REPRESENTATIVES Salerno, Evans, G. Smith, Webster, Setzer, Otterman, Collier, Hoops, Coates, Lendrum, Widowfield, Flowers, Grendell, Clancy, Goodman, Carmichael, Cates, Woodard

To amend sections 1707.01, 1707.03, 1707.041,

1

1707.06, 1707.08, 1707.09, 1707.092, 1707.14,

2

1707.141, 1707.161, 1707.17, 1707.19, 1707.23,

3

1707.391, 1707.44, and 1707.45 and to repeal

4

sections 1707.05 and 1707.07 of the Revised Code

5

to make revisions in the Securities Law, and to

6

maintain the provisions of this act on and after

7

October 5, 2001, by amending the versions of

8

sections 1707.01, 1707.17, 1707.23, and 1707.44 of

9

the Revised Code that are scheduled to take effect

10

on that date.

11

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

Section 1. That sections 1707.01, 1707.03, 1707.041, 1707.06,	12
1707.08, 1707.09, 1707.092, 1707.14, 1707.141, 1707.161, 1707.17,	13
1707.19, 1707.23, 1707.391, 1707.44, and 1707.45 of the Revised	14
Code be amended to read as follows:	15

Sec. 1707.01.  As used in this chapter:

16

(A) Whenever the context requires it, "division" or	17
"division of securities" may be read as "director of commerce" or	18
as "commissioner of securities."	19

(B) "Security" means any certificate or instrument that	20
represents title to or interest in, or is secured by any lien or	21
charge upon, the capital, assets, profits, property, or credit of	22
any person or of any public or governmental body, subdivision, or	23
agency. It includes shares of stock, certificates for shares of	24
stock, membership interests in limited liability companies,	25
voting-trust certificates, warrants and options to purchase	26
securities, subscription rights, interim receipts, interim	27
certificates, promissory notes, all forms of commercial paper,	28
evidences of indebtedness, bonds, debentures, land trust	29
certificates, fee certificates, leasehold certificates, syndicate	30
certificates, endowment certificates, certificates or written	31
instruments in or under profit-sharing or participation agreements	32
or in or under oil, gas, or mining leases, or certificates or	33
written instruments of any interest in or under the same, receipts	34
evidencing preorganization or reorganization subscriptions,	35
preorganization certificates, reorganization certificates,	36
certificates evidencing an interest in any trust or pretended	37
trust, any investment contract, any instrument evidencing a	38
promise or an agreement to pay money, warehouse receipts for	39
intoxicating liquor, and the currency of any government other than	40
those of the United States and Canada, but sections 1707.01 to	41
1707.45 of the Revised Code do not apply to the sale of real	42
estate.	43

(C)(1) "Sale" has the full meaning of "sale" as applied by or	44
accepted in courts of law or equity, and includes every	45
disposition, or attempt to dispose, of a security or of an	46
interest in a security. "Sale" also includes a contract to sell,	47
an exchange, an attempt to sell, an option of sale, a solicitation	48
of a sale, a solicitation of an offer to buy, a subscription, or	49
an offer to sell, directly or indirectly, by agent, circular,	50
pamphlet, advertisement, or otherwise.	51

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

52

(3) The use of advertisements, circulars, or pamphlets in	53
connection with the sale of securities in this state exclusively	54
to the purchasers specified in division (D) of section 1707.03 of	55
the Revised Code is not a sale when the advertisements, circulars,	56
and pamphlets describing and offering those securities bear a	57
readily legible legend in substance as follows: "This offer is	58
made on behalf of dealers licensed under sections 1707.01 to	59
1707.45 of the Revised Code, and is confined in this state	60
exclusively to institutional investors and licensed dealers."	61

(4) The offering of securities by any person in conjunction	62
with a licensed dealer by use of advertisement, circular, or	63
pamphlet is not a sale if that person does not otherwise attempt	64
to sell securities in this state.	65

(5) Any security given with, or as a bonus on account of,	66
any purchase of securities is conclusively presumed to constitute	67
a part of the subject of that purchase and has been "sold."	68

(6) "Sale" by an owner, pledgee, or mortgagee, or by a person	69
acting in a representative capacity, includes sale on behalf of	70
such party by an agent, including a licensed dealer or	71
salesperson.	72

(D) "Person," except as otherwise provided in this chapter,	73
means a natural person, firm, partnership, limited partnership,	74
partnership association, syndicate, joint-stock company,	75
unincorporated association, trust or trustee except where the	76
trust was created or the trustee designated by law or judicial	77
authority or by a will, and a corporation or limited liability	78
company organized under the laws of any state, any foreign	79
government, or any political subdivision of a state or foreign	80
government.	81

(E)(1) "Dealer," except as otherwise provided in this	82
chapter, means every person, other than a salesperson, who engages	83
or professes to engage, in this state, for either all or part of	84
the person's time, directly or indirectly, either in the business	85
of the sale of securities for the person's own account, or in the	86
business of the purchase or sale of securities for the account of	87
others in the reasonable expectation of receiving a commission,	88
fee, or other remuneration as a result of engaging in the purchase	89
and sale of securities. "Dealer" does not mean any of the	90
following:	91

(a) Any issuer, including any officer, director, employee,	92
or trustee of, or member or manager of, or partner in, or any	93
general partner of, any issuer, that sells, offers for sale, or	94
does any act in furtherance of the sale of a security that	95
represents an economic interest in that issuer, provided no	96
commission, fee, or other similar remuneration is paid to or	97
received by the issuer for the sale;	98

(b) Any licensed attorney, public accountant, or firm of	99
such attorneys or accountants, whose activities are incidental to	100
the practice of the attorney's, accountant's, or firm's	101
profession;	102

(c) Any person that, for the account of others, engages in	103
the purchase or sale of securities that are issued and outstanding	104
before such purchase and sale, if a majority or more of the equity	105
interest of an issuer is sold in that transaction, and if, in the	106
case of a corporation, the securities sold in that transaction	107
represent a majority or more of the voting power of the	108
corporation in the election of directors;	109

(d) Any person that brings an issuer together with a	110
potential investor and whose compensation is not directly or	111
indirectly based on the sale of any securities by the issuer to	112
the investor;	113

(e) Any bank, savings and loan association, savings bank, or	114
credit union chartered under the laws of the United States or any	115
state of the United States, provided that all transactions are	116
consummated by or through a person licensed pursuant to section	117
1707.14 of the Revised Code;	118

(f) Any person that the division of securities by rule	119
exempts from the definition of "dealer" under division (E)(1) of	120
this section.	121

(2) "Licensed dealer" means a dealer licensed under this	122
chapter.	123

(F)(1) "Salesman" or "salesperson" means every natural	124
person, other than a dealer, who is employed, authorized, or	125
appointed by a dealer to sell securities within this state.	126

(2) The general partners of a partnership, and the executive	127
officers of a corporation or unincorporated association, licensed	128
as a dealer are not salespersons within the meaning of this	129
definition, nor are such clerical or other employees of an issuer	130
or dealer as are employed for work to which the sale of securities	131
is secondary and incidental; but the division of securities may	132
require a license from any such partner, executive officer, or	133
employee if it determines that protection of the public	134
necessitates the licensing.	135

(3) "Licensed salesperson" means a salesperson licensed under	136
this chapter.	137

(G) "Issuer" means every person who has issued, proposes to	138
issue, or issues any security.	139

(H) "Director" means each director or trustee of a	140
corporation, each trustee of a trust, each general partner of a	141
partnership, except a partnership association, each manager of a	142
partnership association, and any person vested with managerial or	143
directory power over an issuer not having a board of directors or	144
trustees.	145

(I) "Incorporator" means any incorporator of a corporation	146
and any organizer of, or any person participating, other than in a	147
representative or professional capacity, in the organization of an	148
unincorporated issuer.	149

(J) "Fraud," "fraudulent," "fraudulent acts," "fraudulent	150
practices," or "fraudulent transactions" means anything recognized	151
on or after July 22, 1929, as such in courts of law or equity; any	152
device, scheme, or artifice to defraud or to obtain money or	153
property by means of any false pretense, representation, or	154
promise; any fictitious or pretended purchase or sale of	155
securities; and any act, practice, transaction, or course of	156
business relating to the purchase or sale of securities that is	157
fraudulent or that has operated or would operate as a fraud upon	158
the seller or purchaser.	159

(K) Except as otherwise specifically provided, whenever any	160
classification or computation is based upon "par value," as	161
applied to securities without par value, the average of the	162
aggregate consideration received or to be received by the issuer	163
for each class of those securities shall be used as the basis for	164
that classification or computation.	165

(L)(1) "Intangible property" means patents, copyrights,	166
secret processes, formulas, services, good will, promotion and	167
organization fees and expenses, trademarks, trade brands, trade	168
names, licenses, franchises, any other assets treated as	169
intangible according to generally accepted accounting principles,	170
and securities, accounts receivable, or contract rights having no	171
readily determinable value.	172

(2) "Tangible property" means all property other than	173
intangible property and includes securities, accounts receivable,	174
and contract rights, when the securities, accounts receivable, or	175
contract rights have a readily determinable value.	176

(M) "Public utilities" means those utilities defined in	177
sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised	178
Code; in the case of a foreign corporation, it means those	179
utilities defined as public utilities by the laws of its domicile;	180
and in the case of any other foreign issuer, it means those	181
utilities defined as public utilities by the laws of the situs of	182
its principal place of business. The term always includes	183
railroads whether or not they are so defined as public utilities.	184

(N) "State" means any state of the United States, any	185
territory or possession of the United States, the District of	186
Columbia, and any province of Canada.	187

(O) "Bank" means any bank, trust company, savings and loan	188
association, savings bank, or credit union that is incorporated or	189
organized under the laws of the United States, any state of the	190
United States, Canada, or any province of Canada and that is	191
subject to regulation or supervision by that country, state, or	192
province.	193

(P) "Include," when used in a definition, does not exclude	194
other things or persons otherwise within the meaning of the term	195
defined.	196

(Q)(1) "Registration by description" means that the	197
requirements of section 1707.08 of the Revised Code have been	198
complied with.	199

(2) "Registration by qualification" means that the	200
requirements of sections 1707.09 and 1707.11 of the Revised Code	201
have been complied with.	202

(3) "Registration by coordination" means that there has been	203
compliance with section 1707.091 of the Revised Code. Reference in	204
this chapter to registration by qualification also shall be deemed	205
to include registration by coordination unless the context	206
otherwise indicates.	207

(R) "Intoxicating liquor" includes all liquids and compounds	208
that contain more than three and two-tenths per cent of alcohol by	209
weight and are fit for use for beverage purposes.	210

(S) "Institutional investor" means any corporation, bank,	211
insurance company, pension fund or pension fund trust, employees'	212
profit-sharing fund or employees' profit-sharing trust, any	213
association engaged, as a substantial part of its business or	214
operations, in purchasing or holding securities, or any trust in	215
respect of which a bank is trustee or cotrustee. "Institutional	216
investor" does not include any business entity formed for the	217
primary purpose of evading sections 1707.01 to 1707.45 of the	218
Revised Code.	219

(T) "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a,	220
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a,	221
"Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 1,	222
"Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b,	223
and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a	224
mean the federal statutes of those names as amended before or	225
after March 18, 1999.	226

(U) "Securities and exchange commission" means the securities	227
and exchange commission established by the Securities Exchange Act	228
of 1934.	229

(V)(1) "Control bid" means the purchase of or offer to	230
purchase any equity security of a subject company from a resident	231
of this state if either of the following applies:	232

(a) After the purchase of that security, the offeror would	233
be directly or indirectly the beneficial owner of more than ten	234
per cent of any class of the issued and outstanding equity	235
securities of the issuer.	236

(b) The offeror is the subject company, there is a pending	237
control bid by a person other than the issuer, and the number of	238
the issued and outstanding shares of the subject company would be	239
reduced by more than ten per cent.	240

(2) For purposes of division (V)(1) of this section,	241
"control bid" does not include any of the following:	242

(a) A bid made by a dealer for the dealer's own account in	243
the ordinary course of business of buying and selling securities;	244

(b) An offer to acquire any equity security solely in	245
exchange for any other security, or the acquisition of any equity	246
security pursuant to an offer, for the sole account of the	247
offeror, in good faith and not for the purpose of avoiding the	248
provisions of this chapter, and not involving any public offering	249
of the other security within the meaning of Section 4 of Title I	250
of the "Securities Act of 1933," 48 Stat. 77, 15 U.S.C.A. 77d(2),	251
as amended;	252

(c) Any other offer to acquire any equity security, or the	253
acquisition of any equity security pursuant to an offer, for the	254
sole account of the offeror, from not more than fifty persons, in	255
good faith and not for the purpose of avoiding the provisions of	256
this chapter.	257

(W) "Offeror" means a person who makes, or in any way	258
participates or aids in making, a control bid and includes persons	259
acting jointly or in concert, or who intend to exercise jointly or	260
in concert any voting rights attached to the securities for which	261
the control bid is made and also includes any subject company	262
making a control bid for its own securities.	263

(X)(1) "Investment adviser" means any person who, for	264
compensation, engages in the business of advising others, either	265
directly or through publications or writings, as to the value of	266
securities or as to the advisability of investing in, purchasing,	267
or selling securities, or who, for compensation and as a part of	268
regular business, issues or promulgates analyses or reports	269
concerning securities.	270

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

271

(a) Any attorney, accountant, engineer, or teacher, whose	272
performance of investment advisory services described in division	273
(X)(1) of this section is solely incidental to the practice of the	274
attorney's, accountant's, engineer's, or teacher's profession;	275

(b) A publisher of any bona fide newspaper, news magazine,	276
or business or financial publication of general and regular	277
circulation;	278

(c) A person who acts solely as an investment adviser	279
representative;	280

(d) A bank holding company, as defined in the "Bank Holding	281
Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that is not an	282
investment company;	283

(e) A bank, or any receiver, conservator, or other	284
liquidating agent of a bank;	285

(f) Any licensed dealer or licensed salesperson whose	286
performance of investment advisory services described in division	287
(X)(1) of this section is solely incidental to the conduct of the	288
dealer's or salesperson's business as a licensed dealer or	289
licensed salesperson and who receives no special compensation for	290
the services;	291

(g) Any person, the advice, analyses, or reports of which do	292
not relate to securities other than securities that are direct	293
obligations of, or obligations guaranteed as to principal or	294
interest by, the United States, or securities issued or guaranteed	295
by corporations in which the United States has a direct or	296
indirect interest, and that have been designated by the secretary	297
of the treasury as exempt securities as defined in the "Securities	298
Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c;	299

(h) Any person that is excluded from the definition of	300
investment adviser pursuant to section 202(a)(11)(A) to (E) of the	301
"Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11), or that	302
has received an order from the securities and exchange commission	303
under section 202(a)(11)(F) of the "Investment Advisers Act of	304
1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that the person is not	305
within the intent of section 202(a)(11) of the Investment Advisers	306
Act of 1940.	307

(i) Any other person that the division designates by rule,	308
if the division finds that the designation is necessary or	309
appropriate in the public interest or for the protection of	310
investors or clients and consistent with the purposes fairly	311
intended by the policy and provisions of this chapter.	312

(Y)(1) "Subject company" means an issuer that satisfies both	313
of the following:	314

(a) Its principal place of business or its principal	315
executive office is located in this state, or it owns or controls	316
assets located within this state that have a fair market value of	317
at least one million dollars.	318

(b) More than ten per cent of its beneficial or record	319
equity security holders are resident in this state, more than ten	320
per cent of its equity securities are owned beneficially or of	321
record by residents in this state, or more than one thousand of	322
its beneficial or record equity security holders are resident in	323
this state.	324

(2) The division of securities may adopt rules to establish	325
more specific application of the provisions set forth in division	326
(Y)(1) of this section. Notwithstanding the provisions set forth	327
in division (Y)(1) of this section and any rules adopted under	328
this division, the division, by rule or in an adjudicatory	329
proceeding, may make a determination that an issuer does not	330
constitute a "subject company" under division (Y)(1) of this	331
section if appropriate review of control bids involving the issuer	332
is to be made by any regulatory authority of another jurisdiction.	333

(Z) "Beneficial owner" includes any person who directly or	334
indirectly through any contract, arrangement, understanding, or	335
relationship has or shares, or otherwise has or shares, the power	336
to vote or direct the voting of a security or the power to dispose	337
of, or direct the disposition of, the security. "Beneficial	338
ownership" includes the right, exercisable within sixty days, to	339
acquire any security through the exercise of any option, warrant,	340
or right, the conversion of any convertible security, or	341
otherwise. Any security subject to any such option, warrant,	342
right, or conversion privilege held by any person shall be deemed	343
to be outstanding for the purpose of computing the percentage of	344
outstanding securities of the class owned by that person, but	345
shall not be deemed to be outstanding for the purpose of computing	346
the percentage of the class owned by any other person. A person	347
shall be deemed the beneficial owner of any security beneficially	348
owned by any relative or spouse or relative of the spouse residing	349
in the home of that person, any trust or estate in which that	350
person owns ten per cent or more of the total beneficial interest	351
or serves as trustee or executor, any corporation or entity in	352
which that person owns ten per cent or more of the equity, and any	353
affiliate or associate of that person.	354

(AA) "Offeree" means the beneficial or record owner of any	355
security that an offeror acquires or offers to acquire in	356
connection with a control bid.	357

(BB) "Equity security" means any share or similar security,	358
or any security convertible into any such security, or carrying	359
any warrant or right to subscribe to or purchase any such	360
security, or any such warrant or right, or any other security	361
that, for the protection of security holders, is treated as an	362
equity security pursuant to rules of the division of securities.	363

(CC) "Investment company" has the same meaning as in section	364
3(A) of the "Investment Company Act of 1940," 54 Stat. 789, 15	365
U.S.C. 80a-1 to 80a-52.	366

(DD) "Penny stock" has the same meaning as in section	367
3(A)(51) of the "Securities Exchange Act of 1934," 48 Stat. 881,	368
15 U.S.C. 78a-78jj, and the rules, regulations, and orders issued	369
pursuant to that section.	370

(EE) "Going concern transaction" has the same meaning given	371
that term under the rules or regulations on the securities and	372
exchange commission issued pursuant to section 13(c) of the	373
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C.	374
78a-78jj.	375

(FF) "Person acting on behalf of an issuer" means an officer,	376
director, or employee of an issuer.	377

(GG) "Blank check company," "roll-up transaction," "executive	378
officer of an entity," and "direct participation program" have the	379
same meanings given those terms by rule or regulation of the	380
securities and exchange commission.	381

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

382

(1) A statement containing a projection of revenues, income	383
including income loss, earnings per share including earnings loss	384
per share, capital expenditures, dividends, capital structure, or	385
other financial items;	386

(2) A statement of the plans and objectives of the	387
management of the issuer for future operations, including plans or	388
objectives relating to the products or services of the issuer;	389

(3) A statement of future economic performance, including	390
any statement of that nature contained in a discussion and	391
analysis of financial conditions by the management or in the	392
results of operations included pursuant to the rules and	393
regulations of the securities and exchange commission;	394

(4) Any disclosed statement of the assumptions underlying or	395
relating to a statement described in division (B)(1), (2), or (3)	396
of section 1707.437 of the Revised Code;	397

(5) Any report issued by an outside reviewer retained by an	398
issuer to the extent that the report relates to a forward-looking	399
statement made by the issuer;	400

(6) A statement containing a projection or estimate of any	401
other items that may be specified by rule or regulation of the	402
securities and exchange commission.	403

(II)(1) "Investment adviser representative" means a	404
supervised person of an investment adviser, provided that the	405
supervised person has more than five clients who are natural	406
persons other than excepted persons defined in division (KK) of	407
this section, and that more than ten per cent of the supervised	408
person's clients are natural persons other than excepted persons	409
defined in division (KK) of this section. "Investment adviser	410
representative" does not mean any of the following:	411

(a) A supervised person that does not on a regular basis	412
solicit, meet with, or otherwise communicate with clients of the	413
investment adviser;	414

(b) A supervised person that provides only investment	415
advisory services described in division (X)(1) of this section by	416
means of written materials or oral statements that do not purport	417
to meet the objectives or needs of specific individuals or	418
accounts;	419

(c) Any other person that the division designates by rule,	420
if the division finds that the designation is necessary or	421
appropriate in the public interest or for the protection of	422
investors or clients and is consistent with the provisions fairly	423
intended by the policy and provisions of this chapter.	424

(2) For the purpose of the calculation of clients in	425
division (II)(1) of this section, a natural person and the	426
following persons are deemed a single client: Any minor child of	427
the natural person; any relative, spouse, or relative of the	428
spouse of the natural person who has the same principal residence	429
as the natural person; all accounts of which the natural person or	430
the persons referred to in division (II)(2) of this section are	431
the only primary beneficiaries; and all trusts of which the	432
natural person or persons referred to in division (II)(2) of this	433
section are the only primary beneficiaries. Persons who are not	434
residents of the United States need not be included in the	435
calculation of clients under division (II)(1) of this section.	436

(3) If subsequent to March 18, 1999, amendments are enacted	437
or adopted defining "investment adviser representative" for	438
purposes of the Investment Advisers Act of 1940 or additional	439
rules or regulations are promulgated by the securities and	440
exchange commission regarding the definition of "investment	441
adviser representative" for purposes of the Investment Advisers	442
Act of 1940, the division of securities shall, by rule, adopt the	443
substance of the amendments, rules, or regulations, unless the	444
division finds that the amendments, rules, or regulations are not	445
necessary for the protection of investors or in the public	446
interest.	447

(JJ) "Supervised person" means a natural person who is any of	448
the following:	449

(1) A partner, officer, or director of an investment	450
adviser, or other person occupying a similar status or performing	451
similar functions with respect to an investment adviser;	452

(2) An employee of an investment adviser;

453

(3) A person who provides investment advisory services	454
described in division (X)(1) of this section on behalf of the	455
investment adviser and is subject to the supervision and control	456
of the investment adviser.	457

(KK) "Excepted person" means a natural person to whom any of	458
the following applies:	459

(1) Immediately after entering into the investment advisory	460
contract with the investment adviser, the person has at least	461
seven hundred fifty thousand dollars under the management of the	462
investment adviser.	463

(2) The investment adviser reasonably believes either of the	464
following at the time the investment advisory contract is entered	465
into with the person:	466

(a) The person has a net worth, together with assets held	467
jointly with a spouse, of more than one million five hundred	468
thousand dollars.	469

(b) The person is a qualified purchaser as defined in	470
division (LL) of this section.	471

(3) Immediately prior to entering into an investment	472
advisory contract with the investment adviser, the person is	473
either of the following:	474

(a) An executive officer, director, trustee, general	475
partner, or person serving in a similar capacity, of the	476
investment adviser;	477

(b) An employee of the investment adviser, other than an	478
employee performing solely clerical, secretarial, or	479
administrative functions or duties for the investment adviser,	480
which employee, in connection with the employee's regular	481
functions or duties, participates in the investment activities of	482
the investment adviser, provided that, for at least twelve months,	483
the employee has been performing such nonclerical, nonsecretarial,	484
or nonadministrative functions or duties for or on behalf of the	485
investment adviser or performing substantially similar functions	486
or duties for or on behalf of another company.	487

If subsequent to March 18, 1999, amendments are enacted or	488
adopted defining "excepted person" for purposes of the Investment	489
Advisers Act of 1940 or additional rules or regulations are	490
promulgated by the securities and exchange commission regarding	491
the definition of "excepted person" for purposes of the Investment	492
Advisers Act of 1940, the division of securities shall, by rule,	493
adopt the substance of the amendments, rules, or regulations,	494
unless the division finds that the amendments, rules, or	495
regulations are not necessary for the protection of investors or	496
in the public interest.	497

(LL)(1) "Qualified purchaser" means either of the following:

498

(a) A natural person who owns not less than five million	499
dollars in investments as defined by rule by the division of	500
securities;	501

(b) A natural person, acting for the person's own account or	502
accounts of other qualified purchasers, who in the aggregate owns	503
and invests on a discretionary basis, not less than twenty-five	504
million dollars in investments as defined by rule by the division	505
of securities.	506

(2) If subsequent to March 18, 1999, amendments are enacted	507
or adopted defining "qualified purchaser" for purposes of the	508
Investment Advisers Act of 1940 or additional rules or regulations	509
are promulgated by the securities and exchange commission	510
regarding the definition of "qualified purchaser" for purposes of	511
the Investment Advisers Act of 1940, the division of securities	512
shall, by rule, adopt the amendments, rules, or regulations,	513
unless the division finds that the amendments, rules, or	514
regulations are not necessary for the protection of investors or	515
in the public interest.	516

(MM)(1) "Purchase" has the full meaning of "purchase" as	517
applied by or accepted in courts of law or equity and includes	518
every acquisition of, or attempt to acquire, a security or an	519
interest in a security. "Purchase" also includes a contract to	520
purchase, an exchange, an attempt to purchase, an option to	521
purchase, a solicitation of a purchase, a solicitation of an offer	522
to sell, a subscription, or an offer to purchase, directly or	523
indirectly, by agent, circular, pamphlet, advertisement, or	524
otherwise.	525

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

526

(3) Any security given with, or as a bonus on account of,	527
any purchase of securities is conclusively presumed to constitute	528
a part of the subject of that purchase.	529

Sec. 1707.03.  (A) As used in this section, "exempt" means	530
that, except in the case of securities the right to buy, sell, or	531
deal in which has been suspended or revoked under an existing	532
order of the division of securities under section 1707.13 of the	533
Revised Code or under a cease and desist order under division (H)	534
of section 1707.23 of the Revised Code, transactions in securities	535
may be carried on and completed without compliance with sections	536
1707.08 to 1707.11 of the Revised Code.	537

(B) A sale of securities made by or on behalf of a bona fide	538
owner, neither the issuer nor a dealer, is exempt if the sale is	539
made in good faith and not for the purpose of avoiding this	540
chapter and is not made in the course of repeated and successive	541
transactions of a similar character. Any sale of securities over	542
a stock exchange that is lawfully conducted in this state and	543
regularly open for public patronage and that has been established	544
and operated for a period of at least five years prior to the sale	545
at a commission not exceeding the commission regularly charged in	546
such transactions also is exempt.	547

(C) The sale of securities by executors, administrators,	548
receivers, trustees, or anyone acting in a fiduciary capacity is	549
exempt, where such relationship was created by law, by a will, or	550
by judicial authority, and where such sales are subject to	551
approval by, or are made in pursuance to authority granted by, any	552
court of competent jurisdiction or are otherwise authorized and	553
lawfully made by such fiduciary.	554

(D) A sale to the issuer, to a dealer, or to an	555
institutional investor is exempt.	556

(E) A sale in good faith, and not for the purpose of	557
avoiding this chapter, by a pledgee of a security pledged for a	558
bona fide debt is exempt.	559

(F) The sale at public auction by a corporation of shares of	560
its stock because of delinquency in payment for the shares is	561
exempt.	562

(G)(1) The giving of any conversion right with, or on	563
account of the purchase of, any security that is exempt, is the	564
subject matter of an exempt transaction, has been registered by	565
description, by coordination, or by qualification, or is the	566
subject matter of a transaction that has been registered by	567
description is exempt.	568

(2) The giving of any subscription right, warrant, or option	569
to purchase a security or right to receive a security upon	570
exchange, which security is exempt at the time the right, warrant,	571
or option to purchase or right to receive is given, is the subject	572
matter of an exempt transaction, is registered by description, by	573
coordination, or by qualification, or is the subject matter of a	574
transaction that has been registered by description is exempt.	575

(3) The giving of any subscription right or any warrant or	576
option to purchase a security, which right, warrant, or option	577
expressly provides that it shall not be exercisable except for a	578
security that at the time of the exercise is exempt, is the	579
subject matter of an exempt transaction, is registered by	580
description, by coordination, or by qualification, or at such time	581
is the subject matter of a transaction that has been registered by	582
description is exempt.	583

(H) The sale of notes, bonds, or other evidences of	584
indebtedness that are secured by a mortgage lien upon real estate,	585
leasehold estate other than oil, gas, or mining leasehold, or	586
tangible personal property, or which evidence of indebtedness is	587
due under or based upon a conditional-sale contract, if all such	588
notes, bonds, or other evidences of indebtedness are sold to a	589
single purchaser at a single sale, is exempt.	590

(I) The delivery of securities by the issuer on the exercise	591
of conversion rights, the sale of securities by the issuer on	592
exercise of subscription rights or of warrants or options to	593
purchase securities, the delivery of voting-trust certificates for	594
securities deposited under a voting-trust agreement, the delivery	595
of deposited securities on surrender of voting-trust certificates,	596
and the delivery of final certificates on surrender of interim	597
certificates are exempt; but the sale of securities on exercise of	598
subscription rights, warrants, or options is not an exempt	599
transaction unless those rights, warrants, or options when granted	600
were the subject matter of an exempt transaction under division	601
(G) of this section or were registered by description, by	602
coordination, or by qualification.	603

(J) The sale of securities by a bank, savings and loan	604
association, savings bank, or credit union organized under the	605
laws of the United States or of this state is exempt if at a	606
profit to that seller of not more than two per cent of the total	607
sale price of the securities.	608

(K)(1) The distribution by a corporation of its securities	609
to its security holders as a share dividend or other distribution	610
out of earnings or surplus is exempt.	611

(2) The exchange or distribution by the issuer of any of its	612
securities or of the securities of any of the issuer's wholly	613
owned subsidiaries exclusively with or to its existing security	614
holders, if no commission or other remuneration is given directly	615
or indirectly for soliciting the exchange, is exempt.	616

(3) The sale of preorganization subscriptions for shares of	617
stock of a corporation prior to the incorporation of the	618
corporation is exempt, when the sale is evidenced by a written	619
agreement, no remuneration is given, or promised, directly or	620
indirectly, for or in connection with the sale of those	621
securities, and no consideration is received, directly or	622
indirectly, by any person from the purchasers of those securities	623
until registration by qualification, by coordination, or by	624
description of those securities is made under this chapter.	625

(L) The issuance of securities in exchange for one or more	626
bona fide outstanding securities, claims, or property interests,	627
not including securities sold for a consideration payable in whole	628
or in part in cash, under a plan of reorganization,	629
recapitalization, or refinancing approved by a court pursuant to	630
the Bankruptcy Act of the United States or to any other federal	631
act giving any federal court jurisdiction over such plan of	632
reorganization, or under a plan of reorganization approved by a	633
court of competent jurisdiction of any state of the United States	634
is exempt. As used in this division, "reorganization,"	635
"recapitalization," and "refinancing" have the same meanings as in	636
section 1707.04 of the Revised Code.	637

(M) A sale by a licensed dealer, acting either as principal	638
or as agent, of securities issued and outstanding before the sale	639
is exempt, unless the sale is of one or more of the following:	640

(1) Securities constituting the whole or a part of an unsold	641
allotment to or subscription by a dealer as an underwriter or	642
other participant in the distribution of those securities by the	643
issuer, whether that distribution is direct or through an	644
underwriter, provided that, if the issuer is such by reason of	645
owning one-fourth or more of those securities, the dealer has	646
knowledge of this fact or reasonable cause to believe this fact;	647

(2) Any class of shares issued by a corporation when the	648
number of beneficial owners of that class is less than	649
twenty-five, with the record owner of securities being deemed the	650
beneficial owner for this purpose, in the absence of actual	651
knowledge to the contrary;	652

(3) Securities that within one year were purchased outside	653
this state or within one year were transported into this state, if	654
the dealer has knowledge or reasonable cause to believe, before	655
the sale of those securities, that within one year they were	656
purchased outside this state or within one year were transported	657
into this state; but such a sale of those securities is exempt if	658
any of the following occurs:	659

(a) A recognized securities manual contains the names of the	660
issuer's officers and directors, a balance sheet of the issuer as	661
of a date within eighteen months, and a profit and loss statement	662
for either the fiscal year preceding that date or the most recent	663
year of operations;	664

(b) Those securities, or securities of the same class, were	665
registered within one year on the basis provided in section	666
1707.05 of the Revised Code, or within one year were registered or	667
qualified under section 1707.09 or 1707.091 of the Revised Code,	668
and that registration or qualification is in full force and	669
effect;	670

(c) Those securities at the time of sale could be registered	671
on the basis provided in section 1707.05 of the Revised Code;	672

(d) The sale is made by a licensed dealer on behalf of the	673
bona fide owner of those securities in accordance with division	674
(B) of this section;	675

(e)(d) Those securities were transported into Ohio in a	676
transaction of the type described in division (L), (K), or (I) of	677
this section, or in a transaction registered under division (A) of	678
section 1707.06 of the Revised Code.	679

(N) For the purpose of this division and division (M) of	680
this section, "underwriter" means any person who has purchased	681
from an issuer with a view to, or sells for an issuer in	682
connection with, the distribution of any security, or who	683
participates directly or indirectly in any such undertaking or in	684
the underwriting thereof, but "underwriter" does not include a	685
person whose interest is limited to a discount, commission, or	686
profit from the underwriter or from a dealer that is not in excess	687
of the customary distributors' or sellers' discount, commission,	688
or profit; and "issuer" includes any person or any group of	689
persons acting in concert in the sale of such securities, owning	690
beneficially one-fourth or more of the outstanding securities of	691
the class involved in the transactions in question, with the	692
record owner of securities being deemed the beneficial owner for	693
this purpose, in the absence of actual knowledge to the contrary.	694

(O)(1) The sale of any equity security is exempt if all the	695
following conditions are satisfied:	696

(a) The sale is by the issuer of the security.

697

(b) The total number of purchasers in this state of all	698
securities issued or sold by the issuer in reliance upon this	699
exemption during the period of one year ending with the date of	700
the sale does not exceed ten. A sale of securities registered	701
under this chapter or sold pursuant to an exemption under this	702
chapter other than this exemption shall not be integrated with a	703
sale pursuant to this exemption in computing the number of	704
purchasers under this exemption.	705

(c) No advertisement, article, notice, or other	706
communication published in any newspaper, magazine, or similar	707
medium or broadcast over television or radio is used in connection	708
with the sale, but the use of an offering circular or other	709
communication delivered by the issuer to selected individuals does	710
not destroy this exemption.	711

(d) The issuer reasonably believes after reasonable	712
investigation that the purchaser is purchasing for investment.	713

(e) The aggregate commission, discount, and other	714
remuneration, excluding legal, accounting, and printing fees, paid	715
or given directly or indirectly does not exceed ten per cent of	716
the initial offering price.	717

(f) Any such commission, discount, or other remuneration for	718
sales in this state is paid or given only to dealers or	719
salespersons registered pursuant to this chapter.	720

(2) For the purposes of division (O)(1) of this section,	721
each of the following is deemed to be a single purchaser of a	722
security: husband and wife, a child and its parent or guardian	723
when the parent or guardian holds the security for the benefit of	724
the child, a corporation, a limited liability company, a	725
partnership, an association or other unincorporated entity, a	726
joint-stock company, or a trust, but only if the corporation,	727
limited liability company, partnership, association, entity,	728
joint-stock company, or trust was not formed for the purpose of	729
purchasing the security.	730

(3) As used in division (O)(1) of this section, "equity	731
security" means any stock or similar security of a corporation or	732
any membership interest in a limited liability company; or any	733
security convertible, with or without consideration, into such a	734
security, or carrying any warrant or right to subscribe to or	735
purchase such a security; or any such warrant or right; or any	736
other security that the division considers necessary or	737
appropriate, by such rules as it may prescribe in the public	738
interest or for the protection of investors, to treat as an equity	739
security.	740

(P) The sale of securities representing interests in or	741
under profit-sharing or participation agreements relating to oil	742
or gas wells located in this state, or representing interests in	743
or under oil or gas leases of real estate situated in this state,	744
is exempt if the securities are issued by an individual,	745
partnership, limited partnership, partnership association,	746
syndicate, pool, trust or trust fund, or other unincorporated	747
association and if each of the following conditions is complied	748
with:	749

(1) The beneficial owners of the securities do not, and will	750
not after the sale, exceed five natural persons;	751

(2) The securities constitute or represent interests in not	752
more than one oil or gas well;	753

(3) A certificate or other instrument in writing is	754
furnished to each purchaser of the securities at or before the	755
consummation of the sale, disclosing the maximum commission,	756
compensation for services, cost of lease, and expenses with	757
respect to the sale of such interests and with respect to the	758
promotion, development, and management of the oil or gas well, and	759
the total of that commission, compensation, costs, and expenses	760
does not exceed twenty-five per cent of the aggregate interests in	761
the oil or gas well, exclusive of any landowner's rental or	762
royalty;	763

(4) The sale is made in good faith and not for the purpose	764
of avoiding this chapter.	765

(Q) The sale of any security is exempt if all of the	766
following conditions are satisfied:	767

(1) The provisions of section 5 of the Securities Act of	768
1933 do not apply to the sale by reason of an exemption under	769
section 4 (2) of that act.	770

(2) The aggregate commission, discount, and other	771
remuneration, excluding legal, accounting, and printing fees, paid	772
or given directly or indirectly does not exceed ten per cent of	773
the initial offering price.	774

(3) Any such commission, discount, or other remuneration for	775
sales in this state is paid or given only to dealers or	776
salespersons registered under this chapter.	777

(4) The issuer or dealer files with the division of	778
securities, not later than sixty days after the sale, a report	779
setting forth the name and address of the issuer, the total amount	780
of the securities sold under this division, the number of persons	781
to whom the securities were sold, the price at which the	782
securities were sold, and the commissions or discounts paid or	783
given.	784

(5) The issuer pays a filing fee of one hundred dollars for	785
the first filing and fifty dollars for every subsequent filing	786
during each calendar year.	787

(R) A sale of a money order, travelers' check, or other	788
instrument for the transmission of money by a person qualified to	789
engage in such business under section 1109.60 or Chapter 1315. of	790
the Revised Code is exempt.	791

(S) A sale by a licensed dealer of securities that are in	792
the process of registration under the Securities Act of 1933,	793
unless exempt under that act, and that are in the process of	794
registration, if registration is required under this chapter, is	795
exempt, provided that no sale of that nature shall be consummated	796
prior to the registration by description or qualification of the	797
securities.	798

(T) The execution by a licensed dealer of orders for the	799
purchase of any security is exempt, provided that the dealer acts	800
only as agent for the purchaser, has made no solicitation of the	801
order to purchase the security, has no interest in the	802
distribution of the security, and delivers to the purchaser	803
written confirmation of the transaction that clearly itemizes the	804
dealer's commission. "Solicitation," as used in this division,	805
means solicitation of the order for the specific security	806
purchased and does not include general solicitations or	807
advertisements of any kind.	808

(U) The sale insofar as the security holders of a person are	809
concerned, where, pursuant to statutory provisions of the	810
jurisdiction under which that person is organized or pursuant to	811
provisions contained in its articles of incorporation, certificate	812
of incorporation, partnership agreement, declaration of trust,	813
trust indenture, or similar controlling instrument, there is	814
submitted to the security holders, for their vote or consent, (1)	815
a plan or agreement for a reclassification of securities of that	816
person that involves the substitution of a security of that person	817
for another security of that person, (2) a plan or agreement of	818
merger or consolidation or a similar plan or agreement of	819
acquisition in which the securities of that person held by the	820
security holders will become or be exchanged for securities of any	821
other person, or (3) a plan or agreement for a combination as	822
defined in division (Q) of section 1701.01 of the Revised Code or	823
a similar plan or agreement for the transfer of assets of that	824
person to another person in consideration of the issuance of	825
securities of any person, is exempt if, with respect to any of the	826
foregoing transactions, either of the following conditions is	827
satisfied:	828

(a) The securities to be issued to the security holders are	829
effectively registered under sections 6 to 8 of the Securities Act	830
of 1933 and offered and sold in compliance with section 5 of that	831
act;	832

(b) At least twenty days prior to the date on which a	833
meeting of the security holders is held or the earliest date on	834
which corporate action may be taken when no meeting is held, there	835
is submitted to the security holders, by that person, or by the	836
person whose securities are to be issued in the transaction,	837
information substantially equivalent to the information that would	838
be required to be included in a proxy statement or information	839
statement prepared by or on behalf of the management of an issuer	840
subject to section 14(a) or 14(c) of the Securities Exchange Act	841
of 1934.	842

(V) The sale of any security is exempt if the division by	843
rule finds that registration is not necessary or appropriate in	844
the public interest or for the protection of investors.	845

(W) Any offer or sale of securities made in reliance on the	846
exemptions provided by Rule 505 of Regulation D made pursuant to	847
the Securities Act of 1933 and the conditions and definitions	848
provided by Rules 501 to 503 thereunder is exempt if the offer or	849
sale satisfies all of the following conditions:	850

(1) No commission or other remuneration is given, directly	851
or indirectly, to any person for soliciting or selling to any	852
person in this state in reliance on the exemption under this	853
division, except to dealers licensed in this state.	854

(2)(a) Unless the cause for disqualification is waived under	855
division (W)(2)(b) of this section, no exemption under this	856
section is available for the securities of an issuer unless the	857
issuer did not know and in the exercise of reasonable care could	858
not have known that any of the following applies to any of the	859
persons described in Rule 262(a) to (c) of Regulation A under the	860
Securities Act of 1933:	861

(i) The person has filed an application for registration or	862
qualification that is the subject of an effective order entered	863
against the issuer, its officers, directors, general partners,	864
controlling persons or affiliates thereof, pursuant to the law of	865
any state within five years before the filing of a notice required	866
under division (W)(3) of this section denying effectiveness to, or	867
suspending or revoking the effectiveness of, the registration	868
statement.	869

(ii) The person has been convicted of any offense in	870
connection with the offer, sale, or purchase of any security or	871
franchise, or any felony involving fraud or deceit, including, but	872
not limited to, forgery, embezzlement, fraud, theft, or conspiracy	873
to defraud.	874

(iii) The person is subject to an effective administrative	875
order or judgment that was entered by a state securities	876
administrator within five years before the filing of a notice	877
required under division (W)(3) of this section and that prohibits,	878
denies, or revokes the use of any exemption from securities	879
registration, prohibits the transaction of business by the person	880
as a dealer, or is based on fraud, deceit, an untrue statement of	881
a material fact, or an omission to state a material fact.	882

(iv) The person is subject to any order, judgment, or decree	883
of any court entered within five years before the filing of a	884
notice required under division (W)(3) of this section,	885
temporarily, preliminarily, or permanently restraining or	886
enjoining the person from engaging in or continuing any conduct or	887
practice in connection with the offer, sale, or purchase of any	888
security, or the making of any false filing with any state.	889

(b)(i) Any disqualification under this division involving a	890
dealer may be waived if the dealer is or continues to be licensed	891
in this state as a dealer after notifying the commissioner of the	892
act or event causing disqualification.	893

(ii) The commissioner may waive any disqualification under	894
this paragraph upon a showing of good cause that it is not	895
necessary under the circumstances that use of the exemption be	896
denied.	897

(3) Not later than five business days before the earlier of	898
the date on which the first use of an offering document or the	899
first sale is made in this state in reliance on the exemption	900
under this division, there is filed with the commissioner a notice	901
comprised of offering material in compliance with the requirements	902
of Rule 502 of Regulation D under the Securities Act of 1933 and a	903
fee of one hundred dollars. Material amendments to the offering	904
document shall be filed with the commissioner not later than the	905
date of their first use in this state.	906

(4) The aggregate commission, discount, and other	907
remuneration paid or given, directly or indirectly, does not	908
exceed twelve per cent of the initial offering price, excluding	909
legal, accounting, and printing fees.	910

(X) Any offer or sale of securities made in reliance on the	911
exemption provided in Rule 506 of Regulation D under the	912
Securities Act of 1933, and in accordance with Rules 501 to 503 of	913
Regulation D under the Securities Act of 1933, is exempt provided	914
that all of the following apply:	915

(1) The issuer makes a notice filing with the division on	916
form D of the securities and exchange commission within fifteen	917
days of the first sale in this state;	918

(2) Any commission, discount, or other remuneration for	919
sales of securities in this state is paid or given only to dealers	920
or salespersons licensed under this chapter;	921

(3) The issuer pays a filing fee of one hundred dollars to	922
the division; however, no filing fee shall be required to file	923
amendments to the form D of the securities and exchange	924
commission.	925

(Y) The offer or sale of securities by an issuer is exempt	926
provided that all of the following apply:	927

(1) The sale of securities is made only to persons who are,	928
or who the issuer reasonably believes are, accredited investors as	929
defined in Rule 501 of Regulation D under the Securities Act of	930
1933.	931

(2) The issuer reasonably believes that all purchasers are	932
purchasing for investment and not with a view to or for sale in	933
connection with a distribution of the security. Any resale of a	934
security sold in reliance on this exemption within twelve months	935
of sale shall be presumed to be with a view to distribution and	936
not for investment, except a resale to which any of the following	937
applies:	938

(a) The resale is pursuant to a registration statement	939
effective under section 1707.09 or 1707.091 of the Revised Code.	940

(b) The resale is to an accredited investor, as defined in	941
Rule 501 of Regulation D under the Securities Act of 1933.	942

(c) The resale is to an institutional investor pursuant to	943
the exemptions under division (B) or (D) of this section.	944

(3) The exemption under this division is not available to an	945
issuer that is in the development stage and that either has no	946
specific business plan or purpose or has indicated that its	947
business plan is to engage in a merger or acquisition with an	948
unidentified company or companies, or other entities or persons.	949

(4) The exemption under this division is not available to an	950
issuer, if the issuer, any of the issuer's predecessors, any	951
affiliated issuer, any of the issuer's directors, officers,	952
general partners, or beneficial owners of ten per cent or more of	953
any class of its equity securities, any of the issuer's promoters	954
presently connected with the issuer in any capacity, any	955
underwriter of the securities to be offered, or any partner,	956
director, or officer of such underwriter:	957

(a) Within the past five years, has filed a registration	958
statement that is the subject of a currently effective	959
registration stop order entered by any state securities	960
administrator or the securities and exchange commission;	961

(b) Within the past five years, has been convicted of any	962
criminal offense in connection with the offer, purchase, or sale	963
of any security, or involving fraud or deceit;	964

(c) Is currently subject to any state or federal	965
administrative enforcement order or judgment, entered within the	966
past five years, finding fraud or deceit in connection with the	967
purchase or sale of any security;	968

(d) Is currently subject to any order, judgment, or decree	969
of any court of competent jurisdiction, entered within the past	970
five years, that temporarily, preliminarily, or permanently	971
restrains or enjoins the party from engaging in or continuing to	972
engage in any conduct or practice involving fraud or deceit in	973
connection with the purchase or sale of any security.	974

(5) Division (Y)(4) of this section is inapplicable if any	975
of the following applies:	976

(a) The party subject to the disqualification is licensed or	977
registered to conduct securities business in the state in which	978
the order, judgment, or decree creating the disqualification was	979
entered against the party described in division (Y)(4) of this	980
section.	981

(b) Before the first offer is made under this exemption, the	982
state securities administrator, or the court or regulatory	983
authority that entered the order, judgment, or decree, waives the	984
disqualification.	985

(c) The issuer did not know and, in the exercise of	986
reasonable care based on reasonable investigation, could not have	987
known that a disqualification from the exemption existed under	988
division (Y)(4) of this section.	989

(6) A general announcement of the proposed offering may be	990
made by any means; however, the general announcement shall include	991
only the following information, unless additional information is	992
specifically permitted by the division by rule:	993

(a) The name, address, and telephone number of the issuer of	994
the securities;	995

(b) The name, a brief description, and price of any security	996
to be issued;	997

(c) A brief description of the business of the issuer;

998

(d) The type, number, and aggregate amount of securities	999
being offered;	1000

(e) The name, address, and telephone number of the person to	1001
contact for additional information; and	1002

(f) A statement indicating all of the following:

1003

(i) Sales will only be made to accredited investors as	1004
defined in Rule 501 of Regulation D under the Securities Act of	1005
1933;	1006

(ii) No money or other consideration is being solicited or	1007
will be accepted by way of this general announcement;	1008

(iii) The securities have not been registered with or	1009
approved by any state securities administrator or the securities	1010
and exchange commission and are being offered and sold pursuant to	1011
an exemption from registration.	1012

(7) The issuer, in connection with an offer, may provide	1013
information in addition to the general announcement described in	1014
division (Y)(6) of this section, provided that either of the	1015
following applies:	1016

(a) The information is delivered through an electronic	1017
database that is restricted to persons that are accredited	1018
investors as defined in Rule 501 of Regulation D under the	1019
Securities Act of 1933.	1020

(b) The information is delivered after the issuer reasonably	1021
believes that the prospective purchaser is an accredited investor	1022
as defined in Rule 501 of Regulation D under the Securities Act of	1023
1933.	1024

(8) No telephone solicitation shall be done, unless prior to	1025
placing the telephone call, the issuer reasonably believes that	1026
the prospective purchaser to be solicited is an accredited	1027
investor as defined in Rule 501 of Regulation D under the	1028
Securities Act of 1933.	1029

(9) Dissemination of the general announcement described in	1030
division (Y)(6) of this section to persons that are not accredited	1031
investors, as defined in Rule 501 of Regulation D under the	1032
Securities Act of 1933, does not disqualify the issuer from	1033
claiming an exemption under this division.	1034

(10) The issuer shall file with the division notice of the	1035
offering of securities within fifteen days after notice of the	1036
offering is made or a general announcement is made in this state.	1037
The filing shall be on forms adopted by the division and shall	1038
include a copy of the general announcement, if one is made	1039
regarding the proposed offering, and copies of any offering	1040
materials, circulars, or prospectuses. A filing fee of one	1041
hundred dollars also shall be included.	1042

Sec. 1707.041.  (A)(1) No control bid for any securities of	1043
a subject company shall be made pursuant to a tender offer or	1044
request or invitation for tenders until the offeror files with the	1045
division of securities the information prescribed in division	1046
(A)(2) of this section. The offeror shall deliver a copy of the	1047
information specified in division (A)(2) of this section, by	1048
personal service, to the subject company at its principal office	1049
not later than the time of the filing with the division of	1050
securities. The offeror shall send or deliver to all offerees in	1051
this state, as soon as practicable after the filing, the material	1052
terms of the proposed offer and the information specified in	1053
division (A)(2) of this section.	1054

(2) The information to be filed with the division of	1055
securities, with the subject company, and with any other offeror,	1056
pursuant to division (A)(1) of this section, shall include:	1057

(a) Copies of all prospectuses, brochures, advertisements,	1058
circulars, letters, or other matter by means of which the offeror	1059
proposes to disclose to offerees all information material to a	1060
decision to accept or reject the offer;	1061

(b) The identity and background of all persons on whose	1062
behalf the acquisition of any equity security of the subject	1063
company has been or is to be effected;	1064

(c) The source and amount of funds or other consideration	1065
used or to be used in acquiring any equity security, including a	1066
statement describing any securities, other than the existing	1067
capital stock or long term debt of the offeror, which are being	1068
offered in exchange for the equity securities of the subject	1069
company;	1070

(d) A statement of any plans or proposals that the offeror,	1071
upon gaining control, may have to liquidate the subject company,	1072
sell its assets, effect a merger or consolidation of it,	1073
establish, terminate, convert, or amend employee benefit plans,	1074
close any plant or facility of the subject company or of any of	1075
its subsidiaries or affiliates, change or reduce the work force of	1076
the subject company or any of its subsidiaries or affiliates, or	1077
make any other major change in its business, corporate structure,	1078
management personnel, or policies of employment;	1079

(e) The number of shares of any equity security of the	1080
subject company of which each offeror is beneficial or record	1081
owner or has a right to acquire, directly or indirectly, together	1082
with the name and address of each person defined in this section	1083
as an offeror;	1084

(f) Particulars as to any contracts, arrangements, or	1085
understandings to which an offeror is party with respect to any	1086
equity security of the subject company, including transfers of any	1087
equity security, joint ventures, loan or option arrangements, puts	1088
and calls, guarantees of loan, guarantees against loss, guarantees	1089
of profits, division of losses or profits, or the giving or	1090
withholding of proxies, naming the persons with whom such	1091
contracts, arrangements, or understandings have been entered into;	1092

(g) Complete information on the organization and operations	1093
of the offeror, including the year of organization,; the form of	1094
organization,; the jurisdiction in which it is organized,; a	1095
description of each class of the offeror's capital stock and of	1096
its long term debt,; financial statements for the current period	1097
and for the three most recent annual accounting periods, unless	1098
the division by rule determines that the financial statements are	1099
not material or permits the filing of financial statements for	1100
less than the three most recent annual accounting periods; a brief	1101
description of the location and general character of the principal	1102
physical properties of the offeror and its subsidiaries,; a	1103
description of pending legal proceedings other than routine	1104
litigation to which the offeror or any of its subsidiaries is a	1105
party or of which any of their property is the subject,; a brief	1106
description of the business done and projected by the offeror and	1107
its subsidiaries and the general development of such business over	1108
the past three years,; the names of all directors and executive	1109
officers together with biographical summaries of each for the	1110
preceding three years to date,; and the approximate amount of any	1111
material interest, direct or indirect, of any of the directors or	1112
officers in any material transaction during the past three years,	1113
or in any proposed material transactions, to which the offeror or	1114
any of its subsidiaries was or is to be a party;	1115

(h) Such other and further documents, exhibits, data, and	1116
information as may be required by regulations of the division of	1117
securities, or as may be necessary to make fair, full, and	1118
effective disclosure to offerees of all information material to a	1119
decision to accept or reject the offer.	1120

(3) Within five calendar days of the date of filing by an	1121
offeror of information specified in division (A)(2) of this	1122
section, the division of securities may by order summarily suspend	1123
the continuation of the control bid if the division determines	1124
that all of the information specified has not been provided by the	1125
offeror or that the control bid materials provided to offerees do	1126
not provide full disclosure to offerees of all material	1127
information concerning the control bid. Such a suspension shall	1128
remain in effect only until the determination following a hearing	1129
held pursuant to division (A)(4) of this section.	1130

(4) A hearing shall be scheduled and held by the division of	1131
securities with respect to each suspension imposed under division	1132
(A)(3) of this section. The hearing shall be held within ten	1133
calendar days of the date on which the suspension is imposed.	1134
Chapter 119. of the Revised Code does not apply to a hearing held	1135
under this division. The division of securities may allow any	1136
interested party to appear at and participate in the hearing in a	1137
manner considered appropriate by the division. The determination	1138
of the division of securities made following the hearing shall be	1139
made within three calendar days after the hearing has been	1140
completed, and no later than fourteen calendar days after the date	1141
on which the suspension is imposed. The division of securities,	1142
by rule or order, may prescribe time limits for conducting the	1143
hearing and for the making of the determination that are shorter	1144
than those specified in this division. If, based upon the	1145
hearing, the division of securities determines that all of the	1146
information required to be provided by division (A)(2) of this	1147
section has not been provided by the offeror, that the control bid	1148
materials provided to offerees do not provide full disclosure to	1149
offerees of all material information concerning the control bid,	1150
or that the control bid is in material violation of any provision	1151
of this chapter, the division shall maintain the suspension of the	1152
continuation of the control bid, subject to the right of the	1153
offeror to correct disclosure and other deficiencies identified by	1154
the division and to reinstitute the control bid by filing new or	1155
amended information pursuant to this section.	1156

(B)(1) No control bid shall be made pursuant to a tender	1157
offer or request or invitation for tenders unless division (A) of	1158
section 1707.14 of the Revised Code has been complied with, and no	1159
offeror shall make a control bid that is not made to all holders	1160
residing in this state of the equity security that is the subject	1161
of the control bid, or that is not made to such holders on the	1162
same terms as the control bid is made to holders of such equity	1163
security not residing in this state.	1164

(2) No offeror may make a control bid pursuant to a tender	1165
offer or request or invitation for tenders or acquire any equity	1166
security in this state pursuant to a control bid at any time	1167
during which any proceeding by the division alleging a violation	1168
of any provision of this chapter is pending against the offeror.	1169

(3) No offeror may acquire from any resident of this state	1170
in any manner any equity security of any class of a subject	1171
company at any time within two years following the last	1172
acquisition of any security of the same class pursuant to a	1173
control bid pursuant to a tender offer or request or invitation	1174
for tenders by that offeror, whether the acquisition was made by	1175
purchase, exchange, merger, consolidation, partial or complete	1176
liquidation, redemption, reverse stock split, recapitalization,	1177
reorganization, or any other similar transaction, unless the	1178
resident is afforded, at the time of the later acquisition, a	1179
reasonable opportunity to dispose of the security to the offeror	1180
upon substantially the same terms as those provided in the earlier	1181
control bid.	1182

(4) If an offeror makes a tender offer or request or	1183
invitation for tenders not subject to Rule 14D-1 or Rule 14D-4 of	1184
the securities and exchange commission under the "Securities	1185
Exchange Act of 1934," for less than all the outstanding equity	1186
securities of a class, and if a greater number of securities is	1187
deposited pursuant thereto within ten days after copies of the	1188
offer or request or invitation for tenders are first published or	1189
sent or given to security holders than the offeror is bound or	1190
willing to take up and pay for, the securities shall be taken up	1191
as nearly as may be pro rata, disregarding fractions, according to	1192
the number of securities deposited by each offeree. The preceding	1193
sentence applies to securities deposited within ten days after	1194
notice of an increase in the consideration offered to security	1195
holders, as described in the next sentence, is first published or	1196
sent or given to security holders. If the terms of a control bid	1197
are changed before its expiration by increasing the consideration	1198
offered to offerees, the offeror shall pay the increased	1199
consideration for all equity securities taken up, whether the same	1200
are deposited or taken up before or after the change in the terms	1201
of the control bid.	1202

(C) If the offeror or the subject company is a banking	1203
corporation subject to regulation by the division of banks, aor	1204
savings and loan association subject to regulation by the division	1205
of savings and loan associationsfinancial institutions, or a	1206
public utility corporation subject to regulation by the public	1207
utilities commission, the division of securities shall forthwith	1208
immediately, upon receipt of the filing required under division	1209
(A) of this section, furnish a copy of the filing to the	1210
regulatory body having jurisdiction over the offeror or subject	1211
company.	1212

(D) An offeror is subject to the liabilities and penalties	1213
applicable to a seller, and an offeree is entitled to the remedies	1214
applicable to a purchaser, as set forth in sections 1707.041 to	1215
1707.44 of the Revised Code.	1216

(E) The division of securities may, pursuant to Chapter 119.	1217
of the Revised Code, prescribe reasonable rules:	1218

(1) Defining fraudulent, evasive, deceptive, or grossly	1219
unfair practices in connection with control bids, and the terms	1220
used in this section;	1221

(2) Exempting from this section control bids not made for	1222
the purpose of, and not having the effect of, changing or	1223
influencing the control of a subject company;	1224

(3) Covering such other matters as are necessary to give	1225
effect to this section.	1226

(F) If the offeror or a subject company is an insurance	1227
company subject to regulation under Title XXXIX of the Revised	1228
Code, the superintendent of insurance shall for all purposes of	1229
this section be substituted for the division of securities. This	1230
section shall not be construed to limit or modify in any way any	1231
responsibility, authority, power, or jurisdiction of the division	1232
of securities or the superintendent of insurance pursuant to any	1233
other section of the Revised Code.	1234

(G) This section does not apply when:

1235

(1) The offeror or the subject company is a public utility	1236
or a public utility holding company as defined in section 2 of the	1237
"Public Utility Holding Company Act of 1935," 49 Stat. 803, 15	1238
U.S.C. 79, as amended, and the control bid is subject to approval	1239
by the appropriate federal agency as provided in such act;	1240

(2) The offeror or the subject company is a bank or a bank	1241
holding company as subject to the "Bank Holding Company Act of	1242
1956," 70 Stat. 133, 12 U.S.C. 1841, and subsequent amendments	1243
thereto, and the control bid is subject to approval by the	1244
appropriate federal agency as provided in such act;	1245

(3) The offeror or the subject company is a savings and loan	1246
holding company as defined in section 2 of the "Savings and Loan	1247
Holding Company Amendments of 1967," 82 Stat. 5, 12 U.S.C. 1730a,	1248
as amended, and the control bid is subject to approval by the	1249
appropriate federal agency as provided in such act;	1250

(4) The offeror and the subject company are banks and the	1251
offer is part of a merger transaction subject to approval by	1252
appropriate federal supervisory authorities.	1253

(H) If any application of any provision of this section is	1254
for any reason held to be illegal or invalid, the illegality or	1255
invalidity shall not affect any legal and valid provision or	1256
application of this section, and the parts and application of this	1257
section are severable.	1258

Sec. 1707.06.  (A) The following transactions in securities	1259
may be carried out upon compliance with section 1707.07sections	1260
1707.08 and 1707.11 of the Revised Code:	1261

(1) The sale of its securities by a corporation may be so	1262
carried out when no part of the securities to be sold is issued	1263
directly or indirectly in payment or exchange for intangible	1264
property or for property not located in this state, and when the	1265
total commission, remuneration, expense, or discount, excluding	1266
legal, accounting, and printing fees of the corporation, in	1267
connection with the sale of those securities does not exceed three	1268
per cent of the initial offering price of those securities.	1269

(2) The sale of its securities by any corporation may be so	1270
carried out when the securities are sold to not more than a	1271
maximum of thirty-five purchasers, the aggregate commission,	1272
discount, or other remuneration, excluding legal, accounting, and	1273
printing fees, paid or given directly or indirectly in connection	1274
with the sale of those securities does not exceed ten per cent of	1275
the initial offering price, and those securities are issued and	1276
disposed of for the sole account of the issuer in good faith and	1277
not for the purpose of avoiding this chapter. For the purposes of	1278
this division, neither of the following shall be included among	1279
the thirty-five purchaser maximum:	1280

(a) Any purchaser of at least one hundred thousand dollars	1281
of the offered securities;	1282

(b) Any director or executive officer of the issuing	1283
corporation.	1284

(3) The sale of securities representing an interest in a	1285
partnership, limited liability company, limited partnership,	1286
partnership association, syndicate, pool, trust, trust fund, or	1287
other unincorporated association may be so carried out if the	1288
securities are sold to not more than a maximum of thirty-five	1289
purchasers, the aggregate commission, discount, or other	1290
remuneration, excluding legal, accounting, and printing fees, paid	1291
or given directly or indirectly in connection with the sale of	1292
those securities does not exceed ten per cent of the initial	1293
offering price, and the sale is made in good faith and not for the	1294
purpose of avoiding this chapter. For the purposes of this	1295
division, neither of the following shall be included among the	1296
thirty-five purchaser maximum:	1297

(a) Any purchaser of at least one hundred thousand dollars	1298
of the offered securitessecurities;	1299

(b) Any trustee, general partner, director, or executive	1300
officer of the issuer, or any member of a limited liability	1301
company, if the issuer is a limited liability company in which the	1302
management is reserved to its members, or manager of a limited	1303
liability company, if the issuer is a limited liability company in	1304
which the management is not reserved to its members.	1305

(4) The offering and sale of additional securities of a	1306
corporation, made by it to its own security holders exclusively,	1307
may be so carried out where no commission or other remuneration is	1308
paid or given directly or indirectly in connection with the	1309
offering and sale, other than a commission in respect of the	1310
securities purchased by such security holders or a discount in	1311
respect of the securities not purchased by the security holders,	1312
or both, paid by the corporation to a dealer who has agreed to	1313
purchase all of those securities not taken by the security	1314
holders.	1315

(B) An issuer engaging in any transaction specified in this	1316
section shall not be deemed a dealer. Any commission, discount,	1317
or other remuneration for sales in this state of securities	1318
specified in this section shall be paid only to dealers or	1319
salesmensalespersons licensed pursuant to this chapter.	1320

(C) For the purpose of this section, each of the following	1321
is deemed to be a single purchaser of a security:	1322

(1) Husband and wife;

1323

(2) A child and its parent or guardian when the parent or	1324
guardian holds the security for the benefit of the child;	1325

(3) A corporation, a limited liability company, a	1326
partnership, an association or other unincorporated entity, a	1327
joint-stock company, or a trust, but only if the corporation,	1328
limited liability company, partnership, association, entity,	1329
joint-stock company, or trust was not formed for the purpose of	1330
purchasing the security.	1331

(D) A sale of securities registered under section 1707.09 or	1332
1707.091 of the Revised Code or sold pursuant to an exemption	1333
under this chapter shall not be integrated with a sale pursuant to	1334
this section in computing the number of purchasers under this	1335
section.	1336

Sec. 1707.08.  The securities specified in section 1707.05 of	1337
the Revised Code may be sold, and the transactions enumerated in	1338
section 1707.06 of the Revised Code may be consummated on	1339
compliance with this section and section 1707.11 of the Revised	1340
Code.	1341

A description, verified either by the oath of the person	1342
filing it or of any person having knowledge of the facts, shall be	1343
filed with the division of securities by the issuer, or by a	1344
majority of the incorporators of suchthe issuer prior to election	1345
of officers if it is an incorporated issuer, or by a licensed	1346
dealer, which description shall be on forms prescribed by the	1347
division and shall set forth:	1348

(A) The name of the issuer;

1349

(B) A brief description of the securities;

1350

(C) The amount of suchthe securities to be offered after	1351
the filing of suchthe description for sale in this state and, if	1352
all the securities are not to be offered by the person filing the	1353
description, then the respective amounts to be offered by others,	1354
so far as suchthose amounts are known, and the names and	1355
addresses of suchthe other offerors;	1356

(D) A brief statement of the facts which show that the	1357
securities fall within one of the classes specified in section	1358
1707.05 of the Revised Code or that they are the subject matter of	1359
a transaction enumerated in section 1707.06 of the Revised Code;	1360

(E) The price at which the securities are to be offered for	1361
sale.	1362

When qualification is sought under division (B)(1) of section	1363
1707.05 of the Revised Code, there shall be filed with the	1364
description an appraisal signed by three disinterested persons	1365
having knowledge of the values described in such division.	1366

Registration by description is completed when the	1367
description, together with thea filing fee of fifty dollars, in	1368
the form of cash, check, or United States postal money order,	1369
prescribed by this section, is delivered, or mailed by certified	1370
mail with postage prepaid, to the division. At the time the	1371
description is filed, the person filing it shall pay to the	1372
division a fee of one-tenth of one per cent of the aggregate price	1373
at which the securities therein described are to be offered for	1374
sale to the public in this state, if they fall within one of the	1375
classes specified in section 1707.05 of the Revised Code; but in	1376
no case shall the fee be less than one hundred or more than one	1377
thousand dollars. If such securities are the subject matter of a	1378
transaction enumerated in section 1707.06 of the Revised Code,	1379
such fee shall be a flat fee of fifty dollars.	1380

In order to correct errors or omissions, a registration by	1381
description may be amended by the person who originally filed it,	1382
by the filing, in the same manner as in the case of an original	1383
registration by description, of an amended registration by	1384
description or of an amendment of the original registration by	1385
description; if a larger fee would have been payable upon the	1386
filing of the original registration by description had the	1387
amendment been incorporated therein, an additional fee in the	1388
amount of any such deficiency shall be paid at the time of filing	1389
such amendment.	1390

When any securities enumerated under section 1707.05 of the	1391
Revised Code have been registered and the fees prescribed by this	1392
section have been paid, any licensed dealer may thereafter sell	1393
such securities under such registration so long as such	1394
registration remains in full force, and any such dealer who	1395
desires may file with the division a written notice of intention	1396
to sell such securities or any designated portion thereof. For	1397
such filing no fee need be paid.	1398

When transactions in any securities enumerated in section	1399
1707.06 of the Revised Code have been registered and the fees	1400
prescribed by this section have been paid, suchthe transactions	1401
may be consummated so long as suchthe registration remains in	1402
full force.	1403

Sec. 1707.09.  All securities, except those enumerated in	1404
section 1707.02 or 1707.05 of the Revised Code and those that are	1405
the subject matter of a transaction permitted by section 1707.03,	1406
1707.04, or 1707.06 of the Revised Code, shall be qualified in the	1407
manner provided by this section before being sold in this state.	1408

Applications for that qualification, on forms prescribed by	1409
the division of securities, shall be made in writing either by the	1410
issuer of the securities or by any licensed dealer desiring to	1411
sell them within this state and shall be signed by the applicant,	1412
sworn to by any person having knowledge of the facts stated in the	1413
application, and filed in the office of the division.	1414

The division shall require the applicant to submit to it the	1415
following information:	1416

(A) The names and addresses of the directors or trustees and	1417
of the officers of the issuer, if the issuer is a corporation or	1418
an unincorporated association; of all the members of the issuer,	1419
if the issuer is a limited liability company in which management	1420
is reserved to its members; of all the managers of the issuer, if	1421
the issuer is a limited liability company in which management is	1422
not reserved to its members; of all partners, if the issuer is a	1423
general or limited partnership or a partnership association; and	1424
the name and address of the issuer, if the issuer is an	1425
individual;	1426

(B) The address of the issuer's principal place of business	1427
and principal office in this state, if any;	1428

(C) The purposes and general character of the business	1429
actually being transacted, or to be transacted, by the issuer, and	1430
the purpose of issuing the securities named in the application;	1431

(D) A statement of the capitalization of the issuer; a	1432
balance sheet made up as of the most recent practicable date,	1433
showing the amount and general character of its assets and	1434
liabilities; a description of the security for the qualification	1435
of which application is being made; and copies of all circulars,	1436
prospectuses, advertisements, or other descriptions of the	1437
securities, that are then prepared by or for the issuer, or by or	1438
for the applicant if the applicant is not the issuer, or by or for	1439
both, to be used for distribution or publication in this state;	1440

(E) A statement of the amount of the issuer's income,	1441
expenses, and fixed charges during the last fiscal year or, if the	1442
issuer has been in actual business less than one year, for the	1443
time that the issuer has been in actual business;	1444

(F) A statement showing the price at which the security is	1445
to be offered for sale;	1446

(G) A statement showing the considerations received or to be	1447
received by the issuer of the securities purchased or to be	1448
purchased from the issuer and an itemized statement of all	1449
expenses of financing to be paid from those considerations so as	1450
to show the aggregate net amount actually received or to be	1451
received by the issuer;	1452

(H) All other information, including an opinion of counsel	1453
as to the validity of the securities that are the subject matter	1454
of the application, that the division considers necessary to	1455
enable it to ascertain whether the securities are entitled to	1456
qualification;	1457

(I) If the issuer is a corporation, there shall be filed	1458
with the application a certified copy of its articles of	1459
incorporation with all amendments to the articles, if the articles	1460
or amendments are not already on file in the office of the	1461
secretary of state; if the issuer is a limited liability company,	1462
there shall be filed with the application a certified copy of its	1463
articles of organization with all amendments to the articles, if	1464
the articles or amendments are not already on file in the office	1465
of the secretary of state; if the issuer is a trust or trustee,	1466
there shall be filed with the application a copy of all	1467
instruments by which the trust was created; and if the issuer is a	1468
partnership or an unincorporated association, or any other form of	1469
organization, there shall be filed with the application a copy of	1470
its articles of partnership or association and of all other papers	1471
pertaining to its organization, if the articles or other papers	1472
are not already on file in the office of the secretary of state;	1473

(J) If the application is made with respect to securities to	1474
be sold or distributed by or on behalf of the issuer, or by or on	1475
behalf of an underwriter, as defined in division (N) of section	1476
1707.03 of the Revised Code, a statement showing that the issuer	1477
has received, or will receive at or prior to the delivery of those	1478
securities, not less than eighty-five per cent of the aggregate	1479
price at which all those securities are sold by or on behalf of	1480
the issuer, without deduction for any additional commission,	1481
directly or indirectly, and without liability to pay any	1482
additional sum as commission;	1483

(K) If the division so permits with respect to a security,	1484
an applicant may file with the division, in lieu of the division's	1485
prescribed forms, a copy of the registration statement relating to	1486
the security, with all amendments to that statement, previously	1487
filed with the securities and exchange commission of the United	1488
States under the "Securities Act of 1933," as amended, together	1489
with all additional data, information, and documents that the	1490
division requires.	1491

If the division finds that it is not necessary in the public	1492
interest and for the protection of investors to require all the	1493
information specified in divisions (A) to (J) of this section, it	1494
may permit the filing of applications for qualification that	1495
contain the information that it considers necessary and	1496
appropriate in the public interest and for the protection of	1497
investors; but this provision applies only in the case of	1498
applications for qualification of securities previously issued and	1499
outstanding that may not be made the subject matter of	1500
transactions exempt under division (M) of section 1707.03 of the	1501
Revised Code by reason of the fact that those securities within	1502
one year were purchased outside this state or within one year were	1503
transported into this state.	1504

All the statements, exhibits, and documents required by the	1505
division under this section, except properly certified public	1506
documents, shall be verified by the oath of the applicant, of the	1507
issuer, or of any person having knowledge of the facts, and in the	1508
manner and form that may be required by the division. Failure or	1509
refusal to comply with the requests of the division shall be	1510
sufficient reason for a refusal by the division to register	1511
securities.	1512

If it appears to the division that substantially the only	1513
consideration to be paid for any of the securities to be qualified	1514
is to be intangible property of doubtful value, the division may	1515
require that the securities be delivered in escrow to a bank in	1516
this state under the terms that the division may reasonably	1517
prescribe or require to prevent a deceitful misrepresentation or	1518
sale of the securities, that the securities be subordinated in	1519
favor of those sold for sound value until they have a value	1520
bearing a reasonable relation to the value of those sold for sound	1521
value, or that a legend of warning specifying the considerations	1522
paid or to be paid for the securities be stamped or printed on all	1523
advertisements, circulars, pamphlets, or subscription blanks used	1524
in connection with the sale of any securities of the same issuer,	1525
or it may impose a combination of any two or more of these	1526
requirements.	1527

At the time of filing the information prescribed in this	1528
section, the applicant shall pay to the division a filing fee of	1529
one hundred dollars.	1530

The division, at any time, as a prerequisite to	1531
qualification, may make an examination of the issuer of securities	1532
sought to be qualified. The applicant for qualification of any	1533
securities may be required by the division to advance sufficient	1534
funds to pay all or any part of the actual expenses of that	1535
examination, an itemized statement of which shall be furnished the	1536
applicant. If the division finds that the business of the issuer	1537
is not fraudulently conducted, that the proposed offer or disposal	1538
of securities is not on grossly unfair terms, that the plan of	1539
issuance and sale of the securities referred to in the proposed	1540
offer or disposal would not defraud or deceive, or tend to defraud	1541
or deceive, purchasers, and that division (J) of this section	1542
applies and has been complied with, the division shall notify the	1543
applicant of its findings; and, upon payment of a registration fee	1544
of one-tenth of one per cent of the aggregate price at which the	1545
securities are to be sold to the public in this state, which fee,	1546
however, shall in no case be less than one hundred or more than	1547
one thousand dollars, the division shall register the	1548
qualification of the securities.	1549

An application may be amended by the person filing it at any	1550
time prior to the division's action on it either in registering	1551
the securities for qualification or in refusing to do so.	1552
Subsequent to any such action by the division, the person who	1553
filed the application may file with the consent of the division	1554
one or more amendments to it that shall become effective upon the	1555
making by the division of the findings enumerated in the next	1556
preceding paragraph of this section, the giving of notice of those	1557
findings to the applicant by the division, and the payment by the	1558
applicant of the additional fee that would have been payable had	1559
the application as it previously became effective contained the	1560
amendment.	1561

When any securities have been qualified and the fees for the	1562
qualification have been paid as provided in this section, any	1563
licensed dealer subsequently may sell the securities under the	1564
qualification, so long as the qualification remains in full force,	1565
and any dealer of that nature who desires may file with the	1566
division a written notice of intention to sell the securities or	1567
any designated portion of them. For that filing, no fee need be	1568
paid.	1569

Sec. 1707.092.  (A) For the purposes of selling securities	1570
in this state, except securities that are the subject matter of	1571
transactions enumerated in section 1707.03 of the Revised Code, an	1572
investment company, as defined by the Investment Company Act of	1573
1940, that is registered or has filed a registration statement	1574
with the securities and exchange commission under the Investment	1575
Company Act of 1940, shall file the following with the division of	1576
securities:	1577

(1) For the purposes of the sale of securities by a managed	1578
investment company, as defined in the Investment Company Act of	1579
1940:	1580

(a) A notice filing consisting of either of the following:

1581

(i) A copy of the investment company's federal registration	1582
statement as filed with the securities and exchange commission;	1583

(ii) A form U-1 or form NF of the North American securities	1584
administrators association and a copy of the investment company's	1585
prospectus and statement of additional information.	1586

(b) Appropriate filing fees consisting of both of the	1587
following:	1588

(i) A flat fee of one hundred dollars;

1589

(ii) A fee calculated at one-tenth of one per cent of the	1590
aggregate price at which the securities are to be sold to the	1591
public in this state, which calculated fee, however, shall in no	1592
case be less than one hundred or more than one thousand dollars.	1593

(c) Upon the registration of the securities with the	1594
securities and exchange commission, a managed investment company	1595
with an initial notice filing on file with the division shall	1596
submit to the division a copy of its final prospectus.	1597

(2) For the purposes of the sale of securities by a	1598
non-managed investment company, as defined in the Investment	1599
Company Act of 1940:	1600

(a) A notice filing consisting of either a copy of the	1601
investment company's federal registration statement as filed with	1602
the securities and exchange commission or a form U-1 or form NF of	1603
the North American securities administrators association;	1604

(b) Appropriate filing fees, as provided in division	1605
(A)(1)(b) of this section;	1606

(c) Upon the effectiveness of the registration of the	1607
securities with the securities and exchange commission, a	1608
non-managed investment company shall submit to the division a copy	1609
of its final prospectus.	1610

(B)(1) Upon payment of the maximum filing fees as provided	1611
in division (A)(1)(b) or (2)(b) of this section, a managed or	1612
non-managed investment company may sell an indefinite amount of	1613
securities in this state.	1614

(2) A managed or non-managed investment company making a	1615
notice filing as provided in this section shall comply with	1616
section 1707.11 of the Revised Code. An investment company that	1617
previously filed with the division a valid consent to service of	1618
process pursuant to section 1707.11 of the Revised Code may	1619
incorporate that consent by reference.	1620

(C)(1) For offerings involving covered securities, as	1621
defined in section 18 of the "Securities act of 1933," 15 U.S.C.	1622
77r, that are not subject to section 1707.02, 1707.03, 1707.04,	1623
1707.05, 1707.06, 1707.07, 1707.08, 1707.09, or 1707.091 of the	1624
Revised Code, or division (A) of this section, a notice filing	1625
shall be submitted to the division together with a consent to	1626
service of process pursuant to section 1707.11 of the Revised Code	1627
and a filing fee as provided in division (A)(1)(b) of this	1628
section.	1629

(2) The notice filing described in division (C)(1) of this	1630
section shall consist of any document filed with the securities	1631
and exchange commission pursuant to the Securities Act of 1933,	1632
together with annual or periodic reports of the value of the	1633
securities sold or offered to be sold to persons located in this	1634
state.	1635

(D) A notice filing submitted under this section shall be	1636
effective for thirteen months.	1637

Sec. 1707.14.  (A)(1) No person shall act as a dealer,	1638
unless the person is licensed as a dealer by the division of	1639
securities, except in the following cases:	1640

(a) When the person is transacting business through or with	1641
a licensed dealer;	1642

(b) When the securities are the subject matter of one or	1643
more transactions enumerated in divisions (B) to (L), (O) to (R),	1644
and (U) to (Y) of section 1707.03, or in section 1707.06 of the	1645
Revised Code, except when a commission, discount, or other	1646
remuneration is paid or given in consideration with transactions	1647
enumerated in divisions (O), (Q), (W), (X), and (Y) of section	1648
1707.03, or in section 1707.06 of the Revised Code;	1649

(c) When the person is an issuer selling securities issued	1650
by it or by its subsidiary, if such securities are specified under	1651
division (G) or (I) of section 1707.02, or under section 1707.04	1652
of the Revised Code;	1653

(d) When the person is participating in transactions exempt,	1654
under section 1707.34 of the Revised Code, from this chapter.	1655

(2) Notwithstanding the exceptions to licensure set forth in	1656
divisions (A)(1)(a) to (d) of this section, no person other than	1657
an issuer selling its own securities shall engage in the business	1658
of selling securities to an institutional investor unless the	1659
person is licensed as a dealer or the division, by rule, finds	1660
that such licensure is not necessary for the protection of	1661
investors or in the public interest.	1662

(B) Each dealer that in any twelve-month or shorter period,	1663
alone or with any other dealer with which it is affiliated, has	1664
total revenues of one hundred fifty thousand dollars or more	1665
derived from the business of buying, selling, or otherwise dealing	1666
in securities, and that at any time during such period has one	1667
hundred or more retail securities customers, shall be registered	1668
as a broker or dealer with the securities and exchange commission	1669
under the Securities Exchange Act of 1934, except the following	1670
entities:	1671

(1) A bank, savings and loan association, savings bank, or	1672
credit union chartered under the laws of the United States or any	1673
state thereof;	1674

(2) A dealer that enters into and is in compliance with an	1675
undertaking accepted by the division, in which the dealer agrees	1676
that it will not engage in any transaction involving the buying,	1677
selling, or otherwise dealing in securities with any natural	1678
person in this state, except for transactions involving either of	1679
the following:	1680

(a) Securities of corporations or associations that have	1681
qualified for treatment as nonprofit organizations pursuant to	1682
section 501(c)(3) of the "Internal Revenue Code of 1986," 100	1683
Stat. 2085, 26 U.S.C.A. 501, as amended;	1684

(b) Securities or transactions that are described in	1685
divisions (A)(1)(a) to (d) of this section.	1686

(C) Every dealer that must be registered as a broker or	1687
dealer with the securities and exchange commission pursuant to	1688
division (B) of this section shall become so registered no later	1689
than ninety days after the date on which the dealer meets the	1690
requirements for such registration.	1691

(D) The division by rule may exempt any dealer from	1692
complying with the licensing or registration requirements of this	1693
section, if the division finds that such licensing or registration	1694
is not necessary for the protection of investors or in the public	1695
interest.	1696

(E) As used in division (B) of this section, "retail	1697
securities customer" means a person that purchases from or through	1698
or sells securities to or through a dealer, and that is not an	1699
officer, a director, a principal, a general partner, or an	1700
employee of, the dealer. Each of the following is deemed to be a	1701
single retail securities customer:	1702

(1) A husband and wife;

1703

(2) A minor child and the minor child's parent or legal	1704
guardian;	1705

(3) A corporation, a partnership, an association or other	1706
unincorporated entity, a joint stock company, or a trust.	1707

Sec. 1707.141.  (A) Subject to division (C)(1) of this	1708
section, noNo person shall act as an investment adviser, unless	1709
one of the following applies:	1710

(1) The person is licensed as an investment adviser by the	1711
division of securities; however, nothing in this section shall be	1712
construed to prohibit a person from being licensed by the division	1713
as both an investment adviser and a dealer or salesperson.	1714

(2) The person is registered under section 203 of the	1715
"Investment Advisers Act of 1940," 15 U.S.C. 80b-3, as an	1716
investment adviser and is in compliance with the notice filing	1717
requirements of division (B) of this section.	1718

(3) The person has no place of business in this state, and	1719
the person's only clients in this state are any of the following:	1720

(a) Investment companies as defined in the Investment	1721
Company ActsAct of 1940;	1722

(b) Other investment advisers;

1723

(c) Licensed dealers;

1724

(d) Banks;

1725

(e) Insurance companies subject to regulation under Title	1726
XXXIX of the Revised Code and health insuring corporations	1727
regulated under Chapter 1751. of the Revised Code;	1728

(f) Employee benefit plans with assets of not less than one	1729
million dollars;	1730

(g) Government agencies or instrumentalities, whether acting	1731
for themselves or trustees with investment control;	1732

(h) Other institutional investors as the division may	1733
designate by rule.	1734

(4) The person has no place of business in this state, and	1735
during the preceding twelve-month period, the person has had not	1736
more than five clients, other than those described in division	1737
(A)(3) of this section, that are residents of this state.	1738

(B)(1) Subject to division (C)(2) of this section, noNo	1739
person who is registered under section 203 of the "Investment	1740
Advisers Act of 1940," 15 U.S.C. 80b-3, as an investment adviser	1741
shall act as an investment adviser, unless the person has done	1742
both of the following:	1743

(a) Filed with the division a consent to service of process	1744
pursuant to section 1707.11 of the Revised Code, together with	1745
either a notice filing form as specified in rules adopted by the	1746
division or a copy of those documents that have been filed by the	1747
investment adviser with the securities and exchange commission as	1748
specified in rules adopted by the division;	1749

(b) Paid the notice filing fee specified in division (B) of	1750
section 1707.17 of the Revised Code.	1751

(2) Upon compliance with division (B)(1) of this section,	1752
the division shall issue to the person an acknowledgment of notice	1753
filing.	1754

(3) The notice filing and fee requirements of division	1755
(B)(1) of this section do not apply to a person described in	1756
division (A)(3) or (4) of this section.	1757

(C)(1) On the effective date of this section, if a person is	1758
registered as an investment adviser with the securities and	1759
exchange commission pursuant to section 203 of the "Investment	1760
Advisers Act of 1940," 15 U.S.C. 80b-3, and is required to be	1761
licensed as an investment adviser by the division of securities,	1762
that person has until no later than December 31, 1999, to be	1763
licensed as an investment adviser by the division of securities.	1764
However, a person required to be licensed by the division as an	1765
investment adviser by no later than December 31, 1999, may be	1766
licensed as an investment adviser by the division on the effective	1767
date of this section and prior to December 31, 1999.	1768

(2) On the effective date of this section, if a person is	1769
registered as an investment adviser with the securities and	1770
exchange commission pursuant to section 203 of the "Investment	1771
Advisers Act of 1940," 15 U.S.C. 80b-3, and is subject to the	1772
notice filing requirements of division (B) of this section, that	1773
person has until no later than December 31, 1999, to comply with	1774
the notice filing requirements of division (B) of this section.	1775
However, a person required to comply with the notice filing	1776
requirements of division (B) of this section by no later than	1777
December 31, 1999, may comply with those notice filing	1778
requirements on the effective date of this section and prior to	1779
December 31, 1999.	1780

Sec. 1707.161.  (A) Subject to division (F) of this section,	1781
noNo person shall act as an investment adviser representative,	1782
unless one of the following applies:	1783

(1) The person is licensed as an investment adviser	1784
representative by the division of securities.	1785

(2) The person is a natural person who is licensed as an	1786
investment adviser by the division, and does not act as an	1787
investment adviser representative for another investment adviser;	1788
however, a natural person who is licensed as an investment adviser	1789
by the division may act as an investment adviser representative	1790
for another investment adviser if the natural person also is	1791
licensed by the division, or is properly excepted from licensure,	1792
as an investment adviser representative of the other investment	1793
adviser.	1794

(3) The person is employed by or associated with an	1795
investment adviser registered under section 203 of the "Investment	1796
Advisers Act of 1940," 15 U.S.C. 80b-3, and does not have a place	1797
of business in this state.	1798

(4) The person is employed by or associated with an	1799
investment adviser that is excepted from licensure pursuant to	1800
division (A)(3) or (4) of section 1707.141 of the Revised Code or	1801
excepted from notice filing pursuant to division (B)(3) of section	1802
1707.141 of the Revised Code.	1803

(B)(1) No investment adviser representative required to be	1804
licensed under this section shall act as an investment adviser	1805
representative for more than two investment advisers. An	1806
investment adviser representative that acts as an investment	1807
adviser representative for two investment advisers shall do so	1808
only after the occurrence of both of the following:	1809

(a) Being properly licensed, or properly excepted from	1810
licensure under this section, as an investment adviser	1811
representative for both investment advisers;	1812

(b) Complying with the requirements set forth in rules	1813
adopted by the division regarding consent of both investment	1814
advisers and notice.	1815

(2) Nothing in this section shall be construed to prohibit a	1816
natural person from being licensed by the division as both an	1817
investment adviser and an investment adviser representative.	1818

(3) Nothing in this section shall be construed to prohibit a	1819
natural person from being licensed by the division as both a	1820
salesperson and an investment adviser representative.	1821

(4) Nothing in this section shall be construed to prohibit a	1822
natural person from being licensed by the division as both a	1823
dealer and an investment adviser representative.	1824

(C) An investment adviser representative's license issued	1825
under this section shall not be effective during any period when	1826
the investment adviser representative is not employed by or	1827
associated with an investment adviser that is licensed by the	1828
division or that is in compliance with the notice filing	1829
requirements of division (B) of section 1707.141 of the Revised	1830
Code. Notice of the commencement and termination of the	1831
employment or association of an investment adviser representative	1832
licensed under this section shall be given to the division within	1833
thirty days after the commencement or termination by either of the	1834
following:	1835

(1) The investment adviser, in the case of an investment	1836
adviser representative licensed under this section and employed by	1837
or associated with, or formerly employed by or associated with, an	1838
investment adviser licensed under section 1707.141 of the Revised	1839
Code;	1840

(2) The investment adviser representative, in the case of an	1841
investment adviser representative licensed under this section and	1842
employed by or associated with, or formerly employed by or	1843
associated with, an investment adviser that is subject to the	1844
notice filings requirements of division (B) of section 1707.141 of	1845
the Revised Code.	1846

(D)(1) Application for an investment adviser representative	1847
license shall be made in accordance with this section and by	1848
filing with the division the information, materials, and forms	1849
specified in rules adopted by the division.	1850

(2) The division shall by rule require an applicant to pass	1851
an examination designated by the division or achieve a specified	1852
professional designation.	1853

(3) Prior to issuing the investment adviser representative	1854
license, the division may require the applicant to reimburse the	1855
division for the actual expenses incurred in investigating the	1856
applicant. An itemized statement of any such expenses that the	1857
applicant is required to pay shall be furnished to the applicant	1858
by the division.	1859

(E) If the division finds that the applicant is of good	1860
business repute, appears to be qualified to act as an investment	1861
adviser representative, and has complied with sections 1707.01 to	1862
1707.45 of the Revised Code and the rules adopted under those	1863
sections by the division, the division, upon payment of the fees	1864
prescribed by division (B) of section 1707.17 of the Revised Code,	1865
shall issue to the applicant a license authorizing the applicant	1866
to act as an investment adviser representative for the investment	1867
adviser, or investment advisers that are under common ownership or	1868
control, named in the application.	1869

(F) On March 18, 1999, a person required to be licensed as	1870
an investment adviser representative pursuant to this section has	1871
until no later than December 31, 1999, to be licensed as an	1872
investment adviser representative by the division of securities.	1873
However, a person required to be licensed by the division as an	1874
investment adviser representative by no later than December 31,	1875
1999, may be licensed as an investment adviser representative by	1876
the division on March 18, 1999, and prior to December 31, 1999.	1877

Sec. 1707.17.  (A)(1) The license of every dealer in and	1878
salesperson of securities shall expire on the thirty-first day of	1879
December of each year, and may be renewed upon the filing with the	1880
division of securities of an application for renewal, and the	1881
payment of the fee prescribed in this section, between the first	1882
day of November and the fifteenth day of December of each year.	1883
The division may accept an application for renewal filed between	1884
the fifteenth and the thirty-first day of December of each year.	1885
The division also may accept an application for renewal received	1886
by the division not later than the tenth day of January of the	1887
subsequent calendar year, provided that the application for	1888
renewal is accompanied by the license renewal fee and the	1889
additional fee prescribed in division (B) of this section. The	1890
division shall give notice, without unreasonable delay, of its	1891
action on any application for renewal of a dealer's or	1892
salesperson's license.	1893

(2) The license of every investment adviser and investment	1894
adviser representative licensed under section 1707.141 or 1707.161	1895
of the Revised Code shall expire on the thirty-first day of	1896
December of each year. The licenses may be renewed upon the	1897
filing with the division of an application for renewal, and the	1898
payment of the fee prescribed in division (B) of this section,	1899
between the fifteenth day of October and the thirtieth day of	1900
November of each year. The division may accept an application for	1901
renewal filed between the first and thirty-first day of December	1902
of each year. The division also may accept an application for	1903
renewal received by the division not later than the tenth day of	1904
January of the subsequent calenarcalendar year, provided that the	1905
application for renewal is accompanied by the license renewal fee	1906
and the additional fee prescribed in division (B) of this section.	1907
The division shall give notice, without unreasonable delay, of its	1908
action on any application for renewal.	1909

(3) An investment adviser required to make a notice filing	1910
under division (B) of section 1707.141 of the Revised Code	1911
annually shall file with the division the notice filing and the	1912
fee prescribed in division (B) of this section, no later than the	1913
thirty-first day of December of each year. The division may	1914
accept a notice filing received by the division not later than the	1915
tenth day of January of the subsequent calendar year, provided	1916
that the notice filing is accompanied by the notice filing fee and	1917
the additional fee prescribed in division (B) of this section.	1918

(B)(1) The fee for each dealer's license, and for each	1919
annual renewal thereof that is received by the division not later	1920
than the thirty-first day of December of each year, shall be	1921
thirty dollars per salesperson, but not less than one hundred	1922
fifty nor more than five thousand dollars. Upon payment of an	1923
additional fee of one-half of the license renewal fee, the	1924
division may accept an application for renewal received by the	1925
division between the first and tenth day of January of the	1926
subsequent calendar year. The fee for the examination of	1927
applicant dealers, when administered by the division, shall be	1928
seventy-five dollars.	1929

(2) The fee for each salesperson's license, and for each	1930
annual renewal thereof, shall be fifty dollars. The fee for the	1931
examination of an applicant salesperson, when administered by the	1932
division, shall be fifty dollars.	1933

(3) The fee for each investment adviser's license, and for	1934
each annual renewal thereof that is received by the division not	1935
later than the thirty-first day of December of each year, shall be	1936
two hundredfifty dollars. Upon the payment of an additional fee	1937
of one-half of the license fee, the division may accept a license	1938
renewal application received by the division between the first and	1939
tenth day of January of the subsequent calendar year. If the fee	1940
for an investment adviser license is paid to the division on or	1941
before October 1, 1999, that fee shall cover the issuance of the	1942
initial license and also shall cover any fee for renewal of the	1943
license for the period ending December 31, 2000.	1944

(4) The fee for each investment adviser notice filing	1945
required by division (B) of section 1707.141 of the Revised Code	1946
and received by the division not later than the thirty-first day	1947
of December of each year shall be one hundredfifty dollars. Upon	1948
the payment of an additional fee of one-half of the notice filing	1949
fee, the division may accept a notice filing received by the	1950
division between the first and tenth day of January of the	1951
subsequent calendar year. A notice filing may be made at any time	1952
during the calendar year. In that event, the notice filing fee	1953
shall not be reduced. If the fee for an investment adviser notice	1954
filing is paid to the division on or before October 1, 1999, that	1955
fee shall cover the initial notice filing and also shall cover any	1956
fee for the notice filing for the period ending December 31, 2000.	1957

(5) The fee for each investment adviser representative's	1958
license, and for each annual renewal thereof that is received by	1959
the division not later than the thirty-first day of December of	1960
each year, shall be thirty-five dollars; however, the fee shall be	1961
waived for the investment adviser representative designated the	1962
principal of the investment adviser pursuant to division (E) of	1963
section 1707.151 of the Revised Code. Upon the payment of an	1964
additional fee of one-half of the license fee, the division may	1965
accept a license renewal application received by the division	1966
between the first and tenth day of January of the subsequent	1967
calendar year. If the fee for an investment adviser	1968
representative's license is paid to the division on or before	1969
October 1, 1999, that fee shall cover the issuance of the initial	1970
license and also shall cover any fee for renewal of the license	1971
for the period ending December 31, 2000.	1972

(C) A dealer's, salesperson's, investment adviser's, or	1973
investment adviser representative's license may be issued at any	1974
time for the remainder of the calendar year. In that event, the	1975
annual fee shall not be reduced.	1976

Sec. 1707.19.  (A) An original license, or a renewal	1977
thereof, applied for by a dealer or salesperson of securities, or	1978
by an investment adviser or an investment adviser representative,	1979
may be refused, and any such license granted may be suspended and,	1980
after notice and hearing in accordance with Chapter 119. of the	1981
Revised Code, may be revoked, by the division of securities, if	1982
the division determines that the applicant or the licensed dealer,	1983
salesperson, investment adviser, or investment adviser	1984
representative:	1985

(1) Is not of good business repute;

1986

(2) Is conducting an illegitimate or fraudulent business;

1987

(3) Is, in the case of a dealer or investment adviser,	1988
insolvent;	1989

(4) Has intentionallyknowingly violated any provision of	1990
sections 1707.01 to 1707.45 of the Revised Code, or any regulation	1991
or order made thereunder;	1992

(5) Has knowingly and intentionally made a false statement	1993
of a material fact or an omission of a material fact in an	1994
application for a license, in a description or application that	1995
has been filed, or in any statement made to the division under	1996
such sections;	1997

(6) Has refused to comply with any lawful order or	1998
requirement of the division under section 1707.23 of the Revised	1999
Code;	2000

(7) Has been guilty of any fraudulent act in connection with	2001
the sale of any securities or in connection with acting as an	2002
investment adviser or investment adviser representative;	2003

(8) Conducts business in purchasing or selling securities at	2004
such variations from the existing market as in the light of all	2005
the circumstances are unconscionable;	2006

(9) Conducts business in violation of such rules and	2007
regulations as the division prescribes for the protection of	2008
investors, clients, or prospective clients;	2009

(10)(a) Has failed to furnish to the division any	2010
information with respect to the purchases or sales of securities	2011
within this state that may be reasonably requested by the division	2012
as pertinent to the protection of investors in this state.	2013

(b) Has failed to furnish to the division any information	2014
with respect to acting as an investment adviser or an investment	2015
adviser representative within this state that may be reasonably	2016
requested by the division.	2017

(B) For the protection of investors the division may	2018
prescribe reasonable rules defining fraudulent, evasive,	2019
deceptive, or grossly unfair practices or devices in the purchase	2020
or sale of securities.	2021

(C) For the protection of investors, clients, or prospective	2022
clients, the division may prescribe reasonable rules regarding the	2023
acts and practices of an investment adviser or an investment	2024
adviser representative.	2025

(D) Pending any investigation or hearing provided for in	2026
sections 1707.01 to 1707.45 of the Revised Code, the division may	2027
order the suspension of any dealer's, salesperson's, investment	2028
adviser's, or investment adviser representative's license by	2029
notifying the party concerned of such suspension and the cause for	2030
it. If it is a salesperson whose license is suspended, the	2031
division shall also notify the dealer employing the salesperson.	2032
If it is an investment adviser representative whose license is	2033
suspended, the division also shall notify the investment adviser	2034
with whom the investment adviser representative is employed or	2035
associated.	2036

(E)(1) The suspension or revocation of the dealer's license	2037
suspends the licenses of all the dealer's salespersons.	2038

(2) The suspension or revocation of the investment adviser's	2039
license suspends the licenses of all the investment adviser's	2040
investment adviser representatives. The suspension or revocation	2041
of an investment adviser's registration under section 203 of the	2042
"Investment Advisers Act of 1940," 15 U.S.C. 80b-3, suspends the	2043
licenses of all the investment adviser's investment adviser	2044
representatives.	2045

(F) It is sufficient cause for refusal, revocation, or	2046
suspension of the license in case of a partnership, partnership	2047
association, corporation, or unincorporated association if any	2048
general partner of the partnership, manager of the partnership	2049
association, or executive officer of the corporation or	2050
unincorporated association is not of good business repute or has	2051
been guilty of any act or omission which would be cause for	2052
refusing or revoking the license of an individual dealer,	2053
salesperson, investment adviser, or investment adviser	2054
representative.	2055

Sec. 1707.23.  Whenever it appears to the division of	2056
securities, from its files, upon complaint, or otherwise, that any	2057
person has engaged in, is engaged in, or is about to engage in any	2058
practice declared to be illegal or prohibited by Chapter 1707. of	2059
the Revised Codethis chapter or rules adopted under thatthis	2060
chapter by the division, or defined as fraudulent in thatthis	2061
chapter or rules adopted under thatthis chapter by the division,	2062
or any other deceptive scheme or practice in connection with the	2063
sale of securities, or acting as an investment adviser or	2064
investment adviser representative, or when the division believes	2065
it to be in the best interests of the public and necessary for the	2066
protection of investors, the division may do any of the following:	2067

(A) Require any person to file with it, on such forms as it	2068
prescribes, an original or additional statement or report in	2069
writing, under oath or otherwise, as to any facts or circumstances	2070
concerning the issuance, sale, or offer for sale of securities	2071
within this state by the person, as to the person's acts or	2072
practices as an investment adviser or investment adviser	2073
representative within this state, and as to other information as	2074
it deems material or relevant thereto;	2075

(B) Examine any investment adviser, investment adviser	2076
representative, or any seller, dealer, salesperson, or issuer of	2077
any securities, and any of their agents, employees, partners,	2078
officers, directors, members, or shareholders, wherever located,	2079
under oath; and examine records, books, documents, accounts, and	2080
papers as the division deems material or relevant to the inquiry;	2081

(C) Require the attendance of witnesses, and the production	2082
of books, records, and papers, as are required either by the	2083
division or by any party to a hearing before the division, and for	2084
that purpose issue a subpoena for any witness, or a subpoena duces	2085
tecum to compel the production of any books, records, or papers.	2086
The subpoena shall be served by certified mail, return receipt	2087
requested. If the subpoena is returned because of inability to	2088
deliver, or if no return is received within thirty days of the	2089
date of mailing, the subpoena may be served by ordinary mail. If	2090
no return of ordinary mail is received within thirty days after	2091
the date of mailing, service shall be deemed to have been made. If	2092
the subpoena is returned because of inability to deliver, the	2093
division may designate a person or persons to effect either	2094
personal or residence service upon the witness. The person may be	2095
the sheriff of the county in which the witness resides or may be	2096
found or any other duly designated person. The fees and mileage	2097
of the person serving the subpoena shall be the same as those	2098
allowed by the courts of common pleas in criminal cases, and shall	2099
be paid from the funds of the division. Fees and mileage for the	2100
witness shall be the same as those allowed for witnesses by the	2101
courts of common pleas in criminal cases, and shall be paid from	2102
the funds of the division upon request of the witness following	2103
the hearing.	2104

(D) Proceed under section 1707.19 of the Revised Code to	2105
refuse a license applied for by a dealer, salesperson, investment	2106
adviser, or investment adviser representative or to suspend the	2107
license of any licensed dealer, licensed salesperson, licensed	2108
investment adviser, or licensed investment adviser representative	2109
and ultimately, if the division determines, revoke such license	2110
under such sectionsthat section;	2111

(E) Initiate criminal proceedings under section 1707.042 or	2112
1707.44 of the Revised Code or rules adopted under those sections	2113
by the division by laying before the prosecuting attorney of the	2114
proper county any evidence of criminality which comes to its	2115
knowledge; and in the event of the neglect or refusal of the	2116
prosecuting attorney to prosecute such violations, or at the	2117
request of the prosecuting attorney, the division shall submit the	2118
evidence to the attorney general, who may proceed in the	2119
prosecution with all the rights, privileges, and powers conferred	2120
by law on prosecuting attorneys, including the power to appear	2121
before grand juries and to interrogate witnesses before such grand	2122
juries.	2123

(F) Require any dealers forthwithimmediately to furnish to	2124
the division copies of prospectuses, circulars, or advertisements	2125
respecting securities that they publish or generally distribute,	2126
or require any investment advisers immediately to furnish to the	2127
division copies of brochures, advertisements, publications,	2128
analyses, reports, or other writings that they publish or	2129
distribute;	2130

(G) Require any dealers to mail to the division, prior to	2131
sale, notices of intention to sell, in respect to all securities	2132
which are not exempt under section 1707.02 of the Revised Code, or	2133
which are sold in transactions not exempt under section 1707.03 or	2134
1707.04 of the Revised Code;	2135

(H) Issue and cause to be served by certified mail upon all	2136
persons affected an order requiring the person or persons to cease	2137
and desist from the acts or practices appearing to the division to	2138
constitute violations of Chapter 1707. of the Revised Codethis	2139
chapter or rules adopted under thatthis chapter by the division.	2140
The order shall state specifically the section or sections of	2141
Chapter 1707. of the Revised Codethis chapter or the rule or	2142
rules adopted under thatthis chapter by the division that appear	2143
to the division to have been violated and the facts constituting	2144
the violation. If after the issuance of the order it appears to	2145
the division that any person or persons affected by the order have	2146
engaged in any act or practice from which the person or persons	2147
shall have been required, by the order, to cease and desist, the	2148
director of commerce may apply to the court of common pleas of any	2149
county for, and upon proof of the validity of the order of the	2150
division, the delivery of the order to the person or persons	2151
affected, and of the illegality and the continuation of the acts	2152
or practices that are the subject of the order, the court may	2153
grant an injunction implementing the order of the division.	2154

(I) Issue and initiate contempt proceedings in this state	2155
regarding subpoenas and subpoenas duces tecum at the request of	2156
the securities administrator of another state, if it appears to	2157
the division that the activities for which the information is	2158
sought would violate Chapter 1707. of the Revised Codethis	2159
chapter if the activities had occurred in this state.	2160

Sec. 1707.391.  When any securities have been sold in	2161
reliance upon division (O), (Q), (W), (X), or (Y) of section	2162
1707.03 of the Revised Code, section 1707.08 of the Revised Code,	2163
or any other section of Chapter 1707. of the Revised Codethis	2164
chapter that the division of securities may specify by rule, but	2165
such reliance was improper because the required filings were not	2166
timely or properly made due to excusable neglect, upon the	2167
effective date of an application, made to the division and payment	2168
of the required fee, if not already paid, plus a penalty fee equal	2169
to the required fee, the sale of the securities shall be deemed	2170
exempt, qualified, or registered, as though timely and properly	2171
filed. SuchThe application shall become effective upon the	2172
expiration of fourteen days after the date of the filing in	2173
question if prior thereto the division did not give notice to the	2174
applicant that the application was denied based on a finding of	2175
lack of excusable neglect. The division shall promptly adopt and	2176
promulgate rules establishing provisions defining excusable	2177
neglect and otherwise establishing reasonable standards for	2178
determining excusable neglect.	2179

The effectiveness of an application under this section does	2180
not relieve anyone who has, other than for excusable neglect,	2181
violated sections 1707.01 to 1707.45 of the Revised Code, or any	2182
previous law in force at the time of sale, from prosecution	2183
thereunder.	2184

Sec. 1707.44.  (A)(1) No person shall engage in any act or	2185
practice that violates division (A), (B), or (C) of section	2186
1707.14 of the Revised Code, and no salesperson shall sell	2187
securities in this state without being licensed pursuant to	2188
section 1707.16 of the Revised Code.	2189

(2) No person shall engage in any act or practice that	2190
violates division (A) of section 1707.141 or section 1707.161 of	2191
the Revised Code.	2192

(B) No person shall knowingly make or cause to be made any	2193
false representation concerning a material and relevant fact, in	2194
any oral statement or in any prospectus, circular, description,	2195
application, or written statement, for any of the following	2196
purposes:	2197

(1) Complying withRegistering securities or transactions, or	2198
exempting securities or transactions from registration, under this	2199
chapter, in regard to registering securities by description;	2200

(2) Securing the qualification of any securities under this	2201
chapter;	2202

(3) Procuring the licensing of any dealer, salesperson,	2203
investment adviser, or investment adviser representative under	2204
this chapter;	2205

(4) Selling any securities in this state;

2206

(5) Advising for compensation, as to the value of securities	2207
or as to the advisability of investing in, purchasing, or selling	2208
securities;	2209

(6) Submitting a notice filing to the division under section	2210
1707.092 or 1707.141 of the Revised Code.	2211

(C) No person shall knowingly and intentionally sell, cause	2212
to be sold, offer for sale, or cause to be offered for sale, any	2213
security which comes under any of the following descriptions:	2214

(1) Is not exempt under section 1707.02 of the Revised Code,	2215
nor the subject matter of one of the transactions exempted in	2216
sections 1707.03, 1707.04, and 1707.34 of the Revised Code, has	2217
not been registered by description, coordination, or	2218
qualification, and is not the subject matter of a transaction that	2219
has been registered by description;	2220

(2) The prescribed fees for registering by description, by	2221
coordination, or by qualification have not been paid in respect to	2222
such security;	2223

(3) Such person has been notified by the division, or has	2224
knowledge of the notice, that the right to buy, sell, or deal in	2225
such security has been suspended or revoked, or that the	2226
registration by description, by coordination, or by qualification	2227
under which it may be sold has been suspended or revoked;	2228

(4) The offer or sale is accompanied by a statement that the	2229
security offered or sold has been or is to be in any manner	2230
indorsed by the division.	2231

(D) No person who is an officer, director, or trustee of, or	2232
a dealer for, any issuer, and who knows such issuer to be	2233
insolvent in that the liabilities of the issuer exceed its assets,	2234
shall sell any securities of or for any such issuer, without	2235
disclosing the fact of the insolvency to the purchaser.	2236

(E) No person with intent to aid in the sale of any	2237
securities on behalf of the issuer, shall knowingly make any	2238
representation not authorized by such issuer or at material	2239
variance with statements and documents filed with the division by	2240
such issuer.	2241

(F) No person, with intent to deceive, shall sell, cause to	2242
be sold, offer for sale, or cause to be offered for sale, any	2243
securities of an insolvent issuer, with knowledge that such issuer	2244
is insolvent in that the liabilities of the issuer exceed its	2245
assets, taken at their fair market value.	2246

(G) No person in purchasing or selling securities shall	2247
knowingly engage in any act or practice that is, in this chapter,	2248
declared illegal, defined as fraudulent, or prohibited.	2249

(H) No licensed dealer shall refuse to buy from, sell to, or	2250
trade with any person because the person appears on a blacklist	2251
issued by, or is being boycotted by, any foreign corporate or	2252
governmental entity, nor sell any securities of or for any issuer	2253
who is known in relation to the issuance or sale of such	2254
securities to have engaged in such practices.	2255

(I) No dealer in securities, knowing that the dealer's	2256
liabilities exceed the reasonable value of the dealer's assets,	2257
shall accept money or securities, except in payment of or as	2258
security for an existing debt, from a customer who is ignorant of	2259
the dealer's insolvency, and thereby cause the customer to lose	2260
any part of the customer's securities or the value of those	2261
securities, by doing either of the following without the	2262
customer's consent:	2263

(1) Pledging, selling, or otherwise disposing of such	2264
securities, when the dealer has no lien on or any special property	2265
in such securities;	2266

(2) Pledging such securities for more than the amount due,	2267
or otherwise disposing of such securities for the dealer's own	2268
benefit, when the dealer has a lien or indebtedness on such	2269
securities.	2270

It is an affirmative defense to a charge under this division	2271
that, at the time the securities involved were pledged, sold, or	2272
disposed of, the dealer had in the dealer's possession or control,	2273
and available for delivery, securities of the same kinds and in	2274
amounts sufficient to satisfy all customers entitled to the	2275
securities, upon demand and tender of any amount due on the	2276
securities.	2277

(J) No person, with purpose to deceive, shall make, issue,	2278
publish, or cause to be made, issued, or published any statement	2279
or advertisement as to the value of securities, or as to alleged	2280
facts affecting the value of securities, or as to the financial	2281
condition of any issuer of securities, when the person knows that	2282
such statement or advertisement is false in any material respect.	2283

(K) No person, with purpose to deceive, shall make, record,	2284
or publish or cause to be made, recorded, or published, a report	2285
of any transaction in securities which is false in any material	2286
respect.	2287

(L) No dealer shall engage in any act that violates the	2288
provisions of section 15(c) or 15(g) of the "Securities Exchange	2289
Act of 1934," 48 Stat. 881, 15 U.S.C.A. 78o(c) or (g), or any rule	2290
or regulation promulgated by the securities and exchange	2291
commission thereunder. If, subsequent to October 11, 1994,	2292
additional amendments to section 15(c) or 15(g) are adopted, or	2293
additional rules or regulations are promulgated pursuant to such	2294
sections, the division of securities shall, by rule, adopt the	2295
amendments, rules, or regulations, unless the division finds that	2296
the amendments, rules, or regulations are not necessary for the	2297
protection of investors or in the public interest.	2298

(M)(1) No investment adviser or investment adviser	2299
representative shall do any of the following:	2300

(a) Employ any device, scheme, or artifice to defraud any	2301
person;	2302

(b) Engage in any act, practice, or course of business that	2303
operates or would operate as a fraud or deceit upon any person;	2304

(c) In acting as principal for the investment adviser's or	2305
investment adviser representative's own account, knowingly sell	2306
any security to or purchase any security from a client, or in	2307
acting as salesperson for a person other than such client,	2308
knowingly effect any sale or purchase of any security for the	2309
account of such client, without disclosing to the client in	2310
writing before the completion of the transaction the capacity in	2311
which the investment adviser or investment adviser representative	2312
is acting and obtaining the consent of the client to the	2313
transaction. Division (M)(1)(c) of this section does not apply to	2314
any investment adviser registered with the securities and exchange	2315
commission under section 203 of the "Investment Advisers Act of	2316
1940," 15 U.S.C. 80b-3, or to any transaction with a customer of a	2317
licensed dealer or salesperson if the licensed dealer or	2318
salesperson is not acting as an investment adviser or investment	2319
adviser representative in relation to the transaction.	2320

(d) Engage in any act, practice, or course of business that	2321
is fraudulent, deceptive, or manipulative. The division of	2322
securities may adopt rules reasonably designed to prevent such	2323
acts, practices, or courses of business as are fraudulent,	2324
deceptive, or manipulative.	2325

(2) No investment adviser or investment adviser	2326
representative licensed or required to be licensed under this	2327
chapter shall take or have custody of any securities or funds of	2328
any person, except as provided in rules adopted by the division.	2329

(3) In the solicitation of clients or prospective clients,	2330
no person shall make any untrue statement of a material fact or	2331
omit to state a material fact necessary in order to make the	2332
statements made not misleading in light of the circumstances under	2333
which the statements were made.	2334

Sec. 1707.45.  In any indictment, complaint, or information	2335
under section 1707.44 of the Revised Code, it shall not be	2336
necessary to negative the existence of facts which would bring a	2337
security within section 1707.02 or 1707.05 of the Revised Code, or	2338
would bring a transaction within section 1707.03, 1707.04, or	2339
1707.06 of the Revised Code, or to negative the existence of facts	2340
which would bring a transaction within the exceptions of section	2341
1707.34 of the Revised Code. The burden of proof shall be upon	2342
the party claiming the benefits of any of such sections.	2343

Section 2. That existing sections 1707.01, 1707.03, 1707.041,	2344
1707.06, 1707.08, 1707.09, 1707.092, 1707.14, 1707.141, 1707.161,	2345
1707.17, 1707.19, 1707.23, 1707.391, 1707.44, and 1707.45 and	2346
sections 1707.05 and 1707.07 of the Revised Code are hereby	2347
repealed.	2348

Section 3. That the versions of sections 1707.01, 1707.17,	2349
1707.23, and 1707.44 of the Revised Code that are scheduled to	2350
take effect October 5, 2001, be amended to read as follows:	2351

Sec. 1707.01.  As used in this chapter:

2352

(A) Whenever the context requires it, "division" or	2353
"division of securities" may be read as "director of commerce" or	2354
as "commissioner of securities."	2355

(B) "Security" means any certificate or instrument that	2356
represents title to or interest in, or is secured by any lien or	2357
charge upon, the capital, assets, profits, property, or credit of	2358
any person or of any public or governmental body, subdivision, or	2359
agency. It includes shares of stock, certificates for shares of	2360
stock, membership interests in limited liability companies,	2361
voting-trust certificates, warrants and options to purchase	2362
securities, subscription rights, interim receipts, interim	2363
certificates, promissory notes, all forms of commercial paper,	2364
evidences of indebtedness, bonds, debentures, land trust	2365
certificates, fee certificates, leasehold certificates, syndicate	2366
certificates, endowment certificates, certificates or written	2367
instruments in or under profit-sharing or participation agreements	2368
or in or under oil, gas, or mining leases, or certificates or	2369
written instruments of any interest in or under the same, receipts	2370
evidencing preorganization or reorganization subscriptions,	2371
preorganization certificates, reorganization certificates,	2372
certificates evidencing an interest in any trust or pretended	2373
trust, any investment contract, any life settlement interest, any	2374
instrument evidencing a promise or an agreement to pay money,	2375
warehouse receipts for intoxicating liquor, and the currency of	2376
any government other than those of the United States and Canada,	2377
but sections 1707.01 to 1707.45 of the Revised Code do not apply	2378
to the sale of real estate.	2379

(C)(1) "Sale" has the full meaning of "sale" as applied by or	2380
accepted in courts of law or equity, and includes every	2381
disposition, or attempt to dispose, of a security or of an	2382
interest in a security. "Sale" also includes a contract to sell,	2383
an exchange, an attempt to sell, an option of sale, a solicitation	2384
of a sale, a solicitation of an offer to buy, a subscription, or	2385
an offer to sell, directly or indirectly, by agent, circular,	2386
pamphlet, advertisement, or otherwise.	2387

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

2388

(3) The use of advertisements, circulars, or pamphlets in	2389
connection with the sale of securities in this state exclusively	2390
to the purchasers specified in division (D) of section 1707.03 of	2391
the Revised Code is not a sale when the advertisements, circulars,	2392
and pamphlets describing and offering those securities bear a	2393
readily legible legend in substance as follows: "This offer is	2394
made on behalf of dealers licensed under sections 1707.01 to	2395
1707.45 of the Revised Code, and is confined in this state	2396
exclusively to institutional investors and licensed dealers."	2397

(4) The offering of securities by any person in conjunction	2398
with a licensed dealer by use of advertisement, circular, or	2399
pamphlet is not a sale if that person does not otherwise attempt	2400
to sell securities in this state.	2401

(5) Any security given with, or as a bonus on account of,	2402
any purchase of securities is conclusively presumed to constitute	2403
a part of the subject of that purchase and has been "sold."	2404

(6) "Sale" by an owner, pledgee, or mortgagee, or by a person	2405
acting in a representative capacity, includes sale on behalf of	2406
such party by an agent, including a licensed dealer or	2407
salesperson.	2408

(D) "Person," except as otherwise provided in this chapter,	2409
means a natural person, firm, partnership, limited partnership,	2410
partnership association, syndicate, joint-stock company,	2411
unincorporated association, trust or trustee except where the	2412
trust was created or the trustee designated by law or judicial	2413
authority or by a will, and a corporation or limited liability	2414
company organized under the laws of any state, any foreign	2415
government, or any political subdivision of a state or foreign	2416
government.	2417

(E)(1) "Dealer," except as otherwise provided in this	2418
chapter, means every person, other than a salesperson, who engages	2419
or professes to engage, in this state, for either all or part of	2420
the person's time, directly or indirectly, either in the business	2421
of the sale of securities for the person's own account, or in the	2422
business of the purchase or sale of securities for the account of	2423
others in the reasonable expectation of receiving a commission,	2424
fee, or other remuneration as a result of engaging in the purchase	2425
and sale of securities. "Dealer" does not mean any of the	2426
following:	2427

(a) Any issuer, including any officer, director, employee,	2428
or trustee of, or member or manager of, or partner in, or any	2429
general partner of, any issuer, that sells, offers for sale, or	2430
does any act in furtherance of the sale of a security that	2431
represents an economic interest in that issuer, provided no	2432
commission, fee, or other similar remuneration is paid to or	2433
received by the issuer for the sale;	2434

(b) Any licensed attorney, public accountant, or firm of	2435
such attorneys or accountants, whose activities are incidental to	2436
the practice of the attorney's, accountant's, or firm's	2437
profession;	2438

(c) Any person that, for the account of others, engages in	2439
the purchase or sale of securities that are issued and outstanding	2440
before such purchase and sale, if a majority or more of the equity	2441
interest of an issuer is sold in that transaction, and if, in the	2442
case of a corporation, the securities sold in that transaction	2443
represent a majority or more of the voting power of the	2444
corporation in the election of directors;	2445

(d) Any person that brings an issuer together with a	2446
potential investor and whose compensation is not directly or	2447
indirectly based on the sale of any securities by the issuer to	2448
the investor;	2449

(e) Any bank, savings and loan association, savings bank, or	2450
credit union chartered under the laws of the United States or any	2451
state of the United States, provided that all transactions are	2452
consummated by or through a person licensed pursuant to section	2453
1707.14 of the Revised Code;	2454

(f) Any person that the division of securities by rule	2455
exempts from the definition of "dealer" under division (E)(1) of	2456
this section.	2457

(2) "Licensed dealer" means a dealer licensed under this	2458
chapter.	2459

(F)(1) "Salesman" or "salesperson" means every natural	2460
person, other than a dealer, who is employed, authorized, or	2461
appointed by a dealer to sell securities within this state.	2462

(2) The general partners of a partnership, and the executive	2463
officers of a corporation or unincorporated association, licensed	2464
as a dealer are not salespersons within the meaning of this	2465
definition, nor are such clerical or other employees of an issuer	2466
or dealer as are employed for work to which the sale of securities	2467
is secondary and incidental; but the division of securities may	2468
require a license from any such partner, executive officer, or	2469
employee if it determines that protection of the public	2470
necessitates the licensing.	2471

(3) "Licensed salesperson" means a salesperson licensed under	2472
this chapter.	2473

(G) "Issuer" means every person who has issued, proposes to	2474
issue, or issues any security.	2475

(H) "Director" means each director or trustee of a	2476
corporation, each trustee of a trust, each general partner of a	2477
partnership, except a partnership association, each manager of a	2478
partnership association, and any person vested with managerial or	2479
directory power over an issuer not having a board of directors or	2480
trustees.	2481

(I) "Incorporator" means any incorporator of a corporation	2482
and any organizer of, or any person participating, other than in a	2483
representative or professional capacity, in the organization of an	2484
unincorporated issuer.	2485

(J) "Fraud," "fraudulent," "fraudulent acts," "fraudulent	2486
practices," or "fraudulent transactions" means anything recognized	2487
on or after July 22, 1929, as such in courts of law or equity; any	2488
device, scheme, or artifice to defraud or to obtain money or	2489
property by means of any false pretense, representation, or	2490
promise; any fictitious or pretended purchase or sale of	2491
securities; and any act, practice, transaction, or course of	2492
business relating to the purchase or sale of securities that is	2493
fraudulent or that has operated or would operate as a fraud upon	2494
the seller or purchaser.	2495

(K) Except as otherwise specifically provided, whenever any	2496
classification or computation is based upon "par value," as	2497
applied to securities without par value, the average of the	2498
aggregate consideration received or to be received by the issuer	2499
for each class of those securities shall be used as the basis for	2500
that classification or computation.	2501

(L)(1) "Intangible property" means patents, copyrights,	2502
secret processes, formulas, services, good will, promotion and	2503
organization fees and expenses, trademarks, trade brands, trade	2504
names, licenses, franchises, any other assets treated as	2505
intangible according to generally accepted accounting principles,	2506
and securities, accounts receivable, or contract rights having no	2507
readily determinable value.	2508

(2) "Tangible property" means all property other than	2509
intangible property and includes securities, accounts receivable,	2510
and contract rights, when the securities, accounts receivable, or	2511
contract rights have a readily determinable value.	2512

(M) "Public utilities" means those utilities defined in	2513
sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised	2514
Code; in the case of a foreign corporation, it means those	2515
utilities defined as public utilities by the laws of its domicile;	2516
and in the case of any other foreign issuer, it means those	2517
utilities defined as public utilities by the laws of the situs of	2518
its principal place of business. The term always includes	2519
railroads whether or not they are so defined as public utilities.	2520

(N) "State" means any state of the United States, any	2521
territory or possession of the United States, the District of	2522
Columbia, and any province of Canada.	2523

(O) "Bank" means any bank, trust company, savings and loan	2524
association, savings bank, or credit union that is incorporated or	2525
organized under the laws of the United States, any state of the	2526
United States, Canada, or any province of Canada and that is	2527
subject to regulation or supervision by that country, state, or	2528
province.	2529

(P) "Include," when used in a definition, does not exclude	2530
other things or persons otherwise within the meaning of the term	2531
defined.	2532

(Q)(1) "Registration by description" means that the	2533
requirements of section 1707.08 of the Revised Code have been	2534
complied with.	2535

(2) "Registration by qualification" means that the	2536
requirements of sections 1707.09 and 1707.11 of the Revised Code	2537
have been complied with.	2538

(3) "Registration by coordination" means that there has been	2539
compliance with section 1707.091 of the Revised Code. Reference in	2540
this chapter to registration by qualification also shall be deemed	2541
to include registration by coordination unless the context	2542
otherwise indicates.	2543

(R) "Intoxicating liquor" includes all liquids and compounds	2544
that contain more than three and two-tenths per cent of alcohol by	2545
weight and are fit for use for beverage purposes.	2546

(S) "Institutional investor" means any corporation, bank,	2547
insurance company, pension fund or pension fund trust, employees'	2548
profit-sharing fund or employees' profit-sharing trust, any	2549
association engaged, as a substantial part of its business or	2550
operations, in purchasing or holding securities, or any trust in	2551
respect of which a bank is trustee or cotrustee. "Institutional	2552
investor" does not include any business entity formed for the	2553
primary purpose of evading sections 1707.01 to 1707.45 of the	2554
Revised Code.	2555

(T) "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a,	2556
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a,	2557
"Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 1,	2558
"Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b,	2559
and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a	2560
mean the federal statutes of those names as amended before or	2561
after March 18, 1999.	2562

(U) "Securities and exchange commission" means the securities	2563
and exchange commission established by the Securities Exchange Act	2564
of 1934.	2565

(V)(1) "Control bid" means the purchase of or offer to	2566
purchase any equity security of a subject company from a resident	2567
of this state if either of the following applies:	2568

(a) After the purchase of that security, the offeror would	2569
be directly or indirectly the beneficial owner of more than ten	2570
per cent of any class of the issued and outstanding equity	2571
securities of the issuer.	2572

(b) The offeror is the subject company, there is a pending	2573
control bid by a person other than the issuer, and the number of	2574
the issued and outstanding shares of the subject company would be	2575
reduced by more than ten per cent.	2576

(2) For purposes of division (V)(1) of this section,	2577
"control bid" does not include any of the following:	2578

(a) A bid made by a dealer for the dealer's own account in	2579
the ordinary course of business of buying and selling securities;	2580

(b) An offer to acquire any equity security solely in	2581
exchange for any other security, or the acquisition of any equity	2582
security pursuant to an offer, for the sole account of the	2583
offeror, in good faith and not for the purpose of avoiding the	2584
provisions of this chapter, and not involving any public offering	2585
of the other security within the meaning of Section 4 of Title I	2586
of the "Securities Act of 1933," 48 Stat. 77, 15 U.S.C.A. 77d(2),	2587
as amended;	2588

(c) Any other offer to acquire any equity security, or the	2589
acquisition of any equity security pursuant to an offer, for the	2590
sole account of the offeror, from not more than fifty persons, in	2591
good faith and not for the purpose of avoiding the provisions of	2592
this chapter.	2593

(W) "Offeror" means a person who makes, or in any way	2594
participates or aids in making, a control bid and includes persons	2595
acting jointly or in concert, or who intend to exercise jointly or	2596
in concert any voting rights attached to the securities for which	2597
the control bid is made and also includes any subject company	2598
making a control bid for its own securities.	2599

(X)(1) "Investment adviser" means any person who, for	2600
compensation, engages in the business of advising others, either	2601
directly or through publications or writings, as to the value of	2602
securities or as to the advisability of investing in, purchasing,	2603
or selling securities, or who, for compensation and as a part of	2604
regular business, issues or promulgates analyses or reports	2605
concerning securities.	2606

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

2607

(a) Any attorney, accountant, engineer, or teacher, whose	2608
performance of investment advisory services described in division	2609
(X)(1) of this section is solely incidental to the practice of the	2610
attorney's, accountant's, engineer's, or teacher's profession;	2611

(b) A publisher of any bona fide newspaper, news magazine,	2612
or business or financial publication of general and regular	2613
circulation;	2614

(c) A person who acts solely as an investment adviser	2615
representative;	2616

(d) A bank holding company, as defined in the "Bank Holding	2617
Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that is not an	2618
investment company;	2619

(e) A bank, or any receiver, conservator, or other	2620
liquidating agent of a bank;	2621

(f) Any licensed dealer or licensed salesperson whose	2622
performance of investment advisory services described in division	2623
(X)(1) of this section is solely incidental to the conduct of the	2624
dealer's or salesperson's business as a licensed dealer or	2625
licensed salesperson and who receives no special compensation for	2626
the services;	2627

(g) Any person, the advice, analyses, or reports of which do	2628
not relate to securities other than securities that are direct	2629
obligations of, or obligations guaranteed as to principal or	2630
interest by, the United States, or securities issued or guaranteed	2631
by corporations in which the United States has a direct or	2632
indirect interest, and that have been designated by the secretary	2633
of the treasury as exempt securities as defined in the "Securities	2634
Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c;	2635

(h) Any person that is excluded from the definition of	2636
investment adviser pursuant to section 202(a)(11)(A) to (E) of the	2637
"Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11), or that	2638
has received an order from the securities and exchange commission	2639
under section 202(a)(11)(F) of the "Investment Advisers Act of	2640
1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that the person is not	2641
within the intent of section 202(a)(11) of the Investment Advisers	2642
Act of 1940.	2643

(i) Any other person that the division designates by rule,	2644
if the division finds that the designation is necessary or	2645
appropriate in the public interest or for the protection of	2646
investors or clients and consistent with the purposes fairly	2647
intended by the policy and provisions of this chapter.	2648

(Y)(1) "Subject company" means an issuer that satisfies both	2649
of the following:	2650

(a) Its principal place of business or its principal	2651
executive office is located in this state, or it owns or controls	2652
assets located within this state that have a fair market value of	2653
at least one million dollars.	2654

(b) More than ten per cent of its beneficial or record	2655
equity security holders are resident in this state, more than ten	2656
per cent of its equity securities are owned beneficially or of	2657
record by residents in this state, or more than one thousand of	2658
its beneficial or record equity security holders are resident in	2659
this state.	2660

(2) The division of securities may adopt rules to establish	2661
more specific application of the provisions set forth in division	2662
(Y)(1) of this section. Notwithstanding the provisions set forth	2663
in division (Y)(1) of this section and any rules adopted under	2664
this division, the division, by rule or in an adjudicatory	2665
proceeding, may make a determination that an issuer does not	2666
constitute a "subject company" under division (Y)(1) of this	2667
section if appropriate review of control bids involving the issuer	2668
is to be made by any regulatory authority of another jurisdiction.	2669

(Z) "Beneficial owner" includes any person who directly or	2670
indirectly through any contract, arrangement, understanding, or	2671
relationship has or shares, or otherwise has or shares, the power	2672
to vote or direct the voting of a security or the power to dispose	2673
of, or direct the disposition of, the security. "Beneficial	2674
ownership" includes the right, exercisable within sixty days, to	2675
acquire any security through the exercise of any option, warrant,	2676
or right, the conversion of any convertible security, or	2677
otherwise. Any security subject to any such option, warrant,	2678
right, or conversion privilege held by any person shall be deemed	2679
to be outstanding for the purpose of computing the percentage of	2680
outstanding securities of the class owned by that person, but	2681
shall not be deemed to be outstanding for the purpose of computing	2682
the percentage of the class owned by any other person. A person	2683
shall be deemed the beneficial owner of any security beneficially	2684
owned by any relative or spouse or relative of the spouse residing	2685
in the home of that person, any trust or estate in which that	2686
person owns ten per cent or more of the total beneficial interest	2687
or serves as trustee or executor, any corporation or entity in	2688
which that person owns ten per cent or more of the equity, and any	2689
affiliate or associate of that person.	2690

(AA) "Offeree" means the beneficial or record owner of any	2691
security that an offeror acquires or offers to acquire in	2692
connection with a control bid.	2693

(BB) "Equity security" means any share or similar security,	2694
or any security convertible into any such security, or carrying	2695
any warrant or right to subscribe to or purchase any such	2696
security, or any such warrant or right, or any other security	2697
that, for the protection of security holders, is treated as an	2698
equity security pursuant to rules of the division of securities.	2699

(CC) "Investment company" has the same meaning as in section	2700
3(A) of the "Investment Company Act of 1940," 54 Stat. 789, 15	2701
U.S.C. 80a-1 to 80a-52.	2702

(DD) "Penny stock" has the same meaning as in section	2703
3(A)(51) of the "Securities Exchange Act of 1934," 48 Stat. 881,	2704
15 U.S.C. 78a-78jj, and the rules, regulations, and orders issued	2705
pursuant to that section.	2706

(EE) "Going concern transaction" has the same meaning given	2707
that term under the rules or regulations on the securities and	2708
exchange commission issued pursuant to section 13(c) of the	2709
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C.	2710
78a-78jj.	2711

(FF) "Person acting on behalf of an issuer" means an officer,	2712
director, or employee of an issuer.	2713

(GG) "Blank check company," "roll-up transaction," "executive	2714
officer of an entity," and "direct participation program" have the	2715
same meanings given those terms by rule or regulation of the	2716
securities and exchange commission.	2717

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

2718

(1) A statement containing a projection of revenues, income	2719
including income loss, earnings per share including earnings loss	2720
per share, capital expenditures, dividends, capital structure, or	2721
other financial items;	2722

(2) A statement of the plans and objectives of the	2723
management of the issuer for future operations, including plans or	2724
objectives relating to the products or services of the issuer;	2725

(3) A statement of future economic performance, including	2726
any statement of that nature contained in a discussion and	2727
analysis of financial conditions by the management or in the	2728
results of operations included pursuant to the rules and	2729
regulations of the securities and exchange commission;	2730

(4) Any disclosed statement of the assumptions underlying or	2731
relating to a statement described in division (B)(1), (2), or (3)	2732
of section 1707.437 of the Revised Code;	2733

(5) Any report issued by an outside reviewer retained by an	2734
issuer to the extent that the report relates to a forward-looking	2735
statement made by the issuer;	2736

(6) A statement containing a projection or estimate of any	2737
other items that may be specified by rule or regulation of the	2738
securities and exchange commission.	2739

(II)(1) "Investment adviser representative" means a	2740
supervised person of an investment adviser, provided that the	2741
supervised person has more than five clients who are natural	2742
persons other than excepted persons defined in division (KK) of	2743
this section, and that more than ten per cent of the supervised	2744
person's clients are natural persons other than excepted persons	2745
defined in division (KK) of this section. "Investment adviser	2746
representative" does not mean any of the following:	2747

(a) A supervised person that does not on a regular basis	2748
solicit, meet with, or otherwise communicate with clients of the	2749
investment adviser;	2750

(b) A supervised person that provides only investment	2751
advisory services described in division (X)(1) of this section by	2752
means of written materials or oral statements that do not purport	2753
to meet the objectives or needs of specific individuals or	2754
accounts;	2755

(c) Any other person that the division designates by rule,	2756
if the division finds that the designation is necessary or	2757
appropriate in the public interest or for the protection of	2758
investors or clients and is consistent with the provisions fairly	2759
intended by the policy and provisions of this chapter.	2760

(2) For the purpose of the calculation of clients in	2761
division (II)(1) of this section, a natural person and the	2762
following persons are deemed a single client: Any minor child of	2763
the natural person; any relative, spouse, or relative of the	2764
spouse of the natural person who has the same principal residence	2765
as the natural person; all accounts of which the natural person or	2766
the persons referred to in division (II)(2) of this section are	2767
the only primary beneficiaries; and all trusts of which the	2768
natural person or persons referred to in division (II)(2) of this	2769
section are the only primary beneficiaries. Persons who are not	2770
residents of the United States need not be included in the	2771
calculation of clients under division (II)(1) of this section.	2772

(3) If subsequent to March 18, 1999, amendments are enacted	2773
or adopted defining "investment adviser representative" for	2774
purposes of the Investment Advisers Act of 1940 or additional	2775
rules or regulations are promulgated by the securities and	2776
exchange commission regarding the definition of "investment	2777
adviser representative" for purposes of the Investment Advisers	2778
Act of 1940, the division of securities shall, by rule, adopt the	2779
substance of the amendments, rules, or regulations, unless the	2780
division finds that the amendments, rules, or regulations are not	2781
necessary for the protection of investors or in the public	2782
interest.	2783

(JJ) "Supervised person" means a natural person who is any of	2784
the following:	2785

(1) A partner, officer, or director of an investment	2786
adviser, or other person occupying a similar status or performing	2787
similar functions with respect to an investment adviser;	2788

(2) An employee of an investment adviser;

2789

(3) A person who provides investment advisory services	2790
described in division (X)(1) of this section on behalf of the	2791
investment adviser and is subject to the supervision and control	2792
of the investment adviser.	2793

(KK) "Excepted person" means a natural person to whom any of	2794
the following applies:	2795

(1) Immediately after entering into the investment advisory	2796
contract with the investment adviser, the person has at least	2797
seven hundred fifty thousand dollars under the management of the	2798
investment adviser.	2799

(2) The investment adviser reasonably believes either of the	2800
following at the time the investment advisory contract is entered	2801
into with the person:	2802

(a) The person has a net worth, together with assets held	2803
jointly with a spouse, of more than one million five hundred	2804
thousand dollars.	2805

(b) The person is a qualified purchaser as defined in	2806
division (LL) of this section.	2807

(3) Immediately prior to entering into an investment	2808
advisory contract with the investment adviser, the person is	2809
either of the following:	2810

(a) An executive officer, director, trustee, general	2811
partner, or person serving in a similar capacity, of the	2812
investment adviser;	2813

(b) An employee of the investment adviser, other than an	2814
employee performing solely clerical, secretarial, or	2815
administrative functions or duties for the investment adviser,	2816
which employee, in connection with the employee's regular	2817
functions or duties, participates in the investment activities of	2818
the investment adviser, provided that, for at least twelve months,	2819
the employee has been performing such nonclerical, nonsecretarial,	2820
or nonadministrative functions or duties for or on behalf of the	2821
investment adviser or performing substantially similar functions	2822
or duties for or on behalf of another company.	2823

If subsequent to March 18, 1999, amendments are enacted or	2824
adopted defining "excepted person" for purposes of the Investment	2825
Advisers Act of 1940 or additional rules or regulations are	2826
promulgated by the securities and exchange commission regarding	2827
the definition of "excepted person" for purposes of the Investment	2828
Advisers Act of 1940, the division of securities shall, by rule,	2829
adopt the substance of the amendments, rules, or regulations,	2830
unless the division finds that the amendments, rules, or	2831
regulations are not necessary for the protection of investors or	2832
in the public interest.	2833

(LL)(1) "Qualified purchaser" means either of the following:

2834

(a) A natural person who owns not less than five million	2835
dollars in investments as defined by rule by the division of	2836
securities;	2837

(b) A natural person, acting for the person's own account or	2838
accounts of other qualified purchasers, who in the aggregate owns	2839
and invests on a discretionary basis, not less than twenty-five	2840
million dollars in investments as defined by rule by the division	2841
of securities.	2842

(2) If subsequent to March 18, 1999, amendments are enacted	2843
or adopted defining "qualified purchaser" for purposes of the	2844
Investment Advisers Act of 1940 or additional rules or regulations	2845
are promulgated by the securities and exchange commission	2846
regarding the definition of "qualified purchaser" for purposes of	2847
the Investment Advisers Act of 1940, the division of securities	2848
shall, by rule, adopt the amendments, rules, or regulations,	2849
unless the division finds that the amendments, rules, or	2850
regulations are not necessary for the protection of investors or	2851
in the public interest.	2852

(MM)(1) "Purchase" has the full meaning of "purchase" as	2853
applied by or accepted in courts of law or equity and includes	2854
every acquisition of, or attempt to acquire, a security or an	2855
interest in a security. "Purchase" also includes a contract to	2856
purchase, an exchange, an attempt to purchase, an option to	2857
purchase, a solicitation of a purchase, a solicitation of an offer	2858
to sell, a subscription, or an offer to purchase, directly or	2859
indirectly, by agent, circular, pamphlet, advertisement, or	2860
otherwise.	2861

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

2862

(3) Any security given with, or as a bonus on account of,	2863
any purchase of securities is conclusively presumed to constitute	2864
a part of the subject of that purchase.	2865

(NN) "Life settlement interest" means the entire interest or	2866
any fractional interest in an insurance policy or certificate of	2867
insurance, or in an insurance benefit under such a policy or	2868
certificate, that is the subject of a life settlement contract.	2869

For purposes of this division, "life settlement contract"	2870
means an agreement for the purchase, sale, assignment, transfer,	2871
devise, or bequest of any portion of the death benefit or	2872
ownership of any life insurance policy or contract, in return for	2873
consideration or any other thing of value that is less than the	2874
expected death benefit of the life insurance policy or contract.	2875
"Life settlement contract" includes a viatical settlement contract	2876
as defined in section 3916.01 of the Revised Code, but does not	2877
include any of the following:	2878

(1) A loan by an insurer under the terms of a life insurance	2879
policy, including, but not limited to, a loan secured by the cash	2880
value of the policy;	2881

(2) An agreement with a bank that takes an assignment of a	2882
life insurance policy as collateral for a loan;	2883

(3) The provision of accelerated benefits as defined in	2884
section 3915.21 of the Revised Code;	2885

(4) Any agreement between an insurer and a reinsurer;

2886

(5) An agreement by an individual to purchase an existing	2887
life insurance policy or contract from the original owner of the	2888
policy or contract, if the individual does not enter into more	2889
than one life settlement contract per calendar year;	2890

(6) The initial purchase of an insurance policy or	2891
certificate of insurance from its owner by a viatical settlement	2892
provider, as defined in section 3916.01 of the Revised Code, that	2893
is licensed under Chapter 3916. of the Revised Code.	2894

Sec. 1707.17.  (A)(1) The license of every dealer in and	2895
salesperson of securities shall expire on the thirty-first day of	2896
December of each year, and may be renewed upon the filing with the	2897
division of securities of an application for renewal, and the	2898
payment of the fee prescribed in this section, between the first	2899
day of November and the fifteenth day of December of each year.	2900
The division may accept an application for renewal filed between	2901
the fifteenth and the thirty-first day of December of each year.	2902
The division also may accept an application for renewal received	2903
by the division not later than the tenth day of January of the	2904
subsequent calendar year, provided that the application for	2905
renewal is accompanied by the license renewal fee and the	2906
additional fee prescribed in division (B) of this section. The	2907
division shall give notice, without unreasonable delay, of its	2908
action on any application for renewal of a dealer's or	2909
salesperson's license.	2910

(2) The license of every investment adviser and investment	2911
adviser representative licensed under section 1707.141 or 1707.161	2912
of the Revised Code shall expire on the thirty-first day of	2913
December of each year. The licenses may be renewed upon the	2914
filing with the division of an application for renewal, and the	2915
payment of the fee prescribed in division (B) of this section,	2916
between the fifteenth day of October and the thirtieth day of	2917
November of each year. The division may accept an application for	2918
renewal filed between the first and thirty-first day of December	2919
of each year. The division also may accept an application for	2920
renewal received by the division not later than the tenth day of	2921
January of the subsequent calendar year, provided that the	2922
application for renewal is accompanied by the license renewal fee	2923
and the additional fee prescribed in division (B) of this section.	2924
The division shall give notice, without unreasonable delay, of its	2925
action on any application for renewal.	2926

(3) An investment adviser required to make a notice filing	2927
under division (B) of section 1707.141 of the Revised Code	2928
annually shall file with the division the notice filing and the	2929
fee prescribed in division (B) of this section, no later than the	2930
thirty-first day of December of each year. The division may	2931
accept a notice filing received by the division not later than the	2932
tenth day of January of the subsequent calendar year, provided	2933
that the notice filing is accompanied by the notice filing fee and	2934
the additional fee prescribed in division (B) of this section.	2935

(B)(1) The fee for each dealer's license, and for each	2936
annual renewal thereof that is received by the division not later	2937
than the thirty-first day of December of each year, shall be	2938
thirty dollars per salesperson, but not less than one hundred	2939
fifty nor more than five thousand dollars. Upon payment of an	2940
additional fee of one-half of the license renewal fee, the	2941
division may accept an application for renewal received by the	2942
division between the first and tenth day of January of the	2943
subsequent calendar year. The fee for the examination of	2944
applicant dealers, when administered by the division, shall be	2945
seventy-five dollars.	2946

(2) The fee for each salesperson's license, and for each	2947
annual renewal thereof, shall be fifty dollars. The fee for the	2948
examination of an applicant salesperson, when administered by the	2949
division, shall be fifty dollars.	2950

(3) The fee for each investment adviser's license, and for	2951
each annual renewal thereof that is received by the division not	2952
later than the thirty-first day of December of each year, shall be	2953
two hundredfifty dollars. Upon the payment of an additional fee	2954
of one-half of the license fee, the division may accept a license	2955
renewal application received by the division between the first and	2956
tenth day of January of the subsequent calendar year. If the fee	2957
for an investment adviser license is paid to the division on or	2958
before October 1, 1999, that fee shall cover the issuance of the	2959
initial license and also shall cover any fee for renewal of the	2960
license for the period ending December 31, 2000.	2961

(4) The fee for each investment adviser notice filing	2962
required by division (B) of section 1707.141 of the Revised Code	2963
and received by the division not later than the thirty-first day	2964
of December of each year shall be one hundredfifty dollars. Upon	2965
the payment of an additional fee of one-half of the notice filing	2966
fee, the division may accept a notice filing received by the	2967
division between the first and tenth day of January of the	2968
subsequent calendar year. A notice filing may be made at any time	2969
during the calendar year. In that event, the notice filing fee	2970
shall not be reduced. If the fee for an investment adviser notice	2971
filing is paid to the division on or before October 1, 1999, that	2972
fee shall cover the initial notice filing and also shall cover any	2973
fee for the notice filing for the period ending December 31, 2000.	2974

(5) The fee for each investment adviser representative's	2975
license, and for each annual renewal thereof that is received by	2976
the division not later than the thirty-first day of December of	2977
each year, shall be thirty-five dollars; however, the fee shall be	2978
waived for the investment adviser representative designated the	2979
principal of the investment adviser pursuant to division (D) of	2980
section 1707.151 of the Revised Code. Upon the payment of an	2981
additional fee of one-half of the license fee, the division may	2982
accept a license renewal application received by the division	2983
between the first and tenth day of January of the subsequent	2984
calendar year. If the fee for an investment adviser	2985
representative's license is paid to the division on or before	2986
October 1, 1999, that fee shall cover the issuance of the initial	2987
license and also shall cover any fee for renewal of the license	2988
for the period ending December 31, 2000.	2989

(C) A dealer's, salesperson's, investment adviser's, or	2990
investment adviser representative's license may be issued at any	2991
time for the remainder of the calendar year. In that event, the	2992
annual fee shall not be reduced.	2993

Sec. 1707.23.  Whenever it appears to the division of	2994
securities, from its files, upon complaint, or otherwise, that any	2995
person has engaged in, is engaged in, or is about to engage in any	2996
practice declared to be illegal or prohibited by this chapter or	2997
rules adopted under this chapter by the division, or defined as	2998
fraudulent in this chapter or rules adopted under this chapter	2999
by the division, or any other deceptive scheme or practice in	3000
connection with the sale of securities, or acting as an investment	3001
adviser or investment adviser representative, or when the division	3002
believes it to be in the best interests of the public and	3003
necessary for the protection of investors, the division may do any	3004
of the following:	3005

(A) Require any person to file with it, on such forms as it	3006
prescribes, an original or additional statement or report in	3007
writing, under oath or otherwise, as to any facts or circumstances	3008
concerning the issuance, sale, or offer for sale of securities	3009
within this state by the person, as to the person's acts or	3010
practices as an investment adviser or investment adviser	3011
representative within this state, and as to other information as	3012
it deems material or relevant thereto;	3013

(B) Examine any investment adviser, investment adviser	3014
representative, or any seller, dealer, salesperson, or issuer of	3015
any securities, and any of their agents, employees, partners,	3016
officers, directors, members, or shareholders, wherever located,	3017
under oath; and examine records, books, documents, accounts, and	3018
papers as the division deems material or relevant to the inquiry;	3019

(C) Require the attendance of witnesses, and the production	3020
of books, records, and papers, as are required either by the	3021
division or by any party to a hearing before the division, and for	3022
that purpose issue a subpoena for any witness, or a subpoena duces	3023
tecum to compel the production of any books, records, or papers.	3024
The subpoena shall be served by personal service or by certified	3025
mail, return receipt requested. If the subpoena is returned	3026
because of inability to deliver, or if no return is received	3027
within thirty days of the date of mailing, the subpoena may be	3028
served by ordinary mail. If no return of ordinary mail is	3029
received within thirty days after the date of mailing, service	3030
shall be deemed to have been made. If the subpoena is returned	3031
because of inability to deliver, the division may designate a	3032
person or persons to effect either personal or residence service	3033
upon the witness. The person designated to effect personal or	3034
residence service under this division may be the sheriff of the	3035
county in which the witness resides or may be found or any other	3036
duly designated person. The fees and mileage of the person	3037
serving the subpoena shall be the same as those allowed by the	3038
courts of common pleas in criminal cases, and shall be paid from	3039
the funds of the division. Fees and mileage for the witness shall	3040
be the same as those allowed for witnesses by the courts of common	3041
pleas in criminal cases, and shall be paid from the funds of the	3042
division upon request of the witness following the hearing.	3043

(D) Proceed under section 1707.19 of the Revised Code to	3044
refuse a license applied for by a dealer, salesperson, investment	3045
adviser, or investment adviser representative or to suspend the	3046
license of any licensed dealer, licensed salesperson, licensed	3047
investment adviser, or licensed investment adviser representative	3048
and ultimately, if the division determines, revoke such license	3049
under such sectionsthat section;	3050

(E) Initiate criminal proceedings under section 1707.042 or	3051
1707.44 of the Revised Code or rules adopted under those sections	3052
by the division by laying before the prosecuting attorney of the	3053
proper county any evidence of criminality which comes to its	3054
knowledge; and in the event of the neglect or refusal of the	3055
prosecuting attorney to prosecute such violations, or at the	3056
request of the prosecuting attorney, the division shall submit the	3057
evidence to the attorney general, who may proceed in the	3058
prosecution with all the rights, privileges, and powers conferred	3059
by law on prosecuting attorneys, including the power to appear	3060
before grand juries and to interrogate witnesses before such grand	3061
juries.	3062

(F) Require any dealers forthwithimmediately to furnish to	3063
the division copies of prospectuses, circulars, or advertisements	3064
respecting securities that they publish or generally distribute,	3065
or require any investment advisers immediately to furnish to the	3066
division copies of brochures, advertisements, publications,	3067
analyses, reports, or other writings that they publish or	3068
distribute;	3069

(G) Require any dealers to mail to the division, prior to	3070
sale, notices of intention to sell, in respect to all securities	3071
which are not exempt under section 1707.02 of the Revised Code, or	3072
which are sold in transactions not exempt under section 1707.03 or	3073
1707.04 of the Revised Code;	3074

(H) Issue and cause to be served by certified mail upon all	3075
persons affected an order requiring the person or persons to cease	3076
and desist from the acts or practices appearing to the division to	3077
constitute violations of this chapter or rules adopted under	3078
this chapter by the division. The order shall state specifically	3079
the section or sections of this chapter or the rule or rules	3080
adopted under this chapter by the division that appear to the	3081
division to have been violated and the facts constituting the	3082
violation. If after the issuance of the order it appears to the	3083
division that any person or persons affected by the order have	3084
engaged in any act or practice from which the person or persons	3085
shall have been required, by the order, to cease and desist, the	3086
director of commerce may apply to the court of common pleas of any	3087
county for, and upon proof of the validity of the order of the	3088
division, the delivery of the order to the person or persons	3089
affected, and of the illegality and the continuation of the acts	3090
or practices that are the subject of the order, the court may	3091
grant an injunction implementing the order of the division.	3092

(I) Issue and initiate contempt proceedings in this state	3093
regarding subpoenas and subpoenas duces tecum at the request of	3094
the securities administrator of another state, if it appears to	3095
the division that the activities for which the information is	3096
sought would violate this chapter if the activities had occurred	3097
in this state.	3098

Sec. 1707.44.  (A)(1) No person shall engage in any act or	3099
practice that violates division (A), (B), or (C) of section	3100
1707.14 of the Revised Code, and no salesperson shall sell	3101
securities in this state without being licensed pursuant to	3102
section 1707.16 of the Revised Code.	3103

(2) No person shall engage in any act or practice that	3104
violates division (A) of section 1707.141 or section 1707.161 of	3105
the Revised Code.	3106

(B) No person shall knowingly make or cause to be made any	3107
false representation concerning a material and relevant fact, in	3108
any oral statement or in any prospectus, circular, description,	3109
application, or written statement, for any of the following	3110
purposes:	3111

(1) Complying withRegistering securities or transactions, or	3112
exempting securities or transactions from registration, under this	3113
chapter, in regard to registering securities by description;	3114

(2) Securing the qualification of any securities under this	3115
chapter;	3116

(3) Procuring the licensing of any dealer, salesperson,	3117
investment adviser, or investment adviser representative under	3118
this chapter;	3119

(4) Selling any securities in this state;

3120

(5) Advising for compensation, as to the value of securities	3121
or as to the advisability of investing in, purchasing, or selling	3122
securities;	3123

(6) Submitting a notice filing to the division under section	3124
1707.092 or 1707.141 of the Revised Code.	3125

(C) No person shall knowingly and intentionally sell, cause	3126
to be sold, offer for sale, or cause to be offered for sale, any	3127
security which comes under any of the following descriptions:	3128

(1) Is not exempt under section 1707.02 of the Revised Code,	3129
nor the subject matter of one of the transactions exempted in	3130
section 1707.03, 1707.04, or 1707.34 of the Revised Code, has not	3131
been registered by description, coordination, or qualification,	3132
and is not the subject matter of a transaction that has been	3133
registered by description;	3134

(2) The prescribed fees for registering by description, by	3135
coordination, or by qualification have not been paid in respect to	3136
such security;	3137

(3) Such person has been notified by the division, or has	3138
knowledge of the notice, that the right to buy, sell, or deal in	3139
such security has been suspended or revoked, or that the	3140
registration by description, by coordination, or by qualification	3141
under which it may be sold has been suspended or revoked;	3142

(4) The offer or sale is accompanied by a statement that the	3143
security offered or sold has been or is to be in any manner	3144
indorsed by the division.	3145

(D) No person who is an officer, director, or trustee of, or	3146
a dealer for, any issuer, and who knows such issuer to be	3147
insolvent in that the liabilities of the issuer exceed its assets,	3148
shall sell any securities of or for any such issuer, without	3149
disclosing the fact of the insolvency to the purchaser.	3150

(E) No person with intent to aid in the sale of any	3151
securities on behalf of the issuer, shall knowingly make any	3152
representation not authorized by such issuer or at material	3153
variance with statements and documents filed with the division by	3154
such issuer.	3155

(F) No person, with intent to deceive, shall sell, cause to	3156
be sold, offer for sale, or cause to be offered for sale, any	3157
securities of an insolvent issuer, with knowledge that such issuer	3158
is insolvent in that the liabilities of the issuer exceed its	3159
assets, taken at their fair market value.	3160

(G) No person in purchasing or selling securities shall	3161
knowingly engage in any act or practice that is, in this chapter,	3162
declared illegal, defined as fraudulent, or prohibited.	3163

(H) No licensed dealer shall refuse to buy from, sell to, or	3164
trade with any person because the person appears on a blacklist	3165
issued by, or is being boycotted by, any foreign corporate or	3166
governmental entity, nor sell any securities of or for any issuer	3167
who is known in relation to the issuance or sale of such	3168
securities to have engaged in such practices.	3169

(I) No dealer in securities, knowing that the dealer's	3170
liabilities exceed the reasonable value of the dealer's assets,	3171
shall accept money or securities, except in payment of or as	3172
security for an existing debt, from a customer who is ignorant of	3173
the dealer's insolvency, and thereby cause the customer to lose	3174
any part of the customer's securities or the value of those	3175
securities, by doing either of the following without the	3176
customer's consent:	3177

(1) Pledging, selling, or otherwise disposing of such	3178
securities, when the dealer has no lien on or any special property	3179
in such securities;	3180

(2) Pledging such securities for more than the amount due,	3181
or otherwise disposing of such securities for the dealer's own	3182
benefit, when the dealer has a lien or indebtedness on such	3183
securities.	3184

It is an affirmative defense to a charge under this division	3185
that, at the time the securities involved were pledged, sold, or	3186
disposed of, the dealer had in the dealer's possession or control,	3187
and available for delivery, securities of the same kinds and in	3188
amounts sufficient to satisfy all customers entitled to the	3189
securities, upon demand and tender of any amount due on the	3190
securities.	3191

(J) No person, with purpose to deceive, shall make, issue,	3192
publish, or cause to be made, issued, or published any statement	3193
or advertisement as to the value of securities, or as to alleged	3194
facts affecting the value of securities, or as to the financial	3195
condition of any issuer of securities, when the person knows that	3196
such statement or advertisement is false in any material respect.	3197

(K) No person, with purpose to deceive, shall make, record,	3198
or publish or cause to be made, recorded, or published, a report	3199
of any transaction in securities which is false in any material	3200
respect.	3201

(L) No dealer shall engage in any act that violates the	3202
provisions of section 15(c) or 15(g) of the "Securities Exchange	3203
Act of 1934," 48 Stat. 881, 15 U.S.C.A. 78o(c) or (g), or any rule	3204
or regulation promulgated by the securities and exchange	3205
commission thereunder. If, subsequent to October 11, 1994,	3206
additional amendments to section 15(c) or 15(g) are adopted, or	3207
additional rules or regulations are promulgated pursuant to such	3208
sections, the division of securities shall, by rule, adopt the	3209
amendments, rules, or regulations, unless the division finds that	3210
the amendments, rules, or regulations are not necessary for the	3211
protection of investors or in the public interest.	3212

(M)(1) No investment adviser or investment adviser	3213
representative shall do any of the following:	3214

(a) Employ any device, scheme, or artifice to defraud any	3215
person;	3216

(b) Engage in any act, practice, or course of business that	3217
operates or would operate as a fraud or deceit upon any person;	3218

(c) In acting as principal for the investment adviser's or	3219
investment adviser representative's own account, knowingly sell	3220
any security to or purchase any security from a client, or in	3221
acting as salesperson for a person other than such client,	3222
knowingly effect any sale or purchase of any security for the	3223
account of such client, without disclosing to the client in	3224
writing before the completion of the transaction the capacity in	3225
which the investment adviser or investment adviser representative	3226
is acting and obtaining the consent of the client to the	3227
transaction. Division (M)(1)(c) of this section does not apply to	3228
any investment adviser registered with the securities and exchange	3229
commission under section 203 of the "Investment Advisers Act of	3230
1940," 15 U.S.C. 80b-3, or to any transaction with a customer of a	3231
licensed dealer or salesperson if the licensed dealer or	3232
salesperson is not acting as an investment adviser or investment	3233
adviser representative in relation to the transaction.	3234

(d) Engage in any act, practice, or course of business that	3235
is fraudulent, deceptive, or manipulative. The division of	3236
securities may adopt rules reasonably designed to prevent such	3237
acts, practices, or courses of business as are fraudulent,	3238
deceptive, or manipulative.	3239

(2) No investment adviser or investment adviser	3240
representative licensed or required to be licensed under this	3241
chapter shall take or have custody of any securities or funds of	3242
any person, except as provided in rules adopted by the division.	3243

(3) In the solicitation of clients or prospective clients,	3244
no person shall make any untrue statement of a material fact or	3245
omit to state a material fact necessary in order to make the	3246
statements made not misleading in light of the circumstances under	3247
which the statements were made.	3248

Section 4. That the existing versions of sections 1707.01,	3249
1707.17, 1707.23, and 1707.44 of the Revised Code that are	3250
scheduled to take effect October 5, 2001, are hereby repealed.	3251

Section 5. Sections 3 and 4 of this act shall take effect	3252
October 5, 2001.	3253

Section 6.  Section 1707.06 of the Revised Code is presented	3254
in this act as a composite of the section as amended by both Am.	3255
Sub. H.B. 488 and Sub. S.B. 74 of the 120th General Assembly. The	3256
General Assembly, applying the principle stated in division (B) of	3257
section 1.52 of the Revised Code that amendments are to be	3258
harmonized if reasonably capable of simultaneous operation, finds	3259
that the composite is the resulting version of the section in	3260
effect prior to the effective date of the section as presented in	3261
this act.	3262