130th Ohio General Assembly
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(122nd General Assembly)
(Amended Substitute House Bill Number 695)



AN ACT
To amend sections 1707.01, 1707.03, 1707.11, 1707.14, 1707.17, 1707.18, 1707.19, 1707.20, 1707.22, 1707.23, 1707.25, 1707.27, 1707.36, 1707.391, 1707.42, 1707.431, 1707.44, 1707.46, 1707.48, 1707.99, 4763.05, and 4763.07 and to enact sections 1707.092, 1707.093, 1707.141, 1707.151, and 1707.161 of the Revised Code to modify the Securities Law, including modifications to the list of securities transactions exempt from registration, provisions for notice filings by investment companies and in connection with covered security offerings, provisions for electronic filing, provisions for the registration and regulation of investment advisers and investment adviser representatives, provisions applying to investigation of alleged violations of the Securities Law by the Office of the Attorney-Inspector and increasing the penalties that apply to violations of the Securities Law, and other provisions for related changes; and to change the experience, education, and continuing education requirements of real estate appraisers.

Be it enacted by the General Assembly of the State of Ohio:

SECTION 1 .  That sections 1707.01, 1707.03, 1707.11, 1707.14, 1707.17, 1707.18, 1707.19, 1707.20, 1707.22, 1707.23, 1707.25, 1707.27, 1707.36, 1707.391, 1707.42, 1707.431, 1707.44, 1707.46, 1707.48, 1707.99, 4763.05, and 4763.07 be amended and sections 1707.092, 1707.093, 1707.141, 1707.151, and 1707.161 of the Revised Code be enacted to read as follows:

Sec. 1707.01.  As used in this chapter:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(F)(1) "Salesman" or "Salesperson" means every natural person, other than a dealer, employed, authorized, or appointed by a dealer to sell securities within this state.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(T) "Securities Act of 1933," 84 48 Stat. 74, 15 U.S.C. 77a-77aa 77a, "Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78a-78jj, and "Internal Revenue Code of 1954 1986," 68a 100 Stat. 3 2085, 26 U.S.C. 1, "Investment Advisers Act of 1940," 54 Stat. 847, 15 U.S.C. 80b, and "Investment Company Act of 1940," 54 Stat. 789, 15 U.S.C. 80a mean the federal statutes of those names as amended before or after July 20, 1978 the effective date of this amendment.

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

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

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

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

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

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

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

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

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

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

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

(1)(a) Any licensed attorney, public accountant, or firm of such attorneys or accountants, engineer, any bank, savings and loan association, or savings bank, or any director, officer, or employee of a bank, savings and loan association, or savings bank or teacher, whose activities are performance of investment advisory services described in division (X)(1) of this section is solely incidental to the practice of the attorney's, accountant's, engineer's, director's, officer's, employee's, firm's, bank's, or association's teacher's profession or occupation;

(2)(b) A publisher or bona fide employee of any bona fide newspaper, news magazine, or business or financial publication of general, regular, and paid regular circulation;

(3) Any issuer, including any officer, director, employee, or partner in, or trustee of, any issuer whose performance of these services occurs in furtherance of the sale of a security that represents an economic interest in that issuer, provided that no commission, fee, or remuneration is paid to or received by such person for such advisory services

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(3) If subsequent to the effective date of this amendment, amendments are enacted or adopted defining "investment adviser representative" for purposes of the Investment Advisers Act of 1940 or additional rules or regulations are promulgated by the securities and exchange commission regarding the definition of "investment adviser representative" for purposes of the Investment Advisers Act of 1940, the division of securities shall, by rule, adopt the substance of the amendments, rules, or regulations, unless the division finds that the amendments, rules, or regulations are not necessary for the protection of investors or in the public interest.

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

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

(2) An employee of an investment adviser;

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

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

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

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

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

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

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

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

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

If subsequent to the effective date of this amendment, amendments are enacted or adopted defining "excepted person" for purposes of the Investment Advisers Act of 1940 or additional rules or regulations are promulgated by the securities and exchange commission regarding the definition of "excepted person" for purposes of the Investment Advisers Act of 1940, the division of securities shall, by rule, adopt the substance of the amendments, rules, or regulations, unless the division finds that the amendments, rules, or regulations are not necessary for the protection of investors or in the public interest.

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

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

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

(2) If subsequent to the effective date of this amendment, amendments are enacted or adopted defining "qualified purchaser" for purposes of the Investment Advisers Act of 1940 or additional rules or regulations are promulgated by the securities and exchange commission regarding the definition of "qualified purchaser" for purposes of the Investment Advisers Act of 1940, the division of securities shall, by rule, adopt the amendments, rules, or regulations, unless the division finds that the amendments, rules, or regulations are not necessary for the protection of investors or in the public interest.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) The provisions of section 5 of the Securities Act of 1933 do not apply to the sale by reason of an exemption under either section 4 (2) of that act or any rule of the securities and exchange commission made to carry out section 4 (2) of that act in effect at the time of the sale.

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

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

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

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

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

(S) A sale by a licensed dealer of securities that are in the process of registration under the "Securities Act of 1933," 48 Stat. 74, 15 U.S.C. 77a, as amended, unless exempt under that act, and that are in the process of registration, if registration is required under this chapter, is exempt, provided that no sale of that nature shall be consummated prior to the registration by description or qualification of the securities.

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

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

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

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

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

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

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

(2)(a) Unless the cause for disqualification is waived under division (W)(2)(b) of this section, no exemption under this section is available for the securities of an issuer unless the issuer did not know and in the exercise of reasonable care could not have known that any of the following applies to any of the persons described in Rule 252(c) 262(a) to (f)(c) of Regulation A under the Securities Act of 1933:

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

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

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

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

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

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

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

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

(5) The commissioner, by rule, may increase the number of purchasers or waive any other conditions of the exemption under this division for a particular offering. The commissioner may require the filing of advertising used in connection with offers or sales in reliance on the exemption.

(X) any offer or sale of securities made in reliance on the exemption provided in rule 506 of regulation d under the securities act of 1933, and in accordance with rules 501 to 503 of regulation d under the securities act of 1933, is exempt provided that all of the following apply:

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

(2) any commission, discount, or other remuneration for sales of securities in this state is paid or given only to dealers or salespersons licensed under this CHAPTER;

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

(Y) the offer or sale of securities is exempt provided that all of the following apply:

(1) the sale of securities is made only to persons who are, or who the issuer reasonably believes are, accredited investors as defined in Rule 501 of regulation d under the securities act of 1933.

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

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

(b) The resale is to an accredited investor, as defined in Rule 501 of regulation d under the securities act of 1933.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(d) the type, number, and aggregate amount of securities being offered;

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

(f) a statement indicating all of the following:

(i) sales will only be made to accredited investors as defined in rule 501 of regulation d under the securities act of 1933;

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

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

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

(a) the information is delivered through an electronic database that is restricted to persons that are accredited investors as defined in rule 501 of regulation d under the securities act of 1933.

(b) the information is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor as defined in rule 501 of regulation d under the securities act of 1933.

(8) no telephone solicitation shall be done, unless prior to placing the telephone call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor as defined in rule 501 of regulation d under the securities act of 1933.

(9) dissemination of the general announcement described in division (y)(6) of this section to persons that are not accredited investors, as defined in rule 501 of regulation d under the securities act of 1933, does not disqualify the issuer from claiming an exemption under this division.

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

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

(1) for the purposes of the sale of securities by a managed investment company, as defined in the investment company act of 1940:

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

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

(ii) A form u-1 or form nf of the north american securities administrators association and a copy of the investment company's prospectus and statement of additional information.

(b) appropriate filing fees consisting of both of the following:

(i) a flat fee of one hundred dollars;

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

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

(2) for the purposes of the sale of securities by a non-managed investment company, as defined in the investment company act of 1940:

(a) a notice filing consisting of either a copy of the investment company's federal registration statement as filed with the securities and exchange commission or a form u-1 or form nf of the north american securities administrators association;

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

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

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

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

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

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

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

Sec. 1707.093. notwithstanding any provision of CHAPTER 1707. of the Revised Code, or any rule adopted by the division of securities under that cHAPTER, requiring a signature or verification, the division may provide by rule for the electronic filing or submission of any form, document, material, or information that is required or permitted to be filed with or submitted to the division.

Sec. 1707.11.  For the purposes of this section, a "person," or an "applicant" for registration or claim of exemption, means every issuer.

Every applicant for registration, or for claim of exemption pursuant to division (O) or (Q), (W), (X), or (Y) of section 1707.03 of the Revised Code, and every person submitting a notice filing pursuant to section 1707.092 of the Revised Code, for the sale of securities pursuant to this chapter, which is an incorporated applicant or person not domiciled in this state or not licensed under section 1703.03 of the Revised Code, or is an unincorporated applicant or person having the situs of its principal place of business outside this state, shall file with its application or notice filing its irrevocable written consent, executed and acknowledged by an individual duly authorized to give such the consent, that actions growing out of the sale of such securities or fraud committed by an applicant in this state may be commenced against it, in the proper court of any county in this state in which a cause of action for such fraud may arise or in which the plaintiff in such the action may reside, by serving on the secretary of state any proper process or pleading authorized by the laws of this state. Such consent shall stipulate that such service of such process or pleading on the secretary of state shall be taken in all courts to be as valid and binding as if service had been made upon the applicant itself.

Service of any process or pleadings may be made on the secretary of state by duplicate copies, of which one shall be filed in the office of the secretary of state, and the other immediately forwarded by the secretary of state by certified mail to the principal place of business of such the applicant, or the last known address as shown on the application form filed with the division, or if it has a principal office in this state, then to such the principal office; but failure to mail such copy shall not invalidate such the service.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) A husband and wife;

(2) A minor child and his or her THE MINOR CHILD'S parent or legal guardian;

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

Sec. 1707.141. (A) Subject to division (C)(1) of this section, no person shall act as an investment adviser, unless one of the following applies:

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

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

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

(a) Investment companies as defined in the Investment Company Act of 1940;

(b) Other investment advisers;

(c) LIcensed dealers;

(d) Banks;

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

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

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

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

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

(B)(1) Subject to division (C)(2) of this section, no person who is registered under section 203 of the "Investment Advisers Act of 1940," 15 U.S.C. 80b-3, as an investment adviser shall act as an investment adviser, unless the person has done both of the following:

(a) Filed with the division a consent to service of process together with either a notice filing form as specified in rules adopted by the division or a copy of those documents that have been filed by the investment adviser with the securities and exchange commission as specified in rules adopted by the division;

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

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

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

(C)(1) On the effective date of this section, if a person is registered as an investment adviser with the securities and exchange commission pursuant to section 203 of the "Investment advisers act of 1940," 15 U.s.c. 80b-3, and is required to be licensed as an investment adviser by the division of securities, that person has until no later than DECEMBER 31, 1999, to be licensed as an investment adviser by the division of securities. However, A person required to be licensed by the division as an investment adviser by no later than DECEMBER 31, 1999, may be licensed as an investment adviser by the division on the effective date of this section and prior to DECEMBER 31, 1999.

(2) On the effective date of this section, if a person is registered as an investment adviser with the securities and exchange commission pursuant to section 203 of the "Investment advisers act of 1940," 15 U.s.c. 80b-3, and is subject to the notice filing requirements of division (B) of this section, that person has until no later than DECEMBER 31, 1999, to comply with the notice filing requirements of division (B) of this section. However, A person required to Comply with the notice filing requirements of division (B) of this section by no later than DECEMBER 31, 1999, may comply with those notice filing requirements on the effective date of this section and prior to DECEMBER 31, 1999.

Sec. 1707.151. (A) Application for an investment adviser's license shall be made in accordance with this section and by filing with the division of securities the information, materials, and forms specified in rules adopted by the division.

(B) Every applicant not a resident of this state shall name a person within this state upon whom process against such applicant may be served and shall give the complete residence and business address or addresses of the person designated.

(C) Every applicant shall file an irrevocable consent to service of process naming the secretary of state for service of process in the event that the applicant, if a resident of this state, or the person designated pursuant to division (B) of this section, cannot be found at the address given on the application. The consent shall be given and service of process shall be made as provided in section 1707.11 Of the Revised Code.

(D)(1) The division may investigate any applicant for a license and may require any additional information as it considers necessary to determine the applicant's business repute and qualifications to act as an investment adviser.

(2) If the application for any license involves investigation outside of this state, the applicant may be required by the division to advance sufficient funds to pay any of the actual expenses of the examination. The division shall furnish the applicant with an itemized statement of such expenses that the applicant is required to pay.

(E) The division shall by rule require one natural person who is a principal, officer, director, general partner, manager, or employee of an investment adviser to pass an examination designated by the division or achieve a specified professional designation. Every investment adviser that is not a natural person shall notify the division of the name and relationship to the investment adviser of the natural person who has passed the examination or achieved the specified professional designation on behalf of the investment adviser and who will serve as the designated principal on behalf of the investment adviser.

(F) An investment adviser licensed under section 1707.141 Of the Revised Code shall employ only investment adviser representatives licensed, or exempted from licensure, under section 1707.161 Of the Revised Code.

(G) If the division finds that the applicant is of good business repute, appears to be qualified to act as an investment adviser, and has complied with sections 1707.01 to 1707.45 Of the Revised Code and rules adopted under those sections by the division, the division, upon payment of the fees prescribed by division (B) of section 1707.17 Of the Revised Code, shall issue to the applicant a license authorizing the applicant to act as an investment adviser.

Sec. 1707.161. (A) Subject to division (F) of this section, no person shall act as an investment adviser representative, unless one of the following applies:

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

(2) The person is a natural person who is licensed as an investment adviser by the division, and does not act as an investment adviser representative for another investment adviser; however, a natural person who is licensed as an investment adviser by the division may act as an investment adviser representative for another investment adviser if the natural person also is licensed by the division as an investment adviser representative of the other investment adviser.

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

(4) The person is employed by or associated with an investment adviser that is exempted from licensure pursuant to division (A)(3) or (4) of section 1707.141 Of the Revised Code.

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

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

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

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

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

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

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

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

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

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

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

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

(F) On the EFFECTIVE date of this section, a person required to be licensed as an investment adviser representative pursuant to this section has until no later than DECEMBER 31, 1999, to be licensed as an investment adviser representative by the division of securities. However, A person required to be licensed by the division as an investment adviser representative by no later than DECEMBER 31, 1999, may be licensed as an investment adviser representative by the division on the effective date of this section and prior to DECEMBER 31, 1999.

Sec. 1707.17.  (A)(1) The license of every dealer in and salesman salesperson of securities shall expire on the thirty-first day of December of each year, and may be renewed upon the filing with the division of securities of an application for renewal, and the payment of the fee prescribed in this section, not less than fifteen nor more than sixty days before the expiration of the old license between the first day of November and the fifteenth day of December of each year. The division may accept an application for renewal less than fifteen days before the expiration of any calendar filed between the fifteenth and the thirty-first day of December of each year. It The division also may accept an application for renewal received by the division not later than the tenth day of January of the subsequent calendar year, provided that the application for renewal is accompanied by the license renewal fee and the additional fee prescribed in division (B) of this section. The division shall give notice, without unreasonable delay, of its action on any application for renewal of a dealer's or salesman's salesperson's license.

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

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

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

A dealer's license may be issued at any time for the remainder of the calendar year. In such event, the annual fee shall not be reduced.

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

(3) The fee for each investment adviser's license, and for each annual renewal thereof that is received by the division not later than the thirty-first day of December of each year, shall be two hundred dollars. Upon the payment of an additional fee of one-half of the license fee, the division may accept a license renewal application received by the division between the first and tenth day of january of the subsequent calendar year. If the fee for an investment ADViSER license is paid to the division on or before october 1, 1999, that fee shall cover the issuance of the INITIAL license and also shall cover any fee for renewal of the license for the period ending DECEMBER 31, 2000.

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

(5) The fee for each investment adviser representative's license, and for each annual renewal thereof that is received by the division not later than the thirty-first day of December of each year, shall be thirty-five dollars; however, the fee shall be waived for the investment adviser representative designated the principal of the investment adviser pursuant to division (E) of section 1707.151 of the Revised Code. Upon the payment of an additional fee of one-half of the license fee, the division may accept a license renewal application received by the division between the first and tenth day of january of the subsequent calendar year. if the fee for an investment ADViSER representative's license is paid to the division on or before october 1, 1999, that fee shall cover the issuance of the INITIAL license and also shall cover any fee for renewal of the license for the period ending DECEMBER 31, 2000.

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

Sec. 1707.18.  (A)(1) If a partnership licensed as a dealer is terminated under the laws of the state where such the partnership is organized, or by death, resignation, withdrawal, or addition of a general partner, the license of the partnership shall be automatically extended for a period of thirty days after such the termination. The license of such the partnership and the licenses of its salesmen salespersons may be transferred to the successor partnership within such that period if the division of securities finds that the successor partnership is substantially similar to its predecessor partnership, and if an application for transfer of license has been filed. The fee for such a transfer shall be fifty dollars, plus ten dollars for every salesman's salesperson's license which that is transferred.

(2) If a partnership licensed as an investment adviser is terminated under the laws of the state where the partnership is organized, or by death, resignation, withdrawal, or addition of a general partner, the license of the partnership shall be automatically extended for a period of thirty days after the termination. The license of the partnership shall, and the licenses of its investment adviser representatives may, be transferred to the successor partnership within that period if the division finds that the successor partnership is substantially similar to its predecessor partnership, and if an application for transfer of license has been filed. The fee for such transfer shall be fifty dollars, plus ten dollars for every investment adviser representative's license that is transferred.

(B)(1) If a licensed dealer changes its business form, reincorporates, or by merger or otherwise becomes a different person, as person is defined in section 1707.01 of the Revised Code, upon application the division of securities may transfer the dealer's license and the licenses of its salesmen salespersons to the successor entity, if the division of securities finds that the successor entity is substantially similar to the predecessor entity. The fee for such a transfer shall be fifty dollars plus ten dollars for every salesman's salesperson's license transferred.

(2) If a licensed investment adviser changes its business form, reincorporates, or by merger or otherwise becomes a different person, as person is defined in section 1707.01 of the Revised Code, upon application, the division may transfer the investment adviser license and the licenses of its investment adviser representatives to the successor entity, if the division finds that the successor entity is substantially similar to the predecessor entity. The fee for the transfer shall be fifty dollars plus ten dollars for every investment adviser representative's license transferred.

Sec. 1707.19.  (A) An original license, or a renewal thereof, applied for by a dealer or salesman salesperson of securities, or by an investment adviser or an investment adviser representative, may be refused, and any such license granted may be suspended and, after notice and hearing in accordance with sections 119.01 to 119.13, inclusive, Chapter 119. of the Revised Code, may be revoked, by the division of securities, if the division determines that such the applicant or such the licensed dealer or salesman, salesperson, investment adviser, or investment adviser representative:

(A)(1) Is not of good business repute;

(B)(2) Is conducting an illegitimate or fraudulent business;

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

(D)(4) Has intentionally violated any provision of sections 1707.01 to 1707.45, inclusive, of the Revised Code, or any regulation or order made thereunder;

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

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

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

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

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

(J)(10)(a) Has failed to furnish to the division any information with respect to his the purchases or sales of securities within this state in his capacity as a licensed dealer or salesman which that may be reasonably requested by the division as pertinent to the protection of investors in this state.

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

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

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

(D) Pending any investigation or hearing provided for in sections 1707.01 to 1707.45, inclusive, of the Revised Code, the division may order the suspension of any dealer's or salesman's, salesperson's, investment adviser's, or investment adviser representative's license by notifying the party concerned of such suspension and the cause for it. If it is a salesman salesperson whose license is suspended, the division shall also notify the dealer employing him the salesperson. If it is an investment adviser representative whose license is suspended, the division also shall notify the investment adviser with whom the investment adviser representative is employed or associated.

(E)(1) The suspension or revocation of the dealer's license suspends those the licenses of all his salesmen the dealer's salespersons.

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

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

Sec. 1707.20.  (A) The division of securities may adopt, amend, and rescind such rules, forms, and orders as are necessary to carry out sections 1707.01 to 1707.45 of the Revised Code, including rules and forms governing registration statements, applications, and reports, and defining any terms, whether or not used in sections 1707.01 to 1707.45 of the Revised Code, insofar as the definitions are not inconsistent with said these sections. For the purpose of rules and forms, the division of securities may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes.

(B) No rule, form, or order may be made, amended, or rescinded unless the division of securities finds that the action is necessary or appropriate in the public interest or for the protection of investors, clients, or prospective clients and consistent with the purposes fairly intended by the policy and provisions of sections 1707.01 to 1707.45 of the Revised Code. In prescribing rules and forms and in otherwise administering sections 1707.01 to 1707.45 of the Revised Code, the division of securities may cooperate with the securities administrators of the other states and the securities and exchange commission with a view of effectuating the policy of this section to achieve maximum uniformity in the form and content of registration statements, applications, reports, and overall securities regulation wherever practicable.

(C) The division of securities may by rule or order prescribe:

(1) The form and content of financial statements required under sections 1707.01 to 1707.45 of the Revised Code;

(2) The circumstances under which consolidated financial statements shall be filed;

(3) Whether any required financial statements shall be certified by independent or certified public accountants. All financial statements shall be prepared in accordance with generally accepted accounting practices.

(D) All rules and forms of the division of securities shall be published; and in addition to fulfilling the requirements of sections 119.01 to 119.13 Chapter 119. of the Revised Code, the division shall prescribe, and shall publish and make available its rules regarding the sale of securities, the administration of sections 1707.01 to 1707.45 of the Revised Code, and the procedure and practice before the division.

The division may also publish and distribute annually a list of licensed dealers and salesmen.

(E) No provision of sections 1707.01 to 1707.45 of the Revised Code imposing any liability applies to any act done or omitted in good faith in conformity with any rule, form, or order of the division of securities, notwithstanding that the rule, form, or order may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason, except that the issuance of an order granting effectiveness to a registration under section 1707.09 or 1707.091 of the Revised Code for the purposes of this division shall not be deemed an order other than as the establishment of the fact of registration.

Sec. 1707.22.  Whenever a dealer's or salesman's, salesperson's, investment adviser's, or investment adviser representative's license has been refused, suspended, or revoked, or a renewal thereof has been denied, by the division of securities, or whenever the division has refused to qualify securities or has suspended or revoked the registration of any particular security by description or by qualification, or the right to buy, sell, or deal in any particular security whether it is registered or qualified or exempt, or whether the transactions in it are registered or exempt, the aggrieved party may appeal in accordance with sections 119.01 to 119.13, inclusive, Chapter 119. of the Revised Code.

An order sustaining the refusal of the division to grant or renew a dealer's or salesman's, salesperson's, investment adviser's, or investment adviser representative's license or to grant qualification of securities, or an order sustaining the division in suspending or revoking a dealer's or salesman's, salesperson's, investment adviser's, or investment adviser representative's license, the registration of any particular security by description or by qualification, or the right to buy, sell, or deal in any particular security, shall not bar, after ten days from such the order, a new registration by description, or a new application of the plaintiff for such a license or qualification or for a withdrawal of such a revocation or suspension; nor shall an order in favor of the plaintiff prevent the division, after proper notice and hearing, from thereafter revoking or suspending such license, registration, or right to buy, sell, or deal in a particular security, for any proper cause which may, after such the order, accrue or be discovered.

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

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

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

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

(D) Proceed under section 1707.19 of the Revised Code to suspend the license of any licensed dealer or salesman, licensed salesperson, licensed investment adviser, or licensed investment adviser representative and ultimately, if the division determines, revoke such license under such sections.;

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

(F) Require any dealers forthwith to furnish to the division copies of prospectuses, circulars, or advertisements respecting securities, which that they publish or generally distribute., or require any investment advisers immediately to furnish to the division copies of brochures, advertisements, publications, analyses, reports, or other writings that they publish or distribute;

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

(H) Issue and cause to be served by certified mail upon all persons affected an order requiring the person or persons to cease and desist from the acts or practices appearing to the division of securities to constitute violations of Chapter 1707. of the Revised Code or rules adopted under that chapter by the division. The order shall state specifically the section or sections of Chapter 1707. of the Revised Code or the rule or rules adopted under that chapter by the division that appear to the division of securities to have been violated and the facts constituting the violation. If after the issuance of the order it appears to the division of securities that any person or persons affected by the order have engaged in any act or practice from which the person or persons shall have been required, by the order, to cease and desist, the director of commerce may apply to the court of common pleas of any county for, and upon proof of the validity of the order of the division of securities, the delivery of the order to the person or persons affected, and of the illegality and the continuation of the acts or practices that are the subject of the order, the court may grant an injunction implementing the order of the division of securities.

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

Sec. 1707.25.  In case any person fails to file any statement or report required by sections 1707.01 to 1707.45, inclusive, of the Revised Code, to obey any subpoena the issuance of which is provided for in such those sections, or to produce books, records, or papers, give testimony, or answer questions, as required by such those sections, the director of commerce may apply to a court of common pleas of any county for, and upon proof of such failure such the court may grant, an injunction restraining the acting as an investment adviser or investment adviser representative, or the issuance, sale, or offer for sale of any securities by such the person or by its agents, employees, partners, officers, directors, or shareholders, until such failure has been remedied and such other relief as the facts may warrant has been had. Such injunctive relief is available in addition to the other remedies provided for in such sections 1707.01 to 1707.45 Of the Revised Code.

Where the person refusing to comply with such order of court is an issuer of securities, the court may enjoin the sale by any dealer of any securities of said the issuer, and the division of securities may revoke the qualification of the securities of said the issuer, or suspend or revoke the sale of any securities of said the issuer which have been registered by description, and such securities shall not thereafter be sold by any dealer until such the order of the court or of the division is withdrawn.

Sec. 1707.27.  If the court of common pleas is satisfied with the sufficiency of the application for a receivership, and of the sufficiency of the proof of substantial violation of sections 1707.01 to 1707.45, inclusive, of the Revised Code, or of the use of any act, practice, or transaction declared to be illegal, or prohibited, or declared defined as fraudulent by such those sections or rules adopted under those sections by the division of securities, to the material prejudice of a purchaser or holder of securities, such or client of an investment adviser or investment adviser representative, the court may appoint a receiver, for any person so violating sections 1707.01 to 1707.45, inclusive, of the Revised Code or rules adopted under those sections by the division, with power to sue for, collect, receive, and take into his the receiver's possession all the books, records, and papers of such the person and all rights, credits, property, and choses in action acquired by such the person by means of any such act, practice, or transaction, and also all property with which such the property has been mingled, if such the property cannot be identified in kind because of such the commingling, and with power to sell, convey, and assign such the property, and to hold and dispose of the proceeds under the direction of the court of common pleas. Such The court shall have jurisdiction of all questions arising in said the proceedings and may make such orders and decrees therein as justice and equity require.

Sec. 1707.36.  (A) There is hereby created in the division of securities a position to be known as attorney-inspector, which shall be held only by an attorney at law. The duties of this position are to investigate and report upon all complaints and alleged violations of laws relating to the issue and sale of securities this chapter or rules adopted under this chapter by the division and to represent the division in prosecutions arising from such complaints and alleged violations.

The office of the attorney-inspector is hereby designated a criminal justice agency in investigating reported violations of law relating to securities and investment advice, and as such is authorized by this state to apply for access to the computerized databases administered by the national crime information center or the law enforcement automated data system in Ohio, and to other computerized databases administered for the purpose of making criminal justice information accessible to state criminal justice agencies.

(B) There is hereby created in the division of securities two positions to be known as control-bid attorneys, which shall be held only by attorneys at law. The duties of these positions are to investigate and report upon all matters relating to control-bids and related matters and to represent the division in the regulatory matters arising under the Ohio control-bid law.

(C) The attorney-inspector and each control-bid attorney shall be paid at a rate not less than pay range 47 set out in schedule E-2 of section 124.152 of the Revised Code, to be paid as other operating expenses of the division.

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

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

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

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

Sec. 1707.431.  For purposes of this section, the following persons shall not be deemed to have effected, participated in, or aided the seller in any way in making, a sale or contract of sale in violation of sections 1707.01 to 1707.45 of the Revised Code:

(A) Any attorney, accountant, or engineer whose performance is incidental to the practice of his the person's profession;

(B) Any person, other than an investment adviser or an investment adviser representative, who brings any issuer together with any potential investor, without receiving, directly or indirectly, a commission, fee, or other remuneration based on the sale of any securities by any such the issuer to any such the investor. Remuneration received by such the person solely for the purpose of offsetting the reasonable out-of-pocket costs incurred by the person shall not be deemed such a commission, fee, or other remuneration.

Any person claiming exemption under this division for a publicly advertised meeting shall file a notice with the division of securities indicating an intent to cause or hold such a meeting at least twenty-one days prior to the meeting. The division may, upon receipt of such notice, issue an order denying the availability of an exemption under this division not more than fourteen days after receipt of such the notice based on a finding that the applicant is not entitled to the exemption. Notwithstanding the notice described in this section, a failure to file such a the notice does not create a presumption that a person was participating in or aiding in the making of a sale or contract of sale in violation of this chapter.

(C) Any person whom the division exempts from this provision by rule.

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

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

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

(1) Complying with this chapter, in regard to registering securities by description;

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

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

(4) Selling any securities in this state;

(5) Advising for compensation, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(c) In acting as principal for the investment adviser's or investment adviser representative's own account, knowingly sell any security to or purchase any security from a client, or in acting as salesperson for a person other than such client, knowingly effect any sale or purchase of any security for the account of such client, without disclosing to the client in writing before the completion of the transaction the capacity in which the investment adviser or investment adviser representative is acting and obtaining the consent of the client to the TRANsACTION. Division (m)(1)(c) of this section does not apply to any investment adviser registered with the securities and exchange commission under section 203 of the "Investment Advisers Act of 1940," 15 u.s.c. 80b-3, or to any transaction with a customer of a licensed dealer or salesperson if the licensed dealer or salesperson is not acting as an investment adviser or investment adviser representative in relation to the transaction.

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

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

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

Sec. 1707.46.  The principal executive officer of the division of securities shall be the commissioner of securities, who shall be appointed by the director of commerce. The commissioner of securities shall enforce all the laws and administrative rules enacted or adopted to regulate the sale of bonds, stocks, and other securities and to prevent fraud in such sales. The commissioner also shall enforce all the laws and administrative rules enacted or adopted to regulate investment advisers and investment adviser representatives and to prevent fraud in their acts, practices, and transactions.

The commissioner shall be paid at a rate not less than pay range 47 set out in schedule E-2 of section 124.152 of the Revised Code, to be paid as other operating expenses of the division.

Sec. 1707.48.  The division of securities shall retain the originals or copies of all documents filed with the division pertaining to registration by description, qualification, or coordination and all filings for claims of exemption for eight years from the date of the initial filing. For purposes of this section, the date of the initial filing shall be the date upon which the first fee for such filing was received by the division.

The division shall retain all documents, testimony transcripts, investigative reports, and investigative notes that the division has compiled in original or copy form for five years from the date of the alleged or suspected violation of any provision of this chapter.

All other documents filed with the division shall be retained in original or copy form for five years.

The division may by rule exempt any document or record from this section, provided that any document or record exempted is retained by the division for at least as long as it would have been retained had it been subject to this section.

Sec. 1707.99.  Whoever commits any act described in division (A) of section 1707.042 or section 1707.44 of the Revised Code is guilty of a violation of sections 1707.01 to 1707.45 of the Revised Code and the following apply to the offender:

(A) If the value of the funds or securities involved in the offense or the loss to the victim is less than five hundred dollars, the offender is guilty of a felony of the fifth degree, and the court may impose upon the offender an additional fine of not more than two thousand five hundred dollars.

(B) If the value of the funds or securities involved in the offense or the loss to the victim is five hundred dollars or more but less than five thousand dollars, the offender is guilty of a felony of the fourth degree, and the court may impose upon the offender an additional fine of not more than five thousand dollars.

(C) If the value of the funds or securities involved in the offense or the loss to the victim is five thousand dollars or more but less than twenty-five thousand dollars, the offender is guilty of a felony of the third degree, and the court may impose upon the offender an additional fine of not more than ten thousand dollars.

(D) If the value of the funds or securities involved in the offense or the loss to the victim is twenty-five thousand dollars or more but less than one hundred thousand dollars, the offender is guilty of a felony of the second degree, and the court may impose upon the offender an additional fine of not more than fifteen thousand dollars.

(E) If the value of the funds or securities involved in the offense or the loss to the victim is one hundred thousand dollars or more, the offender is guilty of a felony of the first degree, and the court may impose upon the offender an additional fine of not more than twenty thousand dollars.

Sec. 4763.05.  (A)(1) A person shall make application for an initial state-certified general real estate appraiser certificate, an initial state-certified residential real estate appraiser certificate, an initial state-licensed residential real estate appraiser license, or an initial state-registered real estate appraiser assistant registration in writing to the superintendent of real estate on a form the superintendent prescribes. The application shall include the address of the applicant's principal place of business and all other addresses at which he the applicant currently engages in the business of preparing real estate appraisals and the address of the applicant's current residence. The superintendent shall retain the applicant's current residence address in a separate record which shall not constitute a public record for purposes of section 149.03 of the Revised Code. The application shall indicate whether the applicant seeks certification as a general real estate appraiser or as a residential real estate appraiser, licensure as a residential real estate appraiser, or registration as a real estate appraiser assistant and be accompanied by the prescribed examination and certification, registration, or licensure fees set forth in section 4763.09 of the Revised Code. The application also shall include a pledge, signed by the applicant, that the applicant will comply with the standards set forth in this chapter and a statement that the applicant understands the types of misconduct for which disciplinary proceedings may be initiated against the applicant pursuant to this chapter.

(2) For purposes of providing funding for the real estate appraiser recovery fund established by section 4763.16 of the Revised Code, the real estate appraiser board shall levy an assessment against each person issued an initial certificate, registration, or license and against current licensees, registrants, and certificate holders, as required by board rule. The assessment is in addition to the application and examination fees for initial applicants required by division (A)(1) of this section and the renewal fees required for current certificate holders, registrants, and licensees. The superintendent shall deposit the assessment into the state treasury to the credit of the real estate appraiser recovery fund. The assessment for initial certificate holders, registrants, and licensees shall be paid prior to the issuance of a certificate, registration, or license, and for current certificate holders, registrants, and licensees, at the time of renewal.

(B) An applicant for an initial general real estate appraiser or certificate shall possess at least thirty months of experience in real estate appraisal, or any equivalent experience the board prescribes. An applicant for a residential real estate appraiser certificate or residential real estate appraiser license shall possess at least two years experience in real estate appraisal, or any equivalent experience the board prescribes. In addition to any other information required by the board, the applicant shall furnish, under oath, a detailed listing of the appraisal reports or file memoranda for each year for which experience is claimed and, upon request of the superintendent or the board, shall make available for examination a sample of the appraisal reports prepared by him the applicant in the course of his the applicant's practice.

(C)(1) Except as provided in division (C)(2) of this section, an applicant for an initial certificate, registration, or license shall be at least eighteen years of age, honest, truthful, and of good reputation and shall present satisfactory evidence to the superintendent of the following, as appropriate:

(a) If the applicant is seeking a state-certified general real estate appraiser certificate, that the applicant has successfully completed at least one hundred fifty sixty-five classroom hours of courses in subjects related to real estate appraisal presented by a nationally recognized appraisal organization, an institution of higher education, a proprietary school registered by the state board of proprietary school registration, a state or federal commission or agency, or any other organization that represents the interests of financial institutions or real estate brokers, appraisers, or agents and that provides appraisal education, plus fifteen classroom hours related to standards of professional practice and the provisions of this chapter;

(b) If the applicant is seeking a state-certified residential real estate appraiser certificate, that the applicant has successfully completed at least one hundred five classroom hours of courses in subjects related to real estate appraisal presented by a nationally recognized appraisal organization, an institution of higher education, a proprietary school registered by the state board of proprietary school registration, or any other organization that represents the interests of financial institutions or real estate brokers, appraisers, or agents and that provides appraisal education, plus fifteen classroom hours related to standards of professional practice and the provisions of this chapter;

(c) If the applicant is seeking a state-licensed residential real estate appraiser license, that the applicant has successfully completed at least sixty seventy-five classroom hours of courses in subjects related to real estate appraisal presented by a nationally recognized appraisal organization, an institution of higher education, a proprietary school registered by the state board of proprietary school registration, a state or federal commission or agency, or any other organization that represents the interests of financial institutions or real estate brokers, appraisers, or agents and that provides appraisal education, plus fifteen classroom hours related to standards of professional practice and the provisions of this chapter;

(d) If the applicant is seeking a state-registered real estate appraiser assistant registration, that the applicant possesses sufficient experience in inspecting has successfully completed at least seventy-five classroom hours of courses in subjects related to real estate and sufficient educational experience to carry out the purposes of this chapter and the rules the superintendent adopts under this chapter; in the case of an initial registration, that the applicant has successfully completed a program of instruction appraisal presented by a nationally recognized appraisal organization, an institution of higher education, a proprietary school registered by the state board of proprietary school registration, or any other organization that represents the interests of financial institutions or real estate brokers, appraisers, or agents, and that provides appraisal education that included at least fifteen classroom hours of instruction related to standards of professional practice and the requirements of this chapter and the rules adopted under this chapter, and that the applicant intends to complete, within one year after the issuance of the initial registration, a similar program of instruction that includes at least sixty classroom hours of instruction; and in the case of a renewal registration, that the applicant has completed the program, and is in compliance with this chapter and the rules adopted under this chapter.

(2) Each person who files an application for an initial certificate or license within one year of the date established by the board as the first date on which applications will be accepted under this section, which date shall be no later than September 1, 1990, and who, at the time of filing that application, does not satisfy the educational requirements for the certification or licensure sought of either division (C)(1)(a) or (b) of this section is exempt from those educational requirements for the term of the initial certification or licensure. In applying for a renewal certificate or license pursuant to section 4763.06 of the Revised Code, a certificate holder or licensee who was exempted from the educational requirements of division (C)(1)(a) or (b) of this section when applying for his the initial certificate or license shall present satisfactory evidence to the superintendent that the certificate holder or licensee has completed the educational requirements for the certification or licensure to be renewed of one of those divisions before the renewal certificate or license may be issued.

(D) An applicant for an initial general real estate appraiser or residential real estate appraiser certificate or residential real estate appraiser license shall take and successfully complete a written examination in order to qualify for the certificate or license. The examination shall require the applicant to demonstrate all of the following:

(1) Appropriate knowledge of technical terms commonly used in or related to real estate appraising, appraisal report writing, and the economic concepts applicable to real estate;

(2) Understanding of the principles of land economics, real estate appraisal processes, and problems likely to be encountered in gathering, interpreting, and processing of data in carrying out appraisal disciplines;

(3) Understanding of the standards for the development and communication of real estate appraisals as provided in this chapter and the rules adopted thereunder;

(4) Knowledge of theories of depreciation, cost estimating, methods of capitalization, direct sales comparison, and the mathematics of real estate appraisal that are appropriate for the certification or licensure for which the applicant has applied;

(5) Knowledge of other principles and procedures as appropriate for the certification or license;

(6) Basic understanding of real estate law;

(7) Understanding of the types of misconduct for which disciplinary proceedings may be initiated against a certificate holder and licensee.

(E)(1) A nonresident, natural person, of this state who has complied with this section may obtain a certificate, registration, or license. The board shall adopt rules relating to the certification, registration, and licensure of a nonresident applicant whose state of residence the board determines to have certification, registration, or licensure requirements that are substantially similar to those set forth in this chapter and the rules adopted thereunder.

(2) A nonresident appraiser may apply for, and the board may issue, a temporary certificate or license, if the board determines that the state in which the nonresident appraiser is licensed or certified has licensing or certification requirements that are substantially similar to the certification or licensure requirements set forth in this chapter and the rules adopted thereunder.

The board shall adopt rules relating to the temporary certification and licensure of nonresident appraisers. Each temporary certificate and license issued by the board shall identify the location of the real estate property to be appraised and shall not authorize appraisal of more than one real estate property located in this state. The board shall not issue more than two temporary certificates or licenses in any one calendar year to any one applicant.

(3) In addition to any other information required to be submitted with his the nonresident applicant's or appraiser's application for a certificate, registration, license, or temporary certificate or license, each nonresident applicant or appraiser shall submit a statement consenting to the service of process upon him the nonresident applicant or appraiser by means of delivering that process to the secretary of state if, in an action against the applicant, certificate holder, registrant, or licensee arising from the applicant's, certificate holder's, registrant's, or licensee's activities as a certificate holder, registrant, or licensee, the plaintiff, in the exercise of due diligence, cannot effect personal service upon the applicant, certificate holder, registrant, or licensee.

(F) The superintendent shall not issue a certificate, registration, temporary certificate or license, or license to a corporation, partnership, or association. This prohibition shall not be construed to prevent a certificate holder or licensee from signing an appraisal report on behalf of a corporation, partnership, or association.

(G) Every person licensed, registered, or certified under this chapter shall notify the superintendent, on a form provided by the superintendent, of a change in the address of his the licensee's, registrant's, or certificate holder's principal place of business or residence within thirty days of the change. If a licensee's, registrant's, or certificate holder's license, registration, or certificate is revoked or not renewed, the licensee, registrant, or certificate holder immediately shall return his the annual and any renewal certificate, registration, or license to the superintendent.

(H) The superintendent shall not issue a certificate, registration, temporary certificate or license, or license to any person who does not meet applicable minimum criteria for state certification, registration, or licensure prescribed by federal law or rule.

Sec. 4763.07.  (A) Every state-certified general real estate appraiser, state-certified residential real estate appraiser, and state-licensed residential real estate appraiser, and state-registered real estate appraiser assistant shall submit proof of successfully completing a minimum of twenty fourteen classroom hours of continuing education instruction in courses or seminars approved by the real estate appraiser board. The certificate holder and licensee shall have satisfied the twenty-hour fourteen-hour continuing education requirements within the two-year one-year period immediately following the issuance of the initial certificate or license and thereafter shall satisfy those requirements every two years annually thereafter. If the certificate holder or licensee fails to submit proof to the superintendent of meeting these requirements, the certificate holder's, registrant's, or licensee's certificate or license automatically is suspended. The superintendent shall notify the certificate holder or licensee of the suspension and if the certificate holder or licensee fails to submit proof to the superintendent of meeting those requirements within three months from the date of suspension, the superintendent shall revoke the certificate or license. If a certificate holder or licensee whose certificate or license has been revoked under this division desires to be certified or licensed under this chapter the certificate holder or licensee shall apply for an initial certificate or license and shall meet all of the requirements of section 4763.05 of the Revised Code for the issuance of a certificate or license. A

A certificate holder and licensee may satisfy all or a portion of the required hours of classroom instruction in the following manner:

(1) Completion of an educational program of study determined by the board to be equivalent, for continuing education purposes, to courses or seminars approved by the board;

(2) Participation, other than as a student, in educational processes or programs approved by the board that relate to real estate appraisal theory, practices, or techniques.

A certificate holder and a licensee shall present to the superintendent of real estate evidence of the manner in which he the certificate holder and licensee satisfied the requirements of division (A) of this section.

(B) The board shall adopt rules for implementing a continuing education program for state-certified general real estate appraisers, state-certified residential real estate appraisers, and state-licensed residential real estate appraisers, and state-registered real estate appraiser assistants for the purpose of assuring that certificate holders and licensees have current knowledge of real estate appraisal theories, practices, and techniques that will provide a high degree of service and protection to members of the public. In addition to any other provisions the board considers appropriate, the rules adopted by the board shall prescribe the following:

(1) Policies and procedures for obtaining board approval of courses of instruction and seminars;

(2) Standards, policies, and procedures to be applied in evaluating the alternative methods of complying with continuing education requirements set forth in divisions (A)(1) and (2) of this section;

(3) Standards, monitoring methods, and systems for recording attendance to be employed by course sponsors as a prerequisite to approval of courses for continuing education credit.

(C) No amendment or rescission of a rule the board adopts pursuant to division (B) of this section shall operate to deprive a certificate holder or licensee of credit toward renewal of certification or licensure for any course of instruction completed by the certificate holder or licensee prior to the effective date of the amendment or rescission that would have qualified for credit under the rule as it existed prior to amendment or rescission.

(D) The superintendent of real estate shall not issue a renewal certificate, registration, or license to any person who does not meet applicable minimum criteria for state certification, registration, or licensure prescribed by federal law or rule.

SECTION 2 .  That existing sections 1707.01, 1707.03, 1707.11, 1707.14, 1707.17, 1707.18, 1707.19, 1707.20, 1707.22, 1707.23, 1707.25, 1707.27, 1707.36, 1707.391, 1707.42, 1707.431, 1707.44, 1707.46, 1707.48, 1707.99, 4763.05, and 4763.07 of the Revised Code are hereby repealed.

SECTION 3 .  Beginning on the effective date of this act, the Commissioner of Securities shall take action, including the adoption of rules, reasonably necessary to provide for the timely licensure of, and acknowledgement of notice filings by, persons seeking to act as investment advisers or investment adviser representatives in compliance with sections 1707.141, 1707.161, and 1707.17 of the Revised Code. In implementing section 1707.141 of the Revised Code, the commissioner, to the extent practicable and consistent with this act, shall coordinate licensure of investment advisers by the Division of Securities with the registration of investment advisers by the Securities and Exchange Commission to provide for an orderly transition of regulation of investment advisers.

SECTION 4 .  Each person who holds a certificate or license pursuant to Chapter 4763. of the Revised Code on the effective date of this act, within one year and annually thereafter, shall satisfy the fourteen-hour continuing education requirements of section 4763.07 of the Revised Code beginning with the person's first continuing education due date following the act's effective date.

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