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| To amend sections 1707.20 and 1707.37 and to enact | 1 |
| section 1707.191 of the Revised Code to permit the | 2 |
| Division of Securities to order the payment of | 3 |
| administrative assessments and investigatory | 4 |
| costs, and to issue consent orders, for violations | 5 |
| of the Securities Law and to make other changes to | 6 |
| that Law relative to the preparation and auditing | 7 |
| of financial statements. | 8 |
| Section 1. That sections 1707.20 and 1707.37 be amended and | 9 |
| section 1707.191 of the Revised Code be enacted to read as | 10 |
| follows: | 11 |
| Sec. 1707.191. (A) After notice and opportunity for a | 12 |
| hearing conducted in accordance with Chapter 119. of the Revised | 13 |
| Code, the division of securities may order the payment of an | 14 |
| administrative assessment of not more than ten thousand dollars | 15 |
| for any violation of sections 1707.01 to 1707.45 of the Revised | 16 |
| Code or of any rule adopted or order issued under those sections. | 17 |
| Each violation shall constitute a separate offense. In the case of | 18 |
| a continuing violation, each calendar day constitutes a separate | 19 |
| offense. The ordering of an administrative assessment pursuant to | 20 |
| this division does not preclude the exercise of any other remedy | 21 |
| provided under sections 1707.01 to 1707.45 of the Revised Code. | 22 |
| (B) In addition to or in lieu of ordering an administrative | 23 |
| assessment under division (A) of this section, the division may, | 24 |
| with respect to any person who has engaged in an act, practice, or | 25 |
| course of business constituting a violation of sections 1707.01 to | 26 |
| 1707.45 of the Revised Code, do either or both of the following: | 27 |
| (1) Order the person to pay any investigatory and related | 28 |
| costs incurred by the division, including attorney's and witness | 29 |
| fees; | 30 |
| (2) Enter into and issue a consent order that compels the | 31 |
| person to do one or more of the following: | 32 |
| (a) Rescind the transaction related to the violation; | 33 |
| (b) Disgorge any assets acquired or profits made as a result | 34 |
| of the violation; | 35 |
| (c) Make restitution, which may include interest not to | 36 |
| exceed the criminal usury rate as defined in section 2905.21 of | 37 |
| the Revised Code. | 38 |
| (C) The division may refer to the attorney general for the | 39 |
| collection of any administrative assessment ordered pursuant to | 40 |
| division (A) of this section and may take any appropriate action | 41 |
| necessary to compel compliance with a consent order issued under | 42 |
| division (B) of this section. | 43 |
| (D) The ten-thousand-dollar limitation imposed under this | 44 |
| section on administrative assessments does not apply to any | 45 |
| settlement agreement entered into by the division with the person | 46 |
| who is the subject of a violation. | 47 |
| Sec. 1707.20. (A)(1) The division of securities may adopt, | 48 |
| amend, and rescind such rules, forms, and orders as are necessary | 49 |
| to carry out sections 1707.01 to 1707.45 of the Revised Code, | 50 |
| including rules and forms governing registration statements, | 51 |
| applications, and reports, and defining any terms, whether or not | 52 |
| used in sections 1707.01 to 1707.45 of the Revised Code, insofar | 53 |
| as the definitions are not inconsistent with these sections. For | 54 |
| the purpose of rules and forms, the division may classify | 55 |
| securities, persons, and matters within its jurisdiction, and | 56 |
| prescribe different requirements for different classes. | 57 |
| (2) Notwithstanding sections 121.71 to 121.76 of the Revised | 58 |
| Code, the division may incorporate by reference into its rules any | 59 |
| statute enacted by the United States congress or any rule, | 60 |
| regulation, or form promulgated by the securities and exchange | 61 |
| commission, or by another federal agency, in a manner that also | 62 |
| incorporates all future amendments to the statute, rule, | 63 |
| regulation, or form. | 64 |
| (B) No rule, form, or order may be made, amended, or | 65 |
| rescinded unless the division finds that the action is necessary | 66 |
| or appropriate in the public interest or for the protection of | 67 |
| investors, clients, prospective clients, state retirement systems, | 68 |
| or the workers' compensation system and consistent with the | 69 |
| purposes fairly intended by the policy and provisions of sections | 70 |
| 1707.01 to 1707.45 of the Revised Code. In prescribing rules and | 71 |
| forms and in otherwise administering sections 1707.01 to 1707.45 | 72 |
| of the Revised Code, the division may cooperate with the | 73 |
| securities administrators of the other states and the securities | 74 |
| and exchange commission with a view of effectuating the policy of | 75 |
| this section to achieve maximum uniformity in the form and content | 76 |
| of registration statements, applications, reports, and overall | 77 |
| securities regulation wherever practicable. | 78 |
| (C) The division may | 79 |
| (1) The form and content of financial statements required | 80 |
| under sections 1707.01 to 1707.45 of the Revised Code; | 81 |
| (2) The circumstances under which consolidated financial | 82 |
| statements will be filed; | 83 |
| (3) Whether any required financial statements shall be | 84 |
| 85 | |
| All financial statements shall be prepared in accordance with | 86 |
|
generally accepted accounting | 87 |
| all other requirements specified by rule adopted or order issued | 88 |
| under sections 1707.01 to 1707.45 of the Revised Code. | 89 |
| (D) All rules and forms of the division shall be published; | 90 |
| and in addition to fulfilling the requirements of Chapter 119. of | 91 |
| the Revised Code, the division shall prescribe, and shall publish | 92 |
| and make available its rules regarding the sale of securities, the | 93 |
| administration of sections 1707.01 to 1707.45 of the Revised Code, | 94 |
| and the procedure and practice before the division. | 95 |
| (E)(1) No provision of sections 1707.01 to 1707.45 of the | 96 |
| Revised Code imposing any liability applies to any act done or | 97 |
| omitted in good faith in conformity with any rule, form, or order | 98 |
| of the division of securities, notwithstanding that the rule, | 99 |
| form, or order may later be amended or rescinded or be determined | 100 |
| by judicial or other authority to be invalid for any reason, | 101 |
| except that the issuance of an order granting effectiveness to a | 102 |
| registration under section 1707.09 or 1707.091 of the Revised Code | 103 |
| for the purposes of this division shall not be deemed an order | 104 |
| other than as the establishment of the fact of registration. | 105 |
| (2) No provision of sections 1707.01 to 1707.45 of the | 106 |
| Revised Code imposing any liability, penalty, sanction, or | 107 |
| disqualification applies to any act done or omitted in good faith | 108 |
| in conformity with either of the following: | 109 |
| (a) Any provision of sections 1707.01 to 1707.45 of the | 110 |
| Revised Code that incorporates by reference a federal statute, | 111 |
| rule, regulation, or form; | 112 |
| (b) Any rule, form, or order of the division that | 113 |
| incorporates by reference a federal statute, rule, regulation, or | 114 |
| form. | 115 |
| Division (E)(2) of this section applies notwithstanding that | 116 |
| the incorporation by reference, or any application of the | 117 |
| incorporated provision, is later determined by judicial or other | 118 |
| authority to be unconstitutional or invalid for any reason. | 119 |
| (F) The division shall, in accordance with Chapter 119. of | 120 |
| the Revised Code, adopt rules that set forth the criteria that | 121 |
| must be met in order to qualify for a hardship exemption from the | 122 |
| requirement that financial statements be audited. | 123 |
| Sec. 1707.37. (A) All fees and charges collected under this | 124 |
| chapter, including investigatory and related costs recovered | 125 |
| pursuant to section 1707.191 of the Revised Code, shall be paid | 126 |
| into the state treasury to the credit of the division of | 127 |
| securities fund, which is hereby created. All expenses of the | 128 |
| division of securities, other than those specified in division (B) | 129 |
| of this section, shall be paid from the fund. | 130 |
| The fund shall be assessed a proportionate share of the | 131 |
| administrative costs of the department of commerce in accordance | 132 |
| with procedures prescribed by the director of commerce and | 133 |
| approved by the director of budget and management. The assessments | 134 |
| shall be paid from the division of securities fund to the division | 135 |
| of administration fund. | 136 |
| If moneys in the division of securities fund are determined | 137 |
| by the director of budget and management and the director of | 138 |
| commerce to be in excess of those necessary to defray all the | 139 |
| expenses in any fiscal year, the director of budget and management | 140 |
| shall transfer the excess to the general revenue fund. | 141 |
| (B) There is hereby created in the state treasury the | 142 |
| division of securities investor education and enforcement expense | 143 |
| fund, which shall consist of all administrative assessments | 144 |
| collected pursuant to section 1707.191 of the Revised Code, money | 145 |
| received in settlement of any violation of this chapter, and any | 146 |
| cash transfers. Money in the fund shall be used to pay expenses of | 147 |
| the division of securities relating to education or enforcement | 148 |
| for the protection of securities investors and the public. The | 149 |
| division may adopt rules pursuant to section 1707.20 of the | 150 |
| Revised Code that establish what qualifies as such an expense. | 151 |
| Section 2. That existing sections 1707.20 and 1707.37 of the | 152 |
| Revised Code are hereby repealed. | 153 |
| Section 3. Section 1707.191 of the Revised Code, as enacted | 154 |
| by this act, applies only to violations that are committed on or | 155 |
| after the effective date of this act. | 156 |