REPRESENTATIVE Taylor

To amend sections 1701.831, 1707.01, 1707.08,

1

1707.09, 1707.11, 1707.23, 1707.40, 1707.41,

2

1707.42, 1707.43, 1707.44, and 2913.02 and to

3

enact sections 1707.131 and 1707.231 of the

4

Revised Code to modify the Corporation Law

5

regarding special meetings of shareholders in

6

connection with tender offer, control share

7

acquisition bids; to modify the Securities Law

8

with respect to securities to which it applies,

9

requirements for registration of securities, the

10

designation of the Secretary of State to receive

11

service of process, the application of remedies

12

under the Securities Law, the Attorney General's

13

enforcement authority on behalf of persons injured

14

by a violation, the statutes of limitations

15

governing an action for specified violations, and

16

the prohibitions against certain misleading

17

actions; and to increase the criminal penalty for

18

certain theft offenses and create a new criminal

19

aggravated theft offense.

20

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

Section 1. That sections 1701.831, 1707.01, 1707.08, 1707.09,	21
1707.11, 1707.23, 1707.40, 1707.41, 1707.42, 1707.43, 1707.44, and	22
2913.02 be amended and sections 1707.131 and 1707.231 of the	23
Revised Code be enacted to read as follows:	24

Sec. 1701.831.  (A) Unless the articles or the regulations of	25
the issuing public corporation provide that this section does not	26
apply to control share acquisitions of shares of such corporation,	27
any control share acquisition of an issuing public corporation	28
shall be made only with the prior authorization of the	29
shareholders of such corporation in accordance with this section.	30

(B) Any person who proposes to make a control share	31
acquisition shall deliver an acquiring person statement to the	32
issuing public corporation at the issuing public corporation's	33
principal executive offices. Such acquiring person statement shall	34
set forth all of the following:	35

(1) The identity of the acquiring person;

36

(2) A statement that the acquiring person statement is given	37
pursuant to this section;	38

(3) The number of shares of the issuing public corporation	39
owned, directly or indirectly, by the acquiring person;	40

(4) The range of voting power, described in division	41
(Z)(1)(a), (b), or (c) of section 1701.01 of the Revised Code,	42
under which the proposed control share acquisition would, if	43
consummated, fall;	44

(5) A description in reasonable detail of the terms of the	45
proposed control share acquisition;	46

(6) Representations of the acquiring person, together with a	47
statement in reasonable detail of the facts upon which they are	48
based, that the proposed control share acquisition, if	49
consummated, will not be contrary to law, and that the acquiring	50
person has the financial capacity to make the proposed control	51
share acquisition.	52

(C)(1) Within ten days after receipt of an acquiring person	53
statement that complies with division (B) of this section, the	54
directors of the issuing public corporation shall call a special	55
meeting of shareholders of the issuing public corporation for the	56
purpose of voting on the proposed control share acquisition.	57
UnlessSubject to division (C)(2) of this section, unless the	58
acquiring person agrees in writing to another date, such special	59
meeting of shareholders shall be held within fifty days after	60
receipt by the issuing public corporation of the acquiring person	61
statement. If the acquiring person so requests in writing at the	62
time of delivery of the acquiring person statement, such special	63
meetings shall be held no sooner than thirty days after receipt by	64
the issuing public corporation of the acquiring person statement.	65
SuchSubject to division (C)(2) of this section, such special	66
meeting of shareholders shall be held no later than any other	67
special meeting of shareholders that is called, after receipt by	68
the issuing public corporation of the acquiring person statement,	69
in compliance with this section or section 1701.76, 1701.78,	70
1701.79, or 1701.83, or 1701.831 of the Revised Code.	71

(2) If, in connection with a tender offer, an acquiring	72
person increases or decreases the percentage of the class of	73
securities being sought, the consideration offered, or the	74
security dealer's soliciting fee, and the acquiring person is	75
required to hold open the tender offer for at least ten business	76
days from the date that the notice of such change is first	77
published, sent, or given to shareholders pursuant to securities	78
and exchange commission rule 14e-1(b), 17 C.F.R. 240.14e-1(b)	79
promulgated pursuant to section 14(e) of the "Securities Exchange	80
Act of 1934," 82 Stat. 455, 15 U.S.C. 78n(e), then the directors	81
of the issuing public corporation may reschedule the special	82
meeting of shareholders required by division (C)(1) of this	83
section to a date that is not later than the date established by	84
the acquiring person as the closing date of the changed tender	85
offer.	86

(D) Notice of the special meeting of shareholders shall be	87
given as promptly as reasonably practicable by the issuing public	88
corporation to all shareholders of record as of the record date	89
set for such meeting, whether or not entitled to vote thereatat	90
the meeting. SuchThe notice shall include or be accompanied by	91
both of the following:	92

(1) A copy of the acquiring person statement delivered to the	93
issuing public corporation pursuant to this section;	94

(2) A statement by the issuing public corporation, authorized	95
by its directors, of its position or recommendation, or that it is	96
taking no position or making no recommendation, with respect to	97
the proposed control share acquisition.	98

(E) The acquiring person may make the proposed control share	99
acquisition if both of the following occur:	100

(1) The shareholders of the issuing public corporation who	101
hold shares as of the record date of such corporation entitling	102
them to vote in the election of directors authorize the	103
acquisition at the special meeting held for that purpose at which	104
a quorum is present by an affirmative vote of a majority of the	105
voting power of such corporation in the election of directors	106
represented at the meeting in person or by proxy, and a majority	107
of the portion of the voting power excluding the voting power of	108
interested shares represented at the meeting in person or by	109
proxy. A quorum shall be deemed to be present at the special	110
meeting if at least a majority of the voting power of the issuing	111
public corporation in the election of directors is represented at	112
the meeting in person or by proxy.	113

(2) The acquisition is consummated, in accordance with the	114
terms so authorized, no later than three hundred sixty days	115
following shareholder authorization of the control share	116
acquisition.	117

(F) Except as expressly provided in this section, nothing in	118
this section shall be construed to affect or impair any right,	119
remedy, obligation, duty, power, or authority of any acquiring	120
person, any issuing public corporation, the directors of any	121
acquiring person or issuing public corporation, or any other	122
person under the laws of this or any other state or of the United	123
States.	124

(G) If any application of any provision of this section is	125
for any reason held to be illegal or invalid, the illegality or	126
invalidity shall not affect any legal and valid provision or	127
application of this section, and the parts and applications of	128
this section are severable.	129

Sec. 1707.01.  As used in this chapter:

130

(A) Whenever the context requires it, "division" or "division	131
of securities" may be read as "director of commerce" or as	132
"commissioner of securities."	133

(B) "Security" means any certificate or instrument, or any	134
oral, written, or electronic agreement, understanding, or	135
opportunity, that represents title to or interest in, or is	136
secured by any lien or charge upon, the capital, assets, profits,	137
property, or credit of any person or of any public or governmental	138
body, subdivision, or agency. It includes shares of stock,	139
certificates for shares of stock, membership interests in limited	140
liability companies, voting-trust certificates, warrants and	141
options to purchase securities, subscription rights, interim	142
receipts, interim certificates, promissory notes, all forms of	143
commercial paper, evidences of indebtedness, bonds, debentures,	144
land trust certificates, fee certificates, leasehold certificates,	145
syndicate certificates, endowment certificates, certificates or	146
written instruments in or under profit-sharing or participation	147
agreements or in or under oil, gas, or mining leases, or	148
certificates or written instruments of any interest in or under	149
the same, receipts evidencing preorganization or reorganization	150
subscriptions, preorganization certificates, reorganization	151
certificates, certificates evidencing an interest in any trust or	152
pretended trust, any investment contract, any life settlement	153
interest, any instrument evidencing a promise or an agreement to	154
pay money, warehouse receipts for intoxicating liquor, and the	155
currency of any government other than those of the United States	156
and Canada, but sections 1707.01 to 1707.45 of the Revised Code do	157
not apply to the sale of real estate.	158

(C)(1) "Sale" has the full meaning of "sale" as applied by or	159
accepted in courts of law or equity, and includes every	160
disposition, or attempt to dispose, of a security or of an	161
interest in a security. "Sale" also includes a contract to sell,	162
an exchange, an attempt to sell, an option of sale, a solicitation	163
of a sale, a solicitation of an offer to buy, a subscription, or	164
an offer to sell, directly or indirectly, by agent, circular,	165
pamphlet, advertisement, or otherwise.	166

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

167

(3) The use of advertisements, circulars, or pamphlets in	168
connection with the sale of securities in this state exclusively	169
to the purchasers specified in division (D) of section 1707.03 of	170
the Revised Code is not a sale when the advertisements, circulars,	171
and pamphlets describing and offering those securities bear a	172
readily legible legend in substance as follows: "This offer is	173
made on behalf of dealers licensed under sections 1707.01 to	174
1707.45 of the Revised Code, and is confined in this state	175
exclusively to institutional investors and licensed dealers."	176

(4) The offering of securities by any person in conjunction	177
with a licensed dealer by use of advertisement, circular, or	178
pamphlet is not a sale if that person does not otherwise attempt	179
to sell securities in this state.	180

(5) Any security given with, or as a bonus on account of, any	181
purchase of securities is conclusively presumed to constitute a	182
part of the subject of that purchase and has been "sold."	183

(6) "Sale" by an owner, pledgee, or mortgagee, or by a person	184
acting in a representative capacity, includes sale on behalf of	185
such party by an agent, including a licensed dealer or	186
salesperson.	187

(D) "Person," except as otherwise provided in this chapter,	188
means a natural person, firm, partnership, limited partnership,	189
partnership association, syndicate, joint-stock company,	190
unincorporated association, trust or trustee except where the	191
trust was created or the trustee designated by law or judicial	192
authority or by a will, and a corporation or limited liability	193
company organized under the laws of any state, any foreign	194
government, or any political subdivision of a state or foreign	195
government.	196

(E)(1) "Dealer," except as otherwise provided in this	197
chapter, means every person, other than a salesperson, who engages	198
or professes to engage, in this state, for either all or part of	199
the person's time, directly or indirectly, either in the business	200
of the sale of securities for the person's own account, or in the	201
business of the purchase or sale of securities for the account of	202
others in the reasonable expectation of receiving a commission,	203
fee, or other remuneration as a result of engaging in the purchase	204
and sale of securities. "Dealer" does not mean any of the	205
following:	206

(a) Any issuer, including any officer, director, employee, or	207
trustee of, or member or manager of, or partner in, or any general	208
partner of, any issuer, that sells, offers for sale, or does any	209
act in furtherance of the sale of a security that represents an	210
economic interest in that issuer, provided no commission, fee, or	211
other similar remuneration is paid to or received by the issuer	212
for the sale;	213

(b) Any licensed attorney, public accountant, or firm of such	214
attorneys or accountants, whose activities are incidental to the	215
practice of the attorney's, accountant's, or firm's profession;	216

(c) Any person that, for the account of others, engages in	217
the purchase or sale of securities that are issued and outstanding	218
before such purchase and sale, if a majority or more of the equity	219
interest of an issuer is sold in that transaction, and if, in the	220
case of a corporation, the securities sold in that transaction	221
represent a majority or more of the voting power of the	222
corporation in the election of directors;	223

(d) Any person that brings an issuer together with a	224
potential investor and whose compensation is not directly or	225
indirectly based on the sale of any securities by the issuer to	226
the investor;	227

(e) Any bank;

228

(f) Any person that the division of securities by rule	229
exempts from the definition of "dealer" under division (E)(1) of	230
this section.	231

(2) "Licensed dealer" means a dealer licensed under this	232
chapter.	233

(F)(1) "Salesman" or "salesperson" means every natural	234
person, other than a dealer, who is employed, authorized, or	235
appointed by a dealer to sell securities within this state.	236

(2) The general partners of a partnership, and the executive	237
officers of a corporation or unincorporated association, licensed	238
as a dealer are not salespersons within the meaning of this	239
definition, nor are such clerical or other employees of an issuer	240
or dealer as are employed for work to which the sale of securities	241
is secondary and incidental; but the division of securities may	242
require a license from any such partner, executive officer, or	243
employee if it determines that protection of the public	244
necessitates the licensing.	245

(3) "Licensed salesperson" means a salesperson licensed under	246
this chapter.	247

(G) "Issuer" means every person who has issued, proposes to	248
issue, or issues any security.	249

(H) "Director" means each director or trustee of a	250
corporation, each trustee of a trust, each general partner of a	251
partnership, except a partnership association, each manager of a	252
partnership association, and any person vested with managerial or	253
directory power over an issuer not having a board of directors or	254
trustees.	255

(I) "Incorporator" means any incorporator of a corporation	256
and any organizer of, or any person participating, other than in a	257
representative or professional capacity, in the organization of an	258
unincorporated issuer.	259

(J) "Fraud," "fraudulent," "fraudulent acts," "fraudulent	260
practices," or "fraudulent transactions" means anything recognized	261
on or after July 22, 1929, as such in courts of law or equity; any	262
device, scheme, or artifice to defraud or to obtain money or	263
property by means of any false pretense, representation, or	264
promise; any fictitious or pretended purchase or sale of	265
securities; and any act, practice, transaction, or course of	266
business relating to the purchase or sale of securities that is	267
fraudulent or that has operated or would operate as a fraud upon	268
the seller or purchaser.	269

(K) Except as otherwise specifically provided, whenever any	270
classification or computation is based upon "par value," as	271
applied to securities without par value, the average of the	272
aggregate consideration received or to be received by the issuer	273
for each class of those securities shall be used as the basis for	274
that classification or computation.	275

(L)(1) "Intangible property" means patents, copyrights,	276
secret processes, formulas, services, good will, promotion and	277
organization fees and expenses, trademarks, trade brands, trade	278
names, licenses, franchises, any other assets treated as	279
intangible according to generally accepted accounting principles,	280
and securities, accounts receivable, or contract rights having no	281
readily determinable value.	282

(2) "Tangible property" means all property other than	283
intangible property and includes securities, accounts receivable,	284
and contract rights, when the securities, accounts receivable, or	285
contract rights have a readily determinable value.	286

(M) "Public utilities" means those utilities defined in	287
sections 4905.02, 4905.03, 4907.02, and 4907.03 of the Revised	288
Code; in the case of a foreign corporation, it means those	289
utilities defined as public utilities by the laws of its domicile;	290
and in the case of any other foreign issuer, it means those	291
utilities defined as public utilities by the laws of the situs of	292
its principal place of business. The term always includes	293
railroads whether or not they are so defined as public utilities.	294

(N) "State" means any state of the United States, any	295
territory or possession of the United States, the District of	296
Columbia, and any province of Canada.	297

(O) "Bank" means any bank, trust company, savings and loan	298
association, savings bank, or credit union that is incorporated or	299
organized under the laws of the United States, any state of the	300
United States, Canada, or any province of Canada and that is	301
subject to regulation or supervision by that country, state, or	302
province.	303

(P) "Include," when used in a definition, does not exclude	304
other things or persons otherwise within the meaning of the term	305
defined.	306

(Q)(1) "Registration by description" means that the	307
requirements of section 1707.08 of the Revised Code have been	308
complied with.	309

(2) "Registration by qualification" means that the	310
requirements of sections 1707.09 and 1707.11 of the Revised Code	311
have been complied with.	312

(3) "Registration by coordination" means that there has been	313
compliance with section 1707.091 of the Revised Code. Reference in	314
this chapter to registration by qualification also shall be deemed	315
to include registration by coordination unless the context	316
otherwise indicates.	317

(R) "Intoxicating liquor" includes all liquids and compounds	318
that contain more than three and two-tenths per cent of alcohol by	319
weight and are fit for use for beverage purposes.	320

(S) "Institutional investor" means any corporation, bank,	321
insurance company, pension fund or pension fund trust, employees'	322
profit-sharing fund or employees' profit-sharing trust, any	323
association engaged, as a substantial part of its business or	324
operations, in purchasing or holding securities, or any trust in	325
respect of which a bank is trustee or cotrustee. "Institutional	326
investor" does not include any business entity formed for the	327
primary purpose of evading sections 1707.01 to 1707.45 of the	328
Revised Code.	329

(T) "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a,	330
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a,	331
"Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C. 1,	332
"Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b,	333
and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a	334
mean the federal statutes of those names as amended before or	335
after March 18, 1999.	336

(U) "Securities and exchange commission" means the securities	337
and exchange commission established by the Securities Exchange Act	338
of 1934.	339

(V)(1) "Control bid" means the purchase of or offer to	340
purchase any equity security of a subject company from a resident	341
of this state if either of the following applies:	342

(a) After the purchase of that security, the offeror would be	343
directly or indirectly the beneficial owner of more than ten per	344
cent of any class of the issued and outstanding equity securities	345
of the issuer.	346

(b) The offeror is the subject company, there is a pending	347
control bid by a person other than the issuer, and the number of	348
the issued and outstanding shares of the subject company would be	349
reduced by more than ten per cent.	350

(2) For purposes of division (V)(1) of this section, "control	351
bid" does not include any of the following:	352

(a) A bid made by a dealer for the dealer's own account in	353
the ordinary course of business of buying and selling securities;	354

(b) An offer to acquire any equity security solely in	355
exchange for any other security, or the acquisition of any equity	356
security pursuant to an offer, for the sole account of the	357
offeror, in good faith and not for the purpose of avoiding the	358
provisions of this chapter, and not involving any public offering	359
of the other security within the meaning of Section 4 of Title I	360
of the "Securities Act of 1933," 48 Stat. 77, 15 U.S.C.A. 77d(2),	361
as amended;	362

(c) Any other offer to acquire any equity security, or the	363
acquisition of any equity security pursuant to an offer, for the	364
sole account of the offeror, from not more than fifty persons, in	365
good faith and not for the purpose of avoiding the provisions of	366
this chapter.	367

(W) "Offeror" means a person who makes, or in any way	368
participates or aids in making, a control bid and includes persons	369
acting jointly or in concert, or who intend to exercise jointly or	370
in concert any voting rights attached to the securities for which	371
the control bid is made and also includes any subject company	372
making a control bid for its own securities.	373

(X)(1) "Investment adviser" means any person who, for	374
compensation, engages in the business of advising others, either	375
directly or through publications or writings, as to the value of	376
securities or as to the advisability of investing in, purchasing,	377
or selling securities, or who, for compensation and as a part of	378
regular business, issues or promulgates analyses or reports	379
concerning securities.	380

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

381

(a) Any attorney, accountant, engineer, or teacher, whose	382
performance of investment advisory services described in division	383
(X)(1) of this section is solely incidental to the practice of the	384
attorney's, accountant's, engineer's, or teacher's profession;	385

(b) A publisher of any bona fide newspaper, news magazine, or	386
business or financial publication of general and regular	387
circulation;	388

(c) A person who acts solely as an investment adviser	389
representative;	390

(d) A bank holding company, as defined in the "Bank Holding	391
Company Act of 1956," 70 Stat. 133, 12 U.S.C. 1841, that is not an	392
investment company;	393

(e) A bank, or any receiver, conservator, or other	394
liquidating agent of a bank;	395

(f) Any licensed dealer or licensed salesperson whose	396
performance of investment advisory services described in division	397
(X)(1) of this section is solely incidental to the conduct of the	398
dealer's or salesperson's business as a licensed dealer or	399
licensed salesperson and who receives no special compensation for	400
the services;	401

(g) Any person, the advice, analyses, or reports of which do	402
not relate to securities other than securities that are direct	403
obligations of, or obligations guaranteed as to principal or	404
interest by, the United States, or securities issued or guaranteed	405
by corporations in which the United States has a direct or	406
indirect interest, and that have been designated by the secretary	407
of the treasury as exempt securities as defined in the "Securities	408
Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78c;	409

(h) Any person that is excluded from the definition of	410
investment adviser pursuant to section 202(a)(11)(A) to (E) of the	411
"Investment Advisers Act of 1940," 15 U.S.C. 80b-2(a)(11), or that	412
has received an order from the securities and exchange commission	413
under section 202(a)(11)(F) of the "Investment Advisers Act of	414
1940," 15 U.S.C. 80b-2(a)(11)(F), declaring that the person is not	415
within the intent of section 202(a)(11) of the Investment Advisers	416
Act of 1940.	417

(i) Any other person that the division designates by rule, if	418
the division finds that the designation is necessary or	419
appropriate in the public interest or for the protection of	420
investors or clients and consistent with the purposes fairly	421
intended by the policy and provisions of this chapter.	422

(Y)(1) "Subject company" means an issuer that satisfies both	423
of the following:	424

(a) Its principal place of business or its principal	425
executive office is located in this state, or it owns or controls	426
assets located within this state that have a fair market value of	427
at least one million dollars.	428

(b) More than ten per cent of its beneficial or record equity	429
security holders are resident in this state, more than ten per	430
cent of its equity securities are owned beneficially or of record	431
by residents in this state, or more than one thousand of its	432
beneficial or record equity security holders are resident in this	433
state.	434

(2) The division of securities may adopt rules to establish	435
more specific application of the provisions set forth in division	436
(Y)(1) of this section. Notwithstanding the provisions set forth	437
in division (Y)(1) of this section and any rules adopted under	438
this division, the division, by rule or in an adjudicatory	439
proceeding, may make a determination that an issuer does not	440
constitute a "subject company" under division (Y)(1) of this	441
section if appropriate review of control bids involving the issuer	442
is to be made by any regulatory authority of another jurisdiction.	443

(Z) "Beneficial owner" includes any person who directly or	444
indirectly through any contract, arrangement, understanding, or	445
relationship has or shares, or otherwise has or shares, the power	446
to vote or direct the voting of a security or the power to dispose	447
of, or direct the disposition of, the security. "Beneficial	448
ownership" includes the right, exercisable within sixty days, to	449
acquire any security through the exercise of any option, warrant,	450
or right, the conversion of any convertible security, or	451
otherwise. Any security subject to any such option, warrant,	452
right, or conversion privilege held by any person shall be deemed	453
to be outstanding for the purpose of computing the percentage of	454
outstanding securities of the class owned by that person, but	455
shall not be deemed to be outstanding for the purpose of computing	456
the percentage of the class owned by any other person. A person	457
shall be deemed the beneficial owner of any security beneficially	458
owned by any relative or spouse or relative of the spouse residing	459
in the home of that person, any trust or estate in which that	460
person owns ten per cent or more of the total beneficial interest	461
or serves as trustee or executor, any corporation or entity in	462
which that person owns ten per cent or more of the equity, and any	463
affiliate or associate of that person.	464

(AA) "Offeree" means the beneficial or record owner of any	465
security that an offeror acquires or offers to acquire in	466
connection with a control bid.	467

(BB) "Equity security" means any share or similar security,	468
or any security convertible into any such security, or carrying	469
any warrant or right to subscribe to or purchase any such	470
security, or any such warrant or right, or any other security	471
that, for the protection of security holders, is treated as an	472
equity security pursuant to rules of the division of securities.	473

(CC)(1) "Investment adviser representative" means a	474
supervised person of an investment adviser, provided that the	475
supervised person has more than five clients who are natural	476
persons other than excepted persons defined in division (EE) of	477
this section, and that more than ten per cent of the supervised	478
person's clients are natural persons other than excepted persons	479
defined in division (EE) of this section. "Investment adviser	480
representative" does not mean any of the following:	481

(a) A supervised person that does not on a regular basis	482
solicit, meet with, or otherwise communicate with clients of the	483
investment adviser;	484

(b) A supervised person that provides only investment	485
advisory services described in division (X)(1) of this section by	486
means of written materials or oral statements that do not purport	487
to meet the objectives or needs of specific individuals or	488
accounts;	489

(c) Any other person that the division designates by rule, if	490
the division finds that the designation is necessary or	491
appropriate in the public interest or for the protection of	492
investors or clients and is consistent with the provisions fairly	493
intended by the policy and provisions of this chapter.	494

(2) For the purpose of the calculation of clients in division	495
(CC)(1) of this section, a natural person and the following	496
persons are deemed a single client: Any minor child of the natural	497
person; any relative, spouse, or relative of the spouse of the	498
natural person who has the same principal residence as the natural	499
person; all accounts of which the natural person or the persons	500
referred to in division (CC)(2) of this section are the only	501
primary beneficiaries; and all trusts of which the natural person	502
or persons referred to in division (CC)(2) of this section are the	503
only primary beneficiaries. Persons who are not residents of the	504
United States need not be included in the calculation of clients	505
under division (CC)(1) of this section.	506

(3) If subsequent to March 18, 1999, amendments are enacted	507
or adopted defining "investment adviser representative" for	508
purposes of the Investment Advisers Act of 1940 or additional	509
rules or regulations are promulgated by the securities and	510
exchange commission regarding the definition of "investment	511
adviser representative" for purposes of the Investment Advisers	512
Act of 1940, the division of securities shall, by rule, adopt the	513
substance of the amendments, rules, or regulations, unless the	514
division finds that the amendments, rules, or regulations are not	515
necessary for the protection of investors or in the public	516
interest.	517

(DD) "Supervised person" means a natural person who is any of	518
the following:	519

(1) A partner, officer, or director of an investment adviser,	520
or other person occupying a similar status or performing similar	521
functions with respect to an investment adviser;	522

(2) An employee of an investment adviser;

523

(3) A person who provides investment advisory services	524
described in division (X)(1) of this section on behalf of the	525
investment adviser and is subject to the supervision and control	526
of the investment adviser.	527

(EE) "Excepted person" means a natural person to whom any of	528
the following applies:	529

(1) Immediately after entering into the investment advisory	530
contract with the investment adviser, the person has at least	531
seven hundred fifty thousand dollars under the management of the	532
investment adviser.	533

(2) The investment adviser reasonably believes either of the	534
following at the time the investment advisory contract is entered	535
into with the person:	536

(a) The person has a net worth, together with assets held	537
jointly with a spouse, of more than one million five hundred	538
thousand dollars.	539

(b) The person is a qualified purchaser as defined in	540
division (FF) of this section.	541

(3) Immediately prior to entering into an investment advisory	542
contract with the investment adviser, the person is either of the	543
following:	544

(a) An executive officer, director, trustee, general partner,	545
or person serving in a similar capacity, of the investment	546
adviser;	547

(b) An employee of the investment adviser, other than an	548
employee performing solely clerical, secretarial, or	549
administrative functions or duties for the investment adviser,	550
which employee, in connection with the employee's regular	551
functions or duties, participates in the investment activities of	552
the investment adviser, provided that, for at least twelve months,	553
the employee has been performing such nonclerical, nonsecretarial,	554
or nonadministrative functions or duties for or on behalf of the	555
investment adviser or performing substantially similar functions	556
or duties for or on behalf of another company.	557

If subsequent to March 18, 1999, amendments are enacted or	558
adopted defining "excepted person" for purposes of the Investment	559
Advisers Act of 1940 or additional rules or regulations are	560
promulgated by the securities and exchange commission regarding	561
the definition of "excepted person" for purposes of the Investment	562
Advisers Act of 1940, the division of securities shall, by rule,	563
adopt the substance of the amendments, rules, or regulations,	564
unless the division finds that the amendments, rules, or	565
regulations are not necessary for the protection of investors or	566
in the public interest.	567

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

568

(a) A natural person who owns not less than five million	569
dollars in investments as defined by rule by the division of	570
securities;	571

(b) A natural person, acting for the person's own account or	572
accounts of other qualified purchasers, who in the aggregate owns	573
and invests on a discretionary basis, not less than twenty-five	574
million dollars in investments as defined by rule by the division	575
of securities.	576

(2) If subsequent to March 18, 1999, amendments are enacted	577
or adopted defining "qualified purchaser" for purposes of the	578
Investment Advisers Act of 1940 or additional rules or regulations	579
are promulgated by the securities and exchange commission	580
regarding the definition of "qualified purchaser" for purposes of	581
the Investment Advisers Act of 1940, the division of securities	582
shall, by rule, adopt the amendments, rules, or regulations,	583
unless the division finds that the amendments, rules, or	584
regulations are not necessary for the protection of investors or	585
in the public interest.	586

(GG)(1) "Purchase" has the full meaning of "purchase" as	587
applied by or accepted in courts of law or equity and includes	588
every acquisition of, or attempt to acquire, a security or an	589
interest in a security. "Purchase" also includes a contract to	590
purchase, an exchange, an attempt to purchase, an option to	591
purchase, a solicitation of a purchase, a solicitation of an offer	592
to sell, a subscription, or an offer to purchase, directly or	593
indirectly, by agent, circular, pamphlet, advertisement, or	594
otherwise.	595

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

596

(3) Any security given with, or as a bonus on account of, any	597
purchase of securities is conclusively presumed to constitute a	598
part of the subject of that purchase.	599

(HH) "Life settlement interest" means the entire interest or	600
any fractional interest in an insurance policy or certificate of	601
insurance, or in an insurance benefit under such a policy or	602
certificate, that is the subject of a life settlement contract.	603

For purposes of this division, "life settlement contract"	604
means an agreement for the purchase, sale, assignment, transfer,	605
devise, or bequest of any portion of the death benefit or	606
ownership of any life insurance policy or contract, in return for	607
consideration or any other thing of value that is less than the	608
expected death benefit of the life insurance policy or contract.	609
"Life settlement contract" includes a viatical settlement contract	610
as defined in section 3916.01 of the Revised Code, but does not	611
include any of the following:	612

(1) A loan by an insurer under the terms of a life insurance	613
policy, including, but not limited to, a loan secured by the cash	614
value of the policy;	615

(2) An agreement with a bank that takes an assignment of a	616
life insurance policy as collateral for a loan;	617

(3) The provision of accelerated benefits as defined in	618
section 3915.21 of the Revised Code;	619

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

620

(5) An agreement by an individual to purchase an existing	621
life insurance policy or contract from the original owner of the	622
policy or contract, if the individual does not enter into more	623
than one life settlement contract per calendar year;	624

(6) The initial purchase of an insurance policy or	625
certificate of insurance from its owner by a viatical settlement	626
provider, as defined in section 3916.01 of the Revised Code, that	627
is licensed under Chapter 3916. of the Revised Code.	628

Sec. 1707.08. (A) The transactions enumerated in section	629
1707.06 of the Revised Code may be consummated on compliance with	630
this section and section 1707.11 of the Revised Code.	631

(B) A description, verified either by the oath of the person	632
individual filing it or of any personindividual having knowledge	633
of the facts, shall be filed with the division of securities by	634
the issuer, or by a majority of the incorporators of the issuer	635
prior to election of officers if it is an incorporated issuer, or	636
by a licensed dealer, which description shall be on forms	637
prescribed by the division and shall set forth:	638

(A)(1) The name of the issuer;

639

(B)(2) A brief description of the securities;

640

(C)(3) The amount of the securities to be offered after the	641
filing of the description for sale in this state and, if all the	642
securities are not to be offered by the person filing the	643
description, then the respective amounts to be offered by others,	644
so far as those amounts are known, and the names and addresses of	645
the other offerors;	646

(D)(4) A brief statement of the facts which show that the	647
securities are the subject matter of a transaction enumerated in	648
section 1707.06 of the Revised Code;	649

(E)(5) The price at which the securities are to be offered	650
for sale.	651

Registration by description is completed when the	652
description, together with a filing fee of fifty dollars, in the	653
form of cash, check, or United States postal money order, is	654
delivered, or mailed by certified mail with postage prepaid, to	655
the division.	656

(C) The individual who executes the application for	657
registration by description on behalf of the applicant shall state	658
the individual's relationship to the applicant and certify all of	659
the following:	660

(1) The individual has executed the application on behalf of	661
the applicant.	662

(2) The individual is fully authorized to execute and file	663
the application on behalf of the applicant.	664

(3) The individual is familiar with the applicant's	665
application.	666

(4) To the best of the individual's knowledge, information,	667
and belief, the statements made in the application are true, and	668
the documents submitted with the application are true copies of	669
the original documents.	670

(D) A registration by description is effective seven business	671
days after the division receives the description on applicable	672
forms, together with a filing fee of fifty dollars, if no	673
proceeding is pending under section 1707.13 or 1707.131 of the	674
Revised Code. However, the division may permit an earlier	675
effective date by rule or by issuing a certificate of	676
acknowledgment for the registration by description.	677

(E) In order to correct errors or omissions, a registration	678
by description may be amended by the person whothat originally	679
filed it, by the filing, in the same manner as in the case of an	680
original registration by description, of an amended registration	681
by description or of an amendment of the original registration by	682
description.	683

(F) When transactions in any securities enumerated in section	684
1707.06 of the Revised Code have been registered and the fees	685
prescribed by this section have been paid, the transactions may be	686
consummated so long as the registration remains in full force.	687

Sec. 1707.09. (A)(1) All securities, except those enumerated	688
in section 1707.02 of the Revised Code and those that are the	689
subject matter of a transaction permitted by section 1707.03,	690
1707.04, or 1707.06 of the Revised Code, shall be qualified in the	691
manner provided by this section before being sold in this state.	692

(2) Applications for that qualification, on forms prescribed	693
by the division of securities, shall be made in writing either by	694
the issuer of the securities or by any licensed dealer desiring to	695
sell them within this state and shall be signed by the applicant,	696
sworn to by any personindividual having knowledge of the facts	697
stated in the application, and filed in the office of the	698
division.	699

(3) The individual who executes the application for	700
qualification of securities on behalf of the applicant shall state	701
the individual's relationship to the applicant and certify that:	702
the individual has executed the application on behalf of the	703
applicant; the individual is fully authorized to execute and file	704
the application on behalf of the applicant; the individual is	705
familiar with the applicant's application; and to the best of the	706
individual's knowledge, information, and belief, the statements	707
made in the application are true, and the documents submitted with	708
the application are true copies of the original documents.	709

(B) The division shall require the applicant for	710
qualification of securities to submit to it the following	711
information:	712

(A)(1) The names and addresses of the directors or trustees	713
and of the officers of the issuer, if the issuer is a corporation	714
or an unincorporated association; of all the members of the	715
issuer, if the issuer is a limited liability company in which	716
management is reserved to its members; of all the managers of the	717
issuer, if the issuer is a limited liability company in which	718
management is not reserved to its members; of all partners, if the	719
issuer is a general or limited partnership or a partnership	720
association; and the name and address of the issuer, if the issuer	721
is an individual;	722

(B)(2) The address of the issuer's principal place of	723
business and principal office in this state, if any;	724

(C)(3) The purposes and general character of the business	725
actually being transacted, or to be transacted, by the issuer, and	726
the purpose of issuing the securities named in the application;	727

(D)(4) A statement of the capitalization of the issuer; a	728
balance sheet made up as of the most recent practicable date,	729
showing the amount and general character of its assets and	730
liabilities; a description of the security for the qualification	731
of which application is being made; and copies of all circulars,	732
prospectuses, advertisements, or other descriptions of the	733
securities, that are then prepared by or for the issuer, or by or	734
for the applicant if the applicant is not the issuer, or by or for	735
both, to be used for distribution or publication in this state;	736

(E)(5) A statement of the amount of the issuer's income,	737
expenses, and fixed charges during the last fiscal year or, if the	738
issuer has been in actual business less than one year, for the	739
time that the issuer has been in actual business;	740

(F)(6) A statement showing the price at which the security is	741
to be offered for sale;	742

(G)(7) A statement showing the considerations received or to	743
be received by the issuer of the securities purchased or to be	744
purchased from the issuer and an itemized statement of all	745
expenses of financing to be paid from those considerations so as	746
to show the aggregate net amount actually received or to be	747
received by the issuer;	748

(H)(8) All other information, including an opinion of counsel	749
as to the validity of the securities that are the subject matter	750
of the application, that the division considers necessary to	751
enable it to ascertain whether the securities are entitled to	752
qualification;	753

(I)(9) If the issuer is a corporation, there shall be filed	754
with the application a certified copy of its articles of	755
incorporation with all amendments to the articles, if the articles	756
or amendments are not already on file in the office of the	757
secretary of state; if the issuer is a limited liability company,	758
there shall be filed with the application a certified copy of its	759
articles of organization with all amendments to the articles, if	760
the articles or amendments are not already on file in the office	761
of the secretary of state; if the issuer is a trust or trustee,	762
there shall be filed with the application a copy of all	763
instruments by which the trust was created; and if the issuer is a	764
partnership or an unincorporated association, or any other form of	765
organization, there shall be filed with the application a copy of	766
its articles of partnership or association and of all other papers	767
pertaining to its organization, if the articles or other papers	768
are not already on file in the office of the secretary of state;	769

(J)(10) If the application is made with respect to securities	770
to be sold or distributed by or on behalf of the issuer, or by or	771
on behalf of an underwriter, as defined in division (N) of section	772
1707.03 of the Revised Code, a statement showing that the issuer	773
has received, or will receive at or prior to the delivery of those	774
securities, not less than eighty-five per cent of the aggregate	775
price at which all those securities are sold by or on behalf of	776
the issuer, without deduction for any additional commission,	777
directly or indirectly, and without liability to pay any	778
additional sum as commission;	779

(K)(11) If the division so permits with respect to a	780
security, an applicant may file with the division, in lieu of the	781
division's prescribed forms, a copy of the registration statement	782
relating to the security, with all amendments to that statement,	783
previously filed with the securities and exchange commission of	784
the United States under the "Securities Act of 1933," as amended,	785
together with all additional data, information, and documents that	786
the division requires.	787

(C) If the division finds that it is not necessary in the	788
public interest and for the protection of investors to require all	789
the information specified in divisions (A) to (J)(B)(1) to (10) of	790
this section, it may permit the filing of applications for	791
qualification that contain the information that it considers	792
necessary and appropriate in the public interest and for the	793
protection of investors;, but this provision applies only in the	794
case of applications for qualification of securities previously	795
issued and outstanding that may not be made the subject matter of	796
transactions exempt under division (M) of section 1707.03 of the	797
Revised Code by reason of the fact that those securities within	798
one year were purchased outside this state or within one year were	799
transported into this state.	800

(D) All the statements, exhibits, and documents required by	801
the division under this section, except properly certified public	802
documents, shall be verified by the oath of the applicant for	803
qualification, of the issuer, or of any personindividual having	804
knowledge of the facts, and in the manner and form that may be	805
required by the division. Failure or refusal to comply with the	806
requests of the division shall be sufficient reason for a refusal	807
by the division to register securities.	808

(E) If it appears to the division that substantially the only	809
consideration to be paid for any of the securities to be qualified	810
is to be intangible property of doubtful value, the division may	811
require that the securities be delivered in escrow to a bank in	812
this state under the terms that the division may reasonably	813
prescribe or require to prevent a deceitful misrepresentation or	814
sale of the securities,; that the securities be subordinated in	815
favor of those sold for sound value until they have a value	816
bearing a reasonable relation to the value of those sold for sound	817
value,; or that a legend of warning specifying the considerations	818
paid or to be paid for the securities be stamped or printed on all	819
advertisements, circulars, pamphlets, or subscription blanks used	820
in connection with the sale of any securities of the same issuer,;	821
or it may impose a combination of any two or more of these	822
requirements.	823

(F) At the time of filing the information prescribed in this	824
section, the applicant shall pay to the division a filing fee of	825
one hundred dollars.	826

(G)(1) The division, at any time, as a prerequisite to	827
qualification, may make an examination of the issuer of securities	828
sought to be qualified. The applicant for qualification of any	829
securities may be required by the division to advance sufficient	830
funds to pay all or any part of the actual expenses of that	831
examination, an itemized statement of which shall be furnished the	832
applicant. If	833

(2) If the division finds that the business of the issuer is	834
not fraudulently conducted, that the proposed offer or disposal of	835
securities is not on grossly unfair terms, that the plan of	836
issuance and sale of the securities referred to in the proposed	837
offer or disposal would not defraud or deceive, or tend to defraud	838
or deceive, purchasers, and that division (J)(B)(10) of this	839
section applies and has been complied with, the division shall	840
notify the applicant of its findings;, and, upon payment of a	841
registration fee of one-tenth of one per cent of the aggregate	842
price at which the securities are to be sold to the public in this	843
state, which fee, however, shall in no case be less than one	844
hundred or more than one thousand dollars, the division shall	845
register the qualification of the securities.	846

(H) An application for qualification of securities may be	847
amended by the person filing it at any time prior to the	848
division's action on it either in registering the securities for	849
qualification or in refusing to do so. Subsequent to any such	850
action by the division, the person who filed the application may	851
file with the consent of the division one or more amendments to it	852
that shall become effective upon the making by the division of the	853
findings enumerated in the next preceding paragraphdivision (G)	854
of this section,; the giving of notice of those findings to the	855
applicant by the division,; and the payment by the applicant of	856
the additional fee that would have been payable had the	857
application, as it previously became effective, contained the	858
amendment.	859

(I) When any securities have been qualified and the fees for	860
the qualification have been paid as provided in this section, any	861
licensed dealer subsequently may sell the securities under the	862
qualification, so long as the qualification remains in full force,	863
and any dealer of that nature whothat desires may file with the	864
division a written notice of intention to sell the securities or	865
any designated portion of them. For that filing, no fee need be	866
paid.	867

Sec. 1707.11.  (A) Each person that is not organized under	868
the laws of this state, that is not licensed under section 1703.03	869
of the Revised Code, or that does not have its principal place of	870
business in this state, shall submit to the division of securities	871
an irrevocable consent to service of process, as described in	872
division (B) of this section, in connection with any of the	873
following:	874

(1) Filings to claim any of the exemptions enumerated in	875
division (Q), (W), (X), or (Y) of section 1707.03 of the Revised	876
Code;	877

(2) Applications for registration by description,	878
qualification, or coordination;	879

(3) Notice filings pursuant to section 1707.092 of the	880
Revised Code.	881

(B) The irrevocable written consent shall be executed and	882
acknowledged by an individual duly authorized to give the consent	883
and shall do all of the following:	884

(1) Designate the secretary of state as agent for service of	885
process or pleadings;	886

(2) State that actions growing out of the sale of such	887
securities, the giving of investment advice, or fraud committed by	888
a person on whose behalf the consent is submitted may be commenced	889
against the person, in the proper court of any county in this	890
state in which a cause of action may arise or in which the	891
plaintiff in the action may reside, by serving on the secretary of	892
state any proper process or pleading authorized by the laws of	893
this state;	894

(3) Stipulate that service of process or pleading on the	895
secretary of state shall be taken in all courts to be as valid and	896
binding as if service had been made upon the person on whose	897
behalf the consent is submitted.	898

(C) Notwithstanding any application, form, or other material	899
filed with or submitted to the division that purports to appoint	900
as agent for service of process a person other than the secretary	901
of state, the application, form, or other material shall be	902
considered to appoint the secretary of state as agent for service	903
of process.	904

(D) Service of any process or pleadings may be made on the	905
secretary of state by duplicate copies, of which one shall be	906
filed in the office of the secretary of state, and the other	907
immediately forwarded by the secretary of state by certified mail	908
to the principal place of business of the person on whose behalf	909
the consent is submitted or to the last known address as shown on	910
the filing made with the division. However, failure to mail such	911
copy does not invalidate the service.	912

(D)(E) Notwithstanding any provision of this chapter, or of	913
any rule adopted by the division of securities under this chapter,	914
that requires the submission of a consent to service of process,	915
the division may provide by rule for the electronic filing or	916
submission of a consent to service of process.	917

Sec. 1707.131. (A) For purposes of this section, "five per	918
cent shareholder" means a beneficial owner of five per cent or	919
more of the issuer's outstanding securities.	920

(B) The division of securities shall refuse any registration	921
by description, by qualification, or by coordination if the issuer	922
is in the development stage and either has no specific business	923
plan or purpose or has indicated that its business is to engage in	924
a merger or acquisition with an unidentified company or companies,	925
or other entities or persons.	926

(C) The division may refuse any registration by description,	927
by qualification, or by coordination if either of the following	928
applies:	929

(1) The issuer does not disclose in the final offering	930
circular, prospectus, or form U-7 of the North American securities	931
administrators association that any future transaction with an	932
officer, director, five per cent shareholder, manager, trustee, or	933
general partner will be on terms no less favorable to the issuer	934
than could be obtained from an independent third party.	935

(2) The issuer does not disclose both of the following in the	936
final offering circular, prospectus, or form U-7 of the North	937
American securities administrators association:	938

(a) Any outstanding loan from the issuer to an officer,	939
director, five per cent shareholder, manager, trustee, or general	940
partner is required to be repaid within six months of the	941
offering, except for a loan or extension of credit made by a bank.	942

(b) Any future loan from the issuer to an officer, director,	943
five per cent shareholder, manager, trustee, or general partner	944
will be for a bona fide business purpose and approved by a	945
majority of the disinterested directors, managers, trustees, or	946
general partners, or will be a type of transaction involving a	947
director or executive officer of the issuer that is permitted by	948
section 13(k) of the "Securities Exchange Act of 1934," 116 Stat.	949
787, 15 U.S.C.A. 78m, as amended.	950

Sec. 1707.23.  Whenever it appears to the division of	951
securities, from its files, upon complaint, or otherwise, that any	952
person has engaged in, is engaged in, or is about to engage in any	953
practice declared to be illegal or prohibited by this chapter or	954
rules adopted under this chapter by the division, or defined as	955
fraudulent in this chapter or rules adopted under this chapter by	956
the division, or any other deceptive scheme or practice in	957
connection with the sale of securities, or acting as an investment	958
adviser or investment adviser representative, or when the division	959
believes it to be in the best interests of the public and	960
necessary for the protection of investors, the division may do any	961
of the following:	962

(A) Require any person to file with it, on such forms as it	963
prescribes, an original or additional statement or report in	964
writing, under oath or otherwise, as to any facts or circumstances	965
concerning the issuance, sale, or offer for sale of securities	966
within this state by the person, as to the person's acts or	967
practices as an investment adviser or investment adviser	968
representative within this state, and as to other information as	969
it deems material or relevant thereto;	970

(B) Examine any investment adviser, investment adviser	971
representative, or any seller, dealer, salesperson, or issuer of	972
any securities, and any of their agents, employees, partners,	973
officers, directors, members, or shareholders, wherever located,	974
under oath; and examine records, books, documents, accounts, and	975
papers as the division deems material or relevant to the inquiry;	976

(C) Require the attendance of witnesses, and the production	977
of books, records, and papers, as are required either by the	978
division or by any party to a hearing before the division, and for	979
that purpose issue a subpoena for any witness, or a subpoena duces	980
tecum to compel the production of any books, records, or papers.	981
The subpoena shall be served by personal service or by certified	982
mail, return receipt requested. If the subpoena is returned	983
because of inability to deliver, or if no return is received	984
within thirty days of the date of mailing, the subpoena may be	985
served by ordinary mail. If no return of ordinary mail is received	986
within thirty days after the date of mailing, service shall be	987
deemed to have been made. If the subpoena is returned because of	988
inability to deliver, the division may designate a person or	989
persons to effect either personal or residence service upon the	990
witness. The person designated to effect personal or residence	991
service under this division may be the sheriff of the county in	992
which the witness resides or may be found or any other duly	993
designated person. The fees and mileage of the person serving the	994
subpoena shall be the same as those allowed by the courts of	995
common pleas in criminal cases, and shall be paid from the funds	996
of the division. Fees and mileage for the witness shall be the	997
same as those allowed for witnesses by the courts of common pleas	998
in criminal cases, and shall be paid from the funds of the	999
division upon request of the witness following the hearing.	1000

(D) Proceed under section 1707.19 of the Revised Code to	1001
refuse a license applied for by a dealer, salesperson, investment	1002
adviser, or investment adviser representative or to suspend the	1003
license of any licensed dealer, licensed salesperson, licensed	1004
investment adviser, or licensed investment adviser representative	1005
and ultimately, if the division determines, revoke such license	1006
under that section;	1007

(E) Initiate criminal proceedings under section 1707.042 or	1008
1707.44 of the Revised Code or rules adopted under those sections	1009
by the division by laying before the prosecuting attorney of the	1010
proper county any evidence of criminality which comes to its	1011
knowledge; and in the event of the neglect or refusal of the	1012
prosecuting attorney to prosecute such violations, or at the	1013
request of the prosecuting attorney, the division shall submit the	1014
evidence to the attorney general, who may proceed in the	1015
prosecution with all the rights, privileges, and powers conferred	1016
by law on prosecuting attorneys, including the power to appear	1017
before grand juries and to interrogate witnesses before such grand	1018
juries.	1019

(F) Require any dealers immediately to furnish to the	1020
division copies of prospectuses, circulars, or advertisements	1021
respecting securities that they publish or generally distribute,	1022
or require any investment advisers immediately to furnish to the	1023
division copies of brochures, advertisements, publications,	1024
analyses, reports, or other writings that they publish or	1025
distribute;	1026

(G) Require any dealers to mail to the division, prior to	1027
sale, notices of intention to sell, in respect to all securities	1028
which are not exempt under section 1707.02 of the Revised Code, or	1029
which are sold in transactions not exempt under section 1707.03 or	1030
1707.04 of the Revised Code;	1031

(H) Issue and cause to be served by certified mail upon all	1032
persons affected an order requiring the person or persons to cease	1033
and desist from the acts or practices appearing to the division to	1034
constitute violations of this chapter or rules adopted under this	1035
chapter by the division. The order shall state specifically the	1036
section or sections of this chapter or the rule or rules adopted	1037
under this chapter by the division that appear to the division to	1038
have been violated and the facts constituting the violation. If	1039
after the issuance of the order it appears to the division that	1040
any person or persons affected by the order have engaged in any	1041
act or practice from which the person or persons shall have been	1042
required, by the order, to cease and desist, the director of	1043
commerce may apply to the court of common pleas of any county for,	1044
and upon proof of the validity of the order of the division, the	1045
delivery of the order to the person or persons affected, and of	1046
the illegality and the continuation of the acts or practices that	1047
are the subject of the order, the court may grant an injunction	1048
implementing the order of the division.	1049

(I) Issue and initiate contempt proceedings in this state	1050
regarding subpoenas and subpoenas duces tecum at the request of	1051
the securities administrator of another state, if it appears to	1052
the division that the activities for which the information is	1053
sought would violate this chapter if the activities had occurred	1054
in this state.	1055

(J) The remedies provided by this section are cumulative and	1056
concurrent with any other remedy provided in this chapter, and the	1057
exercise of one remedy does not preclude or require the exercise	1058
of any other remedy.	1059

Sec. 1707.231. (A) If the attorney general, by referral from	1060
the division of securities, or as a result of complaints or	1061
otherwise, has reasonable cause to believe that a person has	1062
violated sections 1707.01 to 1707.45 of the Revised Code, the	1063
attorney general may bring a class action under Civil Rule 23, as	1064
amended, seeking an order granting restitution to persons damaged	1065
by a violation of sections 1707.01 to 1707.45 of the Revised Code.	1066

(B) The attorney general's exercise of authority pursuant to	1067
this section does not require or preclude the exercise of any	1068
other authority or remedy in accordance with this chapter.	1069

Sec. 1707.40. SectionsExcept as provided in section	1070
1707.231 of the Revised Code, sections 1707.01 to 1707.45 of the	1071
Revised Code create no new civil liabilities, and do not limit or	1072
restrict common law liabilities for deception or fraud other than	1073
as specified in sections 1707.042, 1707.043, 1707.41, 1707.42, and	1074
1707.43 of the Revised Code, and there is no civil liability for	1075
noncompliance with orders, requirements, rules, or regulations	1076
made by the division of securities under sections 1707.19,	1077
1707.20, 1707.201, and 1707.23 of the Revised Code.	1078

Sec. 1707.41. (A) In addition to the other liabilities	1079
imposed by law, any person whothat, by a written or printed	1080
circular, prospectus, or advertisement, offers any security for	1081
sale, or receives the profits accruing from such sale, is liable,	1082
to any person whothat purchased suchthe security relying on such	1083
the circular, prospectus, or advertisement, for the loss or damage	1084
sustained by suchthe relying person by reason of the falsity of	1085
any material statement contained therein or for the omission	1086
therefrom of material facts, unless suchthe offeror or person who	1087
that receives the profits establishes that hethe offeror or	1088
person had no knowledge of the publication thereof prior to the	1089
transaction complained of, or had just and reasonable grounds to	1090
believe suchthe statement to be true or the omitted facts to be	1091
not material. Whenever	1092

(B)(1) Whenever a corporation is so liable as described in	1093
division (A) of this section, each director of the corporation is	1094
likewise liable unless hethe director shows that hethe director	1095
had no knowledge of the publication complained of, or had just and	1096
reasonable grounds to believe the statement therein to be true or	1097
the omission of facts to be not material. Any such	1098

(2) Any director, upon the payment by himthe director of a	1099
judgment so obtained against himthe director, shall be	1100
subrograted to the rights of the plaintiff against suchthe	1101
corporation, and shall have the right of contribution for the	1102
payment of suchthe judgment against such of histhe director's	1103
fellow directors as would be individually liable under this	1104
section. Lack	1105

(C) For purposes of this section, lack of reasonable	1106
diligence in ascertaining the fact of sucha publication or the	1107
falsity of any statement contained in it or of the omission of	1108
sucha material fact shall be deemed knowledge of suchthe	1109
publication and of the falsity of any untrue statement in it or of	1110
the omission of material facts.	1111

(D) No action brought against any director, based upon the	1112
liability imposed by this section, shall be brought unless it is	1113
brought within two years after the plaintiff knew, or had reason	1114
to know, of the facts by reason of which the actions of the person	1115
or the director were unlawful, or within fourfive years after the	1116
purchase of the securities, whichever is the shorter period, or,	1117
in the case of an action to enforce a right of contribution under	1118
this section, itthe action is brought within two years after the	1119
payment of the judgment for which contribution is sought.	1120

Sec. 1707.42.  (A) Whoever, with intent to secure financial	1121
gain to self, advises and procures any person to purchase any	1122
security, and receives any commission or reward for the advice or	1123
services without disclosing to the purchaser the fact of the	1124
person's agency or interest in such sales, shall be liable to the	1125
purchaser for the amount of the purchaser's damage thereby, upon	1126
tender of the security to, and suit brought against, the adviser,	1127
by the purchaser. No suit shall be brought more than one year	1128
subsequent to the purchase.	1129

(B) Whoever acts as an investment adviser or investment	1130
adviser representative in violation of Chapter 1707. of the	1131
Revised Code shall be liable for damages resulting from the	1132
violation in an action at law in a court of competent	1133
jurisdiction. Damages may include consideration paid for the	1134
advice, any loss due to the advice, and all court costs, less the	1135
amount of any income received from the advice. No person may bring	1136
an action under this division more than fourfive years after the	1137
rendering of investment advice or two years after discovery of	1138
facts constituting the violation, whichever is the shorter period.	1139

Sec. 1707.43. Every(A) Subject to divisions (B) and (C) of	1140
this section, every sale or contract for sale made in violation of	1141
Chapter 1707. of the Revised Code, is voidable at the election of	1142
the purchaser. The person making such sale or contract for sale,	1143
and every person whothat has participated in or aided the seller	1144
in any way in making such sale or contract for sale, are jointly	1145
and severally liable to suchthe purchaser, in an action at law in	1146
any court of competent jurisdiction, upon tender to the seller in	1147
person or in open court of the securities sold or of the contract	1148
made, for the full amount paid by suchthe purchaser and for all	1149
taxable court costs, unless the court determines that the	1150
violation did not materially affect the protection contemplated by	1151
the violated provision.	1152

(B) No action for the recovery of the purchase price as	1153
provided for in this section, and no other action for any recovery	1154
based upon or arising out of a sale or contract for sale made in	1155
violation of Chapter 1707. of the Revised Code, shall be brought	1156
more than two years after the plaintiff knew, or had reason to	1157
know, of the facts by reason of which the actions of the person or	1158
director were unlawful, or more than fourfive years from the date	1159
of such sale or contract for sale, whichever is the shorter	1160
period.	1161

(C) No purchaser is entitled to the benefit of this section	1162
who has failed to accept, within thirty days from the date of such	1163
offer, an offer in writing made after two weeks from the date of	1164
suchthe sale or contract of sale, by the seller or by any person	1165
whothat has participated in or aided the seller in any way in	1166
making suchthe sale or contract of sale, to take back the	1167
security in question and to refund the full amount paid by such	1168
the purchaser.	1169

Sec. 1707.44.  (A)(1) No person shall engage in any act or	1170
practice that violates division (A), (B), or (C) of section	1171
1707.14 of the Revised Code, and no salesperson shall sell	1172
securities in this state without being licensed pursuant to	1173
section 1707.16 of the Revised Code.	1174

(2) No person shall engage in any act or practice that	1175
violates division (A) of section 1707.141 or section 1707.161 of	1176
the Revised Code.	1177

(B) No person shall knowingly make or cause to be made any	1178
false representation concerning a material and relevant fact, in	1179
any oral statement or in any prospectus, circular, description,	1180
application, or written statement, for any of the following	1181
purposes:	1182

(1) Registering securities or transactions, or exempting	1183
securities or transactions from registration, under this chapter;	1184

(2) Securing the qualification of any securities under this	1185
chapter;	1186

(3) Procuring the licensing of any dealer, salesperson,	1187
investment adviser, or investment adviser representative under	1188
this chapter;	1189

(4) Selling any securities in this state;

1190

(5) Advising for compensation, as to the value of securities	1191
or as to the advisability of investing in, purchasing, or selling	1192
securities;	1193

(6) Submitting a notice filing to the division under division	1194
(X) of section 1707.03 or section 1707.092 or 1707.141 of the	1195
Revised Code.	1196

(C) No person shall knowingly sell, cause to be sold, offer	1197
for sale, or cause to be offered for sale, any security which	1198
comes under any of the following descriptions:	1199

(1) Is not exempt under section 1707.02 of the Revised Code,	1200
nor the subject matter of one of the transactions exempted in	1201
section 1707.03, 1707.04, or 1707.34 of the Revised Code, has not	1202
been registered by coordination or qualification, and is not the	1203
subject matter of a transaction that has been registered by	1204
description;	1205

(2) The prescribed fees for registering by description, by	1206
coordination, or by qualification have not been paid in respect to	1207
such security;	1208

(3) SuchThe person has been notified by the division, or has	1209
knowledge of the notice, that the right to buy, sell, or deal in	1210
such security has been suspended or revoked, or that the	1211
registration by description, by coordination, or by qualification	1212
under which it may be sold has been suspended or revoked;	1213

(4) The offer or sale is accompanied by a statement that the	1214
security offered or sold has been or is to be in any manner	1215
indorsed by the division.	1216

(D) No person who is an officer, director, or trustee of, or	1217
a dealer for, any issuer, and who knows such issuer to be	1218
insolvent in that the liabilities of the issuer exceed its assets,	1219
shall sell any securities of or for any such issuer, without	1220
disclosing the fact of the insolvency to the purchaser.	1221

(E) No person with intent to aid in the sale of any	1222
securities on behalf of the issuer, shall knowingly make any	1223
representation not authorized by such issuer or at material	1224
variance with statements and documents filed with the division by	1225
such issuer.	1226

(F) No person, with intent to deceive, shall sell, cause to	1227
be sold, offer for sale, or cause to be offered for sale, any	1228
securities of an insolvent issuer, with knowledge that such issuer	1229
is insolvent in that the liabilities of the issuer exceed its	1230
assets, taken at their fair market value.	1231

(G) No person in purchasing or selling securities shall	1232
knowingly engage in any act or practice that is, in this chapter,	1233
declared illegal, defined as fraudulent, or prohibited.	1234

(H) No licensed dealer shall refuse to buy from, sell to, or	1235
trade with any person because the person appears on a blacklist	1236
issued by, or is being boycotted by, any foreign corporate or	1237
governmental entity, nor sell any securities of or for any issuer	1238
who is known in relation to the issuance or sale of suchthe	1239
securities to have engaged in such practices.	1240

(I) No dealer in securities, knowing that the dealer's	1241
liabilities exceed the reasonable value of the dealer's assets,	1242
shall accept money or securities, except in payment of or as	1243
security for an existing debt, from a customer who is ignorant of	1244
the dealer's insolvency, and thereby cause the customer to lose	1245
any part of the customer's securities or the value of those	1246
securities, by doing either of the following without the	1247
customer's consent:	1248

(1) Pledging, selling, or otherwise disposing of such	1249
securities, when the dealer has no lien on or any special property	1250
in such securities;	1251

(2) Pledging such securities for more than the amount due, or	1252
otherwise disposing of such securities for the dealer's own	1253
benefit, when the dealer has a lien or indebtedness on such	1254
securities.	1255

It is an affirmative defense to a charge under this division	1256
that, at the time the securities involved were pledged, sold, or	1257
disposed of, the dealer had in the dealer's possession or control,	1258
and available for delivery, securities of the same kinds and in	1259
amounts sufficient to satisfy all customers entitled to the	1260
securities, upon demand and tender of any amount due on the	1261
securities.	1262

(J) No person, with purpose to deceive, shall make, issue,	1263
publish, or cause to be made, issued, or published any statement	1264
or advertisement as to the value of securities, or as to alleged	1265
facts affecting the value of securities, or as to the financial	1266
condition of any issuer of securities, when the person knows that	1267
such statement or advertisement is false in any material respect.	1268

(K) No person, with purpose to deceive, shall make, record,	1269
or publish or cause to be made, recorded, or published, a report	1270
of any transaction in securities which is false in any material	1271
respect.	1272

(L) No dealer shall engage in any act that violates the	1273
provisions of section 15(c) or 15(g) of the "Securities Exchange	1274
Act of 1934," 48 Stat. 881, 15 U.S.C.A. 78o(c) or (g), or any rule	1275
or regulation promulgated by the securities and exchange	1276
commission thereunder. If, subsequent to October 11, 1994,	1277
additional amendments to section 15(c) or 15(g) are adopted, or	1278
additional rules or regulations are promulgated pursuant to such	1279
sections, the division of securities shall, by rule, adopt the	1280
amendments, rules, or regulations, unless the division finds that	1281
the amendments, rules, or regulations are not necessary for the	1282
protection of investors or in the public interest.	1283

(M)(1) No investment adviser or investment adviser	1284
representative shall do any of the following:	1285

(a) Employ any device, scheme, or artifice to defraud any	1286
person;	1287

(b) Engage in any act, practice, or course of business that	1288
operates or would operate as a fraud or deceit upon any person;	1289

(c) In acting as principal for the investment adviser's or	1290
investment adviser representative's own account, knowingly sell	1291
any security to or purchase any security from a client, or in	1292
acting as salesperson for a person other than such client,	1293
knowingly effect any sale or purchase of any security for the	1294
account of such client, without disclosing to the client in	1295
writing before the completion of the transaction the capacity in	1296
which the investment adviser or investment adviser representative	1297
is acting and obtaining the consent of the client to the	1298
transaction. Division (M)(1)(c) of this section does not apply to	1299
any investment adviser registered with the securities and exchange	1300
commission under section 203 of the "Investment Advisers Act of	1301
1940," 15 U.S.C. 80b-3, or to any transaction with a customer of a	1302
licensed dealer or salesperson if the licensed dealer or	1303
salesperson is not acting as an investment adviser or investment	1304
adviser representative in relation to the transaction.	1305

(d) Engage in any act, practice, or course of business that	1306
is fraudulent, deceptive, or manipulative. The division of	1307
securities may adopt rules reasonably designed to prevent such	1308
acts, practices, or courses of business asthat are fraudulent,	1309
deceptive, or manipulative.	1310

(2) No investment adviser or investment adviser	1311
representative licensed or required to be licensed under this	1312
chapter shall take or have custody of any securities or funds of	1313
any person, except as provided in rules adopted by the division.	1314

(3) In the solicitation of clients or prospective clients, no	1315
person shall make any untrue statement of a material fact or omit	1316
to state a material fact necessary in order to make the statements	1317
made not misleading in light of the circumstances under which the	1318
statements were made.	1319

(N) No person knowingly shall influence, coerce, manipulate,	1320
or mislead any person engaged in the preparation, compilation,	1321
review, or audit of financial statements to be used in the	1322
purchase or sale of securities for the purpose of rendering the	1323
financial statements materially misleading.	1324

Sec. 2913.02.  (A) No person, with purpose to deprive the	1325
owner of property or services, shall knowingly obtain or exert	1326
control over either the property or services in any of the	1327
following ways:	1328

(1) Without the consent of the owner or person authorized to	1329
give consent;	1330

(2) Beyond the scope of the express or implied consent of the	1331
owner or person authorized to give consent;	1332

(3) By deception;

1333

(4) By threat;

1334

(5) By intimidation.

1335

(B)(1) Whoever violates this section is guilty of theft.

1336

(2) Except as otherwise provided in this division or division	1337
(B)(3), (4), (5), or (6) of this section, a violation of this	1338
section is petty theft, a misdemeanor of the first degree. If the	1339
value of the property or services stolen is five hundred dollars	1340
or more and is less than five thousand dollars or if the property	1341
stolen is any of the property listed in section 2913.71 of the	1342
Revised Code, a violation of this section is theft, a felony of	1343
the fifth degree. If the value of the property or services stolen	1344
is five thousand dollars or more and is less than one hundred	1345
thousand dollars, a violation of this section is grand theft, a	1346
felony of the fourth degree. If the value of the property or	1347
services stolen is one hundred thousand dollars or more, a	1348
violation of this section is aggravated theft, a felony of the	1349
thirdsecond degree. If the value of the property or services	1350
stolen is one million dollars or more, a violation of this section	1351
is aggravated theft of one million dollars or more, a felony of	1352
the first degree.	1353

(3) Except as otherwise provided in division (B)(4), (5), or	1354
(6) of this section, if the victim of the offense is an elderly	1355
person or disabled adult, a violation of this section is theft	1356
from an elderly person or disabled adult, and division (B)(3) of	1357
this section applies. Except as otherwise provided in this	1358
division, theft from an elderly person or disabled adult is a	1359
felony of the fifth degree. If the value of the property or	1360
services stolen is five hundred dollars or more and is less than	1361
five thousand dollars, theft from an elderly person or disabled	1362
adult is a felony of the fourth degree. If the value of the	1363
property or services stolen is five thousand dollars or more and	1364
is less than twenty-five thousand dollars, theft from an elderly	1365
person or disabled adult is a felony of the third degree. If the	1366
value of the property or services stolen is twenty-five thousand	1367
dollars or more, theft from an elderly person or disabled adult is	1368
a felony of the secondfirst degree.	1369

(4) If the property stolen is a firearm or dangerous	1370
ordnance, a violation of this section is grand theft, a felony of	1371
the fourth degree.	1372

(5) If the property stolen is a motor vehicle, a violation of	1373
this section is grand theft of a motor vehicle, a felony of the	1374
fourth degree.	1375

(6) If the property stolen is any dangerous drug, a violation	1376
of this section is theft of drugs, a felony of the fourth degree,	1377
or, if the offender previously has been convicted of a felony drug	1378
abuse offense, a felony of the third degree.	1379

Section 2. That existing sections 1701.831, 1707.01, 1707.08,	1380
1707.09, 1707.11, 1707.23, 1707.40, 1707.41, 1707.42, 1707.43,	1381
1707.44, and 2913.02 of the Revised Code are hereby repealed.	1382

Section 3.  Section 1707.01 of the Revised Code is presented	1383
in this act as a composite of the section as amended by both S.B.	1384
32 and Sub. S.B. 108 of the 124th General Assembly. The General	1385
Assembly, applying the principle stated in division (B) of section	1386
1.52 of the Revised Code that amendments are to be harmonized if	1387
reasonably capable of simultaneous operation, finds that the	1388
composite is the resulting version of the section in effect prior	1389
to the effective date of the section as presented in this act.	1390