As Passed by the Senate                       1            

123rd General Assembly                                             4            

   Regular Session                         Am. 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-SENATORS LATTA-RAY-NEIN-        10           

                JOHNSON-GARDNER-OELSLAGER-HARRIS                   11           


_________________________________________________________________   13           

                          A   B I L L                                           

             To amend sections 1707.01, 1707.02, 1707.11,          15           

                1707.15, 1707.151, 1707.16, 1707.17, 1707.20,      16           

                1707.23, and 1707.44; to enact sections 3916.01,                

                3916.02, 3916.03, 3916.04, 3916.05, 3916.06,       18           

                3916.07, 3916.08, 3916.09, 3916.10, 3916.11,                    

                3916.12, 3916.13, 3916.14, 3916.15, 3916.16,       19           

                3916.17, 3916.18, 3916.19, 3916.20, 3916.21, and   20           

                3916.99; and to repeal sections 1707.432,          21           

                1707.433, 1707.434, 1707.435, 1707.436, 1707.437,  22           

                1707.438, and 1707.439 of the Revised Code to      23           

                adopt the Viatical Settlements Model Act of the    24           

                National Association of Insurance Commissioners,                

                to make life settlement interests subject to the   25           

                Ohio Securities Law, and to make other changes in  26           

                the Securities Law, including changes relative to  27           

                exempt securities, consent to service of process,  28           

                application for a dealer's, investment adviser's,               

                or salesperson's license, private civil actions    29           

                seeking damages arising from the sale of a         30           

                security, and expedited rulemaking authority.                   




BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:        32           

      Section 1.  That sections 1707.01, 1707.02, 1707.11,         34           

1707.15, 1707.151, 1707.16, 1707.17, 1707.20, 1707.23, and         36           

                                                          2      


                                                                 
1707.44 be amended and sections 3916.01, 3916.02, 3916.03,                      

3916.04, 3916.05, 3916.06, 3916.07, 3916.08, 3916.09, 3916.10,     38           

3916.11, 3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17,     40           

3916.18, 3916.19, 3916.20, 3916.21, and 3916.99 of the Revised     41           

Code be enacted to read as follows:                                43           

      Sec. 1707.01.  As used in this chapter:                      52           

      (A)  Whenever the context requires it, "division" or         54           

"division of securities" may be read as "director of commerce" or  55           

as "commissioner of securities."                                   56           

      (B)  "Security" means any certificate or instrument that     58           

represents title to or interest in, or is secured by any lien or   59           

charge upon, the capital, assets, profits, property, or credit of  60           

any person or of any public or governmental body, subdivision, or  61           

agency.  It includes shares of stock, certificates for shares of   62           

stock, membership interests in limited liability companies,        63           

voting-trust certificates, warrants and options to purchase        64           

securities, subscription rights, interim receipts, interim         65           

certificates, promissory notes, all forms of commercial paper,     66           

evidences of indebtedness, bonds, debentures, land trust           67           

certificates, fee certificates, leasehold certificates, syndicate  68           

certificates, endowment certificates, certificates or written      69           

instruments in or under profit-sharing or participation            70           

agreements or in or under oil, gas, or mining leases, or           71           

certificates or written instruments of any interest in or under    72           

the same, receipts evidencing preorganization or reorganization    73           

subscriptions, preorganization certificates, reorganization        74           

certificates, certificates evidencing an interest in any trust or  75           

pretended trust, any investment contract, ANY LIFE SETTLEMENT      76           

INTEREST, any instrument evidencing a promise or an agreement to   77           

pay money, warehouse receipts for intoxicating liquor, and the     78           

currency of any government other than those of the United States   79           

and Canada, but sections 1707.01 to 1707.45 of the Revised Code    80           

do not apply to the sale of real estate.                           81           

      (C)(1)  "Sale" has the full meaning of "sale" as applied by  83           

                                                          3      


                                                                 
or accepted in courts of law or equity, and includes every         84           

disposition, or attempt to dispose, of a security or of an         85           

interest in a security.  "Sale" also includes a contract to sell,  86           

an exchange, an attempt to sell, an option of sale, a              87           

solicitation of a sale, a solicitation of an offer to buy, a       88           

subscription, or an offer to sell, directly or indirectly, by      89           

agent, circular, pamphlet, advertisement, or otherwise.            90           

      (2)  "Sell" means any act by which a sale is made.           92           

      (3)  The use of advertisements, circulars, or pamphlets in   94           

connection with the sale of securities in this state exclusively   95           

to the purchasers specified in division (D) of section 1707.03 of  96           

the Revised Code is not a sale when the advertisements,            97           

circulars, and pamphlets describing and offering those securities  98           

bear a readily legible legend in substance as follows:  "This      99           

offer is made on behalf of dealers licensed under sections         100          

1707.01 to 1707.45 of the Revised Code, and is confined in this    101          

state exclusively to institutional investors and licensed          102          

dealers."                                                          103          

      (4)  The offering of securities by any person in             105          

conjunction with a licensed dealer by use of advertisement,        106          

circular, or pamphlet is not a sale if that person does not        107          

otherwise attempt to sell securities in this state.                108          

      (5)  Any security given with, or as a bonus on account of,   110          

any purchase of securities is conclusively presumed to constitute  111          

a part of the subject of that purchase and has been "sold."        112          

      (6)  "Sale" by an owner, pledgee, or mortgagee, or by a      114          

person acting in a representative capacity, includes sale on       115          

behalf of such party by an agent, including a licensed dealer or   116          

salesperson.                                                       117          

      (D)  "Person," except as otherwise provided in this          119          

chapter, means a natural person, firm, partnership, limited        121          

partnership, partnership association, syndicate, joint-stock       122          

company, unincorporated association, trust or trustee except       123          

where the trust was created or the trustee designated by law or    124          

                                                          4      


                                                                 
judicial authority or by a will, and a corporation or limited      125          

liability company organized under the laws of any state, any       126          

foreign government, or any political subdivision of a state or     127          

foreign government.                                                             

      (E)(1)  "Dealer," except as otherwise provided in this       129          

chapter, means every person, other than a salesperson, who         131          

engages or professes to engage, in this state, for either all or                

part of the person's time, directly or indirectly, either in the   132          

business of the sale of securities for the person's own account,   133          

or in the business of the purchase or sale of securities for the   134          

account of others in the reasonable expectation of receiving a     135          

commission, fee, or other remuneration as a result of engaging in  136          

the purchase and sale of securities.  "Dealer" does not mean any   137          

of the following:                                                               

      (a)  Any issuer, including any officer, director, employee,  139          

or trustee of, or member or manager of, or partner in, or any      140          

general partner of, any issuer, that sells, offers for sale, or    142          

does any act in furtherance of the sale of a security that         143          

represents an economic interest in that issuer, provided no        144          

commission, fee, or other similar remuneration is paid to or       145          

received by the issuer for the sale;                               146          

      (b)  Any licensed attorney, public accountant, or firm of    148          

such attorneys or accountants, whose activities are incidental to  149          

the practice of the attorney's, accountant's, or firm's            150          

profession;                                                                     

      (c)  Any person that, for the account of others, engages in  152          

the purchase or sale of securities that are issued and             153          

outstanding before such purchase and sale, if a majority or more   154          

of the equity interest of an issuer is sold in that transaction,   155          

and if, in the case of a corporation, the securities sold in that  156          

transaction represent a majority or more of the voting power of    157          

the corporation in the election of directors;                      158          

      (d)  Any person that brings an issuer together with a        160          

potential investor and whose compensation is not directly or       161          

                                                          5      


                                                                 
indirectly based on the sale of any securities by the issuer to    162          

the investor;                                                      163          

      (e)  Any bank, savings and loan association, savings bank,   165          

or credit union chartered under the laws of the United States or   166          

any state of the United States, provided that all transactions     168          

are consummated by or through a person licensed pursuant to        169          

section 1707.14 of the Revised Code;                               170          

      (f)  Any person that the division of securities by rule      172          

exempts from the definition of "dealer" under division (E)(1) of   173          

this section.                                                      174          

      (2)  "Licensed dealer" means a dealer licensed under this    177          

chapter.                                                                        

      (F)(1)  "Salesman" or "salesperson" means every natural      179          

person, other than a dealer, who is employed, authorized, or       180          

appointed by a dealer to sell securities within this state.        181          

      (2)  The general partners of a partnership, and the          183          

executive officers of a corporation or unincorporated              184          

association, licensed as a dealer are not salespersons within the  186          

meaning of this definition, nor are such clerical or other                      

employees of an issuer or dealer as are employed for work to       187          

which the sale of securities is secondary and incidental; but the  188          

division of securities may require a license from any such         189          

partner, executive officer, or employee if it determines that      190          

protection of the public necessitates the licensing.               191          

      (3)  "Licensed salesperson" means a salesperson licensed     194          

under this chapter.                                                             

      (G)  "Issuer" means every person who has issued, proposes    196          

to issue, or issues any security.                                  197          

      (H)  "Director" means each director or trustee of a          199          

corporation, each trustee of a trust, each general partner of a    200          

partnership, except a partnership association, each manager of a   201          

partnership association, and any person vested with managerial or  202          

directory power over an issuer not having a board of directors or  203          

trustees.                                                          204          

                                                          6      


                                                                 
      (I)  "Incorporator" means any incorporator of a corporation  206          

and any organizer of, or any person participating, other than in   207          

a representative or professional capacity, in the organization of  208          

an unincorporated issuer.                                          209          

      (J)  "Fraud," "fraudulent," "fraudulent acts," "fraudulent   211          

practices," or "fraudulent transactions" means anything            212          

recognized on or after July 22, 1929, as such in courts of law or  213          

equity; any device, scheme, or artifice to defraud or to obtain    214          

money or property by means of any false pretense, representation,  215          

or promise; any fictitious or pretended purchase or sale of        216          

securities; and any act, practice, transaction, or course of       217          

business relating to the purchase or sale of securities that is    218          

fraudulent or that has operated or would operate as a fraud upon   220          

the seller or purchaser.                                                        

      (K)  Except as otherwise specifically provided, whenever     222          

any classification or computation is based upon "par value," as    223          

applied to securities without par value, the average of the        224          

aggregate consideration received or to be received by the issuer   225          

for each class of those securities shall be used as the basis for  226          

that classification or computation.                                227          

      (L)(1)  "Intangible property" means patents, copyrights,     229          

secret processes, formulas, services, good will, promotion and     230          

organization fees and expenses, trademarks, trade brands, trade    231          

names, licenses, franchises, any other assets treated as           232          

intangible according to generally accepted accounting principles,  233          

and securities, accounts receivable, or contract rights having no  234          

readily determinable value.                                        235          

      (2)  "Tangible property" means all property other than       237          

intangible property and includes securities, accounts receivable,  238          

and contract rights, when the securities, accounts receivable, or  239          

contract rights have a readily determinable value.                 240          

      (M)  "Public utilities" means those utilities defined in     242          

sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised     243          

Code; in the case of a foreign corporation, it means those         244          

                                                          7      


                                                                 
utilities defined as public utilities by the laws of its           245          

domicile; and in the case of any other foreign issuer, it means    246          

those utilities defined as public utilities by the laws of the     247          

situs of its principal place of business.  The term always         248          

includes railroads whether or not they are so defined as public    249          

utilities.                                                         250          

      (N)  "State" means any state of the United States, any       252          

territory or possession of the United States, the District of      253          

Columbia, and any province of Canada.                              254          

      (O)  "Bank" means any bank, trust company, savings and loan  256          

association, savings bank, or credit union that is incorporated    258          

or organized under the laws of the United States, any state of     259          

the United States, Canada, or any province of Canada and that is   260          

subject to regulation or supervision by that country, state, or    261          

province.                                                                       

      (P)  "Include," when used in a definition, does not exclude  263          

other things or persons otherwise within the meaning of the term   264          

defined.                                                           265          

      (Q)(1)  "Registration by description" means that the         267          

requirements of section 1707.08 of the Revised Code have been      268          

complied with.                                                     269          

      (2)  "Registration by qualification" means that the          271          

requirements of sections 1707.09 and 1707.11 of the Revised Code   272          

have been complied with.                                           273          

      (3)  "Registration by coordination" means that there has     275          

been compliance with section 1707.091 of the Revised Code.         276          

Reference in this chapter to registration by qualification also    277          

shall be deemed to include registration by coordination unless     278          

the context otherwise indicates.                                   279          

      (R)  "Intoxicating liquor" includes all liquids and          281          

compounds that contain more than three and two-tenths per cent of  282          

alcohol by weight and are fit for use for beverage purposes.       283          

      (S)  "Institutional investor" means any corporation, bank,   285          

insurance company, pension fund or pension fund trust, employees'  286          

                                                          8      


                                                                 
profit-sharing fund or employees' profit-sharing trust, any        287          

association engaged, as a substantial part of its business or      288          

operations, in purchasing or holding securities, or any trust in   289          

respect of which a bank is trustee or cotrustee.  "Institutional   290          

investor" does not include any business entity formed for the      291          

primary purpose of evading sections 1707.01 to 1707.45 of the      292          

Revised Code.                                                      293          

      (T)  "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a,   296          

"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a,    297          

"Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 1,      298          

"Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b,    299          

and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a  301          

mean the federal statutes of those names as amended before or      302          

after March 18, 1999.                                                           

      (U)  "Securities and exchange commission" means the          304          

securities and exchange commission established by the Securities   305          

Exchange Act of 1934.                                              306          

      (V)(1)  "Control bid" means the purchase of or offer to      308          

purchase any equity security of a subject company from a resident  309          

of this state if either of the following applies:                  310          

      (a)  After the purchase of that security, the offeror would  312          

be directly or indirectly the beneficial owner of more than ten    313          

per cent of any class of the issued and outstanding equity         314          

securities of the issuer.                                          315          

      (b)  The offeror is the subject company, there is a pending  317          

control bid by a person other than the issuer, and the number of   318          

the issued and outstanding shares of the subject company would be  319          

reduced by more than ten per cent.                                 320          

      (2)  For purposes of division (V)(1) of this section,        322          

"control bid" does not include any of the following:               323          

      (a)  A bid made by a dealer for the dealer's own account in  325          

the ordinary course of business of buying and selling securities;  326          

      (b)  An offer to acquire any equity security solely in       328          

exchange for any other security, or the acquisition of any equity  329          

                                                          9      


                                                                 
security pursuant to an offer, for the sole account of the         330          

offeror, in good faith and not for the purpose of avoiding the     331          

provisions of this chapter, and not involving any public offering  332          

of the other security within the meaning of Section 4 of Title I   333          

of the "Securities Act of 1933," 48 Stat. 77, 15 U.S.C.A. 77d(2),  334          

as amended;                                                        335          

      (c)  Any other offer to acquire any equity security, or the  337          

acquisition of any equity security pursuant to an offer, for the   338          

sole account of the offeror, from not more than fifty persons, in  339          

good faith and not for the purpose of avoiding the provisions of   340          

this chapter.                                                      341          

      (W)  "Offeror" means a person who makes, or in any way       343          

participates or aids in making, a control bid and includes         344          

persons acting jointly or in concert, or who intend to exercise    345          

jointly or in concert any voting rights attached to the            346          

securities for which the control bid is made and also includes     347          

any subject company making a control bid for its own securities.   348          

      (X)(1)  "Investment adviser" means any person who, for       351          

compensation, engages in the business of advising others, either   352          

directly or through publications or writings, as to the value of   353          

securities or as to the advisability of investing in, purchasing,  354          

or selling securities, or who, for compensation and as a part of   355          

regular business, issues or promulgates analyses or reports        356          

concerning securities.                                                          

      (2)  "Investment adviser" does not mean any of the           358          

following:                                                                      

      (a)  Any attorney, accountant, engineer, or teacher, whose   360          

performance of investment advisory services described in division  362          

(X)(1) of this section is solely incidental to the practice of     363          

the attorney's, accountant's, engineer's, or teacher's             364          

profession;                                                                     

      (b)  A publisher of any bona fide newspaper, news magazine,  367          

or business or financial publication of general and regular        368          

circulation;                                                                    

                                                          10     


                                                                 
      (c)  A person who acts solely as an investment adviser       370          

representative;                                                    371          

      (d)  A bank holding company, as defined in the "Bank         373          

Holding Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that   375          

is not an investment company;                                      376          

      (e)  A bank, or any receiver, conservator, or other          378          

liquidating agent of a bank;                                       379          

      (f)  Any licensed dealer or licensed salesperson whose       381          

performance of investment advisory services described in division  382          

(X)(1) of this section is solely incidental to the conduct of the  383          

dealer's or salesperson's business as a licensed dealer or         384          

licensed salesperson and who receives no special compensation for  385          

the services;                                                                   

      (g)  Any person, the advice, analyses, or reports of which   387          

do not relate to securities other than securities that are direct  388          

obligations of, or obligations guaranteed as to principal or       389          

interest by, the United States, or securities issued or            390          

guaranteed by corporations in which the United States has a        391          

direct or indirect interest, and that have been designated by the  392          

secretary of the treasury as exempt securities as defined in the   393          

"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c;    394          

      (h)  Any person that is excluded from the definition of      396          

investment adviser pursuant to section 202(a)(11)(A) to (E) of     398          

the "Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11), or  399          

that has received an order from the securities and exchange        400          

commission under section 202(a)(11)(F) of the "Investment          401          

Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that   402          

the person is not within the intent of section 202(a)(11) of the   403          

Investment Advisers Act of 1940.                                                

      (i)  Any other person that the division designates by rule,  405          

if the division finds that the designation is necessary or         406          

appropriate in the public interest or for the protection of        407          

investors or clients and consistent with the purposes fairly       408          

intended by the policy and provisions of this chapter.                          

                                                          11     


                                                                 
      (Y)(1)  "Subject company" means an issuer that satisfies     410          

both of the following:                                             411          

      (a)  Its principal place of business or its principal        413          

executive office is located in this state, or it owns or controls  414          

assets located within this state that have a fair market value of  415          

at least one million dollars.                                      416          

      (b)  More than ten per cent of its beneficial or record      418          

equity security holders are resident in this state, more than ten  419          

per cent of its equity securities are owned beneficially or of     420          

record by residents in this state, or more than one thousand of    421          

its beneficial or record equity security holders are resident in   422          

this state.                                                        423          

      (2)  The division of securities may adopt rules to           425          

establish more specific application of the provisions set forth    426          

in division (Y)(1) of this section.  Notwithstanding the           427          

provisions set forth in division (Y)(1) of this section and any    428          

rules adopted under this division, the division, by rule or in an  429          

adjudicatory proceeding, may make a determination that an issuer   430          

does not constitute a "subject company" under division (Y)(1) of   431          

this section if appropriate review of control bids involving the   432          

issuer is to be made by any regulatory authority of another        433          

jurisdiction.                                                      434          

      (Z)  "Beneficial owner" includes any person who directly or  436          

indirectly through any contract, arrangement, understanding, or    437          

relationship has or shares, or otherwise has or shares, the power  438          

to vote or direct the voting of a security or the power to         439          

dispose of, or direct the disposition of, the security.            440          

"Beneficial ownership" includes the right, exercisable within      441          

sixty days, to acquire any security through the exercise of any    442          

option, warrant, or right, the conversion of any convertible       443          

security, or otherwise.  Any security subject to any such option,  444          

warrant, right, or conversion privilege held by any person shall   445          

be deemed to be outstanding for the purpose of computing the       446          

percentage of outstanding securities of the class owned by that    447          

                                                          12     


                                                                 
person, but shall not be deemed to be outstanding for the purpose  448          

of computing the percentage of the class owned by any other        449          

person.  A person shall be deemed the beneficial owner of any      450          

security beneficially owned by any relative or spouse or relative  451          

of the spouse residing in the home of that person, any trust or    452          

estate in which that person owns ten per cent or more of the       453          

total beneficial interest or serves as trustee or executor, any    454          

corporation or entity in which that person owns ten per cent or    455          

more of the equity, and any affiliate or associate of that         456          

person.                                                            457          

      (AA)  "Offeree" means the beneficial or record owner of any  459          

security that an offeror acquires or offers to acquire in          460          

connection with a control bid.                                     461          

      (BB)  "Equity security" means any share or similar           463          

security, or any security convertible into any such security, or   464          

carrying any warrant or right to subscribe to or purchase any      465          

such security, or any such warrant or right, or any other          466          

security that, for the protection of security holders, is treated  467          

as an equity security pursuant to rules of the division of         468          

securities.                                                        469          

      (CC)  "Investment company" has the same meaning as in        471          

section 3(A) of the "Investment Company Act of 1940," 54 Stat.     472          

789, 15 U.S.C. 80a-1 to 80a-52.                                    473          

      (DD)  "Penny stock" has the same meaning as in section       476          

3(A)(51) of the "Securities Exchange Act of 1934," 48 Stat. 881,   477          

15 U.S.C. 78a-78jj, and the rules, regulations, and orders issued  478          

pursuant to that section.                                          479          

      (EE)  "Going concern transaction" has the same meaning       482          

given that term under the rules or regulations on the securities   483          

and exchange commission issued pursuant to section 13(c) of the    484          

"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C.                      

78a-78jj.                                                          485          

      (FF)  "Person acting on behalf of an issuer" means an        488          

officer, director, or employee of an issuer.                                    

                                                          13     


                                                                 
      (GG)  "Blank check company," "roll-up transaction,"          491          

"executive officer of an entity," and "direct participation                     

program" have the same meanings given those terms by rule or       492          

regulation of the securities and exchange commission.              493          

      (HH)  "Forward-looking statement" means any of the           495          

following:                                                                      

      (1)  A statement containing a projection of revenues,        497          

income including income loss, earnings per share including         498          

earnings loss per share, capital expenditures, dividends, capital  499          

structure, or other financial items;                                            

      (2)  A statement of the plans and objectives of the          501          

management of the issuer for future operations, including plans    502          

or objectives relating to the products or services of the issuer;  503          

      (3)  A statement of future economic performance, including   505          

any statement of that nature contained in a discussion and         506          

analysis of financial conditions by the management or in the       507          

results of operations included pursuant to the rules and           508          

regulations of the securities and exchange commission;                          

      (4)  Any disclosed statement of the assumptions underlying   510          

or relating to a statement described in division (B)(1), (2), or   512          

(3) of section 1707.437 of the Revised Code;                       513          

      (5)  Any report issued by an outside reviewer retained by    515          

an issuer to the extent that the report relates to a               516          

forward-looking statement made by the issuer;                      517          

      (6)  A statement containing a projection or estimate of any  519          

other items that may be specified by rule or regulation of the     520          

securities and exchange commission.                                521          

      (II)(1)  "Investment adviser representative" means a         523          

supervised person of an investment adviser, provided that the      525          

supervised person has more than five clients who are natural       526          

persons other than excepted persons defined in division (KK) of    527          

this section, and that more than ten per cent of the supervised    528          

person's clients are natural persons other than excepted persons                

defined in division (KK) of this section.  "Investment adviser     529          

                                                          14     


                                                                 
representative" does not mean any of the following:                530          

      (a)  A supervised person that does not on a regular basis    532          

solicit, meet with, or otherwise communicate with clients of the   533          

investment adviser;                                                             

      (b)  A supervised person that provides only investment       535          

advisory services described in division (X)(1) of this section by  536          

means of written materials or oral statements that do not purport  537          

to meet the objectives or needs of specific individuals or         538          

accounts;                                                                       

      (c)  Any other person that the division designates by rule,  541          

if the division finds that the designation is necessary or         542          

appropriate in the public interest or for the protection of                     

investors or clients and is consistent with the provisions fairly  544          

intended by the policy and provisions of this chapter.             545          

      (2)  For the purpose of the calculation of clients in        547          

division (II)(1) of this section, a natural person and the         549          

following persons are deemed a single client:  Any minor child of  550          

the natural person; any  relative, spouse, or relative of the      551          

spouse of the natural person who has the same principal residence  552          

as the natural person; all accounts of which the natural person    553          

or the persons referred to in division (II)(2) of this section     555          

are the only primary beneficiaries; and all trusts of which the    556          

natural person or persons referred to in division (II)(2) of this  557          

section are the only primary beneficiaries.  Persons who are not   558          

residents of the United States need not be included in the         560          

calculation of clients under division (II)(1) of this section.     561          

      (3)  If subsequent to March 18, 1999, amendments are         563          

enacted or adopted defining "investment adviser representative"    564          

for purposes of the Investment Advisers Act of 1940 or additional  566          

rules or regulations are promulgated by the securities and         567          

exchange commission regarding the definition of "investment        568          

adviser representative" for purposes of the Investment Advisers    570          

Act of 1940, the division of securities shall, by rule, adopt the  571          

substance of the amendments, rules, or regulations, unless the     572          

                                                          15     


                                                                 
division finds that the amendments, rules, or regulations are not  573          

necessary for the protection of investors or in the public         574          

interest.                                                                       

      (JJ)  "Supervised person" means a natural person who is any  576          

of the following:                                                  577          

      (1)  A partner, officer, or director of an investment        579          

adviser, or other person occupying a similar status or performing  580          

similar functions with respect to an investment adviser;           581          

      (2)  An employee of an investment adviser;                   583          

      (3)  A person who provides investment advisory services      585          

described in division (X)(1) of this section on behalf of the      586          

investment adviser and is subject to the supervision and control   587          

of the investment adviser.                                                      

      (KK)  "Excepted person" means a natural person to whom any   589          

of the following applies:                                          590          

      (1)  Immediately after entering into the investment          592          

advisory contract with the investment adviser, the person has at   593          

least seven hundred fifty thousand dollars under the management    595          

of the investment adviser.                                                      

      (2)  The investment adviser reasonably believes either of    597          

the following at the time the investment advisory contract is      598          

entered into with the person:                                                   

      (a)  The person has a net worth, together with assets held   601          

jointly with a spouse, of more than one million five hundred       602          

thousand dollars.                                                               

      (b)  The person is a qualified purchaser as defined in       605          

division (LL) of this section.                                                  

      (3)  Immediately prior to entering into an investment        607          

advisory contract with the investment adviser, the person is       608          

either of the following:                                           609          

      (a)  An executive officer, director, trustee, general        612          

partner, or person serving in a similar capacity, of the           613          

investment adviser;                                                             

      (b)  An employee of the investment adviser, other than an    616          

                                                          16     


                                                                 
employee performing solely clerical, secretarial, or               617          

administrative functions or duties for the investment adviser,     618          

which employee, in connection with the employee's regular          619          

functions or duties, participates in the investment activities of  620          

the investment adviser, provided that, for at least twelve         621          

months, the employee has been performing such nonclerical,         622          

nonsecretarial, or nonadministrative functions or duties for or    623          

on behalf of the investment adviser or performing substantially    624          

similar functions or duties for or on behalf of another company.   625          

      If subsequent to March 18, 1999, amendments are enacted or   628          

adopted defining "excepted person" for purposes of the Investment  629          

Advisers Act of 1940 or additional rules or regulations are        631          

promulgated by the securities and exchange commission regarding    632          

the definition of "excepted person" for purposes of the            633          

Investment Advisers Act of 1940, the division of securities        635          

shall, by rule, adopt the substance of the amendments, rules, or   636          

regulations, unless the division finds that the amendments,        637          

rules, or regulations are not necessary for the protection of      638          

investors or in the public interest.                                            

      (LL)(1)  "Qualified purchaser" means either of the           640          

following:                                                                      

      (a)  A natural person who owns not less than five million    643          

dollars in investments as defined by rule by the division of       644          

securities;                                                                     

      (b)  A natural person, acting for the person's own account   647          

or accounts of other qualified purchasers, who in the aggregate    648          

owns and invests on a discretionary basis, not less than           649          

twenty-five million dollars in investments as defined by rule by   650          

the division of securities.                                        651          

      (2)  If subsequent to March 18, 1999, amendments are         653          

enacted or adopted defining "qualified purchaser" for purposes of  654          

the Investment Advisers Act of 1940 or additional rules or         656          

regulations are promulgated by the securities and exchange                      

commission regarding the definition of "qualified purchaser" for   657          

                                                          17     


                                                                 
purposes of the Investment Advisers Act of 1940, the division of   658          

securities shall, by rule, adopt the amendments, rules, or         659          

regulations, unless the division finds that the amendments,        660          

rules, or regulations are not necessary for the protection of      661          

investors or in the public interest.                               662          

      (MM)(1)  "Purchase" has the full meaning of "purchase" as    664          

applied by or accepted in courts of law or equity and includes     665          

every acquisition of, or attempt to acquire, a security or an      666          

interest in a security.  "Purchase" also includes a contract to    667          

purchase, an exchange, an attempt to purchase, an option to        668          

purchase, a solicitation of a purchase, a solicitation of an       669          

offer to sell, a subscription, or an offer to purchase, directly   670          

or indirectly, by agent, circular, pamphlet, advertisement, or                  

otherwise.                                                         671          

      (2)  "Purchase" means any act by which a purchase is made.   673          

      (3)  Any security given with, or as a bonus on account of,   675          

any purchase of securities is conclusively presumed to constitute  676          

a part of the subject of that purchase.                            677          

      (NN)  "LIFE SETTLEMENT INTEREST" MEANS THE ENTIRE INTEREST   679          

OR ANY FRACTIONAL INTEREST IN AN INSURANCE POLICY OR CERTIFICATE   680          

OF INSURANCE, OR IN AN INSURANCE BENEFIT UNDER SUCH A POLICY OR    681          

CERTIFICATE, THAT IS THE SUBJECT OF A LIFE SETTLEMENT CONTRACT.    682          

      FOR PURPOSES OF THIS DIVISION, "LIFE SETTLEMENT CONTRACT"    684          

MEANS AN AGREEMENT FOR THE PURCHASE, SALE, ASSIGNMENT, TRANSFER,   686          

DEVISE, OR BEQUEST OF ANY PORTION OF THE DEATH BENEFIT OR          687          

OWNERSHIP OF ANY LIFE INSURANCE POLICY OR CONTRACT, IN RETURN FOR  688          

CONSIDERATION OR ANY OTHER THING OF VALUE THAT IS LESS THAN THE    689          

EXPECTED DEATH BENEFIT OF THE LIFE INSURANCE POLICY OR CONTRACT.   690          

"LIFE SETTLEMENT CONTRACT" INCLUDES A VIATICAL SETTLEMENT          691          

CONTRACT AS DEFINED IN SECTION 3916.01 OF THE REVISED CODE, BUT    692          

DOES NOT INCLUDE ANY OF THE FOLLOWING:                             693          

      (1)  A LOAN BY AN INSURER UNDER THE TERMS OF A LIFE          695          

INSURANCE POLICY, INCLUDING, BUT NOT LIMITED TO, A LOAN SECURED    696          

BY THE CASH VALUE OF THE POLICY;                                   697          

                                                          18     


                                                                 
      (2)  AN AGREEMENT WITH A BANK THAT TAKES AN ASSIGNMENT OF A  699          

LIFE INSURANCE POLICY AS COLLATERAL FOR A LOAN;                    700          

      (3)  THE PROVISION OF ACCELERATED BENEFITS AS DEFINED IN     702          

SECTION 3915.21 OF THE REVISED CODE;                               703          

      (4)  ANY AGREEMENT BETWEEN AN INSURER AND A REINSURER;       705          

      (5)  AN AGREEMENT BY AN INDIVIDUAL TO PURCHASE AN EXISTING   707          

LIFE INSURANCE POLICY OR CONTRACT FROM THE ORIGINAL OWNER OF THE   708          

POLICY OR CONTRACT, IF THE INDIVIDUAL DOES NOT ENTER INTO MORE     709          

THAN ONE LIFE SETTLEMENT CONTRACT PER CALENDAR YEAR;               710          

      (6)  THE INITIAL PURCHASE OF AN INSURANCE POLICY OR          712          

CERTIFICATE OF INSURANCE FROM ITS OWNER BY A VIATICAL SETTLEMENT   713          

PROVIDER, AS DEFINED IN SECTION 3916.01 OF THE REVISED CODE, THAT  714          

IS LICENSED UNDER CHAPTER 3916. OF THE REVISED CODE.               717          

      Sec. 1707.02.  (A)  "Exempt," as used in this section,       726          

means exempt from sections 1707.08 to 1707.11 and 1707.39 of the   727          

Revised Code.                                                      728          

      (B)(1)  Except as provided in division (B)(2) of this        730          

section, the following securities are exempt, if the issuer or     731          

guarantor has the power of taxation or assessment for the purpose  732          

of paying the obligation represented by the security, or is in     733          

specific terms empowered by the laws of the state of issuance to   734          

issue securities payable as to principal or interest, or as to     735          

both, out of revenues collected or administered by such issuer:    736          

      (a)  Any security issued or guaranteed by the United         738          

States;                                                            739          

      (b)  Any security issued or guaranteed by, and recognized,   741          

at the time of sale, as its valid obligation by, any foreign       742          

government with which the United States is, at the time of sale,   743          

maintaining diplomatic relations;                                  744          

      (c)  Any security issued or guaranteed, and recognized as    746          

its valid obligation, by any political subdivision or any          747          

governmental or other public body, corporation, or agency in or    748          

of the United States, any state, territory, or possession of the   749          

United States, or any foreign government with which the United     750          

                                                          19     


                                                                 
States is, at the time of sale, maintaining diplomatic relations.  751          

      (2)  If a security described in division (B)(1) of this      753          

section is not payable out of the proceeds of a general tax, the   755          

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   757          

or principal of the security, and there are no adjudications or    758          

pending suits adversely affecting its validity.                    759          

      (C)  Any security issued by and representing an interest in  761          

or an obligation of a state or nationally chartered bank, savings  762          

and loan association, savings bank, or credit union, or a          764          

governmental corporation or agency created by or under the laws    765          

of the United States or of Canada is exempt, if it is under the    766          

supervision of or subject to regulation by the government or       767          

state under whose laws it was organized.                                        

      (D)  Any interim certificate is exempt, if the securities    769          

to be delivered therefor are themselves exempt, are the subject    770          

matter of an exempt transaction, have been registered by           771          

description or registered by qualification, or are the subject     772          

matter of a transaction which has been registered by description.  773          

      (E)(1)  Any A security, whether a preliminary or final       775          

security, is exempt, which, at the time of sale within this        776          

state, is listed, or listed upon notice of issuance, on the        777          

Cincinnati stock exchange, the Midwest stock exchange, the New     778          

York stock exchange, or the American stock exchange, or is         779          

designated, or approved for designation upon notice of issuance,   780          

as a national market system security on the national association   781          

of securities dealers automated quotation system, or is listed or  782          

designated on any other stock exchange or national quotation       783          

system approved by the division as having listing requirements     784          

substantially equivalent to those of any one of those exchanges    785          

or systems, and any security senior to any security so listed or   786          

designated is also exempt; but these exemptions shall apply only   787          

so long as such security remains so listed or designated pursuant  788          

to official action of such exchange or system and not under        789          

                                                          20     


                                                                 
suspension, and only so long as such exchange or system remains    790          

approved under this section IF IT MEETS ANY OF THE FOLLOWING       792          

REQUIREMENTS:                                                                   

      (a)  THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON   794          

THE NEW YORK STOCK EXCHANGE, THE AMERICAN STOCK EXCHANGE, OR THE   796          

NATIONAL MARKET SYSTEM OF THE NASDAQ STOCK MARKET, OR ANY          797          

SUCCESSOR TO SUCH ENTITIES.                                        798          

      (b)  THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON   800          

A NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT  801          

OF SUCH EXCHANGE OR SYSTEM, DESIGNATED BY THE SECURITIES AND       803          

EXCHANGE COMMISSION IN RULE 146(b) PROMULGATED UNDER SECTION       804          

18(b)(1) OF THE SECURITIES ACT OF 1933.                            805          

      (c)  THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON   807          

A NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT  808          

OF SUCH EXCHANGE OR SYSTEM, THAT HAS LISTING STANDARDS THAT THE    810          

DIVISION OF SECURITIES, ON ITS OWN INITIATIVE OR ON THE BASIS OF   811          

AN APPLICATION, DETERMINES BY RULE ARE SUBSTANTIALLY SIMILAR TO    812          

THE LISTING STANDARDS APPLICABLE TO SECURITIES DESCRIBED IN        813          

DIVISION (E)(1)(a) OF THIS SECTION.                                             

      (d)  THE SECURITY IS A SECURITY OF THE SAME ISSUER THAT IS   815          

EQUAL IN SENIORITY OR THAT IS A SENIOR SECURITY TO A SECURITY      816          

DESCRIBED IN DIVISION (E)(1)(a), (b), OR (c) OF THIS SECTION.      818          

      (2)  Application for approval of a stock exchange or system  820          

not approved in this section may be made by any organized stock    821          

exchange or system, or by any dealer who is a member of such       822          

exchange, in such manner and upon such forms as are prescribed by  823          

the division, accompanied by payment of an approval fee of two     824          

hundred dollars, and the division shall make such investigation    825          

and may hold such hearings as it deems necessary to determine the  826          

propriety of giving approval.  The cost of such investigation      827          

shall be borne by the applicant.  The division may enter an order  828          

of approval, and if it does so, it shall notify the applicant of   829          

such approval.                                                     830          

      (3)  The division may revoke the approval of an exchange or  832          

                                                          21     


                                                                 
system approved ENUMERATED in DIVISION (E)(1) OF this section or   835          

approved by it upon finding, PROVIDED THAT THE EXCHANGE OR SYSTEM  836          

IS NOT LISTED IN SECTION 18(b)(1) OF THE SECURITIES ACT OF 1933    837          

OR ANY RULE PROMULGATED THEREUNDER.  THE DIVISION MAY EFFECT A     838          

REVOCATION after due notice, investigation, and A hearing, AND A   839          

FINDING that the practices or requirements of such exchange or     841          

system have been so changed or modified, or are, in their actual   842          

operation, such that the contemplated protection is no longer      843          

afforded.  The principles of res adjudicata ordinarily applicable  844          

in civil matters shall not be applicable to this matter, which is  845          

hereby declared to be administrative rather than judicial.         846          

Notice of the hearing may be given by certified mail at least ten  847          

days before such hearing.                                                       

      (4)  The division may suspend the exemption of any security  849          

described in division (E)(1) of this section,  PROVIDED THAT THE   851          

SECURITY IS LISTED OR AUTHORIZED FOR LISTING ON AN EXCHANGE OR     852          

SYSTEM THAT IS NOT LISTED IN SECTION 18(b)(1) OF THE SECURITIES    853          

ACT OF 1933 OR ANY RULE PROMULGATED THEREUNDER.  THE DIVISION MAY  855          

EFFECT A SUSPENSION by giving notice, by certified mail, to that   857          

effect to the exchange or system upon which such security is       858          

listed or designated and to the issuer of such security.  After    859          

notice and hearing, the division may revoke such exemption if it   860          

appears to it that sales of such security have been fraudulent or  861          

that future sales of it would be fraudulent.  The division shall   862          

set such hearing not later than ten days from the date of the      863          

order of suspension, but may for good cause continue such hearing  864          

upon application of the exchange or system upon which such         865          

security is listed or designated or upon application of the        866          

issuer of such security.                                                        

      (F)  Any security, issued or guaranteed as to principal,     868          

interest, or dividend or distribution by a corporation owning or   869          

operating any public utility, is exempt, if such corporation is,   870          

as to its rates and charges or as to the issuance and              871          

guaranteeing of securities, under the supervision of or regulated  872          

                                                          22     


                                                                 
by a public commission, board, or officer of the United States,    873          

or of Canada, or of any state, province, or municipal corporation  874          

in either of such countries.  Equipment-trust securities based on  875          

chattel mortgages, leases, or agreements for conditional sale, of  876          

cars, locomotives, motor trucks, or other rolling stock or of      877          

motor vehicles mortgaged, leased, or sold to, or finished for the  878          

use of, a public utility, are exempt; and so are equipment         879          

securities where the ownership or title of such equipment is       880          

pledged or retained, in accordance with the laws of the United     881          

States or of any state, or of Canada or any province thereof, to   882          

secure the payment of such securities.                             883          

      (G)  Commercial paper and promissory notes are exempt when   885          

they are not offered directly or indirectly for sale to the        886          

public.                                                            887          

      (H)  Any security issued or guaranteed by an insurance       889          

company, except as provided in section 1707.32 of the Revised      890          

Code, is exempt if such company is under the supervision of, and   891          

the issuance or guaranty of such security is regulated by, a       892          

state.                                                             893          

      (I)  Any security, except notes, bonds, debentures, or       895          

other evidences of indebtedness or of promises or agreements to    896          

pay money, which is issued by a person, corporation, or            897          

association organized not for profit, including persons,           898          

corporations, and associations organized exclusively for           899          

conducting county fairs, or for religious, educational, social,    903          

recreational, athletic, benevolent, fraternal, charitable, or      904          

reformatory purposes, and agricultural cooperatives as defined in  905          

section 1729.01 of the Revised Code, is exempt, if no part of the  907          

net earnings of such issuer inures to the benefit of any           908          

shareholder or member of such issuer or of any individual, and if  909          

the total commission, remuneration, expense, or discount in        910          

connection with the sale of such securities does not exceed two    911          

per cent of the total sale price thereof plus five hundred         912          

dollars.                                                                        

                                                          23     


                                                                 
      (J)(1)  Any securities outstanding for a period of not less  914          

than five years, on which there has occurred no default in         915          

payment of principal, interest, or dividend or distribution for    916          

the five years immediately preceding the sale, are exempt.         917          

      (2)  For the purpose of division (J) of this section, the    919          

dividend, distribution, or interest rate on securities in which    920          

no such rate is specified shall be at the rate of at least four    921          

per cent annually on the aggregate of the price at which such      922          

securities are to be sold.                                         923          

      (K)  All bonds issued under authority of Chapter 165. or     925          

761., or section 4582.06 or 4582.31 of the Revised Code are        926          

exempt.                                                            927          

      Sec. 1707.11.  For the purposes of this section, a           936          

"person," or an "applicant" for registration or claim of           937          

exemption, means every issuer.                                     938          

      Every applicant for registration or for claim of exemption   940          

pursuant to division (Q), (W), (X), or (Y) of section 1707.03 of   942          

the Revised Code, and every (A)  EACH person submitting a notice   943          

filing pursuant to section 1707.092 of the Revised Code, for the   946          

sale of securities pursuant to this chapter, which THAT is an      947          

incorporated applicant or person not domiciled in ORGANIZED UNDER  948          

THE LAWS OF this state or, THAT IS not licensed under section      949          

1703.03 of the Revised Code, or is an unincorporated applicant or  951          

person having the situs of THAT DOES NOT HAVE its principal place  953          

of business outside IN this state, shall file with its                          

application or notice filing its SUBMIT TO THE DIVISION OF         955          

SECURITIES AN IRREVOCABLE CONSENT TO SERVICE OF PROCESS, AS        956          

DESCRIBED IN DIVISION (B) OF THIS SECTION, IN CONNECTION WITH ANY  957          

OF THE FOLLOWING:                                                               

      (1)  FILINGS TO CLAIM ANY OF THE EXEMPTIONS ENUMERATED IN    959          

DIVISION (Q), (W), (X), OR (Y) OF SECTION 1707.03 OF THE REVISED   962          

CODE;                                                                           

      (2)  APPLICATIONS FOR REGISTRATION BY DESCRIPTION,           964          

QUALIFICATION, OR COORDINATION;                                    965          

                                                          24     


                                                                 
      (3)  NOTICE FILINGS PURSUANT TO SECTION 1707.092 OR          967          

1707.141 OF THE REVISED CODE;                                      968          

      (4)  APPLICATIONS FOR LICENSURE AS A SECURITIES DEALER       970          

UNDER SECTION 1707.15 OF THE REVISED CODE;                         971          

      (5)  APPLICATIONS FOR LICENSURE AS AN INVESTMENT ADVISER     973          

UNDER SECTION 1707.151 OF THE REVISED CODE.                        974          

      (B)  THE irrevocable written consent, SHALL BE executed and  977          

acknowledged by an individual duly authorized to give the          978          

consent, AND SHALL DO ALL OF THE FOLLOWING:                        979          

      (1)  DESIGNATE THE SECRETARY OF STATE AS AGENT FOR SERVICE   981          

OF PROCESS OR PLEADINGS;                                           982          

      (2)  STATE that actions growing out of the sale of such      985          

securities, THE GIVING OF INVESTMENT ADVICE, or fraud committed    986          

by an applicant in this state A PERSON ON WHOSE BEHALF THE         987          

CONSENT IS SUBMITTED may be commenced against it THE PERSON, in    988          

the proper court of any county in this state in which a cause of   989          

action for fraud may arise or in which the plaintiff in the        990          

action may reside, by serving on the secretary of state any        991          

proper process or pleading authorized by the laws of this state.   992          

Such consent shall stipulate;                                      993          

      (3)  STIPULATE that service of process or pleading on the    996          

secretary of state shall be taken in all courts to be as valid     997          

and binding as if service had been made upon the applicant itself  998          

PERSON ON WHOSE BEHALF THE CONSENT IS SUBMITTED.                   999          

      (C)  Service of any process or pleadings may be made on the  1,001        

secretary of state by duplicate copies, of which one shall be      1,002        

filed in the office of the secretary of state, and the other       1,003        

immediately forwarded by the secretary of state by certified mail  1,004        

to the principal place of business of the applicant, PERSON ON     1,005        

WHOSE BEHALF THE CONSENT IS SUBMITTED or TO the last known         1,007        

address as shown on the application form filed FILING MADE with    1,008        

the division, or if it has a principal office in this state, then  1,009        

to the principal office; but.  HOWEVER, failure to mail such copy  1,011        

shall DOES not invalidate the service.                             1,012        

                                                          25     


                                                                 
      (D)  NOTWITHSTANDING ANY PROVISION OF THIS CHAPTER, OR OF    1,014        

ANY RULE ADOPTED BY THE DIVISION OF SECURITIES UNDER THIS          1,015        

CHAPTER, THAT REQUIRES THE SUBMISSION OF A CONSENT TO SERVICE OF   1,016        

PROCESS, THE DIVISION MAY PROVIDE BY RULE FOR THE ELECTRONIC       1,017        

FILING OR SUBMISSION OF A CONSENT TO SERVICE OF PROCESS.           1,018        

      Sec. 1707.15.  An application to act as dealer (A)           1,027        

APPLICATION FOR A DEALER'S LICENSE shall be MADE in writing        1,029        

ACCORDANCE WITH THIS SECTION and shall be filed BY FILING with     1,030        

the division of securities.  It shall be in such form as the       1,031        

division prescribes, and verified by oath of the applicant, his    1,032        

agent, or his attorney, and it shall set forth THE INFORMATION,    1,033        

MATERIALS, AND FORMS SPECIFIED IN RULES ADOPTED BY THE DIVISION,   1,034        

ALONG WITH ALL OF THE FOLLOWING INFORMATION:                                    

      (A)(1)  The name and address of the applicant;               1,036        

      (B)(2)  A description of the applicant, including, if the    1,038        

applicant is a partnership, unincorporated association, or any     1,039        

similar form of business organization, the names and the           1,040        

residence and business addresses of all partners, officers,        1,041        

directors, trustees, or managers of the organization, and the      1,042        

limitation of the liability of any partner or member; and if the   1,043        

applicant is a corporation, a list of its executive officers and   1,044        

directors, and the residence and business addresses of each,; and  1,046        

if it is a foreign corporation, a copy of its articles of          1,047        

incorporation in addition thereto;                                 1,048        

      (C)(3)  The location and addresses of the principal office   1,050        

and all other offices of the applicant;                            1,051        

      (D)(4)  A general description of the business of the         1,053        

applicant done prior to such THE application, including a list of  1,054        

states in which the applicant is a licensed dealer;                1,056        

      (E)  The names and addresses of all salesmen of the          1,058        

applicant at the date of the application;                          1,059        

      (F)  The nature of the applicant's business, and its places  1,061        

of business, for the period of ten years next preceding the date   1,062        

of application.                                                    1,063        

                                                          26     


                                                                 
      Every (B)  EACH applicant not a resident of this state       1,066        

shall name a person within this state upon whom process against                 

such applicant may be served and shall give the complete           1,068        

residence and business address of the person designated.           1,069        

      Every applicant shall file an irrevocable consent to         1,071        

service of process on the secretary of state in the event that     1,072        

such applicant, if a resident of this state, or the person         1,073        

designated by the nonresident applicant, cannot be found at the    1,074        

address given.  Such consent shall be given and service            1,075        

thereunder shall be made as provided in section 1707.11 of the     1,076        

Revised Code.                                                      1,077        

      (C)(1)  The division may investigate any applicant for a     1,079        

license, and may require such additional information as it deems   1,080        

necessary to determine the applicant's business repute and         1,081        

qualifications to act as a dealer in securities.                   1,082        

      (2)  If the application for any license involves             1,084        

investigation outside of this state, the applicant may be          1,085        

required by the division to advance sufficient funds to pay any    1,086        

of the actual expenses of such examination.  An itemized           1,087        

statement of any such expenses which he THE APPLICANT is required  1,088        

to pay shall be furnished the applicant by the division.           1,090        

      If the applicant is merely renewing his license for the      1,093        

previous year the application need contain only the information                 

required by divisions (B), (C), and (E) of this section.           1,094        

      (D)  The division shall by rule require an applicant ONE     1,096        

NATURAL PERSON WHO IS A PRINCIPAL, OFFICER, DIRECTOR, GENERAL      1,097        

PARTNER, MANAGER, OR EMPLOYEE OF A DEALER to pass an examination   1,099        

which covers his  knowledge of securities laws and practices       1,100        

DESIGNATED BY THE DIVISION.  EACH DEALER THAT IS NOT A NATURAL     1,101        

PERSON SHALL NOTIFY THE DIVISION OF THE NAME AND RELATIONSHIP TO   1,102        

THE DEALER OF THE NATURAL PERSON WHO HAS PASSED THE EXAMINATION    1,103        

ON BEHALF OF THE DEALER AND WHO WILL SERVE AS THE DESIGNATED       1,104        

PRINCIPAL ON BEHALF OF THE DEALER.                                 1,105        

      (E)  DEALERS SHALL EMPLOY AS SALESPERSONS ONLY THOSE         1,107        

                                                          27     


                                                                 
SALESPERSONS WHO ARE LICENSED UNDER THIS CHAPTER.  IF AT ANY TIME  1,108        

A SALESPERSON RESIGNS OR IS DISCHARGED OR A NEW SALESPERSON IS     1,109        

ADDED, THE DEALER SHALL PROMPTLY NOTIFY THE DIVISION.              1,110        

      (F)  If the division finds that the applicant is of good     1,112        

business repute, appears qualified to act as a dealer in           1,113        

securities, and has fully complied with sections 1707.01 to        1,114        

1707.45 of the Revised Code THIS CHAPTER AND RULES ADOPTED UNDER   1,115        

THIS CHAPTER BY THE DIVISION, the division shall issue to such     1,116        

applicant a license to act as dealer, upon payment by the          1,117        

applicant of the fee FEES prescribed by DIVISION (B) OF section    1,119        

1707.17 of the Revised Code.                                                    

      The division may, after proper hearing, refuse, as provided  1,121        

in section 1707.19 of the Revised Code, SHALL ISSUE to grant a     1,122        

license to the applicant.                                          1,124        

      Dealers shall employ as salesmen only those who are          1,126        

licensed under sections 1707.01 to 1707.45 of the Revised Code.    1,127        

If at any time such salesmen resign or are discharged or new       1,128        

salesmen are added, the dealer shall forthwith notify the          1,129        

division and shall file with the division the names and addresses  1,130        

of new salesmen A LICENSE AUTHORIZING THE APPLICANT TO ACT AS A    1,131        

DEALER.                                                            1,132        

      Sec. 1707.151.  (A)  Application for an investment           1,141        

adviser's license shall be made in accordance with this section    1,142        

and by filing with the division of securities the information,     1,143        

materials, and forms specified in rules adopted by the division.   1,144        

      (B)  Every applicant not a resident of this state shall      1,146        

name a person within this state upon whom process against such     1,147        

applicant may be served and shall give the complete residence and  1,148        

business address or addresses of the person designated.            1,149        

      (C)  Every EACH applicant shall file an irrevocable consent  1,151        

to service of process naming the secretary of state for service    1,153        

of process in the event that the applicant, if a resident of this  1,156        

state, or the person designated pursuant to division (B) of this   1,157        

section, cannot be found at the address given on the application.  1,158        

                                                          28     


                                                                 
The consent shall be given and service of process shall be made    1,159        

as provided in section 1707.11 of the Revised Code.                1,160        

      (D)(C)(1)  The division may investigate any applicant for a  1,162        

license and may require any additional information as it           1,164        

considers necessary to determine the applicant's business repute   1,165        

and qualifications to act as an investment adviser.                1,166        

      (2)  If the application for any license involves             1,168        

investigation outside of this state, the applicant may be          1,169        

required by the division to advance sufficient funds to pay any    1,170        

of the actual expenses of the examination.  The division shall     1,171        

furnish the applicant with an itemized statement of such expenses  1,172        

that the applicant is required to pay.                                          

      (E)(D)  The division shall by rule require one natural       1,174        

person who is a principal, officer, director, general partner,     1,176        

manager, or employee of an investment adviser to pass an           1,177        

examination designated by the division or achieve a specified      1,178        

professional designation.  Every EACH investment adviser that is   1,180        

not a natural person shall notify the division of the name and                  

relationship to the investment adviser of the natural person who   1,182        

has passed the examination or achieved the specified professional               

designation on behalf of the investment adviser and who will       1,183        

serve as the designated principal on behalf of the investment      1,184        

adviser.                                                                        

      (F)(E)  An investment adviser licensed under section         1,186        

1707.141 of the Revised Code shall employ only investment adviser  1,188        

representatives licensed, or exempted from licensure, under        1,189        

section 1707.161 of the Revised Code.                                           

      (G)(F)  If the division finds that the applicant is of good  1,191        

business repute, appears to be qualified to act as an investment   1,193        

adviser, and has complied with sections 1707.01 to 1707.45 of the  1,195        

Revised Code THIS CHAPTER and rules adopted under those sections   1,196        

THIS CHAPTER by the division, the division, upon payment of the    1,197        

fees prescribed by division (B) of section 1707.17 of the Revised  1,198        

Code, shall issue to the applicant a license authorizing the       1,200        

                                                          29     


                                                                 
applicant to act as an investment adviser.                                      

      Sec. 1707.16.  (A)  Every salesman SALESPERSON of            1,209        

securities must be licensed by the division of securities and      1,211        

shall be employed only by the licensed dealer specified in his     1,212        

THE SALESPERSON'S license.  IF THE SALESPERSON SEVERS THE          1,213        

CONNECTION WITH THAT LICENSED DEALER, THE SALESPERSON'S LICENSE    1,214        

IS VOID.                                                                        

      The application (B)  APPLICATION for a salesman's            1,217        

SALESPERSON'S license shall set forth BE MADE IN ACCORDANCE WITH   1,218        

THIS SECTION AND BY FILING WITH THE DIVISION THE INFORMATION,      1,219        

MATERIALS, AND FORMS SPECIFIED IN RULES ADOPTED BY THE DIVISION,   1,220        

ALONG WITH ALL OF THE FOLLOWING INFORMATION:                       1,221        

      (A)(1)  The name and complete residence and business         1,223        

addresses of the applicant;                                        1,224        

      (B)(2)  The name of the dealer who is employing the          1,226        

applicant or who intends to employ him THE APPLICANT;              1,227        

      (C)(3)  The applicant's age and education, and his THE       1,230        

APPLICANT'S experience in the sale of securities; whether he THE   1,232        

APPLICANT has ever been licensed by the division, and if so,       1,234        

when; whether he THE APPLICANT has ever been refused a license by  1,236        

the division; and whether he THE APPLICANT has ever been licensed  1,237        

or refused a license or any similar permit by any division or      1,238        

commissioner of securities, whatsoever name known or designated,   1,239        

anywhere;.                                                         1,240        

      (C)  THE DIVISION SHALL BY RULE REQUIRE AN APPLICANT TO      1,242        

PASS AN EXAMINATION DESIGNATED BY THE DIVISION.                    1,243        

      (D)  The nature of the employment, and the names and         1,245        

addresses of the employers, of the applicant for the period of     1,246        

ten years immediately preceding the date of the application.       1,247        

      If the division finds that the applicant is of good          1,249        

business repute, appears to be qualified to act as a salesman      1,250        

SALESPERSON of securities, and has fully complied with sections    1,252        

1707.01 to 1707.45 of the Revised Code THIS CHAPTER, and that the  1,253        

dealer named in the application is a licensed dealer, the          1,254        

                                                          30     


                                                                 
division shall, upon payment of the fees prescribed by section     1,255        

1707.17 of the Revised Code, issue a license to the applicant      1,256        

authorizing him THE APPLICANT to act as salesman SALESPERSON for   1,257        

the dealer named in the application.                               1,258        

      If such salesman severs his connection with such dealer,     1,260        

the salesman's license is void.                                    1,261        

      The division shall by rule require an applicant to pass an   1,263        

examination which covers his knowledge of securities laws and      1,265        

practices.                                                                      

      If the applicant is merely renewing his license for the      1,267        

previous year or renewing his license upon change of employment,   1,268        

only the information required under divisions (A) and (B) of this  1,269        

section need be given.                                             1,270        

      Sec. 1707.17.  (A)(1)  The license of every dealer in and    1,279        

salesperson of securities shall expire on the thirty-first day of  1,280        

December of each year, and may be renewed upon the filing with     1,281        

the division of securities of an application for renewal, and the  1,282        

payment of the fee prescribed in this section, between the first   1,284        

day of November and the fifteenth day of December of each year.    1,285        

The division may accept an application for renewal filed between   1,286        

the fifteenth and the thirty-first day of December of each year.   1,287        

The division also may accept an application for renewal received   1,288        

by the division not later than the tenth day of January of the     1,289        

subsequent calendar year, provided that the application for        1,291        

renewal is accompanied by the license renewal fee and the          1,292        

additional fee prescribed in division (B) of this section.  The    1,293        

division shall give notice, without unreasonable delay, of its     1,295        

action on any application for renewal of a dealer's or             1,296        

salesperson's license.                                             1,297        

      (2)  The license of every investment adviser and investment  1,300        

adviser representative licensed under section 1707.141 or          1,301        

1707.161 of the Revised Code shall expire on the thirty-first day  1,302        

of December of each year.  The licenses may be renewed upon the    1,303        

filing with the division of an application for renewal, and the    1,304        

                                                          31     


                                                                 
payment of the fee prescribed in division (B) of this section,     1,305        

between the fifteenth day of October and the thirtieth day of      1,306        

November of each year.  The division may accept an application     1,308        

for renewal filed between the first and thirty-first day of        1,309        

December of each year.  The division also may accept an            1,310        

application for renewal received by the division not later than    1,311        

the tenth day of January of the subsequent calenar CALENDAR year,  1,312        

provided that the application for renewal is accompanied by the    1,314        

license renewal fee and the additional fee prescribed in division  1,316        

(B) of this section.  The division shall give notice, without      1,317        

unreasonable delay, of its action on any application for renewal.  1,318        

      (3)  An investment adviser required to make a notice filing  1,320        

under division (B) of section 1707.141 of the Revised Code         1,322        

annually shall file with the division the notice filing and the    1,323        

fee prescribed in division (B) of this section, no later than the  1,324        

thirty-first day of December of each year.  The division may       1,325        

accept a notice filing received by the division not later than     1,326        

the tenth day of January of the subsequent calendar year,          1,327        

provided that the notice filing is accompanied by the notice       1,329        

filing fee and the additional fee prescribed in division (B) of    1,330        

this section.                                                                   

      (B)(1)  The fee for each dealer's license, and for each      1,332        

annual renewal thereof that is received by the division not later  1,333        

than the thirty-first day of December of each year, shall be       1,334        

thirty dollars per salesperson, but not less than one hundred      1,336        

fifty nor more than five thousand dollars.  Upon payment of an     1,337        

additional fee of one-half of the license renewal fee, the         1,338        

division may accept an application for renewal received by the     1,339        

division between the first and tenth day of January of the         1,340        

subsequent calendar year.  The fee for the examination of          1,341        

applicant dealers, when administered by the division, shall be     1,343        

seventy-five dollars.                                                           

      (2)  The fee for each salesperson's license, and for each    1,346        

annual renewal thereof, shall be fifty dollars.  The fee for the   1,348        

                                                          32     


                                                                 
examination of an applicant salesperson, when administered by the  1,350        

division, shall be fifty dollars.                                               

      (3)  The fee for each investment adviser's license, and for  1,353        

each annual renewal thereof that is received by the division not                

later than the thirty-first day of December of each year, shall    1,354        

be two hundred dollars.  Upon the payment of an additional fee of  1,356        

one-half of the license fee, the division may accept a license     1,357        

renewal application received by the division between the first     1,358        

and tenth day of January of the subsequent calendar year.  If the  1,360        

fee for an investment adviser license is paid to the division on   1,361        

or before October 1, 1999, that fee shall cover the issuance of    1,363        

the initial license and also shall cover any fee for renewal of    1,364        

the license for the period ending December 31, 2000.               1,365        

      (4)  The fee for each investment adviser notice filing       1,367        

required by division (B) of section 1707.141 of the Revised Code   1,369        

and received by the division not later than the thirty-first day                

of December of each year shall be one hundred dollars.  Upon the   1,370        

payment of an additional fee of one-half of the notice filing      1,372        

fee, the division may accept a notice filing received by the       1,373        

division between the first and tenth day of January of the         1,374        

subsequent calendar year.  A notice filing may be made at any      1,376        

time during the calendar year.  In that event, the notice filing   1,377        

fee shall not be reduced.  If the fee for an investment adviser                 

notice filing is paid to the division on or before October 1,      1,379        

1999, that fee shall cover the initial notice filing and also      1,380        

shall cover any fee for the notice filing for the period ending    1,381        

December 31, 2000.                                                 1,382        

      (5)  The fee for each investment adviser representative's    1,384        

license, and for each annual renewal thereof that is received by   1,385        

the division not later than the thirty-first day of December of    1,386        

each year, shall be thirty-five dollars; however, the fee shall    1,388        

be waived for the investment adviser representative designated     1,389        

the principal of the investment adviser pursuant to division       1,391        

(E)(D) of section 1707.151 of the Revised Code.  Upon the payment  1,392        

                                                          33     


                                                                 
of an additional fee of one-half of the license fee, the division  1,393        

may accept a license renewal application received by the division  1,394        

between the first and tenth day of January of the subsequent       1,395        

calendar year.  If the fee for an investment adviser               1,396        

representative's license is paid to the division on or before      1,397        

October 1, 1999, that fee shall cover the issuance of the initial  1,399        

license and also shall cover any fee for renewal of the license    1,400        

for the period ending December 31, 2000.                           1,401        

      (C)  A dealer's, salesperson's, investment adviser's, or     1,403        

investment adviser representative's license may be issued at any   1,405        

time for the remainder of the calendar year.  In that event, the   1,406        

annual fee shall not be reduced.                                   1,407        

      Sec. 1707.20.  (A)  The division of securities may adopt,    1,416        

amend, and rescind such rules, forms, and orders as are necessary  1,417        

to carry out sections 1707.01 to 1707.45 of the Revised Code,      1,418        

including rules and forms governing registration statements,       1,419        

applications, and reports, and defining any terms, whether or not  1,420        

used in sections 1707.01 to 1707.45 of the Revised Code, insofar   1,421        

as the definitions are not inconsistent with these sections.  For  1,423        

the purpose of rules and forms, the division may classify          1,425        

securities, persons, and matters within its jurisdiction, and      1,426        

prescribe different requirements for different classes.            1,427        

      (B)  No rule, form, or order may be made, amended, or        1,429        

rescinded unless the division finds that the action is necessary   1,431        

or appropriate in the public interest or for the protection of     1,432        

investors, clients, or prospective clients and consistent with     1,433        

the purposes fairly intended by the policy and provisions of       1,434        

sections 1707.01 to 1707.45 of the Revised Code.  In prescribing   1,435        

rules and forms and in otherwise administering sections 1707.01    1,436        

to 1707.45 of the Revised Code, the division may cooperate with    1,437        

the securities administrators of the other states and the          1,438        

securities and exchange commission with a view of effectuating     1,439        

the policy of this section to achieve maximum uniformity in the    1,440        

form and content of registration statements, applications,         1,441        

                                                          34     


                                                                 
reports, and overall securities regulation wherever practicable.   1,442        

      (C)  The division may by rule or order prescribe:            1,445        

      (1)  The form and content of financial statements required   1,447        

under sections 1707.01 to 1707.45 of the Revised Code;             1,448        

      (2)  The circumstances under which consolidated financial    1,450        

statements shall be filed;                                         1,451        

      (3)  Whether any required financial statements shall be      1,453        

certified by independent or certified public accountants.  All     1,454        

financial statements shall be prepared in accordance with          1,455        

generally accepted accounting practices.                           1,456        

      (D)  All rules and forms of the division shall be            1,459        

published; and in addition to fulfilling the requirements of       1,460        

Chapter 119. of the Revised Code, the division shall prescribe,    1,462        

and shall publish and make available its rules regarding the sale  1,463        

of securities, the administration of sections 1707.01 to 1707.45   1,464        

of the Revised Code, and the procedure and practice before the     1,465        

division..                                                                      

      (E)  No provision of sections 1707.01 to 1707.45 of the      1,467        

Revised Code imposing any liability applies to any act done or     1,468        

omitted in good faith in conformity with any rule, form, or order  1,469        

of the division of securities, notwithstanding that the rule,      1,470        

form, or order may later be amended or rescinded or be determined  1,471        

by judicial or other authority to be invalid for any reason,       1,472        

except that the issuance of an order granting effectiveness to a   1,473        

registration under section 1707.09 or 1707.091 of the Revised      1,474        

Code for the purposes of this division shall not be deemed an      1,475        

order other than as the establishment of the fact of               1,476        

registration.                                                      1,477        

      (F)  NOTWITHSTANDING ANY PROVISION OF THE REVISED CODE, IF   1,479        

THE "SECURITIES ACT OF 1933," THE "SECURITIES EXCHANGE ACT OF      1,482        

1934," THE "INVESTMENT COMPANY ACT OF 1940," THE "INVESTMENT       1,485        

ADVISERS ACT OF 1940," AND ANY AMENDMENTS TO ANY OF THOSE FEDERAL  1,486        

ACTS, IF ANY RULE, REGULATION, RELEASE, STATEMENT, OR POSITION     1,487        

PROMULGATED OR ADOPTED UNDER THE AUTHORITY OF ANY OF THOSE         1,488        

                                                          35     


                                                                 
FEDERAL ACTS, AND ANY AMENDMENTS TO THOSE FEDERAL ACTS, OR IF ANY  1,489        

RULE, REGULATION, OR GUIDELINE OF A SELF-REGULATORY ORGANIZATION   1,490        

REGISTERED UNDER THE "SECURITIES AND EXCHANGE ACT OF 1934," AND    1,491        

ANY AMENDMENTS TO THAT ACT, CONTAINS A PROVISION THAT IS NOT       1,493        

CONTAINED IN THIS CHAPTER OR THE RULES ADOPTED UNDER THIS CHAPTER  1,494        

AND THAT AFFECTS ANY MATTER WITHIN THE SCOPE OF THIS CHAPTER, THE  1,496        

DIVISION BY RULE MAY PROMULGATE A SIMILAR PROVISION.                            

      A RULE ADOPTED UNDER THE AUTHORITY GRANTED IN THIS DIVISION  1,498        

MAY DELETE, MODIFY, OR REPLACE AN EXISTING RULE OF THE DIVISION.   1,499        

A RULE ADOPTED UNDER THE AUTHORITY GRANTED IN THIS DIVISION        1,500        

BECOMES EFFECTIVE ON THE LATER OF THE DATE ON WHICH THE DIVISION   1,501        

ISSUES THE RULE OR THE DATE ON WHICH THE FEDERAL STATUTE OR THE    1,502        

RULE, REGULATION, RELEASE, STATEMENT, OR POSITION ON WHICH THE     1,503        

DIVISION'S RULE IS BASED BECOMES EFFECTIVE.  THE DIVISION, UPON    1,504        

THIRTY DAYS WRITTEN NOTICE, MAY REVOKE ANY RULE ADOPTED UNDER THE  1,505        

AUTHORITY GRANTED IN THIS DIVISION.  A RULE ADOPTED UNDER THE      1,506        

AUTHORITY GRANTED IN THIS DIVISION, AND NOT REVOKED BY THE         1,507        

COMMISSIONER, LAPSES AND HAS NO FURTHER FORCE AND EFFECT THIRTY    1,508        

MONTHS AFTER THE RULE'S EFFECTIVE DATE.                            1,509        

      Sec. 1707.23.  Whenever it appears to the division of        1,518        

securities, from its files, upon complaint, or otherwise, that     1,519        

any person has engaged in, is engaged in, or is about to engage    1,520        

in any practice declared to be illegal or prohibited by Chapter    1,521        

1707. of the Revised Code THIS CHAPTER or rules adopted under      1,522        

that THIS chapter by the division, or defined as fraudulent in     1,524        

that THIS chapter or rules adopted under that THIS chapter by the  1,525        

division, or any other deceptive scheme or practice in connection  1,526        

with the sale of securities, or acting as an investment adviser    1,527        

or investment adviser representative, or when the division         1,528        

believes it to be in the best interests of the public and          1,529        

necessary for the protection of investors, the division may do     1,530        

any of the following:                                                           

      (A)  Require any person to file with it, on such forms as    1,532        

it prescribes, an original or additional statement or report in    1,533        

                                                          36     


                                                                 
writing, under oath or otherwise, as to any facts or               1,534        

circumstances concerning the issuance, sale, or offer for sale of  1,535        

securities within this state by the person, as to the person's     1,537        

acts or practices as an investment adviser or investment adviser   1,538        

representative within this state, and as to other information as   1,539        

it deems material or relevant thereto;                                          

      (B)  Examine any investment adviser, investment adviser      1,541        

representative, or any seller, dealer, salesperson, or issuer of   1,543        

any securities, and any of their agents, employees, partners,      1,544        

officers, directors, members, or shareholders, wherever located,   1,545        

under oath; and examine records, books, documents, accounts, and   1,547        

papers as the division deems material or relevant to the inquiry;  1,548        

      (C)  Require the attendance of witnesses, and the            1,550        

production of books, records, and papers, as are required either   1,552        

by the division or by any party to a hearing before the division,  1,553        

and for that purpose issue a subpoena for any witness, or a        1,554        

subpoena duces tecum to compel the production of any books,                     

records, or papers.  The subpoena shall be served by PERSONAL      1,556        

SERVICE OR BY certified mail, return receipt requested.  If the    1,557        

subpoena is returned because of inability to deliver, or if no     1,558        

return is received within thirty days of the date of mailing, the  1,559        

subpoena may be served by ordinary mail.  If no return of          1,560        

ordinary mail is received within thirty days after the date of     1,561        

mailing, service shall be deemed to have been made.  If the        1,562        

subpoena is returned because of inability to deliver, the          1,563        

division may designate a person or persons to effect either        1,564        

personal or residence service upon the witness.  The person        1,565        

DESIGNATED TO EFFECT PERSONAL OR RESIDENCE SERVICE UNDER THIS      1,566        

DIVISION may be the sheriff of the county in which the witness     1,567        

resides or may be found or any other duly designated person.  The  1,568        

fees and mileage of the person serving the subpoena shall be the   1,569        

same as those allowed by the courts of common pleas in criminal    1,570        

cases, and shall be paid from the funds of the division.  Fees     1,571        

and mileage for the witness shall be the same as those allowed     1,572        

                                                          37     


                                                                 
for witnesses by the courts of common pleas in criminal cases,     1,573        

and shall be paid from the funds of the division upon request of   1,574        

the witness following the hearing.                                              

      (D)  Proceed under section 1707.19 of the Revised Code to    1,576        

suspend the license of any licensed dealer, licensed salesperson,  1,578        

licensed investment adviser, or licensed investment adviser        1,579        

representative and ultimately, if the division determines, revoke  1,580        

such license under such sections;                                  1,581        

      (E)  Initiate criminal proceedings under section 1707.042    1,583        

or 1707.44 of the Revised Code or rules adopted under those        1,584        

sections by the division by laying before the prosecuting          1,585        

attorney of the proper county any evidence of criminality which    1,586        

comes to its knowledge; and in the event of the neglect or         1,587        

refusal of the prosecuting attorney to prosecute such violations,  1,588        

or at the request of the prosecuting attorney, the division shall  1,589        

submit the evidence to the attorney general, who may proceed in    1,591        

the prosecution with all the rights, privileges, and powers        1,592        

conferred by law on prosecuting attorneys, including the power to  1,593        

appear before grand juries and to interrogate witnesses before     1,594        

such grand juries.                                                 1,595        

      (F)  Require any dealers forthwith to furnish to the         1,597        

division copies of prospectuses, circulars, or advertisements      1,598        

respecting securities that they publish or generally distribute,   1,600        

or require any investment advisers immediately to furnish to the   1,601        

division copies of brochures, advertisements, publications,        1,602        

analyses, reports, or other writings that they publish or          1,603        

distribute;                                                                     

      (G)  Require any dealers to mail to the division, prior to   1,605        

sale, notices of intention to sell, in respect to all securities   1,606        

which are not exempt under section 1707.02 of the Revised Code,    1,607        

or which are sold in transactions not exempt under section         1,608        

1707.03 or 1707.04 of the Revised Code;                            1,609        

      (H)  Issue and cause to be served by certified mail upon     1,611        

all persons affected an order requiring the person or persons to   1,612        

                                                          38     


                                                                 
cease and desist from the acts or practices appearing to the       1,613        

division to constitute violations of Chapter 1707. of the Revised  1,615        

Code THIS CHAPTER or rules adopted under that THIS chapter by the  1,616        

division.  The order shall state specifically the section or       1,618        

sections of Chapter 1707. of the Revised Code THIS CHAPTER or the  1,619        

rule or rules adopted under that THIS chapter by the division      1,620        

that appear to the division to have been violated and the facts    1,622        

constituting the violation.  If after the issuance of the order    1,623        

it appears to the division that any person or persons affected by  1,624        

the order have engaged in any act or practice from which the       1,625        

person or persons shall have been required, by the order, to       1,626        

cease and desist, the director of commerce may apply to the court  1,627        

of common pleas of any county for, and upon proof of the validity  1,628        

of the order of the division, the delivery of the order to the     1,629        

person or persons affected, and of the illegality and the          1,630        

continuation of the acts or practices that are the subject of the  1,631        

order, the court may grant an injunction implementing the order    1,632        

of the division.                                                                

      (I)  Issue and initiate contempt proceedings in this state   1,634        

regarding subpoenas and subpoenas duces tecum at the request of    1,636        

the securities administrator of another state, if it appears to    1,637        

the division that the activities for which the information is      1,638        

sought would violate Chapter 1707. of the Revised Code THIS        1,639        

CHAPTER if the activities had occurred in this state.              1,640        

      Sec. 1707.44.  (A)(1)  No person shall engage in any act or  1,649        

practice that violates division (A), (B), or (C) of section        1,650        

1707.14 of the Revised Code, and no salesperson shall sell         1,651        

securities in this state without being licensed pursuant to        1,652        

section 1707.16 of the Revised Code.                                            

      (2)  No person shall engage in any act or practice that      1,654        

violates division (A) of section 1707.141 or section 1707.161 of   1,655        

the Revised Code.                                                               

      (B)  No person shall knowingly make or cause to be made any  1,657        

false representation concerning a material and relevant fact, in   1,658        

                                                          39     


                                                                 
any oral statement or in any prospectus, circular, description,    1,659        

application, or written statement, for any of the following        1,660        

purposes:                                                          1,661        

      (1)  Complying with this chapter, in regard to registering   1,663        

securities by description;                                         1,664        

      (2)  Securing the qualification of any securities under      1,666        

this chapter;                                                      1,667        

      (3)  Procuring the licensing of any dealer, salesperson,     1,670        

investment adviser, or investment adviser representative under     1,672        

this chapter;                                                                   

      (4)  Selling any securities in this state;                   1,674        

      (5)  Advising for compensation, as to the value of           1,676        

securities or as to the advisability of investing in, purchasing,  1,677        

or selling securities.                                                          

      (C)  No person shall knowingly and intentionally sell,       1,679        

cause to be sold, offer for sale, or cause to be offered for       1,680        

sale, any security which comes under any of the following          1,681        

descriptions:                                                      1,682        

      (1)  Is not exempt under section 1707.02 of the Revised      1,684        

Code, nor the subject matter of one of the transactions exempted   1,685        

in sections SECTION 1707.03, 1707.04, and OR 1707.34 of the        1,687        

Revised Code, has not been registered by description,              1,688        

coordination, or qualification, and is not the subject matter of   1,689        

a transaction that has been registered by description;             1,690        

      (2)  The prescribed fees for registering by description, by  1,692        

coordination, or by qualification have not been paid in respect    1,693        

to such security;                                                  1,694        

      (3)  Such person has been notified by the division, or has   1,696        

knowledge of the notice, that the right to buy, sell, or deal in   1,698        

such security has been suspended or revoked, or that the           1,699        

registration by description, by coordination, or by qualification  1,700        

under which it may be sold has been suspended or revoked;          1,701        

      (4)  The offer or sale is accompanied by a statement that    1,703        

the security offered or sold has been or is to be in any manner    1,704        

                                                          40     


                                                                 
indorsed by the division.                                          1,705        

      (D)  No person who is an officer, director, or trustee of,   1,707        

or a dealer for, any issuer, and who knows such issuer to be       1,708        

insolvent in that the liabilities of the issuer exceed its         1,709        

assets, shall sell any securities of or for any such issuer,       1,710        

without disclosing the fact of the insolvency to the purchaser.    1,712        

      (E)  No person with intent to aid in the sale of any         1,714        

securities on behalf of the issuer, shall knowingly make any       1,715        

representation not authorized by such issuer or at material        1,716        

variance with statements and documents filed with the division by  1,717        

such issuer.                                                       1,718        

      (F)  No person, with intent to deceive, shall sell, cause    1,720        

to be sold, offer for sale, or cause to be offered for sale, any   1,721        

securities of an insolvent issuer, with knowledge that such        1,722        

issuer is insolvent in that the liabilities of the issuer exceed   1,724        

its assets, taken at their fair market value.                      1,725        

      (G)  No person in purchasing or selling securities shall     1,727        

knowingly engage in any act or practice that is, in this chapter,  1,728        

declared illegal, defined as fraudulent, or prohibited.            1,729        

      (H)  No licensed dealer shall refuse to buy from, sell to,   1,731        

or trade with any person because the person appears on a           1,732        

blacklist issued by, or is being boycotted by, any foreign         1,733        

corporate or governmental entity, nor sell any securities of or    1,734        

for any issuer who is known in relation to the issuance or sale    1,735        

of such securities to have engaged in such practices.              1,736        

      (I)  No dealer in securities, knowing that the dealer's      1,738        

liabilities exceed the reasonable value of the dealer's assets,    1,740        

shall accept money or securities, except in payment of or as                    

security for an existing debt, from a customer who is ignorant of  1,741        

the dealer's insolvency, and thereby cause the customer to lose    1,743        

any part of the customer's securities or the value of those        1,744        

securities, by doing either of the following without the           1,745        

customer's consent:                                                             

      (1)  Pledging, selling, or otherwise disposing of such       1,747        

                                                          41     


                                                                 
securities, when the dealer has no lien on or any special          1,749        

property in such securities;                                                    

      (2)  Pledging such securities for more than the amount due,  1,751        

or otherwise disposing of such securities for the dealer's own     1,753        

benefit, when the dealer has a lien or indebtedness on such        1,754        

securities.                                                        1,755        

      It is an affirmative defense to a charge under this          1,757        

division that, at the time the securities involved were pledged,   1,758        

sold, or disposed of, the dealer had in the dealer's possession    1,760        

or control, and available for delivery, securities of the same     1,761        

kinds and in amounts sufficient to satisfy all customers entitled  1,762        

to the securities, upon demand and tender of any amount due on     1,764        

the securities.                                                                 

      (J)  No person, with purpose to deceive, shall make, issue,  1,766        

publish, or cause to be made, issued, or published any statement   1,767        

or advertisement as to the value of securities, or as to alleged   1,768        

facts affecting the value of securities, or as to the financial    1,769        

condition of any issuer of securities, when the person knows that  1,771        

such statement or advertisement is false in any material respect.  1,772        

      (K)  No person, with purpose to deceive, shall make,         1,774        

record, or publish or cause to be made, recorded, or published, a  1,775        

report of any transaction in securities which is false in any      1,776        

material respect.                                                  1,777        

      (L)  No dealer shall engage in any act that violates the     1,779        

provisions of section 15(c) or 15(g) of the "Securities Exchange   1,780        

Act of 1934," 48 Stat. 881, 15 U.S.C.A. 78o(c) or (g), or any      1,781        

rule or regulation promulgated by the securities and exchange      1,782        

commission thereunder.  If, subsequent to October 11, 1994,        1,783        

additional amendments to section 15(c) or 15(g) are adopted, or    1,784        

additional rules or regulations are promulgated pursuant to such   1,785        

sections, the division of securities shall, by rule, adopt the     1,786        

amendments, rules, or regulations, unless the division finds that  1,787        

the amendments, rules, or regulations are not necessary for the    1,788        

protection of investors or in the public interest.                              

                                                          42     


                                                                 
      (M)(1)  No investment adviser or investment adviser          1,790        

representative shall do any of the following:                      1,791        

      (a)  Employ any device, scheme, or artifice to defraud any   1,794        

person;                                                                         

      (b)  Engage in any act, practice, or course of business      1,796        

that operates or would operate as a fraud or deceit upon any       1,797        

person;                                                            1,798        

      (c)  In acting as principal for the investment adviser's or  1,800        

investment adviser representative's own account, knowingly sell    1,801        

any security to or purchase any security from a client, or in      1,802        

acting as salesperson for a person other than such client,         1,803        

knowingly effect any sale or purchase of any security for the      1,804        

account of such client, without disclosing to the client in        1,805        

writing before the completion of the transaction the capacity in   1,806        

which the investment adviser or investment adviser representative  1,808        

is acting and obtaining the consent of the client to the           1,809        

transaction.  Division (M)(1)(c) of this section does not apply    1,810        

to any investment adviser registered with the securities and       1,811        

exchange commission under section 203 of the "Investment Advisers  1,812        

Act of 1940," 15 U.S.C. 80b-3, or to any transaction with a        1,813        

customer of a licensed dealer or salesperson if the licensed       1,814        

dealer or salesperson is not acting as an investment adviser or    1,815        

investment adviser representative in relation to the transaction.  1,816        

      (d)  Engage in any act, practice, or course of business      1,819        

that is fraudulent, deceptive, or manipulative.  The division of   1,820        

securities may adopt rules reasonably designed to prevent such     1,821        

acts, practices, or courses of business as are fraudulent,         1,822        

deceptive, or manipulative.                                                     

      (2)  No investment adviser or investment adviser             1,824        

representative licensed or required to be licensed under this      1,825        

chapter shall take or have custody of any securities or funds of   1,826        

any person, except as provided in rules adopted by the division.   1,827        

      (3)  In the solicitation of clients or prospective clients,  1,829        

no person shall make any untrue statement of a material fact or    1,830        

                                                          43     


                                                                 
omit to state a material fact necessary in order to make the       1,831        

statements made not misleading in light of the circumstances       1,832        

under which the statements were made.                              1,833        

      Sec. 3916.01.  AS USED IN THIS CHAPTER:                      1,835        

      (A)  "ADVERTISING" MEANS ANY WRITTEN, ELECTRONIC, OR         1,838        

PRINTED COMMUNICATION OR ANY COMMUNICATION BY MEANS OF RECORDED    1,839        

TELEPHONE MESSAGES OR TRANSMITTED ON RADIO, TELEVISION, THE        1,840        

INTERNET, OR SIMILAR COMMUNICATIONS MEDIA, INCLUDING, BUT NOT      1,841        

LIMITED TO, FILM STRIPS, MOTION PICTURES, AND VIDEOS, THAT IS      1,842        

DIRECTLY OR INDIRECTLY PUBLISHED, DISSEMINATED, CIRCULATED, OR     1,843        

PLACED BEFORE THE PUBLIC FOR THE PURPOSE OF CREATING AN INTEREST   1,844        

IN OR INDUCING A PERSON TO SELL A LIFE INSURANCE POLICY PURSUANT   1,845        

TO A VIATICAL SETTLEMENT CONTRACT.                                 1,846        

      (B)  "BUSINESS OF VIATICAL SETTLEMENTS" MEANS AN ACTIVITY    1,848        

INVOLVED IN THE OFFERING, SOLICITATION, NEGOTIATION, PROCUREMENT,  1,849        

EFFECTUATION, PURCHASING, INVESTING, FINANCING, MONITORING,                     

TRACKING, UNDERWRITING, SELLING, TRANSFERRING, ASSIGNING,          1,850        

PLEDGING, OR HYPOTHECATING OF VIATICAL SETTLEMENT CONTRACTS OR     1,851        

PURCHASE AGREEMENTS OR ANY SIMILAR ACTIVITY RELATED TO VIATICAL    1,852        

SETTLEMENT CONTRACTS OR PURCHASE AGREEMENTS.                       1,853        

      (C)  "CHRONICALLY ILL" MEANS ANY OF THE FOLLOWING:           1,855        

      (1)  BEING UNABLE TO PERFORM AT LEAST TWO ACTIVITIES OF      1,857        

DAILY LIVING, INCLUDING, BUT NOT LIMITED TO, EATING, TOILETING,    1,858        

TRANSFERRING, BATHING, DRESSING, OR CONTINENCE;                    1,859        

      (2)  REQUIRING SUBSTANTIAL SUPERVISION TO PROTECT THE        1,861        

INDIVIDUAL FROM THREATS TO HEALTH AND SAFETY DUE TO SEVERE         1,862        

COGNITIVE IMPAIRMENT;                                              1,863        

      (3)  HAVING A LEVEL OF DISABILITY SIMILAR TO THAT DESCRIBED  1,865        

IN DIVISION (C)(1) OF THIS SECTION, AS DETERMINED BY THE UNITED    1,867        

STATES SECRETARY OF HEALTH AND HUMAN SERVICES;                     1,868        

      (D)(1)  "FINANCING ENTITY" MEANS AN UNDERWRITER, PLACEMENT   1,870        

AGENT, LENDER, PURCHASER OF SECURITIES, PURCHASER OF A POLICY OR   1,871        

CERTIFICATE FROM A VIATICAL SETTLEMENT PROVIDER, CREDIT ENHANCER,  1,872        

OR ANY OTHER PERSON THAT HAS A DIRECT OWNERSHIP INTEREST IN A      1,873        

                                                          44     


                                                                 
POLICY OR CERTIFICATE THAT IS THE SUBJECT OF A VIATICAL            1,874        

SETTLEMENT CONTRACT AND TO WHICH BOTH OF THE FOLLOWING APPLY:      1,875        

      (a)  ITS PRINCIPAL ACTIVITY RELATED TO THE TRANSACTION IS    1,877        

PROVIDING FUNDS TO EFFECT THE VIATICAL SETTLEMENT OR THE PURCHASE  1,879        

OF ONE OR MORE VIATICATED POLICIES.                                1,880        

      (b)  IT HAS AN AGREEMENT IN WRITING WITH ONE OR MORE         1,882        

LICENSED VIATICAL SETTLEMENT PROVIDERS TO FINANCE THE ACQUISITION  1,883        

OF VIATICAL SETTLEMENT CONTRACTS.                                  1,884        

      (2)  "FINANCING ENTITY" DOES NOT INCLUDE A NON-ACCREDITED    1,886        

INVESTOR OR VIATICAL SETTLEMENT PURCHASER.                         1,887        

      (E)  "FRAUDULENT VIATICAL SETTLEMENT ACT" MEANS AN ACT OR    1,889        

OMISSION COMMITTED BY ANY PERSON WHO, KNOWINGLY OR WITH INTENT TO  1,890        

DEFRAUD AND FOR THE PURPOSE OF DEPRIVING ANOTHER OF PROPERTY OR    1,891        

FOR PECUNIARY GAIN, COMMITS, OR PERMITS ANY OF ITS EMPLOYEES OR    1,892        

AGENTS TO COMMIT, ANY OF THE FOLLOWING ACTS:                       1,893        

      (1)  PRESENTING, CAUSING TO BE PRESENTED, OR PREPARING WITH  1,895        

KNOWLEDGE OR BELIEF THAT IT WILL BE PRESENTED TO OR BY A VIATICAL  1,896        

SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, VIATICAL          1,897        

SETTLEMENT PURCHASER, FINANCING ENTITY, INSURER, INSURANCE         1,898        

BROKER, INSURANCE AGENT, OR ANY OTHER PERSON, ANY FALSE MATERIAL   1,899        

INFORMATION, OR CONCEALING ANY MATERIAL INFORMATION, AS PART OF,   1,900        

IN SUPPORT OF, OR CONCERNING A FACT MATERIAL TO, ONE OR MORE OF    1,901        

THE FOLLOWING:                                                                  

      (a)  AN APPLICATION FOR THE ISSUANCE OF A VIATICAL           1,903        

SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE;            1,904        

      (b)  THE UNDERWRITING OF A VIATICAL SETTLEMENT CONTRACT OR   1,906        

INSURANCE POLICY OR CERTIFICATE;                                   1,907        

      (c)  A CLAIM FOR PAYMENT OR BENEFIT PURSUANT TO A VIATICAL   1,909        

SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE;            1,910        

      (d)  ANY PREMIUMS PAID ON AN INSURANCE POLICY OR             1,912        

CERTIFICATE;                                                                    

      (e)  ANY PAYMENTS AND CHANGES IN OWNERSHIP OR BENEFICIARY    1,914        

MADE IN ACCORDANCE WITH THE TERMS OF A VIATICAL SETTLEMENT         1,915        

CONTRACT OR INSURANCE POLICY OR CERTIFICATE;                       1,916        

                                                          45     


                                                                 
      (f)  THE REINSTATEMENT OR CONVERSION OF AN INSURANCE POLICY  1,918        

OR CERTIFICATE;                                                    1,919        

      (g)  THE SOLICITATION, OFFER, EFFECTUATION, OR SALE OF A     1,921        

VIATICAL SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE;   1,922        

      (h)  THE ISSUANCE OF WRITTEN EVIDENCE OF A VIATICAL          1,924        

SETTLEMENT CONTRACT OR INSURANCE POLICY OR CERTIFICATE;            1,925        

      (i)  A FINANCING TRANSACTION.                                1,927        

      (2)  IN THE FURTHERANCE OF A FRAUD OR TO PREVENT THE         1,929        

DETECTION OF A FRAUD, DOING ANY OF THE FOLLOWING:                  1,930        

      (a)  REMOVING, CONCEALING, ALTERING, DESTROYING, OR          1,932        

SEQUESTERING FROM THE SUPERINTENDENT THE ASSETS OR RECORDS OF A    1,933        

LICENSEE OR ANOTHER PERSON ENGAGED IN THE BUSINESS OF VIATICAL                  

SETTLEMENTS;                                                       1,934        

      (b)  MISREPRESENTING OR CONCEALING THE FINANCIAL CONDITION   1,936        

OF A LICENSEE, FINANCING ENTITY, INSURER, OR ANY OTHER PERSON;     1,938        

      (c)  TRANSACTING THE BUSINESS OF VIATICAL SETTLEMENTS IN     1,940        

VIOLATION OF ANY LAW OF THIS STATE REQUIRING A LICENSE,            1,942        

CERTIFICATE OF AUTHORITY, OR OTHER LEGAL AUTHORITY FOR THE         1,943        

TRANSACTION OF THE BUSINESS OF VIATICAL SETTLEMENTS;               1,944        

      (d)  FILING WITH THE SUPERINTENDENT OF INSURANCE OR THE      1,946        

CHIEF INSURANCE REGULATORY OFFICIAL OF ANOTHER JURISDICTION A      1,947        

DOCUMENT CONTAINING FALSE INFORMATION OR OTHERWISE CONCEALING      1,949        

FROM THE SUPERINTENDENT ANY INFORMATION ABOUT A MATERIAL FACT.     1,950        

      (3)  PRESENTING, CAUSING TO BE PRESENTED, OR PREPARING WITH  1,952        

KNOWLEDGE OR REASON TO BELIEVE THAT IT WILL BE PRESENTED, TO OR    1,953        

BY A VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER,     1,954        

INSURER, INSURANCE AGENT, FINANCING ENTITY, VIATICAL SETTLEMENT    1,955        

PURCHASER, OR ANY OTHER PERSON, IN CONNECTION WITH A VIATICAL      1,956        

SETTLEMENT TRANSACTION OR INSURANCE TRANSACTION, AN INSURANCE      1,957        

POLICY OR CERTIFICATE THAT THE ACTOR KNOWS WAS FRAUDULENTLY        1,958        

OBTAINED BY THE INSURED, THE OWNER, OR ANY AGENT OF THE INSURED    1,959        

OR OWNER;                                                                       

      (4)  COMMITTING ANY EMBEZZLEMENT, THEFT, MISAPPROPRIATION,   1,961        

OR CONVERSION OF MONEYS, FUNDS, PREMIUMS, CREDITS OR OTHER         1,962        

                                                          46     


                                                                 
PROPERTY OF A VIATICAL SETTLEMENT PROVIDER, INSURER, INSURED,      1,963        

VIATOR, INSURANCE POLICYOWNER, OR ANY OTHER PERSON ENGAGED IN THE  1,964        

BUSINESS OF VIATICAL SETTLEMENTS OR INSURANCE;                     1,965        

      (5)  ATTEMPTING TO COMMIT, ASSISTING, AIDING OR ABETTING IN  1,967        

THE COMMISSION OF, OR CONSPIRACY TO COMMIT ANY ACT OR OMISSION     1,968        

SPECIFIED IN DIVISIONS (E)(1) TO (4) OF THIS SECTION.              1,969        

      (F)  NOTWITHSTANDING SECTION 1.59 OF THE REVISED CODE,       1,971        

"PERSON" MEANS A NATURAL PERSON OR A LEGAL ENTITY, INCLUDING, BUT  1,972        

NOT LIMITED TO, AN INDIVIDUAL, PARTNERSHIP, LIMITED LIABILITY      1,973        

COMPANY, ASSOCIATION, TRUST, OR CORPORATION.                       1,974        

      (G)  "POLICY" MEANS AN INDIVIDUAL OR GROUP POLICY, GROUP     1,976        

CERTIFICATE, CONTRACT, OR ARRANGEMENT OF INSURANCE AFFECTING THE   1,977        

RIGHTS OF A RESIDENT OF THIS STATE OR BEARING A REASONABLE                      

RELATION TO THIS STATE, REGARDLESS OF WHETHER DELIVERED OR ISSUED  1,978        

FOR DELIVERY IN THIS STATE.                                        1,979        

      (H)  "RELATED PROVIDER TRUST" MEANS A TITLING TRUST OR ANY   1,981        

OTHER TRUST ESTABLISHED BY A LICENSED VIATICAL SETTLEMENT          1,982        

PROVIDER OR A FINANCING ENTITY FOR THE SOLE PURPOSE OF HOLDING                  

OWNERSHIP OR BENEFICIAL INTEREST IN PURCHASED POLICIES IN          1,983        

CONNECTION WITH A FINANCING TRANSACTION, PROVIDED THAT THE TRUST   1,984        

HAS A WRITTEN AGREEMENT WITH THE LICENSED VIATICAL SETTLEMENT      1,985        

PROVIDER UNDER WHICH THE LICENSED VIATICAL SETTLEMENT PROVIDER IS  1,986        

RESPONSIBLE FOR ENSURING COMPLIANCE WITH ALL STATUTORY AND         1,987        

REGULATORY REQUIREMENTS AND UNDER WHICH THE TRUST AGREES TO MAKE   1,988        

ALL RECORDS AND FILES RELATED TO VIATICAL SETTLEMENT TRANSACTIONS  1,989        

AVAILABLE TO THE SUPERINTENDENT AS IF THOSE RECORDS AND FILES      1,990        

WERE MAINTAINED DIRECTLY BY THE LICENSED VIATICAL SETTLEMENT       1,991        

PROVIDER.                                                                       

      (I)  "SPECIAL PURPOSE ENTITY" MEANS A CORPORATION,           1,993        

PARTNERSHIP, TRUST, LIMITED LIABILITY COMPANY OR OTHER SIMILAR     1,994        

ENTITY FORMED SOLELY TO PROVIDE ACCESS, EITHER DIRECTLY OR         1,995        

INDIRECTLY, TO INSTITUTIONAL CAPITAL MARKETS FOR A FINANCING       1,996        

ENTITY OR LICENSED VIATICAL SETTLEMENT PROVIDER.                   1,997        

      (J)  "TERMINALLY ILL" MEANS HAVING AN ILLNESS OR SICKNESS    1,999        

                                                          47     


                                                                 
THAT CAN REASONABLY BE EXPECTED TO RESULT IN DEATH IN TWENTY-FOUR  2,000        

MONTHS OR LESS.                                                    2,001        

      (K)  "VIATICAL SETTLEMENT BROKER" MEANS A PERSON THAT, ON    2,003        

BEHALF OF A VIATOR AND FOR A FEE, COMMISSION, OR OTHER VALUABLE    2,004        

CONSIDERATION, OFFERS OR ATTEMPTS TO NEGOTIATE VIATICAL            2,005        

SETTLEMENTS BETWEEN A VIATOR AND ONE OR MORE VIATICAL SETTLEMENT   2,006        

PROVIDERS.  "VIATICAL SETTLEMENT BROKER" DOES NOT INCLUDE AN       2,007        

ATTORNEY, A CERTIFIED PUBLIC ACCOUNTANT, OR A FINANCIAL PLANNER                 

ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITATION AGENCY, WHO    2,008        

IS RETAINED TO REPRESENT THE VIATOR AND WHOSE COMPENSATION IS NOT  2,009        

PAID DIRECTLY OR INDIRECTLY BY THE VIATICAL SETTLEMENT PROVIDER    2,010        

OR PURCHASER.                                                                   

      (L)  "VIATICAL SETTLEMENT CONTRACT" MEANS ANY OF THE         2,012        

FOLLOWING:                                                                      

      (1)  A WRITTEN AGREEMENT ESTABLISHING THE TERMS UNDER WHICH  2,014        

COMPENSATION OR ANY THING OF VALUE, THAT IS LESS THAN THE          2,015        

EXPECTED DEATH BENEFIT OF THE INSURANCE POLICY OR CERTIFICATE      2,016        

WILL BE PAID IN RETURN FOR THE VIATOR'S ASSIGNMENT, TRANSFER,      2,017        

SALE, DEVISE, OR BEQUEST OF THE DEATH BENEFIT OR OWNERSHIP OF ANY  2,018        

PORTION OF THE INSURANCE POLICY OR CERTIFICATE OF INSURANCE;       2,019        

      (2)  A CONTRACT FOR A LOAN OR ANY OTHER FINANCING            2,021        

TRANSACTION SECURED PRIMARILY BY AN INDIVIDUAL OR GROUP LIFE       2,022        

INSURANCE POLICY OR CERTIFICATE, OTHER THAN A LOAN BY A LIFE       2,024        

INSURANCE COMPANY PURSUANT TO THE TERMS OF THE LIFE INSURANCE      2,025        

CONTRACT OR A LOAN SECURED BY THE CASH VALUE OF A POLICY OR                     

CERTIFICATE;                                                       2,026        

      (3)  AN AGREEMENT TO TRANSFER OWNERSHIP OR CHANGE THE        2,028        

BENEFICIARY DESIGNATION OF THE POLICY OR CERTIFICATE AT A LATER    2,029        

DATE, REGARDLESS OF THE DATE THAT COMPENSATION IS PAID TO THE      2,030        

VIATOR.                                                                         

      (M)(1)  "VIATICAL SETTLEMENT PROVIDER" MEANS A PERSON,       2,033        

OTHER THAN A VIATOR, THAT ENTERS INTO OR EFFECTUATES A VIATICAL                 

SETTLEMENT CONTRACT.                                               2,034        

      (2)  "VIATICAL SETTLEMENT PROVIDER" DOES NOT INCLUDE ANY OF  2,036        

                                                          48     


                                                                 
THE FOLLOWING:                                                                  

      (a)  A BANK, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION,     2,038        

CREDIT UNION, OR OTHER FINANCIAL INSTITUTION THAT TAKES AN         2,039        

ASSIGNMENT OF A LIFE INSURANCE POLICY OR CERTIFICATE AS            2,040        

COLLATERAL FOR A LOAN;                                                          

      (b)  THE ISSUER OF A LIFE INSURANCE POLICY OR CERTIFICATE    2,042        

PROVIDING ACCELERATED BENEFITS AS DEFINED IN SECTION 3915.21 OF    2,044        

THE REVISED CODE AND PURSUANT TO THE CONTRACT;                                  

      (c)  AN INDIVIDUAL WHO ENTERS INTO OR EFFECTUATES NOT MORE   2,046        

THAN ONE AGREEMENT IN ANY CALENDAR YEAR FOR THE TRANSFER OF LIFE   2,048        

INSURANCE POLICIES OR CERTIFICATES FOR ANY VALUE LESS THAN THE     2,050        

EXPECTED DEATH BENEFIT;                                                         

      (d)  AN AUTHORIZED OR ELIGIBLE INSURER THAT PROVIDES STOP    2,052        

LOSS COVERAGE TO A VIATICAL SETTLEMENT PROVIDER, PURCHASER,        2,054        

FINANCING ENTITY, SPECIAL PURPOSE ENTITY, OR RELATED PROVIDER      2,056        

TRUST;                                                                          

      (e)  A FINANCING ENTITY;                                     2,058        

      (f)  SPECIAL PURPOSE ENTITY;                                 2,060        

      (g)  A RELATED PROVIDER TRUST;                               2,062        

      (h)  A VIATICAL SETTLEMENT PURCHASER.                        2,064        

      (N)  "VIATICATED POLICY" MEANS A LIFE INSURANCE POLICY OR    2,066        

CERTIFICATE THAT HAS BEEN ACQUIRED BY A VIATICAL SETTLEMENT        2,067        

PROVIDER PURSUANT TO A VIATICAL SETTLEMENT CONTRACT.               2,068        

      (O)  "VIATOR" MEANS THE OWNER OF A LIFE INSURANCE POLICY OR  2,070        

A CERTIFICATE HOLDER UNDER A GROUP POLICY WHO, IN RETURN FOR       2,072        

COMPENSATION OR ANY THING OF VALUE THAT IS LESS THAN THE EXPECTED  2,073        

DEATH BENEFIT OF THE POLICY OR CERTIFICATE, ASSIGNS, TRANSFERS,    2,074        

SELLS, DEVISES, OR BEQUESTS THE DEATH BENEFIT OR OWNERSHIP OF ANY  2,075        

PORTION OF THE INSURANCE POLICY OR CERTIFICATE OF INSURANCE.  FOR  2,076        

THE PURPOSES OF THIS CHAPTER, A "VIATOR" IS NOT LIMITED TO AN      2,077        

OWNER OF A LIFE INSURANCE POLICY OR A CERTIFICATE HOLDER UNDER A   2,078        

GROUP POLICY INSURING THE LIFE OF AN INDIVIDUAL WITH A TERMINAL    2,079        

OR CHRONIC ILLNESS OR CONDITION EXCEPT WHERE SPECIFICALLY          2,080        

ADDRESSED.  "VIATOR" DOES NOT INCLUDE ANY OF THE FOLLOWING:        2,081        

                                                          49     


                                                                 
      (1)  A LICENSEE UNDER THIS CHAPTER;                          2,083        

      (2)  AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL       2,085        

BUYER AS DEFINED RESPECTIVELY IN REGULATION D, RULE 501 OR RULE    2,090        

144A OF THE SECURITIES ACT OF 1933, AS AMENDED;                    2,092        

      (3)  A FINANCING ENTITY;                                     2,094        

      (4)  A SPECIAL PURPOSE ENTITY;                               2,096        

      (5)  A RELATED PROVIDER TRUST.                               2,098        

      (P)  "VIATICAL SETTLEMENT PURCHASER" MEANS A PERSON WHO      2,100        

GIVES A SUM OF MONEY AS CONSIDERATION FOR A LIFE INSURANCE POLICY  2,101        

OR AN INTEREST IN THE DEATH BENEFITS OF A LIFE INSURANCE POLICY,                

OR A PERSON WHO OWNS, ACQUIRES, OR IS ENTITLED TO A BENEFICIAL     2,102        

INTEREST IN A TRUST THAT OWNS A VIATICAL SETTLEMENT CONTRACT OR    2,103        

IS THE BENEFICIARY OF A LIFE INSURANCE POLICY THAT HAS BEEN OR     2,104        

WILL BE THE SUBJECT OF A VIATICAL SETTLEMENT CONTRACT, FOR THE     2,105        

PURPOSE OF DERIVING AN ECONOMIC BENEFIT.  "VIATICAL SETTLEMENT     2,106        

PURCHASER" DOES NOT INCLUDE ANY OF THE FOLLOWING:                  2,107        

      (1)  A LICENSEE UNDER THIS CHAPTER;                          2,109        

      (2)  AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL       2,111        

BUYER AS DEFINED RESPECTIVELY IN REGULATION D, RULE 501 OR RULE    2,116        

144A OF THE SECURITIES ACT OF 1933, AS AMENDED;                    2,118        

      (3)  A FINANCING ENTITY;                                     2,120        

      (4)  A SPECIAL PURPOSE ENTITY;                               2,122        

      (5)  A RELATED PROVIDER TRUST.                               2,124        

      (Q) "LICENSEE" MEANS A PERSON LICENSED UNDER THIS CHAPTER.   2,126        

      (R)  "NAIC" MEANS THE NATIONAL ASSOCIATION OF INSURANCE      2,128        

COMMISSIONERS.                                                     2,129        

      (S)  "SECURITIES ACT OF 1933" HAS THE SAME MEANING AS IN     2,132        

SECTION 1707.01 OF THE REVISED CODE.                               2,133        

      Sec. 3916.02.  NO PERSON SHALL OPERATE IN THIS STATE AS A    2,135        

VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER         2,136        

WITHOUT FIRST HAVING OBTAINED A LICENSE FROM THE SUPERINTENDENT    2,137        

OF INSURANCE AND, IF DIFFERENT FROM THIS STATE, FROM THE           2,139        

COMPARABLE OFFICIAL OF THE STATE OF RESIDENCE OF THE VIATOR.  IF   2,140        

THERE IS MORE THAN ONE VIATOR ON A SINGLE POLICY OR CERTIFICATE    2,141        

                                                          50     


                                                                 
AND THE VIATORS ARE RESIDENTS OF DIFFERENT STATES, THE VIATICAL    2,142        

SETTLEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE IN WHICH THE  2,143        

VIATOR HAVING THE LARGEST PERCENTAGE OWNERSHIP OF THE POLICY OR    2,144        

CERTIFICATE RESIDES OR, IF THE VIATORS HOLD EQUAL OWNERSHIP, THE   2,145        

STATE OF RESIDENCE OF ONE VIATOR AGREED UPON IN WRITING BY ALL     2,146        

VIATORS.                                                                        

      Sec. 3916.03.  (A)  AN APPLICANT FOR A LICENSE AS A          2,148        

VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL   2,151        

SUBMIT AN APPLICATION FOR THE LICENSE IN A MANNER PRESCRIBED BY                 

THE SUPERINTENDENT OF INSURANCE.  THE APPLICATION SHALL BE         2,152        

ACCOMPANIED BY A FEE ESTABLISHED BY THE SUPERINTENDENT BY RULE     2,154        

ADOPTED IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE.       2,155        

      (B)  A LICENSE ISSUED UNDER THIS CHAPTER TO A PERSON OTHER   2,159        

THAN AN INDIVIDUAL AUTHORIZES ALL PARTNERS, OFFICERS, MEMBERS, OR  2,160        

DESIGNATED EMPLOYEES OF THE PERSON TO ACT AS VIATICAL SETTLEMENT   2,161        

PROVIDERS OR VIATICAL SETTLEMENT BROKERS, AS APPLICABLE, AND ALL   2,162        

THOSE PARTNERS, OFFICERS, MEMBERS, OR DESIGNATED EMPLOYEES SHALL   2,163        

BE NAMED IN THE APPLICATION AND ANY SUPPLEMENTS TO THE             2,164        

APPLICATION.                                                                    

      (C)  UPON THE FILING OF AN APPLICATION UNDER THIS SECTION    2,166        

AND THE PAYMENT OF THE LICENSE FEE, THE SUPERINTENDENT SHALL MAKE  2,168        

AN INVESTIGATION OF THE APPLICANT AND ISSUE TO THE APPLICANT A     2,169        

LICENSE THAT STATES IN SUBSTANCE THAT THE PERSON IS AUTHORIZED TO  2,170        

ACT AS A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT       2,171        

BROKER, AS APPLICABLE, IF ALL OF THE FOLLOWING APPLY:              2,172        

      (1)  REGARDING AN APPLICATION FOR A LICENSE AS A VIATICAL    2,174        

SETTLEMENT PROVIDER, THE APPLICANT PROVIDES A DETAILED PLAN OF     2,175        

OPERATION.                                                                      

      (2)  THE SUPERINTENDENT FINDS ALL OF THE FOLLOWING:          2,177        

      (a)  THE APPLICANT IS COMPETENT AND TRUSTWORTHY AND INTENDS  2,179        

TO ACT IN GOOD FAITH IN THE CAPACITY OF A VIATICAL SETTLEMENT      2,180        

PROVIDER OR VIATICAL SETTLEMENT BROKER, AS APPLICABLE.             2,181        

      (b)  THE APPLICANT HAS A GOOD BUSINESS REPUTATION AND HAS    2,183        

HAD EXPERIENCE, TRAINING, OR EDUCATION SO AS TO BE QUALIFIED TO    2,184        

                                                          51     


                                                                 
ACT IN THE CAPACITY OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL  2,186        

SETTLEMENT BROKER, AS APPLICABLE.                                               

      (3)  IF THE APPLICANT IS A PERSON OTHER THAN AN INDIVIDUAL,  2,188        

THE APPLICANT PROVIDES A CERTIFICATE OF GOOD STANDING FROM THE     2,189        

STATE OF ITS DOMICILE.                                             2,190        

      (4)  THE APPLICANT PROVIDES AN ANTIFRAUD PLAN THAT MEETS     2,193        

THE REQUIREMENTS OF DIVISION (G) OF SECTION 3916.18 OF THE         2,194        

REVISED CODE.                                                                   

      (D)  AN APPLICANT SHALL PROVIDE ALL INFORMATION REQUESTED    2,196        

BY THE SUPERINTENDENT.  THE SUPERINTENDENT MAY, AT ANY TIME,       2,197        

REQUIRE AN APPLICANT TO FULLY DISCLOSE THE IDENTITY OF ALL         2,198        

STOCKHOLDERS, PARTNERS, OFFICERS, MEMBERS, AND EMPLOYEES, AND      2,199        

MAY, IN THE EXERCISE OF THE SUPERINTENDENT'S DISCRETION, REFUSE    2,200        

TO ISSUE A LICENSE TO AN APPLICANT THAT IS NOT AN INDIVIDUAL IF                 

THE SUPERINTENDENT IS NOT SATISFIED THAT EACH OFFICER, EMPLOYEE,   2,202        

STOCKHOLDER, PARTNER, OR MEMBER WHO MAY MATERIALLY INFLUENCE THE   2,203        

APPLICANT'S CONDUCT MEETS THE STANDARDS SET FORTH IN THIS          2,204        

CHAPTER.                                                                        

      (E)  EXCEPT AS OTHERWISE PROVIDED IN THIS DIVISION, A        2,206        

LICENSE AS A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT   2,207        

BROKER EXPIRES ON THE LAST DAY OF MARCH NEXT AFTER ITS ISSUANCE    2,208        

OR CONTINUANCE.  A LICENSE AS A VIATICAL SETTLEMENT PROVIDER OR    2,210        

VIATICAL SETTLEMENT BROKER MAY, IN THE DISCRETION OF THE           2,211        

SUPERINTENDENT AND THE PAYMENT OF AN ANNUAL RENEWAL FEE                         

ESTABLISHED BY THE SUPERINTENDENT BY RULE ADOPTED IN ACCORDANCE    2,213        

WITH CHAPTER 119. OF THE REVISED CODE, BE CONTINUED PAST THE LAST  2,214        

DAY OF MARCH NEXT AFTER ITS ISSUE AND AFTER THE LAST DAY OF MARCH  2,215        

IN EACH SUCCEEDING YEAR.  FAILURE TO PAY THE RENEWAL FEE BY THE    2,216        

REQUIRED DATE RESULTS IN THE EXPIRATION OF THE LICENSE.            2,217        

      (F)  THE SUPERINTENDENT SHALL NOT ISSUE A LICENSE TO A       2,219        

NONRESIDENT APPLICANT, UNLESS EITHER OF THE FOLLOWING APPLIES:     2,220        

      (1)  THE APPLICANT FILES AND MAINTAINS A WRITTEN             2,222        

DESIGNATION OF AN AGENT FOR SERVICE OF PROCESS WITH THE            2,223        

SUPERINTENDENT.                                                                 

                                                          52     


                                                                 
      (2)  THE APPLICANT HAS FILED WITH THE SUPERINTENDENT THE     2,225        

APPLICANT'S WRITTEN IRREVOCABLE CONSENT THAT ANY ACTION AGAINST    2,226        

THE APPLICANT MAY BE COMMENCED AGAINST THE APPLICANT BY SERVICE    2,227        

OF PROCESS ON THE SUPERINTENDENT.                                  2,228        

      (G)  A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT   2,232        

BROKER SHALL PROVIDE TO THE SUPERINTENDENT NEW OR REVISED          2,233        

INFORMATION REGARDING ANY CHANGE IN ITS OFFICERS, TEN PER CENT OR  2,234        

MORE OF ITS STOCKHOLDERS, OR ITS PARTNERS, DIRECTORS, MEMBERS, OR  2,235        

DESIGNATED EMPLOYEES WITHIN THIRTY DAYS OF THE CHANGE.             2,236        

      (H)  ANY FEE COLLECTED UNDER THIS SECTION SHALL BE PAID      2,238        

INTO THE STATE TREASURY TO THE CREDIT OF THE DEPARTMENT OF         2,239        

INSURANCE OPERATING FUND CREATED BY SECTION 3901.021 OF THE        2,240        

REVISED CODE.                                                                   

      Sec. 3916.04.  IRRESPECTIVE OF THE MANNER IN WHICH THE       2,242        

VIATICAL SETTLEMENT BROKER IS COMPENSATED, A VIATICAL SETTLEMENT   2,243        

BROKER IS DEEMED TO REPRESENT ONLY THE VIATOR AND OWES A           2,244        

FIDUCIARY DUTY TO THE VIATOR TO ACT ACCORDING TO THE VIATOR'S      2,245        

INSTRUCTIONS AND IN THE BEST INTEREST OF THE VIATOR.                            

      Sec. 3916.05.  (A)  A PERSON SHALL NOT USE A VIATICAL        2,247        

SETTLEMENT CONTRACT FORM OR PROVIDE A DISCLOSURE STATEMENT FORM    2,248        

TO A VIATOR IN THIS STATE UNLESS THE VIATICAL SETTLEMENT CONTRACT  2,249        

FORM OR THE DISCLOSURE STATEMENT FORM IS FILED WITH AND APPROVED   2,250        

BY THE SUPERINTENDENT OF INSURANCE.  THE SUPERINTENDENT SHALL      2,251        

DISAPPROVE A VIATICAL SETTLEMENT CONTRACT FORM OR A DISCLOSURE     2,252        

STATEMENT FORM IF, IN THE SUPERINTENDENT'S OPINION, THE VIATICAL   2,253        

SETTLEMENT CONTRACT FORM, THE DISCLOSURE STATEMENT FORM, OR ANY    2,254        

PROVISION CONTAINED THEREIN IS UNREASONABLE, CONTRARY TO THE       2,255        

INTERESTS OF THE PUBLIC, OR OTHERWISE MISLEADING OR UNFAIR TO THE  2,256        

VIATOR.  AT THE SUPERINTENDENT'S DISCRETION, THE SUPERINTENDENT    2,258        

MAY REQUIRE THE SUBMISSION OF ADVERTISING MATERIAL TO WHICH        2,259        

SECTION 3916.17 OF THE REVISED CODE APPLIES.                                    

      (B)  THE SUPERINTENDENT MAY ADOPT RULES IN ACCORDANCE WITH   2,261        

CHAPTER 119. OF THE REVISED CODE TO ESTABLISH REASONABLE FEES FOR  2,262        

ANY SERVICE OR TRANSACTION PERFORMED BY THE DEPARTMENT OF          2,263        

                                                          53     


                                                                 
INSURANCE PURSUANT TO DIVISION (A) OF THIS SECTION.  ANY FEE       2,264        

COLLECTED PURSUANT TO THOSE RULES SHALL BE PAID INTO THE STATE     2,265        

TREASURY TO THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING    2,266        

FUND CREATED BY SECTION 3901.021 OF THE REVISED CODE.                           

      Sec. 3916.06.  (A)(1)  WITH EACH APPLICATION FOR A VIATICAL  2,268        

SETTLEMENT, A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT  2,269        

BROKER SHALL DISCLOSE AT LEAST THE FOLLOWING TO A VIATOR NO LATER  2,270        

THAN THE TIME ALL PARTIES SIGN THE APPLICATION FOR THE VIATICAL    2,271        

SETTLEMENT CONTRACT:                                                            

      (a)  THAT THERE ARE POSSIBLE ALTERNATIVES TO VIATICAL        2,273        

SETTLEMENT CONTRACTS, INCLUDING ANY ACCELERATED DEATH BENEFITS     2,275        

OFFERED UNDER THE VIATOR'S LIFE INSURANCE POLICY OR CERTIFICATE;   2,276        

      (b)  THAT SOME OR ALL OF THE PROCEEDS OF THE VIATICAL        2,278        

SETTLEMENT MAY BE SUBJECT TO FEDERAL INCOME TAXATION AND STATE     2,280        

FRANCHISE AND INCOME TAXATION, AND THAT ASSISTANCE SHOULD BE       2,281        

SOUGHT FROM A PROFESSIONAL TAX ADVISOR;                                         

      (c)  THAT THE PROCEEDS OF THE VIATICAL SETTLEMENT COULD BE   2,283        

SUBJECT TO THE CLAIMS OF CREDITORS;                                2,285        

      (d)  THAT RECEIPT OF THE PROCEEDS OF THE VIATICAL            2,287        

SETTLEMENT MAY ADVERSELY AFFECT THE VIATOR'S ELIGIBILITY FOR       2,289        

MEDICAL ASSISTANCE UNDER CHAPTER 5111. OF THE REVISED CODE OR      2,290        

OTHER GOVERNMENT BENEFITS OR ENTITLEMENTS, AND THAT ADVICE SHOULD  2,291        

BE OBTAINED FROM THE APPROPRIATE GOVERNMENT AGENCIES;                           

      (e)  THAT THE VIATOR HAS A RIGHT TO RESCIND THE VIATICAL     2,293        

SETTLEMENT CONTRACT FOR AT LEAST FIFTEEN CALENDAR DAYS AFTER THE   2,295        

VIATOR RECEIVES THE VIATICAL SETTLEMENT PROCEEDS, AS PROVIDED IN   2,297        

SECTION 3916.08 OF THE REVISED CODE.  IF THE INSURED DIES DURING   2,298        

THE RESCISSION PERIOD, THE SETTLEMENT CONTRACT SHALL BE DEEMED TO  2,299        

HAVE BEEN RESCINDED, SUBJECT TO REPAYMENT OF ALL VIATICAL          2,300        

SETTLEMENT PROCEEDS TO THE VIATICAL SETTLEMENT COMPANY.            2,301        

      (f)  THAT FUNDS WILL BE SENT TO THE VIATOR WITHIN THREE      2,303        

BUSINESS DAYS AFTER THE VIATICAL SETTLEMENT PROVIDER HAS RECEIVED  2,305        

ACKNOWLEDGMENT FROM THE INSURER OR GROUP ADMINISTRATOR THAT        2,306        

OWNERSHIP OF THE POLICY OR INTEREST IN THE CERTIFICATE HAS BEEN    2,307        

                                                          54     


                                                                 
TRANSFERRED AND THAT THE BENEFICIARY HAS BEEN DESIGNATED PURSUANT  2,308        

TO THE VIATICAL SETTLEMENT CONTRACT;                                            

      (g)  THAT ENTERING INTO A VIATICAL SETTLEMENT CONTRACT MAY   2,310        

CAUSE OTHER RIGHTS OR BENEFITS, INCLUDING CONVERSION RIGHTS AND    2,312        

WAIVER OF PREMIUM BENEFITS THAT MAY EXIST UNDER THE POLICY OR      2,313        

CERTIFICATE, TO BE FORFEITED BY THE VIATOR AND THAT ASSISTANCE     2,314        

SHOULD BE SOUGHT FROM A FINANCIAL ADVISOR.                                      

      (2)  THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL            2,316        

SETTLEMENT BROKER SHALL PROVIDE THE DISCLOSURES UNDER DIVISION     2,317        

(A)(1) OF THIS SECTION IN A SEPARATE DOCUMENT THAT IS SIGNED BY    2,318        

THE VIATOR AND THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL        2,319        

SETTLEMENT BROKER.                                                 2,320        

      (3)  DISCLOSURE TO A VIATOR UNDER DIVISION (A)(1) OF THIS    2,322        

SECTION SHALL INCLUDE DISTRIBUTION OF A BROCHURE DESCRIBING THE    2,324        

PROCESS OF VIATICAL SETTLEMENTS.  THE VIATICAL SETTLEMENT          2,325        

PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL USE THE NAIC'S FORM   2,326        

FOR THE BROCHURE UNLESS ONE IS DEVELOPED BY THE SUPERINTENDENT.    2,327        

      (4)  THE DISCLOSURE DOCUMENT UNDER DIVISION (A)(1) OF THIS   2,329        

SECTION SHALL CONTAIN THE FOLLOWING LANGUAGE:                      2,331        

      "ALL MEDICAL, FINANCIAL, OR PERSONAL INFORMATION SOLICITED   2,333        

OR OBTAINED BY A VIATICAL SETTLEMENT PROVIDER OR VIATICAL          2,334        

SETTLEMENT BROKER ABOUT AN INSURED, INCLUDING THE INSURED'S        2,335        

IDENTITY OR THE IDENTITY OF FAMILY MEMBERS, A SPOUSE, OR A         2,336        

SIGNIFICANT OTHER MAY BE DISCLOSED AS NECESSARY TO EFFECT THE      2,337        

VIATICAL SETTLEMENT BETWEEN THE VIATOR AND THE VIATICAL            2,338        

SETTLEMENT PROVIDER.  IF YOU ARE ASKED TO PROVIDE THIS             2,339        

INFORMATION, YOU WILL BE ASKED TO CONSENT TO THE DISCLOSURE.  THE  2,340        

INFORMATION MAY BE PROVIDED TO SOMEONE WHO BUYS THE POLICY OR                   

PROVIDES FUNDS FOR THE PURCHASE.  YOU MAY BE ASKED TO RENEW YOUR   2,341        

PERMISSION TO SHARE INFORMATION EVERY TWO YEARS."                  2,342        

      (B)(1)  A VIATICAL SETTLEMENT PROVIDER SHALL DISCLOSE AT     2,344        

LEAST THE FOLLOWING TO A VIATOR PRIOR TO THE DATE THE VIATICAL     2,346        

SETTLEMENT CONTRACT IS SIGNED BY ALL THE NECESSARY PARTIES:        2,347        

      (a)  THE AFFILIATION, IF ANY, BETWEEN THE VIATICAL           2,349        

                                                          55     


                                                                 
SETTLEMENT PROVIDER AND THE ISSUER OF THE INSURANCE POLICY OR      2,351        

CERTIFICATE TO BE VIATICATED;                                                   

      (b)  THE NAME, ADDRESS, AND TELEPHONE NUMBER OF THE          2,353        

VIATICAL SETTLEMENT PROVIDER;                                      2,354        

      (c)  REGARDING A VIATICAL SETTLEMENT BROKER, THE AMOUNT AND  2,356        

METHOD OF CALCULATING THE BROKER'S COMPENSATION.  AS USED IN THIS  2,358        

DIVISION, "COMPENSATION" INCLUDES ANYTHING OF VALUE PAID OR GIVEN  2,359        

TO A VIATICAL SETTLEMENT BROKER FOR THE PLACEMENT OF A POLICY OR   2,360        

CERTIFICATE.                                                       2,361        

      (d)  IF AN INSURANCE POLICY OR CERTIFICATE TO BE VIATICATED  2,363        

HAS BEEN ISSUED AS A JOINT POLICY OR CERTIFICATE OR INVOLVES       2,366        

FAMILY RIDERS OR ANY COVERAGE OF A LIFE OTHER THAN THE INSURED     2,368        

UNDER THE POLICY OR CERTIFICATE TO BE VIATICATED, THE POSSIBLE                  

LOSS OF COVERAGE ON THE OTHER LIVES UNDER THE POLICY OR            2,369        

CERTIFICATE AND THAT ADVICE SHOULD BE SOUGHT FROM THE VIATOR'S     2,370        

INSURANCE PRODUCER OR THE COMPANY ISSUING THE POLICY OR            2,371        

CERTIFICATE;                                                                    

      (e)  THE DOLLAR AMOUNT OF THE CURRENT DEATH BENEFIT PAYABLE  2,373        

TO THE VIATICAL SETTLEMENT PROVIDER UNDER THE POLICY OR            2,375        

CERTIFICATE, AND, IF KNOWN, THE AVAILABILITY OF ANY ADDITIONAL     2,376        

GUARANTEED INSURANCE BENEFITS, THE DOLLAR AMOUNT OF ANY            2,377        

ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS UNDER THE POLICY OR                 

CERTIFICATE, AND THE VIATICAL SETTLEMENT PROVIDER'S INTEREST IN    2,378        

THOSE BENEFITS.                                                    2,379        

      (f)  THE NAME, BUSINESS ADDRESS, AND TELEPHONE NUMBER OF     2,381        

THE INDEPENDENT THIRD-PARTY ESCROW AGENT, AND THE FACT THAT THE    2,382        

VIATOR OR OWNER MAY INSPECT OR RECEIVE COPIES OF THE RELEVANT      2,384        

ESCROW OR TRUST AGREEMENTS OR DOCUMENTS.                                        

      (2) THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT  2,386        

BROKER SHALL CONSPICUOUSLY DISPLAY THE DISCLOSURES UNDER DIVISION  2,387        

(B)(1) OF THIS SECTION IN A SEPARATE DOCUMENT SIGNED BY THE        2,388        

VIATOR AND THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL            2,389        

SETTLEMENT BROKER.                                                 2,390        

      (C)  IF THE PROVIDER TRANSFERS OWNERSHIP OR CHANGES THE      2,392        

                                                          56     


                                                                 
BENEFICIARY OF THE INSURANCE POLICY OR CERTIFICATE, THE PROVIDER   2,393        

SHALL COMMUNICATE THE CHANGE IN OWNERSHIP OR BENEFICIARY TO THE    2,394        

INSURED WITHIN TWENTY DAYS AFTER THE CHANGE.                       2,395        

      Sec. 3916.07.  (A)  A VIATICAL SETTLEMENT PROVIDER ENTERING  2,397        

INTO A VIATICAL SETTLEMENT CONTRACT SHALL FIRST OBTAIN ALL OF THE  2,399        

FOLLOWING:                                                                      

      (1)  IF THE VIATOR IS THE INSURED, A WRITTEN STATEMENT FROM  2,401        

AN ATTENDING PHYSICIAN THAT THE VIATOR IS OF SOUND MIND AND UNDER  2,402        

NO CONSTRAINT OR UNDUE INFLUENCE TO ENTER INTO A VIATICAL          2,403        

SETTLEMENT CONTRACT.  AS USED IN THIS DIVISION, "PHYSICIAN" MEANS  2,404        

A PERSON AUTHORIZED UNDER CHAPTER 4731. OF THE REVISED CODE TO     2,405        

PRACTICE MEDICINE AND SURGERY OR OSTEOPATHIC MEDICINE AND                       

SURGERY.                                                           2,406        

      (2)  A DOCUMENT IN WHICH THE INSURED CONSENTS IN WRITING,    2,408        

AS REQUIRED BY DIVISION (E) OF SECTION 3916.13 OF THE REVISED      2,409        

CODE, TO THE RELEASE OF THE INSURED'S MEDICAL RECORDS TO A         2,410        

VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER AND TO  2,411        

THE INSURANCE COMPANY THAT ISSUED THE LIFE INSURANCE POLICY OR     2,412        

CERTIFICATE COVERING THE LIFE OF THE INSURED.                                   

      (B)  WITHIN TWENTY DAYS AFTER A VIATOR EXECUTES DOCUMENTS    2,414        

NECESSARY TO TRANSFER ANY RIGHTS UNDER AN INSURANCE POLICY OR      2,415        

CERTIFICATE OR WITHIN TWENTY DAYS OF ENTERING ANY EXPRESSED OR     2,416        

IMPLIED AGREEMENT, OPTION, PROMISE, OR OTHER FORM OF               2,418        

UNDERSTANDING TO VIATICATE THE POLICY, THE VIATICAL SETTLEMENT     2,419        

PROVIDER SHALL GIVE WRITTEN NOTICE TO THE INSURER THAT ISSUED      2,420        

THAT INSURANCE POLICY OR CERTIFICATE THAT THE POLICY OR            2,421        

CERTIFICATE HAS OR WILL BECOME A VIATICATED POLICY OR                           

CERTIFICATE.  THE NOTICE SHALL BE ACCOMPANIED BY THE DOCUMENTS     2,422        

REQUIRED BY DIVISION (C) OF THIS SECTION.                          2,423        

      (C)  THE VIATICAL PROVIDER SHALL DELIVER A COPY OF THE       2,425        

MEDICAL RELEASE REQUIRED UNDER DIVISION (A)(2) OF THIS SECTION, A  2,426        

COPY OF THE VIATOR'S APPLICATION FOR THE VIATICAL SETTLEMENT       2,427        

CONTRACT, THE NOTICE REQUIRED UNDER DIVISION (B) OF THIS SECTION,  2,428        

AND A REQUEST FOR VERIFICATION OF COVERAGE TO THE INSURER THAT     2,429        

                                                          57     


                                                                 
ISSUED THE LIFE INSURANCE POLICY OR CERTIFICATE THAT IS THE        2,430        

SUBJECT OF THE VIATICAL TRANSACTION.  THE VIATICAL PROVIDER SHALL  2,431        

USE THE NAIC'S FORM FOR VERIFICATION UNLESS STANDARDS FOR          2,432        

VERIFICATION ARE DEVELOPED BY THE SUPERINTENDENT.                  2,433        

      (D)  THE INSURER SHALL RESPOND TO A REQUEST FOR              2,435        

VERIFICATION OF COVERAGE SUBMITTED ON AN APPROVED FORM BY A        2,436        

VIATICAL SETTLEMENT PROVIDER WITHIN THIRTY CALENDAR DAYS AFTER     2,437        

THE DATE THE REQUEST IS RECEIVED AND SHALL INDICATE WHETHER,       2,438        

BASED ON THE MEDICAL EVIDENCE AND DOCUMENTS PROVIDED, THE INSURER  2,439        

INTENDS TO PURSUE AN INVESTIGATION AT THAT TIME REGARDING THE      2,440        

VALIDITY OF THE LIFE INSURANCE CONTRACT OR CERTIFICATE THAT IS     2,441        

THE SUBJECT OF THE REQUEST.                                        2,442        

      (E)  PRIOR TO OR AT THE TIME OF EXECUTION OF THE VIATICAL    2,444        

SETTLEMENT CONTRACT, THE VIATICAL SETTLEMENT PROVIDER SHALL        2,445        

OBTAIN A WITNESSED DOCUMENT IN WHICH THE VIATOR CONSENTS TO THE    2,446        

VIATICAL SETTLEMENT CONTRACT, REPRESENTS THAT THE VIATOR HAS A     2,447        

FULL AND COMPLETE UNDERSTANDING OF THE VIATICAL SETTLEMENT         2,448        

CONTRACT AND A FULL AND COMPLETE UNDERSTANDING OF THE BENEFITS OF  2,449        

THE LIFE INSURANCE POLICY OR CERTIFICATE, AND ACKNOWLEDGES THAT    2,450        

THE VIATOR IS ENTERING INTO THE VIATICAL SETTLEMENT CONTRACT       2,451        

FREELY AND VOLUNTARILY AND, FOR PERSONS WITH A TERMINAL OR         2,452        

CHRONIC ILLNESS OR CONDITION, ACKNOWLEDGES THAT THE INSURED HAS A  2,453        

TERMINAL OR CHRONIC ILLNESS AND THAT THE TERMINAL OR CHRONIC       2,454        

ILLNESS OR CONDITION WAS DIAGNOSED AFTER THE LIFE INSURANCE        2,455        

POLICY OR CERTIFICATE WAS ISSUED.                                  2,456        

      (F)  IF A VIATICAL SETTLEMENT BROKER PERFORMS ANY OF THE     2,458        

ACTIVITIES SPECIFIED IN THIS SECTION ON BEHALF OF THE VIATICAL     2,459        

SETTLEMENT PROVIDER, THE PROVIDER IS DEEMED TO HAVE FULFILLED THE  2,460        

REQUIREMENTS OF THIS SECTION.                                      2,461        

      (G)  ALL MEDICAL INFORMATION SOLICITED OR OBTAINED BY ANY    2,463        

LICENSEE SHALL BE SUBJECT TO THE APPLICABLE PROVISIONS OF STATE    2,464        

LAW RELATING TO CONFIDENTIALITY OF MEDICAL INFORMATION.            2,465        

      Sec. 3916.08.  EACH VIATICAL SETTLEMENT CONTRACT ENTERED     2,467        

INTO IN THIS STATE SHALL PROVIDE THE VIATOR WITH AN UNCONDITIONAL  2,468        

                                                          58     


                                                                 
RIGHT TO RESCIND THE CONTRACT FOR AT LEAST FIFTEEN CALENDAR DAYS   2,469        

AFTER THE RECEIPT OF THE VIATICAL SETTLEMENT PROCEEDS.  IF THE     2,471        

INSURED DIES DURING THE RESCISSION PERIOD, THE VIATICAL                         

SETTLEMENT CONTRACT IS DEEMED TO HAVE BEEN RESCINDED, SUBJECT TO   2,472        

REPAYMENT OF ALL VIATICAL SETTLEMENT PROCEEDS TO THE VIATICAL      2,473        

SETTLEMENT PROVIDER.  IF A VIATICAL SETTLEMENT CONTRACT IS         2,475        

RESCINDED BY THE VIATOR PURSUANT TO THIS SECTION, OWNERSHIP OF     2,476        

THE INSURANCE POLICY OR CERTIFICATE REVERTS TO THE VIATOR OR TO    2,477        

THE VIATOR'S ESTATE IF THE VIATOR IS DECEASED, IRRESPECTIVE OF     2,478        

ANY TRANSFER OF OWNERSHIP OF THE POLICY OR CERTIFICATE BY THE      2,479        

VIATOR, VIATICAL SETTLEMENT PROVIDER, OR ANY OTHER PERSON.         2,480        

      Sec. 3916.09.  (A)  THE VIATICAL SETTLEMENT PROVIDER SHALL   2,482        

INSTRUCT THE VIATOR TO SEND THE EXECUTED DOCUMENTS REQUIRED TO     2,484        

EFFECT THE CHANGE IN OWNERSHIP, ASSIGNMENT, OR CHANGE IN           2,486        

BENEFICIARY DIRECTLY TO THE INDEPENDENT ESCROW AGENT.  WITHIN                   

THREE BUSINESS DAYS AFTER THE DATE THE ESCROW AGENT RECEIVES THE   2,488        

DOCUMENTS, OR FROM THE DATE THE VIATICAL SETTLEMENT PROVIDER       2,489        

RECEIVES THE DOCUMENTS IF THE VIATOR ERRONEOUSLY PROVIDES THE      2,490        

DOCUMENTS DIRECTLY TO THE PROVIDER, THE PROVIDER SHALL PAY OR      2,491        

TRANSFER THE PROCEEDS OF THE VIATICAL SETTLEMENT TO AN ESCROW OR   2,492        

TRUST ACCOUNT IN A STATE OR FEDERALLY CHARTERED FINANCIAL          2,493        

INSTITUTION WHOSE DEPOSITS ARE INSURED BY THE FEDERAL DEPOSIT      2,494        

INSURANCE CORPORATION.  UPON PAYMENT OF THE SETTLEMENT PROCEEDS    2,496        

INTO THE ESCROW OR TRUST ACCOUNT, THE ESCROW AGENT OR TRUSTEE      2,497        

SHALL DELIVER THE ORIGINAL CHANGE IN OWNERSHIP, ASSIGNMENT, OR     2,498        

CHANGE IN BENEFICIARY FORMS TO THE VIATICAL SETTLEMENT PROVIDER                 

OR RELATED PROVIDER TRUST.  UPON THE LICENSED PROVIDER'S RECEIPT   2,499        

OF THE ACKNOWLEDGMENT OF THE PROPERLY COMPLETED TRANSFER OF        2,500        

OWNERSHIP, ASSIGNMENT, OR DESIGNATION OF BENEFICIARY FROM THE      2,501        

INSURANCE COMPANY, THE LICENSED PROVIDER SHALL INSTRUCT THE        2,502        

ESCROW AGENT TO PAY THE SETTLEMENT PROCEEDS TO THE VIATOR.  THE    2,503        

ESCROW AGENT SHALL MAKE PAYMENT WITHIN THREE BUSINESS DAYS OF THE  2,504        

DATE THE PROVIDER RECEIVED THE ACKNOWLEDGED FORMS FROM THE         2,505        

INSURANCE COMPANY.                                                              

                                                          59     


                                                                 
      (B)  FAILURE TO TRANSFER THE PROCEEDS TO THE VIATOR WITHIN   2,507        

THE PERIOD OF TIME DISCLOSED PURSUANT TO DIVISION (A)(1)(f) OF     2,509        

SECTION 3916.06 OF THE REVISED CODE RENDERS THE VIATICAL                        

SETTLEMENT CONTRACT VOIDABLE BY THE VIATOR FOR LACK OF             2,511        

CONSIDERATION UNTIL THE TIME CONSIDERATION IS TENDERED TO AND      2,512        

ACCEPTED BY THE VIATOR.  IF A VIATICAL SETTLEMENT CONTRACT IS      2,514        

VOIDED BY THE VIATOR PURSUANT TO THIS DIVISION, OWNERSHIP OF THE   2,515        

INSURANCE POLICY OR CERTIFICATE REVERTS TO THE VIATOR OR TO THE    2,516        

VIATOR'S ESTATE IF THE VIATOR IS DECEASED, IRRESPECTIVE OF ANY                  

TRANSFER OF OWNERSHIP OF THE POLICY OR CERTIFICATE BY THE VIATOR,  2,517        

VIATICAL SETTLEMENT PROVIDER, OR ANY OTHER PERSON.                 2,518        

      Sec. 3916.10.  AFTER A VIATICAL SETTLEMENT HAS OCCURRED,     2,520        

CONTACT WITH THE INSURED FOR THE PURPOSE OF DETERMINING THE        2,522        

HEALTH STATUS OF THE INSURED BY THE VIATICAL SETTLEMENT PROVIDER   2,523        

OR VIATICAL SETTLEMENT BROKER SHALL BE MADE ONLY BY THE VIATICAL   2,524        

SETTLEMENT PROVIDER OR BROKER LICENSED IN THIS STATE.  THE         2,525        

VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL   2,526        

NOT CONTACT THE INSURED FOR THE PURPOSE OF DETERMINING THE         2,527        

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  2,528        

ONCE PER MONTH IF THE INSURED HAS A LIFE EXPECTANCY OF ONE YEAR    2,529        

OR LESS.  THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT  2,530        

BROKER SHALL EXPLAIN THE PROCEDURE FOR MAKING THESE CONTACTS AT    2,531        

THE TIME THE VIATICAL SETTLEMENT CONTRACT IS ENTERED INTO.         2,532        

      THE LIMITATIONS SET FORTH IN THIS SECTION DO NOT APPLY TO    2,534        

CONTACTS MADE WITH AN INSURED UNDER A VIATICATED POLICY FOR        2,535        

PURPOSES OTHER THAN TO DETERMINE THE INSURED'S HEALTH STATUS.      2,536        

      VIATICAL SETTLEMENT PROVIDERS AND VIATICAL SETTLEMENT        2,538        

BROKERS ARE RESPONSIBLE FOR THE ACTIONS OF THEIR AUTHORIZED        2,539        

REPRESENTATIVES, FOR THE PURPOSES OF THIS SECTION.                 2,540        

      Sec. 3916.11.  (A)(1)  A LICENSEE UNDER THIS CHAPTER SHALL,  2,542        

FOR FIVE YEARS, RETAIN COPIES OF ALL OF THE FOLLOWING:             2,543        

      (a)  ALL PROPOSED, OFFERED, OR EXECUTED CONTRACTS, PURCHASE  2,546        

AGREEMENTS, UNDERWRITING DOCUMENTS, POLICY FORMS, AND              2,547        

                                                          60     


                                                                 
APPLICATIONS FROM THE DATE OF THE PROPOSAL, OFFER, OR EXECUTION    2,549        

OF THE CONTRACT OR PURCHASE AGREEMENT, WHICHEVER IS LATER;         2,550        

      (b)  ALL CHECKS, DRAFTS, OR OTHER EVIDENCE AND               2,552        

DOCUMENTATION RELATED TO THE PAYMENT, TRANSFER, DEPOSIT, OR        2,554        

RELEASE OF FUNDS FROM THE DATE OF THE TRANSACTION;                 2,555        

      (c)  ALL OTHER RECORDS AND DOCUMENTS RELATED TO THE          2,557        

REQUIREMENTS OF THIS CHAPTER.                                      2,559        

      (2)  THIS SECTION DOES NOT RELIEVE A PERSON OF THE           2,561        

OBLIGATION TO PRODUCE THE DOCUMENTS DESCRIBED IN DIVISION (A)(1)   2,562        

OF THIS SECTION TO THE SUPERINTENDENT AFTER THE RETENTION PERIOD   2,563        

SPECIFIED IN THAT DIVISION HAS EXPIRED IF THE PERSON HAS RETAINED               

THE DOCUMENTS.                                                     2,564        

      (3)  RECORDS REQUIRED TO BE RETAINED BY THIS SECTION MUST    2,566        

BE LEGIBLE AND COMPLETE AND MAY BE RETAINED IN PAPER, PHOTOGRAPH,  2,567        

MICROPROCESS, MAGNETIC, MECHANICAL, OR ELECTRONIC MEDIA, OR BY     2,568        

ANY PROCESS THAT ACCURATELY REPRODUCES OR FORMS A DURABLE MEDIUM   2,569        

FOR THE REPRODUCTION OF A RECORD.                                  2,570        

      (B)(1)  UPON DETERMINING THAT AN EXAMINATION SHOULD BE       2,572        

CONDUCTED, SUBJECT TO DIVISION (E) OF THIS SECTION, THE            2,573        

SUPERINTENDENT SHALL APPOINT ONE OR MORE EXAMINERS TO PERFORM THE  2,574        

EXAMINATION AND INSTRUCT THEM AS TO THE SCOPE OF THE EXAMINATION.  2,575        

THE SUPERINTENDENT MAY EMPLOY ANY GUIDELINES OR PROCEDURES FOR     2,576        

PURPOSES OF THIS DIVISION THAT THE SUPERINTENDENT CONSIDERS        2,577        

APPROPRIATE.                                                                    

      (2)  EVERY LICENSEE OR PERSON FROM WHOM INFORMATION IS       2,579        

SOUGHT, AND ALL OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS OF ANY  2,580        

LICENSEE OR PERSON FROM WHOM INFORMATION IS SOUGHT, SHALL PROVIDE  2,581        

TO THE EXAMINERS TIMELY, CONVENIENT, AND FREE ACCESS AT ALL        2,582        

REASONABLE HOURS AT THE LICENSEE'S OR PERSON'S OFFICES TO ALL      2,583        

BOOKS, RECORDS, ACCOUNTS, PAPERS, DOCUMENTS, ASSETS, AND COMPUTER  2,584        

OR OTHER RECORDINGS RELATING TO THE PROPERTY, ASSETS, BUSINESS,    2,585        

AND AFFAIRS OF THE LICENSEE BEING EXAMINED. THE OFFICERS,          2,586        

DIRECTORS, EMPLOYEES, AND AGENTS OF THE LICENSEE OR PERSON SHALL   2,587        

FACILITATE THE EXAMINATION AND AID IN THE EXAMINATION SO FAR AS    2,588        

                                                          61     


                                                                 
IT IS IN THEIR POWER TO DO SO.                                     2,589        

      THE REFUSAL OF A LICENSEE, BY ITS OFFICERS, DIRECTORS,       2,591        

EMPLOYEES, OR AGENTS, TO SUBMIT TO EXAMINATION OR TO COMPLY WITH   2,592        

ANY REASONABLE WRITTEN REQUEST OF THE SUPERINTENDENT SHALL BE      2,593        

GROUNDS FOR SUSPENSION, REVOCATION, DENIAL OF ISSUANCE, OR         2,594        

NONRENEWAL OF ANY LICENSE OR AUTHORITY HELD BY THE LICENSEE TO     2,595        

ENGAGE IN THE VIATICAL SETTLEMENT BUSINESS OR OTHER BUSINESS       2,596        

SUBJECT TO THE SUPERINTENDENT'S JURISDICTION.  ANY PROCEEDINGS     2,597        

FOR SUSPENSION, REVOCATION, DENIAL, OR NONRENEWAL OF ANY LICENSE   2,598        

OR AUTHORITY IS SUBJECT TO CHAPTER 119. OF THE REVISED CODE.       2,599        

      (3)  THE SUPERINTENDENT HAS THE POWER TO ISSUE SUBPOENAS,    2,601        

TO ADMINISTER OATHS, AND TO EXAMINE UNDER OATH ANY PERSON AS TO    2,602        

ANY MATTER PERTINENT TO THE EXAMINATION. UPON THE FAILURE OR       2,603        

REFUSAL OF A PERSON TO OBEY A SUBPOENA, THE SUPERINTENDENT MAY     2,604        

PETITION A COURT OF COMPETENT JURISDICTION, AND, UPON PROPER       2,605        

SHOWING, THE COURT MAY ENTER AN ORDER COMPELLING THE WITNESS TO    2,606        

APPEAR AND TESTIFY OR PRODUCE DOCUMENTARY EVIDENCE. FAILURE TO     2,607        

OBEY THE COURT ORDER SHALL BE PUNISHABLE AS CONTEMPT OF COURT.     2,608        

      (4)  WHEN MAKING AN EXAMINATION UNDER THIS CHAPTER, THE      2,610        

SUPERINTENDENT MAY RETAIN ATTORNEYS, APPRAISERS, INDEPENDENT       2,611        

ACTUARIES, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, OR OTHER      2,612        

PROFESSIONALS AND SPECIALISTS AS EXAMINERS, AND THE LICENSEE THAT  2,613        

IS THE SUBJECT OF THE EXAMINATION SHALL BEAR THE COST OF THOSE     2,614        

EXAMINERS.  EXAMINERS WHO ARE APPOINTED BY THE SUPERINTENDENT,     2,615        

BUT WHO ARE NOT EMPLOYEES OF THE DEPARTMENT OF INSURANCE, SHALL    2,616        

BE COMPENSATED FOR THEIR WORK, TRAVEL, AND LIVING EXPENSES AT      2,617        

REASONABLE AND CUSTOMARY RATES.                                    2,618        

      (5)  NOTHING CONTAINED IN THIS CHAPTER LIMITS THE            2,620        

SUPERINTENDENT'S AUTHORITY TO TERMINATE OR SUSPEND AN EXAMINATION  2,621        

IN ORDER TO PURSUE OTHER LEGAL OR REGULATORY ACTION PURSUANT TO    2,622        

THE INSURANCE LAWS OF THIS STATE. FINDINGS OF FACT AND             2,623        

CONCLUSIONS MADE PURSUANT TO ANY EXAMINATION SHALL BE PRIMA-FACIE  2,624        

EVIDENCE IN ANY LEGAL OR REGULATORY ACTION.                        2,625        

      (6)  NOTHING CONTAINED IN THIS CHAPTER LIMITS THE            2,627        

                                                          62     


                                                                 
SUPERINTENDENT'S AUTHORITY TO USE AND, IF APPROPRIATE, TO MAKE     2,628        

PUBLIC ANY FINAL OR PRELIMINARY EXAMINATION REPORT, ANY EXAMINER   2,629        

OR LICENSEE WORKING PAPERS OR OTHER DOCUMENTS, OR ANY OTHER        2,630        

INFORMATION DISCOVERED OR DEVELOPED DURING THE COURSE OF ANY       2,631        

EXAMINATION IN THE FURTHERANCE OF ANY LEGAL OR REGULATORY ACTION   2,632        

THAT THE SUPERINTENDENT, IN THE SUPERINTENDENT'S SOLE DISCRETION,  2,633        

CONSIDERS APPROPRIATE.                                                          

      (C)(1)  EXAMINATION REPORTS SHALL BE COMPRISED OF ONLY       2,635        

FACTS APPEARING UPON THE BOOKS, RECORDS, OR OTHER DOCUMENTS OF     2,636        

THE LICENSEE, ITS AGENTS, OR OTHER PERSONS EXAMINED, OR AS         2,637        

ASCERTAINED FROM THE TESTIMONY OF ITS OFFICERS, AGENTS, OR OTHER   2,638        

PERSONS EXAMINED CONCERNING ITS AFFAIRS, AND THE CONCLUSIONS AND   2,639        

RECOMMENDATIONS THAT THE EXAMINERS FIND REASONABLY WARRANTED FROM  2,640        

THE FACTS.                                                         2,641        

      (2)  UPON COMPLETION OF THE EXAMINATION, THE EXAMINER IN     2,643        

CHARGE SHALL FILE WITH THE SUPERINTENDENT A VERIFIED WRITTEN       2,644        

REPORT OF EXAMINATION. UPON RECEIPT OF THE VERIFIED REPORT, THE    2,645        

SUPERINTENDENT SHALL TRANSMIT THE REPORT TO THE LICENSEE           2,646        

EXAMINED, TOGETHER WITH A NOTICE THAT SHALL AFFORD THE LICENSEE    2,647        

EXAMINED A REASONABLE OPPORTUNITY OF NOT MORE THAN THIRTY DAYS     2,648        

FROM RECEIPT OF THE REPORT TO MAKE A WRITTEN SUBMISSION OR         2,649        

REBUTTAL WITH RESPECT TO ANY MATTERS CONTAINED IN THE EXAMINATION  2,650        

REPORT.                                                                         

      (3) IF THE SUPERINTENDENT DETERMINES THAT REGULATORY ACTION  2,652        

IS APPROPRIATE AS A RESULT OF AN EXAMINATION, THE SUPERINTENDENT   2,653        

MAY INITIATE ANY PROCEEDINGS OR ACTIONS PROVIDED BY LAW.           2,654        

      (D)(1)  NAMES AND INDIVIDUAL IDENTIFICATION DATA FOR ALL     2,656        

VIATORS SHALL BE CONSIDERED PRIVATE AND CONFIDENTIAL INFORMATION   2,657        

AND SHALL NOT BE DISCLOSED BY THE SUPERINTENDENT, UNLESS REQUIRED               

BY LAW.                                                            2,658        

      (2)  EXCEPT AS OTHERWISE PROVIDED IN THIS CHAPTER OR IN THE  2,660        

LAW OF ANOTHER STATE OR JURISDICTION THAT IS SUBSTANTIALLY         2,661        

SIMILAR TO THIS CHAPTER, ALL EXAMINATION REPORTS, WORKING PAPERS,  2,662        

RECORDED INFORMATION, DOCUMENTS, AND COPIES OF THOSE REPORTS,      2,663        

                                                          63     


                                                                 
PAPERS, INFORMATION, DOCUMENTS, AND COPIES PRODUCED BY, OBTAINED   2,664        

BY, OR DISCLOSED TO THE SUPERINTENDENT OR TO ANY OTHER PERSON IN   2,665        

THE COURSE OF AN EXAMINATION MADE UNDER THIS CHAPTER OR UNDER THE  2,666        

LAW OF ANOTHER STATE OR JURISDICTION THAT IS SUBSTANTIALLY         2,667        

SIMILAR TO THIS CHAPTER, OR IN THE COURSE OF THE SUPERINTENDENT'S  2,668        

ANALYSIS OR INVESTIGATION OF THE FINANCIAL CONDITION OR MARKET     2,669        

CONDUCT OF A LICENSEE ARE CONFIDENTIAL BY LAW AND PRIVILEGED, ARE  2,670        

NOT A PUBLIC RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF    2,671        

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,           2,672        

MATERIALS, OR OTHER INFORMATION IN THE FURTHERANCE OF ANY          2,673        

REGULATORY OR LEGAL ACTION BROUGHT AS PART OF THE                  2,674        

SUPERINTENDENT'S OFFICIAL DUTIES.                                               

      (3)  DOCUMENTS, MATERIALS, OR OTHER INFORMATION, INCLUDING,  2,676        

BUT NOT LIMITED TO, ALL WORKING PAPERS, AND COPIES OF WORKING      2,677        

PAPERS, IN THE POSSESSION OR CONTROL OF THE NAIC AND ITS           2,678        

AFFILIATES AND SUBSIDIARIES ARE CONFIDENTIAL BY LAW AND            2,679        

PRIVILEGED, ARE NOT SUBJECT TO SUBPOENA, AND ARE NOT SUBJECT TO                 

DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION,   2,680        

IF EITHER OF THE FOLLOWING APPLIES:                                2,681        

      (a)  THEY ARE CREATED, PRODUCED, OR OBTAINED BY OR           2,683        

DISCLOSED TO THE NAIC AND ITS AFFILIATES AND SUBSIDIARIES IN THE   2,684        

COURSE OF ASSISTING AN EXAMINATION MADE UNDER THIS CHAPTER OR      2,685        

ASSISTING THE SUPERINTENDENT OR THE COMPARABLE OFFICIAL IN         2,686        

ANOTHER STATE IN THE ANALYSIS OR INVESTIGATION OF THE FINANCIAL    2,687        

CONDITION OR MARKET CONDUCT OF A LICENSEE.                         2,688        

      (b) THE SUPERINTENDENT OR THE COMPARABLE OFFICIAL IN         2,690        

ANOTHER STATE DISCLOSES THEM TO THE NAIC AND ITS AFFILIATES AND    2,692        

SUBSIDIARIES UNDER DIVISION (D)(5) OF THIS SECTION OR UNDER A                   

COMPARABLE PROVISION IN THE LAW OF THE OTHER STATE.                2,693        

      (4)  NEITHER THE SUPERINTENDENT NOR ANY PERSON THAT          2,695        

RECEIVED THE DOCUMENTS, MATERIAL, OR OTHER INFORMATION WHILE       2,696        

ACTING UNDER THE AUTHORITY OF THE SUPERINTENDENT, INCLUDING THE    2,697        

                                                          64     


                                                                 
NAIC AND ITS AFFILIATES AND SUBSIDIARIES, SHALL BE PERMITTED TO    2,698        

TESTIFY IN ANY PRIVATE CIVIL ACTION CONCERNING ANY CONFIDENTIAL    2,699        

DOCUMENTS, MATERIALS, OR INFORMATION SUBJECT TO DIVISION (D)(1)    2,700        

OF THIS SECTION.                                                   2,701        

      (5)(a)  IN ORDER TO ASSIST IN THE PERFORMANCE OF THE         2,703        

SUPERINTENDENT'S DUTIES, THE SUPERINTENDENT MAY DO ANY OF THE      2,704        

FOLLOWING:                                                         2,705        

      (i)  SHARE DOCUMENTS, MATERIALS, OR OTHER INFORMATION,       2,707        

INCLUDING THE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS,    2,708        

OR INFORMATION SUBJECT TO DIVISION (D)(1) OF THIS SECTION, WITH    2,709        

OTHER STATE, FEDERAL, AND INTERNATIONAL REGULATORY AGENCIES, WITH  2,710        

THE NAIC AND ITS AFFILIATES AND SUBSIDIARIES, AND WITH STATE,      2,712        

FEDERAL, AND INTERNATIONAL LAW ENFORCEMENT AUTHORITIES, IF THE     2,713        

RECIPIENT AGREES TO MAINTAIN THE CONFIDENTIALITY AND PRIVILEGED    2,714        

STATUS OF THE DOCUMENT, MATERIAL, COMMUNICATION, OR OTHER          2,715        

INFORMATION;                                                                    

      (ii)  RECEIVE DOCUMENTS, MATERIALS, COMMUNICATIONS, OR       2,717        

INFORMATION, INCLUDING OTHERWISE CONFIDENTIAL AND PRIVILEGED       2,718        

DOCUMENTS, MATERIALS, OR INFORMATION, FROM THE NAIC AND ITS        2,719        

AFFILIATES AND SUBSIDIARIES, AND FROM REGULATORY AND LAW           2,720        

ENFORCEMENT OFFICIALS OF OTHER FOREIGN OR DOMESTIC JURISDICTIONS;  2,721        

      (iii)  ENTER INTO AGREEMENTS GOVERNING SHARING AND USE OF    2,723        

INFORMATION CONSISTENT WITH THIS SECTION.                          2,724        

      (b)  THE SUPERINTENDENT SHALL MAINTAIN AS CONFIDENTIAL OR    2,726        

PRIVILEGED ANY DOCUMENT, MATERIAL, OR INFORMATION RECEIVED UNDER   2,727        

DIVISION (D)(5)(a)(ii) OF THIS SECTION WITH NOTICE OR THE          2,728        

UNDERSTANDING THAT IT IS CONFIDENTIAL OR PRIVILEGED UNDER THE      2,729        

LAWS OF THE JURISDICTION THAT IS THE SOURCE OF THE DOCUMENT,       2,730        

MATERIAL, OR INFORMATION.                                                       

      (6)  NO WAIVER OF ANY APPLICABLE PRIVILEGE OR CLAIM OF       2,732        

CONFIDENTIALITY IN THE DOCUMENTS, MATERIALS, OR INFORMATION SHALL  2,733        

OCCUR AS A RESULT OF DISCLOSURE TO THE SUPERINTENDENT UNDER THIS   2,734        

SECTION OR AS A RESULT OF SHARING AS AUTHORIZED IN DIVISION        2,735        

(D)(5) OF THIS SECTION.                                            2,736        

                                                          65     


                                                                 
      (7)  A PRIVILEGE ESTABLISHED UNDER THE LAW OF ANY STATE OR   2,738        

JURISDICTION THAT IS SUBSTANTIALLY SIMILAR TO THE PRIVILEGE        2,739        

ESTABLISHED UNDER DIVISION (D) OF THIS SECTION SHALL BE AVAILABLE  2,740        

AND ENFORCED IN ANY PROCEEDING IN, AND IN ANY COURT OF, THIS       2,741        

STATE.                                                                          

      (8)  NOTHING CONTAINED IN THIS CHAPTER PREVENTS OR           2,743        

PROHIBITS THE SUPERINTENDENT FROM DISCLOSING THE CONTENT OF AN     2,744        

EXAMINATION REPORT, PRELIMINARY EXAMINATION REPORT OR RESULTS, OR  2,745        

ANY MATTER RELATING TO THOSE REPORTS OR RESULTS, TO THE OFFICIAL   2,746        

OF ANY OTHER STATE OR COUNTRY THAT IS COMPARABLE TO THE            2,747        

SUPERINTENDENT, OR TO LAW ENFORCEMENT OFFICIALS OF THIS OR ANY     2,748        

OTHER STATE OR AGENCY OF THE FEDERAL GOVERNMENT AT ANY TIME, OR    2,749        

TO THE NAIC, IF THE AGENCY OR OFFICE RECEIVING THE REPORT OR       2,750        

MATTERS RELATING TO IT AGREES IN WRITING TO HOLD IT CONFIDENTIAL                

AND IN A MANNER CONSISTENT WITH THIS CHAPTER.                      2,751        

      (E)(1) THE SUPERINTENDENT MAY NOT APPOINT AN EXAMINER IF     2,753        

THE EXAMINER, EITHER DIRECTLY OR INDIRECTLY, HAS A CONFLICT OF     2,754        

INTEREST OR IS AFFILIATED WITH THE MANAGEMENT OF, OR OWNS A                     

PECUNIARY INTEREST IN, ANY PERSON SUBJECT TO EXAMINATION UNDER     2,755        

THIS CHAPTER.  THIS DIVISION DOES NOT AUTOMATICALLY PRECLUDE ANY   2,756        

OF THE FOLLOWING FROM BEING AN EXAMINER:                           2,757        

      (a)  A VIATOR;                                               2,759        

      (b)  AN INSURED IN A VIATICATED INSURANCE POLICY OR          2,761        

CERTIFICATE;                                                                    

      (c)  A BENEFICIARY IN AN INSURANCE POLICY OR CERTIFICATE     2,763        

THAT IS PROPOSED TO BE VIATICATED.                                 2,764        

      (2)  NOTWITHSTANDING THE REQUIREMENTS OF DIVISION (E) OF     2,766        

THIS SECTION, THE SUPERINTENDENT MAY RETAIN FROM TIME TO TIME, ON  2,767        

AN INDIVIDUAL BASIS, QUALIFIED ACTUARIES, CERTIFIED PUBLIC                      

ACCOUNTANTS, OR OTHER SIMILAR INDIVIDUALS WHO ARE INDEPENDENTLY    2,768        

PRACTICING THEIR PROFESSIONS, EVEN THOUGH THESE PERSONS MAY FROM   2,769        

TIME TO TIME BE SIMILARLY EMPLOYED OR RETAINED BY PERSONS SUBJECT  2,770        

TO EXAMINATION UNDER THIS CHAPTER.                                 2,771        

      (F)(1)  AS USED IN DIVISION (F) OF THIS SECTION, "EXPENSES"  2,773        

                                                          66     


                                                                 
INCLUDE ALL OF THE FOLLOWING:                                      2,774        

      (a)  COMPENSATION OF EXAMINERS FOR EACH DAY OR PORTION OF A  2,776        

DAY WORKED;                                                        2,777        

      (b)  TRAVEL AND LIVING EXPENSES OF EXAMINERS;                2,779        

      (c)  ALL OTHER INCIDENTAL EXPENSES INCURRED BY OR ON BEHALF  2,781        

OF EXAMINERS;                                                      2,782        

      (d)  AN ALLOCATED SHARE OF ALL EXPENSES NOT DESCRIBED IN     2,784        

DIVISION (F)(1), (2), OR (3) OF THIS SECTION THAT ARE NECESSARILY  2,785        

INCURRED IN THE PERFORMANCE OF A MARKET CONDUCT EXAMINATION,       2,786        

INCLUDING THE EXPENSES OF DIRECT OVERHEAD AND SUPPORT STAFF FOR    2,787        

EXAMINERS.                                                                      

      (2)  WHEN A MARKET CONDUCT EXAMINATION IS MADE OF AN         2,789        

INSURER, THE INSURER SHALL PAY THE EXPENSES OF THE EXAMINATION.    2,790        

THE EXPENSES OF AN EXAMINATION INCLUDE THOSE INCURRED ON OR AFTER  2,791        

THE DATE ON WHICH THE SUPERINTENDENT NOTIFIES THE INSURER OF THE   2,792        

EXAMINATION THROUGH THE ISSUANCE OF THE FINAL EXAMINATION REPORT.  2,793        

      (3)  UPON AN INSURER'S FAILURE TO COMPLY WITH DIVISION (A)   2,795        

OF THIS SECTION, THE SUPERINTENDENT MAY INITIATE PROCEEDINGS IN    2,796        

ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE TO REVOKE,        2,797        

SUSPEND, OR REFUSE TO RENEW THE CERTIFICATE OF AUTHORITY OR        2,798        

LICENSE OF THE INSURER.  ADDITIONALLY, THE SUPERINTENDENT MAY                   

REQUEST THE ATTORNEY GENERAL TO INITIATE A CIVIL ACTION IN THE     2,799        

COURT OF COMMON PLEAS OF FRANKLIN COUNTY TO OBTAIN AND ENFORCE A   2,800        

JUDGMENT FOR EXPENSES INCURRED IN THE PERFORMANCE OF A MARKET      2,801        

CONDUCT EXAMINATION.                                                            

      (G)(1)  NO CAUSE OF ACTION SHALL ARISE NOR SHALL ANY         2,803        

LIABILITY BE IMPOSED AGAINST THE SUPERINTENDENT, ANY AUTHORIZED    2,804        

REPRESENTATIVE OF THE SUPERINTENDENT, OR ANY EXAMINER APPOINTED                 

BY THE SUPERINTENDENT FOR ANY STATEMENTS MADE OR CONDUCT           2,805        

PERFORMED IN GOOD FAITH WHILE CARRYING OUT THE PROVISIONS OF THIS  2,806        

CHAPTER.                                                                        

      (2)  NO CAUSE OF ACTION SHALL ARISE NOR SHALL ANY LIABILITY  2,808        

BE IMPOSED AGAINST ANY PERSON FOR THE ACT OF COMMUNICATING OR      2,809        

DELIVERING INFORMATION OR DATA TO THE SUPERINTENDENT, ANY          2,810        

                                                          67     


                                                                 
AUTHORIZED REPRESENTATIVE OF THE SUPERINTENDENT, OR ANY EXAMINER   2,811        

APPOINTED BY THE SUPERINTENDENT PURSUANT TO AN EXAMINATION MADE    2,812        

UNDER THIS CHAPTER, IF THE ACT OF COMMUNICATION OR DELIVERY WAS    2,813        

PERFORMED IN GOOD FAITH AND WITHOUT FRAUDULENT INTENT OR THE       2,814        

INTENT TO DECEIVE.  DIVISION (G)(2) OF THIS SECTION DOES NOT       2,815        

ABROGATE OR MODIFY IN ANY WAY ANY COMMON LAW OR STATUTORY          2,816        

PRIVILEGE OR IMMUNITY PREVIOUSLY ENJOYED BY ANY PERSON IDENTIFIED  2,817        

IN DIVISION (G)(1) OF THIS SECTION.                                2,818        

      (3)  A PERSON IDENTIFIED IN DIVISION (G)(1) OR (2) OF THIS   2,820        

SECTION SHALL BE ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND       2,821        

COSTS IF THE PERSON IS THE PREVAILING PARTY IN A CIVIL ACTION FOR  2,822        

LIBEL, SLANDER, OR ANY OTHER RELEVANT TORT ARISING OUT OF          2,823        

ACTIVITIES IN CARRYING OUT THE PROVISIONS OF THIS CHAPTER AND THE  2,824        

PARTY BRINGING THE ACTION WAS NOT SUBSTANTIALLY JUSTIFIED IN       2,825        

BRINGING THE ACTION.  FOR PURPOSES OF DIVISION (G)(3) OF THIS      2,826        

SECTION, A PROCEEDING IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A     2,827        

REASONABLE BASIS IN LAW OR FACT AT THE TIME THAT IT WAS            2,828        

INITIATED.                                                                      

      (H)  THE SUPERINTENDENT MAY INVESTIGATE SUSPECTED            2,830        

FRAUDULENT VIATICAL SETTLEMENT ACTS AND PERSONS ENGAGED IN THE     2,831        

BUSINESS OF VIATICAL SETTLEMENTS.                                  2,832        

      Sec. 3916.12.  EACH VIATICAL SETTLEMENT PROVIDER AND         2,835        

VIATICAL SETTLEMENT BROKER LICENSED UNDER THIS CHAPTER SHALL FILE  2,836        

WITH THE SUPERINTENDENT OF INSURANCE, ON OR BEFORE THE FIRST DAY                

OF MARCH OF EACH YEAR, AN ANNUAL STATEMENT CONTAINING THE          2,837        

INFORMATION REQUIRED BY THE SUPERINTENDENT BY RULE ADOPTED IN      2,839        

ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE.                               

      Sec. 3916.13.  EXCEPT AS OTHERWISE PERMITTED OR REQUIRED BY  2,841        

LAW, A VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER,   2,843        

INSURANCE COMPANY, INSURANCE AGENT, INSURANCE BROKER, INFORMATION               

BUREAU, RATING AGENCY OR COMPANY, OR ANY OTHER PERSON WITH ACTUAL  2,844        

KNOWLEDGE OF AN INSURED'S IDENTITY, SHALL NOT DISCLOSE THAT        2,845        

IDENTITY AS AN INSURED, INCLUDING THE INSURED'S NAME AND           2,847        

INDIVIDUAL IDENTIFICATION DATA, OR THE INSURED'S FINANCIAL OR      2,848        

                                                          68     


                                                                 
MEDICAL INFORMATION, UNLESS ANY OF THE FOLLOWING APPLY:            2,849        

      (A)  THE DISCLOSURE IS NECESSARY TO EFFECT A VIATICAL        2,851        

SETTLEMENT BETWEEN THE VIATOR AND A VIATICAL SETTLEMENT PROVIDER,  2,852        

AND THE VIATOR AND INSURED HAVE PROVIDED PRIOR WRITTEN CONSENT TO  2,853        

THE DISCLOSURE.                                                                 

      (B)  THE DISCLOSURE IS PROVIDED IN RESPONSE TO AN            2,855        

INVESTIGATION OR EXAMINATION BY THE SUPERINTENDENT OF INSURANCE    2,856        

OR BY ANY OTHER GOVERNMENTAL OFFICER OR AGENCY OR PURSUANT TO THE  2,857        

REQUIREMENTS OF DIVISION (C) OF SECTION 3916.18 OF THE REVISED     2,858        

CODE.                                                                           

      (C)  THE DISCLOSURE IS A TERM OF, OR CONDITION TO, THE       2,860        

TRANSFER OF A VIATICATED POLICY BY ONE VIATICAL SETTLEMENT         2,861        

PROVIDER TO ANOTHER VIATICAL SETTLEMENT PROVIDER.                  2,862        

      (D)  THE DISCLOSURE IS NECESSARY TO PERMIT A FINANCING       2,864        

ENTITY, RELATED PROVIDER TRUST, OR SPECIAL PURPOSE ENTITY TO       2,866        

FINANCE THE PURCHASE OF POLICIES OR CERTIFICATES BY A VIATICAL     2,867        

SETTLEMENT PROVIDER, AND THE VIATOR AND INSURED HAVE PROVIDED      2,868        

PRIOR WRITTEN CONSENT TO THE DISCLOSURE.                           2,870        

      (E)  THE DISCLOSURE IS NECESSARY TO ALLOW THE VIATICAL       2,872        

SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER OR THEIR         2,873        

AUTHORIZED REPRESENTATIVES TO MAKE CONTACTS FOR THE PURPOSE OF     2,874        

DETERMINING HEALTH STATUS.                                         2,875        

      (F)  THE DISCLOSURE IS REQUIRED TO PURCHASE STOP-LOSS        2,877        

COVERAGE.                                                          2,878        

      Sec. 3916.14.  (A)(1)  THE SUPERINTENDENT OF INSURANCE MAY   2,881        

CONDUCT AN EXAMINATION UNDER THIS CHAPTER OF A LICENSEE AS OFTEN   2,882        

AS THE SUPERINTENDENT IN THE SUPERINTENDENT'S SOLE DISCRETION      2,883        

CONSIDERS APPROPRIATE.                                             2,884        

      (2)  FOR THE PURPOSES OF COMPLETING AN EXAMINATION OF A      2,886        

LICENSEE UNDER THIS CHAPTER, THE SUPERINTENDENT MAY EXAMINE OR     2,887        

INVESTIGATE ANY PERSON, OR THE BUSINESS OF ANY PERSON, INSOFAR AS  2,888        

THE EXAMINATION OR INVESTIGATION, IN THE SOLE DISCRETION OF THE    2,889        

SUPERINTENDENT, IS NECESSARY OR MATERIAL TO THE EXAMINATION OF     2,890        

THE LICENSEE.                                                                   

                                                          69     


                                                                 
      (3)  IN LIEU OF AN EXAMINATION UNDER THIS CHAPTER OF ANY     2,892        

FOREIGN OR ALIEN LICENSEE LICENSED UNDER THIS CHAPTER, THE         2,893        

SUPERINTENDENT, AT THE SUPERINTENDENT'S DISCRETION, MAY ACCEPT AN  2,894        

EXAMINATION REPORT ON THE LICENSEE AS PREPARED BY THE OFFICIAL OF  2,895        

THE LICENSEE'S STATE OF DOMICILE OR PORT-OF-ENTRY STATE WHO IS     2,896        

COMPARABLE TO THE SUPERINTENDENT.                                  2,897        

      (B)  THE LICENSEE OR APPLICANT SHALL PAY TO THE              2,899        

SUPERINTENDENT ALL COSTS, ASSESSMENTS, FORFEITURES, OR FINES       2,900        

INCURRED IN CONDUCTING AN EXAMINATION UNDER THIS SECTION.  THE     2,901        

SUPERINTENDENT SHALL DEPOSIT THE MONEY INTO THE STATE TREASURY TO  2,903        

THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING FUND CREATED                

BY SECTION 3901.021 OF THE REVISED CODE.                           2,904        

      Sec. 3916.15.  (A)  THE SUPERINTENDENT OF INSURANCE MAY      2,906        

REFUSE TO ISSUE OR MAY SUSPEND, REVOKE, OR REFUSE TO RENEW THE     2,908        

LICENSE OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT   2,909        

BROKER, IF THE SUPERINTENDENT FINDS THAT ANY OF THE FOLLOWING      2,910        

APPLY:                                                                          

      (1)  THERE WAS A MATERIAL MISREPRESENTATION IN THE           2,912        

APPLICATION FOR THE LICENSE.                                       2,913        

      (2)  THE APPLICANT OR LICENSEE OR ANY OFFICER, PARTNER,      2,915        

MEMBER, KEY MANAGEMENT PERSONNEL, OR DESIGNEE OF THE APPLICANT OR  2,917        

LICENSEE HAS BEEN CONVICTED OF FRAUDULENT OR DISHONEST PRACTICES,  2,919        

IS SUBJECT TO A FINAL ADMINISTRATIVE ACTION IN ANOTHER STATE, OR   2,920        

IS OTHERWISE SHOWN TO BE UNTRUSTWORTHY OR INCOMPETENT.             2,921        

      (3)  THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT     2,923        

DEMONSTRATES A PATTERN OF UNREASONABLE PAYMENTS TO VIATORS.        2,924        

      (4)  THE LICENSEE OR ANY OFFICER, PARTNER, MEMBER, KEY       2,926        

MANAGEMENT PERSONNEL, OR DESIGNEE OF THE LICENSEE HAS BEEN         2,927        

CONVICTED OF OR HAS PLEADED GUILTY OR NO CONTEST TO A FELONY OR    2,930        

TO A MISDEMEANOR INVOLVING FRAUD, MORAL TURPITUDE, DISHONESTY, OR  2,931        

BREACH OF TRUST, REGARDLESS OF WHETHER A JUDGMENT OF CONVICTION                 

HAS BEEN ENTERED BY THE COURT.                                     2,932        

      (5)  THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT     2,934        

HAS USED A VIATICAL SETTLEMENT CONTRACT FORM THAT HAS NOT BEEN     2,936        

                                                          70     


                                                                 
APPROVED UNDER THIS CHAPTER.                                                    

      (6)  THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT     2,938        

HAS FAILED TO HONOR CONTRACTUAL OBLIGATIONS SET OUT IN A VIATICAL  2,940        

SETTLEMENT CONTRACT.                                                            

      (7)  THE LICENSEE NO LONGER MEETS THE REQUIREMENTS FOR       2,942        

INITIAL LICENSURE.                                                              

      (8)  THE LICENSEE IS A VIATICAL SETTLEMENT PROVIDER THAT     2,944        

HAS ASSIGNED, TRANSFERRED, OR PLEDGED A VIATICATED POLICY TO A     2,946        

PERSON THAT IS NOT A VIATICAL SETTLEMENT PROVIDER LICENSED IN      2,947        

THIS STATE, A FINANCING ENTITY, A SPECIAL PURPOSE ENTITY, OR A                  

RELATED PROVIDER TRUST.                                            2,948        

      (9)  THE LICENSEE OR ANY OFFICER, PARTNER, MEMBER, KEY       2,950        

MANAGEMENT PERSONNEL, OR DESIGNEE OF THE LICENSEE HAS VIOLATED     2,951        

ANY PROVISION OF THIS CHAPTER OR ANY RULE ADOPTED UNDER THIS       2,953        

CHAPTER.                                                                        

      (10)  THE LICENSEE OR ANY OFFICER, PARTNER, MEMBER, KEY      2,955        

MANAGEMENT PERSONNEL, OR DESIGNEE OF THE LICENSEE HAS COMMITTED    2,956        

ANY COERCIVE, FRAUDULENT, OR DISHONEST ACT, OR MADE ANY UNTRUE,    2,958        

DECEPTIVE, OR MISLEADING STATEMENT, IN CONNECTION WITH A VIATICAL  2,959        

TRANSACTION OR A PROPOSED VIATICAL TRANSACTION.                                 

      (B)  BEFORE THE SUPERINTENDENT REFUSES TO ISSUE A LICENSE    2,961        

UNDER THIS CHAPTER, OR SUSPENDS, REVOKES, OR REFUSES TO RENEW THE  2,962        

LICENSE OF A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT   2,964        

BROKER, THE SUPERINTENDENT SHALL PROVIDE THE LICENSEE OR                        

APPLICANT WITH NOTICE AND AN OPPORTUNITY FOR HEARING AS PROVIDED   2,965        

IN CHAPTER 119. OF THE REVISED CODE, EXCEPT AS FOLLOWS:            2,966        

      (1)(a)  ANY NOTICE OF OPPORTUNITY FOR HEARING, THE HEARING   2,968        

OFFICER'S FINDINGS AND RECOMMENDATIONS, OR THE SUPERINTENDENT'S    2,969        

ORDER SHALL BE SERVED BY CERTIFIED MAIL AT THE LAST KNOWN ADDRESS  2,970        

OF THE LICENSEE OR APPLICANT.  SERVICE SHALL BE EVIDENCED BY       2,971        

RETURN RECEIPT SIGNED BY ANY PERSON.                                            

      FOR PURPOSES OF THIS SECTION, THE "LAST KNOWN ADDRESS" IS    2,973        

THE ADDRESS THAT APPEARS IN THE LICENSING RECORDS OF THE           2,974        

DEPARTMENT OF INSURANCE.                                                        

                                                          71     


                                                                 
      (b)  IF THE CERTIFIED MAIL ENVELOPE IS RETURNED WITH AN      2,976        

ENDORSEMENT SHOWING THAT SERVICE WAS REFUSED, OR THAT THE          2,977        

ENVELOPE WAS UNCLAIMED, THE NOTICE AND ALL SUBSEQUENT NOTICES      2,978        

REQUIRED BY CHAPTER 119. OF THE REVISED CODE MAY BE SERVED BY      2,979        

ORDINARY MAIL TO THE LAST KNOWN ADDRESS OF THE LICENSEE OR         2,980        

APPLICANT.  THE MAILING SHALL BE EVIDENCED BY A CERTIFICATE OF                  

MAILING.  SERVICE IS DEEMED COMPLETE AS OF THE DATE OF SUCH        2,981        

CERTIFICATE PROVIDED THAT THE ORDINARY MAIL ENVELOPE IS NOT        2,982        

RETURNED BY THE POSTAL AUTHORITIES WITH AN ENDORSEMENT SHOWING     2,983        

FAILURE OF DELIVERY.  THE TIME PERIOD IN WHICH TO REQUEST A        2,984        

HEARING, AS PROVIDED IN CHAPTER 119. OF THE REVISED CODE, BEGINS   2,985        

TO RUN ON THE DATE OF MAILING.                                                  

      (c)  IF SERVICE BY ORDINARY MAIL FAILS, THE SUPERINTENDENT   2,987        

MAY CAUSE A SUMMARY OF THE SUBSTANTIVE PROVISIONS OF THE NOTICE    2,988        

TO BE PUBLISHED ONCE A WEEK FOR THREE CONSECUTIVE WEEKS IN A       2,989        

NEWSPAPER OF GENERAL CIRCULATION IN THE COUNTY WHERE THE LAST      2,990        

KNOWN PLACE OF RESIDENCE OR BUSINESS OF THE LICENSEE OR APPLICANT  2,991        

IS LOCATED.  THE NOTICE IS CONSIDERED SERVED ON THE DATE OF THE    2,992        

THIRD PUBLICATION.                                                 2,993        

      (d)  ANY NOTICE REQUIRED TO BE SERVED UNDER CHAPTER 119. OF  2,996        

THE REVISED CODE SHALL ALSO BE SERVED UPON THE ATTORNEY OF THE                  

LICENSEE OR APPLICANT BY ORDINARY MAIL IF THE ATTORNEY HAS         2,998        

ENTERED AN APPEARANCE IN THE MATTER.                                            

      (e)  THE SUPERINTENDENT MAY, AT ANY TIME, PERFECT SERVICE    3,000        

ON A LICENSEE OR APPLICANT BY PERSONAL DELIVERY OF THE NOTICE BY   3,001        

AN EMPLOYEE OF THE DEPARTMENT.                                     3,002        

      (f)  NOTICES REGARDING THE SCHEDULING OF HEARINGS AND ALL    3,004        

OTHER MATTERS NOT DESCRIBED IN DIVISION (B)(1)(a) OF THIS SECTION  3,006        

SHALL BE SENT BY ORDINARY MAIL TO THE LICENSEE OR APPLICANT AND                 

TO THE ATTORNEY OF THE LICENSEE OR APPLICANT.                      3,007        

      (2)  ANY SUBPOENA FOR THE APPEARANCE OF A WITNESS OR THE     3,009        

PRODUCTION OF DOCUMENTS OR OTHER EVIDENCE AT A HEARING, OR FOR     3,010        

THE PURPOSE OF TAKING TESTIMONY FOR USE AT A HEARING, SHALL BE     3,011        

SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, BY AN          3,012        

                                                          72     


                                                                 
ATTORNEY OR BY AN EMPLOYEE OF THE DEPARTMENT DESIGNATED BY THE     3,013        

SUPERINTENDENT.  SUCH SUBPOENAS SHALL BE ENFORCED IN THE MANNER    3,014        

PROVIDED IN SECTION 119.09 OF THE REVISED CODE.  NOTHING IN THIS                

SECTION SHALL BE CONSTRUED AS LIMITING THE SUPERINTENDENT'S OTHER  3,015        

STATUTORY POWERS TO ISSUE SUBPOENAS.                               3,016        

      Sec. 3916.16.  (A)  IT IS A VIOLATION OF THIS CHAPTER FOR    3,018        

ANY PERSON TO ENTER INTO A VIATICAL SETTLEMENT CONTRACT WITHIN A   3,020        

TWO-YEAR PERIOD COMMENCING WITH THE DATE OF ISSUANCE OF THE        3,021        

INSURANCE POLICY OR CERTIFICATE UNLESS THE VIATOR CERTIFIES TO     3,022        

THE VIATICAL SETTLEMENT PROVIDER THAT ONE OR MORE OF THE           3,023        

FOLLOWING CONDITIONS HAVE BEEN MET WITHIN THAT TWO-YEAR PERIOD:    3,024        

      (1)  THE POLICY OR CERTIFICATE WAS ISSUED UPON THE VIATOR'S  3,026        

EXERCISE OF CONVERSION RIGHTS ARISING OUT OF A GROUP POLICY OR     3,027        

CERTIFICATE, PROVIDED THE TOTAL OF THE TIME COVERED UNDER THE      3,028        

CONVERSION POLICY OR CERTIFICATE PLUS THE TIME COVERED UNDER THE   3,029        

GROUP POLICY OR CERTIFICATE IS AT LEAST TWENTY-FOUR MONTHS.  THE   3,030        

TIME COVERED UNDER THE GROUP POLICY OR CERTIFICATE SHALL BE        3,031        

CALCULATED WITHOUT REGARD TO ANY CHANGE IN INSURANCE CARRIERS,     3,032        

PROVIDED THE COVERAGE HAS BEEN CONTINUOUS AND UNDER THE SAME       3,033        

GROUP SPONSORSHIP.                                                              

      (2)  THE VIATOR IS A CHARITABLE ORGANIZATION EXEMPT FROM     3,035        

TAXATION UNDER 26 U.S.C. SECTION 501(c)(3).                        3,036        

      (3)  THE VIATOR IS NOT AN INDIVIDUAL.                        3,038        

      (4)  THE VIATOR SUBMITS INDEPENDENT EVIDENCE TO THE          3,040        

VIATICAL SETTLEMENT PROVIDER THAT ONE OR MORE OF THE FOLLOWING     3,041        

CONDITIONS HAVE BEEN MET WITHIN THAT TWO-YEAR PERIOD:              3,042        

      (a)  THE VIATOR OR INSURED IS TERMINALLY OR CHRONICALLY      3,044        

ILL.                                                                            

      (b)  THE VIATOR'S SPOUSE DIES.                               3,046        

      (c)  THE VIATOR DIVORCES THE VIATOR'S SPOUSE.                3,048        

      (d)  THE VIATOR RETIRES FROM FULL-TIME EMPLOYMENT.           3,050        

      (e)  THE VIATOR BECOMES PHYSICALLY OR MENTALLY DISABLED,     3,052        

AND A PHYSICIAN DETERMINES THAT THE DISABILITY PREVENTS THE        3,053        

VIATOR FROM MAINTAINING FULL-TIME EMPLOYMENT.                      3,054        

                                                          73     


                                                                 
      (f)  THE VIATOR WAS THE INSURED'S EMPLOYER AT THE TIME THE   3,056        

POLICY OR CERTIFICATE WAS ISSUED AND THE EMPLOYMENT RELATIONSHIP   3,057        

TERMINATED.                                                        3,058        

      (g)  A COURT OF COMPETENT JURISDICTION ENTERS A FINAL        3,060        

ORDER, JUDGMENT, OR DECREE ON THE APPLICATION OF A CREDITOR OF     3,061        

THE VIATOR AND ADJUDICATES THE VIATOR BANKRUPT OR INSOLVENT OR     3,062        

APPROVES A PETITION SEEKING REORGANIZATION OF THE VIATOR OR                     

APPOINTING A RECEIVER, TRUSTEE, OR LIQUIDATOR TO ALL OR A          3,063        

SUBSTANTIAL PART OF THE VIATOR'S ASSETS.                           3,064        

      (h)  THE VIATOR EXPERIENCES A SIGNIFICANT DECREASE IN        3,066        

INCOME THAT IS UNEXPECTED AND THAT IMPAIRS THE VIATOR'S            3,067        

REASONABLE ABILITY TO PAY THE POLICY PREMIUM.                      3,068        

      (i)  THE VIATOR OR INSURED DISPOSES OF THE VIATOR'S OR       3,070        

INSURED'S OWNERSHIP INTERESTS IN A CLOSELY HELD CORPORATION.       3,071        

      (B)  COPIES OF THE INDEPENDENT EVIDENCE DESCRIBED IN         3,073        

DIVISION (A)(4) OF THIS SECTION AND DOCUMENTS REQUIRED BY SECTION  3,075        

3916.07 OF THE REVISED CODE SHALL BE SUBMITTED TO THE INSURER      3,076        

WHEN THE VIATICAL SETTLEMENT PROVIDER SUBMITS A REQUEST TO THE                  

INSURER FOR VERIFICATION OF COVERAGE.  THE COPIES SHALL BE         3,077        

ACCOMPANIED BY A LETTER OF ATTESTATION FROM THE VIATICAL           3,078        

SETTLEMENT PROVIDER THAT THE COPIES ARE TRUE AND CORRECT COPIES    3,079        

OF THE DOCUMENTS RECEIVED BY THE VIATICAL SETTLEMENT PROVIDER.     3,080        

      (C)  IF THE VIATICAL SETTLEMENT PROVIDER SUBMITS TO THE      3,082        

INSURER A COPY OF THE OWNER OR INSURED'S CERTIFICATION DESCRIBED   3,083        

IN DIVISION (A)(4) OF THIS SECTION WHEN THE PROVIDER SUBMITS A     3,084        

REQUEST TO THE INSURER TO EFFECT THE TRANSFER OF THE POLICY OR     3,085        

CERTIFICATE TO THE VIATICAL SETTLEMENT PROVIDER, THE COPY          3,086        

CONCLUSIVELY ESTABLISHES THAT THE VIATICAL SETTLEMENT CONTRACT     3,087        

SATISFIES THE REQUIREMENTS OF THIS SECTION, AND THE INSURER SHALL  3,088        

TIMELY RESPOND TO THE REQUEST.                                                  

      Sec. 3916.17.  (A)  THE GENERAL ASSEMBLY HEREBY DECLARES     3,090        

THAT THE PURPOSE OF THIS SECTION IS TO PROVIDE PROSPECTIVE         3,091        

VIATORS WITH CLEAR AND UNAMBIGUOUS STATEMENTS IN THE                            

ADVERTISEMENT OF VIATICAL SETTLEMENTS AND TO ASSURE THE CLEAR,     3,092        

                                                          74     


                                                                 
TRUTHFUL, AND ADEQUATE DISCLOSURE OF THE BENEFITS, RISKS,          3,093        

LIMITATIONS, AND EXCLUSIONS OF ANY VIATICAL SETTLEMENT CONTRACT.   3,094        

THIS PURPOSE IS INTENDED TO BE ACCOMPLISHED BY THE ESTABLISHMENT   3,095        

OF GUIDELINES AND STANDARDS OF PERMISSIBLE AND IMPERMISSIBLE       3,096        

CONDUCT IN THE ADVERTISING OF VIATICAL SETTLEMENTS TO ASSURE THAT  3,097        

PRODUCT DESCRIPTIONS ARE PRESENTED IN A MANNER THAT PREVENTS       3,098        

UNFAIR, DECEPTIVE, OR MISLEADING ADVERTISING AND IS CONDUCIVE TO   3,099        

ACCURATE PRESENTATION AND DESCRIPTION OF VIATICAL SETTLEMENTS      3,100        

THROUGH THE ADVERTISING MEDIA AND MATERIAL USED BY VIATICAL        3,101        

SETTLEMENT LICENSEES.                                                           

      DIVISIONS (B) TO (P) OF THIS SECTION APPLY TO ANY            3,103        

ADVERTISING OF VIATICAL SETTLEMENT CONTRACTS, OR ANY RELATED       3,104        

PRODUCTS OR SERVICES INTENDED FOR DISSEMINATION IN THIS STATE,     3,105        

INCLUDING, BUT NOT LIMITED TO, INTERNET ADVERTISING VIEWED BY      3,106        

PERSONS LOCATED IN THIS STATE.  IN CASES IN WHICH DISCLOSURE       3,107        

REQUIREMENTS ARE ESTABLISHED PURSUANT TO FEDERAL REGULATION, THIS  3,108        

SECTION SHALL BE INTERPRETED SO AS TO MINIMIZE OR ELIMINATE        3,109        

CONFLICT WITH FEDERAL REGULATION WHEREVER POSSIBLE.                3,110        

      (B)  EVERY VIATICAL SETTLEMENT LICENSEE SHALL ESTABLISH AND  3,112        

AT ALL TIMES SHALL MAINTAIN A SYSTEM OF CONTROL OVER THE CONTENT,  3,113        

FORM, AND METHOD OF DISSEMINATION OF ALL ADVERTISEMENTS OF ITS     3,114        

CONTRACTS, PRODUCTS, AND SERVICES. ALL ADVERTISEMENTS, REGARDLESS  3,115        

OF BY WHOM THEY ARE WRITTEN, CREATED, DESIGNED, OR PRESENTED,      3,116        

SHALL BE THE RESPONSIBILITY OF THE VIATICAL SETTLEMENT LICENSEE    3,117        

AND OF THE INDIVIDUAL WHO CREATED OR PRESENTED THE ADVERTISEMENT.  3,118        

A SYSTEM OF CONTROL SHALL INCLUDE REGULAR ROUTINE NOTIFICATION,    3,119        

AT LEAST ONCE A YEAR, TO AGENTS AND OTHERS AUTHORIZED BY THE       3,120        

VIATICAL SETTLEMENT LICENSEE WHO DISSEMINATE ADVERTISEMENTS OF     3,121        

THE REQUIREMENTS AND PROCEDURES FOR APPROVAL PRIOR TO THE USE OF   3,122        

ANY ADVERTISEMENTS NOT FURNISHED BY THE VIATICAL SETTLEMENT        3,123        

LICENSEE.                                                                       

      (C)  ALL ADVERTISEMENTS THAT ARE SUBJECT TO THIS SECTION     3,125        

SHALL BE TRUTHFUL AND NOT MISLEADING IN FACT OR BY IMPLICATION.    3,126        

THE FORM AND CONTENT OF AN ADVERTISEMENT OF A VIATICAL SETTLEMENT               

                                                          75     


                                                                 
CONTRACT SHALL BE SUFFICIENTLY COMPLETE AND CLEAR SO AS TO AVOID   3,127        

DECEPTION AND SHALL NOT HAVE THE CAPACITY OR TENDENCY TO MISLEAD   3,128        

OR DECEIVE.  THE DETERMINATION OF WHETHER AN ADVERTISEMENT HAS     3,129        

THE CAPACITY OR TENDENCY TO MISLEAD OR DECEIVE SHALL BE MADE BY    3,130        

THE SUPERINTENDENT OF INSURANCE, FROM THE OVERALL IMPRESSION THAT  3,131        

THE ADVERTISEMENT MAY BE REASONABLY EXPECTED TO CREATE UPON A      3,132        

PERSON OF AVERAGE EDUCATION OR INTELLIGENCE WITHIN THE SEGMENT OF  3,133        

THE PUBLIC TO WHICH IT IS DIRECTED.                                3,134        

      (D)  VIATICAL SETTLEMENT ADVERTISEMENTS CONTAINING ANY       3,136        

REPRESENTATION SET FORTH IN THIS DIVISION ARE DEEMED FALSE AND     3,137        

MISLEADING ON THEIR FACE AND ARE PROHIBITED.  FALSE AND                         

MISLEADING VIATICAL SETTLEMENT ADVERTISEMENTS INCLUDE, BUT ARE     3,138        

NOT LIMITED TO, THOSE INCLUDING ANY OF THE FOLLOWING               3,139        

REPRESENTATIONS:                                                                

      (1)  "GUARANTEED," "FULLY SECURED," "100 PERCENT SECURED,"   3,141        

"FULLY INSURED," "SECURE," "SAFE," "BACKED BY RATED INSURANCE      3,142        

COMPANIES," "BACKED BY FEDERAL LAW," "BACKED BY STATE LAW," OR     3,143        

"STATE GUARANTY FUNDS," OR SIMILAR REPRESENTATIONS;                3,144        

      (2)  "NO RISK," "MINIMAL RISK," "LOW RISK," "NO              3,146        

SPECULATION," "NO FLUCTUATION," OR SIMILAR REPRESENTATIONS;        3,147        

      (3)  "QUALIFIED OR APPROVED FOR INDIVIDUAL RETIREMENT        3,149        

ACCOUNTS (IRAS), ROTH IRAS, 401(k) PLANS, SIMPLIFIED EMPLOYEE      3,151        

PENSIONS (SEPS), 403(b), KEOGH PLANS, TSA, OR OTHER RETIREMENT     3,152        

ACCOUNT ROLLOVERS," "TAX DEFERRED," OR SIMILAR REPRESENTATIONS;    3,153        

      (4)  UTILIZATION OF THE WORD "GUARANTEED" TO DESCRIBE THE    3,155        

FIXED RETURN, ANNUAL RETURN, PRINCIPAL, EARNINGS, PROFITS,         3,156        

INVESTMENT, OR SIMILAR REPRESENTATIONS;                            3,157        

      (5)  "NO SALES CHARGES OR FEES" OR SIMILAR REPRESENTATIONS;  3,159        

      (6)  "HIGH YIELD," "SUPERIOR RETURN," "EXCELLENT RETURN,"    3,161        

"HIGH RETURN," "QUICK PROFIT," OR SIMILAR REPRESENTATIONS;         3,162        

      (7)  PURPORTED FAVORABLE REPRESENTATIONS OR TESTIMONIALS     3,164        

ABOUT THE BENEFITS OF VIATICAL SETTLEMENT CONTRACTS OR VIATICAL    3,165        

SETTLEMENT PURCHASE AGREEMENTS AS AN INVESTMENT, TAKEN OUT OF      3,166        

CONTEXT FROM ANY NEWSPAPER, TRADE PAPER, JOURNAL, RADIO OR         3,167        

                                                          76     


                                                                 
TELEVISION PROGRAM, OR ANY OTHER FORM OF PRINT AND ELECTRONIC      3,168        

MEDIA.                                                                          

      (E)(1)  THE INFORMATION REQUIRED TO BE DISCLOSED UNDER THIS  3,170        

SECTION SHALL NOT BE MINIMIZED, RENDERED OBSCURE, OR PRESENTED IN  3,171        

AN AMBIGUOUS FASHION OR INTERMINGLED WITH THE TEXT OF THE                       

ADVERTISEMENT SO AS TO BE CONFUSING OR MISLEADING.                 3,172        

      AN ADVERTISEMENT SHALL NOT OMIT MATERIAL INFORMATION OR USE  3,174        

ANY WORDS, PHRASES, STATEMENTS, REFERENCES, OR ILLUSTRATIONS IF    3,175        

THE OMISSION OR USE HAS THE CAPACITY, TENDENCY, OR EFFECT OF       3,176        

MISLEADING OR DECEIVING VIATORS, AS TO THE NATURE OR EXTENT OF     3,177        

ANY BENEFIT, LOSS COVERED, PREMIUM PAYABLE, OR STATE OR FEDERAL    3,178        

TAX CONSEQUENCE.  THE FACT THAT THE VIATICAL SETTLEMENT CONTRACT   3,179        

OFFERED IS MADE AVAILABLE FOR INSPECTION PRIOR TO CONSUMMATION OF  3,180        

THE SALE, THAT AN OFFER IS MADE TO REFUND THE PAYMENT IF THE       3,181        

VIATOR IS NOT SATISFIED, OR THAT THE VIATICAL SETTLEMENT CONTRACT  3,182        

INCLUDES A "FREE LOOK" PERIOD THAT SATISFIES OR EXCEEDS LEGAL      3,183        

REQUIREMENTS, DOES NOT REMEDY ANY MISLEADING STATEMENTS.           3,184        

      (2)  AN ADVERTISEMENT SHALL NOT USE THE NAME OR TITLE OF A   3,186        

LIFE INSURANCE COMPANY OR A LIFE INSURANCE POLICY UNLESS THE       3,187        

ADVERTISEMENT HAS BEEN APPROVED BY THE INSURER.                    3,188        

      (3)  AN ADVERTISEMENT SHALL NOT REPRESENT THAT ANY PREMIUM   3,190        

PAYMENTS WILL NOT BE REQUIRED TO BE PAID ON THE LIFE INSURANCE     3,191        

POLICY THAT IS THE SUBJECT OF A VIATICAL SETTLEMENT CONTRACT OR    3,192        

VIATICAL SETTLEMENT PURCHASE AGREEMENT IN ORDER TO MAINTAIN THAT   3,193        

POLICY, UNLESS THAT IS THE FACT.                                   3,194        

      (4)  AN ADVERTISEMENT SHALL NOT STATE OR IMPLY THAT          3,196        

INTEREST CHARGED ON AN ACCELERATED DEATH BENEFIT OR A POLICY LOAN  3,197        

IS UNFAIR, INEQUITABLE, OR IN ANY MANNER AN INCORRECT OR IMPROPER  3,198        

PRACTICE.                                                                       

      (5)  THE WORDS "FREE," "NO COST," "WITHOUT COST," "NO        3,200        

ADDITIONAL COST," "AT NO EXTRA COST," OR WORDS OF SIMILAR IMPORT   3,201        

SHALL NOT BE USED WITH RESPECT TO ANY BENEFIT OR SERVICE UNLESS    3,202        

TRUE. AN ADVERTISEMENT MAY SPECIFY THE CHARGE FOR A BENEFIT OR A   3,203        

SERVICE OR MAY STATE THAT A CHARGE IS INCLUDED IN THE PAYMENT OR   3,204        

                                                          77     


                                                                 
USE OTHER APPROPRIATE LANGUAGE.                                    3,205        

      (6)(a)  TESTIMONIALS, APPRAISALS, ANALYSES, OR ENDORSEMENTS  3,207        

USED IN ADVERTISEMENTS MUST SATISFY ALL OF THE FOLLOWING:          3,208        

      (i)  THEY MUST BE GENUINE.                                   3,210        

      (ii)  THEY MUST REPRESENT THE CURRENT OPINION OF THE         3,212        

AUTHOR.                                                                         

      (iii)  THEY MUST BE APPLICABLE TO THE VIATICAL SETTLEMENT    3,214        

CONTRACT PRODUCT OR SERVICE ADVERTISED, IF ANY.                    3,215        

      (iv)  THEY MUST BE ACCURATELY REPRODUCED WITH SUFFICIENT     3,217        

COMPLETENESS TO AVOID MISLEADING OR DECEIVING PROSPECTIVE VIATORS  3,218        

AS TO THE NATURE OR SCOPE OF THE TESTIMONIALS, APPRAISALS,         3,219        

ANALYSES, OR ENDORSEMENTS.                                                      

      (b)  IN USING TESTIMONIALS, APPRAISALS, ANALYSES, OR         3,221        

ENDORSEMENTS, THE VIATICAL SETTLEMENT LICENSEE MAKES AS ITS OWN    3,222        

ALL THE STATEMENTS CONTAINED IN THE TESTIMONIALS, APPRAISALS,                   

ANALYSES, OR ENDORSEMENTS, AND THE STATEMENTS ARE SUBJECT TO ALL   3,223        

THE PROVISIONS OF THIS SECTION.                                    3,224        

      (c)  IF THE INDIVIDUAL MAKING A TESTIMONIAL, APPRAISAL,      3,226        

ANALYSIS, OR ENDORSEMENT HAS A FINANCIAL INTEREST IN THE VIATICAL  3,227        

SETTLEMENT PROVIDER OR RELATED ENTITY AS A STOCKHOLDER, DIRECTOR,  3,228        

OFFICER, EMPLOYEE, OR OTHERWISE, OR RECEIVES ANY BENEFIT DIRECTLY  3,229        

OR INDIRECTLY OTHER THAN REQUIRED UNION SCALE WAGES, THAT FACT     3,230        

SHALL BE PROMINENTLY DISCLOSED IN THE ADVERTISEMENT.               3,231        

      (d)  AN ADVERTISEMENT SHALL NOT STATE OR IMPLY THAT A        3,233        

VIATICAL SETTLEMENT CONTRACT BENEFIT OR SERVICE HAS BEEN APPROVED  3,234        

OR ENDORSED BY A GROUP OF INDIVIDUALS, SOCIETY, ASSOCIATION, OR    3,235        

OTHER ORGANIZATION UNLESS THAT IS THE FACT AND UNLESS ANY          3,236        

RELATIONSHIP BETWEEN THE INDIVIDUAL, SOCIETY, ASSOCIATION, OR      3,237        

ORGANIZATION AND THE VIATICAL SETTLEMENT PROVIDER IS DISCLOSED.    3,238        

IF THE ENTITY MAKING THE ENDORSEMENT OR TESTIMONIAL IS OWNED,      3,239        

CONTROLLED, OR MANAGED BY THE VIATICAL SETTLEMENT PROVIDER, OR     3,240        

RECEIVES ANY PAYMENT OR OTHER CONSIDERATION FROM THE VIATICAL      3,241        

SETTLEMENT PROVIDER FOR MAKING AN ENDORSEMENT OR TESTIMONIAL,      3,242        

THAT FACT SHALL BE DISCLOSED IN THE ADVERTISEMENT.                              

                                                          78     


                                                                 
      (e)  WHEN AN ENDORSEMENT REFERS TO BENEFITS RECEIVED UNDER   3,244        

A VIATICAL SETTLEMENT CONTRACT, ALL PERTINENT INFORMATION SHALL    3,245        

BE RETAINED FOR A PERIOD OF AT LEAST FIVE YEARS AFTER ITS USE.     3,246        

      (F)  AN ADVERTISEMENT SHALL NOT CONTAIN STATISTICAL          3,248        

INFORMATION UNLESS THE INFORMATION ACCURATELY REFLECTS RECENT AND  3,249        

RELEVANT FACTS.  THE SOURCE OF ALL STATISTICS USED IN AN                        

ADVERTISEMENT SHALL BE IDENTIFIED.                                 3,250        

      (G)  AN ADVERTISEMENT SHALL NOT DISPARAGE ANY INSURER,       3,252        

VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER,          3,253        

VIATICAL SETTLEMENT INVESTMENT AGENT, INSURANCE PRODUCER, POLICY,               

SERVICE, OR METHOD OF MARKETING.                                   3,254        

      (H)  ALL ADVERTISEMENTS ABOUT A VIATICAL SETTLEMENT          3,256        

PROVIDER OR ITS VIATICAL SETTLEMENT CONTRACT, PRODUCTS, OR         3,257        

SERVICES SHALL CLEARLY IDENTIFY THE VIATICAL SETTLEMENT                         

PROVIDER'S NAME.  IF ANY SPECIFIC VIATICAL SETTLEMENT CONTRACT IS  3,258        

ADVERTISED, THE VIATICAL SETTLEMENT CONTRACT SHALL BE IDENTIFIED   3,259        

EITHER BY FORM NUMBER OR SOME OTHER APPROPRIATE DESCRIPTION.  IF   3,260        

AN APPLICATION IS PART OF THE ADVERTISEMENT, THE NAME OF THE       3,261        

VIATICAL SETTLEMENT PROVIDER SHALL BE SHOWN ON THE APPLICATION.    3,262        

      (I)  AN ADVERTISEMENT SHALL NOT USE A TRADE NAME, GROUP      3,264        

DESIGNATION, NAME OF THE PARENT COMPANY OF A VIATICAL SETTLEMENT   3,265        

LICENSEE, NAME OF A PARTICULAR DIVISION OF THE VIATICAL                         

SETTLEMENT LICENSEE, SERVICE MARK, SLOGAN, SYMBOL, OR OTHER        3,266        

DEVICE OR REFERENCE WITHOUT DISCLOSING THE NAME OF THE VIATICAL    3,267        

SETTLEMENT LICENSEE, IF EITHER OF THE FOLLOWING APPLIES REGARDING  3,268        

THE ADVERTISEMENT:                                                 3,269        

      (1)  IT WOULD HAVE THE CAPACITY OR TENDENCY TO MISLEAD OR    3,271        

DECEIVE AS TO THE TRUE IDENTITY OF THE VIATICAL SETTLEMENT         3,272        

LICENSEE.                                                                       

      (2)  IT WOULD HAVE THE CAPACITY OR TENDENCY TO CREATE THE    3,274        

IMPRESSION THAT A COMPANY OTHER THAN THE VIATICAL SETTLEMENT       3,275        

LICENSEE WOULD HAVE ANY RESPONSIBILITY FOR THE FINANCIAL           3,276        

OBLIGATION UNDER A VIATICAL SETTLEMENT CONTRACT.                   3,277        

      (J)  AN ADVERTISEMENT SHALL NOT USE ANY COMBINATION OF       3,279        

                                                          79     


                                                                 
WORDS, SYMBOLS, OR PHYSICAL MATERIALS THAT, BY THEIR CONTENT,      3,280        

PHRASEOLOGY, SHAPE, COLOR, OR OTHER CHARACTERISTICS, ARE SO                     

SIMILAR TO A COMBINATION OF WORDS, SYMBOLS, OR PHYSICAL MATERIALS  3,281        

USED BY A GOVERNMENT PROGRAM OR AGENCY OR OTHERWISE APPEAR TO BE   3,282        

OF SUCH A NATURE THAT THEY TEND TO MISLEAD PROSPECTIVE VIATORS     3,283        

INTO BELIEVING THAT THE SOLICITATION IS IN SOME MANNER CONNECTED   3,284        

WITH A GOVERNMENT PROGRAM OR AGENCY.                               3,285        

      (K)  AN ADVERTISEMENT MAY STATE THAT A VIATICAL SETTLEMENT   3,287        

PROVIDER IS LICENSED IN THE STATE IN WHICH THE ADVERTISEMENT       3,288        

APPEARS, PROVIDED IT DOES NOT EXAGGERATE THAT FACT OR SUGGEST OR                

IMPLY THAT COMPETING VIATICAL SETTLEMENT PROVIDERS MAY NOT BE SO   3,289        

LICENSED.  THE ADVERTISEMENT MAY ASK THE AUDIENCE TO CONSULT THE   3,290        

LICENSEE'S WEB SITE OR CONTACT THE DEPARTMENT OF INSURANCE TO      3,291        

FIND OUT IF THE STATE IN WHICH THE ADVERTISEMENT APPEARS REQUIRES  3,292        

LICENSING AND, IF IT DOES, WHETHER THE VIATICAL SETTLEMENT         3,293        

PROVIDER OR VIATICAL SETTLEMENT BROKER IS LICENSED.                3,294        

      (L)  AN ADVERTISEMENT SHALL NOT CREATE THE IMPRESSION THAT   3,296        

THE VIATICAL SETTLEMENT PROVIDER, ITS FINANCIAL CONDITION OR       3,297        

STATUS, THE PAYMENT OF ITS CLAIMS, OR THE MERITS, DESIRABILITY,                 

OR ADVISABILITY OF ITS VIATICAL SETTLEMENT CONTRACTS ARE           3,298        

RECOMMENDED OR ENDORSED BY ANY GOVERNMENT ENTITY.                  3,299        

      (M)  ALL ADVERTISEMENTS OF AN ACTUAL LICENSEE SHALL STATE    3,301        

THE NAME OF THE ACTUAL LICENSEE.  AN ADVERTISEMENT SHALL NOT USE   3,302        

A TRADE NAME, ANY GROUP DESIGNATION, NAME OF ANY AFFILIATE OR                   

CONTROLLING ENTITY OF THE LICENSEE, SERVICE MARK, SLOGAN, SYMBOL,  3,303        

OR OTHER DEVICE IN A MANNER THAT WOULD HAVE THE CAPACITY OR        3,304        

TENDENCY TO MISLEAD OR DECEIVE AS TO THE TRUE IDENTITY OF THE      3,305        

ACTUAL LICENSEE OR CREATE THE FALSE IMPRESSION THAT AN AFFILIATE   3,306        

OR CONTROLLING ENTITY WOULD HAVE ANY RESPONSIBILITY FOR THE        3,307        

FINANCIAL OBLIGATION OF THE LICENSEE.                              3,308        

      (N)  AN ADVERTISEMENT SHALL NOT DIRECTLY OR INDIRECTLY       3,310        

CREATE THE IMPRESSION THAT ANY DIVISION OR AGENCY OF THIS STATE,   3,311        

ANY OTHER STATE, OR THE UNITED STATES GOVERNMENT ENDORSES,         3,312        

APPROVES, OR FAVORS ANY OF THE FOLLOWING:                          3,313        

                                                          80     


                                                                 
      (1)  ANY VIATICAL SETTLEMENT LICENSEE OR ITS BUSINESS        3,315        

PRACTICES OR METHODS OF OPERATION;                                 3,316        

      (2)  THE MERITS, DESIRABILITY, OR ADVISABILITY OF ANY        3,318        

VIATICAL SETTLEMENT CONTRACT, OR VIATICAL SETTLEMENT PROGRAM;      3,319        

      (3)  ANY VIATICAL SETTLEMENT CONTRACT, OR VIATICAL           3,321        

SETTLEMENT PROGRAM;                                                3,322        

      (4)  ANY LIFE INSURANCE POLICY OR CERTIFICATE OR LIFE        3,324        

INSURANCE COMPANY.                                                 3,325        

      (O)  IF THE ADVERTISER EMPHASIZES THE SPEED WITH WHICH THE   3,327        

VIATICATION WILL OCCUR, THE ADVERTISING MUST DISCLOSE THE AVERAGE  3,328        

TIME FRAME, FROM COMPLETED APPLICATION TO THE DATE OF OFFER AND    3,329        

FROM ACCEPTANCE OF THE OFFER TO RECEIPT OF THE FUNDS BY THE                     

VIATOR.                                                            3,330        

      (P)  IF THE ADVERTISING EMPHASIZES THE DOLLAR AMOUNTS        3,332        

AVAILABLE TO VIATORS, THE ADVERTISING SHALL DISCLOSE THE AVERAGE   3,333        

PURCHASE PRICE AS A PER CENT OF FACE VALUE OBTAINED BY VIATORS     3,334        

CONTRACTING WITH THE LICENSEE DURING THE PAST SIX MONTHS.          3,335        

      Sec. 3916.18.  (A)(1)  NO PERSON SHALL COMMIT A FRAUDULENT   3,337        

VIATICAL SETTLEMENT ACT.                                           3,338        

      (2)  NO PERSON SHALL KNOWINGLY OR INTENTIONALLY INTERFERE    3,340        

WITH THE ENFORCEMENT OF THE PROVISIONS OF THIS CHAPTER OR          3,341        

INVESTIGATIONS OF SUSPECTED OR ACTUAL VIOLATIONS OF THIS CHAPTER.  3,342        

      (3)  NO PERSON IN THE BUSINESS OF VIATICAL SETTLEMENTS       3,344        

SHALL KNOWINGLY OR INTENTIONALLY PERMIT ANY PERSON CONVICTED OF A  3,345        

FELONY INVOLVING DISHONESTY OR BREACH OF TRUST TO PARTICIPATE IN   3,346        

THE BUSINESS OF VIATICAL SETTLEMENTS.                              3,347        

      (B)(1)  EACH VIATICAL SETTLEMENT CONTRACT AND EACH           3,349        

APPLICATION FOR A VIATICAL SETTLEMENT, REGARDLESS OF THE FORM OF   3,350        

TRANSMISSION, SHALL CONTAIN THE FOLLOWING STATEMENT OR A           3,351        

SUBSTANTIALLY SIMILAR STATEMENT:                                   3,352        

      "ANY PERSON WHO KNOWINGLY PRESENTS FALSE INFORMATION IN AN   3,354        

APPLICATION FOR INSURANCE OR VIATICAL SETTLEMENT CONTRACT IS       3,355        

GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND IMPRISONMENT."   3,356        

      (2)  THE LACK OF A STATEMENT AS REQUIRED IN DIVISION (B)(1)  3,358        

                                                          81     


                                                                 
OF THIS SECTION DOES NOT CONSTITUTE A DEFENSE IN ANY PROSECUTION   3,359        

FOR A FRAUDULENT VIATICAL SETTLEMENT ACT.                          3,360        

      (C)(1)  EVERY PERSON ENGAGED IN THE BUSINESS OF VIATICAL     3,362        

SETTLEMENTS HAVING KNOWLEDGE OR A REASONABLE BELIEF THAT A         3,363        

FRAUDULENT VIATICAL SETTLEMENT ACT IS BEING, WILL BE, OR HAS BEEN               

COMMITTED SHALL PROVIDE TO THE SUPERINTENDENT OF INSURANCE THE     3,364        

INFORMATION REQUIRED BY THE SUPERINTENDENT.  THE PERSON SHALL      3,365        

PROVIDE THE INFORMATION IN A MANNER PRESCRIBED BY THE              3,366        

SUPERINTENDENT.                                                    3,367        

      (2)  EVERY PERSON HAVING KNOWLEDGE OR A REASONABLE BELIEF    3,369        

THAT A FRAUDULENT VIATICAL SETTLEMENT ACT IS BEING, WILL BE, OR    3,370        

HAS BEEN COMMITTED MAY PROVIDE TO THE SUPERINTENDENT THE           3,371        

INFORMATION REQUIRED BY THE SUPERINTENDENT.  THE PERSON SHALL      3,372        

PROVIDE THE INFORMATION UNDER THIS DIVISION IN A MANNER            3,373        

PRESCRIBED BY THE SUPERINTENDENT.                                               

      (D)(1)  NO CIVIL LIABILITY SHALL BE IMPOSED ON, AND NO       3,375        

CAUSE OF ACTION SHALL ARISE FROM, A PERSON'S FURNISHING            3,376        

INFORMATION CONCERNING SUSPECTED, ANTICIPATED, OR COMPLETED        3,377        

FRAUDULENT VIATICAL SETTLEMENT ACTS OR SUSPECTED OR COMPLETED      3,378        

FRAUDULENT INSURANCE ACTS, IF THE INFORMATION IS PROVIDED TO OR    3,379        

RECEIVED FROM ANY OF THE FOLLOWING:                                3,380        

      (a)  THE SUPERINTENDENT, OR THE SUPERINTENDENT'S EMPLOYEES,  3,382        

AGENTS, OR REPRESENTATIVES;                                        3,383        

      (b)  LAW ENFORCEMENT OR REGULATORY OFFICIALS OF THIS STATE,  3,385        

ANOTHER STATE, THE UNITED STATES, OR A POLITICAL SUBDIVISION OF    3,386        

THIS STATE OR ANOTHER STATE, OR ANY EMPLOYEE, AGENT, OR            3,387        

REPRESENTATIVE OF ANY OF THOSE OFFICIALS;                          3,388        

      (c)  A PERSON INVOLVED IN THE PREVENTION AND DETECTION OF    3,390        

FRAUDULENT VIATICAL SETTLEMENT ACTS OR ANY AGENT, EMPLOYEE, OR     3,391        

REPRESENTATIVE OF ANY PERSON SO INVOLVED;                          3,392        

      (d)  THE NAIC, NATIONAL ASSOCIATION OF SECURITIES DEALERS    3,394        

(NASD), THE NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION   3,395        

(NASAA), ANY EMPLOYEE, AGENT, OR REPRESENTATIVE OF ANY OF THOSE    3,396        

ASSOCIATIONS, OR OTHER REGULATORY BODY OVERSEEING LIFE INSURANCE,               

                                                          82     


                                                                 
VIATICAL SETTLEMENTS, SECURITIES, OR INVESTMENT FRAUD;             3,397        

      (e)  THE LIFE INSURER THAT ISSUED THE LIFE INSURANCE POLICY  3,399        

OR CERTIFICATE COVERING THE LIFE OF THE INSURED.                   3,400        

      (2)  THE IMMUNITY PROVIDED IN DIVISION (D)(1) OF THIS        3,402        

SECTION SHALL NOT APPLY TO ANY STATEMENT MADE WITH ACTUAL MALICE.  3,403        

IN AN ACTION BROUGHT AGAINST A PERSON FOR FILING A REPORT OR                    

FURNISHING OTHER INFORMATION CONCERNING A FRAUDULENT VIATICAL      3,404        

SETTLEMENT ACT OR A FRAUDULENT INSURANCE ACT, THE PARTY BRINGING   3,405        

THE ACTION SHALL PLEAD SPECIFICALLY ANY ALLEGATION THAT THE        3,406        

IMMUNITY PROVIDED IN DIVISION (D)(1) OF THIS SECTION DOES NOT      3,407        

APPLY BECAUSE THE PERSON FILING THE REPORT OR FURNISHING THE       3,408        

INFORMATION DID SO WITH ACTUAL MALICE.                             3,409        

      (3)  IF A PERSON IS THE PREVAILING PARTY IN A CIVIL ACTION   3,411        

FOR LIBEL, SLANDER, OR ANY OTHER RELEVANT TORT ARISING OUT OF      3,412        

ACTIVITIES IN CARRYING OUT THE PROVISIONS OF THIS CHAPTER, IF THE  3,413        

PREVAILING PARTY IS A PERSON IDENTIFIED IN DIVISION (D)(1) OF      3,414        

THIS SECTION AND THE IMMUNITY DESCRIBED IN THAT DIVISION APPLIES   3,415        

TO THE PERSON, AND IF THE PARTY WHO BROUGHT THE ACTION WAS NOT                  

SUBSTANTIALLY JUSTIFIED IN DOING SO, THE PERSON WHO IS THE         3,416        

PREVAILING PARTY IS ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND    3,417        

COSTS ARISING OUT OF THE ACTION.  FOR PURPOSES OF THIS DIVISION,   3,418        

AN ACTION IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A REASONABLE      3,419        

BASIS IN LAW OR FACT AT THE TIME THAT IT WAS INITIATED.            3,420        

      (4)  THIS SECTION DOES NOT ABROGATE OR MODIFY ANY COMMON     3,422        

LAW OR STATUTORY PRIVILEGE OR IMMUNITY ENJOYED BY A PERSON         3,423        

DESCRIBED IN DIVISION (D)(1) OF THIS SECTION.                      3,424        

      (E)(1)  THE DOCUMENTS AND EVIDENCE PROVIDED PURSUANT TO      3,426        

DIVISION (D) OF THIS SECTION OR OBTAINED BY THE SUPERINTENDENT IN  3,428        

AN INVESTIGATION OF ANY SUSPECTED OR ACTUAL FRAUDULENT VIATICAL    3,429        

SETTLEMENT ACT IS PRIVILEGED AND CONFIDENTIAL, IS NOT A PUBLIC     3,430        

RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF THE REVISED                  

CODE, AND IS NOT SUBJECT TO DISCOVERY OR SUBPOENA IN A CIVIL OR    3,431        

CRIMINAL ACTION.                                                                

      (2)  DIVISION (E)(1) OF THIS SECTION DOES NOT PROHIBIT       3,433        

                                                          83     


                                                                 
RELEASE BY THE SUPERINTENDENT OF ANY DOCUMENT OR EVIDENCE          3,434        

OBTAINED IN AN INVESTIGATION OF SUSPECTED OR ACTUAL FRAUDULENT                  

VIATICAL SETTLEMENT ACTS, IN ANY OF THE FOLLOWING MANNERS OR       3,435        

CIRCUMSTANCES:                                                                  

      (a)  IN ANY ADMINISTRATIVE OR JUDICIAL PROCEEDING TO         3,437        

ENFORCE ANY LAWS ADMINISTERED BY THE SUPERINTENDENT;               3,438        

      (b)  TO ANY LAW ENFORCEMENT OR REGULATORY AGENCY OF THIS     3,440        

STATE, ANOTHER STATE, THE UNITED STATES, OR A POLITICAL            3,441        

SUBDIVISION OF THIS STATE OR ANOTHER STATE, TO AN ORGANIZATION     3,442        

ESTABLISHED FOR THE PURPOSE OF DETECTING AND PREVENTING                         

FRAUDULENT VIATICAL SETTLEMENT ACTS, OR TO THE NAIC;               3,443        

      (c)  AT THE DISCRETION OF THE SUPERINTENDENT, TO A PERSON    3,445        

IN THE BUSINESS OF VIATICAL SETTLEMENTS THAT IS AGGRIEVED BY A     3,446        

FRAUDULENT VIATICAL SETTLEMENT ACT.                                3,447        

      (3)  RELEASE OF DOCUMENTS AND EVIDENCE UNDER DIVISION        3,449        

(E)(2) OF THIS SECTION DOES NOT ABROGATE OR MODIFY THE PRIVILEGE   3,450        

GRANTED IN DIVISION (E)(1) OF THIS SECTION.                        3,451        

      (F)  THE PROVISIONS OF THIS CHAPTER DO NOT DO ANY OF THE     3,453        

FOLLOWING:                                                         3,454        

      (1)  PREEMPT THE AUTHORITY OR RELIEVE THE DUTY OF ANY OTHER  3,456        

LAW ENFORCEMENT OR REGULATORY AGENCIES TO INVESTIGATE, EXAMINE,    3,457        

OR PROSECUTE SUSPECTED VIOLATIONS OF LAW;                          3,458        

      (2)  PREVENT OR PROHIBIT A PERSON FROM DISCLOSING            3,460        

VOLUNTARILY ANY INFORMATION CONCERNING VIATICAL SETTLEMENT FRAUD   3,461        

TO A LAW ENFORCEMENT OR REGULATORY AGENCY OTHER THAN THE           3,462        

DEPARTMENT OF INSURANCE;                                                        

      (3)  LIMIT ANY POWER GRANTED ELSEWHERE BY THE LAW OF THIS    3,464        

STATE TO THE SUPERINTENDENT OR AN INSURANCE FRAUD UNIT TO          3,465        

INVESTIGATE AND EXAMINE POSSIBLE VIOLATIONS OF LAW AND TO TAKE     3,466        

APPROPRIATE ACTION AGAINST WRONGDOERS.                             3,467        

      (G)(1)  VIATICAL SETTLEMENT PROVIDERS AND VIATICAL           3,469        

SETTLEMENT BROKERS SHALL ADOPT AND HAVE IN PLACE ANTIFRAUD         3,470        

INITIATIVES REASONABLY CALCULATED TO DETECT, PROSECUTE, AND                     

PREVENT FRAUDULENT VIATICAL SETTLEMENT ACTS.  AT THE DISCRETION    3,471        

                                                          84     


                                                                 
OF THE SUPERINTENDENT, THE SUPERINTENDENT MAY ORDER, OR A          3,472        

LICENSEE MAY REQUEST AND THE SUPERINTENDENT MAY GRANT, ANY         3,473        

MODIFICATIONS OF THE FOLLOWING REQUIRED INITIATIVES DESCRIBED IN   3,474        

DIVISIONS (G)(1)(a) AND (b) OF THIS SECTION THAT ARE NECESSARY TO  3,475        

ENSURE AN EFFECTIVE ANTIFRAUD PROGRAM.  THE MODIFICATIONS MAY BE   3,476        

MORE OR LESS RESTRICTIVE THAN THE REQUIRED INITIATIVES SO LONG AS  3,477        

THE MODIFICATIONS MAY REASONABLY BE EXPECTED TO ACCOMPLISH THE     3,478        

PURPOSE OF THIS SECTION.  ANTIFRAUD INITIATIVES UNDER THIS         3,479        

DIVISION SHALL INCLUDE ALL OF THE FOLLOWING:                                    

      (a)  FRAUD INVESTIGATORS, WHO MAY BE VIATICAL SETTLEMENT     3,481        

PROVIDER OR VIATICAL SETTLEMENT BROKER EMPLOYEES OR INDEPENDENT    3,482        

CONTRACTORS;                                                       3,483        

      (b)  AN ANTIFRAUD PLAN THAT INCLUDES, BUT NOT IS NOT         3,485        

LIMITED TO, ALL OF THE FOLLOWING:                                  3,486        

      (i)  A DESCRIPTION OF THE PROCEDURES FOR DETECTING AND       3,488        

INVESTIGATING POSSIBLE FRAUDULENT VIATICAL SETTLEMENT ACTS AND     3,489        

PROCEDURES FOR RESOLVING MATERIAL INCONSISTENCIES BETWEEN MEDICAL  3,490        

RECORDS AND INSURANCE APPLICATIONS;                                             

      (ii)  A DESCRIPTION OF THE PROCEDURES FOR REPORTING          3,492        

POSSIBLE FRAUDULENT VIATICAL SETTLEMENT ACTS TO THE                3,493        

SUPERINTENDENT;                                                                 

      (iii)  A DESCRIPTION OF THE PLAN FOR ANTIFRAUD EDUCATION     3,495        

AND TRAINING OF UNDERWRITERS AND OTHER PERSONNEL;                  3,496        

      (iv)  A DESCRIPTION OR CHART OUTLINING THE ORGANIZATIONAL    3,498        

ARRANGEMENT OF THE ANTIFRAUD PERSONNEL WHO ARE RESPONSIBLE FOR     3,499        

THE INVESTIGATION AND REPORTING OF POSSIBLE FRAUDULENT VIATICAL    3,500        

SETTLEMENT ACTS AND INVESTIGATING UNRESOLVED MATERIAL              3,501        

INCONSISTENCIES BETWEEN MEDICAL RECORDS AND INSURANCE                           

APPLICATIONS.                                                      3,502        

      (2)  THE SUPERINTENDENT, BY RULE ADOPTED IN ACCORDANCE WITH  3,504        

CHAPTER 119. OF THE REVISED CODE, MAY REQUIRE THAT ANTIFRAUD       3,506        

PLANS REQUIRED UNDER DIVISION (G)(1) OF THIS SECTION BE SUBMITTED  3,507        

TO THE SUPERINTENDENT.  IF THE SUPERINTENDENT REQUIRES THAT        3,508        

ANTIFRAUD PLANS BE SUBMITTED TO THE SUPERINTENDENT, THE PLANS SO   3,509        

                                                          85     


                                                                 
SUBMITTED ARE PRIVILEGED AND CONFIDENTIAL, ARE NOT A PUBLIC                     

RECORD OPEN FOR INSPECTION UNDER SECTION 149.43 OF THE REVISED     3,510        

CODE, AND ARE NOT SUBJECT TO DISCOVERY OR SUBPOENA IN A CIVIL OR   3,511        

CRIMINAL ACTION.                                                   3,512        

      Sec. 3916.19.  (A)  IN ADDITION TO THE PENALTIES AND OTHER   3,514        

ENFORCEMENT PROVISIONS CONTAINED IN THIS CHAPTER, IF ANY PERSON    3,515        

VIOLATES ANY PROVISION OF THIS CHAPTER OR ANY RULE OR REGULATION                

IMPLEMENTING ANY PROVISION OF THIS CHAPTER, THE SUPERINTENDENT OF  3,516        

INSURANCE MAY SEEK AN INJUNCTION IN A COURT OF COMPETENT           3,517        

JURISDICTION AND MAY APPLY FOR ANY TEMPORARY OR PERMANENT ORDER    3,518        

THAT THE SUPERINTENDENT DETERMINES IS NECESSARY TO RESTRAIN THE    3,519        

PERSON FROM COMMITTING THE VIOLATION.                              3,520        

      (B)  ANY PERSON DAMAGED BY ANY ACT OF A PERSON IN VIOLATION  3,522        

OF ANY PROVISION OF THIS CHAPTER MAY BRING A CIVIL ACTION AGAINST  3,523        

THE PERSON COMMITTING THE VIOLATION IN A COURT OF COMPETENT        3,524        

JURISDICTION.  A CIVIL ACTION BROUGHT UNDER THIS DIVISION DOES     3,525        

NOT PRECLUDE THE SUPERINTENDENT FROM EXERCISING ANY REGULATORY,    3,526        

ENFORCEMENT, OR OTHER AUTHORITY AVAILABLE TO THE SUPERINTENDENT    3,527        

UNDER THIS CHAPTER.                                                3,528        

      (C)  IN ADDITION TO THE PENALTIES AND OTHER ENFORCEMENT      3,530        

PROVISIONS CONTAINED IN THIS CHAPTER, ANY PERSON WHO VIOLATES ANY  3,531        

PROVISION OF THIS CHAPTER IS SUBJECT TO A CIVIL PENALTY OF UP TO   3,532        

TEN THOUSAND DOLLARS PER VIOLATION.  IMPOSITION OF CIVIL           3,533        

PENALTIES DESCRIBED IN THIS DIVISION SHALL BE PURSUANT TO AN       3,534        

ORDER OF THE SUPERINTENDENT ISSUED UNDER CHAPTER 119. OF THE       3,535        

REVISED CODE.  THE SUPERINTENDENT'S ORDER MAY REQUIRE A PERSON     3,537        

FOUND TO BE IN VIOLATION OF THIS CHAPTER TO MAKE RESTITUTION TO    3,538        

PERSONS AGGRIEVED BY VIOLATIONS OF THIS CHAPTER.                   3,539        

      Sec. 3916.20.  THE SUPERINTENDENT OF INSURANCE MAY ADOPT     3,541        

RULES IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE FOR      3,543        

PURPOSES OF IMPLEMENTING THIS CHAPTER, INCLUDING, BUT NOT LIMITED               

TO, RULES THAT DO THE FOLLOWING:                                   3,544        

      (A)  GOVERN THE RELATIONSHIP AND RESPONSIBILITIES OF BOTH    3,547        

INSURERS AND VIATICAL SETTLEMENT PROVIDERS AND VIATICAL            3,548        

                                                          86     


                                                                 
SETTLEMENT BROKERS DURING THE VIATICATION OF A LIFE INSURANCE      3,550        

POLICY OR CERTIFICATE.                                                          

      (B)  ESTABLISH STANDARDS FOR EVALUATING THE REASONABLENESS   3,552        

OF PAYMENTS UNDER VIATICAL SETTLEMENT CONTRACTS FOR PERSONS WITH   3,555        

A TERMINAL OR CHRONIC ILLNESS OR CONDITION.  THIS AUTHORITY        3,556        

INCLUDES, BUT IS NOT LIMITED TO, THE REGULATION OF DISCOUNT RATES  3,558        

USED TO DETERMINE THE AMOUNT PAID IN EXCHANGE FOR THE ASSIGNMENT,  3,559        

TRANSFER, SALE, DEVISE, OR BEQUEST OF A BENEFIT UNDER A LIFE       3,560        

INSURANCE POLICY OR CERTIFICATE.                                                

      (C)  ESTABLISH APPROPRIATE LICENSING REQUIREMENTS, FEES,     3,562        

AND STANDARDS FOR CONTINUED LICENSURE FOR VIATICAL SETTLEMENT      3,564        

PROVIDERS AND VIATICAL SETTLEMENT BROKERS;                         3,565        

      (D)  REQUIRE A BOND OR OTHER MECHANISM FOR ENSURING THE      3,567        

FINANCIAL ACCOUNTABILITY OF VIATICAL SETTLEMENT PROVIDERS AND      3,568        

VIATICAL SETTLEMENT BROKERS.                                       3,569        

      Sec. 3916.21.  (A)  NO PERSON SHALL FAIL TO COMPLY WITH      3,571        

THIS CHAPTER.                                                      3,572        

      (B)  WHOEVER VIOLATES DIVISION (A) OF THIS SECTION IS        3,574        

DEEMED TO HAVE ENGAGED IN AN UNFAIR AND DECEPTIVE ACT OR PRACTICE  3,575        

IN THE BUSINESS OF INSURANCE UNDER SECTIONS 3901.19 TO 3901.26 OF  3,576        

THE REVISED CODE.                                                  3,577        

      Sec. 3916.99.  (A)  WHOEVER VIOLATES SECTION 3916.02 OF THE  3,579        

REVISED CODE IS GUILTY OF A FELONY OF THE THIRD DEGREE.            3,581        

      (B)  WHOEVER VIOLATES DIVISION (A)(1) OF SECTION 3916.18 OF  3,584        

THE REVISED CODE IS GUILTY OF A VIOLATION OF SECTION 2913.02 OF    3,585        

THE REVISED CODE.                                                               

      Section 2.  That existing sections 1707.01, 1707.02,         3,588        

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,   3,589        

1707.436, 1707.437, 1707.438, and 1707.439 of the Revised Code     3,590        

are hereby repealed.                                                            

      Section 3.  Sections 1 and 2 of this act shall take effect   3,592        

six months after the effective date of this act.                   3,593        

      Section 4.  Any person that, on the effective date of this   3,595        

                                                          87     


                                                                 
act, transacts business in this state as a viatical settlement     3,596        

provider, viatical settlement representative, or viatical          3,597        

settlement broker may continue to do so pending approval of the    3,598        

person's application for a license, if the person applies for the  3,599        

license during the six-month period immediately following the      3,600        

effective date of this act.                                        3,601