As Reported by the Senate Judiciary Committee 1
123rd General Assembly 4
Regular Session Sub. H. B. No. 551 5
1999-2000 6
REPRESENTATIVE SALERNO-PETERSON-CALLENDER-WOMER BENJAMIN- 8
WILLAMOWSKI-GOODMAN-HOOPS-JOLIVETTE-OLMAN-PERRY-BARNES- 9
VERICH-JONES-BRITTON-STEVENS 10
_________________________________________________________________ 11
A B I L L
To amend sections 1707.01, 1707.02, 1707.11, 13
1707.15, 1707.151, 1707.16, 1707.17, 1707.20, 14
1707.23, and 1707.44; to enact sections 3916.01,
3916.02, 3916.03, 3916.04, 3916.05, 3916.06, 16
3916.07, 3916.08, 3916.09, 3916.10, 3916.11,
3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 17
3916.17, 3916.18, 3916.19, 3916.20, 3916.21, and 18
3916.99; and to repeal sections 1707.432, 19
1707.433, 1707.434, 1707.435, 1707.436, 1707.437, 20
1707.438, and 1707.439 of the Revised Code to 21
adopt the Viatical Settlements Model Act of the 22
National Association of Insurance Commissioners,
to make life settlement interests subject to the 23
Ohio Securities Law, and to make other changes in 24
the Securities Law, including changes relative to 25
exempt securities, consent to service of process, 26
application for a dealer's, investment adviser's,
or salesperson's license, private civil actions 27
seeking damages arising from the sale of a 28
security, and expedited rulemaking authority.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 30
Section 1. That sections 1707.01, 1707.02, 1707.11, 32
1707.15, 1707.151, 1707.16, 1707.17, 1707.20, 1707.23, and 34
1707.44 be amended and sections 3916.01, 3916.02, 3916.03,
2
3916.04, 3916.05, 3916.06, 3916.07, 3916.08, 3916.09, 3916.10, 36
3916.11, 3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17, 38
3916.18, 3916.19, 3916.20, 3916.21, and 3916.99 of the Revised 39
Code be enacted to read as follows: 41
Sec. 1707.01. As used in this chapter: 50
(A) Whenever the context requires it, "division" or 52
"division of securities" may be read as "director of commerce" or 53
as "commissioner of securities." 54
(B) "Security" means any certificate or instrument that 56
represents title to or interest in, or is secured by any lien or 57
charge upon, the capital, assets, profits, property, or credit of 58
any person or of any public or governmental body, subdivision, or 59
agency. It includes shares of stock, certificates for shares of 60
stock, membership interests in limited liability companies, 61
voting-trust certificates, warrants and options to purchase 62
securities, subscription rights, interim receipts, interim 63
certificates, promissory notes, all forms of commercial paper, 64
evidences of indebtedness, bonds, debentures, land trust 65
certificates, fee certificates, leasehold certificates, syndicate 66
certificates, endowment certificates, certificates or written 67
instruments in or under profit-sharing or participation 68
agreements or in or under oil, gas, or mining leases, or 69
certificates or written instruments of any interest in or under 70
the same, receipts evidencing preorganization or reorganization 71
subscriptions, preorganization certificates, reorganization 72
certificates, certificates evidencing an interest in any trust or 73
pretended trust, any investment contract, ANY LIFE SETTLEMENT 74
INTEREST, any instrument evidencing a promise or an agreement to 75
pay money, warehouse receipts for intoxicating liquor, and the 76
currency of any government other than those of the United States 77
and Canada, but sections 1707.01 to 1707.45 of the Revised Code 78
do not apply to the sale of real estate. 79
(C)(1) "Sale" has the full meaning of "sale" as applied by 81
or accepted in courts of law or equity, and includes every 82
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disposition, or attempt to dispose, of a security or of an 83
interest in a security. "Sale" also includes a contract to sell, 84
an exchange, an attempt to sell, an option of sale, a 85
solicitation of a sale, a solicitation of an offer to buy, a 86
subscription, or an offer to sell, directly or indirectly, by 87
agent, circular, pamphlet, advertisement, or otherwise. 88
(2) "Sell" means any act by which a sale is made. 90
(3) The use of advertisements, circulars, or pamphlets in 92
connection with the sale of securities in this state exclusively 93
to the purchasers specified in division (D) of section 1707.03 of 94
the Revised Code is not a sale when the advertisements, 95
circulars, and pamphlets describing and offering those securities 96
bear a readily legible legend in substance as follows: "This 97
offer is made on behalf of dealers licensed under sections 98
1707.01 to 1707.45 of the Revised Code, and is confined in this 99
state exclusively to institutional investors and licensed 100
dealers." 101
(4) The offering of securities by any person in 103
conjunction with a licensed dealer by use of advertisement, 104
circular, or pamphlet is not a sale if that person does not 105
otherwise attempt to sell securities in this state. 106
(5) Any security given with, or as a bonus on account of, 108
any purchase of securities is conclusively presumed to constitute 109
a part of the subject of that purchase and has been "sold." 110
(6) "Sale" by an owner, pledgee, or mortgagee, or by a 112
person acting in a representative capacity, includes sale on 113
behalf of such party by an agent, including a licensed dealer or 114
salesperson. 115
(D) "Person," except as otherwise provided in this 117
chapter, means a natural person, firm, partnership, limited 119
partnership, partnership association, syndicate, joint-stock 120
company, unincorporated association, trust or trustee except 121
where the trust was created or the trustee designated by law or 122
judicial authority or by a will, and a corporation or limited 123
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liability company organized under the laws of any state, any 124
foreign government, or any political subdivision of a state or 125
foreign government.
(E)(1) "Dealer," except as otherwise provided in this 127
chapter, means every person, other than a salesperson, who 129
engages or professes to engage, in this state, for either all or
part of the person's time, directly or indirectly, either in the 130
business of the sale of securities for the person's own account, 131
or in the business of the purchase or sale of securities for the 132
account of others in the reasonable expectation of receiving a 133
commission, fee, or other remuneration as a result of engaging in 134
the purchase and sale of securities. "Dealer" does not mean any 135
of the following:
(a) Any issuer, including any officer, director, employee, 137
or trustee of, or member or manager of, or partner in, or any 138
general partner of, any issuer, that sells, offers for sale, or 140
does any act in furtherance of the sale of a security that 141
represents an economic interest in that issuer, provided no 142
commission, fee, or other similar remuneration is paid to or 143
received by the issuer for the sale; 144
(b) Any licensed attorney, public accountant, or firm of 146
such attorneys or accountants, whose activities are incidental to 147
the practice of the attorney's, accountant's, or firm's 148
profession;
(c) Any person that, for the account of others, engages in 150
the purchase or sale of securities that are issued and 151
outstanding before such purchase and sale, if a majority or more 152
of the equity interest of an issuer is sold in that transaction, 153
and if, in the case of a corporation, the securities sold in that 154
transaction represent a majority or more of the voting power of 155
the corporation in the election of directors; 156
(d) Any person that brings an issuer together with a 158
potential investor and whose compensation is not directly or 159
indirectly based on the sale of any securities by the issuer to 160
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the investor; 161
(e) Any bank, savings and loan association, savings bank, 163
or credit union chartered under the laws of the United States or 164
any state of the United States, provided that all transactions 166
are consummated by or through a person licensed pursuant to 167
section 1707.14 of the Revised Code; 168
(f) Any person that the division of securities by rule 170
exempts from the definition of "dealer" under division (E)(1) of 171
this section. 172
(2) "Licensed dealer" means a dealer licensed under this 175
chapter.
(F)(1) "Salesman" or "salesperson" means every natural 177
person, other than a dealer, who is employed, authorized, or 178
appointed by a dealer to sell securities within this state. 179
(2) The general partners of a partnership, and the 181
executive officers of a corporation or unincorporated 182
association, licensed as a dealer are not salespersons within the 184
meaning of this definition, nor are such clerical or other
employees of an issuer or dealer as are employed for work to 185
which the sale of securities is secondary and incidental; but the 186
division of securities may require a license from any such 187
partner, executive officer, or employee if it determines that 188
protection of the public necessitates the licensing. 189
(3) "Licensed salesperson" means a salesperson licensed 192
under this chapter.
(G) "Issuer" means every person who has issued, proposes 194
to issue, or issues any security. 195
(H) "Director" means each director or trustee of a 197
corporation, each trustee of a trust, each general partner of a 198
partnership, except a partnership association, each manager of a 199
partnership association, and any person vested with managerial or 200
directory power over an issuer not having a board of directors or 201
trustees. 202
(I) "Incorporator" means any incorporator of a corporation 204
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and any organizer of, or any person participating, other than in 205
a representative or professional capacity, in the organization of 206
an unincorporated issuer. 207
(J) "Fraud," "fraudulent," "fraudulent acts," "fraudulent 209
practices," or "fraudulent transactions" means anything 210
recognized on or after July 22, 1929, as such in courts of law or 211
equity; any device, scheme, or artifice to defraud or to obtain 212
money or property by means of any false pretense, representation, 213
or promise; any fictitious or pretended purchase or sale of 214
securities; and any act, practice, transaction, or course of 215
business relating to the purchase or sale of securities that is 216
fraudulent or that has operated or would operate as a fraud upon 218
the seller or purchaser.
(K) Except as otherwise specifically provided, whenever 220
any classification or computation is based upon "par value," as 221
applied to securities without par value, the average of the 222
aggregate consideration received or to be received by the issuer 223
for each class of those securities shall be used as the basis for 224
that classification or computation. 225
(L)(1) "Intangible property" means patents, copyrights, 227
secret processes, formulas, services, good will, promotion and 228
organization fees and expenses, trademarks, trade brands, trade 229
names, licenses, franchises, any other assets treated as 230
intangible according to generally accepted accounting principles, 231
and securities, accounts receivable, or contract rights having no 232
readily determinable value. 233
(2) "Tangible property" means all property other than 235
intangible property and includes securities, accounts receivable, 236
and contract rights, when the securities, accounts receivable, or 237
contract rights have a readily determinable value. 238
(M) "Public utilities" means those utilities defined in 240
sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised 241
Code; in the case of a foreign corporation, it means those 242
utilities defined as public utilities by the laws of its 243
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domicile; and in the case of any other foreign issuer, it means 244
those utilities defined as public utilities by the laws of the 245
situs of its principal place of business. The term always 246
includes railroads whether or not they are so defined as public 247
utilities. 248
(N) "State" means any state of the United States, any 250
territory or possession of the United States, the District of 251
Columbia, and any province of Canada. 252
(O) "Bank" means any bank, trust company, savings and loan 254
association, savings bank, or credit union that is incorporated 256
or organized under the laws of the United States, any state of 257
the United States, Canada, or any province of Canada and that is 258
subject to regulation or supervision by that country, state, or 259
province.
(P) "Include," when used in a definition, does not exclude 261
other things or persons otherwise within the meaning of the term 262
defined. 263
(Q)(1) "Registration by description" means that the 265
requirements of section 1707.08 of the Revised Code have been 266
complied with. 267
(2) "Registration by qualification" means that the 269
requirements of sections 1707.09 and 1707.11 of the Revised Code 270
have been complied with. 271
(3) "Registration by coordination" means that there has 273
been compliance with section 1707.091 of the Revised Code. 274
Reference in this chapter to registration by qualification also 275
shall be deemed to include registration by coordination unless 276
the context otherwise indicates. 277
(R) "Intoxicating liquor" includes all liquids and 279
compounds that contain more than three and two-tenths per cent of 280
alcohol by weight and are fit for use for beverage purposes. 281
(S) "Institutional investor" means any corporation, bank, 283
insurance company, pension fund or pension fund trust, employees' 284
profit-sharing fund or employees' profit-sharing trust, any 285
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association engaged, as a substantial part of its business or 286
operations, in purchasing or holding securities, or any trust in 287
respect of which a bank is trustee or cotrustee. "Institutional 288
investor" does not include any business entity formed for the 289
primary purpose of evading sections 1707.01 to 1707.45 of the 290
Revised Code. 291
(T) "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a, 294
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a, 295
"Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 1, 296
"Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b, 297
and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a 299
mean the federal statutes of those names as amended before or 300
after March 18, 1999.
(U) "Securities and exchange commission" means the 302
securities and exchange commission established by the Securities 303
Exchange Act of 1934. 304
(V)(1) "Control bid" means the purchase of or offer to 306
purchase any equity security of a subject company from a resident 307
of this state if either of the following applies: 308
(a) After the purchase of that security, the offeror would 310
be directly or indirectly the beneficial owner of more than ten 311
per cent of any class of the issued and outstanding equity 312
securities of the issuer. 313
(b) The offeror is the subject company, there is a pending 315
control bid by a person other than the issuer, and the number of 316
the issued and outstanding shares of the subject company would be 317
reduced by more than ten per cent. 318
(2) For purposes of division (V)(1) of this section, 320
"control bid" does not include any of the following: 321
(a) A bid made by a dealer for the dealer's own account in 323
the ordinary course of business of buying and selling securities; 324
(b) An offer to acquire any equity security solely in 326
exchange for any other security, or the acquisition of any equity 327
security pursuant to an offer, for the sole account of the 328
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offeror, in good faith and not for the purpose of avoiding the 329
provisions of this chapter, and not involving any public offering 330
of the other security within the meaning of Section 4 of Title I 331
of the "Securities Act of 1933," 48 Stat. 77, 15 U.S.C.A. 77d(2), 332
as amended; 333
(c) Any other offer to acquire any equity security, or the 335
acquisition of any equity security pursuant to an offer, for the 336
sole account of the offeror, from not more than fifty persons, in 337
good faith and not for the purpose of avoiding the provisions of 338
this chapter. 339
(W) "Offeror" means a person who makes, or in any way 341
participates or aids in making, a control bid and includes 342
persons acting jointly or in concert, or who intend to exercise 343
jointly or in concert any voting rights attached to the 344
securities for which the control bid is made and also includes 345
any subject company making a control bid for its own securities. 346
(X)(1) "Investment adviser" means any person who, for 349
compensation, engages in the business of advising others, either 350
directly or through publications or writings, as to the value of 351
securities or as to the advisability of investing in, purchasing, 352
or selling securities, or who, for compensation and as a part of 353
regular business, issues or promulgates analyses or reports 354
concerning securities.
(2) "Investment adviser" does not mean any of the 356
following:
(a) Any attorney, accountant, engineer, or teacher, whose 358
performance of investment advisory services described in division 360
(X)(1) of this section is solely incidental to the practice of 361
the attorney's, accountant's, engineer's, or teacher's 362
profession;
(b) A publisher of any bona fide newspaper, news magazine, 365
or business or financial publication of general and regular 366
circulation;
(c) A person who acts solely as an investment adviser 368
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representative; 369
(d) A bank holding company, as defined in the "Bank 371
Holding Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that 373
is not an investment company; 374
(e) A bank, or any receiver, conservator, or other 376
liquidating agent of a bank; 377
(f) Any licensed dealer or licensed salesperson whose 379
performance of investment advisory services described in division 380
(X)(1) of this section is solely incidental to the conduct of the 381
dealer's or salesperson's business as a licensed dealer or 382
licensed salesperson and who receives no special compensation for 383
the services;
(g) Any person, the advice, analyses, or reports of which 385
do not relate to securities other than securities that are direct 386
obligations of, or obligations guaranteed as to principal or 387
interest by, the United States, or securities issued or 388
guaranteed by corporations in which the United States has a 389
direct or indirect interest, and that have been designated by the 390
secretary of the treasury as exempt securities as defined in the 391
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c; 392
(h) Any person that is excluded from the definition of 394
investment adviser pursuant to section 202(a)(11)(A) to (E) of 396
the "Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11), or 397
that has received an order from the securities and exchange 398
commission under section 202(a)(11)(F) of the "Investment 399
Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that 400
the person is not within the intent of section 202(a)(11) of the 401
Investment Advisers Act of 1940.
(i) Any other person that the division designates by rule, 403
if the division finds that the designation is necessary or 404
appropriate in the public interest or for the protection of 405
investors or clients and consistent with the purposes fairly 406
intended by the policy and provisions of this chapter.
(Y)(1) "Subject company" means an issuer that satisfies 408
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both of the following: 409
(a) Its principal place of business or its principal 411
executive office is located in this state, or it owns or controls 412
assets located within this state that have a fair market value of 413
at least one million dollars. 414
(b) More than ten per cent of its beneficial or record 416
equity security holders are resident in this state, more than ten 417
per cent of its equity securities are owned beneficially or of 418
record by residents in this state, or more than one thousand of 419
its beneficial or record equity security holders are resident in 420
this state. 421
(2) The division of securities may adopt rules to 423
establish more specific application of the provisions set forth 424
in division (Y)(1) of this section. Notwithstanding the 425
provisions set forth in division (Y)(1) of this section and any 426
rules adopted under this division, the division, by rule or in an 427
adjudicatory proceeding, may make a determination that an issuer 428
does not constitute a "subject company" under division (Y)(1) of 429
this section if appropriate review of control bids involving the 430
issuer is to be made by any regulatory authority of another 431
jurisdiction. 432
(Z) "Beneficial owner" includes any person who directly or 434
indirectly through any contract, arrangement, understanding, or 435
relationship has or shares, or otherwise has or shares, the power 436
to vote or direct the voting of a security or the power to 437
dispose of, or direct the disposition of, the security. 438
"Beneficial ownership" includes the right, exercisable within 439
sixty days, to acquire any security through the exercise of any 440
option, warrant, or right, the conversion of any convertible 441
security, or otherwise. Any security subject to any such option, 442
warrant, right, or conversion privilege held by any person shall 443
be deemed to be outstanding for the purpose of computing the 444
percentage of outstanding securities of the class owned by that 445
person, but shall not be deemed to be outstanding for the purpose 446
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of computing the percentage of the class owned by any other 447
person. A person shall be deemed the beneficial owner of any 448
security beneficially owned by any relative or spouse or relative 449
of the spouse residing in the home of that person, any trust or 450
estate in which that person owns ten per cent or more of the 451
total beneficial interest or serves as trustee or executor, any 452
corporation or entity in which that person owns ten per cent or 453
more of the equity, and any affiliate or associate of that 454
person. 455
(AA) "Offeree" means the beneficial or record owner of any 457
security that an offeror acquires or offers to acquire in 458
connection with a control bid. 459
(BB) "Equity security" means any share or similar 461
security, or any security convertible into any such security, or 462
carrying any warrant or right to subscribe to or purchase any 463
such security, or any such warrant or right, or any other 464
security that, for the protection of security holders, is treated 465
as an equity security pursuant to rules of the division of 466
securities. 467
(CC) "Investment company" has the same meaning as in 469
section 3(A) of the "Investment Company Act of 1940," 54 Stat. 470
789, 15 U.S.C. 80a-1 to 80a-52. 471
(DD) "Penny stock" has the same meaning as in section 474
3(A)(51) of the "Securities Exchange Act of 1934," 48 Stat. 881, 475
15 U.S.C. 78a-78jj, and the rules, regulations, and orders issued 476
pursuant to that section. 477
(EE) "Going concern transaction" has the same meaning 480
given that term under the rules or regulations on the securities 481
and exchange commission issued pursuant to section 13(c) of the 482
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C.
78a-78jj. 483
(FF) "Person acting on behalf of an issuer" means an 486
officer, director, or employee of an issuer.
(GG) "Blank check company," "roll-up transaction," 489
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"executive officer of an entity," and "direct participation
program" have the same meanings given those terms by rule or 490
regulation of the securities and exchange commission. 491
(HH) "Forward-looking statement" means any of the 493
following:
(1) A statement containing a projection of revenues, 495
income including income loss, earnings per share including 496
earnings loss per share, capital expenditures, dividends, capital 497
structure, or other financial items;
(2) A statement of the plans and objectives of the 499
management of the issuer for future operations, including plans 500
or objectives relating to the products or services of the issuer; 501
(3) A statement of future economic performance, including 503
any statement of that nature contained in a discussion and 504
analysis of financial conditions by the management or in the 505
results of operations included pursuant to the rules and 506
regulations of the securities and exchange commission;
(4) Any disclosed statement of the assumptions underlying 508
or relating to a statement described in division (B)(1), (2), or 510
(3) of section 1707.437 of the Revised Code; 511
(5) Any report issued by an outside reviewer retained by 513
an issuer to the extent that the report relates to a 514
forward-looking statement made by the issuer; 515
(6) A statement containing a projection or estimate of any 517
other items that may be specified by rule or regulation of the 518
securities and exchange commission. 519
(II)(1) "Investment adviser representative" means a 521
supervised person of an investment adviser, provided that the 523
supervised person has more than five clients who are natural 524
persons other than excepted persons defined in division (KK) of 525
this section, and that more than ten per cent of the supervised 526
person's clients are natural persons other than excepted persons
defined in division (KK) of this section. "Investment adviser 527
representative" does not mean any of the following: 528
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(a) A supervised person that does not on a regular basis 530
solicit, meet with, or otherwise communicate with clients of the 531
investment adviser;
(b) A supervised person that provides only investment 533
advisory services described in division (X)(1) of this section by 534
means of written materials or oral statements that do not purport 535
to meet the objectives or needs of specific individuals or 536
accounts;
(c) Any other person that the division designates by rule, 539
if the division finds that the designation is necessary or 540
appropriate in the public interest or for the protection of
investors or clients and is consistent with the provisions fairly 542
intended by the policy and provisions of this chapter. 543
(2) For the purpose of the calculation of clients in 545
division (II)(1) of this section, a natural person and the 547
following persons are deemed a single client: Any minor child of 548
the natural person; any relative, spouse, or relative of the 549
spouse of the natural person who has the same principal residence 550
as the natural person; all accounts of which the natural person 551
or the persons referred to in division (II)(2) of this section 553
are the only primary beneficiaries; and all trusts of which the 554
natural person or persons referred to in division (II)(2) of this 555
section are the only primary beneficiaries. Persons who are not 556
residents of the United States need not be included in the 558
calculation of clients under division (II)(1) of this section. 559
(3) If subsequent to March 18, 1999, amendments are 561
enacted or adopted defining "investment adviser representative" 562
for purposes of the Investment Advisers Act of 1940 or additional 564
rules or regulations are promulgated by the securities and 565
exchange commission regarding the definition of "investment 566
adviser representative" for purposes of the Investment Advisers 568
Act of 1940, the division of securities shall, by rule, adopt the 569
substance of the amendments, rules, or regulations, unless the 570
division finds that the amendments, rules, or regulations are not 571
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necessary for the protection of investors or in the public 572
interest.
(JJ) "Supervised person" means a natural person who is any 574
of the following: 575
(1) A partner, officer, or director of an investment 577
adviser, or other person occupying a similar status or performing 578
similar functions with respect to an investment adviser; 579
(2) An employee of an investment adviser; 581
(3) A person who provides investment advisory services 583
described in division (X)(1) of this section on behalf of the 584
investment adviser and is subject to the supervision and control 585
of the investment adviser.
(KK) "Excepted person" means a natural person to whom any 587
of the following applies: 588
(1) Immediately after entering into the investment 590
advisory contract with the investment adviser, the person has at 591
least seven hundred fifty thousand dollars under the management 593
of the investment adviser.
(2) The investment adviser reasonably believes either of 595
the following at the time the investment advisory contract is 596
entered into with the person:
(a) The person has a net worth, together with assets held 599
jointly with a spouse, of more than one million five hundred 600
thousand dollars.
(b) The person is a qualified purchaser as defined in 603
division (LL) of this section.
(3) Immediately prior to entering into an investment 605
advisory contract with the investment adviser, the person is 606
either of the following: 607
(a) An executive officer, director, trustee, general 610
partner, or person serving in a similar capacity, of the 611
investment adviser;
(b) An employee of the investment adviser, other than an 614
employee performing solely clerical, secretarial, or 615
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administrative functions or duties for the investment adviser, 616
which employee, in connection with the employee's regular 617
functions or duties, participates in the investment activities of 618
the investment adviser, provided that, for at least twelve 619
months, the employee has been performing such nonclerical, 620
nonsecretarial, or nonadministrative functions or duties for or 621
on behalf of the investment adviser or performing substantially 622
similar functions or duties for or on behalf of another company. 623
If subsequent to March 18, 1999, amendments are enacted or 626
adopted defining "excepted person" for purposes of the Investment 627
Advisers Act of 1940 or additional rules or regulations are 629
promulgated by the securities and exchange commission regarding 630
the definition of "excepted person" for purposes of the 631
Investment Advisers Act of 1940, the division of securities 633
shall, by rule, adopt the substance of the amendments, rules, or 634
regulations, unless the division finds that the amendments, 635
rules, or regulations are not necessary for the protection of 636
investors or in the public interest.
(LL)(1) "Qualified purchaser" means either of the 638
following:
(a) A natural person who owns not less than five million 641
dollars in investments as defined by rule by the division of 642
securities;
(b) A natural person, acting for the person's own account 645
or accounts of other qualified purchasers, who in the aggregate 646
owns and invests on a discretionary basis, not less than 647
twenty-five million dollars in investments as defined by rule by 648
the division of securities. 649
(2) If subsequent to March 18, 1999, amendments are 651
enacted or adopted defining "qualified purchaser" for purposes of 652
the Investment Advisers Act of 1940 or additional rules or 654
regulations are promulgated by the securities and exchange
commission regarding the definition of "qualified purchaser" for 655
purposes of the Investment Advisers Act of 1940, the division of 656
17
securities shall, by rule, adopt the amendments, rules, or 657
regulations, unless the division finds that the amendments, 658
rules, or regulations are not necessary for the protection of 659
investors or in the public interest. 660
(MM)(1) "Purchase" has the full meaning of "purchase" as 662
applied by or accepted in courts of law or equity and includes 663
every acquisition of, or attempt to acquire, a security or an 664
interest in a security. "Purchase" also includes a contract to 665
purchase, an exchange, an attempt to purchase, an option to 666
purchase, a solicitation of a purchase, a solicitation of an 667
offer to sell, a subscription, or an offer to purchase, directly 668
or indirectly, by agent, circular, pamphlet, advertisement, or
otherwise. 669
(2) "Purchase" means any act by which a purchase is made. 671
(3) Any security given with, or as a bonus on account of, 673
any purchase of securities is conclusively presumed to constitute 674
a part of the subject of that purchase. 675
(NN) "LIFE SETTLEMENT INTEREST" MEANS THE ENTIRE INTEREST 677
OR ANY FRACTIONAL INTEREST IN AN INSURANCE POLICY OR CERTIFICATE 678
OF INSURANCE, OR IN AN INSURANCE BENEFIT UNDER SUCH A POLICY OR 679
CERTIFICATE, THAT IS THE SUBJECT OF A LIFE SETTLEMENT CONTRACT. 680
FOR PURPOSES OF THIS DIVISION, "LIFE SETTLEMENT CONTRACT" 682
MEANS AN AGREEMENT FOR THE PURCHASE, SALE, ASSIGNMENT, TRANSFER, 684
DEVISE, OR BEQUEST OF ANY PORTION OF THE DEATH BENEFIT OR 685
OWNERSHIP OF ANY LIFE INSURANCE POLICY OR CONTRACT, IN RETURN FOR 686
CONSIDERATION OR ANY OTHER THING OF VALUE THAT IS LESS THAN THE 687
EXPECTED DEATH BENEFIT OF THE LIFE INSURANCE POLICY OR CONTRACT. 688
"LIFE SETTLEMENT CONTRACT" INCLUDES A VIATICAL SETTLEMENT 689
CONTRACT AS DEFINED IN SECTION 3916.01 OF THE REVISED CODE, BUT 690
DOES NOT INCLUDE ANY OF THE FOLLOWING: 691
(1) A LOAN BY AN INSURER UNDER THE TERMS OF A LIFE 693
INSURANCE POLICY, INCLUDING, BUT NOT LIMITED TO, A LOAN SECURED 694
BY THE CASH VALUE OF THE POLICY; 695
(2) AN AGREEMENT WITH A BANK THAT TAKES AN ASSIGNMENT OF A 697
18
LIFE INSURANCE POLICY AS COLLATERAL FOR A LOAN; 698
(3) THE PROVISION OF ACCELERATED BENEFITS AS DEFINED IN 700
SECTION 3915.21 OF THE REVISED CODE; 701
(4) ANY AGREEMENT BETWEEN AN INSURER AND A REINSURER; 703
(5) AN AGREEMENT BY AN INDIVIDUAL TO PURCHASE AN EXISTING 705
LIFE INSURANCE POLICY OR CONTRACT FROM THE ORIGINAL OWNER OF THE 706
POLICY OR CONTRACT, IF THE INDIVIDUAL DOES NOT ENTER INTO MORE 707
THAN ONE LIFE SETTLEMENT CONTRACT PER CALENDAR YEAR; 708
(6) THE INITIAL PURCHASE OF AN INSURANCE POLICY OR 710
CERTIFICATE OF INSURANCE FROM ITS OWNER BY A VIATICAL SETTLEMENT 711
PROVIDER, AS DEFINED IN SECTION 3916.01 OF THE REVISED CODE, THAT 712
IS LICENSED UNDER CHAPTER 3916. OF THE REVISED CODE. 715
Sec. 1707.02. (A) "Exempt," as used in this section, 724
means exempt from sections 1707.08 to 1707.11 and 1707.39 of the 725
Revised Code. 726
(B)(1) Except as provided in division (B)(2) of this 728
section, the following securities are exempt, if the issuer or 729
guarantor has the power of taxation or assessment for the purpose 730
of paying the obligation represented by the security, or is in 731
specific terms empowered by the laws of the state of issuance to 732
issue securities payable as to principal or interest, or as to 733
both, out of revenues collected or administered by such issuer: 734
(a) Any security issued or guaranteed by the United 736
States; 737
(b) Any security issued or guaranteed by, and recognized, 739
at the time of sale, as its valid obligation by, any foreign 740
government with which the United States is, at the time of sale, 741
maintaining diplomatic relations; 742
(c) Any security issued or guaranteed, and recognized as 744
its valid obligation, by any political subdivision or any 745
governmental or other public body, corporation, or agency in or 746
of the United States, any state, territory, or possession of the 747
United States, or any foreign government with which the United 748
States is, at the time of sale, maintaining diplomatic relations. 749
19
(2) If a security described in division (B)(1) of this 751
section is not payable out of the proceeds of a general tax, the 753
security is exempt only if, at the time of its first sale in this
state, there is no default in the payment of any of the interest 755
or principal of the security, and there are no adjudications or 756
pending suits adversely affecting its validity. 757
(C) Any security issued by and representing an interest in 759
or an obligation of a state or nationally chartered bank, savings 760
and loan association, savings bank, or credit union, or a 762
governmental corporation or agency created by or under the laws 763
of the United States or of Canada is exempt, if it is under the 764
supervision of or subject to regulation by the government or 765
state under whose laws it was organized.
(D) Any interim certificate is exempt, if the securities 767
to be delivered therefor are themselves exempt, are the subject 768
matter of an exempt transaction, have been registered by 769
description or registered by qualification, or are the subject 770
matter of a transaction which has been registered by description. 771
(E)(1) Any A security, whether a preliminary or final 773
security, is exempt, which, at the time of sale within this 774
state, is listed, or listed upon notice of issuance, on the 775
Cincinnati stock exchange, the Midwest stock exchange, the New 776
York stock exchange, or the American stock exchange, or is 777
designated, or approved for designation upon notice of issuance, 778
as a national market system security on the national association 779
of securities dealers automated quotation system, or is listed or 780
designated on any other stock exchange or national quotation 781
system approved by the division as having listing requirements 782
substantially equivalent to those of any one of those exchanges 783
or systems, and any security senior to any security so listed or 784
designated is also exempt; but these exemptions shall apply only 785
so long as such security remains so listed or designated pursuant 786
to official action of such exchange or system and not under 787
suspension, and only so long as such exchange or system remains 788
20
approved under this section IF IT MEETS ANY OF THE FOLLOWING 790
REQUIREMENTS:
(a) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON 792
THE NEW YORK STOCK EXCHANGE, THE AMERICAN STOCK EXCHANGE, OR THE 794
NATIONAL MARKET SYSTEM OF THE NASDAQ STOCK MARKET, OR ANY 795
SUCCESSOR TO SUCH ENTITIES. 796
(b) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON 798
A NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT 799
OF SUCH EXCHANGE OR SYSTEM, DESIGNATED BY THE SECURITIES AND 801
EXCHANGE COMMISSION IN RULE 146(b) PROMULGATED UNDER SECTION 802
18(b)(1) OF THE SECURITIES ACT OF 1933. 803
(c) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON 805
A NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT 806
OF SUCH EXCHANGE OR SYSTEM, THAT HAS LISTING STANDARDS THAT THE 808
DIVISION OF SECURITIES, ON ITS OWN INITIATIVE OR ON THE BASIS OF 809
AN APPLICATION, DETERMINES BY RULE ARE SUBSTANTIALLY SIMILAR TO 810
THE LISTING STANDARDS APPLICABLE TO SECURITIES DESCRIBED IN 811
DIVISION (E)(1)(a) OF THIS SECTION.
(d) THE SECURITY IS A SECURITY OF THE SAME ISSUER THAT IS 813
EQUAL IN SENIORITY OR THAT IS A SENIOR SECURITY TO A SECURITY 814
DESCRIBED IN DIVISION (E)(1)(a), (b), OR (c) OF THIS SECTION. 816
(2) Application for approval of a stock exchange or system 818
not approved in this section may be made by any organized stock 819
exchange or system, or by any dealer who is a member of such 820
exchange, in such manner and upon such forms as are prescribed by 821
the division, accompanied by payment of an approval fee of two 822
hundred dollars, and the division shall make such investigation 823
and may hold such hearings as it deems necessary to determine the 824
propriety of giving approval. The cost of such investigation 825
shall be borne by the applicant. The division may enter an order 826
of approval, and if it does so, it shall notify the applicant of 827
such approval. 828
(3) The division may revoke the approval of an exchange or 830
system approved ENUMERATED in DIVISION (E)(1) OF this section or 833
21
approved by it upon finding, PROVIDED THAT THE EXCHANGE OR SYSTEM 834
IS NOT LISTED IN SECTION 18(b)(1) OF THE SECURITIES ACT OF 1933 835
OR ANY RULE PROMULGATED THEREUNDER. THE DIVISION MAY EFFECT A 836
REVOCATION after due notice, investigation, and A hearing, AND A 837
FINDING that the practices or requirements of such exchange or 839
system have been so changed or modified, or are, in their actual 840
operation, such that the contemplated protection is no longer 841
afforded. The principles of res adjudicata ordinarily applicable 842
in civil matters shall not be applicable to this matter, which is 843
hereby declared to be administrative rather than judicial. 844
Notice of the hearing may be given by certified mail at least ten 845
days before such hearing.
(4) The division may suspend the exemption of any security 847
described in division (E)(1) of this section, PROVIDED THAT THE 849
SECURITY IS LISTED OR AUTHORIZED FOR LISTING ON AN EXCHANGE OR 850
SYSTEM THAT IS NOT LISTED IN SECTION 18(b)(1) OF THE SECURITIES 851
ACT OF 1933 OR ANY RULE PROMULGATED THEREUNDER. THE DIVISION MAY 853
EFFECT A SUSPENSION by giving notice, by certified mail, to that 855
effect to the exchange or system upon which such security is 856
listed or designated and to the issuer of such security. After 857
notice and hearing, the division may revoke such exemption if it 858
appears to it that sales of such security have been fraudulent or 859
that future sales of it would be fraudulent. The division shall 860
set such hearing not later than ten days from the date of the 861
order of suspension, but may for good cause continue such hearing 862
upon application of the exchange or system upon which such 863
security is listed or designated or upon application of the 864
issuer of such security.
(F) Any security, issued or guaranteed as to principal, 866
interest, or dividend or distribution by a corporation owning or 867
operating any public utility, is exempt, if such corporation is, 868
as to its rates and charges or as to the issuance and 869
guaranteeing of securities, under the supervision of or regulated 870
by a public commission, board, or officer of the United States, 871
22
or of Canada, or of any state, province, or municipal corporation 872
in either of such countries. Equipment-trust securities based on 873
chattel mortgages, leases, or agreements for conditional sale, of 874
cars, locomotives, motor trucks, or other rolling stock or of 875
motor vehicles mortgaged, leased, or sold to, or finished for the 876
use of, a public utility, are exempt; and so are equipment 877
securities where the ownership or title of such equipment is 878
pledged or retained, in accordance with the laws of the United 879
States or of any state, or of Canada or any province thereof, to 880
secure the payment of such securities. 881
(G) Commercial paper and promissory notes are exempt when 883
they are not offered directly or indirectly for sale to the 884
public. 885
(H) Any security issued or guaranteed by an insurance 887
company, except as provided in section 1707.32 of the Revised 888
Code, is exempt if such company is under the supervision of, and 889
the issuance or guaranty of such security is regulated by, a 890
state. 891
(I) Any security, except notes, bonds, debentures, or 893
other evidences of indebtedness or of promises or agreements to 894
pay money, which is issued by a person, corporation, or 895
association organized not for profit, including persons, 896
corporations, and associations organized exclusively for 897
conducting county fairs, or for religious, educational, social, 901
recreational, athletic, benevolent, fraternal, charitable, or 902
reformatory purposes, and agricultural cooperatives as defined in 903
section 1729.01 of the Revised Code, is exempt, if no part of the 905
net earnings of such issuer inures to the benefit of any 906
shareholder or member of such issuer or of any individual, and if 907
the total commission, remuneration, expense, or discount in 908
connection with the sale of such securities does not exceed two 909
per cent of the total sale price thereof plus five hundred 910
dollars.
(J)(1) Any securities outstanding for a period of not less 912
23
than five years, on which there has occurred no default in 913
payment of principal, interest, or dividend or distribution for 914
the five years immediately preceding the sale, are exempt. 915
(2) For the purpose of division (J) of this section, the 917
dividend, distribution, or interest rate on securities in which 918
no such rate is specified shall be at the rate of at least four 919
per cent annually on the aggregate of the price at which such 920
securities are to be sold. 921
(K) All bonds issued under authority of Chapter 165. or 923
761., or section 4582.06 or 4582.31 of the Revised Code are 924
exempt. 925
Sec. 1707.11. For the purposes of this section, a 934
"person," or an "applicant" for registration or claim of 935
exemption, means every issuer. 936
Every applicant for registration or for claim of exemption 938
pursuant to division (Q), (W), (X), or (Y) of section 1707.03 of 940
the Revised Code, and every (A) EACH person submitting a notice 941
filing pursuant to section 1707.092 of the Revised Code, for the 944
sale of securities pursuant to this chapter, which THAT is an 945
incorporated applicant or person not domiciled in ORGANIZED UNDER 946
THE LAWS OF this state or, THAT IS not licensed under section 947
1703.03 of the Revised Code, or is an unincorporated applicant or 949
person having the situs of THAT DOES NOT HAVE its principal place 951
of business outside IN this state, shall file with its
application or notice filing its SUBMIT TO THE DIVISION OF 953
SECURITIES AN IRREVOCABLE CONSENT TO SERVICE OF PROCESS, AS 954
DESCRIBED IN DIVISION (B) OF THIS SECTION, IN CONNECTION WITH ANY 955
OF THE FOLLOWING:
(1) FILINGS TO CLAIM ANY OF THE EXEMPTIONS ENUMERATED IN 957
DIVISION (Q), (W), (X), OR (Y) OF SECTION 1707.03 OF THE REVISED 960
CODE;
(2) APPLICATIONS FOR REGISTRATION BY DESCRIPTION, 962
QUALIFICATION, OR COORDINATION; 963
(3) NOTICE FILINGS PURSUANT TO SECTION 1707.092 OR 965
24
1707.141 OF THE REVISED CODE; 966
(4) APPLICATIONS FOR LICENSURE AS A SECURITIES DEALER 968
UNDER SECTION 1707.15 OF THE REVISED CODE; 969
(5) APPLICATIONS FOR LICENSURE AS AN INVESTMENT ADVISER 971
UNDER SECTION 1707.151 OF THE REVISED CODE. 972
(B) THE irrevocable written consent, SHALL BE executed and 975
acknowledged by an individual duly authorized to give the 976
consent, AND SHALL DO ALL OF THE FOLLOWING: 977
(1) DESIGNATE THE SECRETARY OF STATE AS AGENT FOR SERVICE 979
OF PROCESS OR PLEADINGS; 980
(2) STATE that actions growing out of the sale of such 983
securities, THE GIVING OF INVESTMENT ADVICE, or fraud committed 984
by an applicant in this state A PERSON ON WHOSE BEHALF THE 985
CONSENT IS SUBMITTED may be commenced against it THE PERSON, in 986
the proper court of any county in this state in which a cause of 987
action for fraud may arise or in which the plaintiff in the 988
action may reside, by serving on the secretary of state any 989
proper process or pleading authorized by the laws of this state. 990
Such consent shall stipulate; 991
(3) STIPULATE that service of process or pleading on the 994
secretary of state shall be taken in all courts to be as valid 995
and binding as if service had been made upon the applicant itself 996
PERSON ON WHOSE BEHALF THE CONSENT IS SUBMITTED. 997
(C) Service of any process or pleadings may be made on the 999
secretary of state by duplicate copies, of which one shall be 1,000
filed in the office of the secretary of state, and the other 1,001
immediately forwarded by the secretary of state by certified mail 1,002
to the principal place of business of the applicant, PERSON ON 1,003
WHOSE BEHALF THE CONSENT IS SUBMITTED or TO the last known 1,005
address as shown on the application form filed FILING MADE with 1,006
the division, or if it has a principal office in this state, then 1,007
to the principal office; but. HOWEVER, failure to mail such copy 1,009
shall DOES not invalidate the service. 1,010
(D) NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, OR OF 1,012
25
ANY RULE ADOPTED BY THE DIVISION OF SECURITIES UNDER THIS 1,013
CHAPTER, THAT REQUIRES THE SUBMISSION OF A CONSENT TO SERVICE OF 1,014
PROCESS, THE DIVISION MAY PROVIDE BY RULE FOR THE ELECTRONIC 1,015
FILING OR SUBMISSION OF A CONSENT TO SERVICE OF PROCESS. 1,016
Sec. 1707.15. An application to act as dealer (A) 1,025
APPLICATION FOR A DEALER'S LICENSE shall be MADE in writing 1,027
ACCORDANCE WITH THIS SECTION and shall be filed BY FILING with 1,028
the division of securities. It shall be in such form as the 1,029
division prescribes, and verified by oath of the applicant, his 1,030
agent, or his attorney, and it shall set forth THE INFORMATION, 1,031
MATERIALS, AND FORMS SPECIFIED IN RULES ADOPTED BY THE DIVISION, 1,032
ALONG WITH ALL OF THE FOLLOWING INFORMATION:
(A)(1) The name and address of the applicant; 1,034
(B)(2) A description of the applicant, including, if the 1,036
applicant is a partnership, unincorporated association, or any 1,037
similar form of business organization, the names and the 1,038
residence and business addresses of all partners, officers, 1,039
directors, trustees, or managers of the organization, and the 1,040
limitation of the liability of any partner or member; and if the 1,041
applicant is a corporation, a list of its executive officers and 1,042
directors, and the residence and business addresses of each,; and 1,044
if it is a foreign corporation, a copy of its articles of 1,045
incorporation in addition thereto; 1,046
(C)(3) The location and addresses of the principal office 1,048
and all other offices of the applicant; 1,049
(D)(4) A general description of the business of the 1,051
applicant done prior to such THE application, including a list of 1,052
states in which the applicant is a licensed dealer; 1,054
(E) The names and addresses of all salesmen of the 1,056
applicant at the date of the application; 1,057
(F) The nature of the applicant's business, and its places 1,059
of business, for the period of ten years next preceding the date 1,060
of application. 1,061
Every (B) EACH applicant not a resident of this state 1,064
26
shall name a person within this state upon whom process against
such applicant may be served and shall give the complete 1,066
residence and business address of the person designated. 1,067
Every applicant shall file an irrevocable consent to 1,069
service of process on the secretary of state in the event that 1,070
such applicant, if a resident of this state, or the person 1,071
designated by the nonresident applicant, cannot be found at the 1,072
address given. Such consent shall be given and service 1,073
thereunder shall be made as provided in section 1707.11 of the 1,074
Revised Code. 1,075
(C)(1) The division may investigate any applicant for a 1,077
license, and may require such additional information as it deems 1,078
necessary to determine the applicant's business repute and 1,079
qualifications to act as a dealer in securities. 1,080
(2) If the application for any license involves 1,082
investigation outside of this state, the applicant may be 1,083
required by the division to advance sufficient funds to pay any 1,084
of the actual expenses of such examination. An itemized 1,085
statement of any such expenses which he THE APPLICANT is required 1,086
to pay shall be furnished the applicant by the division. 1,088
If the applicant is merely renewing his license for the 1,091
previous year the application need contain only the information
required by divisions (B), (C), and (E) of this section. 1,092
(D) The division shall by rule require an applicant ONE 1,094
NATURAL PERSON WHO IS A PRINCIPAL, OFFICER, DIRECTOR, GENERAL 1,095
PARTNER, MANAGER, OR EMPLOYEE OF A DEALER to pass an examination 1,097
which covers his knowledge of securities laws and practices 1,098
DESIGNATED BY THE DIVISION. EACH DEALER THAT IS NOT A NATURAL 1,099
PERSON SHALL NOTIFY THE DIVISION OF THE NAME AND RELATIONSHIP TO 1,100
THE DEALER OF THE NATURAL PERSON WHO HAS PASSED THE EXAMINATION 1,101
ON BEHALF OF THE DEALER AND WHO WILL SERVE AS THE DESIGNATED 1,102
PRINCIPAL ON BEHALF OF THE DEALER. 1,103
(E) DEALERS SHALL EMPLOY AS SALESPERSONS ONLY THOSE 1,105
SALESPERSONS WHO ARE LICENSED UNDER THIS CHAPTER. IF AT ANY TIME 1,106
27
A SALESPERSON RESIGNS OR IS DISCHARGED OR A NEW SALESPERSON IS 1,107
ADDED, THE DEALER SHALL PROMPTLY NOTIFY THE DIVISION. 1,108
(F) If the division finds that the applicant is of good 1,110
business repute, appears qualified to act as a dealer in 1,111
securities, and has fully complied with sections 1707.01 to 1,112
1707.45 of the Revised Code THIS CHAPTER AND RULES ADOPTED UNDER 1,113
THIS CHAPTER BY THE DIVISION, the division shall issue to such 1,114
applicant a license to act as dealer, upon payment by the 1,115
applicant of the fee FEES prescribed by DIVISION (B) OF section 1,117
1707.17 of the Revised Code.
The division may, after proper hearing, refuse, as provided 1,119
in section 1707.19 of the Revised Code, SHALL ISSUE to grant a 1,120
license to the applicant. 1,122
Dealers shall employ as salesmen only those who are 1,124
licensed under sections 1707.01 to 1707.45 of the Revised Code. 1,125
If at any time such salesmen resign or are discharged or new 1,126
salesmen are added, the dealer shall forthwith notify the 1,127
division and shall file with the division the names and addresses 1,128
of new salesmen A LICENSE AUTHORIZING THE APPLICANT TO ACT AS A 1,129
DEALER. 1,130
Sec. 1707.151. (A) Application for an investment 1,139
adviser's license shall be made in accordance with this section 1,140
and by filing with the division of securities the information, 1,141
materials, and forms specified in rules adopted by the division. 1,142
(B) Every applicant not a resident of this state shall 1,144
name a person within this state upon whom process against such 1,145
applicant may be served and shall give the complete residence and 1,146
business address or addresses of the person designated. 1,147
(C) Every EACH applicant shall file an irrevocable consent 1,149
to service of process naming the secretary of state for service 1,151
of process in the event that the applicant, if a resident of this 1,154
state, or the person designated pursuant to division (B) of this 1,155
section, cannot be found at the address given on the application. 1,156
The consent shall be given and service of process shall be made 1,157
28
as provided in section 1707.11 of the Revised Code. 1,158
(D)(C)(1) The division may investigate any applicant for a 1,160
license and may require any additional information as it 1,162
considers necessary to determine the applicant's business repute 1,163
and qualifications to act as an investment adviser. 1,164
(2) If the application for any license involves 1,166
investigation outside of this state, the applicant may be 1,167
required by the division to advance sufficient funds to pay any 1,168
of the actual expenses of the examination. The division shall 1,169
furnish the applicant with an itemized statement of such expenses 1,170
that the applicant is required to pay.
(E)(D) The division shall by rule require one natural 1,172
person who is a principal, officer, director, general partner, 1,174
manager, or employee of an investment adviser to pass an 1,175
examination designated by the division or achieve a specified 1,176
professional designation. Every EACH investment adviser that is 1,178
not a natural person shall notify the division of the name and
relationship to the investment adviser of the natural person who 1,180
has passed the examination or achieved the specified professional
designation on behalf of the investment adviser and who will 1,181
serve as the designated principal on behalf of the investment 1,182
adviser.
(F)(E) An investment adviser licensed under section 1,184
1707.141 of the Revised Code shall employ only investment adviser 1,186
representatives licensed, or exempted from licensure, under 1,187
section 1707.161 of the Revised Code.
(G)(F) If the division finds that the applicant is of good 1,189
business repute, appears to be qualified to act as an investment 1,191
adviser, and has complied with sections 1707.01 to 1707.45 of the 1,193
Revised Code THIS CHAPTER and rules adopted under those sections 1,194
THIS CHAPTER by the division, the division, upon payment of the 1,195
fees prescribed by division (B) of section 1707.17 of the Revised 1,196
Code, shall issue to the applicant a license authorizing the 1,198
applicant to act as an investment adviser.
29
Sec. 1707.16. (A) Every salesman SALESPERSON of 1,207
securities must be licensed by the division of securities and 1,209
shall be employed only by the licensed dealer specified in his 1,210
THE SALESPERSON'S license. IF THE SALESPERSON SEVERS THE 1,211
CONNECTION WITH THAT LICENSED DEALER, THE SALESPERSON'S LICENSE 1,212
IS VOID.
The application (B) APPLICATION for a salesman's 1,215
SALESPERSON'S license shall set forth BE MADE IN ACCORDANCE WITH 1,216
THIS SECTION AND BY FILING WITH THE DIVISION THE INFORMATION, 1,217
MATERIALS, AND FORMS SPECIFIED IN RULES ADOPTED BY THE DIVISION, 1,218
ALONG WITH ALL OF THE FOLLOWING INFORMATION: 1,219
(A)(1) The name and complete residence and business 1,221
addresses of the applicant; 1,222
(B)(2) The name of the dealer who is employing the 1,224
applicant or who intends to employ him THE APPLICANT; 1,225
(C)(3) The applicant's age and education, and his THE 1,228
APPLICANT'S experience in the sale of securities; whether he THE 1,230
APPLICANT has ever been licensed by the division, and if so, 1,232
when; whether he THE APPLICANT has ever been refused a license by 1,234
the division; and whether he THE APPLICANT has ever been licensed 1,235
or refused a license or any similar permit by any division or 1,236
commissioner of securities, whatsoever name known or designated, 1,237
anywhere;. 1,238
(C) THE DIVISION SHALL BY RULE REQUIRE AN APPLICANT TO 1,240
PASS AN EXAMINATION DESIGNATED BY THE DIVISION. 1,241
(D) The nature of the employment, and the names and 1,243
addresses of the employers, of the applicant for the period of 1,244
ten years immediately preceding the date of the application. 1,245
If the division finds that the applicant is of good 1,247
business repute, appears to be qualified to act as a salesman 1,248
SALESPERSON of securities, and has fully complied with sections 1,250
1707.01 to 1707.45 of the Revised Code THIS CHAPTER, and that the 1,251
dealer named in the application is a licensed dealer, the 1,252
division shall, upon payment of the fees prescribed by section 1,253
30
1707.17 of the Revised Code, issue a license to the applicant 1,254
authorizing him THE APPLICANT to act as salesman SALESPERSON for 1,255
the dealer named in the application. 1,256
If such salesman severs his connection with such dealer, 1,258
the salesman's license is void. 1,259
The division shall by rule require an applicant to pass an 1,261
examination which covers his knowledge of securities laws and 1,263
practices.
If the applicant is merely renewing his license for the 1,265
previous year or renewing his license upon change of employment, 1,266
only the information required under divisions (A) and (B) of this 1,267
section need be given. 1,268
Sec. 1707.17. (A)(1) The license of every dealer in and 1,277
salesperson of securities shall expire on the thirty-first day of 1,278
December of each year, and may be renewed upon the filing with 1,279
the division of securities of an application for renewal, and the 1,280
payment of the fee prescribed in this section, between the first 1,282
day of November and the fifteenth day of December of each year. 1,283
The division may accept an application for renewal filed between 1,284
the fifteenth and the thirty-first day of December of each year. 1,285
The division also may accept an application for renewal received 1,286
by the division not later than the tenth day of January of the 1,287
subsequent calendar year, provided that the application for 1,289
renewal is accompanied by the license renewal fee and the 1,290
additional fee prescribed in division (B) of this section. The 1,291
division shall give notice, without unreasonable delay, of its 1,293
action on any application for renewal of a dealer's or 1,294
salesperson's license. 1,295
(2) The license of every investment adviser and investment 1,298
adviser representative licensed under section 1707.141 or 1,299
1707.161 of the Revised Code shall expire on the thirty-first day 1,300
of December of each year. The licenses may be renewed upon the 1,301
filing with the division of an application for renewal, and the 1,302
payment of the fee prescribed in division (B) of this section, 1,303
31
between the fifteenth day of October and the thirtieth day of 1,304
November of each year. The division may accept an application 1,306
for renewal filed between the first and thirty-first day of 1,307
December of each year. The division also may accept an 1,308
application for renewal received by the division not later than 1,309
the tenth day of January of the subsequent calenar CALENDAR year, 1,310
provided that the application for renewal is accompanied by the 1,312
license renewal fee and the additional fee prescribed in division 1,314
(B) of this section. The division shall give notice, without 1,315
unreasonable delay, of its action on any application for renewal. 1,316
(3) An investment adviser required to make a notice filing 1,318
under division (B) of section 1707.141 of the Revised Code 1,320
annually shall file with the division the notice filing and the 1,321
fee prescribed in division (B) of this section, no later than the 1,322
thirty-first day of December of each year. The division may 1,323
accept a notice filing received by the division not later than 1,324
the tenth day of January of the subsequent calendar year, 1,325
provided that the notice filing is accompanied by the notice 1,327
filing fee and the additional fee prescribed in division (B) of 1,328
this section.
(B)(1) The fee for each dealer's license, and for each 1,330
annual renewal thereof that is received by the division not later 1,331
than the thirty-first day of December of each year, shall be 1,332
thirty dollars per salesperson, but not less than one hundred 1,334
fifty nor more than five thousand dollars. Upon payment of an 1,335
additional fee of one-half of the license renewal fee, the 1,336
division may accept an application for renewal received by the 1,337
division between the first and tenth day of January of the 1,338
subsequent calendar year. The fee for the examination of 1,339
applicant dealers, when administered by the division, shall be 1,341
seventy-five dollars.
(2) The fee for each salesperson's license, and for each 1,344
annual renewal thereof, shall be fifty dollars. The fee for the 1,346
examination of an applicant salesperson, when administered by the 1,348
32
division, shall be fifty dollars.
(3) The fee for each investment adviser's license, and for 1,351
each annual renewal thereof that is received by the division not
later than the thirty-first day of December of each year, shall 1,352
be two hundred dollars. Upon the payment of an additional fee of 1,354
one-half of the license fee, the division may accept a license 1,355
renewal application received by the division between the first 1,356
and tenth day of January of the subsequent calendar year. If the 1,358
fee for an investment adviser license is paid to the division on 1,359
or before October 1, 1999, that fee shall cover the issuance of 1,361
the initial license and also shall cover any fee for renewal of 1,362
the license for the period ending December 31, 2000. 1,363
(4) The fee for each investment adviser notice filing 1,365
required by division (B) of section 1707.141 of the Revised Code 1,367
and received by the division not later than the thirty-first day
of December of each year shall be one hundred dollars. Upon the 1,368
payment of an additional fee of one-half of the notice filing 1,370
fee, the division may accept a notice filing received by the 1,371
division between the first and tenth day of January of the 1,372
subsequent calendar year. A notice filing may be made at any 1,374
time during the calendar year. In that event, the notice filing 1,375
fee shall not be reduced. If the fee for an investment adviser
notice filing is paid to the division on or before October 1, 1,377
1999, that fee shall cover the initial notice filing and also 1,378
shall cover any fee for the notice filing for the period ending 1,379
December 31, 2000. 1,380
(5) The fee for each investment adviser representative's 1,382
license, and for each annual renewal thereof that is received by 1,383
the division not later than the thirty-first day of December of 1,384
each year, shall be thirty-five dollars; however, the fee shall 1,386
be waived for the investment adviser representative designated 1,387
the principal of the investment adviser pursuant to division 1,389
(E)(D) of section 1707.151 of the Revised Code. Upon the payment 1,390
of an additional fee of one-half of the license fee, the division 1,391
33
may accept a license renewal application received by the division 1,392
between the first and tenth day of January of the subsequent 1,393
calendar year. If the fee for an investment adviser 1,394
representative's license is paid to the division on or before 1,395
October 1, 1999, that fee shall cover the issuance of the initial 1,397
license and also shall cover any fee for renewal of the license 1,398
for the period ending December 31, 2000. 1,399
(C) A dealer's, salesperson's, investment adviser's, or 1,401
investment adviser representative's license may be issued at any 1,403
time for the remainder of the calendar year. In that event, the 1,404
annual fee shall not be reduced. 1,405
Sec. 1707.20. (A) The division of securities may adopt, 1,414
amend, and rescind such rules, forms, and orders as are necessary 1,415
to carry out sections 1707.01 to 1707.45 of the Revised Code, 1,416
including rules and forms governing registration statements, 1,417
applications, and reports, and defining any terms, whether or not 1,418
used in sections 1707.01 to 1707.45 of the Revised Code, insofar 1,419
as the definitions are not inconsistent with these sections. For 1,421
the purpose of rules and forms, the division may classify 1,423
securities, persons, and matters within its jurisdiction, and 1,424
prescribe different requirements for different classes. 1,425
(B) No rule, form, or order may be made, amended, or 1,427
rescinded unless the division finds that the action is necessary 1,429
or appropriate in the public interest or for the protection of 1,430
investors, clients, or prospective clients and consistent with 1,431
the purposes fairly intended by the policy and provisions of 1,432
sections 1707.01 to 1707.45 of the Revised Code. In prescribing 1,433
rules and forms and in otherwise administering sections 1707.01 1,434
to 1707.45 of the Revised Code, the division may cooperate with 1,435
the securities administrators of the other states and the 1,436
securities and exchange commission with a view of effectuating 1,437
the policy of this section to achieve maximum uniformity in the 1,438
form and content of registration statements, applications, 1,439
reports, and overall securities regulation wherever practicable. 1,440
34
(C) The division may by rule or order prescribe: 1,443
(1) The form and content of financial statements required 1,445
under sections 1707.01 to 1707.45 of the Revised Code; 1,446
(2) The circumstances under which consolidated financial 1,448
statements shall be filed; 1,449
(3) Whether any required financial statements shall be 1,451
certified by independent or certified public accountants. All 1,452
financial statements shall be prepared in accordance with 1,453
generally accepted accounting practices. 1,454
(D) All rules and forms of the division shall be 1,457
published; and in addition to fulfilling the requirements of 1,458
Chapter 119. of the Revised Code, the division shall prescribe, 1,460
and shall publish and make available its rules regarding the sale 1,461
of securities, the administration of sections 1707.01 to 1707.45 1,462
of the Revised Code, and the procedure and practice before the 1,463
division..
(E) No provision of sections 1707.01 to 1707.45 of the 1,465
Revised Code imposing any liability applies to any act done or 1,466
omitted in good faith in conformity with any rule, form, or order 1,467
of the division of securities, notwithstanding that the rule, 1,468
form, or order may later be amended or rescinded or be determined 1,469
by judicial or other authority to be invalid for any reason, 1,470
except that the issuance of an order granting effectiveness to a 1,471
registration under section 1707.09 or 1707.091 of the Revised 1,472
Code for the purposes of this division shall not be deemed an 1,473
order other than as the establishment of the fact of 1,474
registration. 1,475
(F) NOTWITHSTANDING ANY PROVISION OF THE REVISED CODE, IF 1,477
THE "SECURITIES ACT OF 1933," THE "SECURITIES EXCHANGE ACT OF 1,480
1934," THE "INVESTMENT COMPANY ACT OF 1940," THE "INVESTMENT 1,483
ADVISERS ACT OF 1940," AND ANY AMENDMENTS TO ANY OF THOSE FEDERAL 1,484
ACTS, IF ANY RULE, REGULATION, RELEASE, STATEMENT, OR POSITION 1,485
PROMULGATED OR ADOPTED UNDER THE AUTHORITY OF ANY OF THOSE 1,486
FEDERAL ACTS, AND ANY AMENDMENTS TO THOSE FEDERAL ACTS, OR IF ANY 1,487
35
RULE, REGULATION, OR GUIDELINE OF A SELF-REGULATORY ORGANIZATION 1,488
REGISTERED UNDER THE "SECURITIES AND EXCHANGE ACT OF 1934," AND 1,489
ANY AMENDMENTS TO THAT ACT, CONTAINS A PROVISION THAT IS NOT 1,491
CONTAINED IN THIS CHAPTER OR THE RULES ADOPTED UNDER THIS CHAPTER 1,492
AND THAT AFFECTS ANY MATTER WITHIN THE SCOPE OF THIS CHAPTER, THE 1,494
DIVISION BY RULE MAY PROMULGATE A SIMILAR PROVISION.
A RULE ADOPTED UNDER THE AUTHORITY GRANTED IN THIS DIVISION 1,496
MAY DELETE, MODIFY, OR REPLACE AN EXISTING RULE OF THE DIVISION. 1,497
A RULE ADOPTED UNDER THE AUTHORITY GRANTED IN THIS DIVISION 1,498
BECOMES EFFECTIVE ON THE LATER OF THE DATE ON WHICH THE DIVISION 1,499
ISSUES THE RULE OR THE DATE ON WHICH THE FEDERAL STATUTE OR THE 1,500
RULE, REGULATION, RELEASE, STATEMENT, OR POSITION ON WHICH THE 1,501
DIVISION'S RULE IS BASED BECOMES EFFECTIVE. THE DIVISION, UPON 1,502
THIRTY DAYS WRITTEN NOTICE, MAY REVOKE ANY RULE ADOPTED UNDER THE 1,503
AUTHORITY GRANTED IN THIS DIVISION. A RULE ADOPTED UNDER THE 1,504
AUTHORITY GRANTED IN THIS DIVISION, AND NOT REVOKED BY THE 1,505
COMMISSIONER, LAPSES AND HAS NO FURTHER FORCE AND EFFECT THIRTY 1,506
MONTHS AFTER THE RULE'S EFFECTIVE DATE. 1,507
Sec. 1707.23. Whenever it appears to the division of 1,516
securities, from its files, upon complaint, or otherwise, that 1,517
any person has engaged in, is engaged in, or is about to engage 1,518
in any practice declared to be illegal or prohibited by Chapter 1,519
1707. of the Revised Code THIS CHAPTER or rules adopted under 1,520
that THIS chapter by the division, or defined as fraudulent in 1,522
that THIS chapter or rules adopted under that THIS chapter by the 1,523
division, or any other deceptive scheme or practice in connection 1,524
with the sale of securities, or acting as an investment adviser 1,525
or investment adviser representative, or when the division 1,526
believes it to be in the best interests of the public and 1,527
necessary for the protection of investors, the division may do 1,528
any of the following:
(A) Require any person to file with it, on such forms as 1,530
it prescribes, an original or additional statement or report in 1,531
writing, under oath or otherwise, as to any facts or 1,532
36
circumstances concerning the issuance, sale, or offer for sale of 1,533
securities within this state by the person, as to the person's 1,535
acts or practices as an investment adviser or investment adviser 1,536
representative within this state, and as to other information as 1,537
it deems material or relevant thereto;
(B) Examine any investment adviser, investment adviser 1,539
representative, or any seller, dealer, salesperson, or issuer of 1,541
any securities, and any of their agents, employees, partners, 1,542
officers, directors, members, or shareholders, wherever located, 1,543
under oath; and examine records, books, documents, accounts, and 1,545
papers as the division deems material or relevant to the inquiry; 1,546
(C) Require the attendance of witnesses, and the 1,548
production of books, records, and papers, as are required either 1,550
by the division or by any party to a hearing before the division, 1,551
and for that purpose issue a subpoena for any witness, or a 1,552
subpoena duces tecum to compel the production of any books,
records, or papers. The subpoena shall be served by PERSONAL 1,554
SERVICE OR BY certified mail, return receipt requested. If the 1,555
subpoena is returned because of inability to deliver, or if no 1,556
return is received within thirty days of the date of mailing, the 1,557
subpoena may be served by ordinary mail. If no return of 1,558
ordinary mail is received within thirty days after the date of 1,559
mailing, service shall be deemed to have been made. If the 1,560
subpoena is returned because of inability to deliver, the 1,561
division may designate a person or persons to effect either 1,562
personal or residence service upon the witness. The person 1,563
DESIGNATED TO EFFECT PERSONAL OR RESIDENCE SERVICE UNDER THIS 1,564
DIVISION may be the sheriff of the county in which the witness 1,565
resides or may be found or any other duly designated person. The 1,566
fees and mileage of the person serving the subpoena shall be the 1,567
same as those allowed by the courts of common pleas in criminal 1,568
cases, and shall be paid from the funds of the division. Fees 1,569
and mileage for the witness shall be the same as those allowed 1,570
for witnesses by the courts of common pleas in criminal cases, 1,571
37
and shall be paid from the funds of the division upon request of 1,572
the witness following the hearing.
(D) Proceed under section 1707.19 of the Revised Code to 1,574
suspend the license of any licensed dealer, licensed salesperson, 1,576
licensed investment adviser, or licensed investment adviser 1,577
representative and ultimately, if the division determines, revoke 1,578
such license under such sections; 1,579
(E) Initiate criminal proceedings under section 1707.042 1,581
or 1707.44 of the Revised Code or rules adopted under those 1,582
sections by the division by laying before the prosecuting 1,583
attorney of the proper county any evidence of criminality which 1,584
comes to its knowledge; and in the event of the neglect or 1,585
refusal of the prosecuting attorney to prosecute such violations, 1,586
or at the request of the prosecuting attorney, the division shall 1,587
submit the evidence to the attorney general, who may proceed in 1,589
the prosecution with all the rights, privileges, and powers 1,590
conferred by law on prosecuting attorneys, including the power to 1,591
appear before grand juries and to interrogate witnesses before 1,592
such grand juries. 1,593
(F) Require any dealers forthwith to furnish to the 1,595
division copies of prospectuses, circulars, or advertisements 1,596
respecting securities that they publish or generally distribute, 1,598
or require any investment advisers immediately to furnish to the 1,599
division copies of brochures, advertisements, publications, 1,600
analyses, reports, or other writings that they publish or 1,601
distribute;
(G) Require any dealers to mail to the division, prior to 1,603
sale, notices of intention to sell, in respect to all securities 1,604
which are not exempt under section 1707.02 of the Revised Code, 1,605
or which are sold in transactions not exempt under section 1,606
1707.03 or 1707.04 of the Revised Code; 1,607
(H) Issue and cause to be served by certified mail upon 1,609
all persons affected an order requiring the person or persons to 1,610
cease and desist from the acts or practices appearing to the 1,611
38
division to constitute violations of Chapter 1707. of the Revised 1,613
Code THIS CHAPTER or rules adopted under that THIS chapter by the 1,614
division. The order shall state specifically the section or 1,616
sections of Chapter 1707. of the Revised Code THIS CHAPTER or the 1,617
rule or rules adopted under that THIS chapter by the division 1,618
that appear to the division to have been violated and the facts 1,620
constituting the violation. If after the issuance of the order 1,621
it appears to the division that any person or persons affected by 1,622
the order have engaged in any act or practice from which the 1,623
person or persons shall have been required, by the order, to 1,624
cease and desist, the director of commerce may apply to the court 1,625
of common pleas of any county for, and upon proof of the validity 1,626
of the order of the division, the delivery of the order to the 1,627
person or persons affected, and of the illegality and the 1,628
continuation of the acts or practices that are the subject of the 1,629
order, the court may grant an injunction implementing the order 1,630
of the division.
(I) Issue and initiate contempt proceedings in this state 1,632
regarding subpoenas and subpoenas duces tecum at the request of 1,634
the securities administrator of another state, if it appears to 1,635
the division that the activities for which the information is 1,636
sought would violate Chapter 1707. of the Revised Code THIS 1,637
CHAPTER if the activities had occurred in this state. 1,638
Sec. 1707.44. (A)(1) No person shall engage in any act or 1,647
practice that violates division (A), (B), or (C) of section 1,648
1707.14 of the Revised Code, and no salesperson shall sell 1,649
securities in this state without being licensed pursuant to 1,650
section 1707.16 of the Revised Code.
(2) No person shall engage in any act or practice that 1,652
violates division (A) of section 1707.141 or section 1707.161 of 1,653
the Revised Code.
(B) No person shall knowingly make or cause to be made any 1,655
false representation concerning a material and relevant fact, in 1,656
any oral statement or in any prospectus, circular, description, 1,657
39
application, or written statement, for any of the following 1,658
purposes: 1,659
(1) Complying with this chapter, in regard to registering 1,661
securities by description; 1,662
(2) Securing the qualification of any securities under 1,664
this chapter; 1,665
(3) Procuring the licensing of any dealer, salesperson, 1,668
investment adviser, or investment adviser representative under 1,670
this chapter;
(4) Selling any securities in this state; 1,672
(5) Advising for compensation, as to the value of 1,674
securities or as to the advisability of investing in, purchasing, 1,675
or selling securities.
(C) No person shall knowingly and intentionally sell, 1,677
cause to be sold, offer for sale, or cause to be offered for 1,678
sale, any security which comes under any of the following 1,679
descriptions: 1,680
(1) Is not exempt under section 1707.02 of the Revised 1,682
Code, nor the subject matter of one of the transactions exempted 1,683
in sections SECTION 1707.03, 1707.04, and OR 1707.34 of the 1,685
Revised Code, has not been registered by description, 1,686
coordination, or qualification, and is not the subject matter of 1,687
a transaction that has been registered by description; 1,688
(2) The prescribed fees for registering by description, by 1,690
coordination, or by qualification have not been paid in respect 1,691
to such security; 1,692
(3) Such person has been notified by the division, or has 1,694
knowledge of the notice, that the right to buy, sell, or deal in 1,696
such security has been suspended or revoked, or that the 1,697
registration by description, by coordination, or by qualification 1,698
under which it may be sold has been suspended or revoked; 1,699
(4) The offer or sale is accompanied by a statement that 1,701
the security offered or sold has been or is to be in any manner 1,702
indorsed by the division. 1,703
40
(D) No person who is an officer, director, or trustee of, 1,705
or a dealer for, any issuer, and who knows such issuer to be 1,706
insolvent in that the liabilities of the issuer exceed its 1,707
assets, shall sell any securities of or for any such issuer, 1,708
without disclosing the fact of the insolvency to the purchaser. 1,710
(E) No person with intent to aid in the sale of any 1,712
securities on behalf of the issuer, shall knowingly make any 1,713
representation not authorized by such issuer or at material 1,714
variance with statements and documents filed with the division by 1,715
such issuer. 1,716
(F) No person, with intent to deceive, shall sell, cause 1,718
to be sold, offer for sale, or cause to be offered for sale, any 1,719
securities of an insolvent issuer, with knowledge that such 1,720
issuer is insolvent in that the liabilities of the issuer exceed 1,722
its assets, taken at their fair market value. 1,723
(G) No person in purchasing or selling securities shall 1,725
knowingly engage in any act or practice that is, in this chapter, 1,726
declared illegal, defined as fraudulent, or prohibited. 1,727
(H) No licensed dealer shall refuse to buy from, sell to, 1,729
or trade with any person because the person appears on a 1,730
blacklist issued by, or is being boycotted by, any foreign 1,731
corporate or governmental entity, nor sell any securities of or 1,732
for any issuer who is known in relation to the issuance or sale 1,733
of such securities to have engaged in such practices. 1,734
(I) No dealer in securities, knowing that the dealer's 1,736
liabilities exceed the reasonable value of the dealer's assets, 1,738
shall accept money or securities, except in payment of or as
security for an existing debt, from a customer who is ignorant of 1,739
the dealer's insolvency, and thereby cause the customer to lose 1,741
any part of the customer's securities or the value of those 1,742
securities, by doing either of the following without the 1,743
customer's consent:
(1) Pledging, selling, or otherwise disposing of such 1,745
securities, when the dealer has no lien on or any special 1,747
41
property in such securities;
(2) Pledging such securities for more than the amount due, 1,749
or otherwise disposing of such securities for the dealer's own 1,751
benefit, when the dealer has a lien or indebtedness on such 1,752
securities. 1,753
It is an affirmative defense to a charge under this 1,755
division that, at the time the securities involved were pledged, 1,756
sold, or disposed of, the dealer had in the dealer's possession 1,758
or control, and available for delivery, securities of the same 1,759
kinds and in amounts sufficient to satisfy all customers entitled 1,760
to the securities, upon demand and tender of any amount due on 1,762
the securities.
(J) No person, with purpose to deceive, shall make, issue, 1,764
publish, or cause to be made, issued, or published any statement 1,765
or advertisement as to the value of securities, or as to alleged 1,766
facts affecting the value of securities, or as to the financial 1,767
condition of any issuer of securities, when the person knows that 1,769
such statement or advertisement is false in any material respect. 1,770
(K) No person, with purpose to deceive, shall make, 1,772
record, or publish or cause to be made, recorded, or published, a 1,773
report of any transaction in securities which is false in any 1,774
material respect. 1,775
(L) No dealer shall engage in any act that violates the 1,777
provisions of section 15(c) or 15(g) of the "Securities Exchange 1,778
Act of 1934," 48 Stat. 881, 15 U.S.C.A. 78o(c) or (g), or any 1,779
rule or regulation promulgated by the securities and exchange 1,780
commission thereunder. If, subsequent to October 11, 1994, 1,781
additional amendments to section 15(c) or 15(g) are adopted, or 1,782
additional rules or regulations are promulgated pursuant to such 1,783
sections, the division of securities shall, by rule, adopt the 1,784
amendments, rules, or regulations, unless the division finds that 1,785
the amendments, rules, or regulations are not necessary for the 1,786
protection of investors or in the public interest.
(M)(1) No investment adviser or investment adviser 1,788
42
representative shall do any of the following: 1,789
(a) Employ any device, scheme, or artifice to defraud any 1,792
person;
(b) Engage in any act, practice, or course of business 1,794
that operates or would operate as a fraud or deceit upon any 1,795
person; 1,796
(c) In acting as principal for the investment adviser's or 1,798
investment adviser representative's own account, knowingly sell 1,799
any security to or purchase any security from a client, or in 1,800
acting as salesperson for a person other than such client, 1,801
knowingly effect any sale or purchase of any security for the 1,802
account of such client, without disclosing to the client in 1,803
writing before the completion of the transaction the capacity in 1,804
which the investment adviser or investment adviser representative 1,806
is acting and obtaining the consent of the client to the 1,807
transaction. Division (M)(1)(c) of this section does not apply 1,808
to any investment adviser registered with the securities and 1,809
exchange commission under section 203 of the "Investment Advisers 1,810
Act of 1940," 15 U.S.C. 80b-3, or to any transaction with a 1,811
customer of a licensed dealer or salesperson if the licensed 1,812
dealer or salesperson is not acting as an investment adviser or 1,813
investment adviser representative in relation to the transaction. 1,814
(d) Engage in any act, practice, or course of business 1,817
that is fraudulent, deceptive, or manipulative. The division of 1,818
securities may adopt rules reasonably designed to prevent such 1,819
acts, practices, or courses of business as are fraudulent, 1,820
deceptive, or manipulative.
(2) No investment adviser or investment adviser 1,822
representative licensed or required to be licensed under this 1,823
chapter shall take or have custody of any securities or funds of 1,824
any person, except as provided in rules adopted by the division. 1,825
(3) In the solicitation of clients or prospective clients, 1,827
no person shall make any untrue statement of a material fact or 1,828
omit to state a material fact necessary in order to make the 1,829
43
statements made not misleading in light of the circumstances 1,830
under which the statements were made. 1,831
Sec. 3916.01. AS USED IN THIS CHAPTER: 1,833
(A) "ADVERTISING" MEANS ANY WRITTEN, ELECTRONIC, OR 1,836
PRINTED COMMUNICATION OR ANY COMMUNICATION BY MEANS OF RECORDED 1,837
TELEPHONE MESSAGES OR TRANSMITTED ON RADIO, TELEVISION, THE 1,838
INTERNET, OR SIMILAR COMMUNICATIONS MEDIA, INCLUDING, BUT NOT 1,839
LIMITED TO, FILM STRIPS, MOTION PICTURES, AND VIDEOS, THAT IS 1,840
DIRECTLY OR INDIRECTLY PUBLISHED, DISSEMINATED, CIRCULATED, OR 1,841
PLACED BEFORE THE PUBLIC FOR THE PURPOSE OF CREATING AN INTEREST 1,842
IN OR INDUCING A PERSON TO SELL A LIFE INSURANCE POLICY PURSUANT 1,843
TO A VIATICAL SETTLEMENT CONTRACT. 1,844
(B) "BUSINESS OF VIATICAL SETTLEMENTS" MEANS AN ACTIVITY 1,846
INVOLVED IN THE OFFERING, SOLICITATION, NEGOTIATION, PROCUREMENT, 1,847
EFFECTUATION, PURCHASING, INVESTING, FINANCING, MONITORING,
TRACKING, UNDERWRITING, SELLING, TRANSFERRING, ASSIGNING, 1,848
PLEDGING, OR HYPOTHECATING OF VIATICAL SETTLEMENT CONTRACTS OR 1,849
PURCHASE AGREEMENTS OR ANY SIMILAR ACTIVITY RELATED TO VIATICAL 1,850
SETTLEMENT CONTRACTS OR PURCHASE AGREEMENTS. 1,851
(C) "CHRONICALLY ILL" MEANS ANY OF THE FOLLOWING: 1,853
(1) BEING UNABLE TO PERFORM AT LEAST TWO ACTIVITIES OF 1,855
DAILY LIVING, INCLUDING, BUT NOT LIMITED TO, EATING, TOILETING, 1,856
TRANSFERRING, BATHING, DRESSING, OR CONTINENCE; 1,857
(2) REQUIRING SUBSTANTIAL SUPERVISION TO PROTECT THE 1,859
INDIVIDUAL FROM THREATS TO HEALTH AND SAFETY DUE TO SEVERE 1,860
COGNITIVE IMPAIRMENT; 1,861
(3) HAVING A LEVEL OF DISABILITY SIMILAR TO THAT DESCRIBED 1,863
IN DIVISION (C)(1) OF THIS SECTION, AS DETERMINED BY THE UNITED 1,865
STATES SECRETARY OF HEALTH AND HUMAN SERVICES; 1,866
(D)(1) "FINANCING ENTITY" MEANS AN UNDERWRITER, PLACEMENT 1,868
AGENT, LENDER, PURCHASER OF SECURITIES, PURCHASER OF A POLICY OR 1,869
CERTIFICATE FROM A VIATICAL SETTLEMENT PROVIDER, CREDIT ENHANCER, 1,870
OR ANY OTHER PERSON THAT HAS A DIRECT OWNERSHIP INTEREST IN A 1,871
POLICY OR CERTIFICATE THAT IS THE SUBJECT OF A VIATICAL 1,872
44
SETTLEMENT CONTRACT AND TO WHICH BOTH OF THE FOLLOWING APPLY: 1,873
(a) ITS PRINCIPAL ACTIVITY RELATED TO THE TRANSACTION IS 1,875
PROVIDING FUNDS TO EFFECT THE VIATICAL SETTLEMENT OR THE PURCHASE 1,877
OF ONE OR MORE VIATICATED POLICIES. 1,878
(b) IT HAS AN AGREEMENT IN WRITING WITH ONE OR MORE 1,880
LICENSED VIATICAL SETTLEMENT PROVIDERS TO FINANCE THE ACQUISITION 1,881
OF VIATICAL SETTLEMENT CONTRACTS. 1,882
(2) "FINANCING ENTITY" DOES NOT INCLUDE A NON-ACCREDITED 1,884
INVESTOR OR VIATICAL SETTLEMENT PURCHASER. 1,885
(E) "FRAUDULENT VIATICAL SETTLEMENT ACT" MEANS AN ACT OR 1,887
OMISSION COMMITTED BY ANY PERSON WHO, KNOWINGLY OR WITH INTENT TO 1,888
DEFRAUD AND FOR THE PURPOSE OF DEPRIVING ANOTHER OF PROPERTY OR 1,889
FOR PECUNIARY GAIN, COMMITS, OR PERMITS ANY OF ITS EMPLOYEES OR 1,890
AGENTS TO COMMIT, ANY OF THE FOLLOWING ACTS: 1,891
(1) PRESENTING, CAUSING TO BE PRESENTED, OR PREPARING WITH 1,893
KNOWLEDGE OR BELIEF THAT IT WILL BE PRESENTED TO OR BY A VIATICAL 1,894
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, VIATICAL 1,895
SETTLEMENT PURCHASER, FINANCING ENTITY, INSURER, INSURANCE 1,896
BROKER, INSURANCE AGENT, OR ANY OTHER PERSON, ANY FALSE MATERIAL 1,897
INFORMATION, OR CONCEALING ANY MATERIAL INFORMATION, AS PART OF, 1,898
IN SUPPORT OF, OR CONCERNING A FACT MATERIAL TO, ONE OR MORE OF 1,899
THE FOLLOWING:
(a) AN APPLICATION FOR THE ISSUANCE OF A VIATICAL 1,901
SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE; 1,902
(b) THE UNDERWRITING OF A VIATICAL SETTLEMENT CONTRACT OR 1,904
INSURANCE POLICY OR CERTIFICATE; 1,905
(c) A CLAIM FOR PAYMENT OR BENEFIT PURSUANT TO A VIATICAL 1,907
SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE; 1,908
(d) ANY PREMIUMS PAID ON AN INSURANCE POLICY OR 1,910
CERTIFICATE;
(e) ANY PAYMENTS AND CHANGES IN OWNERSHIP OR BENEFICIARY 1,912
MADE IN ACCORDANCE WITH THE TERMS OF A VIATICAL SETTLEMENT 1,913
CONTRACT OR INSURANCE POLICY OR CERTIFICATE; 1,914
(f) THE REINSTATEMENT OR CONVERSION OF AN INSURANCE POLICY 1,916
45
OR CERTIFICATE; 1,917
(g) THE SOLICITATION, OFFER, EFFECTUATION, OR SALE OF A 1,919
VIATICAL SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE; 1,920
(h) THE ISSUANCE OF WRITTEN EVIDENCE OF A VIATICAL 1,922
SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE; 1,923
(i) A FINANCING TRANSACTION. 1,925
(2) IN THE FURTHERANCE OF A FRAUD OR TO PREVENT THE 1,927
DETECTION OF A FRAUD, DOING ANY OF THE FOLLOWING: 1,928
(a) REMOVING, CONCEALING, ALTERING, DESTROYING, OR 1,930
SEQUESTERING FROM THE SUPERINTENDENT THE ASSETS OR RECORDS OF A 1,931
LICENSEE OR ANOTHER PERSON ENGAGED IN THE BUSINESS OF VIATICAL
SETTLEMENTS; 1,932
(b) MISREPRESENTING OR CONCEALING THE FINANCIAL CONDITION 1,934
OF A LICENSEE, FINANCING ENTITY, INSURER, OR ANY OTHER PERSON; 1,936
(c) TRANSACTING THE BUSINESS OF VIATICAL SETTLEMENTS IN 1,938
VIOLATION OF ANY LAW OF THIS STATE REQUIRING A LICENSE, 1,940
CERTIFICATE OF AUTHORITY, OR OTHER LEGAL AUTHORITY FOR THE 1,941
TRANSACTION OF THE BUSINESS OF VIATICAL SETTLEMENTS; 1,942
(d) FILING WITH THE SUPERINTENDENT OF INSURANCE OR THE 1,944
CHIEF INSURANCE REGULATORY OFFICIAL OF ANOTHER JURISDICTION A 1,945
DOCUMENT CONTAINING FALSE INFORMATION OR OTHERWISE CONCEALING 1,947
FROM THE SUPERINTENDENT ANY INFORMATION ABOUT A MATERIAL FACT. 1,948
(3) PRESENTING, CAUSING TO BE PRESENTED, OR PREPARING WITH 1,950
KNOWLEDGE OR REASON TO BELIEVE THAT IT WILL BE PRESENTED, TO OR 1,951
BY A VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, 1,952
INSURER, INSURANCE AGENT, FINANCING ENTITY, VIATICAL SETTLEMENT 1,953
PURCHASER, OR ANY OTHER PERSON, IN CONNECTION WITH A VIATICAL 1,954
SETTLEMENT TRANSACTION OR INSURANCE TRANSACTION, AN INSURANCE 1,955
POLICY OR CERTIFICATE THAT THE ACTOR KNOWS WAS FRAUDULENTLY 1,956
OBTAINED BY THE INSURED, THE OWNER, OR ANY AGENT OF THE INSURED 1,957
OR OWNER;
(4) COMMITTING ANY EMBEZZLEMENT, THEFT, MISAPPROPRIATION, 1,959
OR CONVERSION OF MONEYS, FUNDS, PREMIUMS, CREDITS OR OTHER 1,960
PROPERTY OF A VIATICAL SETTLEMENT PROVIDER, INSURER, INSURED, 1,961
46
VIATOR, INSURANCE POLICYOWNER, OR ANY OTHER PERSON ENGAGED IN THE 1,962
BUSINESS OF VIATICAL SETTLEMENTS OR INSURANCE; 1,963
(5) ATTEMPTING TO COMMIT, ASSISTING, AIDING OR ABETTING IN 1,965
THE COMMISSION OF, OR CONSPIRACY TO COMMIT ANY ACT OR OMISSION 1,966
SPECIFIED IN DIVISIONS (E)(1) TO (4) OF THIS SECTION. 1,967
(F) NOTWITHSTANDING SECTION 1.59 OF THE REVISED CODE, 1,969
"PERSON" MEANS A NATURAL PERSON OR A LEGAL ENTITY, INCLUDING, BUT 1,970
NOT LIMITED TO, AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY 1,971
COMPANY, ASSOCIATION, TRUST, OR CORPORATION. 1,972
(G) "POLICY" MEANS AN INDIVIDUAL OR GROUP POLICY, GROUP 1,974
CERTIFICATE, CONTRACT, OR ARRANGEMENT OF INSURANCE AFFECTING THE 1,975
RIGHTS OF A RESIDENT OF THIS STATE OR BEARING A REASONABLE
RELATION TO THIS STATE, REGARDLESS OF WHETHER DELIVERED OR ISSUED 1,976
FOR DELIVERY IN THIS STATE. 1,977
(H) "RELATED PROVIDER TRUST" MEANS A TITLING TRUST OR ANY 1,979
OTHER TRUST ESTABLISHED BY A LICENSED VIATICAL SETTLEMENT 1,980
PROVIDER OR A FINANCING ENTITY FOR THE SOLE PURPOSE OF HOLDING
OWNERSHIP OR BENEFICIAL INTEREST IN PURCHASED POLICIES IN 1,981
CONNECTION WITH A FINANCING TRANSACTION, PROVIDED THAT THE TRUST 1,982
HAS A WRITTEN AGREEMENT WITH THE LICENSED VIATICAL SETTLEMENT 1,983
PROVIDER UNDER WHICH THE LICENSED VIATICAL SETTLEMENT PROVIDER IS 1,984
RESPONSIBLE FOR ENSURING COMPLIANCE WITH ALL STATUTORY AND 1,985
REGULATORY REQUIREMENTS AND UNDER WHICH THE TRUST AGREES TO MAKE 1,986
ALL RECORDS AND FILES RELATED TO VIATICAL SETTLEMENT TRANSACTIONS 1,987
AVAILABLE TO THE SUPERINTENDENT AS IF THOSE RECORDS AND FILES 1,988
WERE MAINTAINED DIRECTLY BY THE LICENSED VIATICAL SETTLEMENT 1,989
PROVIDER.
(I) "SPECIAL PURPOSE ENTITY" MEANS A CORPORATION, 1,991
PARTNERSHIP, TRUST, LIMITED LIABILITY COMPANY OR OTHER SIMILAR 1,992
ENTITY FORMED SOLELY TO PROVIDE ACCESS, EITHER DIRECTLY OR 1,993
INDIRECTLY, TO INSTITUTIONAL CAPITAL MARKETS FOR A FINANCING 1,994
ENTITY OR LICENSED VIATICAL SETTLEMENT PROVIDER. 1,995
(J) "TERMINALLY ILL" MEANS HAVING AN ILLNESS OR SICKNESS 1,997
THAT CAN REASONABLY BE EXPECTED TO RESULT IN DEATH IN TWENTY-FOUR 1,998
47
MONTHS OR LESS. 1,999
(K) "VIATICAL SETTLEMENT BROKER" MEANS A PERSON THAT, ON 2,001
BEHALF OF A VIATOR AND FOR A FEE, COMMISSION, OR OTHER VALUABLE 2,002
CONSIDERATION, OFFERS OR ATTEMPTS TO NEGOTIATE VIATICAL 2,003
SETTLEMENTS BETWEEN A VIATOR AND ONE OR MORE VIATICAL SETTLEMENT 2,004
PROVIDERS. "VIATICAL SETTLEMENT BROKER" DOES NOT INCLUDE AN 2,005
ATTORNEY, A CERTIFIED PUBLIC ACCOUNTANT, OR A FINANCIAL PLANNER
ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITATION AGENCY, WHO 2,006
IS RETAINED TO REPRESENT THE VIATOR AND WHOSE COMPENSATION IS NOT 2,007
PAID DIRECTLY OR INDIRECTLY BY THE VIATICAL SETTLEMENT PROVIDER 2,008
OR PURCHASER.
(L) "VIATICAL SETTLEMENT CONTRACT" MEANS ANY OF THE 2,010
FOLLOWING:
(1) A WRITTEN AGREEMENT ESTABLISHING THE TERMS UNDER WHICH 2,012
COMPENSATION OR ANY THING OF VALUE, THAT IS LESS THAN THE 2,013
EXPECTED DEATH BENEFIT OF THE INSURANCE POLICY OR CERTIFICATE 2,014
WILL BE PAID IN RETURN FOR THE VIATOR'S ASSIGNMENT, TRANSFER, 2,015
SALE, DEVISE, OR BEQUEST OF THE DEATH BENEFIT OR OWNERSHIP OF ANY 2,016
PORTION OF THE INSURANCE POLICY OR CERTIFICATE OF INSURANCE; 2,017
(2) A CONTRACT FOR A LOAN OR ANY OTHER FINANCING 2,019
TRANSACTION SECURED PRIMARILY BY AN INDIVIDUAL OR GROUP LIFE 2,020
INSURANCE POLICY OR CERTIFICATE, OTHER THAN A LOAN BY A LIFE 2,022
INSURANCE COMPANY PURSUANT TO THE TERMS OF THE LIFE INSURANCE 2,023
CONTRACT OR A LOAN SECURED BY THE CASH VALUE OF A POLICY OR
CERTIFICATE; 2,024
(3) AN AGREEMENT TO TRANSFER OWNERSHIP OR CHANGE THE 2,026
BENEFICIARY DESIGNATION OF THE POLICY OR CERTIFICATE AT A LATER 2,027
DATE, REGARDLESS OF THE DATE THAT COMPENSATION IS PAID TO THE 2,028
VIATOR.
(M)(1) "VIATICAL SETTLEMENT PROVIDER" MEANS A PERSON, 2,031
OTHER THAN A VIATOR, THAT ENTERS INTO OR EFFECTUATES A VIATICAL
SETTLEMENT CONTRACT. 2,032
(2) "VIATICAL SETTLEMENT PROVIDER" DOES NOT INCLUDE ANY OF 2,034
THE FOLLOWING:
48
(a) A BANK, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, 2,036
CREDIT UNION, OR OTHER FINANCIAL INSTITUTION THAT TAKES AN 2,037
ASSIGNMENT OF A LIFE INSURANCE POLICY OR CERTIFICATE AS 2,038
COLLATERAL FOR A LOAN;
(b) THE ISSUER OF A LIFE INSURANCE POLICY OR CERTIFICATE 2,040
PROVIDING ACCELERATED BENEFITS AS DEFINED IN SECTION 3915.21 OF 2,042
THE REVISED CODE AND PURSUANT TO THE CONTRACT;
(c) AN INDIVIDUAL WHO ENTERS INTO OR EFFECTUATES NOT MORE 2,044
THAN ONE AGREEMENT IN ANY CALENDAR YEAR FOR THE TRANSFER OF LIFE 2,046
INSURANCE POLICIES OR CERTIFICATES FOR ANY VALUE LESS THAN THE 2,048
EXPECTED DEATH BENEFIT;
(d) AN AUTHORIZED OR ELIGIBLE INSURER THAT PROVIDES STOP 2,050
LOSS COVERAGE TO A VIATICAL SETTLEMENT PROVIDER, PURCHASER, 2,052
FINANCING ENTITY, SPECIAL PURPOSE ENTITY, OR RELATED PROVIDER 2,054
TRUST;
(e) A FINANCING ENTITY; 2,056
(f) SPECIAL PURPOSE ENTITY; 2,058
(g) A RELATED PROVIDER TRUST; 2,060
(h) A VIATICAL SETTLEMENT PURCHASER. 2,062
(N) "VIATICATED POLICY" MEANS A LIFE INSURANCE POLICY OR 2,064
CERTIFICATE THAT HAS BEEN ACQUIRED BY A VIATICAL SETTLEMENT 2,065
PROVIDER PURSUANT TO A VIATICAL SETTLEMENT CONTRACT. 2,066
(O) "VIATOR" MEANS THE OWNER OF A LIFE INSURANCE POLICY OR 2,068
A CERTIFICATE HOLDER UNDER A GROUP POLICY WHO, IN RETURN FOR 2,070
COMPENSATION OR ANY THING OF VALUE THAT IS LESS THAN THE EXPECTED 2,071
DEATH BENEFIT OF THE POLICY OR CERTIFICATE, ASSIGNS, TRANSFERS, 2,072
SELLS, DEVISES, OR BEQUESTS THE DEATH BENEFIT OR OWNERSHIP OF ANY 2,073
PORTION OF THE INSURANCE POLICY OR CERTIFICATE OF INSURANCE. FOR 2,074
THE PURPOSES OF THIS CHAPTER, A "VIATOR" IS NOT LIMITED TO AN 2,075
OWNER OF A LIFE INSURANCE POLICY OR A CERTIFICATE HOLDER UNDER A 2,076
GROUP POLICY INSURING THE LIFE OF AN INDIVIDUAL WITH A TERMINAL 2,077
OR CHRONIC ILLNESS OR CONDITION EXCEPT WHERE SPECIFICALLY 2,078
ADDRESSED. "VIATOR" DOES NOT INCLUDE ANY OF THE FOLLOWING: 2,079
(1) A LICENSEE UNDER THIS CHAPTER; 2,081
49
(2) AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL 2,083
BUYER AS DEFINED RESPECTIVELY IN REGULATION D, RULE 501 OR RULE 2,088
144A OF THE SECURITIES ACT OF 1933, AS AMENDED; 2,090
(3) A FINANCING ENTITY; 2,092
(4) A SPECIAL PURPOSE ENTITY; 2,094
(5) A RELATED PROVIDER TRUST. 2,096
(P) "VIATICAL SETTLEMENT PURCHASER" MEANS A PERSON WHO 2,098
GIVES A SUM OF MONEY AS CONSIDERATION FOR A LIFE INSURANCE POLICY 2,099
OR AN INTEREST IN THE DEATH BENEFITS OF A LIFE INSURANCE POLICY,
OR A PERSON WHO OWNS, ACQUIRES, OR IS ENTITLED TO A BENEFICIAL 2,100
INTEREST IN A TRUST THAT OWNS A VIATICAL SETTLEMENT CONTRACT OR 2,101
IS THE BENEFICIARY OF A LIFE INSURANCE POLICY THAT HAS BEEN OR 2,102
WILL BE THE SUBJECT OF A VIATICAL SETTLEMENT CONTRACT, FOR THE 2,103
PURPOSE OF DERIVING AN ECONOMIC BENEFIT. "VIATICAL SETTLEMENT 2,104
PURCHASER" DOES NOT INCLUDE ANY OF THE FOLLOWING: 2,105
(1) A LICENSEE UNDER THIS CHAPTER; 2,107
(2) AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL 2,109
BUYER AS DEFINED RESPECTIVELY IN REGULATION D, RULE 501 OR RULE 2,114
144A OF THE SECURITIES ACT OF 1933, AS AMENDED; 2,116
(3) A FINANCING ENTITY; 2,118
(4) A SPECIAL PURPOSE ENTITY; 2,120
(5) A RELATED PROVIDER TRUST. 2,122
(Q) "LICENSEE" MEANS A PERSON LICENSED UNDER THIS CHAPTER. 2,124
(R) "NAIC" MEANS THE NATIONAL ASSOCIATION OF INSURANCE 2,126
COMMISSIONERS. 2,127
(S) "SECURITIES ACT OF 1933" HAS THE SAME MEANING AS IN 2,130
SECTION 1707.01 OF THE REVISED CODE. 2,131
Sec. 3916.02. NO PERSON SHALL OPERATE IN THIS STATE AS A 2,133
VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER 2,134
WITHOUT FIRST HAVING OBTAINED A LICENSE FROM THE SUPERINTENDENT 2,135
OF INSURANCE AND, IF DIFFERENT FROM THIS STATE, FROM THE 2,137
COMPARABLE OFFICIAL OF THE STATE OF RESIDENCE OF THE VIATOR. IF 2,138
THERE IS MORE THAN ONE VIATOR ON A SINGLE POLICY OR CERTIFICATE 2,139
AND THE VIATORS ARE RESIDENTS OF DIFFERENT STATES, THE VIATICAL 2,140
50
SETTLEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE IN WHICH THE 2,141
VIATOR HAVING THE LARGEST PERCENTAGE OWNERSHIP OF THE POLICY OR 2,142
CERTIFICATE RESIDES OR, IF THE VIATORS HOLD EQUAL OWNERSHIP, THE 2,143
STATE OF RESIDENCE OF ONE VIATOR AGREED UPON IN WRITING BY ALL 2,144
VIATORS.
Sec. 3916.03. (A) AN APPLICANT FOR A LICENSE AS A 2,146
VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL 2,149
SUBMIT AN APPLICATION FOR THE LICENSE IN A MANNER PRESCRIBED BY
THE SUPERINTENDENT OF INSURANCE. THE APPLICATION SHALL BE 2,150
ACCOMPANIED BY A FEE ESTABLISHED BY THE SUPERINTENDENT BY RULE 2,152
ADOPTED IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE. 2,153
(B) A LICENSE ISSUED UNDER THIS CHAPTER TO A PERSON OTHER 2,157
THAN AN INDIVIDUAL AUTHORIZES ALL PARTNERS, OFFICERS, MEMBERS, OR 2,158
DESIGNATED EMPLOYEES OF THE PERSON TO ACT AS VIATICAL SETTLEMENT 2,159
PROVIDERS OR VIATICAL SETTLEMENT BROKERS, AS APPLICABLE, AND ALL 2,160
THOSE PARTNERS, OFFICERS, MEMBERS, OR DESIGNATED EMPLOYEES SHALL 2,161
BE NAMED IN THE APPLICATION AND ANY SUPPLEMENTS TO THE 2,162
APPLICATION.
(C) UPON THE FILING OF AN APPLICATION UNDER THIS SECTION 2,164
AND THE PAYMENT OF THE LICENSE FEE, THE SUPERINTENDENT SHALL MAKE 2,166
AN INVESTIGATION OF THE APPLICANT AND ISSUE TO THE APPLICANT A 2,167
LICENSE THAT STATES IN SUBSTANCE THAT THE PERSON IS AUTHORIZED TO 2,168
ACT AS A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,169
BROKER, AS APPLICABLE, IF ALL OF THE FOLLOWING APPLY: 2,170
(1) REGARDING AN APPLICATION FOR A LICENSE AS A VIATICAL 2,172
SETTLEMENT PROVIDER, THE APPLICANT PROVIDES A DETAILED PLAN OF 2,173
OPERATION.
(2) THE SUPERINTENDENT FINDS ALL OF THE FOLLOWING: 2,175
(a) THE APPLICANT IS COMPETENT AND TRUSTWORTHY AND INTENDS 2,177
TO ACT IN GOOD FAITH IN THE CAPACITY OF A VIATICAL SETTLEMENT 2,178
PROVIDER OR VIATICAL SETTLEMENT BROKER, AS APPLICABLE. 2,179
(b) THE APPLICANT HAS A GOOD BUSINESS REPUTATION AND HAS 2,181
HAD EXPERIENCE, TRAINING, OR EDUCATION SO AS TO BE QUALIFIED TO 2,182
ACT IN THE CAPACITY OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL 2,184
51
SETTLEMENT BROKER, AS APPLICABLE.
(3) IF THE APPLICANT IS A PERSON OTHER THAN AN INDIVIDUAL, 2,186
THE APPLICANT PROVIDES A CERTIFICATE OF GOOD STANDING FROM THE 2,187
STATE OF ITS DOMICILE. 2,188
(4) THE APPLICANT PROVIDES AN ANTIFRAUD PLAN THAT MEETS 2,191
THE REQUIREMENTS OF DIVISION (G) OF SECTION 3916.18 OF THE 2,192
REVISED CODE.
(D) AN APPLICANT SHALL PROVIDE ALL INFORMATION REQUESTED 2,194
BY THE SUPERINTENDENT. THE SUPERINTENDENT MAY, AT ANY TIME, 2,195
REQUIRE AN APPLICANT TO FULLY DISCLOSE THE IDENTITY OF ALL 2,196
STOCKHOLDERS, PARTNERS, OFFICERS, MEMBERS, AND EMPLOYEES, AND 2,197
MAY, IN THE EXERCISE OF THE SUPERINTENDENT'S DISCRETION, REFUSE 2,198
TO ISSUE A LICENSE TO AN APPLICANT THAT IS NOT AN INDIVIDUAL IF
THE SUPERINTENDENT IS NOT SATISFIED THAT EACH OFFICER, EMPLOYEE, 2,200
STOCKHOLDER, PARTNER, OR MEMBER WHO MAY MATERIALLY INFLUENCE THE 2,201
APPLICANT'S CONDUCT MEETS THE STANDARDS SET FORTH IN THIS 2,202
CHAPTER.
(E) A LICENSE AS A VIATICAL SETTLEMENT PROVIDER OR 2,205
VIATICAL SETTLEMENT BROKER MAY, IN THE DISCRETION OF THE 2,206
SUPERINTENDENT AND THE PAYMENT OF AN ANNUAL RENEWAL FEE
ESTABLISHED BY THE SUPERINTENDENT BY RULE ADOPTED IN ACCORDANCE 2,208
WITH CHAPTER 119. OF THE REVISED CODE, BE CONTINUED PAST THE LAST 2,209
DAY OF MARCH NEXT AFTER ITS ISSUE AND AFTER THE LAST DAY OF MARCH 2,210
IN EACH SUCCEEDING YEAR. FAILURE TO PAY THE RENEWAL FEE BY THE 2,211
REQUIRED DATE RESULTS IN THE EXPIRATION OF THE LICENSE. 2,212
(F) THE SUPERINTENDENT SHALL NOT ISSUE A LICENSE TO A 2,214
NONRESIDENT APPLICANT, UNLESS EITHER OF THE FOLLOWING APPLIES: 2,215
(1) THE APPLICANT FILES AND MAINTAINS A WRITTEN 2,217
DESIGNATION OF AN AGENT FOR SERVICE OF PROCESS WITH THE 2,218
SUPERINTENDENT.
(2) THE APPLICANT HAS FILED WITH THE SUPERINTENDENT THE 2,220
APPLICANT'S WRITTEN IRREVOCABLE CONSENT THAT ANY ACTION AGAINST 2,221
THE APPLICANT MAY BE COMMENCED AGAINST THE APPLICANT BY SERVICE 2,222
OF PROCESS ON THE SUPERINTENDENT. 2,223
52
(G) A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,227
BROKER SHALL PROVIDE TO THE SUPERINTENDENT NEW OR REVISED 2,228
INFORMATION REGARDING ANY CHANGE IN ITS OFFICERS, TEN PER CENT OR 2,229
MORE OF ITS STOCKHOLDERS, OR ITS PARTNERS, DIRECTORS, MEMBERS, OR 2,230
DESIGNATED EMPLOYEES WITHIN THIRTY DAYS OF THE CHANGE. 2,231
(H) ANY FEE COLLECTED UNDER THIS SECTION SHALL BE PAID 2,233
INTO THE STATE TREASURY TO THE CREDIT OF THE DEPARTMENT OF 2,234
INSURANCE OPERATING FUND CREATED BY SECTION 3901.021 OF THE 2,235
REVISED CODE.
Sec. 3916.04. IRRESPECTIVE OF THE MANNER IN WHICH THE 2,237
VIATICAL SETTLEMENT BROKER IS COMPENSATED, A VIATICAL SETTLEMENT 2,238
BROKER IS DEEMED TO REPRESENT ONLY THE VIATOR AND OWES A 2,239
FIDUCIARY DUTY TO THE VIATOR TO ACT ACCORDING TO THE VIATOR'S 2,240
INSTRUCTIONS AND IN THE BEST INTEREST OF THE VIATOR.
Sec. 3916.05. (A) A PERSON SHALL NOT USE A VIATICAL 2,242
SETTLEMENT CONTRACT FORM OR PROVIDE A DISCLOSURE STATEMENT FORM 2,243
TO A VIATOR IN THIS STATE UNLESS THE VIATICAL SETTLEMENT CONTRACT 2,244
FORM OR THE DISCLOSURE STATEMENT FORM IS FILED WITH AND APPROVED 2,245
BY THE SUPERINTENDENT OF INSURANCE. THE SUPERINTENDENT SHALL 2,246
DISAPPROVE A VIATICAL SETTLEMENT CONTRACT FORM OR A DISCLOSURE 2,247
STATEMENT FORM IF, IN THE SUPERINTENDENT'S OPINION, THE VIATICAL 2,248
SETTLEMENT CONTRACT FORM, THE DISCLOSURE STATEMENT FORM, OR ANY 2,249
PROVISION CONTAINED THEREIN IS UNREASONABLE, CONTRARY TO THE 2,250
INTERESTS OF THE PUBLIC, OR OTHERWISE MISLEADING OR UNFAIR TO THE 2,251
VIATOR. AT THE SUPERINTENDENT'S DISCRETION, THE SUPERINTENDENT 2,253
MAY REQUIRE THE SUBMISSION OF ADVERTISING MATERIAL TO WHICH 2,254
SECTION 3916.17 OF THE REVISED CODE APPLIES.
(B) THE SUPERINTENDENT MAY ADOPT RULES IN ACCORDANCE WITH 2,256
CHAPTER 119. OF THE REVISED CODE TO ESTABLISH REASONABLE FEES FOR 2,257
ANY SERVICE OR TRANSACTION PERFORMED BY THE DEPARTMENT OF 2,258
INSURANCE PURSUANT TO DIVISION (A) OF THIS SECTION. ANY FEE 2,259
COLLECTED PURSUANT TO THOSE RULES SHALL BE PAID INTO THE STATE 2,260
TREASURY TO THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING 2,261
FUND CREATED BY SECTION 3901.021 OF THE REVISED CODE.
53
Sec. 3916.06. (A)(1) WITH EACH APPLICATION FOR A VIATICAL 2,263
SETTLEMENT, A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,264
BROKER SHALL DISCLOSE AT LEAST THE FOLLOWING TO A VIATOR NO LATER 2,265
THAN THE TIME ALL PARTIES SIGN THE APPLICATION FOR THE VIATICAL 2,266
SETTLEMENT CONTRACT:
(a) THAT THERE ARE POSSIBLE ALTERNATIVES TO VIATICAL 2,268
SETTLEMENT CONTRACTS, INCLUDING ANY ACCELERATED DEATH BENEFITS 2,270
OFFERED UNDER THE VIATOR'S LIFE INSURANCE POLICY OR CERTIFICATE; 2,271
(b) THAT SOME OR ALL OF THE PROCEEDS OF THE VIATICAL 2,273
SETTLEMENT MAY BE SUBJECT TO FEDERAL INCOME TAXATION AND STATE 2,275
FRANCHISE AND INCOME TAXATION, AND THAT ASSISTANCE SHOULD BE 2,276
SOUGHT FROM A PROFESSIONAL TAX ADVISOR;
(c) THAT THE PROCEEDS OF THE VIATICAL SETTLEMENT COULD BE 2,278
SUBJECT TO THE CLAIMS OF CREDITORS; 2,280
(d) THAT RECEIPT OF THE PROCEEDS OF THE VIATICAL 2,282
SETTLEMENT MAY ADVERSELY AFFECT THE VIATOR'S ELIGIBILITY FOR 2,284
MEDICAL ASSISTANCE UNDER CHAPTER 5111. OF THE REVISED CODE OR 2,285
OTHER GOVERNMENT BENEFITS OR ENTITLEMENTS, AND THAT ADVICE SHOULD 2,286
BE OBTAINED FROM THE APPROPRIATE GOVERNMENT AGENCIES;
(e) THAT THE VIATOR HAS A RIGHT TO RESCIND THE VIATICAL 2,288
SETTLEMENT CONTRACT FOR AT LEAST FIFTEEN CALENDAR DAYS AFTER THE 2,290
VIATOR RECEIVES THE VIATICAL SETTLEMENT PROCEEDS, AS PROVIDED IN 2,292
SECTION 3916.08 OF THE REVISED CODE. IF THE INSURED DIES DURING 2,293
THE RESCISSION PERIOD, THE SETTLEMENT CONTRACT SHALL BE DEEMED TO 2,294
HAVE BEEN RESCINDED, SUBJECT TO REPAYMENT OF ALL VIATICAL 2,295
SETTLEMENT PROCEEDS TO THE VIATICAL SETTLEMENT COMPANY. 2,296
(f) THAT FUNDS WILL BE SENT TO THE VIATOR WITHIN THREE 2,298
BUSINESS DAYS AFTER THE VIATICAL SETTLEMENT PROVIDER HAS RECEIVED 2,300
ACKNOWLEDGMENT FROM THE INSURER OR GROUP ADMINISTRATOR THAT 2,301
OWNERSHIP OF THE POLICY OR INTEREST IN THE CERTIFICATE HAS BEEN 2,302
TRANSFERRED AND THAT THE BENEFICIARY HAS BEEN DESIGNATED PURSUANT 2,303
TO THE VIATICAL SETTLEMENT CONTRACT;
(g) THAT ENTERING INTO A VIATICAL SETTLEMENT CONTRACT MAY 2,305
CAUSE OTHER RIGHTS OR BENEFITS, INCLUDING CONVERSION RIGHTS AND 2,307
54
WAIVER OF PREMIUM BENEFITS THAT MAY EXIST UNDER THE POLICY OR 2,308
CERTIFICATE, TO BE FORFEITED BY THE VIATOR AND THAT ASSISTANCE 2,309
SHOULD BE SOUGHT FROM A FINANCIAL ADVISOR.
(2) THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL 2,311
SETTLEMENT BROKER SHALL PROVIDE THE DISCLOSURES UNDER DIVISION 2,312
(A)(1) OF THIS SECTION IN A SEPARATE DOCUMENT THAT IS SIGNED BY 2,313
THE VIATOR AND THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL 2,314
SETTLEMENT BROKER. 2,315
(3) DISCLOSURE TO A VIATOR UNDER DIVISION (A)(1) OF THIS 2,317
SECTION SHALL INCLUDE DISTRIBUTION OF A BROCHURE DESCRIBING THE 2,319
PROCESS OF VIATICAL SETTLEMENTS. THE VIATICAL SETTLEMENT 2,320
PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL USE THE NAIC'S FORM 2,321
FOR THE BROCHURE UNLESS ONE IS DEVELOPED BY THE SUPERINTENDENT. 2,322
(4) THE DISCLOSURE DOCUMENT UNDER DIVISION (A)(1) OF THIS 2,324
SECTION SHALL CONTAIN THE FOLLOWING LANGUAGE: 2,326
"ALL MEDICAL, FINANCIAL, OR PERSONAL INFORMATION SOLICITED 2,328
OR OBTAINED BY A VIATICAL SETTLEMENT PROVIDER OR VIATICAL 2,329
SETTLEMENT BROKER ABOUT AN INSURED, INCLUDING THE INSURED'S 2,330
IDENTITY OR THE IDENTITY OF FAMILY MEMBERS, A SPOUSE, OR A 2,331
SIGNIFICANT OTHER MAY BE DISCLOSED AS NECESSARY TO EFFECT THE 2,332
VIATICAL SETTLEMENT BETWEEN THE VIATOR AND THE VIATICAL 2,333
SETTLEMENT PROVIDER. IF YOU ARE ASKED TO PROVIDE THIS 2,334
INFORMATION, YOU WILL BE ASKED TO CONSENT TO THE DISCLOSURE. THE 2,335
INFORMATION MAY BE PROVIDED TO SOMEONE WHO BUYS THE POLICY OR
PROVIDES FUNDS FOR THE PURCHASE. YOU MAY BE ASKED TO RENEW YOUR 2,336
PERMISSION TO SHARE INFORMATION EVERY TWO YEARS." 2,337
(B)(1) A VIATICAL SETTLEMENT PROVIDER SHALL DISCLOSE AT 2,339
LEAST THE FOLLOWING TO A VIATOR PRIOR TO THE DATE THE VIATICAL 2,341
SETTLEMENT CONTRACT IS SIGNED BY ALL THE NECESSARY PARTIES: 2,342
(a) THE AFFILIATION, IF ANY, BETWEEN THE VIATICAL 2,344
SETTLEMENT PROVIDER AND THE ISSUER OF THE INSURANCE POLICY OR 2,346
CERTIFICATE TO BE VIATICATED;
(b) THE NAME, ADDRESS, AND TELEPHONE NUMBER OF THE 2,348
VIATICAL SETTLEMENT PROVIDER; 2,349
55
(c) REGARDING A VIATICAL SETTLEMENT BROKER, THE AMOUNT AND 2,351
METHOD OF CALCULATING THE BROKER'S COMPENSATION. AS USED IN THIS 2,353
DIVISION, "COMPENSATION" INCLUDES ANYTHING OF VALUE PAID OR GIVEN 2,354
TO A VIATICAL SETTLEMENT BROKER FOR THE PLACEMENT OF A POLICY OR 2,355
CERTIFICATE. 2,356
(d) IF AN INSURANCE POLICY OR CERTIFICATE TO BE VIATICATED 2,358
HAS BEEN ISSUED AS A JOINT POLICY OR CERTIFICATE OR INVOLVES 2,361
FAMILY RIDERS OR ANY COVERAGE OF A LIFE OTHER THAN THE INSURED 2,363
UNDER THE POLICY OR CERTIFICATE TO BE VIATICATED, THE POSSIBLE
LOSS OF COVERAGE ON THE OTHER LIVES UNDER THE POLICY OR 2,364
CERTIFICATE AND THAT ADVICE SHOULD BE SOUGHT FROM THE VIATOR'S 2,365
INSURANCE PRODUCER OR THE COMPANY ISSUING THE POLICY OR 2,366
CERTIFICATE;
(e) THE DOLLAR AMOUNT OF THE CURRENT DEATH BENEFIT PAYABLE 2,368
TO THE VIATICAL SETTLEMENT PROVIDER UNDER THE POLICY OR 2,370
CERTIFICATE, AND, IF KNOWN, THE AVAILABILITY OF ANY ADDITIONAL 2,371
GUARANTEED INSURANCE BENEFITS, THE DOLLAR AMOUNT OF ANY 2,372
ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS UNDER THE POLICY OR
CERTIFICATE, AND THE VIATICAL SETTLEMENT PROVIDER'S INTEREST IN 2,373
THOSE BENEFITS. 2,374
(f) THE NAME, BUSINESS ADDRESS, AND TELEPHONE NUMBER OF 2,376
THE INDEPENDENT THIRD-PARTY ESCROW AGENT, AND THE FACT THAT THE 2,377
VIATOR OR OWNER MAY INSPECT OR RECEIVE COPIES OF THE RELEVANT 2,379
ESCROW OR TRUST AGREEMENTS OR DOCUMENTS.
(2) THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,381
BROKER SHALL CONSPICUOUSLY DISPLAY THE DISCLOSURES UNDER DIVISION 2,382
(B)(1) OF THIS SECTION IN A SEPARATE DOCUMENT SIGNED BY THE 2,383
VIATOR AND THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL 2,384
SETTLEMENT BROKER. 2,385
(C) IF THE PROVIDER TRANSFERS OWNERSHIP OR CHANGES THE 2,387
BENEFICIARY OF THE INSURANCE POLICY OR CERTIFICATE, THE PROVIDER 2,388
SHALL COMMUNICATE THE CHANGE IN OWNERSHIP OR BENEFICIARY TO THE 2,389
INSURED WITHIN TWENTY DAYS AFTER THE CHANGE. 2,390
Sec. 3916.07. (A) A VIATICAL SETTLEMENT PROVIDER ENTERING 2,392
56
INTO A VIATICAL SETTLEMENT CONTRACT SHALL FIRST OBTAIN ALL OF THE 2,394
FOLLOWING:
(1) IF THE VIATOR IS THE INSURED, A WRITTEN STATEMENT FROM 2,396
AN ATTENDING PHYSICIAN THAT THE VIATOR IS OF SOUND MIND AND UNDER 2,397
NO CONSTRAINT OR UNDUE INFLUENCE TO ENTER INTO A VIATICAL 2,398
SETTLEMENT CONTRACT. AS USED IN THIS DIVISION, "PHYSICIAN" MEANS 2,399
A PERSON AUTHORIZED UNDER CHAPTER 4731. OF THE REVISED CODE TO 2,400
PRACTICE MEDICINE AND SURGERY OR OSTEOPATHIC MEDICINE AND
SURGERY. 2,401
(2) A DOCUMENT IN WHICH THE INSURED CONSENTS IN WRITING, 2,403
AS REQUIRED BY DIVISION (E) OF SECTION 3916.13 OF THE REVISED 2,404
CODE, TO THE RELEASE OF THE INSURED'S MEDICAL RECORDS TO A 2,405
VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER AND TO 2,406
THE INSURANCE COMPANY THAT ISSUED THE LIFE INSURANCE POLICY OR 2,407
CERTIFICATE COVERING THE LIFE OF THE INSURED.
(B) WITHIN TWENTY DAYS AFTER A VIATOR EXECUTES DOCUMENTS 2,409
NECESSARY TO TRANSFER ANY RIGHTS UNDER AN INSURANCE POLICY OR 2,410
CERTIFICATE OR WITHIN TWENTY DAYS OF ENTERING ANY EXPRESSED OR 2,411
IMPLIED AGREEMENT, OPTION, PROMISE, OR OTHER FORM OF 2,413
UNDERSTANDING TO VIATICATE THE POLICY, THE VIATICAL SETTLEMENT 2,414
PROVIDER SHALL GIVE WRITTEN NOTICE TO THE INSURER THAT ISSUED 2,415
THAT INSURANCE POLICY OR CERTIFICATE THAT THE POLICY OR 2,416
CERTIFICATE HAS OR WILL BECOME A VIATICATED POLICY OR
CERTIFICATE. THE NOTICE SHALL BE ACCOMPANIED BY THE DOCUMENTS 2,417
REQUIRED BY DIVISION (C) OF THIS SECTION. 2,418
(C) THE VIATICAL PROVIDER SHALL DELIVER A COPY OF THE 2,420
MEDICAL RELEASE REQUIRED UNDER DIVISION (A)(2) OF THIS SECTION, A 2,421
COPY OF THE VIATOR'S APPLICATION FOR THE VIATICAL SETTLEMENT 2,422
CONTRACT, THE NOTICE REQUIRED UNDER DIVISION (B) OF THIS SECTION, 2,423
AND A REQUEST FOR VERIFICATION OF COVERAGE TO THE INSURER THAT 2,424
ISSUED THE LIFE INSURANCE POLICY OR CERTIFICATE THAT IS THE 2,425
SUBJECT OF THE VIATICAL TRANSACTION. THE VIATICAL PROVIDER SHALL 2,426
USE THE NAIC'S FORM FOR VERIFICATION UNLESS STANDARDS FOR 2,427
VERIFICATION ARE DEVELOPED BY THE COMMISSIONER. 2,428
57
(D) THE INSURER SHALL RESPOND TO A REQUEST FOR 2,430
VERIFICATION OF COVERAGE SUBMITTED ON AN APPROVED FORM BY A 2,431
VIATICAL SETTLEMENT PROVIDER WITHIN THIRTY CALENDAR DAYS AFTER
THE DATE THE REQUEST IS RECEIVED AND SHALL INDICATE WHETHER, 2,432
BASED ON THE MEDICAL EVIDENCE AND DOCUMENTS PROVIDED, THE INSURER 2,433
INTENDS TO PURSUE AN INVESTIGATION AT THAT TIME REGARDING THE 2,434
VALIDITY OF THE LIFE INSURANCE CONTRACT OR CERTIFICATE THAT IS 2,435
THE SUBJECT OF THE REQUEST. 2,436
(E) PRIOR TO OR AT THE TIME OF EXECUTION OF THE VIATICAL 2,438
SETTLEMENT CONTRACT, THE VIATICAL SETTLEMENT PROVIDER SHALL 2,439
OBTAIN A WITNESSED DOCUMENT IN WHICH THE VIATOR CONSENTS TO THE
VIATICAL SETTLEMENT CONTRACT, REPRESENTS THAT THE VIATOR HAS A 2,440
FULL AND COMPLETE UNDERSTANDING OF THE VIATICAL SETTLEMENT 2,441
CONTRACT AND A FULL AND COMPLETE UNDERSTANDING OF THE BENEFITS OF 2,442
THE LIFE INSURANCE POLICY OR CERTIFICATE, AND ACKNOWLEDGES THAT 2,443
THE VIATOR IS ENTERING INTO THE VIATICAL SETTLEMENT CONTRACT 2,444
FREELY AND VOLUNTARILY AND, FOR PERSONS WITH A TERMINAL OR 2,445
CHRONIC ILLNESS OR CONDITION, ACKNOWLEDGES THAT THE INSURED HAS A 2,446
TERMINAL OR CHRONIC ILLNESS AND THAT THE TERMINAL OR CHRONIC 2,447
ILLNESS OR CONDITION WAS DIAGNOSED AFTER THE LIFE INSURANCE 2,448
POLICY OR CERTIFICATE WAS ISSUED. 2,449
(F) IF A VIATICAL SETTLEMENT BROKER PERFORMS ANY OF THE 2,451
ACTIVITIES SPECIFIED IN THIS SECTION ON BEHALF OF THE VIATICAL 2,452
SETTLEMENT PROVIDER, THE PROVIDER IS DEEMED TO HAVE FULFILLED THE 2,453
REQUIREMENTS OF THIS SECTION. 2,454
(G) ALL MEDICAL INFORMATION SOLICITED OR OBTAINED BY ANY 2,456
LICENSEE SHALL BE SUBJECT TO THE APPLICABLE PROVISIONS OF STATE 2,457
LAW RELATING TO CONFIDENTIALITY OF MEDICAL INFORMATION. 2,458
Sec. 3916.08. EACH VIATICAL SETTLEMENT CONTRACT ENTERED 2,460
INTO IN THIS STATE SHALL PROVIDE THE VIATOR WITH AN UNCONDITIONAL 2,461
RIGHT TO RESCIND THE CONTRACT FOR AT LEAST FIFTEEN CALENDAR DAYS 2,462
AFTER THE RECEIPT OF THE VIATICAL SETTLEMENT PROCEEDS. IF THE 2,464
INSURED DIES DURING THE RESCISSION PERIOD, THE VIATICAL
SETTLEMENT CONTRACT IS DEEMED TO HAVE BEEN RESCINDED, SUBJECT TO 2,465
58
REPAYMENT OF ALL VIATICAL SETTLEMENT PROCEEDS TO THE VIATICAL 2,466
SETTLEMENT PROVIDER. IF A VIATICAL SETTLEMENT CONTRACT IS 2,468
RESCINDED BY THE VIATOR PURSUANT TO THIS SECTION, OWNERSHIP OF 2,469
THE INSURANCE POLICY OR CERTIFICATE REVERTS TO THE VIATOR OR TO 2,470
THE VIATOR'S ESTATE IF THE VIATOR IS DECEASED, IRRESPECTIVE OF 2,471
ANY TRANSFER OF OWNERSHIP OF THE POLICY OR CERTIFICATE BY THE 2,472
VIATOR, VIATICAL SETTLEMENT PROVIDER, OR ANY OTHER PERSON. 2,473
Sec. 3916.09. (A) THE VIATICAL SETTLEMENT PROVIDER SHALL 2,475
INSTRUCT THE VIATOR TO SEND THE EXECUTED DOCUMENTS REQUIRED TO 2,477
EFFECT THE CHANGE IN OWNERSHIP, ASSIGNMENT, OR CHANGE IN 2,479
BENEFICIARY DIRECTLY TO THE INDEPENDENT ESCROW AGENT. WITHIN
THREE BUSINESS DAYS AFTER THE DATE THE ESCROW AGENT RECEIVES THE 2,481
DOCUMENTS, OR FROM THE DATE THE VIATICAL SETTLEMENT PROVIDER 2,482
RECEIVES THE DOCUMENTS IF THE VIATOR ERRONEOUSLY PROVIDES THE 2,483
DOCUMENTS DIRECTLY TO THE PROVIDER, THE PROVIDER SHALL PAY OR 2,484
TRANSFER THE PROCEEDS OF THE VIATICAL SETTLEMENT TO AN ESCROW OR 2,485
TRUST ACCOUNT IN A STATE OR FEDERALLY CHARTERED FINANCIAL 2,486
INSTITUTION WHOSE DEPOSITS ARE INSURED BY THE FEDERAL DEPOSIT 2,487
INSURANCE CORPORATION. UPON PAYMENT OF THE SETTLEMENT PROCEEDS 2,489
INTO THE ESCROW OR TRUST ACCOUNT, THE ESCROW AGENT OR TRUSTEE 2,490
SHALL DELIVER THE ORIGINAL CHANGE IN OWNERSHIP, ASSIGNMENT, OR 2,491
CHANGE IN BENEFICIARY FORMS TO THE VIATICAL SETTLEMENT PROVIDER
OR RELATED PROVIDER TRUST. UPON THE LICENSED PROVIDER'S RECEIPT 2,492
OF THE ACKNOWLEDGMENT OF THE PROPERLY COMPLETED TRANSFER OF 2,493
OWNERSHIP, ASSIGNMENT, OR DESIGNATION OF BENEFICIARY FROM THE 2,494
INSURANCE COMPANY, THE LICENSED PROVIDER SHALL INSTRUCT THE 2,495
ESCROW AGENT TO PAY THE SETTLEMENT PROCEEDS TO THE VIATOR. THE 2,496
ESCROW AGENT SHALL MAKE PAYMENT WITHIN THREE BUSINESS DAYS OF THE 2,497
DATE THE PROVIDER RECEIVED THE ACKNOWLEDGED FORMS FROM THE 2,498
INSURANCE COMPANY.
(B) FAILURE TO TRANSFER THE PROCEEDS TO THE VIATOR WITHIN 2,500
THE PERIOD OF TIME DISCLOSED PURSUANT TO DIVISION (A)(1)(f) OF 2,502
SECTION 3916.06 OF THE REVISED CODE RENDERS THE VIATICAL
SETTLEMENT CONTRACT VOIDABLE BY THE VIATOR FOR LACK OF 2,504
59
CONSIDERATION UNTIL THE TIME CONSIDERATION IS TENDERED TO AND 2,505
ACCEPTED BY THE VIATOR. IF A VIATICAL SETTLEMENT CONTRACT IS 2,507
VOIDED BY THE VIATOR PURSUANT TO THIS DIVISION, OWNERSHIP OF THE 2,508
INSURANCE POLICY OR CERTIFICATE REVERTS TO THE VIATOR OR TO THE 2,509
VIATOR'S ESTATE IF THE VIATOR IS DECEASED, IRRESPECTIVE OF ANY
TRANSFER OF OWNERSHIP OF THE POLICY OR CERTIFICATE BY THE VIATOR, 2,510
VIATICAL SETTLEMENT PROVIDER, OR ANY OTHER PERSON. 2,511
Sec. 3916.10. AFTER A VIATICAL SETTLEMENT HAS OCCURRED, 2,513
CONTACT WITH THE INSURED FOR THE PURPOSE OF DETERMINING THE 2,515
HEALTH STATUS OF THE INSURED BY THE VIATICAL SETTLEMENT PROVIDER 2,516
OR VIATICAL SETTLEMENT BROKER SHALL BE MADE ONLY BY THE VIATICAL 2,517
SETTLEMENT PROVIDER OR BROKER LICENSED IN THIS STATE. THE 2,518
VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL 2,519
NOT CONTACT THE INSURED FOR THE PURPOSE OF DETERMINING THE 2,520
INSURED'S HEALTH STATUS MORE THAN ONCE EVERY THREE MONTHS IF THE
INSURED HAS A LIFE EXPECTANCY OF MORE THAN ONE YEAR, OR MORE THAN 2,521
ONCE PER MONTH IF THE INSURED HAS A LIFE EXPECTANCY OF ONE YEAR 2,522
OR LESS. THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,523
BROKER SHALL EXPLAIN THE PROCEDURE FOR MAKING THESE CONTACTS AT 2,524
THE TIME THE VIATICAL SETTLEMENT CONTRACT IS ENTERED INTO. 2,525
THE LIMITATIONS SET FORTH IN THIS SECTION DO NOT APPLY TO 2,527
CONTACTS MADE WITH AN INSURED UNDER A VIATICATED POLICY FOR 2,528
PURPOSES OTHER THAN TO DETERMINE THE INSURED'S HEALTH STATUS. 2,529
VIATICAL SETTLEMENT PROVIDERS AND VIATICAL SETTLEMENT 2,531
BROKERS ARE RESPONSIBLE FOR THE ACTIONS OF THEIR AUTHORIZED 2,532
REPRESENTATIVES, FOR THE PURPOSES OF THIS SECTION. 2,533
Sec. 3916.11. (A)(1) A LICENSEE UNDER THIS CHAPTER SHALL, 2,535
FOR FIVE YEARS, RETAIN COPIES OF ALL OF THE FOLLOWING: 2,536
(a) ALL PROPOSED, OFFERED, OR EXECUTED CONTRACTS, PURCHASE 2,539
AGREEMENTS, UNDERWRITING DOCUMENTS, POLICY FORMS, AND 2,540
APPLICATIONS FROM THE DATE OF THE PROPOSAL, OFFER, OR EXECUTION 2,542
OF THE CONTRACT OR PURCHASE AGREEMENT, WHICHEVER IS LATER; 2,543
(b) ALL CHECKS, DRAFTS, OR OTHER EVIDENCE AND 2,545
DOCUMENTATION RELATED TO THE PAYMENT, TRANSFER, DEPOSIT, OR 2,547
60
RELEASE OF FUNDS FROM THE DATE OF THE TRANSACTION; 2,548
(c) ALL OTHER RECORDS AND DOCUMENTS RELATED TO THE 2,550
REQUIREMENTS OF THIS CHAPTER. 2,552
(2) THIS SECTION DOES NOT RELIEVE A PERSON OF THE 2,554
OBLIGATION TO PRODUCE THE DOCUMENTS DESCRIBED IN DIVISION (A)(1) 2,555
OF THIS SECTION TO THE SUPERINTENDENT AFTER THE RETENTION PERIOD 2,556
SPECIFIED IN THAT DIVISION HAS EXPIRED IF THE PERSON HAS RETAINED
THE DOCUMENTS. 2,557
(3) RECORDS REQUIRED TO BE RETAINED BY THIS SECTION MUST 2,559
BE LEGIBLE AND COMPLETE AND MAY BE RETAINED IN PAPER, PHOTOGRAPH, 2,560
MICROPROCESS, MAGNETIC, MECHANICAL, OR ELECTRONIC MEDIA, OR BY 2,561
ANY PROCESS THAT ACCURATELY REPRODUCES OR FORMS A DURABLE MEDIUM 2,562
FOR THE REPRODUCTION OF A RECORD. 2,563
(B)(1) UPON DETERMINING THAT AN EXAMINATION SHOULD BE 2,565
CONDUCTED, SUBJECT TO DIVISION (E) OF THIS SECTION, THE 2,566
SUPERINTENDENT SHALL APPOINT ONE OR MORE EXAMINERS TO PERFORM THE 2,567
EXAMINATION AND INSTRUCT THEM AS TO THE SCOPE OF THE EXAMINATION. 2,568
THE SUPERINTENDENT MAY EMPLOY ANY GUIDELINES OR PROCEDURES FOR 2,569
PURPOSES OF THIS DIVISION THAT THE SUPERINTENDENT CONSIDERS 2,570
APPROPRIATE.
(2) EVERY LICENSEE OR PERSON FROM WHOM INFORMATION IS 2,572
SOUGHT, AND ALL OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS OF ANY 2,573
LICENSEE OR PERSON FROM WHOM INFORMATION IS SOUGHT, SHALL PROVIDE 2,574
TO THE EXAMINERS TIMELY, CONVENIENT, AND FREE ACCESS AT ALL 2,575
REASONABLE HOURS AT THE LICENSEE'S OR PERSON'S OFFICES TO ALL 2,576
BOOKS, RECORDS, ACCOUNTS, PAPERS, DOCUMENTS, ASSETS, AND COMPUTER 2,577
OR OTHER RECORDINGS RELATING TO THE PROPERTY, ASSETS, BUSINESS, 2,578
AND AFFAIRS OF THE LICENSEE BEING EXAMINED. THE OFFICERS, 2,579
DIRECTORS, EMPLOYEES, AND AGENTS OF THE LICENSEE OR PERSON SHALL 2,580
FACILITATE THE EXAMINATION AND AID IN THE EXAMINATION SO FAR AS 2,581
IT IS IN THEIR POWER TO DO SO. 2,582
THE REFUSAL OF A LICENSEE, BY ITS OFFICERS, DIRECTORS, 2,584
EMPLOYEES, OR AGENTS, TO SUBMIT TO EXAMINATION OR TO COMPLY WITH 2,585
ANY REASONABLE WRITTEN REQUEST OF THE SUPERINTENDENT SHALL BE 2,586
61
GROUNDS FOR SUSPENSION, REVOCATION, DENIAL OF ISSUANCE, OR 2,587
NONRENEWAL OF ANY LICENSE OR AUTHORITY HELD BY THE LICENSEE TO 2,588
ENGAGE IN THE VIATICAL SETTLEMENT BUSINESS OR OTHER BUSINESS 2,589
SUBJECT TO THE SUPERINTENDENT'S JURISDICTION. ANY PROCEEDINGS 2,590
FOR SUSPENSION, REVOCATION, DENIAL, OR NONRENEWAL OF ANY LICENSE 2,591
OR AUTHORITY IS SUBJECT TO CHAPTER 119. OF THE REVISED CODE. 2,592
(3) THE SUPERINTENDENT HAS THE POWER TO ISSUE SUBPOENAS, 2,594
TO ADMINISTER OATHS, AND TO EXAMINE UNDER OATH ANY PERSON AS TO 2,595
ANY MATTER PERTINENT TO THE EXAMINATION. UPON THE FAILURE OR 2,596
REFUSAL OF A PERSON TO OBEY A SUBPOENA, THE SUPERINTENDENT MAY 2,597
PETITION A COURT OF COMPETENT JURISDICTION, AND, UPON PROPER 2,598
SHOWING, THE COURT MAY ENTER AN ORDER COMPELLING THE WITNESS TO 2,599
APPEAR AND TESTIFY OR PRODUCE DOCUMENTARY EVIDENCE. FAILURE TO 2,600
OBEY THE COURT ORDER SHALL BE PUNISHABLE AS CONTEMPT OF COURT. 2,601
(4) WHEN MAKING AN EXAMINATION UNDER THIS CHAPTER, THE 2,603
SUPERINTENDENT MAY RETAIN ATTORNEYS, APPRAISERS, INDEPENDENT 2,604
ACTUARIES, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, OR OTHER 2,605
PROFESSIONALS AND SPECIALISTS AS EXAMINERS, AND THE LICENSEE THAT 2,606
IS THE SUBJECT OF THE EXAMINATION SHALL BEAR THE COST OF THOSE 2,607
EXAMINERS. EXAMINERS WHO ARE APPOINTED BY THE SUPERINTENDENT, 2,608
BUT WHO ARE NOT EMPLOYEES OF THE DEPARTMENT OF INSURANCE, SHALL 2,609
BE COMPENSATED FOR THEIR WORK, TRAVEL, AND LIVING EXPENSES AT 2,610
REASONABLE AND CUSTOMARY RATES. 2,611
(5) NOTHING CONTAINED IN THIS CHAPTER LIMITS THE 2,613
SUPERINTENDENT'S AUTHORITY TO TERMINATE OR SUSPEND AN EXAMINATION 2,614
IN ORDER TO PURSUE OTHER LEGAL OR REGULATORY ACTION PURSUANT TO 2,615
THE INSURANCE LAWS OF THIS STATE. FINDINGS OF FACT AND 2,616
CONCLUSIONS MADE PURSUANT TO ANY EXAMINATION SHALL BE PRIMA-FACIE 2,617
EVIDENCE IN ANY LEGAL OR REGULATORY ACTION. 2,618
(6) NOTHING CONTAINED IN THIS CHAPTER LIMITS THE 2,620
SUPERINTENDENT'S AUTHORITY TO USE AND, IF APPROPRIATE, TO MAKE 2,621
PUBLIC ANY FINAL OR PRELIMINARY EXAMINATION REPORT, ANY EXAMINER 2,622
OR LICENSEE WORKING PAPERS OR OTHER DOCUMENTS, OR ANY OTHER 2,623
INFORMATION DISCOVERED OR DEVELOPED DURING THE COURSE OF ANY 2,624
62
EXAMINATION IN THE FURTHERANCE OF ANY LEGAL OR REGULATORY ACTION 2,625
THAT THE SUPERINTENDENT, IN THE SUPERINTENDENT'S SOLE DISCRETION, 2,626
CONSIDERS APPROPRIATE.
(C)(1) EXAMINATION REPORTS SHALL BE COMPRISED OF ONLY 2,628
FACTS APPEARING UPON THE BOOKS, RECORDS, OR OTHER DOCUMENTS OF 2,629
THE LICENSEE, ITS AGENTS, OR OTHER PERSONS EXAMINED, OR AS 2,630
ASCERTAINED FROM THE TESTIMONY OF ITS OFFICERS, AGENTS, OR OTHER 2,631
PERSONS EXAMINED CONCERNING ITS AFFAIRS, AND THE CONCLUSIONS AND 2,632
RECOMMENDATIONS THAT THE EXAMINERS FIND REASONABLY WARRANTED FROM 2,633
THE FACTS. 2,634
(2) UPON COMPLETION OF THE EXAMINATION, THE EXAMINER IN 2,636
CHARGE SHALL FILE WITH THE SUPERINTENDENT A VERIFIED WRITTEN 2,637
REPORT OF EXAMINATION. UPON RECEIPT OF THE VERIFIED REPORT, THE 2,638
SUPERINTENDENT SHALL TRANSMIT THE REPORT TO THE LICENSEE 2,639
EXAMINED, TOGETHER WITH A NOTICE THAT SHALL AFFORD THE LICENSEE 2,640
EXAMINED A REASONABLE OPPORTUNITY OF NOT MORE THAN THIRTY DAYS 2,641
FROM RECEIPT OF THE REPORT TO MAKE A WRITTEN SUBMISSION OR 2,642
REBUTTAL WITH RESPECT TO ANY MATTERS CONTAINED IN THE EXAMINATION 2,643
REPORT.
(3) IF THE SUPERINTENDENT DETERMINES THAT REGULATORY ACTION 2,645
IS APPROPRIATE AS A RESULT OF AN EXAMINATION, THE SUPERINTENDENT 2,646
MAY INITIATE ANY PROCEEDINGS OR ACTIONS PROVIDED BY LAW. 2,647
(D)(1) NAMES AND INDIVIDUAL IDENTIFICATION DATA FOR ALL 2,649
VIATORS SHALL BE CONSIDERED PRIVATE AND CONFIDENTIAL INFORMATION 2,650
AND SHALL NOT BE DISCLOSED BY THE SUPERINTENDENT, UNLESS REQUIRED
BY LAW. 2,651
(2) EXCEPT AS OTHERWISE PROVIDED IN THIS CHAPTER OR IN THE 2,653
LAW OF ANOTHER STATE OR JURISDICTION THAT IS SUBSTANTIALLY 2,654
SIMILAR TO THIS CHAPTER, ALL EXAMINATION REPORTS, WORKING PAPERS, 2,655
RECORDED INFORMATION, DOCUMENTS, AND COPIES OF THOSE REPORTS, 2,656
PAPERS, INFORMATION, DOCUMENTS, AND COPIES PRODUCED BY, OBTAINED 2,657
BY, OR DISCLOSED TO THE SUPERINTENDENT OR TO ANY OTHER PERSON IN 2,658
THE COURSE OF AN EXAMINATION MADE UNDER THIS CHAPTER OR UNDER THE 2,659
LAW OF ANOTHER STATE OR JURISDICTION THAT IS SUBSTANTIALLY 2,660
63
SIMILAR TO THIS CHAPTER, OR IN THE COURSE OF THE SUPERINTENDENT'S 2,661
ANALYSIS OR INVESTIGATION OF THE FINANCIAL CONDITION OR MARKET 2,662
CONDUCT OF A LICENSEE ARE CONFIDENTIAL BY LAW AND PRIVILEGED, ARE 2,663
NOT A PUBLIC RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF 2,664
THE REVISED CODE, ARE NOT SUBJECT TO SUBPOENA, AND ARE NOT
SUBJECT TO DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY PRIVATE
CIVIL ACTION. THE SUPERINTENDENT MAY USE THE DOCUMENTS, 2,665
MATERIALS, OR OTHER INFORMATION IN THE FURTHERANCE OF ANY 2,666
REGULATORY OR LEGAL ACTION BROUGHT AS PART OF THE 2,667
SUPERINTENDENT'S OFFICIAL DUTIES.
(3) DOCUMENTS, MATERIALS, OR OTHER INFORMATION, INCLUDING, 2,669
BUT NOT LIMITED TO, ALL WORKING PAPERS, AND COPIES OF WORKING 2,670
PAPERS, IN THE POSSESSION OR CONTROL OF THE NAIC AND ITS 2,671
AFFILIATES AND SUBSIDIARIES ARE CONFIDENTIAL BY LAW AND 2,672
PRIVILEGED, ARE NOT SUBJECT TO SUBPOENA, AND ARE NOT SUBJECT TO
DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION, 2,673
IF EITHER OF THE FOLLOWING APPLIES: 2,674
(a) THEY ARE CREATED, PRODUCED, OR OBTAINED BY OR 2,676
DISCLOSED TO THE NAIC AND ITS AFFILIATES AND SUBSIDIARIES IN THE 2,677
COURSE OF ASSISTING AN EXAMINATION MADE UNDER THIS CHAPTER OR 2,678
ASSISTING A COMMISSIONER IN THE ANALYSIS OR INVESTIGATION OF THE 2,679
FINANCIAL CONDITION OR MARKET CONDUCT OF A LICENSEE. 2,680
(b) A COMMISSIONER DISCLOSES THEM TO THE NAIC AND ITS 2,682
AFFILIATES AND SUBSIDIARIES UNDER DIVISION (D)(4) OF THIS 2,683
SECTION.
(4) NEITHER THE SUPERINTENDENT NOR ANY PERSON THAT 2,685
RECEIVED THE DOCUMENTS, MATERIAL, OR OTHER INFORMATION WHILE 2,686
ACTING UNDER THE AUTHORITY OF THE SUPERINTENDENT, INCLUDING THE 2,687
NAIC AND ITS AFFILIATES AND SUBSIDIARIES, SHALL BE PERMITTED TO 2,688
TESTIFY IN ANY PRIVATE CIVIL ACTION CONCERNING ANY CONFIDENTIAL
DOCUMENTS, MATERIALS, OR INFORMATION SUBJECT TO DIVISION (D)(1) 2,689
OF THIS SECTION. 2,690
(5)(a) IN ORDER TO ASSIST IN THE PERFORMANCE OF THE 2,692
SUPERINTENDENT'S DUTIES, THE SUPERINTENDENT MAY DO ANY OF THE 2,693
64
FOLLOWING: 2,694
(i) SHARE DOCUMENTS, MATERIALS, OR OTHER INFORMATION, 2,696
INCLUDING THE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS, 2,697
OR INFORMATION SUBJECT TO DIVISION (D)(1) OF THIS SECTION, WITH 2,698
OTHER STATE, FEDERAL, AND INTERNATIONAL REGULATORY AGENCIES, WITH 2,699
THE NAIC AND ITS AFFILIATES AND SUBSIDIARIES, AND WITH STATE, 2,701
FEDERAL, AND INTERNATIONAL LAW ENFORCEMENT AUTHORITIES, IF THE 2,702
RECIPIENT AGREES TO MAINTAIN THE CONFIDENTIALITY AND PRIVILEGED 2,703
STATUS OF THE DOCUMENT, MATERIAL, COMMUNICATION, OR OTHER 2,704
INFORMATION;
(ii) RECEIVE DOCUMENTS, MATERIALS, COMMUNICATIONS, OR 2,706
INFORMATION, INCLUDING OTHERWISE CONFIDENTIAL AND PRIVILEGED 2,707
DOCUMENTS, MATERIALS, OR INFORMATION, FROM THE NAIC AND ITS 2,708
AFFILIATES AND SUBSIDIARIES, AND FROM REGULATORY AND LAW 2,709
ENFORCEMENT OFFICIALS OF OTHER FOREIGN OR DOMESTIC JURISDICTIONS; 2,710
(iii) ENTER INTO AGREEMENTS GOVERNING SHARING AND USE OF 2,712
INFORMATION CONSISTENT WITH THIS SECTION. 2,713
(b) THE SUPERINTENDENT SHALL MAINTAIN AS CONFIDENTIAL OR 2,715
PRIVILEGED ANY DOCUMENT, MATERIAL, OR INFORMATION RECEIVED UNDER 2,716
DIVISION (D)(5)(a)(ii) OF THIS SECTION WITH NOTICE OR THE 2,717
UNDERSTANDING THAT IT IS CONFIDENTIAL OR PRIVILEGED UNDER THE 2,718
LAWS OF THE JURISDICTION THAT IS THE SOURCE OF THE DOCUMENT, 2,719
MATERIAL, OR INFORMATION.
(6) NO WAIVER OF ANY APPLICABLE PRIVILEGE OR CLAIM OF 2,721
CONFIDENTIALITY IN THE DOCUMENTS, MATERIALS, OR INFORMATION SHALL 2,722
OCCUR AS A RESULT OF DISCLOSURE TO THE SUPERINTENDENT UNDER THIS 2,723
SECTION OR AS A RESULT OF SHARING AS AUTHORIZED IN DIVISION 2,724
(D)(5) OF THIS SECTION. 2,725
(7) A PRIVILEGE ESTABLISHED UNDER THE LAW OF ANY STATE OR 2,727
JURISDICTION THAT IS SUBSTANTIALLY SIMILAR TO THE PRIVILEGE 2,728
ESTABLISHED UNDER DIVISION (D) OF THIS SECTION SHALL BE AVAILABLE 2,729
AND ENFORCED IN ANY PROCEEDING IN, AND IN ANY COURT OF, THIS 2,730
STATE.
(8) NOTHING CONTAINED IN THIS CHAPTER PREVENTS OR 2,732
65
PROHIBITS THE SUPERINTENDENT FROM DISCLOSING THE CONTENT OF AN 2,733
EXAMINATION REPORT, PRELIMINARY EXAMINATION REPORT OR RESULTS, OR 2,734
ANY MATTER RELATING TO THOSE REPORTS OR RESULTS, TO THE OFFICIAL 2,735
OF ANY OTHER STATE OR COUNTRY THAT IS COMPARABLE TO THE 2,736
SUPERINTENDENT, OR TO LAW ENFORCEMENT OFFICIALS OF THIS OR ANY 2,737
OTHER STATE OR AGENCY OF THE FEDERAL GOVERNMENT AT ANY TIME, OR 2,738
TO THE NAIC, IF THE AGENCY OR OFFICE RECEIVING THE REPORT OR 2,739
MATTERS RELATING TO IT AGREES IN WRITING TO HOLD IT CONFIDENTIAL
AND IN A MANNER CONSISTENT WITH THIS CHAPTER. 2,740
(E)(1) THE SUPERINTENDENT MAY NOT APPOINT AN EXAMINER IF 2,742
THE EXAMINER, EITHER DIRECTLY OR INDIRECTLY, HAS A CONFLICT OF 2,743
INTEREST OR IS AFFILIATED WITH THE MANAGEMENT OF, OR OWNS A
PECUNIARY INTEREST IN, ANY PERSON SUBJECT TO EXAMINATION UNDER 2,744
THIS CHAPTER. THIS DIVISION DOES NOT AUTOMATICALLY PRECLUDE ANY 2,745
OF THE FOLLOWING FROM BEING AN EXAMINER: 2,746
(a) A VIATOR; 2,748
(b) AN INSURED IN A VIATICATED INSURANCE POLICY OR 2,750
CERTIFICATE;
(c) A BENEFICIARY IN AN INSURANCE POLICY OR CERTIFICATE 2,752
THAT IS PROPOSED TO BE VIATICATED. 2,753
(2) NOTWITHSTANDING THE REQUIREMENTS OF DIVISION (E) OF 2,755
THIS SECTION, THE SUPERINTENDENT MAY RETAIN FROM TIME TO TIME, ON 2,756
AN INDIVIDUAL BASIS, QUALIFIED ACTUARIES, CERTIFIED PUBLIC
ACCOUNTANTS, OR OTHER SIMILAR INDIVIDUALS WHO ARE INDEPENDENTLY 2,757
PRACTICING THEIR PROFESSIONS, EVEN THOUGH THESE PERSONS MAY FROM 2,758
TIME TO TIME BE SIMILARLY EMPLOYED OR RETAINED BY PERSONS SUBJECT 2,759
TO EXAMINATION UNDER THIS CHAPTER. 2,760
(F)(1) AS USED IN DIVISION (F) OF THIS SECTION, "EXPENSES" 2,762
INCLUDE ALL OF THE FOLLOWING: 2,763
(a) COMPENSATION OF EXAMINERS FOR EACH DAY OR PORTION OF A 2,765
DAY WORKED; 2,766
(b) TRAVEL AND LIVING EXPENSES OF EXAMINERS; 2,768
(c) ALL OTHER INCIDENTAL EXPENSES INCURRED BY OR ON BEHALF 2,770
OF EXAMINERS; 2,771
66
(d) AN ALLOCATED SHARE OF ALL EXPENSES NOT DESCRIBED IN 2,773
DIVISION (F)(1), (2), OR (3) OF THIS SECTION THAT ARE NECESSARILY 2,774
INCURRED IN THE PERFORMANCE OF A MARKET CONDUCT EXAMINATION, 2,775
INCLUDING THE EXPENSES OF DIRECT OVERHEAD AND SUPPORT STAFF FOR 2,776
EXAMINERS.
(2) WHEN A MARKET CONDUCT EXAMINATION IS MADE OF AN 2,778
INSURER, THE INSURER SHALL PAY THE EXPENSES OF THE EXAMINATION. 2,779
THE EXPENSES OF AN EXAMINATION INCLUDE THOSE INCURRED ON OR AFTER 2,780
THE DATE ON WHICH THE SUPERINTENDENT NOTIFIES THE INSURER OF THE 2,781
EXAMINATION THROUGH THE ISSUANCE OF THE FINAL EXAMINATION REPORT. 2,782
(3) UPON AN INSURER'S FAILURE TO COMPLY WITH DIVISION (A) 2,784
OF THIS SECTION, THE SUPERINTENDENT MAY INITIATE PROCEEDINGS IN 2,785
ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE TO REVOKE, 2,786
SUSPEND, OR REFUSE TO RENEW THE CERTIFICATE OF AUTHORITY OR 2,787
LICENSE OF THE INSURER. ADDITIONALLY, THE SUPERINTENDENT MAY
REQUEST THE ATTORNEY GENERAL TO INITIATE A CIVIL ACTION IN THE 2,788
COURT OF COMMON PLEAS OF FRANKLIN COUNTY TO OBTAIN AND ENFORCE A 2,789
JUDGMENT FOR EXPENSES INCURRED IN THE PERFORMANCE OF A MARKET 2,790
CONDUCT EXAMINATION.
(G)(1) NO CAUSE OF ACTION SHALL ARISE NOR SHALL ANY 2,792
LIABILITY BE IMPOSED AGAINST THE SUPERINTENDENT, ANY AUTHORIZED 2,793
REPRESENTATIVE OF THE SUPERINTENDENT, OR ANY EXAMINER APPOINTED
BY THE SUPERINTENDENT FOR ANY STATEMENTS MADE OR CONDUCT 2,794
PERFORMED IN GOOD FAITH WHILE CARRYING OUT THE PROVISIONS OF THIS 2,795
CHAPTER.
(2) NO CAUSE OF ACTION SHALL ARISE NOR SHALL ANY LIABILITY 2,797
BE IMPOSED AGAINST ANY PERSON FOR THE ACT OF COMMUNICATING OR 2,798
DELIVERING INFORMATION OR DATA TO THE SUPERINTENDENT, ANY 2,799
AUTHORIZED REPRESENTATIVE OF THE SUPERINTENDENT, OR ANY EXAMINER 2,800
APPOINTED BY THE SUPERINTENDENT PURSUANT TO AN EXAMINATION MADE 2,801
UNDER THIS CHAPTER, IF THE ACT OF COMMUNICATION OR DELIVERY WAS 2,802
PERFORMED IN GOOD FAITH AND WITHOUT FRAUDULENT INTENT OR THE 2,803
INTENT TO DECEIVE. DIVISION (G)(2) OF THIS SECTION DOES NOT 2,804
ABROGATE OR MODIFY IN ANY WAY ANY COMMON LAW OR STATUTORY 2,805
67
PRIVILEGE OR IMMUNITY PREVIOUSLY ENJOYED BY ANY PERSON IDENTIFIED 2,806
IN DIVISION (G)(1) OF THIS SECTION. 2,807
(3) A PERSON IDENTIFIED IN DIVISION (G)(1) OR (2) OF THIS 2,809
SECTION SHALL BE ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND 2,810
COSTS IF THE PERSON IS THE PREVAILING PARTY IN A CIVIL ACTION FOR 2,811
LIBEL, SLANDER, OR ANY OTHER RELEVANT TORT ARISING OUT OF 2,812
ACTIVITIES IN CARRYING OUT THE PROVISIONS OF THIS CHAPTER AND THE 2,813
PARTY BRINGING THE ACTION WAS NOT SUBSTANTIALLY JUSTIFIED IN 2,814
BRINGING THE ACTION. FOR PURPOSES OF DIVISION (G)(3) OF THIS 2,815
SECTION, A PROCEEDING IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A 2,816
REASONABLE BASIS IN LAW OR FACT AT THE TIME THAT IT WAS 2,817
INITIATED.
(H) THE SUPERINTENDENT MAY INVESTIGATE SUSPECTED 2,819
FRAUDULENT VIATICAL SETTLEMENT ACTS AND PERSONS ENGAGED IN THE 2,820
BUSINESS OF VIATICAL SETTLEMENTS. 2,821
Sec. 3916.12. EACH VIATICAL SETTLEMENT PROVIDER AND 2,824
VIATICAL SETTLEMENT BROKER LICENSED UNDER THIS CHAPTER SHALL FILE 2,825
WITH THE SUPERINTENDENT OF INSURANCE, ON OR BEFORE THE FIRST DAY
OF MARCH OF EACH YEAR, AN ANNUAL STATEMENT CONTAINING THE 2,826
INFORMATION REQUIRED BY THE SUPERINTENDENT BY RULE ADOPTED IN 2,828
ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE.
Sec. 3916.13. EXCEPT AS OTHERWISE PERMITTED OR REQUIRED BY 2,830
LAW, A VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, 2,832
INSURANCE COMPANY, INSURANCE AGENT, INSURANCE BROKER, INFORMATION
BUREAU, RATING AGENCY OR COMPANY, OR ANY OTHER PERSON WITH ACTUAL 2,833
KNOWLEDGE OF AN INSURED'S IDENTITY, SHALL NOT DISCLOSE THAT 2,834
IDENTITY AS AN INSURED, INCLUDING THE INSURED'S NAME AND 2,836
INDIVIDUAL IDENTIFICATION DATA, OR THE INSURED'S FINANCIAL OR 2,837
MEDICAL INFORMATION, UNLESS ANY OF THE FOLLOWING APPLY: 2,838
(A) THE DISCLOSURE IS NECESSARY TO EFFECT A VIATICAL 2,840
SETTLEMENT BETWEEN THE VIATOR AND A VIATICAL SETTLEMENT PROVIDER, 2,841
AND THE VIATOR AND INSURED HAVE PROVIDED PRIOR WRITTEN CONSENT TO 2,842
THE DISCLOSURE.
(B) THE DISCLOSURE IS PROVIDED IN RESPONSE TO AN 2,844
68
INVESTIGATION OR EXAMINATION BY THE SUPERINTENDENT OF INSURANCE 2,845
OR BY ANY OTHER GOVERNMENTAL OFFICER OR AGENCY OR PURSUANT TO THE 2,846
REQUIREMENTS OF DIVISION (C) OF SECTION 3916.18 OF THE REVISED 2,847
CODE.
(C) THE DISCLOSURE IS A TERM OF, OR CONDITION TO, THE 2,849
TRANSFER OF A VIATICATED POLICY BY ONE VIATICAL SETTLEMENT 2,850
PROVIDER TO ANOTHER VIATICAL SETTLEMENT PROVIDER. 2,851
(D) THE DISCLOSURE IS NECESSARY TO PERMIT A FINANCING 2,853
ENTITY, RELATED PROVIDER TRUST, OR SPECIAL PURPOSE ENTITY TO 2,855
FINANCE THE PURCHASE OF POLICIES OR CERTIFICATES BY A VIATICAL 2,856
SETTLEMENT PROVIDER, AND THE VIATOR AND INSURED HAVE PROVIDED 2,857
PRIOR WRITTEN CONSENT TO THE DISCLOSURE. 2,859
(E) THE DISCLOSURE IS NECESSARY TO ALLOW THE VIATICAL 2,861
SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER OR THEIR 2,862
AUTHORIZED REPRESENTATIVES TO MAKE CONTACTS FOR THE PURPOSE OF 2,863
DETERMINING HEALTH STATUS. 2,864
(F) THE DISCLOSURE IS REQUIRED TO PURCHASE STOP-LOSS 2,866
COVERAGE. 2,867
Sec. 3916.14. (A)(1) THE SUPERINTENDENT OF INSURANCE MAY 2,870
CONDUCT AN EXAMINATION UNDER THIS CHAPTER OF A LICENSEE AS OFTEN 2,871
AS THE SUPERINTENDENT IN THE SUPERINTENDENT'S SOLE DISCRETION 2,872
CONSIDERS APPROPRIATE. 2,873
(2) FOR THE PURPOSES OF COMPLETING AN EXAMINATION OF A 2,875
LICENSEE UNDER THIS CHAPTER, THE SUPERINTENDENT MAY EXAMINE OR 2,876
INVESTIGATE ANY PERSON, OR THE BUSINESS OF ANY PERSON, INSOFAR AS 2,877
THE EXAMINATION OR INVESTIGATION, IN THE SOLE DISCRETION OF THE 2,878
SUPERINTENDENT, IS NECESSARY OR MATERIAL TO THE EXAMINATION OF 2,879
THE LICENSEE.
(3) IN LIEU OF AN EXAMINATION UNDER THIS CHAPTER OF ANY 2,881
FOREIGN OR ALIEN LICENSEE LICENSED UNDER THIS CHAPTER, THE 2,882
SUPERINTENDENT, AT THE SUPERINTENDENT'S DISCRETION, MAY ACCEPT AN 2,883
EXAMINATION REPORT ON THE LICENSEE AS PREPARED BY THE OFFICIAL OF 2,884
THE LICENSEE'S STATE OF DOMICILE OR PORT-OF-ENTRY STATE WHO IS 2,885
COMPARABLE TO THE SUPERINTENDENT. 2,886
69
(B) THE LICENSEE OR APPLICANT SHALL PAY TO THE 2,888
SUPERINTENDENT ALL COSTS, ASSESSMENTS, FORFEITURES, OR FINES 2,889
INCURRED IN CONDUCTING AN EXAMINATION UNDER THIS SECTION. THE 2,890
SUPERINTENDENT SHALL DEPOSIT THE MONEY INTO THE STATE TREASURY TO 2,892
THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING FUND CREATED
BY SECTION 3901.021 OF THE REVISED CODE. 2,893
Sec. 3916.15. (A) THE SUPERINTENDENT OF INSURANCE MAY 2,895
REFUSE TO ISSUE OR MAY SUSPEND, REVOKE, OR REFUSE TO RENEW THE 2,897
LICENSE OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,898
BROKER, IF THE SUPERINTENDENT FINDS THAT ANY OF THE FOLLOWING 2,899
APPLY:
(1) THERE WAS A MATERIAL MISREPRESENTATION IN THE 2,901
APPLICATION FOR THE LICENSE. 2,902
(2) THE APPLICANT OR LICENSEE OR ANY OFFICER, PARTNER, 2,904
MEMBER, OR KEY MANAGEMENT PERSONNEL OF THE APPLICANT OR LICENSEE 2,906
HAS BEEN CONVICTED OF FRAUDULENT OR DISHONEST PRACTICES, IS 2,907
SUBJECT TO A FINAL ADMINISTRATIVE ACTION IN ANOTHER STATE, OR IS 2,908
OTHERWISE SHOWN TO BE UNTRUSTWORTHY OR INCOMPETENT. 2,909
(3) THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT 2,911
DEMONSTRATES A PATTERN OF UNREASONABLE PAYMENTS TO VIATORS. 2,912
(4) THE LICENSEE HAS BEEN CONVICTED OF OR HAS PLEADED 2,914
GUILTY OR NO CONTEST TO A FELONY OR TO A MISDEMEANOR INVOLVING 2,915
FRAUD, MORAL TURPITUDE, DISHONESTY, OR BREACH OF TRUST, 2,916
REGARDLESS OF WHETHER A JUDGMENT OF CONVICTION HAS BEEN ENTERED 2,917
BY THE COURT.
(5) THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT 2,919
HAS USED A VIATICAL SETTLEMENT CONTRACT FORM THAT HAS NOT BEEN 2,921
APPROVED UNDER THIS CHAPTER.
(6) THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT 2,923
HAS FAILED TO HONOR CONTRACTUAL OBLIGATIONS SET OUT IN A VIATICAL 2,925
SETTLEMENT CONTRACT.
(7) THE LICENSEE NO LONGER MEETS THE REQUIREMENTS FOR 2,927
INITIAL LICENSURE.
(8) THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT 2,929
70
HAS ASSIGNED, TRANSFERRED, OR PLEDGED A VIATICATED POLICY TO A 2,931
PERSON THAT IS NOT A VIATICAL SETTLEMENT PROVIDER LICENSED IN 2,932
THIS STATE, A FINANCING ENTITY, A SPECIAL PURPOSE ENTITY, OR A
RELATED PROVIDER TRUST. 2,933
(9) THE LICENSEE HAS VIOLATED ANY PROVISION OF THIS 2,935
CHAPTER OR ANY RULE ADOPTED UNDER THIS CHAPTER. 2,936
(10) THE LICENSEE HAS COMMITTED ANY COERCIVE, FRAUDULENT, 2,938
OR DISHONEST ACT, OR MADE ANY UNTRUE, DECEPTIVE, OR MISLEADING 2,939
STATEMENT, IN CONNECTION WITH A VIATICAL TRANSACTION OR A 2,940
PROPOSED VIATICAL TRANSACTION.
(B) BEFORE THE SUPERINTENDENT REFUSES TO ISSUE A LICENSE 2,942
UNDER THIS CHAPTER, OR SUSPENDS, REVOKES, OR REFUSES TO RENEW THE 2,943
LICENSE OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT 2,945
BROKER, THE SUPERINTENDENT SHALL PROVIDE THE LICENSEE OR
APPLICANT WITH NOTICE AND AN OPPORTUNITY FOR HEARING AS PROVIDED 2,946
IN CHAPTER 119. OF THE REVISED CODE, EXCEPT AS FOLLOWS: 2,947
(1)(a) ANY NOTICE OF OPPORTUNITY FOR HEARING, THE HEARING 2,949
OFFICER'S FINDINGS AND RECOMMENDATIONS, OR THE SUPERINTENDENT'S 2,950
ORDER SHALL BE SERVED BY CERTIFIED MAIL AT THE LAST KNOWN ADDRESS 2,951
OF THE LICENSEE OR APPLICANT. SERVICE SHALL BE EVIDENCED BY 2,952
RETURN RECEIPT SIGNED BY ANY PERSON.
FOR PURPOSES OF THIS SECTION, THE "LAST KNOWN ADDRESS" IS 2,954
THE ADDRESS THAT APPEARS IN THE LICENSING RECORDS OF THE 2,955
DEPARTMENT OF INSURANCE.
(b) IF THE CERTIFIED MAIL ENVELOPE IS RETURNED WITH AN 2,957
ENDORSEMENT SHOWING THAT SERVICE WAS REFUSED, OR THAT THE 2,958
ENVELOPE WAS UNCLAIMED, THE NOTICE AND ALL SUBSEQUENT NOTICES 2,959
REQUIRED BY CHAPTER 119. OF THE REVISED CODE MAY BE SERVED BY 2,960
ORDINARY MAIL TO THE LAST KNOWN ADDRESS OF THE LICENSEE OR 2,961
APPLICANT. THE MAILING SHALL BE EVIDENCED BY A CERTIFICATE OF
MAILING. SERVICE IS DEEMED COMPLETE AS OF THE DATE OF SUCH 2,962
CERTIFICATE PROVIDED THAT THE ORDINARY MAIL ENVELOPE IS NOT 2,963
RETURNED BY THE POSTAL AUTHORITIES WITH AN ENDORSEMENT SHOWING 2,964
FAILURE OF DELIVERY. THE TIME PERIOD IN WHICH TO REQUEST A 2,965
71
HEARING, AS PROVIDED IN CHAPTER 119. OF THE REVISED CODE, BEGINS 2,966
TO RUN ON THE DATE OF MAILING.
(c) IF SERVICE BY ORDINARY MAIL FAILS, THE SUPERINTENDENT 2,968
MAY CAUSE A SUMMARY OF THE SUBSTANTIVE PROVISIONS OF THE NOTICE 2,969
TO BE PUBLISHED ONCE A WEEK FOR THREE CONSECUTIVE WEEKS IN A 2,970
NEWSPAPER OF GENERAL CIRCULATION IN THE COUNTY WHERE THE LAST 2,971
KNOWN PLACE OF RESIDENCE OR BUSINESS OF THE LICENSEE OR APPLICANT 2,972
IS LOCATED. THE NOTICE IS CONSIDERED SERVED ON THE DATE OF THE 2,973
THIRD PUBLICATION. 2,974
(d) ANY NOTICE REQUIRED TO BE SERVED UNDER CHAPTER 119. OF 2,977
THE REVISED CODE SHALL ALSO BE SERVED UPON THE ATTORNEY OF THE
LICENSEE OR APPLICANT BY ORDINARY MAIL IF THE ATTORNEY HAS 2,979
ENTERED AN APPEARANCE IN THE MATTER.
(e) THE SUPERINTENDENT MAY, AT ANY TIME, PERFECT SERVICE 2,981
ON A LICENSEE OR APPLICANT BY PERSONAL DELIVERY OF THE NOTICE BY 2,982
AN EMPLOYEE OF THE DEPARTMENT. 2,983
(f) NOTICES REGARDING THE SCHEDULING OF HEARINGS AND ALL 2,985
OTHER MATTERS NOT DESCRIBED IN DIVISION (B)(1)(a) OF THIS SECTION 2,987
SHALL BE SENT BY ORDINARY MAIL TO THE LICENSEE OR APPLICANT AND
TO THE ATTORNEY OF THE LICENSEE OR APPLICANT. 2,988
(2) ANY SUBPOENA FOR THE APPEARANCE OF A WITNESS OR THE 2,990
PRODUCTION OF DOCUMENTS OR OTHER EVIDENCE AT A HEARING, OR FOR 2,991
THE PURPOSE OF TAKING TESTIMONY FOR USE AT A HEARING, SHALL BE 2,992
SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, BY AN 2,993
ATTORNEY OR BY AN EMPLOYEE OF THE DEPARTMENT DESIGNATED BY THE 2,994
SUPERINTENDENT. SUCH SUBPOENAS SHALL BE ENFORCED IN THE MANNER 2,995
PROVIDED IN SECTION 119.09 OF THE REVISED CODE. NOTHING IN THIS
SECTION SHALL BE CONSTRUED AS LIMITING THE SUPERINTENDENT'S OTHER 2,996
STATUTORY POWERS TO ISSUE SUBPOENAS. 2,997
Sec. 3916.16. (A) IT IS A VIOLATION OF THIS CHAPTER FOR 2,999
ANY PERSON TO ENTER INTO A VIATICAL SETTLEMENT CONTRACT WITHIN A 3,001
TWO-YEAR PERIOD COMMENCING WITH THE DATE OF ISSUANCE OF THE 3,002
INSURANCE POLICY OR CERTIFICATE UNLESS THE VIATOR CERTIFIES TO 3,003
THE VIATICAL SETTLEMENT PROVIDER THAT ONE OR MORE OF THE 3,004
72
FOLLOWING CONDITIONS HAVE BEEN MET WITHIN THAT TWO-YEAR PERIOD: 3,005
(1) THE POLICY OR CERTIFICATE WAS ISSUED UPON THE VIATOR'S 3,007
EXERCISE OF CONVERSION RIGHTS ARISING OUT OF A GROUP POLICY OR 3,008
CERTIFICATE, PROVIDED THE TOTAL OF THE TIME COVERED UNDER THE 3,009
CONVERSION POLICY OR CERTIFICATE PLUS THE TIME COVERED UNDER THE 3,010
GROUP POLICY OR CERTIFICATE IS AT LEAST TWENTY-FOUR MONTHS. THE 3,011
TIME COVERED UNDER THE GROUP POLICY OR CERTIFICATE SHALL BE 3,012
CALCULATED WITHOUT REGARD TO ANY CHANGE IN INSURANCE CARRIERS, 3,013
PROVIDED THE COVERAGE HAS BEEN CONTINUOUS AND UNDER THE SAME 3,014
GROUP SPONSORSHIP.
(2) THE VIATOR IS A CHARITABLE ORGANIZATION EXEMPT FROM 3,016
TAXATION UNDER 26 U.S.C. SECTION 501(c)(3). 3,017
(3) THE VIATOR IS NOT AN INDIVIDUAL. 3,019
(4) THE VIATOR SUBMITS INDEPENDENT EVIDENCE TO THE 3,021
VIATICAL SETTLEMENT PROVIDER THAT ONE OR MORE OF THE FOLLOWING 3,022
CONDITIONS HAVE BEEN MET WITHIN THAT TWO-YEAR PERIOD: 3,023
(a) THE VIATOR OR INSURED IS TERMINALLY OR CHRONICALLY 3,025
ILL.
(b) THE VIATOR'S SPOUSE DIES. 3,027
(c) THE VIATOR DIVORCES THE VIATOR'S SPOUSE. 3,029
(d) THE VIATOR RETIRES FROM FULL-TIME EMPLOYMENT. 3,031
(e) THE VIATOR BECOMES PHYSICALLY OR MENTALLY DISABLED, 3,033
AND A PHYSICIAN DETERMINES THAT THE DISABILITY PREVENTS THE 3,034
VIATOR FROM MAINTAINING FULL-TIME EMPLOYMENT. 3,035
(f) THE VIATOR WAS THE INSURED'S EMPLOYER AT THE TIME THE 3,037
POLICY OR CERTIFICATE WAS ISSUED AND THE EMPLOYMENT RELATIONSHIP 3,038
TERMINATED. 3,039
(g) A COURT OF COMPETENT JURISDICTION ENTERS A FINAL 3,041
ORDER, JUDGMENT, OR DECREE ON THE APPLICATION OF A CREDITOR OF 3,042
THE VIATOR AND ADJUDICATES THE VIATOR BANKRUPT OR INSOLVENT OR 3,043
APPROVES A PETITION SEEKING REORGANIZATION OF THE VIATOR OR
APPOINTING A RECEIVER, TRUSTEE, OR LIQUIDATOR TO ALL OR A 3,044
SUBSTANTIAL PART OF THE VIATOR'S ASSETS. 3,045
(h) THE VIATOR EXPERIENCES A SIGNIFICANT DECREASE IN 3,047
73
INCOME THAT IS UNEXPECTED AND THAT IMPAIRS THE VIATOR'S 3,048
REASONABLE ABILITY TO PAY THE POLICY PREMIUM. 3,049
(i) THE VIATOR OR INSURED DISPOSES OF THE VIATOR'S OR 3,051
INSURED'S OWNERSHIP INTERESTS IN A CLOSELY HELD CORPORATION. 3,052
(B) COPIES OF THE INDEPENDENT EVIDENCE DESCRIBED IN 3,054
DIVISION (A)(4) OF THIS SECTION AND DOCUMENTS REQUIRED BY SECTION 3,056
3916.07 OF THE REVISED CODE SHALL BE SUBMITTED TO THE INSURER 3,057
WHEN THE VIATICAL SETTLEMENT PROVIDER SUBMITS A REQUEST TO THE
INSURER FOR VERIFICATION OF COVERAGE. THE COPIES SHALL BE 3,058
ACCOMPANIED BY A LETTER OF ATTESTATION FROM THE VIATICAL 3,059
SETTLEMENT PROVIDER THAT THE COPIES ARE TRUE AND CORRECT COPIES 3,060
OF THE DOCUMENTS RECEIVED BY THE VIATICAL SETTLEMENT PROVIDER. 3,061
(C) IF THE VIATICAL SETTLEMENT PROVIDER SUBMITS TO THE 3,063
INSURER A COPY OF THE OWNER OR INSURED'S CERTIFICATION DESCRIBED 3,064
IN DIVISION (A)(4) OF THIS SECTION WHEN THE PROVIDER SUBMITS A 3,065
REQUEST TO THE INSURER TO EFFECT THE TRANSFER OF THE POLICY OR 3,066
CERTIFICATE TO THE VIATICAL SETTLEMENT PROVIDER, THE COPY 3,067
CONCLUSIVELY ESTABLISHES THAT THE VIATICAL SETTLEMENT CONTRACT 3,068
SATISFIES THE REQUIREMENTS OF THIS SECTION, AND THE INSURER SHALL 3,069
TIMELY RESPOND TO THE REQUEST.
Sec. 3916.17. (A) THE GENERAL ASSEMBLY HEREBY DECLARES 3,071
THAT THE PURPOSE OF THIS SECTION IS TO PROVIDE PROSPECTIVE 3,072
VIATORS WITH CLEAR AND UNAMBIGUOUS STATEMENTS IN THE
ADVERTISEMENT OF VIATICAL SETTLEMENTS AND TO ASSURE THE CLEAR, 3,073
TRUTHFUL, AND ADEQUATE DISCLOSURE OF THE BENEFITS, RISKS, 3,074
LIMITATIONS, AND EXCLUSIONS OF ANY VIATICAL SETTLEMENT CONTRACT. 3,075
THIS PURPOSE IS INTENDED TO BE ACCOMPLISHED BY THE ESTABLISHMENT 3,076
OF GUIDELINES AND STANDARDS OF PERMISSIBLE AND IMPERMISSIBLE 3,077
CONDUCT IN THE ADVERTISING OF VIATICAL SETTLEMENTS TO ASSURE THAT 3,078
PRODUCT DESCRIPTIONS ARE PRESENTED IN A MANNER THAT PREVENTS 3,079
UNFAIR, DECEPTIVE, OR MISLEADING ADVERTISING AND IS CONDUCIVE TO 3,080
ACCURATE PRESENTATION AND DESCRIPTION OF VIATICAL SETTLEMENTS 3,081
THROUGH THE ADVERTISING MEDIA AND MATERIAL USED BY VIATICAL 3,082
SETTLEMENT LICENSEES.
74
DIVISIONS (B) TO (P) OF THIS SECTION APPLY TO ANY 3,084
ADVERTISING OF VIATICAL SETTLEMENT CONTRACTS, OR ANY RELATED 3,085
PRODUCTS OR SERVICES INTENDED FOR DISSEMINATION IN THIS STATE, 3,086
INCLUDING, BUT NOT LIMITED TO, INTERNET ADVERTISING VIEWED BY 3,087
PERSONS LOCATED IN THIS STATE. IN CASES IN WHICH DISCLOSURE 3,088
REQUIREMENTS ARE ESTABLISHED PURSUANT TO FEDERAL REGULATION, THIS 3,089
SECTION SHALL BE INTERPRETED SO AS TO MINIMIZE OR ELIMINATE 3,090
CONFLICT WITH FEDERAL REGULATION WHEREVER POSSIBLE. 3,091
(B) EVERY VIATICAL SETTLEMENT LICENSEE SHALL ESTABLISH AND 3,093
AT ALL TIMES SHALL MAINTAIN A SYSTEM OF CONTROL OVER THE CONTENT, 3,094
FORM, AND METHOD OF DISSEMINATION OF ALL ADVERTISEMENTS OF ITS 3,095
CONTRACTS, PRODUCTS, AND SERVICES. ALL ADVERTISEMENTS, REGARDLESS 3,096
OF BY WHOM THEY ARE WRITTEN, CREATED, DESIGNED, OR PRESENTED, 3,097
SHALL BE THE RESPONSIBILITY OF THE VIATICAL SETTLEMENT LICENSEE 3,098
AND OF THE INDIVIDUAL WHO CREATED OR PRESENTED THE ADVERTISEMENT. 3,099
A SYSTEM OF CONTROL SHALL INCLUDE REGULAR ROUTINE NOTIFICATION, 3,100
AT LEAST ONCE A YEAR, TO AGENTS AND OTHERS AUTHORIZED BY THE 3,101
VIATICAL SETTLEMENT LICENSEE WHO DISSEMINATE ADVERTISEMENTS OF 3,102
THE REQUIREMENTS AND PROCEDURES FOR APPROVAL PRIOR TO THE USE OF 3,103
ANY ADVERTISEMENTS NOT FURNISHED BY THE VIATICAL SETTLEMENT 3,104
LICENSEE.
(C) ALL ADVERTISEMENTS THAT ARE SUBJECT TO THIS SECTION 3,106
SHALL BE TRUTHFUL AND NOT MISLEADING IN FACT OR BY IMPLICATION. 3,107
THE FORM AND CONTENT OF AN ADVERTISEMENT OF A VIATICAL SETTLEMENT
CONTRACT SHALL BE SUFFICIENTLY COMPLETE AND CLEAR SO AS TO AVOID 3,108
DECEPTION AND SHALL NOT HAVE THE CAPACITY OR TENDENCY TO MISLEAD 3,109
OR DECEIVE. THE DETERMINATION OF WHETHER AN ADVERTISEMENT HAS 3,110
THE CAPACITY OR TENDENCY TO MISLEAD OR DECEIVE SHALL BE MADE BY 3,111
THE SUPERINTENDENT OF INSURANCE, FROM THE OVERALL IMPRESSION THAT 3,112
THE ADVERTISEMENT MAY BE REASONABLY EXPECTED TO CREATE UPON A 3,113
PERSON OF AVERAGE EDUCATION OR INTELLIGENCE WITHIN THE SEGMENT OF 3,114
THE PUBLIC TO WHICH IT IS DIRECTED. 3,115
(D) VIATICAL SETTLEMENT ADVERTISEMENTS CONTAINING ANY 3,117
REPRESENTATION SET FORTH IN THIS DIVISION ARE DEEMED FALSE AND 3,118
75
MISLEADING ON THEIR FACE AND ARE PROHIBITED. FALSE AND
MISLEADING VIATICAL SETTLEMENT ADVERTISEMENTS INCLUDE, BUT ARE 3,119
NOT LIMITED TO, THOSE INCLUDING ANY OF THE FOLLOWING 3,120
REPRESENTATIONS:
(1) "GUARANTEED," "FULLY SECURED," "100 PERCENT SECURED," 3,122
"FULLY INSURED," "SECURE," "SAFE," "BACKED BY RATED INSURANCE 3,123
COMPANIES," "BACKED BY FEDERAL LAW," "BACKED BY STATE LAW," OR 3,124
"STATE GUARANTY FUNDS," OR SIMILAR REPRESENTATIONS; 3,125
(2) "NO RISK," "MINIMAL RISK," "LOW RISK," "NO 3,127
SPECULATION," "NO FLUCTUATION," OR SIMILAR REPRESENTATIONS; 3,128
(3) "QUALIFIED OR APPROVED FOR INDIVIDUAL RETIREMENT 3,130
ACCOUNTS (IRAS), ROTH IRAS, 401(k) PLANS, SIMPLIFIED EMPLOYEE 3,132
PENSIONS (SEPS), 403(b), KEOGH PLANS, TSA, OR OTHER RETIREMENT 3,133
ACCOUNT ROLLOVERS," "TAX DEFERRED," OR SIMILAR REPRESENTATIONS; 3,134
(4) UTILIZATION OF THE WORD "GUARANTEED" TO DESCRIBE THE 3,136
FIXED RETURN, ANNUAL RETURN, PRINCIPAL, EARNINGS, PROFITS, 3,137
INVESTMENT, OR SIMILAR REPRESENTATIONS; 3,138
(5) "NO SALES CHARGES OR FEES" OR SIMILAR REPRESENTATIONS; 3,140
(6) "HIGH YIELD," "SUPERIOR RETURN," "EXCELLENT RETURN," 3,142
"HIGH RETURN," "QUICK PROFIT," OR SIMILAR REPRESENTATIONS; 3,143
(7) PURPORTED FAVORABLE REPRESENTATIONS OR TESTIMONIALS 3,145
ABOUT THE BENEFITS OF VIATICAL SETTLEMENT CONTRACTS OR VIATICAL 3,146
SETTLEMENT PURCHASE AGREEMENTS AS AN INVESTMENT, TAKEN OUT OF 3,147
CONTEXT FROM ANY NEWSPAPER, TRADE PAPER, JOURNAL, RADIO OR 3,148
TELEVISION PROGRAM, OR ANY OTHER FORM OF PRINT AND ELECTRONIC 3,149
MEDIA.
(E)(1) THE INFORMATION REQUIRED TO BE DISCLOSED UNDER THIS 3,151
SECTION SHALL NOT BE MINIMIZED, RENDERED OBSCURE, OR PRESENTED IN 3,152
AN AMBIGUOUS FASHION OR INTERMINGLED WITH THE TEXT OF THE
ADVERTISEMENT SO AS TO BE CONFUSING OR MISLEADING. 3,153
AN ADVERTISEMENT SHALL NOT OMIT MATERIAL INFORMATION OR USE 3,155
ANY WORDS, PHRASES, STATEMENTS, REFERENCES, OR ILLUSTRATIONS IF 3,156
THE OMISSION OR USE HAS THE CAPACITY, TENDENCY, OR EFFECT OF 3,157
MISLEADING OR DECEIVING VIATORS, AS TO THE NATURE OR EXTENT OF 3,158
76
ANY BENEFIT, LOSS COVERED, PREMIUM PAYABLE, OR STATE OR FEDERAL 3,159
TAX CONSEQUENCE. THE FACT THAT THE VIATICAL SETTLEMENT CONTRACT 3,160
OFFERED IS MADE AVAILABLE FOR INSPECTION PRIOR TO CONSUMMATION OF 3,161
THE SALE, THAT AN OFFER IS MADE TO REFUND THE PAYMENT IF THE 3,162
VIATOR IS NOT SATISFIED, OR THAT THE VIATICAL SETTLEMENT CONTRACT 3,163
INCLUDES A "FREE LOOK" PERIOD THAT SATISFIES OR EXCEEDS LEGAL 3,164
REQUIREMENTS, DOES NOT REMEDY ANY MISLEADING STATEMENTS. 3,165
(2) AN ADVERTISEMENT SHALL NOT USE THE NAME OR TITLE OF A 3,167
LIFE INSURANCE COMPANY OR A LIFE INSURANCE POLICY UNLESS THE 3,168
ADVERTISEMENT HAS BEEN APPROVED BY THE INSURER. 3,169
(3) AN ADVERTISEMENT SHALL NOT REPRESENT THAT ANY PREMIUM 3,171
PAYMENTS WILL NOT BE REQUIRED TO BE PAID ON THE LIFE INSURANCE 3,172
POLICY THAT IS THE SUBJECT OF A VIATICAL SETTLEMENT CONTRACT OR 3,173
VIATICAL SETTLEMENT PURCHASE AGREEMENT IN ORDER TO MAINTAIN THAT 3,174
POLICY, UNLESS THAT IS THE FACT. 3,175
(4) AN ADVERTISEMENT SHALL NOT STATE OR IMPLY THAT 3,177
INTEREST CHARGED ON AN ACCELERATED DEATH BENEFIT OR A POLICY LOAN 3,178
IS UNFAIR, INEQUITABLE, OR IN ANY MANNER AN INCORRECT OR IMPROPER 3,179
PRACTICE.
(5) THE WORDS "FREE," "NO COST," "WITHOUT COST," "NO 3,181
ADDITIONAL COST," "AT NO EXTRA COST," OR WORDS OF SIMILAR IMPORT 3,182
SHALL NOT BE USED WITH RESPECT TO ANY BENEFIT OR SERVICE UNLESS 3,183
TRUE. AN ADVERTISEMENT MAY SPECIFY THE CHARGE FOR A BENEFIT OR A 3,184
SERVICE OR MAY STATE THAT A CHARGE IS INCLUDED IN THE PAYMENT OR 3,185
USE OTHER APPROPRIATE LANGUAGE. 3,186
(6)(a) TESTIMONIALS, APPRAISALS, ANALYSES, OR ENDORSEMENTS 3,188
USED IN ADVERTISEMENTS MUST SATISFY ALL OF THE FOLLOWING: 3,189
(i) THEY MUST BE GENUINE. 3,191
(ii) THEY MUST REPRESENT THE CURRENT OPINION OF THE 3,193
AUTHOR.
(iii) THEY MUST BE APPLICABLE TO THE VIATICAL SETTLEMENT 3,195
CONTRACT PRODUCT OR SERVICE ADVERTISED, IF ANY. 3,196
(iv) THEY MUST BE ACCURATELY REPRODUCED WITH SUFFICIENT 3,198
COMPLETENESS TO AVOID MISLEADING OR DECEIVING PROSPECTIVE VIATORS 3,199
77
AS TO THE NATURE OR SCOPE OF THE TESTIMONIALS, APPRAISALS, 3,200
ANALYSES, OR ENDORSEMENTS.
(b) IN USING TESTIMONIALS, APPRAISALS, ANALYSES, OR 3,202
ENDORSEMENTS, THE VIATICAL SETTLEMENT LICENSEE MAKES AS ITS OWN 3,203
ALL THE STATEMENTS CONTAINED IN THE TESTIMONIALS, APPRAISALS,
ANALYSES, OR ENDORSEMENTS, AND THE STATEMENTS ARE SUBJECT TO ALL 3,204
THE PROVISIONS OF THIS SECTION. 3,205
(c) IF THE INDIVIDUAL MAKING A TESTIMONIAL, APPRAISAL, 3,207
ANALYSIS, OR ENDORSEMENT HAS A FINANCIAL INTEREST IN THE VIATICAL 3,208
SETTLEMENT PROVIDER OR RELATED ENTITY AS A STOCKHOLDER, DIRECTOR, 3,209
OFFICER, EMPLOYEE, OR OTHERWISE, OR RECEIVES ANY BENEFIT DIRECTLY 3,210
OR INDIRECTLY OTHER THAN REQUIRED UNION SCALE WAGES, THAT FACT 3,211
SHALL BE PROMINENTLY DISCLOSED IN THE ADVERTISEMENT. 3,212
(d) AN ADVERTISEMENT SHALL NOT STATE OR IMPLY THAT A 3,214
VIATICAL SETTLEMENT CONTRACT BENEFIT OR SERVICE HAS BEEN APPROVED 3,215
OR ENDORSED BY A GROUP OF INDIVIDUALS, SOCIETY, ASSOCIATION, OR 3,216
OTHER ORGANIZATION UNLESS THAT IS THE FACT AND UNLESS ANY 3,217
RELATIONSHIP BETWEEN THE INDIVIDUAL, SOCIETY, ASSOCIATION, OR 3,218
ORGANIZATION AND THE VIATICAL SETTLEMENT PROVIDER IS DISCLOSED. 3,219
IF THE ENTITY MAKING THE ENDORSEMENT OR TESTIMONIAL IS OWNED, 3,220
CONTROLLED, OR MANAGED BY THE VIATICAL SETTLEMENT PROVIDER, OR 3,221
RECEIVES ANY PAYMENT OR OTHER CONSIDERATION FROM THE VIATICAL 3,222
SETTLEMENT PROVIDER FOR MAKING AN ENDORSEMENT OR TESTIMONIAL, 3,223
THAT FACT SHALL BE DISCLOSED IN THE ADVERTISEMENT.
(e) WHEN AN ENDORSEMENT REFERS TO BENEFITS RECEIVED UNDER 3,225
A VIATICAL SETTLEMENT CONTRACT, ALL PERTINENT INFORMATION SHALL 3,226
BE RETAINED FOR A PERIOD OF AT LEAST FIVE YEARS AFTER ITS USE. 3,227
(F) AN ADVERTISEMENT SHALL NOT CONTAIN STATISTICAL 3,229
INFORMATION UNLESS THE INFORMATION ACCURATELY REFLECTS RECENT AND 3,230
RELEVANT FACTS. THE SOURCE OF ALL STATISTICS USED IN AN
ADVERTISEMENT SHALL BE IDENTIFIED. 3,231
(G) AN ADVERTISEMENT SHALL NOT DISPARAGE ANY INSURER, 3,233
VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, 3,234
VIATICAL SETTLEMENT INVESTMENT AGENT, INSURANCE PRODUCER, POLICY,
78
SERVICE, OR METHOD OF MARKETING. 3,235
(H) ALL ADVERTISEMENTS ABOUT A VIATICAL SETTLEMENT 3,237
PROVIDER OR ITS VIATICAL SETTLEMENT CONTRACT, PRODUCTS, OR 3,238
SERVICES SHALL CLEARLY IDENTIFY THE VIATICAL SETTLEMENT
PROVIDER'S NAME. IF ANY SPECIFIC VIATICAL SETTLEMENT CONTRACT IS 3,239
ADVERTISED, THE VIATICAL SETTLEMENT CONTRACT SHALL BE IDENTIFIED 3,240
EITHER BY FORM NUMBER OR SOME OTHER APPROPRIATE DESCRIPTION. IF 3,241
AN APPLICATION IS PART OF THE ADVERTISEMENT, THE NAME OF THE 3,242
VIATICAL SETTLEMENT PROVIDER SHALL BE SHOWN ON THE APPLICATION. 3,243
(I) AN ADVERTISEMENT SHALL NOT USE A TRADE NAME, GROUP 3,245
DESIGNATION, NAME OF THE PARENT COMPANY OF A VIATICAL SETTLEMENT 3,246
LICENSEE, NAME OF A PARTICULAR DIVISION OF THE VIATICAL
SETTLEMENT LICENSEE, SERVICE MARK, SLOGAN, SYMBOL, OR OTHER 3,247
DEVICE OR REFERENCE WITHOUT DISCLOSING THE NAME OF THE VIATICAL 3,248
SETTLEMENT LICENSEE, IF EITHER OF THE FOLLOWING APPLIES REGARDING 3,249
THE ADVERTISEMENT: 3,250
(1) IT WOULD HAVE THE CAPACITY OR TENDENCY TO MISLEAD OR 3,252
DECEIVE AS TO THE TRUE IDENTITY OF THE VIATICAL SETTLEMENT 3,253
LICENSEE.
(2) IT WOULD HAVE THE CAPACITY OR TENDENCY TO CREATE THE 3,255
IMPRESSION THAT A COMPANY OTHER THAN THE VIATICAL SETTLEMENT 3,256
LICENSEE WOULD HAVE ANY RESPONSIBILITY FOR THE FINANCIAL 3,257
OBLIGATION UNDER A VIATICAL SETTLEMENT CONTRACT. 3,258
(J) AN ADVERTISEMENT SHALL NOT USE ANY COMBINATION OF 3,260
WORDS, SYMBOLS, OR PHYSICAL MATERIALS THAT, BY THEIR CONTENT, 3,261
PHRASEOLOGY, SHAPE, COLOR, OR OTHER CHARACTERISTICS, ARE SO
SIMILAR TO A COMBINATION OF WORDS, SYMBOLS, OR PHYSICAL MATERIALS 3,262
USED BY A GOVERNMENT PROGRAM OR AGENCY OR OTHERWISE APPEAR TO BE 3,263
OF SUCH A NATURE THAT THEY TEND TO MISLEAD PROSPECTIVE VIATORS 3,264
INTO BELIEVING THAT THE SOLICITATION IS IN SOME MANNER CONNECTED 3,265
WITH A GOVERNMENT PROGRAM OR AGENCY. 3,266
(K) AN ADVERTISEMENT MAY STATE THAT A VIATICAL SETTLEMENT 3,268
PROVIDER IS LICENSED IN THE STATE IN WHICH THE ADVERTISEMENT 3,269
APPEARS, PROVIDED IT DOES NOT EXAGGERATE THAT FACT OR SUGGEST OR
79
IMPLY THAT COMPETING VIATICAL SETTLEMENT PROVIDERS MAY NOT BE SO 3,270
LICENSED. THE ADVERTISEMENT MAY ASK THE AUDIENCE TO CONSULT THE 3,271
LICENSEE'S WEB SITE OR CONTACT THE DEPARTMENT OF INSURANCE TO 3,272
FIND OUT IF THE STATE IN WHICH THE ADVERTISEMENT APPEARS REQUIRES 3,273
LICENSING AND, IF IT DOES, WHETHER THE VIATICAL SETTLEMENT 3,274
PROVIDER OR VIATICAL SETTLEMENT BROKER IS LICENSED. 3,275
(L) AN ADVERTISEMENT SHALL NOT CREATE THE IMPRESSION THAT 3,277
THE VIATICAL SETTLEMENT PROVIDER, ITS FINANCIAL CONDITION OR 3,278
STATUS, THE PAYMENT OF ITS CLAIMS, OR THE MERITS, DESIRABILITY,
OR ADVISABILITY OF ITS VIATICAL SETTLEMENT CONTRACTS ARE 3,279
RECOMMENDED OR ENDORSED BY ANY GOVERNMENT ENTITY. 3,280
(M) ALL ADVERTISEMENTS OF AN ACTUAL LICENSEE SHALL STATE 3,282
THE NAME OF THE ACTUAL LICENSEE. AN ADVERTISEMENT SHALL NOT USE 3,283
A TRADE NAME, ANY GROUP DESIGNATION, NAME OF ANY AFFILIATE OR
CONTROLLING ENTITY OF THE LICENSEE, SERVICE MARK, SLOGAN, SYMBOL, 3,284
OR OTHER DEVICE IN A MANNER THAT WOULD HAVE THE CAPACITY OR 3,285
TENDENCY TO MISLEAD OR DECEIVE AS TO THE TRUE IDENTITY OF THE 3,286
ACTUAL LICENSEE OR CREATE THE FALSE IMPRESSION THAT AN AFFILIATE 3,287
OR CONTROLLING ENTITY WOULD HAVE ANY RESPONSIBILITY FOR THE 3,288
FINANCIAL OBLIGATION OF THE LICENSEE. 3,289
(N) AN ADVERTISEMENT SHALL NOT DIRECTLY OR INDIRECTLY 3,291
CREATE THE IMPRESSION THAT ANY DIVISION OR AGENCY OF THIS STATE, 3,292
ANY OTHER STATE, OR THE UNITED STATES GOVERNMENT ENDORSES, 3,293
APPROVES, OR FAVORS ANY OF THE FOLLOWING: 3,294
(1) ANY VIATICAL SETTLEMENT LICENSEE OR ITS BUSINESS 3,296
PRACTICES OR METHODS OF OPERATION; 3,297
(2) THE MERITS, DESIRABILITY, OR ADVISABILITY OF ANY 3,299
VIATICAL SETTLEMENT CONTRACT, OR VIATICAL SETTLEMENT PROGRAM; 3,300
(3) ANY VIATICAL SETTLEMENT CONTRACT, OR VIATICAL 3,302
SETTLEMENT PROGRAM; 3,303
(4) ANY LIFE INSURANCE POLICY OR CERTIFICATE OR LIFE 3,305
INSURANCE COMPANY. 3,306
(O) IF THE ADVERTISER EMPHASIZES THE SPEED WITH WHICH THE 3,308
VIATICATION WILL OCCUR, THE ADVERTISING MUST DISCLOSE THE AVERAGE 3,309
80
TIME FRAME, FROM COMPLETED APPLICATION TO THE DATE OF OFFER AND 3,310
FROM ACCEPTANCE OF THE OFFER TO RECEIPT OF THE FUNDS BY THE
VIATOR. 3,311
(P) IF THE ADVERTISING EMPHASIZES THE DOLLAR AMOUNTS 3,313
AVAILABLE TO VIATORS, THE ADVERTISING SHALL DISCLOSE THE AVERAGE 3,314
PURCHASE PRICE AS A PER CENT OF FACE VALUE OBTAINED BY VIATORS 3,315
CONTRACTING WITH THE LICENSEE DURING THE PAST SIX MONTHS. 3,316
Sec. 3916.18. (A)(1) NO PERSON SHALL COMMIT A FRAUDULENT 3,318
VIATICAL SETTLEMENT ACT. 3,319
(2) NO PERSON SHALL KNOWINGLY OR INTENTIONALLY INTERFERE 3,321
WITH THE ENFORCEMENT OF THE PROVISIONS OF THIS ACT OR 3,322
INVESTIGATIONS OF SUSPECTED OR ACTUAL VIOLATIONS OF THIS ACT. 3,323
(3) NO PERSON IN THE BUSINESS OF VIATICAL SETTLEMENTS 3,325
SHALL KNOWINGLY OR INTENTIONALLY PERMIT ANY PERSON CONVICTED OF A 3,326
FELONY INVOLVING DISHONESTY OR BREACH OF TRUST TO PARTICIPATE IN 3,327
THE BUSINESS OF VIATICAL SETTLEMENTS. 3,328
(B)(1) EACH VIATICAL SETTLEMENT CONTRACT AND EACH 3,330
APPLICATION FOR A VIATICAL SETTLEMENT, REGARDLESS OF THE FORM OF 3,331
TRANSMISSION, SHALL CONTAIN THE FOLLOWING STATEMENT OR A
SUBSTANTIALLY SIMILAR STATEMENT: 3,332
"ANY PERSON WHO KNOWINGLY PRESENTS FALSE INFORMATION IN AN 3,334
APPLICATION FOR INSURANCE OR VIATICAL SETTLEMENT CONTRACT IS 3,335
GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND IMPRISONMENT." 3,336
(2) THE LACK OF A STATEMENT AS REQUIRED IN DIVISION (B)(1) 3,338
OF THIS SECTION DOES NOT CONSTITUTE A DEFENSE IN ANY PROSECUTION 3,339
FOR A FRAUDULENT VIATICAL SETTLEMENT ACT. 3,340
(C)(1) EVERY PERSON ENGAGED IN THE BUSINESS OF VIATICAL 3,342
SETTLEMENTS HAVING KNOWLEDGE OR A REASONABLE BELIEF THAT A 3,343
FRAUDULENT VIATICAL SETTLEMENT ACT IS BEING, WILL BE, OR HAS BEEN
COMMITTED SHALL PROVIDE TO THE SUPERINTENDENT OF INSURANCE THE 3,344
INFORMATION REQUIRED BY THE SUPERINTENDENT. THE PERSON SHALL 3,345
PROVIDE THE INFORMATION IN A MANNER PRESCRIBED BY THE 3,346
SUPERINTENDENT. 3,347
(2) EVERY PERSON HAVING KNOWLEDGE OR A REASONABLE BELIEF 3,349
81
THAT A FRAUDULENT VIATICAL SETTLEMENT ACT IS BEING, WILL BE, OR 3,350
HAS BEEN COMMITTED MAY PROVIDE TO THE SUPERINTENDENT THE 3,351
INFORMATION REQUIRED BY THE SUPERINTENDENT. THE PERSON SHALL 3,352
PROVIDE THE INFORMATION UNDER THIS DIVISION IN A MANNER 3,353
PRESCRIBED BY THE SUPERINTENDENT.
(D)(1) NO CIVIL LIABILITY SHALL BE IMPOSED ON, AND NO 3,355
CAUSE OF ACTION SHALL ARISE FROM, A PERSON'S FURNISHING 3,356
INFORMATION CONCERNING SUSPECTED, ANTICIPATED, OR COMPLETED 3,357
FRAUDULENT VIATICAL SETTLEMENT ACTS OR SUSPECTED OR COMPLETED 3,358
FRAUDULENT INSURANCE ACTS, IF THE INFORMATION IS PROVIDED TO OR 3,359
RECEIVED FROM ANY OF THE FOLLOWING: 3,360
(a) THE SUPERINTENDENT, OR THE SUPERINTENDENT'S EMPLOYEES, 3,362
AGENTS, OR REPRESENTATIVES; 3,363
(b) LAW ENFORCEMENT OR REGULATORY OFFICIALS OF THIS STATE, 3,365
ANOTHER STATE, THE UNITED STATES, OR A POLITICAL SUBDIVISION OF 3,366
THIS STATE OR ANOTHER STATE, OR ANY EMPLOYEE, AGENT, OR 3,367
REPRESENTATIVE OF ANY OF THOSE OFFICIALS; 3,368
(c) A PERSON INVOLVED IN THE PREVENTION AND DETECTION OF 3,370
FRAUDULENT VIATICAL SETTLEMENT ACTS OR ANY AGENT, EMPLOYEE, OR 3,371
REPRESENTATIVE OF ANY PERSON SO INVOLVED; 3,372
(d) THE NAIC, NATIONAL ASSOCIATION OF SECURITIES DEALERS 3,374
(NASD), THE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION 3,375
(NASAA), ANY EMPLOYEE, AGENT, OR REPRESENTATIVE OF ANY OF THOSE 3,376
ASSOCIATIONS, OR OTHER REGULATORY BODY OVERSEEING LIFE INSURANCE,
VIATICAL SETTLEMENTS, SECURITIES, OR INVESTMENT FRAUD; 3,377
(e) THE LIFE INSURER THAT ISSUED THE LIFE INSURANCE POLICY 3,379
OR CERTIFICATE COVERING THE LIFE OF THE INSURED. 3,380
(2) THE IMMUNITY PROVIDED IN DIVISION (D)(1) OF THIS 3,382
SECTION SHALL NOT APPLY TO ANY STATEMENT MADE WITH ACTUAL MALICE. 3,383
IN AN ACTION BROUGHT AGAINST A PERSON FOR FILING A REPORT OR
FURNISHING OTHER INFORMATION CONCERNING A FRAUDULENT VIATICAL 3,384
SETTLEMENT ACT OR A FRAUDULENT INSURANCE ACT, THE PARTY BRINGING 3,385
THE ACTION SHALL PLEAD SPECIFICALLY ANY ALLEGATION THAT THE 3,386
IMMUNITY PROVIDED IN DIVISION (D)(1) OF THIS SECTION DOES NOT 3,387
82
APPLY BECAUSE THE PERSON FILING THE REPORT OR FURNISHING THE 3,388
INFORMATION DID SO WITH ACTUAL MALICE. 3,389
(3) IF A PERSON IS THE PREVAILING PARTY IN A CIVIL ACTION 3,391
FOR LIBEL, SLANDER, OR ANY OTHER RELEVANT TORT ARISING OUT OF 3,392
ACTIVITIES IN CARRYING OUT THE PROVISIONS OF THIS CHAPTER, IF THE 3,393
PREVAILING PARTY IS A PERSON IDENTIFIED IN DIVISION (D)(1) OF 3,394
THIS SECTION AND THE IMMUNITY DESCRIBED IN THAT DIVISION APPLIES 3,395
TO THE PERSON, AND IF THE PARTY WHO BROUGHT THE ACTION WAS NOT
SUBSTANTIALLY JUSTIFIED IN DOING SO, THE PERSON WHO IS THE 3,396
PREVAILING PARTY IS ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND 3,397
COSTS ARISING OUT OF THE ACTION. FOR PURPOSES OF THIS DIVISION, 3,398
AN ACTION IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A REASONABLE 3,399
BASIS IN LAW OR FACT AT THE TIME THAT IT WAS INITIATED. 3,400
(4) THIS SECTION DOES NOT ABROGATE OR MODIFY ANY COMMON 3,402
LAW OR STATUTORY PRIVILEGE OR IMMUNITY ENJOYED BY A PERSON 3,403
DESCRIBED IN DIVISION (D)(1) OF THIS SECTION. 3,404
(E)(1) THE DOCUMENTS AND EVIDENCE PROVIDED PURSUANT TO 3,406
DIVISION (D) OF THIS SECTION OR OBTAINED BY THE SUPERINTENDENT IN 3,408
AN INVESTIGATION OF ANY SUSPECTED OR ACTUAL FRAUDULENT VIATICAL 3,409
SETTLEMENT ACT IS PRIVILEGED AND CONFIDENTIAL, IS NOT A PUBLIC 3,410
RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF THE REVISED
CODE, AND IS NOT SUBJECT TO DISCOVERY OR SUBPOENA IN A CIVIL OR 3,411
CRIMINAL ACTION.
(2) DIVISION (E)(1) OF THIS SECTION DOES NOT PROHIBIT 3,413
RELEASE BY THE SUPERINTENDENT OF ANY DOCUMENT OR EVIDENCE 3,414
OBTAINED IN AN INVESTIGATION OF SUSPECTED OR ACTUAL FRAUDULENT
VIATICAL SETTLEMENT ACTS, IN ANY OF THE FOLLOWING MANNERS OR 3,415
CIRCUMSTANCES:
(a) IN ANY ADMINISTRATIVE OR JUDICIAL PROCEEDING TO 3,417
ENFORCE ANY LAWS ADMINISTERED BY THE SUPERINTENDENT; 3,418
(b) TO ANY LAW ENFORCEMENT OR REGULATORY AGENCY OF THIS 3,420
STATE, ANOTHER STATE, THE UNITED STATES, OR A POLITICAL 3,421
SUBDIVISION OF THIS STATE OR ANOTHER STATE, TO AN ORGANIZATION 3,422
ESTABLISHED FOR THE PURPOSE OF DETECTING AND PREVENTING
83
FRAUDULENT VIATICAL SETTLEMENT ACTS, OR TO THE NAIC; 3,423
(c) AT THE DISCRETION OF THE SUPERINTENDENT, TO A PERSON 3,425
IN THE BUSINESS OF VIATICAL SETTLEMENTS THAT IS AGGRIEVED BY A 3,426
FRAUDULENT VIATICAL SETTLEMENT ACT. 3,427
(3) RELEASE OF DOCUMENTS AND EVIDENCE UNDER DIVISION 3,429
(E)(2) OF THIS SECTION DOES NOT ABROGATE OR MODIFY THE PRIVILEGE 3,430
GRANTED IN DIVISION (E)(1) OF THIS SECTION. 3,431
(F) THE PROVISIONS OF THIS CHAPTER DO NOT DO ANY OF THE 3,433
FOLLOWING: 3,434
(1) PREEMPT THE AUTHORITY OR RELIEVE THE DUTY OF ANY OTHER 3,436
LAW ENFORCEMENT OR REGULATORY AGENCIES TO INVESTIGATE, EXAMINE, 3,437
OR PROSECUTE SUSPECTED VIOLATIONS OF LAW; 3,438
(2) PREVENT OR PROHIBIT A PERSON FROM DISCLOSING 3,440
VOLUNTARILY ANY INFORMATION CONCERNING VIATICAL SETTLEMENT FRAUD 3,441
TO A LAW ENFORCEMENT OR REGULATORY AGENCY OTHER THAN THE 3,442
DEPARTMENT OF INSURANCE;
(3) LIMIT ANY POWER GRANTED ELSEWHERE BY THE LAW OF THIS 3,444
STATE TO THE SUPERINTENDENT OR AN INSURANCE FRAUD UNIT TO 3,445
INVESTIGATE AND EXAMINE POSSIBLE VIOLATIONS OF LAW AND TO TAKE 3,446
APPROPRIATE ACTION AGAINST WRONGDOERS. 3,447
(G)(1) VIATICAL SETTLEMENT PROVIDERS AND VIATICAL 3,449
SETTLEMENT BROKERS SHALL ADOPT AND HAVE IN PLACE ANTIFRAUD 3,450
INITIATIVES REASONABLY CALCULATED TO DETECT, PROSECUTE, AND
PREVENT FRAUDULENT VIATICAL SETTLEMENT ACTS. AT THE DISCRETION 3,451
OF THE SUPERINTENDENT, THE SUPERINTENDENT MAY ORDER, OR A 3,452
LICENSEE MAY REQUEST AND THE SUPERINTENDENT MAY GRANT, ANY 3,453
MODIFICATIONS OF THE FOLLOWING REQUIRED INITIATIVES DESCRIBED IN 3,454
DIVISIONS (G)(1)(a) AND (b) OF THIS SECTION THAT ARE NECESSARY TO 3,455
ENSURE AN EFFECTIVE ANTIFRAUD PROGRAM. THE MODIFICATIONS MAY BE 3,456
MORE OR LESS RESTRICTIVE THAN THE REQUIRED INITIATIVES SO LONG AS 3,457
THE MODIFICATIONS MAY REASONABLY BE EXPECTED TO ACCOMPLISH THE 3,458
PURPOSE OF THIS SECTION. ANTIFRAUD INITIATIVES UNDER THIS 3,459
DIVISION SHALL INCLUDE ALL OF THE FOLLOWING:
(a) FRAUD INVESTIGATORS, WHO MAY BE VIATICAL SETTLEMENT 3,461
84
PROVIDER OR VIATICAL SETTLEMENT BROKER EMPLOYEES OR INDEPENDENT 3,462
CONTRACTORS; 3,463
(b) AN ANTIFRAUD PLAN THAT INCLUDES, BUT NOT IS NOT 3,465
LIMITED TO, ALL OF THE FOLLOWING: 3,466
(i) A DESCRIPTION OF THE PROCEDURES FOR DETECTING AND 3,468
INVESTIGATING POSSIBLE FRAUDULENT VIATICAL SETTLEMENT ACTS AND 3,469
PROCEDURES FOR RESOLVING MATERIAL INCONSISTENCIES BETWEEN MEDICAL 3,470
RECORDS AND INSURANCE APPLICATIONS;
(ii) A DESCRIPTION OF THE PROCEDURES FOR REPORTING 3,472
POSSIBLE FRAUDULENT VIATICAL SETTLEMENT ACTS TO THE 3,473
SUPERINTENDENT;
(iii) A DESCRIPTION OF THE PLAN FOR ANTIFRAUD EDUCATION 3,475
AND TRAINING OF UNDERWRITERS AND OTHER PERSONNEL; 3,476
(iv) A DESCRIPTION OR CHART OUTLINING THE ORGANIZATIONAL 3,478
ARRANGEMENT OF THE ANTIFRAUD PERSONNEL WHO ARE RESPONSIBLE FOR 3,479
THE INVESTIGATION AND REPORTING OF POSSIBLE FRAUDULENT VIATICAL 3,480
SETTLEMENT ACTS AND INVESTIGATING UNRESOLVED MATERIAL 3,481
INCONSISTENCIES BETWEEN MEDICAL RECORDS AND INSURANCE
APPLICATIONS. 3,482
(2) THE SUPERINTENDENT, BY RULE ADOPTED IN ACCORDANCE WITH 3,484
CHAPTER 119. OF THE REVISED CODE, MAY REQUIRE THAT ANTIFRAUD 3,486
PLANS REQUIRED UNDER DIVISION (G)(1) OF THIS SECTION BE SUBMITTED 3,487
TO THE SUPERINTENDENT. IF THE SUPERINTENDENT REQUIRES THAT 3,488
ANTIFRAUD PLANS BE SUBMITTED TO THE SUPERINTENDENT, THE PLANS SO 3,489
SUBMITTED ARE PRIVILEGED AND CONFIDENTIAL, ARE NOT A PUBLIC
RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF THE REVISED 3,490
CODE, AND ARE NOT SUBJECT TO DISCOVERY OR SUBPOENA IN A CIVIL OR 3,491
CRIMINAL ACTION. 3,492
Sec. 3916.19. (A) IN ADDITION TO THE PENALTIES AND OTHER 3,494
ENFORCEMENT PROVISIONS CONTAINED IN THIS CHAPTER, IF ANY PERSON 3,495
VIOLATES ANY PROVISION OF THIS CHAPTER OR ANY RULE OR REGULATION
IMPLEMENTING ANY PROVISION OF THIS CHAPTER, THE SUPERINTENDENT OF 3,496
INSURANCE MAY SEEK AN INJUNCTION IN A COURT OF COMPETENT 3,497
JURISDICTION AND MAY APPLY FOR ANY TEMPORARY OR PERMANENT ORDER 3,498
85
THAT THE SUPERINTENDENT DETERMINES IS NECESSARY TO RESTRAIN THE 3,499
PERSON FROM COMMITTING THE VIOLATION. 3,500
(B) ANY PERSON DAMAGED BY ANY ACT OF A PERSON IN VIOLATION 3,502
OF ANY PROVISION OF THIS CHAPTER MAY BRING A CIVIL ACTION AGAINST 3,503
THE PERSON COMMITTING THE VIOLATION IN A COURT OF COMPETENT 3,504
JURISDICTION. A CIVIL ACTION BROUGHT UNDER THIS DIVISION DOES 3,505
NOT PRECLUDE THE SUPERINTENDENT FROM EXERCISING ANY REGULATORY, 3,506
ENFORCEMENT, OR OTHER AUTHORITY AVAILABLE TO THE SUPERINTENDENT 3,507
UNDER THIS CHAPTER. 3,508
(C) IN ADDITION TO THE PENALTIES AND OTHER ENFORCEMENT 3,510
PROVISIONS CONTAINED IN THIS CHAPTER, ANY PERSON WHO VIOLATES ANY 3,511
PROVISION OF THIS CHAPTER IS SUBJECT TO A CIVIL PENALTY OF UP TO 3,512
TEN THOUSAND DOLLARS PER VIOLATION. IMPOSITION OF CIVIL 3,513
PENALTIES DESCRIBED IN THIS DIVISION SHALL BE PURSUANT TO AN 3,514
ORDER OF THE SUPERINTENDENT ISSUED UNDER CHAPTER 119. OF THE 3,515
REVISED CODE. THE SUPERINTENDENT'S ORDER MAY REQUIRE A PERSON 3,517
FOUND TO BE IN VIOLATION OF THIS ACT TO MAKE RESTITUTION TO 3,518
PERSONS AGGRIEVED BY VIOLATIONS OF THIS ACT. 3,519
Sec. 3916.20. THE SUPERINTENDENT OF INSURANCE MAY ADOPT 3,521
RULES IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE FOR 3,523
PURPOSES OF IMPLEMENTING THIS CHAPTER, INCLUDING, BUT NOT LIMITED
TO, RULES THAT DO THE FOLLOWING: 3,524
(A) GOVERN THE RELATIONSHIP AND RESPONSIBILITIES OF BOTH 3,527
INSURERS AND VIATICAL SETTLEMENT PROVIDERS AND VIATICAL 3,528
SETTLEMENT BROKERS DURING THE VIATICATION OF A LIFE INSURANCE 3,530
POLICY OR CERTIFICATE.
(B) ESTABLISH STANDARDS FOR EVALUATING THE REASONABLENESS 3,532
OF PAYMENTS UNDER VIATICAL SETTLEMENT CONTRACTS FOR PERSONS WITH 3,535
A TERMINAL OR CHRONIC ILLNESS OR CONDITION. THIS AUTHORITY 3,536
INCLUDES, BUT IS NOT LIMITED TO, THE REGULATION OF DISCOUNT RATES 3,538
USED TO DETERMINE THE AMOUNT PAID IN EXCHANGE FOR THE ASSIGNMENT, 3,539
TRANSFER, SALE, DEVISE, OR BEQUEST OF A BENEFIT UNDER A LIFE 3,540
INSURANCE POLICY OR CERTIFICATE.
(C) ESTABLISH APPROPRIATE LICENSING REQUIREMENTS, FEES, 3,542
86
AND STANDARDS FOR CONTINUED LICENSURE FOR VIATICAL SETTLEMENT 3,544
PROVIDERS AND VIATICAL SETTLEMENT BROKERS; 3,545
(D) REQUIRE A BOND OR OTHER MECHANISM FOR ENSURING THE 3,547
FINANCIAL ACCOUNTABILITY OF VIATICAL SETTLEMENT PROVIDERS AND 3,548
VIATICAL SETTLEMENT BROKERS. 3,549
Sec. 3916.21. (A) NO PERSON SHALL FAIL TO COMPLY WITH 3,551
THIS CHAPTER. 3,552
(B) WHOEVER VIOLATES DIVISION (A) OF THIS SECTION IS 3,554
DEEMED TO HAVE ENGAGED IN AN UNFAIR AND DECEPTIVE ACT OR PRACTICE 3,555
IN THE BUSINESS OF INSURANCE UNDER SECTIONS 3901.19 TO 3901.26 OF 3,556
THE REVISED CODE. 3,557
Sec. 3916.99. (A) WHOEVER VIOLATES SECTION 3916.02 OF THE 3,559
REVISED CODE IS GUILTY OF A FELONY OF THE THIRD DEGREE. 3,561
(B) WHOEVER VIOLATES DIVISION (A)(1) OF SECTION 3916.18 OF 3,564
THE REVISED CODE IS GUILTY OF A VIOLATION OF SECTION 2913.02 OF 3,565
THE REVISED CODE.
Section 2. That existing sections 1707.01, 1707.02, 3,568
1707.11, 1707.15, 1707.151, 1707.16, 1707.17, 1707.20, 1707.23,
and 1707.44 and sections 1707.432, 1707.433, 1707.434, 1707.435, 3,569
1707.436, 1707.437, 1707.438, and 1707.439 of the Revised Code 3,570
are hereby repealed.
Section 3. Sections 1 and 2 of this act shall take effect 3,572
six months after the effective date of this act. 3,573
Section 4. Any person that, on the effective date of this 3,575
act, transacts business in this state as a viatical settlement 3,576
provider, viatical settlement representative, or viatical 3,577
settlement broker may continue to do so pending approval of the 3,578
person's application for a license, if the person applies for the 3,579
license during the six-month period immediately following the 3,580
effective date of this act. 3,581