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
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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
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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
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(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
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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