempt if at a
profit to that seller of not more than two per cent of the total
sale price of the securities.
(K)(1) The distribution by a corporation of its securities
to its security holders as a share dividend or other
656
657
658
659
660
661
662
663
664
665
666
667
668
669
670
671
672
673
674
675
676
677
678
679
680
681
682
683
684
685 S. B. No. 115 Page 25
As Introduced
distribution out of earnings or surplus is exempt.
(2) The exchange or distribution by the issuer of any of
its securities or of the securities of any of the issuer's
wholly owned subsidiaries exclusively with or to its existing
security holders, if no commission or other remuneration is
given directly or indirectly for soliciting the exchange, is
exempt.
(3) The sale of preorganization subscriptions for shares
of stock of a corporation prior to the incorporation of the
corporation is exempt, when the sale is evidenced by a written
agreement, no remuneration is given, or promised, directly or
indirectly, for or in connection with the sale of those
securities, and no consideration is received, directly or
indirectly, by any person from the purchasers of those
securities until registration by qualification, by coordination,
or by description of those securities is made under this
chapter.
(L) The issuance of securities in exchange for one or more
bona fide outstanding securities, claims, or property interests,
not including securities sold for a consideration payable in
whole or in part in cash, under a plan of reorganization,
recapitalization, or refinancing approved by a court pursuant to
the Bankruptcy Act of the United States or to any other federal
act giving any federal court jurisdiction over such plan of
reorganization, or under a plan of reorganization approved by a
court of competent jurisdiction of any state of the United
States is exempt. As used in this division, "reorganization,"
"recapitalization," and "refinancing" have the same meanings as
in section 1707.04 of the Revised Code.
(M) A sale by a licensed dealer, acting either as
686
687
688
689
690
691
692
693
694
695
696
697
698
699
700
701
702
703
704
705
706
707
708
709
710
711
712
713
714
715 S. B. No. 115 Page 26
As Introduced
principal or as agent, of securities issued and outstanding
before the sale is exempt, unless the sale is of one or more of
the following:
(1) Securities constituting the whole or a part of an
unsold allotment to or subscription by a dealer as an
underwriter or other participant in the distribution of those
securities by the issuer, whether that distribution is direct or
through an underwriter, provided that, if the issuer is such by
reason of owning one-fourth or more of those securities, the
dealer has knowledge of this fact or reasonable cause to believe
this fact;
(2) Any class of shares issued by a corporation when the
number of beneficial owners of that class is less than twenty-
five, with the record owner of securities being deemed the
beneficial owner for this purpose, in the absence of actual
knowledge to the contrary;
(3) Securities that within one year were purchased outside
this state or within one year were transported into this state,
if the dealer has knowledge or reasonable cause to believe,
before the sale of those securities, that within one year they
were purchased outside this state or within one year were
transported into this state; but such a sale of those securities
is exempt if any of the following occurs:
(a) A recognized securities manual contains the names of
the issuer's officers and directors, a balance sheet of the
issuer as of a date within eighteen months, and a profit and
loss statement for either the fiscal year preceding that date or
the most recent year of operations;
(b) Those securities, or securities of the same class,
716
717
718
719
720
721
722
723
724
725
726
727
728
729
730
731
732
733
734
735
736
737
738
739
740
741
742
743
744 S. B. No. 115 Page 27
As Introduced
within one year were registered or qualified under section
1707.09 or 1707.091 of the Revised Code, and that registration
or qualification is in full force and effect;
(c) The sale is made by a licensed dealer on behalf of the
bona fide owner of those securities in accordance with division
(B) of this section;
(d) Those securities were transported into Ohio in a
transaction of the type described in division (L), (K), or (I)
of this section, or in a transaction registered under division
(A) of section 1707.06 of the Revised Code.
(N) For the purpose of this division and division (M) of
this section, "underwriter" means any person who has purchased
from an issuer with a view to, or sells for an issuer in
connection with, the distribution of any security, or who
participates directly or indirectly in any such undertaking or
in the underwriting thereof, but "underwriter" does not include
a person whose interest is limited to a discount, commission, or
profit from the underwriter or from a dealer that is not in
excess of the customary distributors' or sellers' discount,
commission, or profit; and "issuer" includes any person or any
group of persons acting in concert in the sale of such
securities, owning beneficially one-fourth or more of the
outstanding securities of the class involved in the transactions
in question, with the record owner of securities being deemed
the beneficial owner for this purpose, in the absence of actual
knowledge to the contrary.
(O)(1) The sale of any equity security is exempt if all
the following conditions are satisfied:
(a) The sale is by the issuer of the security.
745
746
747
748
749
750
751
752
753
754
755
756
757
758
759
760
761
762
763
764
765
766
767
768
769
770
771
772
773 S. B. No. 115 Page 28
As Introduced
(b) The total number of purchasers in this state of all
securities issued or sold by the issuer in reliance upon this
exemption during the period of one year ending with the date of
the sale does not exceed ten. A sale of securities registered
under this chapter or sold pursuant to an exemption under this
chapter other than this exemption shall not be integrated with a
sale pursuant to this exemption in computing the number of
purchasers under this exemption.
(c) No advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar
medium or broadcast over television or radio is used in
connection with the sale, but the use of an offering circular or
other communication delivered by the issuer to selected
individuals does not destroy this exemption.
(d) The issuer reasonably believes after reasonable
investigation that the purchaser is purchasing for investment.
(e) The aggregate commission, discount, and other
remuneration, excluding legal, accounting, and printing fees,
paid or given directly or indirectly does not exceed ten per
cent of the initial offering price.
(f) Any such commission, discount, or other remuneration
for sales in this state is paid or given only to dealers or
salespersons registered pursuant to this chapter.
(2) For the purposes of division (O)(1) of this section,
each of the following is deemed to be a single purchaser of a
security: husband and wife, a child and its parent or guardian
when the parent or guardian holds the security for the benefit
of the child, a corporation, a limited liability company, a
partnership, an association or other unincorporated entity, a
774
775
776
777
778
779
780
781
782
783
784
785
786
787
788
789
790
791
792
793
794
795
796
797
798
799
800
801
802 S. B. No. 115 Page 29
As Introduced
joint-stock company, or a trust, but only if the corporation,
limited liability company, partnership, association, entity,
joint-stock company, or trust was not formed for the purpose of
purchasing the security.
(3) As used in division (O)(1) of this section, "equity
security" means any stock or similar security of a corporation
or any membership interest in a limited liability company; or
any security convertible, with or without consideration, into
such a security, or carrying any warrant or right to subscribe
to or purchase such a security; or any such warrant or right; or
any other security that the division considers necessary or
appropriate, by such rules as it may prescribe in the public
interest or for the protection of investors, to treat as an
equity security.
(P) The sale of securities representing interests in or
under profit-sharing or participation agreements relating to oil
or gas wells located in this state, or representing interests in
or under oil or gas leases of real estate situated in this
state, is exempt if the securities are issued by an individual,
partnership, limited partnership, partnership association,
syndicate, pool, trust or trust fund, or other unincorporated
association and if each of the following conditions is complied
with:
(1) The beneficial owners of the securities do not, and
will not after the sale, exceed five natural persons;
(2) The securities constitute or represent interests in
not more than one oil or gas well;
(3) A certificate or other instrument in writing is
furnished to each purchaser of the securities at or before the
803
804
805
806
807
808
809
810
811
812
813
814
815
816
817
818
819
820
821
822
823
824
825
826
827
828
829
830
831 S. B. No. 115 Page 30
As Introduced
consummation of the sale, disclosing the maximum commission,
compensation for services, cost of lease, and expenses with
respect to the sale of such interests and with respect to the
promotion, development, and management of the oil or gas well,
and the total of that commission, compensation, costs, and
expenses does not exceed twenty-five per cent of the aggregate
interests in the oil or gas well, exclusive of any landowner's
rental or royalty;
(4) The sale is made in good faith and not for the purpose
of avoiding this chapter.
(Q) The sale of any security is exempt if all of the
following conditions are satisfied:
(1) The provisions of section 5 of the Securities Act of
1933 do not apply to the sale by reason of an exemption under
section 4 (2) of that act.
(2) The aggregate commission, discount, and other
remuneration, excluding legal, accounting, and printing fees,
paid or given directly or indirectly does not exceed ten per
cent of the initial offering price.
(3) Any such commission, discount, or other remuneration
for sales in this state is paid or given only to dealers or
salespersons registered under this chapter.
(4) The issuer or dealer files with the division of
securities, not later than sixty days after the sale, a report
setting forth the name and address of the issuer, the total
amount of the securities sold under this division, the number of
persons to whom the securities were sold, the price at which the
securities were sold, and the commissions or discounts paid or
given.
832
833
834
835
836
837
838
839
840
841
842
843
844
845
846
847
848
849
850
851
852
853
854
855
856
857
858
859
860 S. B. No. 115 Page 31
As Introduced
(5) The issuer pays a filing fee of one hundred dollars
for the first filing and fifty dollars for every subsequent
filing during each calendar year.
(R) A sale of a money order, travelers' check, or other
instrument for the transmission of money by a person qualified
to engage in such business under Chapter 1315. of the Revised
Code is exempt.
(S) A sale by a licensed dealer of securities that are in
the process of registration under the Securities Act of 1933,
unless exempt under that act, and that are in the process of
registration, if registration is required under this chapter, is
exempt, provided that no sale of that nature shall be
consummated prior to the registration by description or
qualification of the securities.
(T) The execution by a licensed dealer of orders for the
purchase of any security is exempt, provided that the dealer
acts only as agent for the purchaser, has made no solicitation
of the order to purchase the security, has no interest in the
distribution of the security, and delivers to the purchaser
written confirmation of the transaction that clearly itemizes
the dealer's commission. "Solicitation," as used in this
division, means solicitation of the order for the specific
security purchased and does not include general solicitations or
advertisements of any kind.
(U) The sale insofar as the security holders of a person
are concerned, where, pursuant to statutory provisions of the
jurisdiction under which that person is organized or pursuant to
provisions contained in its articles of incorporation,
certificate of incorporation, partnership agreement, declaration
of trust, trust indenture, or similar controlling instrument,
861
862
863
864
865
866
867
868
869
870
871
872
873
874
875
876
877
878
879
880
881
882
883
884
885
886
887
888
889
890 S. B. No. 115 Page 32
As Introduced
there is submitted to the security holders, for their vote or
consent, (1) a plan or agreement for a reclassification of
securities of that person that involves the substitution of a
security of that person for another security of that person, (2)
a plan or agreement of merger or consolidation or a similar plan
or agreement of acquisition in which the securities of that
person held by the security holders will become or be exchanged
for securities of any other person, or (3) a plan or agreement
for a combination as defined in division (Q) of section 1701.01
of the Revised Code or a similar plan or agreement for the
transfer of assets of that person to another person in
consideration of the issuance of securities of any person, is
exempt if, with respect to any of the foregoing transactions,
either of the following conditions is satisfied:
(a) The securities to be issued to the security holders
are effectively registered under sections 6 to 8 of the
Securities Act of 1933 and offered and sold in compliance with
section 5 of that act;
(b) At least twenty days prior to the date on which a
meeting of the security holders is held or the earliest date on
which corporate action may be taken when no meeting is held,
there is submitted to the security holders, by that person, or
by the person whose securities are to be issued in the
transaction, information substantially equivalent to the
information that would be required to be included in a proxy
statement or information statement prepared by or on behalf of
the management of an issuer subject to section 14(a) or 14(c) of
the Securities Exchange Act of 1934.
(V) The sale of any security is exempt if the division by
rule finds that registration is not necessary or appropriate in
891
892
893
894
895
896
897
898
899
900
901
902
903
904
905
906
907
908
909
910
911
912
913
914
915
916
917
918
919
920 S. B. No. 115 Page 33
As Introduced
the public interest or for the protection of investors.
(W) Any offer or sale of securities made in reliance on
the exemptions provided by Rule 505 of Regulation D made
pursuant to the Securities Act of 1933 and the conditions and
definitions provided by Rules 501 to 503 thereunder is exempt if
the offer or sale satisfies all of the following conditions:
(1) No commission or other remuneration is given, directly
or indirectly, to any person for soliciting or selling to any
person in this state in reliance on the exemption under this
division, except to dealers licensed in this state.
(2)(a) Unless the cause for disqualification is waived
under division (W)(2)(b) of this section, no exemption under
this section is available for the securities of an issuer unless
the issuer did not know and in the exercise of reasonable care
could not have known that any of the following applies to any of
the persons described in Rule 262(a) to (c) of Regulation A
under the Securities Act of 1933:
(i) The person has filed an application for registration
or qualification that is the subject of an effective order
entered against the issuer, its officers, directors, general
partners, controlling persons or affiliates thereof, pursuant to
the law of any state within five years before the filing of a
notice required under division (W)(3) of this section denying
effectiveness to, or suspending or revoking the effectiveness
of, the registration statement.
(ii) The person has been convicted of any offense in
connection with the offer, sale, or purchase of any security or
franchise, or any felony involving fraud or deceit, including,
but not limited to, forgery, embezzlement, fraud, theft, or
921
922
923
924
925
926
927
928
929
930
931
932
933
934
935
936
937
938
939
940
941
942
943
944
945
946
947
948
949 S. B. No. 115 Page 34
As Introduced
conspiracy to defraud.
(iii) The person is subject to an effective administrative
order or judgment that was entered by a state securities
administrator within five years before the filing of a notice
required under division (W)(3) of this section and that
prohibits, denies, or revokes the use of any exemption from
securities registration, prohibits the transaction of business
by the person as a dealer, or is based on fraud, deceit, an
untrue statement of a material fact, or an omission to state a
material fact.
(iv) The person is subject to any order, judgment, or
decree of any court entered within five years before the filing
of a notice required under division (W)(3) of this section,
temporarily, preliminarily, or permanently restraining or
enjoining the person from engaging in or continuing any conduct
or practice in connection with the offer, sale, or purchase of
any security, or the making of any false filing with any state.
(b)(i) Any disqualification under this division involving
a dealer may be waived if the dealer is or continues to be
licensed in this state as a dealer after notifying the
commissioner of the act or event causing disqualification.
(ii) The commissioner may waive any disqualification under
this paragraph upon a showing of good cause that it is not
necessary under the circumstances that use of the exemption be
denied.
(3) Not later than five business days before the earlier
of the date on which the first use of an offering document or
the first sale is made in this state in reliance on the
exemption under this division, there is filed with the
950
951
952
953
954
955
956
957
958
959
960
961
962
963
964
965
966
967
968
969
970
971
972
973
974
975
976
977
978 S. B. No. 115 Page 35
As Introduced
commissioner a notice comprised of offering material in
compliance with the requirements of Rule 502 of Regulation D
under the Securities Act of 1933 and a fee of one hundred
dollars. Material amendments to the offering document shall be
filed with the commissioner not later than the date of their
first use in this state.
(4) The aggregate commission, discount, and other
remuneration paid or given, directly or indirectly, does not
exceed twelve per cent of the initial offering price, excluding
legal, accounting, and printing fees.
(X) Any offer or sale of securities made in reliance on
the exemption provided in Rule 506 of Regulation D under the
Securities Act of 1933, and in accordance with Rules 501 to 503
of Regulation D under the Securities Act of 1933, is exempt
provided that all of the following apply:
(1) The issuer makes a notice filing with the division on
form D of the securities and exchange commission within fifteen
days of the first sale in this state;
(2) Any commission, discount, or other remuneration for
sales of securities in this state is paid or given only to
dealers or salespersons licensed under this chapter;
(3) The issuer pays a filing fee of one hundred dollars to
the division; however, no filing fee shall be required to file
amendments to the form D of the securities and exchange
commission.
(Y) The offer or sale of securities by an issuer is exempt
provided that all of the following apply:
(1) The sale of securities is made only to persons who
are, or who the issuer reasonably believes are, accredited
979
980
981
982
983
984
985
986
987
988
989
990
991
992
993
994
995
996
997
998
999
1000
1001
1002
1003
1004
1005
1006
1007 S. B. No. 115 Page 36
As Introduced
investors as defined in Rule 501 of Regulation D under the
Securities Act of 1933.
(2) The issuer reasonably believes that all purchasers are
purchasing for investment and not with a view to or for sale in
connection with a distribution of the security. Any resale of a
security sold in reliance on this exemption within twelve months
of sale shall be presumed to be with a view to distribution and
not for investment, except a resale to which any of the
following applies:
(a) The resale is pursuant to a registration statement
effective under section 1707.09 or 1707.091 of the Revised Code.
(b) The resale is to an accredited investor, as defined in
Rule 501 of Regulation D under the Securities Act of 1933.
(c) The resale is to an institutional investor pursuant to
the exemptions under division (B) or (D) of this section.
(3) The exemption under this division is not available to
an issuer that is in the development stage and that either has
no specific business plan or purpose or has indicated that its
business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entities or persons.
(4) The exemption under this division is not available to
an issuer, if the issuer, any of the issuer's predecessors, any
affiliated issuer, any of the issuer's directors, officers,
general partners, or beneficial owners of ten per cent or more
of any class of its equity securities, any of the issuer's
promoters presently connected with the issuer in any capacity,
any underwriter of the securities to be offered, or any partner,
director, or officer of such underwriter:
(a) Within the past five years, has filed a registration
1008
1009
1010
1011
1012
1013
1014
1015
1016
1017
1018
1019
1020
1021
1022
1023
1024
1025
1026
1027
1028
1029
1030
1031
1032
1033
1034
1035
1036 S. B. No. 115 Page 37
As Introduced
statement that is the subject of a currently effective
registration stop order entered by any state securities
administrator or the securities and exchange commission;
(b) Within the past five years, has been convicted of any
criminal offense in connection with the offer, purchase, or sale
of any security, or involving fraud or deceit;
(c) Is currently subject to any state or federal
administrative enforcement order or judgment, entered within the
past five years, finding fraud or deceit in connection with the
purchase or sale of any security;
(d) Is currently subject to any order, judgment, or decree
of any court of competent jurisdiction, entered within the past
five years, that temporarily, preliminarily, or permanently
restrains or enjoins the party from engaging in or continuing to
engage in any conduct or practice involving fraud or deceit in
connection with the purchase or sale of any security.
(5) Division (Y)(4) of this section is inapplicable if any
of the following applies:
(a) The party subject to the disqualification is licensed
or registered to conduct securities business in the state in
which the order, judgment, or decree creating the
disqualification was entered against the party described in
division (Y)(4) of this section.
(b) Before the first offer is made under this exemption,
the state securities administrator, or the court or regulatory
authority that entered the order, judgment, or decree, waives
the disqualification.
(c) The issuer did not know and, in the exercise of
reasonable care based on reasonable investigation, could not
1037
1038
1039
1040
1041
1042
1043
1044
1045
1046
1047
1048
1049
1050
1051
1052
1053
1054
1055
1056
1057
1058
1059
1060
1061
1062
1063
1064
1065 S. B. No. 115 Page 38
As Introduced
have known that a disqualification from the exemption existed
under division (Y)(4) of this section.
(6) A general announcement of the proposed offering may be
made by any means; however, the general announcement shall
include only the following information, unless additional
information is specifically permitted by the division by rule:
(a) The name, address, and telephone number of the issuer
of the securities;
(b) The name, a brief description, and price of any
security to be issued;
(c) A brief description of the business of the issuer;
(d) The type, number, and aggregate amount of securities
being offered;
(e) The name, address, and telephone number of the person
to contact for additional information; and
(f) A statement indicating all of the following:
(i) Sales will only be made to accredited investors as
defined in Rule 501 of Regulation D under the Securities Act of
1933;
(ii) No money or other consideration is being solicited or
will be accepted by way of this general announcement;
(iii) The securities have not been registered with or
approved by any state securities administrator or the securities
and exchange commission and are being offered and sold pursuant
to an exemption from registration.
(7) The issuer, in connection with an offer, may provide
information in addition to the general announcement described in
1066
1067
1068
1069
1070
1071
1072
1073
1074
1075
1076
1077
1078
1079
1080
1081
1082
1083
1084
1085
1086
1087
1088
1089
1090
1091
1092 S. B. No. 115 Page 39
As Introduced
division (Y)(6) of this section, provided that either of the
following applies:
(a) The information is delivered through an electronic
database that is restricted to persons that are accredited
investors as defined in Rule 501 of Regulation D under the
Securities Act of 1933.
(b) The information is delivered after the issuer
reasonably believes that the prospective purchaser is an
accredited investor as defined in Rule 501 of Regulation D under
the Securities Act of 1933.
(8) No telephone solicitation shall be done, unless prior
to placing the telephone call, the issuer reasonably believes
that the prospective purchaser to be solicited is an accredited
investor as defined in Rule 501 of Regulation D under the
Securities Act of 1933.
(9) Dissemination of the general announcement described in
division (Y)(6) of this section to persons that are not
accredited investors, as defined in Rule 501 of Regulation D
under the Securities Act of 1933, does not disqualify the issuer
from claiming an exemption under this division.
(10) The issuer shall file with the division notice of the
offering of securities within fifteen days after notice of the
offering is made or a general announcement is made in this
state. The filing shall be on forms adopted by the division and
shall include a copy of the general announcement, if one is made
regarding the proposed offering, and copies of any offering
materials, circulars, or prospectuses. A filing fee of one
hundred dollars also shall be included.
(Z) The offer or sale of securities by an OhioInvests
1093
1094
1095
1096
1097
1098
1099
1100
1101
1102
1103
1104
1105
1106
1107
1108
1109
1110
1111
1112
1113
1114
1115
1116
1117
1118
1119
1120
1121 S. B. No. 115 Page 40
As Introduced
issuer under sections 1707.05 to 1707.058 of the Revised Code is
exempt.
Sec. 1707.09. (A)(1) All securities, except those
enumerated in section 1707.02 of the Revised Code and , those
that are the subject matter of a transaction permitted by
section 1707.03, 1707.04, or 1707.06 of the Revised Code, and
those that are subject to registration by coordination under
section 1707.091 of the Revised Code, shall be qualified in the
manner provided by this section before being sold in this state.
No security subject to registration by coordination under
section 1707.091 of the Revised Code is subject to this section.
(2) Applications for qualification, on forms prescribed by
the division of securities, shall be made in writing either by
the issuer of the securities or by any licensed dealer desiring
to sell them within this state and shall be signed by the
applicant, sworn to by any individual having knowledge of the
facts stated in the application, and filed in the office of the
division.
(3) The individual who executes the application for
qualification of securities on behalf of the applicant shall
state the individual's relationship to the applicant and certify
that: the individual has executed the application on behalf of
the applicant; the individual is fully authorized to execute and
file the application on behalf of the applicant; the individual
is familiar with the applicant's application; and to the best of
the individual's knowledge, information, and belief, the
statements made in the application are true, and the documents
submitted with the application are true copies of the original
documents.
(B) The division shall require the applicant for
1122
1123
1124
1125
1126
1127
1128
1129
1130
1131
1132
1133
1134
1135
1136
1137
1138
1139
1140
1141
1142
1143
1144
1145
1146
1147
1148
1149
1150
1151 S. B. No. 115 Page 41
As Introduced
qualification of securities to submit to it the following
information:
(1) The names and addresses of the directors or trustees
and of the officers of the issuer, if the issuer is a
corporation or an unincorporated association; of all the members
of the issuer, if the issuer is a limited liability company in
which management is reserved to its members; of all the managers
of the issuer, if the issuer is a limited liability company in
which management is not reserved to its members; of all
partners, if the issuer is a general or limited partnership or a
partnership association; and the name and address of the issuer,
if the issuer is an individual;
(2) The address of the issuer's principal place of
business and principal office in this state, if any;
(3) The purposes and general character of the business
actually being transacted, or to be transacted, by the issuer,
and the purpose of issuing the securities named in the
application;
(4) A statement of the capitalization of the issuer; a
balance sheet made up as of the most recent practicable date,
showing the amount and general character of its assets and
liabilities; a description of the security for the qualification
of which application is being made; and copies of all circulars,
prospectuses, advertisements, or other descriptions of the
securities, that are then prepared by or for the issuer, or by
or for the applicant if the applicant is not the issuer, or by
or for both, to be used for distribution or publication in this
state;
(5) A statement of the amount of the issuer's income,
1152
1153
1154
1155
1156
1157
1158
1159
1160
1161
1162
1163
1164
1165
1166
1167
1168
1169
1170
1171
1172
1173
1174
1175
1176
1177
1178
1179
1180 S. B. No. 115 Page 42
As Introduced
expenses, and fixed charges during the last fiscal year or, if
the issuer has been in actual business less than one year, for
the time that the issuer has been in actual business;
(6) A statement showing the price at which the security is
to be offered for sale;
(7) A statement showing the considerations received or to
be received by the issuer of the securities purchased or to be
purchased from the issuer and an itemized statement of all
expenses of financing to be paid from those considerations so as
to show the aggregate net amount actually received or to be
received by the issuer;
(8) All other information, including an opinion of counsel
as to the validity of the securities that are the subject matter
of the application, that the division considers necessary to
enable it to ascertain whether the securities are entitled to
qualification;
(9) If the issuer is a corporation, there shall be filed
with the application a certified copy of its articles of
incorporation with all amendments to the articles, if the
articles or amendments are not already on file in the office of
the secretary of state; if the issuer is a limited liability
company, there shall be filed with the application a certified
copy of its articles of organization with all amendments to the
articles, if the articles or amendments are not already on file
in the office of the secretary of state; if the issuer is a
trust or trustee, there shall be filed with the application a
copy of all instruments by which the trust was created; and if
the issuer is a partnership or an unincorporated association, or
any other form of organization, there shall be filed with the
application a copy of its articles of partnership or association
1181
1182
1183
1184
1185
1186
1187
1188
1189
1190
1191
1192
1193
1194
1195
1196
1197
1198
1199
1200
1201
1202
1203
1204
1205
1206
1207
1208
1209
1210 S. B. No. 115 Page 43
As Introduced
and of all other papers pertaining to its organization, if the
articles or other papers are not already on file in the office
of the secretary of state;
(10) If the application is made with respect to securities
to be sold or distributed by or on behalf of the issuer, or by
or on behalf of an underwriter, as defined in division (N) of
section 1707.03 of the Revised Code, a statement showing that
the issuer has received, or will receive at or prior to the
delivery of those securities, not less than eighty-five per cent
of the aggregate price at which all those securities are sold by
or on behalf of the issuer, without deduction for any additional
commission, directly or indirectly, and without liability to pay
any additional sum as commission;
(11) If the division so permits with respect to a
security, an applicant may file with the division, in lieu of
the division's prescribed forms, a copy of the registration
statement relating to the security, with all amendments to that
statement, previously filed with the securities and exchange
commission of the United States under the "Securities Act of
1933," as amended, together with all additional data,
information, and documents that the division requires.
(C) If the division finds that it is not necessary in the
public interest and for the protection of investors to require
all the information specified in divisions (B)(1) to (10) of
this section, it may permit the filing of applications for
qualification that contain the information that it considers
necessary and appropriate in the public interest and for the
protection of investors, but this provision applies only in the
case of applications for qualification of securities previously
issued and outstanding that may not be made the subject matter
1211
1212
1213
1214
1215
1216
1217
1218
1219
1220
1221
1222
1223
1224
1225
1226
1227
1228
1229
1230
1231
1232
1233
1234
1235
1236
1237
1238
1239
1240 S. B. No. 115 Page 44
As Introduced
of transactions exempt under division (M) of section 1707.03 of
the Revised Code by reason of the fact that those securities
within one year were purchased outside this state or within one
year were transported into this state.
(D) All the statements, exhibits, and documents required
by the division under this section, except properly certified
public documents, shall be verified by the oath of the applicant
for qualification, of the issuer, or of any individual having
knowledge of the facts, and in the manner and form that may be
required by the division. Failure or refusal to comply with the
requests of the division shall be sufficient reason for a
refusal by the division to register securities.
(E) If it appears to the division that substantially the
only consideration to be paid for any of the securities to be
qualified is to be intangible property of doubtful value, the
division may require that the securities be delivered in escrow
to a bank in this state under the terms that the division may
reasonably prescribe or require to prevent a deceitful
misrepresentation or sale of the securities; that the securities
be subordinated in favor of those sold for sound value until
they have a value bearing a reasonable relation to the value of
those sold for sound value; or that a legend of warning
specifying the considerations paid or to be paid for the
securities be stamped or printed on all advertisements,
circulars, pamphlets, or subscription blanks used in connection
with the sale of any securities of the same issuer; or it may
impose a combination of any two or more of these requirements.
(F) At the time of filing the information prescribed in
this section, the applicant shall pay to the division a filing
fee of one hundred dollars.
1241
1242
1243
1244
1245
1246
1247
1248
1249
1250
1251
1252
1253
1254
1255
1256
1257
1258
1259
1260
1261
1262
1263
1264
1265
1266
1267
1268
1269
1270 S. B. No. 115 Page 45
As Introduced
(G)(1) The division, at any time, as a prerequisite to
qualification, may make an examination of the issuer of
securities sought to be qualified. The applicant for
qualification of any securities may be required by the division
to advance sufficient funds to pay all or any part of the actual
expenses of that examination, an itemized statement of which
shall be furnished the applicant.
(2) If (2)(a) Subject to division (G)(2)(b) of this
section, if the division finds that the business of the issuer
is not fraudulently conducted, that the proposed offer or
disposal of securities is not on grossly unfair terms, that the
plan of issuance and sale of the securities referred to in the
proposed offer or disposal would not defraud or deceive, or tend
to defraud or deceive, purchasers, and that division (B)(10) of
this section applies and has been complied with, the division
shall notify the applicant of its findings, and, upon payment of
a registration fee of one-tenth of one per cent of the aggregate
price at which the securities are to be sold to the public in
this state, which fee, however, shall in no case be less than
one hundred or more than one thousand dollars, the division
shall register the qualification of the securities.
(b) To eliminate and preclude excessive and duplicative
rules and regulations that stand in the way of job creation, the
division shall not condition or delay any registration due to
any noncompliance or partial compliance with any requirement,
formal or informal rule, or principle of law or policy of the
division that is inconsistent with, or more stringent or
burdensome than, federal law and rule require.
(H) An application for qualification of securities may be
amended by the person filing it at any time prior to the
1271
1272
1273
1274
1275
1276
1277
1278
1279
1280
1281
1282
1283
1284
1285
1286
1287
1288
1289
1290
1291
1292
1293
1294
1295
1296
1297
1298
1299
1300 S. B. No. 115 Page 46
As Introduced
division's action on it either in registering the securities for
qualification or in refusing to do so. Subsequent to any such
action by the division, the person who filed the application may
file with the consent of the division one or more amendments to
it that shall become effective upon the making by the division
of the findings enumerated in division (G) of this section; the
giving of notice of those findings to the applicant by the
division; and the payment by the applicant of the additional fee
that would have been payable had the application, as it
previously became effective, contained the amendment.
(I) When any securities have been qualified and the fees
for the qualification have been paid as provided in this
section, any licensed dealer subsequently may sell the
securities under the qualification, so long as the qualification
remains in full force, and any dealer of that nature that
desires may file with the division a written notice of intention
to sell the securities or any designated portion of them. For
that filing, no fee need be paid.
Sec. 1707.091. (A) Any security for which a registration
statement has been filed pursuant to Section 6 of the Securities
Act of 1933 or for which a notification form and offering
circular has been filed pursuant to regulation A of the general
rules and regulations of the securities and exchange commission,
17 C.F.R. sections 230.251 to 230.256 and 230.258 to 230.263, as
amended before or after the effective date of this section, in
connection with the same offering may shall be registered by
coordination rather than by qualification under section 1707.09
of the Revised Code or any other method of registration .
(B) A registration statement filed by or on behalf of the
issuer under this section with the division of securities shall
1301
1302
1303
1304
1305
1306
1307
1308
1309
1310
1311
1312
1313
1314
1315
1316
1317
1318
1319
1320
1321
1322
1323
1324
1325
1326
1327
1328
1329
1330 S. B. No. 115 Page 47
As Introduced
contain the following information and be accompanied by the
following items in addition to the consent to service of process
required by section 1707.11 of the Revised Code:
(1) One copy of the latest form of prospectus or offering
circular and notification filed with the securities and exchange
commission;
(2) If the division of securities by rule or otherwise
requires, a copy of the articles of incorporation and code of
regulations or bylaws, or their substantial equivalents, as
currently in effect, a copy of any agreements with or among
underwriters, a copy of any indenture or other instrument
governing the issuance of the security to be registered, and a
specimen or copy of the security;
(3) If the division of securities requests, any other
information, or copies of any other documents, filed with the
securities and exchange commission;
(4) An undertaking by the issuer to forward to the
division, promptly and in any event not later than the first
business day after the day they are forwarded to or thereafter
are filed with the securities and exchange commission, whichever
occurs first, all amendments to the federal prospectus, offering
circular, notification form, or other documents filed with the
securities and exchange commission, other than an amendment that
merely delays the effective date;
(5) A filing fee of one hundred dollars.
(C) A Subject to division (E) of this section, a
registration statement filed under this section becomes
effective, without delay or waiver of any condition by the
division of securities or issuer, either at the moment the
1331
1332
1333
1334
1335
1336
1337
1338
1339
1340
1341
1342
1343
1344
1345
1346
1347
1348
1349
1350
1351
1352
1353
1354
1355
1356
1357
1358
1359 S. B. No. 115 Page 48
As Introduced
federal registration statement becomes effective or at the time
the offering may otherwise be commenced in accordance with the
rules, regulations, or orders of the securities and exchange
commission, if all of the following conditions are satisfied:
(1) No stop order is in effect, no proceeding is pending
under section 1707.13 of the Revised Code, and no cease and
desist order has been issued pursuant to section 1707.23 of the
Revised Code;
(2) The registration statement has been on file with the
division for at least fifteen days or for such shorter period as
the division by rule or otherwise permits; provided, that if the
registration statement is not filed with the division within
five days of the initial filing with the securities and exchange
commission, the registration statement must be on file with the
division for thirty days or for such shorter period as the
division by rule or otherwise permits.
(3) A statement of the maximum and minimum proposed
offering prices and the maximum underwriting discounts and
commissions has been on file with the division for two full
business days or for such shorter period as the division by rule
or otherwise permits and the offering is made within those
limitations;
(4) The division has received a registration fee of one-
tenth of one per cent of the aggregate price at which the
securities are to be sold to the public in this state, which
fee, however, shall in no case be less than one hundred or more
than one thousand dollars.
(D) The issuer shall promptly notify the division by
telephone of the date and time when the federal registration
1360
1361
1362
1363
1364
1365
1366
1367
1368
1369
1370
1371
1372
1373
1374
1375
1376
1377
1378
1379
1380
1381
1382
1383
1384
1385
1386
1387
1388 S. B. No. 115 Page 49
As Introduced
statement became effective, or when the offering may otherwise
be commenced in accordance with the rules, regulations, or
orders of the securities and exchange commission, and of the
contents of the price amendment, if any, and shall promptly file
the price amendment.
"Price amendment" for the purpose of this division, means
the final federal registration statement amendment that includes
a statement of the offering price, underwriting and selling
discounts or commissions, amount of proceeds, conversion rates,
call prices, and other matters dependent upon the offering
price.
If the division fails to receive the required notice and
required copies of the price amendment, the division may enter a
provisional stop order retroactively denying effectiveness to
the registration statement or suspending its effectiveness until
there is compliance with this division, provided the division
promptly notifies the issuer or its representative by telephone,
and promptly confirms by letter when it notifies by telephone,
of the entry of the order. If the issuer or its representative
proves compliance with the requirements of this division as to
notice and price amendment filing, the stop order is void as of
the time of its entry. The division may by rule or otherwise
waive either or both of the conditions specified in divisions
(C)(2) and (3) of this section. If the federal registration
statement becomes effective, or if the offering may otherwise be
commenced in accordance with the rules, regulations, or orders
of the securities and exchange commission, before all of the
conditions specified in divisions (C) and (D) of this section
are satisfied and they are not waived by the division the
registration statement becomes effective as soon as all of the
conditions are satisfied.
1389
1390
1391
1392
1393
1394
1395
1396
1397
1398
1399
1400
1401
1402
1403
1404
1405
1406
1407
1408
1409
1410
1411
1412
1413
1414
1415
1416
1417
1418
1419 S. B. No. 115 Page 50
As Introduced
If the issuer advises the division of the date when the
federal registration statement is expected to become effective,
or when the offering may otherwise be commenced in accordance
with the rules, regulations, or orders of the securities and
exchange commission, the division shall promptly advise the
issuer or its representative by telephone, at the issuer's
expense, whether all of the conditions have been satisfied or
whether the division then contemplates the institution of a
proceeding under section 1707.13 or 1707.23 of the Revised Code,
but such advice does not preclude the institution of such a
proceeding at any time.
(E) To eliminate and preclude excessive and duplicative
rules and regulations that stand in the way of job creation, the
division shall not condition or delay any registration under
this section, or enter any stop order respecting any such
registration, due to any noncompliance or partial compliance
with any requirement, formal or informal rule, or principle of
law or policy of the division that is inconsistent with, or more
stringent or burdensome than, federal law and rule require.
(F) The division shall not issue a comment letter
concerning a registration under this section.
(G) The division shall not issue any written guidance or
interpretation, policy statement, advisory opinion, standard, or
similar statement concerning registration by coordination, other
than statements solely of an administration nature that have no
general and uniform operation.
Sec. 1707.092. (A) For the purposes of selling securities
in this state, except securities that are the subject matter of
transactions enumerated in section 1707.03 of the Revised Code,
an investment company, as defined by the Investment Company Act
1420
1421
1422
1423
1424
1425
1426
1427
1428
1429
1430
1431
1432
1433
1434
1435
1436
1437
1438
1439
1440
1441
1442
1443
1444
1445
1446
1447
1448
1449 S. B. No. 115 Page 51
As Introduced
of 1940, that is registered or has filed a registration
statement with the securities and exchange commission under the
Investment Company Act of 1940 and a business development
company that has elected to be subject to 15 U.S.C. 80a-54 to
80a-64, shall file the following with the division of
securities:
(1) A notice filing consisting of either of the following:
(a) A copy of the investment company's or business
development company's federal registration statement as filed
with the securities and exchange commission;
(b) A form U-1 or form NF of the North American securities
administrators association.
(2) Appropriate filing fees consisting of both of the
following:
(a) A flat fee of one hundred dollars;
(b) A fee calculated at one-tenth of one per cent of the
aggregate price at which the securities are to be sold to the
public in this state, which calculated fee, however, shall in no
case be less than one hundred or more than one thousand dollars.
(B)(1) Upon payment of the maximum filing fees as provided
in division (A)(2) of this section, an investment company or
business development company may sell an indefinite amount of
securities in this state.
(2) An investment company or business development company
making a notice filing as provided in this section shall comply
with section 1707.11 of the Revised Code. An investment company
or business development company that previously filed with the
division a valid consent to service of process pursuant to
1450
1451
1452
1453
1454
1455
1456
1457
1458
1459
1460
1461
1462
1463
1464
1465
1466
1467
1468
1469
1470
1471
1472
1473
1474
1475
1476
1477 S. B. No. 115 Page 52
As Introduced
section 1707.11 of the Revised Code may incorporate that consent
by reference.
(C)(1) For offerings involving covered securities, as
defined in section 18 of the "Securities Act of 1933," 15 U.S.C.
77r, that are not subject to section 1707.02, 1707.03, 1707.04,
1707.06, 1707.08, 1707.09, or 1707.091 of the Revised Code, or
division (A) of this section, a notice filing shall be submitted
to the division together with a consent to service of process
pursuant to section 1707.11 of the Revised Code and a filing fee
as provided in division (A)(2) of this section.
(2) The notice filing described in division (C)(1) of this
section shall consist of any document filed with the securities
and exchange commission pursuant to the Securities Act of 1933,
together with annual or periodic reports of the value of the
securities sold or offered to be sold to persons located in this
state.
(D) A notice filing submitted under this section shall be
effective for thirteen months.
Sec. 1707.13. (A) The division of securities may suspend
the registration by description or by qualification of any
securities, or the right of any dealers or of the issuer, or of
both, to buy, sell, or deal in any particular security whether
it is registered, qualified, or exempt or even though
transactions in it are registered or exempt, if the division
finds that the issuer has violated sections 1707.01 to 1707.50,
inclusive, of the Revised Code, or any lawful order or
requirement of the division, has fraudulently conducted its
business, or has been engaged in or is engaged or about to
engage in deceptive or fraudulent acts, practices, or
transactions; that such security is being disposed of or
1478
1479
1480
1481
1482
1483
1484
1485
1486
1487
1488
1489
1490
1491
1492
1493
1494
1495
1496
1497
1498
1499
1500
1501
1502
1503
1504
1505
1506
1507 S. B. No. 115 Page 53
As Introduced
purchased on grossly unfair terms, in such manner as to deceive
or defraud or as to tend to deceive or defraud purchasers or
sellers, or in disregard of the lawful rules and regulations of
the division applicable to such security or to transactions
therein; or, in the case of securities being sold under a
registration or qualification, that the issuer is insolvent.
(B) To eliminate and preclude excessive and duplicative
rules and regulations that stand in the way of job creation, the
division shall not suspend, revoke, condition, or delay any
registration of securities, or enter any stop order respecting
any registration of securities due to noncompliance or partial
compliance with any requirement, formal or informal rule, or
principle of law or policy of the division that is inconsistent
with, or more stringent or burdensome than, federal law and rule
require.
(C) Notice of such suspension shall be mailed by the
division to the issuer and to all licensed dealers concerned.
Such notice shall specify the particular security whose
registration is being suspended and shall set a date, not more
than ten days later than the date of the order of suspension,
for a hearing on the continuation or revocation of such
suspension. For good cause the division may continue such
hearing on application of any interested party. In conducting
such hearing the division shall have all the authority and
powers set forth in section 1707.23 of the Revised Code.
Following such hearing the division shall either confirm or
revoke such suspension. No such suspension shall invalidate any
sale of securities made prior thereto; and the rights of persons
defrauded by any sale shall in no wise be impaired.
(D) If the issuer of a security refuses to permit an
1508
1509
1510
1511
1512
1513
1514
1515
1516
1517
1518
1519
1520
1521
1522
1523
1524
1525
1526
1527
1528
1529
1530
1531
1532
1533
1534
1535
1536
1537 S. B. No. 115 Page 54
As Introduced
examination to be made by the division of its books, records,
and property, or refuses to furnish the division any information
which it may lawfully require under sections 1707.01 to 1707.50,
inclusive, of the Revised Code, such refusal is a sufficient
ground for the division to suspend the registration by
description or by qualification of such security, or the right
of any dealers or of the issuer, or of both, to buy, sell, or
deal in such security.
If any interested party desires an investigation at a
place other than the office of the division, such person may be
required by the division to advance sufficient funds to pay the
actual expenses of such investigation.
Whenever the division determines, upon hearing, that any
application for qualification was made, or that any securities
or any transaction was registered by description, by a person
who knew that untrue statements were contained in such
application or description, the division may proceed under
sections 1707.19, 1707.23, and 1707.44 of the Revised Code, or
any of them, against the person who filed such application or
such registration by description.
Sec. 1707.23. (A) Whenever it appears to the division of
securities, from its files, upon complaint, or otherwise, that
any person has engaged in, is engaged in, or is about to engage
in any practice declared to be illegal or prohibited by this
chapter or rules adopted under this chapter by the division, or
defined as fraudulent in this chapter or rules adopted under
this chapter by the division, or any other deceptive scheme or
practice in connection with the sale of securities, or acting as
a dealer, a salesperson, an investment adviser, investment
adviser representative, bureau of workers' compensation chief
1538
1539
1540
1541
1542
1543
1544
1545
1546
1547
1548
1549
1550
1551
1552
1553
1554
1555
1556
1557
1558
1559
1560
1561
1562
1563
1564
1565
1566
1567 S. B. No. 115 Page 55
As Introduced
investment officer, state retirement system investment officer,
or portal operator as defined in section 1707.05 of the Revised
Code or when the division believes it to be in the best
interests of the public and necessary for the protection of
investors, the division may do any of the following:
(A) (1) Require any person to file with it, on such forms
as it prescribes, an original or additional statement or report
in writing, under oath or otherwise, as to any facts or
circumstances concerning the issuance, sale, or offer for sale
of securities within this state by the person, as to the
person's acts or practices as a dealer, a salesperson, an
investment adviser, investment adviser representative, bureau of
workers' compensation chief investment officer, state retirement
system investment officer, or portal operator within this state,
and as to other information as it deems material or relevant
thereto;
(B) (2) Examine any investment adviser, investment adviser
representative, state retirement system investment officer,
bureau of workers' compensation chief investment officer, or any
seller, dealer, salesperson, or issuer of any securities, or any
portal operator, and any of their agents, employees, partners,
officers, directors, members, or shareholders, wherever located,
under oath; and examine and produce records, books, documents,
accounts, and papers as the division deems material or relevant
to the inquiry;
(C) (3) Require the attendance of witnesses, and the
production of books, records, and papers, as are required either
by the division or by any party to a hearing before the
division, and for that purpose issue a subpoena for any witness,
or a subpoena duces tecum to compel the production of any books,
1568
1569
1570
1571
1572
1573
1574
1575
1576
1577
1578
1579
1580
1581
1582
1583
1584
1585
1586
1587
1588
1589
1590
1591
1592
1593
1594
1595
1596
1597 S. B. No. 115 Page 56
As Introduced
records, or papers. The subpoena shall be served by personal
service or by certified mail, return receipt requested. If the
subpoena is returned because of inability to deliver, or if no
return is received within thirty days of the date of mailing,
the subpoena may be served by ordinary mail. If no return of
ordinary mail is received within thirty days after the date of
mailing, service shall be deemed to have been made. If the
subpoena is returned because of inability to deliver, the
division may designate a person or persons to effect either
personal or residence service upon the witness. The person
designated to effect personal or residence service under this
division may be the sheriff of the county in which the witness
resides or may be found or any other duly designated person. The
fees and mileage of the person serving the subpoena shall be the
same as those allowed by the courts of common pleas in criminal
cases, and shall be paid from the funds of the division. Fees
and mileage for the witness shall be determined under section
119.094 of the Revised Code, and shall be paid from the funds of
the division upon request of the witness following the hearing.
(D) (4) Initiate criminal proceedings under section
1707.042 or 1707.44 of the Revised Code or rules adopted under
those sections by the division by laying before the prosecuting
attorney of the proper county any evidence of criminality which
comes to its knowledge; and in the event of the neglect or
refusal of the prosecuting attorney to prosecute such
violations, or at the request of the prosecuting attorney, the
division shall submit the evidence to the attorney general, who
may proceed in the prosecution with all the rights, privileges,
and powers conferred by law on prosecuting attorneys, including
the power to appear before grand juries and to interrogate
witnesses before such grand juries.
1598
1599
1600
1601
1602
1603
1604
1605
1606
1607
1608
1609
1610
1611
1612
1613
1614
1615
1616
1617
1618
1619
1620
1621
1622
1623
1624
1625
1626
1627
1628 S. B. No. 115 Page 57
As Introduced
(E) (5) Require any dealers immediately to furnish to the
division copies of prospectuses, circulars, or advertisements
respecting securities that they publish or generally distribute,
or require any investment advisers immediately to furnish to the
division copies of brochures, advertisements, publications,
analyses, reports, or other writings that they publish or
distribute;
(F) (6) Require any dealers to mail to the division, prior
to sale, notices of intention to sell, in respect to all
securities which are not exempt under section 1707.02 of the
Revised Code, or which are sold in transactions not exempt under
section 1707.03 or 1707.04 of the Revised Code;
(G) (7) Issue and cause to be served by certified mail
upon all persons affected an order requiring the person or
persons to cease and desist from the acts or practices appearing
to the division to constitute violations of this chapter or
rules adopted under this chapter by the division. The order
shall state specifically the section or sections of this chapter
or the rule or rules adopted under this chapter by the division
that appear to the division to have been violated and the facts
constituting the violation. If after the issuance of the order
it appears to the division that any person or persons affected
by the order have engaged in any act or practice from which the
person or persons shall have been required, by the order, to
cease and desist, the director of commerce may apply to the
court of common pleas of any county for, and upon proof of the
validity of the order of the division, the delivery of the order
to the person or persons affected, and of the illegality and the
continuation of the acts or practices that are the subject of
the order, the court may grant an injunction implementing the
order of the division.
1629
1630
1631
1632
1633
1634
1635
1636
1637
1638
1639
1640
1641
1642
1643
1644
1645
1646
1647
1648
1649
1650
1651
1652
1653
1654
1655
1656
1657
1658
1659 S. B. No. 115 Page 58
As Introduced
(H) (8) Issue and initiate contempt proceedings in this
state regarding subpoenas and subpoenas duces tecum at the
request of the securities administrator of another state, if it
appears to the division that the activities for which the
information is sought would violate this chapter if the
activities had occurred in this state.
(I) (9) The remedies provided by this section are
cumulative and concurrent with any other remedy provided in this
chapter, and the exercise of one remedy does not preclude or
require the exercise of any other remedy.
(B) To eliminate and preclude excessive and duplicative
rules and regulations that stand in the way of job creation, the
division shall not suspend, revoke, condition, or delay any
registration of securities, or enter any stop order respecting
any registration of securities due to any noncompliance or
partial compliance with any requirement, formal or informal
rule, or principle of law or policy of the division that is
inconsistent with, or more stringent or burdensome than, federal
law and rule require.
Sec. 1707.39. When any securities have been sold without
compliance with sections 1707.01 to 1707.50 of the Revised Code,
or any former law in force at the time of such sale, any
interested person may apply in writing to the division of
securities for the qualification of such securities under such
sections. If it appears to the division that no person has been
defrauded, prejudiced, or damaged by such noncompliance or sale
and that no person will be defrauded, prejudiced, or damaged by
such qualification, the division may permit such securities to
be so qualified upon the payment of a fee of one hundred dollars
plus a fee of one-fifth of one per cent of the aggregate price
1660
1661
1662
1663
1664
1665
1666
1667
1668
1669
1670
1671
1672
1673
1674
1675
1676
1677
1678
1679
1680
1681
1682
1683
1684
1685
1686
1687
1688
1689 S. B. No. 115 Page 59
As Introduced
at which the securities have been sold in this state, which fee
shall in no case be less than one hundred dollars nor more than
two thousand dollars. In addition, the division may require the
applicant to advance sufficient funds to pay the actual expenses
of an examination or investigation by the division, whether to
be conducted in this state or outside this state. An itemized
statement of such expenses shall be furnished to the applicant.
Such qualification shall estop the division from
proceeding under division (D)(A)(4) of section 1707.23 of the
Revised Code against anyone who has violated division (C)(1) of
section 1707.44 of the Revised Code for acts within the scope of
the application, or from proceeding with administrative action
pursuant to section 1707.13 of the Revised Code.
Section 2. That existing sections 1707.01, 1707.03,
1707.09, 1707.091, 1707.092, 1707.13, 1707.23, and 1707.39 of
the Revised Code are hereby repealed.
1690
1691
1692
1693
1694
1695
1696
1697
1698
1699
1700
1701
1702
1703
1704
1705