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As Reported by House Civil and Commercial Law Committee
123rd General Assembly
Regular Session
1999-2000 | Sub. H. B. No. 551 |
REPRESENTATIVE SALERNO-PETERSON-CALLENDER-WOMER BENJAMIN
A BILL
To amend sections 1707.01, 1707.02, 1707.11, 1707.15, 1707.151, 1707.16,
1707.17, and 1707.23; to enact sections 3916.01, 3916.02, 3916.03,
3916.05, 3916.07, 3916.08, 3916.10, 3916.12, 3916.13, 3916.15,
3916.17, 3916.19, 3916.21, 3916.22, 3916.24, 3916.26, 3916.28,
3916.30, 3916.32, and 3916.99; and to repeal sections 1707.432,
1707.433, 1707.434, 1707.435, 1707.436, 1707.437, 1707.438, and
1707.439 of the Revised Code to adopt the Viatical Settlements
Model Act of the National Association of Insurance Commissioners,
to make life settlement interests subject to the Ohio Securities
Law, and to make other changes in the Securities Law, including
changes relative to exempt securities, consent to service of
process, application for a dealer's, investment adviser's, or
salesperson's license, and private civil actions seeking damages
arising from the sale of a security.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1707.01, 1707.02, 1707.11, 1707.15, 1707.151,
1707.16, 1707.17, and
1707.23 be amended and sections 3916.01, 3916.02, 3916.03,
3916.05, 3916.07, 3916.08, 3916.10, 3916.12, 3916.13, 3916.15,
3916.17, 3916.19, 3916.21, 3916.22, 3916.24, 3916.26, 3916.28,
3916.30, 3916.32, and 3916.99 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 LIFE SETTLEMENT
INTEREST, 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
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
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 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 of the United States,
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, who is 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 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 salesperson" means a
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
purchase or sale of securities that is fraudulent or that has operated
or
would operate as a fraud upon the seller or 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, 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," 48 Stat. 74, 15 U.S.C.
77a, "Securities Exchange Act of 1934," 48 Stat. 881,
15 U.S.C. 78a, "Internal Revenue Code of
1986," 100 Stat. 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 March 18, 1999.
(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 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 adviser" does not mean any of the following:
(a) Any attorney, accountant, engineer, or teacher, whose
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, or teacher's profession;
(b) A publisher of any bona fide
newspaper, news magazine, or business or financial publication of
general and regular circulation;
(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 March 18, 1999, 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 March 18, 1999,
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 March 18, 1999, 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.
(MM)(1) "Purchase" has the full meaning of "purchase" as applied
by or accepted in courts of law or equity and includes every acquisition of,
or attempt to acquire, a security or an interest in a security. "Purchase"
also includes a contract to purchase, an exchange, an attempt to purchase, an
option to purchase, a solicitation of a purchase, a
solicitation of an offer to sell, a subscription, or an offer to purchase,
directly or indirectly, by agent, circular, pamphlet, advertisement, or
otherwise.
(2) "Purchase" means any act by which a purchase is made.
(3) 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.
(NN) "LIFE SETTLEMENT INTEREST" MEANS THE ENTIRE INTEREST OR
ANY FRACTIONAL INTEREST IN AN INSURANCE POLICY OR CERTIFICATE OF
INSURANCE, OR IN AN INSURANCE BENEFIT UNDER SUCH A POLICY OR CERTIFICATE,
THAT IS THE SUBJECT OF A LIFE SETTLEMENT CONTRACT.
FOR PURPOSES OF THIS DIVISION, "LIFE SETTLEMENT CONTRACT"
MEANS AN
AGREEMENT FOR THE PURCHASE, SALE, ASSIGNMENT, TRANSFER, DEVISE, OR
BEQUEST OF ANY PORTION OF THE DEATH BENEFIT OR OWNERSHIP OF ANY LIFE
INSURANCE POLICY OR CONTRACT, IN RETURN FOR CONSIDERATION OR ANY OTHER
THING OF VALUE THAT IS LESS THAN THE EXPECTED DEATH BENEFIT OF THE
LIFE INSURANCE POLICY OR CONTRACT. "LIFE SETTLEMENT CONTRACT"
INCLUDES A VIATICAL SETTLEMENT CONTRACT AS DEFINED IN SECTION
3916.01 OF THE REVISED CODE, BUT DOES NOT INCLUDE ANY OF THE
FOLLOWING:
(1) A LOAN BY AN INSURER UNDER THE TERMS OF A LIFE INSURANCE
POLICY, INCLUDING, BUT NOT LIMITED TO, A LOAN SECURED BY THE CASH VALUE OF
THE POLICY;
(2) AN AGREEMENT WITH A BANK THAT TAKES AN ASSIGNMENT OF A LIFE
INSURANCE POLICY AS COLLATERAL FOR A LOAN;
(3) THE PROVISION OF ACCELERATED BENEFITS AS DEFINED IN SECTION
3915.21 OF THE REVISED CODE;
(4) ANY AGREEMENT BETWEEN AN INSURER AND A REINSURER;
(5) AN AGREEMENT BY AN INDIVIDUAL TO PURCHASE AN EXISTING LIFE
INSURANCE POLICY OR CONTRACT FROM THE ORIGINAL OWNER OF THE POLICY
OR CONTRACT, IF THE INDIVIDUAL DOES NOT ENTER INTO MORE THAN ONE
LIFE SETTLEMENT CONTRACT PER CALENDAR YEAR;
(6) THE INITIAL PURCHASE OF AN INSURANCE POLICY OR CERTIFICATE OF
INSURANCE FROM ITS OWNER BY A VIATICAL SETTLEMENT PROVIDER, AS DEFINED
IN SECTION 3916.01 OF THE REVISED CODE, THAT IS
LICENSED UNDER
CHAPTER 3916. OF THE REVISED
CODE.
Sec. 1707.02. (A) "Exempt," as used in this section,
means exempt from sections 1707.08 to 1707.11 and 1707.39 of the
Revised Code.
(B)(1) Except as provided in division (B)(2) of this section, the following
securities are exempt, if the issuer or
guarantor has the power of taxation or assessment for the purpose
of paying the obligation represented by the security, or is in
specific terms empowered by the laws of the state of issuance to
issue securities payable as to principal or interest, or as to
both, out of revenues collected or administered by such issuer:
(a) Any security issued or guaranteed by the United
States;
(b) Any security issued or guaranteed by, and recognized,
at the time of sale, as its valid obligation by, any foreign
government with which the United States is, at the time of sale,
maintaining diplomatic relations;
(c) Any security issued or guaranteed, and recognized as
its valid obligation, by any political subdivision or any
governmental or other public body, corporation, or agency in or
of the United States, any state, territory, or possession of the
United States, or any foreign government with which the United
States is, at the time of sale, maintaining diplomatic relations.
(2) If a security described in division (B)(1) of this section
is not payable out of the proceeds of a general tax,
the security is exempt only if, at the time of its first sale in this state,
there is no default in the payment
of any of the interest or principal of the security, and
there are no adjudications or pending suits adversely affecting
its validity.
(C) Any security issued by and representing an interest in
or an obligation of a state or nationally chartered bank, savings and loan
association, savings bank, or
credit union, or a governmental corporation or agency created by
or under the laws of the United States or of Canada is exempt, if
it is under the supervision of or subject to regulation by the
government or state under whose laws it was organized.
(D) Any interim certificate is exempt, if the securities
to be delivered therefor are themselves exempt, are the subject
matter of an exempt transaction, have been registered by
description or registered by qualification, or are the subject
matter of a transaction which has been registered by description.
(E)(1) Any A security, whether a preliminary or final
security, is exempt, which, at the time of sale within this
state, is listed, or listed upon notice of issuance, on the
Cincinnati stock exchange, the Midwest stock exchange, the New
York stock exchange, or the American stock exchange, or is
designated, or approved for designation upon notice of issuance,
as a national market system security on the national association
of securities dealers automated quotation system, or is listed or
designated on any other stock exchange or national quotation
system approved by the division as having listing requirements
substantially equivalent to those of any one of those exchanges
or systems, and any security senior to any security so listed or
designated is also exempt; but these exemptions shall apply only
so long as such security remains so listed or designated pursuant
to official action of such exchange or system and not under
suspension, and only so long as such exchange or system remains
approved under this section
IF IT MEETS ANY OF THE FOLLOWING REQUIREMENTS:
(a) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON THE
NEW YORK STOCK EXCHANGE, THE
AMERICAN STOCK EXCHANGE, OR THE NATIONAL
MARKET SYSTEM OF THE NASDAQ STOCK MARKET, OR ANY SUCCESSOR
TO SUCH ENTITIES.
(b) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON A
NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT OF SUCH
EXCHANGE OR SYSTEM, DESIGNATED
BY THE SECURITIES AND EXCHANGE COMMISSION IN RULE 146(b)
PROMULGATED UNDER SECTION 18(b)(1) OF THE
SECURITIES ACT OF 1933.
(c) THE SECURITY IS LISTED, OR AUTHORIZED FOR LISTING, ON A
NATIONAL SECURITIES EXCHANGE OR SYSTEM, OR ON A TIER OR SEGMENT OF SUCH
EXCHANGE OR SYSTEM, THAT HAS
LISTING STANDARDS THAT THE DIVISION OF SECURITIES, ON ITS OWN
INITIATIVE OR ON THE BASIS OF AN APPLICATION, DETERMINES BY RULE
ARE SUBSTANTIALLY SIMILAR TO THE LISTING STANDARDS APPLICABLE TO SECURITIES
DESCRIBED IN DIVISION (E)(1)(a) OF THIS SECTION.
(d) THE SECURITY IS A SECURITY OF THE SAME ISSUER THAT IS EQUAL
IN SENIORITY OR THAT IS A SENIOR SECURITY TO A SECURITY DESCRIBED
IN DIVISION (E)(1)(a), (b), OR
(c) OF THIS SECTION.
(2) Application for approval of a stock exchange or system
not approved in this section may be made by any organized stock
exchange or system, or by any dealer who is a member of such
exchange, in such manner and upon such forms as are prescribed by
the division, accompanied by payment of an approval fee of two
hundred dollars, and the division shall make such investigation
and may hold such hearings as it deems necessary to determine the
propriety of giving approval. The cost of such investigation
shall be borne by the applicant. The division may enter an order
of approval, and if it does so, it shall notify the applicant of
such approval.
(3) The division may revoke the approval of an exchange or
system approved ENUMERATED in DIVISION (E)(1) OF
this section
or approved by it upon finding,
PROVIDED THAT THE EXCHANGE OR SYSTEM IS NOT LISTED IN SECTION
18(b)(1) OF THE SECURITIES ACT OF 1933 OR ANY
RULE PROMULGATED THEREUNDER. THE DIVISION MAY EFFECT A REVOCATION
after due notice, investigation, and A hearing, AND A
FINDING that the practices
or requirements of such exchange or system have been so changed
or modified, or are, in their actual operation, such that the
contemplated protection is no longer afforded. The principles of
res adjudicata ordinarily applicable in civil matters shall not
be applicable to this matter, which is hereby declared to be
administrative rather than judicial. Notice of the hearing may
ye given by certified mail at least ten days before such hearing.
(4) The division may suspend the exemption of any security
described in division (E)(1) of this section,
PROVIDED THAT THE SECURITY IS LISTED OR AUTHORIZED FOR LISTING
ON AN EXCHANGE OR SYSTEM THAT IS NOT LISTED IN SECTION
18(b)(1) OF THE SECURITIES ACT OF 1933 OR ANY
RULE PROMULGATED
THEREUNDER. THE DIVISION MAY EFFECT A SUSPENSION
by giving notice, by
certified mail, to that effect to the exchange or system upon
which such security is listed or designated and to the issuer of
such security. After notice and hearing, the division may revoke
such exemption if it appears to it that sales of such security
have been fraudulent or that future sales of it would be
fraudulent. The division shall set such hearing not later than
ten days from the date of the order of suspension, but may for
good cause continue such hearing upon application of the exchange
or system upon which such security is listed or designated or
upon application of the issuer of such security.
(F) Any security, issued or guaranteed as to principal,
interest, or dividend or distribution by a corporation owning or
operating any public utility, is exempt, if such corporation is,
as to its rates and charges or as to the issuance and
guaranteeing of securities, under the supervision of or regulated
by a public commission, board, or officer of the United States,
or of Canada, or of any state, province, or municipal corporation
in either of such countries. Equipment-trust securities based on
chattel mortgages, leases, or agreements for conditional sale, of
cars, locomotives, motor trucks, or other rolling stock or of
motor vehicles mortgaged, leased, or sold to, or finished for the
use of, a public utility, are exempt; and so are equipment
securities where the ownership or title of such equipment is
pledged or retained, in accordance with the laws of the United
States or of any state, or of Canada or any province thereof, to
secure the payment of such securities.
(G) Commercial paper and promissory notes are exempt when
they are not offered directly or indirectly for sale to the
public.
(H) Any security issued or guaranteed by an insurance
company, except as provided in section 1707.32 of the Revised
Code, is exempt if such company is under the supervision of, and
the issuance or guaranty of such security is regulated by, a
state.
(I) Any security, except notes, bonds, debentures, or
other evidences of indebtedness or of promises or agreements to
pay money, which is issued by a person, corporation, or
association organized not for profit, including persons,
corporations, and associations organized exclusively for
conducting county fairs,
or
for
religious, educational, social, recreational, athletic,
benevolent, fraternal, charitable, or reformatory purposes, and agricultural
cooperatives as defined in section 1729.01 of the Revised
Code, is
exempt, if no part of the net earnings of such issuer inures to
the benefit of any shareholder or member of such issuer or of any
individual, and if the total commission, remuneration, expense,
or discount in connection with the sale of such securities does
not exceed two per cent of the total sale price thereof plus five
hundred dollars.
(J)(1) Any securities outstanding for a period of not less
than five years, on which there has occurred no default in
payment of principal, interest, or dividend or distribution for
the five years immediately preceding the sale, are exempt.
(2) For the purpose of division (J) of this section, the
dividend, distribution, or interest rate on securities in which
no such rate is specified shall be at the rate of at least four
per cent annually on the aggregate of the price at which such
securities are to be sold.
(K) All bonds issued under authority of Chapter 165. or
761., or section 4582.06 or 4582.31 of the Revised Code are
exempt.
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 (Q), (W), (X),
or (Y) of section 1707.03 of the Revised Code,
and every (A) EACH person submitting a notice filing
pursuant to
section 1707.092 of the Revised Code,
for the sale of securities pursuant to this chapter, which THAT
is an incorporated applicant or person not domiciled in
ORGANIZED UNDER THE LAWS OF this state or, THAT IS
not licensed under section 1703.03 of the
Revised Code, or is an
unincorporated applicant or person having the situs of THAT DOES NOT
HAVE its principal
place of business outside IN this state, shall file with its
application or notice filing its
SUBMIT TO THE DIVISION OF SECURITIES AN IRREVOCABLE CONSENT TO
SERVICE OF PROCESS, AS DESCRIBED IN DIVISION (B) OF THIS SECTION,
IN CONNECTION WITH ANY OF THE FOLLOWING:
(1) FILINGS TO CLAIM ANY OF THE EXEMPTIONS ENUMERATED IN
DIVISION (Q), (W), (X), OR (Y) OF SECTION
1707.03 OF
THE REVISED CODE;
(2) APPLICATIONS FOR REGISTRATION BY DESCRIPTION, QUALIFICATION,
OR COORDINATION;
(3) NOTICE FILINGS PURSUANT TO SECTION 1707.092 OR 1707.141 OF
THE REVISED CODE;
(4) APPLICATIONS FOR LICENSURE AS A SECURITIES DEALER UNDER
SECTION 1707.15 OF THE REVISED CODE;
(5) APPLICATIONS FOR LICENSURE AS AN INVESTMENT ADVISER UNDER
SECTION 1707.151 OF THE REVISED CODE.
(B) THE irrevocable written consent, SHALL BE
executed and acknowledged by an
individual duly authorized to give the consent, AND SHALL DO ALL OF
THE FOLLOWING:
(1) DESIGNATE THE SECRETARY OF STATE AS AGENT FOR SERVICE OF PROCESS OR
PLEADINGS;
(2) STATE that
actions growing out of the sale of such securities, THE GIVING OF
INVESTMENT ADVICE, or fraud committed by
an applicant in this state A PERSON ON WHOSE BEHALF THE CONSENT IS
SUBMITTED may be commenced against it THE PERSON, in the
proper court of any county in this state in which a cause of
action for fraud may arise or in which the plaintiff in 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;
(3) STIPULATE that service of 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 PERSON ON WHOSE BEHALF THE CONSENT IS
SUBMITTED.
(C) 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 the applicant, PERSON ON WHOSE
BEHALF THE CONSENT IS SUBMITTED or TO the
last known address as shown on the application form filed FILING
MADE with the
division, or if it has a principal office in this state, then to
the principal office; but. HOWEVER, failure to mail
such copy shall DOES
not invalidate the service.
Sec. 1707.15. An application to act as dealer (A)
APPLICATION FOR A DEALER'S LICENSE shall be MADE in
writing ACCORDANCE WITH THIS SECTION and shall be filed
BY FILING with the division of securities. It
shall be in such form as the division prescribes, and verified by
oath of the applicant, his agent, or his attorney, and it shall
set forth THE INFORMATION, MATERIALS, AND FORMS SPECIFIED IN RULES
ADOPTED BY THE DIVISION, ALONG WITH ALL OF THE FOLLOWING INFORMATION:
(A)(1) The name and address of the applicant;
(B)(2) A description of the applicant, including, if the
applicant is a partnership, unincorporated association, or any
similar form of business organization, the names and the
residence and business addresses of all partners, officers,
directors, trustees, or managers of the organization, and the
limitation of the liability of any partner or member; and if the
applicant is a corporation, a list of its executive officers and
directors, and the residence and business addresses of each,;
and
if it is a foreign corporation, a copy of its articles of
incorporation in addition thereto;
(C)(3) The location and addresses of the principal office and
all other offices of the applicant;
(D)(4) A general description of the business of the applicant
done prior to such THE application, including a list of states
in
which the applicant is a licensed dealer;
(E) The names and addresses of all salesmen of the
applicant at the date of the application;
(F) The nature of the applicant's business, and its places
of business, for the period of ten years next preceding the date
of application.
Every (B) EACH 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 of the person designated.
Every applicant shall file an irrevocable consent to
service of process on the secretary of state in the event that
such applicant, if a resident of this state, or the person
designated by the nonresident applicant, cannot be found at the
address given. Such consent shall be given and service
thereunder shall be made as provided in section 1707.11 of the
Revised Code.
(C)(1) The division may investigate any applicant for a license,
and may require such additional information as it deems necessary
to determine the applicant's business repute and qualifications
to act as a dealer in securities.
(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 such examination. An itemized statement of any such
expenses which he THE APPLICANT is required to pay shall be
furnished the
applicant by the division.
If the applicant is merely renewing his license
for the previous year the application need contain only the information
required by divisions (B), (C), and (E) of this section.
(D) The division shall by rule require an applicant ONE
NATURAL PERSON WHO IS A PRINCIPAL, OFFICER, DIRECTOR, GENERAL PARTNER,
MANAGER, OR EMPLOYEE OF A DEALER to pass an
examination which covers his knowledge of
securities laws and practices
DESIGNATED BY THE DIVISION. EACH DEALER THAT IS NOT A NATURAL
PERSON SHALL NOTIFY THE DIVISION OF THE NAME AND RELATIONSHIP TO THE
DEALER OF THE NATURAL PERSON WHO HAS PASSED THE EXAMINATION ON BEHALF OF
THE DEALER AND WHO WILL SERVE AS THE DESIGNATED PRINCIPAL ON
BEHALF OF THE DEALER.
(E) DEALERS SHALL EMPLOY AS SALESPERSONS ONLY THOSE SALESPERSONS
WHO ARE LICENSED UNDER THIS CHAPTER. IF AT ANY TIME A SALESPERSON
RESIGNS OR IS DISCHARGED OR A NEW SALESPERSON IS ADDED, THE DEALER
SHALL PROMPTLY NOTIFY THE DIVISION.
(F) If the division finds that the applicant is of good
business repute, appears qualified to act as a dealer in
securities, and has fully complied with sections 1707.01 to
1707.45 of the Revised Code THIS CHAPTER AND RULES ADOPTED UNDER THIS
CHAPTER BY THE DIVISION, the division shall issue to such
applicant a license to act as dealer, upon payment by the applicant
of the fee FEES prescribed by DIVISION (B) OF
section 1707.17 of the Revised Code.
The division may, after proper hearing, refuse, as provided
in section 1707.19 of the Revised Code, SHALL ISSUE to grant a
license to the
applicant.
Dealers shall employ as salesmen only those who are
licensed under sections 1707.01 to 1707.45 of the Revised Code.
If at any time such salesmen resign or are discharged or new
salesmen are added, the dealer shall forthwith notify the
division and shall file with the division the names and addresses
of new salesmen A LICENSE AUTHORIZING THE APPLICANT TO ACT AS A
DEALER.
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 EACH 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)(C)(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)(D) 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 EACH 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)(E) 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)(F) 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 THIS CHAPTER and rules adopted under those
sections THIS CHAPTER 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. 1707.16. (A) Every salesman SALESPERSON of
securities must be
licensed by the division of securities and shall be employed only
by the licensed dealer specified in his THE SALESPERSON'S
license. IF THE SALESPERSON SEVERS THE CONNECTION WITH THAT LICENSED
DEALER, THE SALESPERSON'S LICENSE IS VOID.
The application (B) APPLICATION for a
salesman's SALESPERSON'S license shall set forth
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, ALONG WITH ALL OF THE FOLLOWING
INFORMATION:
(A)(1) The name and complete residence and business addresses
of the applicant;
(B)(2) The name of the dealer who is employing the applicant
or who intends to employ him THE APPLICANT;
(C)(3) The applicant's age and education, and his
THE APPLICANT'S
experience
in the sale of securities; whether he THE APPLICANT has ever
been licensed by
the division, and if so, when; whether he THE APPLICANT has ever
been refused a
license by the division; and whether he THE APPLICANT has ever
been licensed or
refused a license or any similar permit by any division or
commissioner of securities, whatsoever name known or designated,
anywhere;.
(C) THE DIVISION SHALL BY RULE REQUIRE AN APPLICANT TO PASS AN
EXAMINATION DESIGNATED BY THE DIVISION.
(D) The nature of the employment, and the names and
addresses of the employers, of the applicant for the period of
ten years immediately preceding the date of the application.
If the division finds that the applicant is of good
business repute, appears to be qualified to act as a salesman
SALESPERSON of
securities, and has fully complied with sections 1707.01 to
1707.45 of the Revised Code THIS CHAPTER, and that the dealer named
in the application is a licensed dealer, the division shall, upon
payment of the fees prescribed by section 1707.17 of the Revised
Code, issue a license to the applicant authorizing him THE
APPLICANT to act as salesman SALESPERSON for the dealer
named in the application.
If such salesman severs his connection with such dealer,
the salesman's license is void.
The division shall by rule require an applicant to pass an
examination which covers his knowledge of
securities laws and practices.
If the applicant is merely renewing his license for the
previous year or renewing his license upon change of employment,
only the information required under divisions (A) and (B) of this
section need be given.
Sec. 1707.17. (A)(1) The license of every dealer in and
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, between
the first day of November and the fifteenth day of December
of each year. The division
may accept an application for renewal filed between the
fifteenth and the 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
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
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 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.
(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
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.
(2) The fee for each salesperson's license,
and for each
annual
renewal thereof, shall be fifty dollars. The fee for the
examination of an applicant 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)(D) 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. 1707.23. 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 THIS CHAPTER or rules adopted under
that THIS chapter by the
division, or defined as fraudulent in that THIS chapter or rules
adopted under that THIS 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 the person,
as to the person's acts or practices as an investment adviser or investment
adviser representative within this state, and as to other
information as it deems material or relevant thereto;
(B) Examine any investment adviser, investment adviser representative, or
any
seller, dealer, salesperson, or issuer of any
securities, and any of their agents, employees, partners,
officers, directors, members, or shareholders, wherever located,
under oath; and examine records, books, documents, accounts,
and papers as the division deems material or relevant to the
inquiry;
(C) Require the attendance of witnesses, and the
production of 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. The subpoena shall be served by
PERSONAL SERVICE OR 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 the witness. The person DESIGNATED TO EFFECT PERSONAL OR RESIDENCE
SERVICE UNDER THIS DIVISION 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 the person serving
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 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 the witness following the hearing.
(D) Proceed under section 1707.19 of the Revised Code to
suspend the license of any licensed dealer,
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
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 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 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 to constitute violations of Chapter 1707.
of the Revised Code THIS CHAPTER or rules adopted under that
THIS chapter by the
division. The order shall state specifically the
section or sections of Chapter 1707. of the Revised Code THIS
CHAPTER or the rule or
rules adopted under that THIS chapter by the division that
appear to the division to have been violated and
the facts constituting the violation. If after the issuance of
the order it appears to the division 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,
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.
(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 THIS CHAPTER if
the activities had occurred in this state.
Sec. 3916.01. AS USED IN THIS CHAPTER:
(A) "FINANCING ENTITY" MEANS AN UNDERWRITER, PLACEMENT AGENT,
LENDER, PURCHASER OF SECURITIES, PURCHASER OF A POLICY OR CERTIFICATE FROM A
VIATICAL SETTLEMENT PROVIDER, CREDIT ENHANCER, OR ANY OTHER PERSON THAT IS A
PARTY TO A VIATICAL SETTLEMENT CONTRACT, HAS AN AGREEMENT IN WRITING WITH A
VIATICAL SETTLEMENT PROVIDER TO ACT AS A PARTICIPANT IN A FINANCING
TRANSACTION, AND HAS A DIRECT OWNERSHIP INTEREST IN THE POLICY OR CERTIFICATE
THAT IS THE SUBJECT OF THE VIATICAL SETTLEMENT CONTRACT, BUT WHOSE SOLE
ACTIVITY RELATED TO THE TRANSACTION IS PROVIDING FUNDS TO EFFECT THE VIATICAL
SETTLEMENT.
(B) "FINANCING TRANSACTION" MEANS A TRANSACTION IN WHICH A
LICENSED VIATICAL SETTLEMENT PROVIDER OR A FINANCING ENTITY OBTAINS FINANCING
FOR VIATICAL SETTLEMENT CONTRACTS, VIATICATED POLICIES, OR INTERESTS THEREIN,
WHICH FINANCING INCLUDES, BUT IS NOT LIMITED TO, ANY SECURED OR UNSECURED
FINANCING, ANY SECURITIZATION TRANSACTION OR SECURITIES OFFERING THAT IS
EITHER REGISTERED OR EXEMPT FROM REGISTRATION UNDER FEDERAL SECURITIES LAW AND
CHAPTER 1707. of the Revised Code, OR ANY DIRECT PURCHASE OF INTERESTS IN A POLICY
OR CERTIFICATE, IF THE
TRANSACTION COMPLIES WITH FEDERAL SECURITIES LAW AND CHAPTER 1707.
of the Revised Code.
(C) "VIATICAL SETTLEMENT BROKER" MEANS A PERSON THAT, ON BEHALF
OF A VIATOR AND FOR A FEE, COMMISSION, OR OTHER VALUABLE CONSIDERATION, OFFERS
OR ATTEMPTS TO NEGOTIATE VIATICAL SETTLEMENTS BETWEEN A VIATOR AND ONE OR MORE
VIATICAL SETTLEMENT PROVIDERS. "VIATICAL SETTLEMENT BROKER" DOES NOT INCLUDE
AN ATTORNEY, A CERTIFIED PUBLIC ACCOUNTANT, OR A FINANCIAL PLANNER RETAINED TO
REPRESENT THE VIATOR
WHOSE COMPENSATION IS PAID DIRECTLY BY, OR AT THE DIRECTION OF, THE VIATOR.
(D) "VIATICAL SETTLEMENT CONTRACT" MEANS EITHER OF THE FOLLOWING:
(1) AN AGREEMENT BETWEEN A VIATICAL SETTLEMENT PROVIDER AND A VIATOR UNDER
WHICH THE VIATICAL SETTLEMENT PROVIDER PAYS COMPENSATION OR ANY OTHER THING OF
VALUE, WHICH COMPENSATION OR OTHER THING OF VALUE IS LESS THAN THE EXPECTED
DEATH BENEFIT OF THE INSURANCE POLICY OR CERTIFICATE, IN RETURN FOR THE
VIATOR'S ASSIGNMENT, TRANSFER, SALE, DEVISE, OR BEQUEST OF THE DEATH BENEFIT
OR OWNERSHIP OF ALL OR A PORTION OF THE INSURANCE POLICY OR CERTIFICATE TO THE
VIATICAL SETTLEMENT PROVIDER;
(2) A CONTRACT FOR A LOAN OR ANY OTHER FINANCIAL
TRANSACTION SECURED PRIMARILY BY AN INDIVIDUAL OR GROUP LIFE INSURANCE POLICY
OR CERTIFICATE,
OTHER THAN A LOAN BY A LIFE INSURANCE COMPANY PURSUANT TO THE TERMS OF THE
LIFE INSURANCE CONTRACT OR A LOAN SECURED BY THE CASH VALUE OF A POLICY OR
CERTIFICATE.
(E)(1) "VIATICAL SETTLEMENT PROVIDER" MEANS EITHER OF THE
FOLLOWING:
(a) A PERSON, OTHER THAN A VIATOR, THAT ENTERS INTO A VIATICAL
SETTLEMENT CONTRACT;
(b) A PERSON THAT OBTAINS FINANCING FROM A FINANCING ENTITY FOR
THE PURCHASE, ACQUISITION, TRANSFER, OR OTHER ASSIGNMENT OF ONE OR MORE
VIATICAL SETTLEMENT CONTRACTS, VIATICATED POLICIES, OR INTERESTS THEREIN, OR
THAT OTHERWISE SELLS, ASSIGNS, TRANSFERS, PLEDGES, HYPOTHECATES, OR OTHERWISE
DISPOSES OF ONE OR MORE VIATICAL SETTLEMENT CONTRACTS, VIATICATED POLICIES, OR
INTERESTS THEREIN.
(2) "VIATICAL SETTLEMENT PROVIDER" DOES NOT INCLUDE ANY OF THE FOLLOWING:
(a) A BANK, SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, CREDIT
UNION, OR OTHER FINANCIAL INSTITUTION THAT TAKES AN ASSIGNMENT OF A LIFE
INSURANCE POLICY OR CERTIFICATE AS COLLATERAL FOR A LOAN;
(b) THE ISSUER OF A LIFE INSURANCE POLICY OR CERTIFICATE
PROVIDING ACCELERATED
BENEFITS AS DEFINED IN SECTION 3915.21 of the Revised Code;
(c) AN INDIVIDUAL WHO ENTERS INTO NOT MORE THAN ONE AGREEMENT IN
ANY CALENDAR YEAR FOR THE TRANSFER OF LIFE INSURANCE POLICIES OR CERTIFICATES
FOR ANY VALUE
LESS THAN THE EXPECTED DEATH BENEFIT.
(F) "VIATICAL SETTLEMENT REPRESENTATIVE" MEANS AN APPOINTED AGENT
OF A LICENSED VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER, AS
APPLICABLE, THAT ACTS OR AIDS IN ANY MANNER IN THE SOLICITATION OF A VIATICAL
SETTLEMENT. "VIATICAL SETTLEMENT REPRESENTATIVE" DOES NOT INCLUDE ANY OF THE
FOLLOWING:
(1) AN ATTORNEY, A CERTIFIED PUBLIC ACCOUNTANT, A FINANCIAL PLANNER, OR
ANY OTHER PERSON
EXERCISING A POWER OF ATTORNEY GRANTED BY A VIATOR;
(2) ANY PERSON THAT IS RETAINED TO REPRESENT A VIATOR AND WHOSE
COMPENSATION IS PAID BY OR AT THE DIRECTION OF THE VIATOR, REGARDLESS OF
WHETHER THE VIATICAL SETTLEMENT IS CONSUMMATED.
(G) "VIATICATED POLICY" MEANS A LIFE INSURANCE POLICY OR
CERTIFICATE THAT HAS BEEN ACQUIRED BY A VIATICAL SETTLEMENT PROVIDER, OR BY A
PERSON DESIGNATED BY THE VIATICAL SETTLEMENT PROVIDER, PURSUANT TO A VIATICAL
SETTLEMENT CONTRACT.
(H) "VIATOR" MEANS THE OWNER OF A LIFE INSURANCE POLICY OR A
CERTIFICATE HOLDER UNDER A GROUP POLICY INSURING THE LIFE OF AN INDIVIDUAL
WITH A TERMINAL OR CHRONIC ILLNESS OR CONDITION, WHO ENTERS OR SEEKS TO ENTER
INTO A VIATICAL SETTLEMENT CONTRACT.
Sec. 3916.02. NO PERSON SHALL ACT AS A VIATICAL SETTLEMENT PROVIDER,
VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER WITHOUT
FIRST
HAVING OBTAINED A LICENSE FROM THE SUPERINTENDENT OF INSURANCE.
Sec. 3916.03. (A) AN APPLICANT FOR A LICENSE AS A VIATICAL
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL
SETTLEMENT
BROKER SHALL SUBMIT AN APPLICATION FOR THE LICENSE IN A MANNER PRESCRIBED BY
THE SUPERINTENDENT OF INSURANCE. THE APPLICATION SHALL BE ACCOMPANIED BY A FEE
ESTABLISHED BY THE SUPERINTENDENT BY RULE ADOPTED IN ACCORDANCE WITH
CHAPTER 119. of the Revised Code.
(B) THE SUPERINTENDENT SHALL ISSUE TO AN APPLICANT A LICENSE THAT
STATES IN SUBSTANCE THAT THE PERSON IS AUTHORIZED TO ACT AS A VIATICAL
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT
BROKER, AS APPLICABLE, IF BOTH OF THE FOLLOWING APPLY:
(1) THE APPLICANT PROVIDES A DETAILED PLAN OF OPERATION AND, IF THE
APPLICANT IS A LEGAL ENTITY, A CERTIFICATE OF GOOD STANDING FROM THE SECRETARY
OF STATE OR OTHER PROOF SATISFACTORY TO THE SUPERINTENDENT.
(2) THE SUPERINTENDENT FINDS ALL OF THE FOLLOWING:
(a) THE APPLICANT IS COMPETENT AND TRUSTWORTHY AND INTENDS TO ACT
IN GOOD FAITH IN THE CAPACITY OF A VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER, AS APPLICABLE.
(b) THE APPLICANT HAS A GOOD BUSINESS REPUTATION AND HAS HAD
EXPERIENCE, TRAINING, OR EDUCATION SO AS TO BE QUALIFIED TO ACT IN THE
CAPACITY OF A VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT
REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER, AS APPLICABLE.
(C) AN APPLICANT SHALL PROVIDE ALL INFORMATION REQUESTED BY THE
SUPERINTENDENT. THE SUPERINTENDENT MAY, AT ANY TIME, REQUIRE AN APPLICANT TO
FULLY DISCLOSE THE IDENTITY OF ALL STOCKHOLDERS, PARTNERS, OFFICERS, MEMBERS,
AND EMPLOYEES, AND MAY, IN THE EXERCISE OF THE SUPERINTENDENT'S DISCRETION,
REFUSE TO ISSUE A LICENSE TO A LEGAL ENTITY IF THE SUPERINTENDENT IS NOT
SATISFIED THAT EACH OFFICER, EMPLOYEE, STOCKHOLDER, PARTNER, OR MEMBER WHO MAY
MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT MEETS THE STANDARDS SET FORTH IN
THIS CHAPTER.
(D) A LICENSE ISSUED TO A LEGAL ENTITY DOES NOT AUTHORIZE ANY
MEMBER, OFFICER, OR EMPLOYEE TO ACT AS A VIATICAL SETTLEMENT PROVIDER,
VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER, AS
APPLICABLE, UNDER THE LICENSE. EACH MEMBER, OFFICER, AND EMPLOYEE INVOLVED IN
A VIATICAL SETTLEMENT TRANSACTION SHALL BE LICENSED UNDER THIS CHAPTER, UNLESS
THEY PERFORM ONLY CLERICAL OR MINISTERIAL DUTIES.
(E) A LICENSE AS A VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER MAY, IN THE
DISCRETION OF THE SUPERINTENDENT AND THE PAYMENT OF A RENEWAL FEE ESTABLISHED
BY THE SUPERINTENDENT BY RULE ADOPTED IN ACCORDANCE WITH CHAPTER 119.
of the Revised Code, BE CONTINUED PAST THE LAST DAY OF FEBRUARY NEXT AFTER ITS ISSUE
AND AFTER THE LAST DAY OF FEBRUARY IN EACH SUCCEEDING YEAR. FAILURE
TO PAY THE RENEWAL FEE BY THE REQUIRED DATE RESULTS IN THE EXPIRATION OF THE
LICENSE.
(F) THE SUPERINTENDENT SHALL NOT ISSUE A LICENSE TO A NONRESIDENT
APPLICANT, UNLESS A WRITTEN DESIGNATION OF AN AGENT FOR SERVICE OF PROCESS IS
FILED AND MAINTAINED WITH THE SUPERINTENDENT.
(G) ANY FEE COLLECTED UNDER THIS SECTION SHALL BE PAID INTO THE
STATE TREASURY TO THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING FUND
CREATED BY SECTION 3901.021 of the Revised Code.
Sec. 3916.05. (A) A VIATICAL SETTLEMENT REPRESENTATIVE SHALL NOT
SOLICIT A VIATICAL SETTLEMENT CONTRACT WITHOUT FIRST OBTAINING AN APPOINTMENT
FROM A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER.
(B) A VIATICAL SETTLEMENT REPRESENTATIVE SHALL NOT REPRESENT
BOTH THE VIATICAL SETTLEMENT PROVIDER AND THE VIATICAL SETTLEMENT BROKER WITH
RESPECT TO THE SAME VIATOR.
Sec. 3916.07. (A) IF A VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT BROKER, OR VIATICAL SETTLEMENT REPRESENTATIVE SUSPECTS ANOTHER
VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT BROKER, OR VIATICAL SETTLEMENT REPRESENTATIVE OF FRAUD,
FORGERY, MISREPRESENTATION, THEFT, CONVERSION, ANY OTHER CULPABLE
MISAPPROPRIATION, OR ANY VIOLATION OF TITLE XXXIX OF THE
REVISED
CODE, THE VIATICAL SETTLEMENT
PROVIDER, VIATICAL SETTLEMENT BROKER, OR VIATICAL SETTLEMENT
REPRESENTATIVE PROMPTLY SHALL NOTIFY THE SUPERINTENDENT OF
INSURANCE OF THE SUSPICION. THE NOTICE SHALL INCLUDE A COMPLETE
STATEMENT OF THE FACTS AND THE REASONS THAT GAVE RISE TO THE
SUSPICION.
(B) IN THE ABSENCE OF FRAUD OR BAD FAITH, A VIATICAL SETTLEMENT
PROVIDER, VIATICAL SETTLEMENT BROKER, OR VIATICAL SETTLEMENT REPRESENTATIVE IS
IMMUNE FROM ANY CIVIL LIABILITY THAT OTHERWISE MIGHT BE
IMPOSED AS A RESULT OF ANY ACTION TAKEN BY THE VIATICAL SETTLEMENT
PROVIDER, VIATICAL SETTLEMENT BROKER, OR VIATICAL SETTLEMENT
REPRESENTATIVE TO COMPLY WITH DIVISION (A) OF THIS SECTION.
Sec. 3916.08. IRRESPECTIVE OF THE MANNER IN WHICH THE VIATICAL SETTLEMENT
BROKER IS COMPENSATED, A VIATICAL SETTLEMENT BROKER IS DEEMED TO REPRESENT
ONLY THE VIATOR AND OWES A FIDUCIARY DUTY TO THE VIATOR TO ACT ACCORDING TO
THE VIATOR'S INSTRUCTIONS AND IN THE BEST INTEREST OF THE VIATOR.
Sec. 3916.10. (A) A PERSON SHALL NOT USE A VIATICAL SETTLEMENT
CONTRACT FORM OR PROVIDE A DISCLOSURE STATEMENT FORM TO A VIATOR IN THIS STATE
UNLESS THE VIATICAL SETTLEMENT CONTRACT FORM OR THE DISCLOSURE STATEMENT FORM
IS FILED WITH AND APPROVED BY THE SUPERINTENDENT
OF
INSURANCE. THE SUPERINTENDENT SHALL DISAPPROVE A VIATICAL SETTLEMENT CONTRACT
FORM OR A DISCLOSURE STATEMENT FORM IF, IN THE SUPERINTENDENT'S OPINION, THE
VIATICAL SETTLEMENT CONTRACT
FORM, THE DISCLOSURE STATEMENT FORM, OR ANY PROVISION CONTAINED THEREIN IS
UNREASONABLE, CONTRARY TO THE
INTERESTS OF THE PUBLIC, OR OTHERWISE MISLEADING OR UNFAIR TO THE VIATOR.
(B) THE SUPERINTENDENT MAY ADOPT RULES IN ACCORDANCE WITH
CHAPTER 119. of the Revised Code TO ESTABLISH REASONABLE FEES FOR ANY SERVICE OR
TRANSACTION PERFORMED BY THE DEPARTMENT OF INSURANCE PURSUANT TO DIVISION
(A) OF THIS SECTION. ANY FEE COLLECTED PURSUANT TO THOSE RULES SHALL
BE PAID INTO THE STATE TREASURY TO THE CREDIT OF THE DEPARTMENT OF INSURANCE
OPERATING FUND CREATED BY SECTION 3901.021 of the Revised Code.
Sec. 3916.12. (A) A VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER SHALL DISCLOSE THE
FOLLOWING TO A VIATOR NO LATER THAN THE TIME OF APPLICATION:
(1) POSSIBLE ALTERNATIVES TO VIATICAL SETTLEMENT CONTRACTS FOR INDIVIDUALS
WITH CATASTROPHIC, LIFE-THREATENING, OR CHRONIC ILLNESSES, INCLUDING ANY
ACCELERATED DEATH BENEFITS OFFERED UNDER THE VIATOR'S LIFE INSURANCE POLICY OR
CERTIFICATE;
(2) THAT SOME OR ALL OF THE PROCEEDS OF THE VIATICAL SETTLEMENT MAY BE
SUBJECT TO FEDERAL INCOME TAXATION AND STATE FRANCHISE AND INCOME TAXATION,
AND THAT ASSISTANCE SHOULD BE SOUGHT FROM A PROFESSIONAL TAX ADVISOR;
(3) THAT THE PROCEEDS OF THE VIATICAL SETTLEMENT COULD BE SUBJECT TO THE
CLAIMS OF CREDITORS;
(4) THAT RECEIPT OF THE PROCEEDS OF THE VIATICAL SETTLEMENT MAY ADVERSELY
AFFECT THE VIATOR'S ELIGIBILITY FOR MEDICAL ASSISTANCE UNDER CHAPTER
5111. of the Revised Code OR OTHER GOVERNMENT BENEFITS OR ENTITLEMENTS, AND THAT ADVICE
SHOULD BE OBTAINED FROM THE APPROPRIATE GOVERNMENT AGENCIES;
(5) THAT THE VIATOR HAS A RIGHT TO RESCIND THE VIATICAL SETTLEMENT
CONTRACT FOR AT LEAST FIFTEEN DAYS AFTER THE VIATOR RECEIVES THE VIATICAL
SETTLEMENT PROCEEDS;
(6) THAT FUNDS WILL BE SENT TO THE VIATOR WITHIN TWO BUSINESS DAYS AFTER
THE VIATICAL SETTLEMENT PROVIDER HAS RECEIVED ACKNOWLEDGMENT FROM THE INSURER
OR GROUP ADMINISTRATOR THAT OWNERSHIP OF THE POLICY OR INTEREST IN THE
CERTIFICATE HAS BEEN TRANSFERRED AND THAT THE BENEFICIARY HAS BEEN DESIGNATED
PURSUANT TO THE VIATICAL SETTLEMENT CONTRACT;
(7) THAT ENTERING INTO A VIATICAL SETTLEMENT CONTRACT MAY CAUSE OTHER
RIGHTS OR BENEFITS, INCLUDING CONVERSION RIGHTS AND WAIVER OF PREMIUM BENEFITS
THAT MAY EXIST UNDER THE POLICY OR CERTIFICATE, TO BE FORFEITED BY THE VIATOR
AND THAT ASSISTANCE SHOULD BE SOUGHT FROM A FINANCIAL ADVISOR.
(B) A VIATICAL SETTLEMENT PROVIDER SHALL DISCLOSE THE FOLLOWING
TO A VIATOR PRIOR TO THE DATE THE VIATICAL SETTLEMENT CONTRACT IS SIGNED BY
ALL THE NECESSARY PARTIES:
(1) THE AFFILIATION, IF ANY, BETWEEN THE VIATICAL SETTLEMENT PROVIDER AND
THE ISSUER OF THE INSURANCE POLICY OR CERTIFICATE TO BE VIATICATED;
(2) IF AN INSURANCE POLICY OR CERTIFICATE TO BE VIATICATED HAS BEEN ISSUED
AS A JOINT
POLICY OR CERTIFICATE OR INVOLVES FAMILY RIDERS OR ANY COVERAGE OF A LIFE
OTHER THAN THE
INSURED, THE POSSIBLE LOSS OF COVERAGE ON THE OTHER LIVES AND THAT ADVICE
SHOULD BE SOUGHT FROM THE VIATOR'S INSURANCE PRODUCER OR THE COMPANY ISSUING
THE POLICY OR CERTIFICATE;
(3) THE DOLLAR AMOUNT OF THE CURRENT DEATH BENEFIT PAYABLE TO THE VIATICAL
SETTLEMENT PROVIDER UNDER THE POLICY OR CERTIFICATE, ALONG WITH THE
AVAILABILITY OF ANY ADDITIONAL GUARANTEED INSURANCE BENEFITS, THE DOLLAR
AMOUNT OF ANY ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS UNDER THE POLICY OR
CERTIFICATE, AND THE VIATICAL SETTLEMENT PROVIDER'S INTEREST IN THOSE
BENEFITS.
Sec. 3916.13. A VIATICAL SETTLEMENT PROVIDER ENTERING INTO A VIATICAL
SETTLEMENT CONTRACT SHALL FIRST OBTAIN ALL OF THE FOLLOWING:
(A) IF THE VIATOR IS THE INSURED, A WRITTEN STATEMENT FROM AN
ATTENDING PHYSICIAN THAT THE VIATOR IS OF SOUND MIND AND UNDER NO CONSTRAINT
OR UNDUE INFLUENCE TO ENTER INTO A VIATICAL SETTLEMENT CONTRACT. AS USED IN
THIS DIVISION, "PHYSICIAN" MEANS A PERSON AUTHORIZED UNDER CHAPTER
4731. of the Revised Code TO PRACTICE MEDICINE AND SURGERY OR OSTEOPATHIC MEDICINE AND
SURGERY.
(B) A WITNESSED DOCUMENT IN WHICH THE VIATOR, IN WRITING,
CONSENTS TO THE VIATICAL SETTLEMENT CONTRACT, ACKNOWLEDGES THAT THE INSURED
HAS A TERMINAL OR CHRONIC ILLNESS OR CONDITION, REPRESENTS THAT THE VIATOR HAS
A FULL AND COMPLETE UNDERSTANDING OF THE VIATICAL SETTLEMENT CONTRACT AND OF
THE BENEFITS OF THE LIFE INSURANCE POLICY OR CERTIFICATE, AND ACKNOWLEDGES
THAT THE VIATOR
HAS ENTERED INTO THE VIATICAL SETTLEMENT CONTRACT FREELY AND VOLUNTARILY;
(C) A DOCUMENT IN WHICH THE INSURED CONSENTS IN WRITING TO THE
RELEASE OF THE INSURED'S MEDICAL RECORDS TO A VIATICAL SETTLEMENT PROVIDER OR
VIATICAL SETTLEMENT BROKER.
Sec. 3916.15. EACH VIATICAL SETTLEMENT CONTRACT ENTERED INTO IN THIS STATE
SHALL PROVIDE THE VIATOR WITH AN UNCONDITIONAL RIGHT TO RESCIND THE CONTRACT
FOR AT LEAST FIFTEEN DAYS AFTER THE RECEIPT OF THE VIATICAL SETTLEMENT
PROCEEDS. IF THE INSURED DIES DURING THE RESCISSION PERIOD, THE VIATICAL
SETTLEMENT CONTRACT IS DEEMED TO HAVE BEEN RESCINDED, SUBJECT TO REPAYMENT OF
ALL VIATICAL SETTLEMENT PROCEEDS TO THE VIATICAL SETTLEMENT PROVIDER.
IF A VIATICAL SETTLEMENT
CONTRACT IS RESCINDED BY THE VIATOR PURSUANT TO THIS SECTION,
OWNERSHIP OF THE INSURANCE POLICY OR CERTIFICATE REVERTS TO THE
VIATOR OR TO THE VIATOR'S ESTATE IF THE VIATOR IS DECEASED,
IRRESPECTIVE OF ANY TRANSFER OF OWNERSHIP OF THE POLICY OR
CERTIFICATE BY THE VIATOR, VIATICAL SETTLEMENT PROVIDER, OR ANY
OTHER PERSON.
Sec. 3916.17. (A) A VIATICAL SETTLEMENT PROVIDER, IMMEDIATELY
UPON RECEIPT OF DOCUMENTS TO EFFECT THE TRANSFER OF THE INSURANCE POLICY OR
CERTIFICATE,
SHALL PAY THE PROCEEDS OF THE VIATICAL SETTLEMENT TO AN ESCROW OR TRUST
ACCOUNT IN A STATE OR FEDERALLY CHARTERED FINANCIAL INSTITUTION WHOSE DEPOSITS
ARE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. THE ACCOUNT SHALL
BE MANAGED BY A TRUSTEE OR ESCROW AGENT INDEPENDENT OF THE PARTIES TO THE
CONTRACT. THE TRUSTEE OR ESCROW AGENT SHALL TRANSFER THE PROCEEDS TO THE
VIATOR IMMEDIATELY UPON THE VIATICAL SETTLEMENT PROVIDER'S RECEIPT OF
ACKNOWLEDGMENT OF THE TRANSFER OF THE INSURANCE POLICY OR CERTIFICATE.
(B) FAILURE TO TRANSFER THE PROCEEDS TO THE VIATOR WITHIN TWO
BUSINESS DAYS AFTER THE VIATICAL SETTLEMENT PROVIDER RECEIVES ACKNOWLEDGMENT
OF THE TRANSFER OF THE INSURANCE POLICY OR CERTIFICATE RENDERS THE VIATICAL
SETTLEMENT
CONTRACT VOIDABLE BY THE VIATOR FOR LACK OF CONSIDERATION UNTIL THE TIME
CONSIDERATION IS TENDERED TO AND ACCEPTED BY THE VIATOR.
IF A VIATICAL SETTLEMENT
CONTRACT IS VOIDED BY THE VIATOR PURSUANT TO THIS DIVISION, OWNERSHIP OF
THE INSURANCE POLICY OR CERTIFICATE REVERTS TO THE VIATOR OR TO
THE VIATOR'S ESTATE IF THE VIATOR IS DECEASED, IRRESPECTIVE OF ANY
TRANSFER OF OWNERSHIP OF THE POLICY OR CERTIFICATE BY THE VIATOR,
VIATICAL SETTLEMENT PROVIDER, OR ANY OTHER PERSON.
Sec. 3916.19. AFTER A VIATICAL SETTLEMENT HAS OCCURRED, THE VIATICAL
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL
SETTLEMENT BROKER SHALL NOT CONTACT THE INSURED FOR THE PURPOSE OF DETERMINING
THE INSURED'S HEALTH STATUS MORE THAN ONCE EVERY THREE MONTHS IF THE INSURED
HAS A LIFE EXPECTANCY OF MORE THAN ONE YEAR, OR MORE THAN ONCE PER MONTH IF
THE INSURED HAS A LIFE EXPECTANCY OF ONE YEAR OR LESS. THE VIATICAL
SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL EXPLAIN THE PROCEDURE
FOR MAKING THESE CONTACTS AT THE TIME THE VIATICAL SETTLEMENT CONTRACT IS
ENTERED INTO.
THE LIMITATIONS SET FORTH IN THIS SECTION DO NOT APPLY TO CONTACTS MADE
WITH AN INSURED UNDER A VIATICATED POLICY FOR PURPOSES OTHER THAN TO DETERMINE
THE INSURED'S HEALTH STATUS.
Sec. 3916.21. (A) EACH VIATICAL SETTLEMENT PROVIDER SHALL
MAINTAIN RECORDS OF ALL TRANSACTIONS OF VIATICAL SETTLEMENT CONTRACTS,
INCLUDING THE NAME, INDIVIDUAL IDENTIFICATION, AND MEDICAL RECORD OF THE
VIATOR. SUCH RECORDS SHALL BE MADE AVAILABLE TO THE SUPERINTENDENT OF
INSURANCE FOR INSPECTION DURING REASONABLE BUSINESS HOURS.
(B) A VIATICAL SETTLEMENT PROVIDER SHALL MAINTAIN THE RECORD OF A
VIATICAL SETTLEMENT FOR AT LEAST FIVE YEARS AFTER THE DEATH OF THE INSURED.
Sec. 3916.22. EACH VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT
REPRESENTATIVE, AND VIATICAL SETTLEMENT BROKER LICENSED UNDER THIS CHAPTER
SHALL FILE WITH THE SUPERINTENDENT OF INSURANCE, ON OR BEFORE THE FIRST DAY OF
MARCH, AN ANNUAL STATEMENT CONTAINING THE INFORMATION REQUIRED BY THE
SUPERINTENDENT BY RULE ADOPTED IN ACCORDANCE WITH CHAPTER 119. of the Revised Code.
Sec. 3916.24. EXCEPT AS OTHERWISE PERMITTED OR REQUIRED BY LAW, A VIATICAL
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT REPRESENTATIVE, VIATICAL SETTLEMENT
BROKER, INSURANCE COMPANY, INSURANCE AGENT, INSURANCE BROKER, INFORMATION
BUREAU, RATING AGENCY OR COMPANY, OR ANY OTHER PERSON WITH ACTUAL KNOWLEDGE OF
A VIATOR'S IDENTITY, SHALL NOT DISCLOSE THAT IDENTITY AS A VIATOR, INCLUDING
THE VIATOR'S NAME, INDIVIDUAL IDENTIFICATION DATA, OR MEDICAL RECORD, UNLESS
ANY OF THE FOLLOWING APPLY:
(A) THE DISCLOSURE IS NECESSARY TO EFFECT A VIATICAL SETTLEMENT
BETWEEN THE VIATOR AND A VIATICAL SETTLEMENT PROVIDER, AND THE VIATOR HAS
PROVIDED PRIOR WRITTEN CONSENT TO THE DISCLOSURE.
(B) THE DISCLOSURE IS PROVIDED IN RESPONSE TO AN INVESTIGATION OR
EXAMINATION BY THE SUPERINTENDENT OF INSURANCE OR BY ANY OTHER GOVERNMENTAL
OFFICER OR AGENCY.
(C) THE DISCLOSURE IS A TERM OF, OR CONDITION TO, THE TRANSFER OF
A VIATICATED POLICY BY ONE VIATICAL SETTLEMENT PROVIDER TO ANOTHER VIATICAL
SETTLEMENT PROVIDER.
Sec. 3916.26. (A) THE SUPERINTENDENT OF INSURANCE, OR ANY PERSON
APPOINTED BY THE SUPERINTENDENT, MAY EXAMINE, WHENEVER THE SUPERINTENDENT
CONSIDERS IT REASONABLY NECESSARY TO PROTECT THE INTERESTS OF THE PUBLIC, THE
BUSINESS AND AFFAIRS OF ANY VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT
REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER LICENSED UNDER THIS CHAPTER, OR
ANY APPLICANT FOR A LICENSE. THE SUPERINTENDENT MAY ORDER ANY LICENSEE OR
APPLICANT TO PRODUCE ANY RECORD, BOOK, FILE, OR OTHER INFORMATION REASONABLY
NECESSARY TO ASCERTAIN WHETHER THE LICENSEE OR APPLICANT IS ACTING OR HAS
ACTED IN VIOLATION OF THE LAW OR IN A MANNER OTHERWISE CONTRARY TO THE
INTERESTS OF THE PUBLIC.
(B) THE LICENSEE OR APPLICANT SHALL PAY TO THE SUPERINTENDENT ALL
COSTS, ASSESSMENTS, FORFEITURES, OR FINES INCURRED IN CONDUCTING AN
EXAMINATION UNDER THIS SECTION. THE SUPERINTENDENT
SHALL DEPOSIT THE MONEY INTO THE STATE TREASURY
TO THE CREDIT OF THE DEPARTMENT OF INSURANCE OPERATING FUND CREATED BY SECTION
3901.021 of the Revised Code.
(C) THE WORK PAPERS OF THE SUPERINTENDENT, OR OF ANY PERSON
APPOINTED BY THE SUPERINTENDENT, RESULTING FROM THE CONDUCT OF AN EXAMINATION
MADE UNDER THIS SECTION, ARE CONFIDENTIAL AND ARE NOT A PUBLIC RECORD AS
DEFINED IN SECTION 149.43 of the Revised Code. THE ORIGINAL WORK PAPERS AND ANY COPIES OF
THEM ARE NOT SUBJECT TO SUBPOENA AND SHALL NOT BE MADE PUBLIC BY THE
SUPERINTENDENT OR ANY OTHER PERSON. HOWEVER, THE ORIGINAL WORK PAPERS AND ANY
COPIES OF THEM MAY BE RELEASED BY THE SUPERINTENDENT TO THE INSURANCE
REGULATORY AUTHORITY OF ANY OTHER STATE IF THAT AUTHORITY AGREES TO MAINTAIN
THE CONFIDENTIALITY OF THE WORK PAPERS OR COPIES AND IF THE WORK PAPERS AND
COPIES ARE NOT PUBLIC RECORDS UNDER THE LAWS OF THAT STATE.
(D) ANY NAME, INDIVIDUAL IDENTIFICATION DATA, OR MEDICAL RECORD
OF A VIATOR THAT IS OBTAINED BY OR DISCLOSED TO THE SUPERINTENDENT OR ANY
OTHER PERSON IN THE COURSE OF AN EXAMINATION MADE UNDER THIS SECTION IS
CONFIDENTIAL AND IS NOT A PUBLIC RECORD AS DEFINED IN SECTION 149.43 of the Revised Code.
THE SUPERINTENDENT OR OTHER PERSON SHALL NOT DISCLOSE SUCH INFORMATION, EXCEPT
IN THE FURTHERANCE OF THE SUPERINTENDENT'S OFFICIAL DUTIES, OR TO ANOTHER
REGULATOR OR A LAW ENFORCEMENT AGENCY.
Sec. 3916.28. (A) THE SUPERINTENDENT OF INSURANCE MAY SUSPEND,
REVOKE, OR REFUSE TO RENEW THE LICENSE OF A VIATICAL SETTLEMENT PROVIDER,
VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL SETTLEMENT BROKER, IF THE
SUPERINTENDENT FINDS THAT ANY OF THE FOLLOWING APPLY:
(1) THERE WAS A MATERIAL MISREPRESENTATION IN THE APPLICATION FOR THE
LICENSE.
(2) THE LICENSEE OR ANY OFFICER, PARTNER, MEMBER, OR KEY MANAGEMENT
PERSONNEL HAS BEEN CONVICTED OF FRAUDULENT OR DISHONEST PRACTICES, IS SUBJECT
TO A FINAL ADMINISTRATIVE ACTION IN ANOTHER STATE, OR IS OTHERWISE SHOWN TO BE
UNTRUSTWORTHY OR INCOMPETENT.
(3) THE VIATICAL SETTLEMENT PROVIDER MADE AN UNREASONABLE PAYMENT TO A
VIATOR.
(4) THE LICENSEE HAS BEEN CONVICTED OF OR HAS PLEADED GUILTY OR NO CONTEST
TO A FELONY, A CRIME INVOLVING MORAL
TURPITUDE, OR A MISDEMEANOR INVOLVING FRAUD.
(5) THE VIATICAL SETTLEMENT PROVIDER HAS USED A VIATICAL
SETTLEMENT CONTRACT FORM THAT HAS NOT BEEN APPROVED UNDER THIS CHAPTER.
(6) THE VIATICAL SETTLEMENT PROVIDER HAS FAILED TO HONOR CONTRACTUAL
OBLIGATIONS SET OUT IN A VIATICAL SETTLEMENT CONTRACT.
(7) THE LICENSEE NO LONGER MEETS THE REQUIREMENTS FOR INITIAL LICENSURE.
(8) THE VIATICAL SETTLEMENT PROVIDER HAS ASSIGNED, TRANSFERRED, OR PLEDGED
A VIATICATED POLICY TO A PERSON THAT IS NOT A VIATICAL SETTLEMENT PROVIDER
LICENSED IN THIS STATE OR A FINANCING ENTITY.
(9) THE LICENSEE HAS VIOLATED ANY PROVISION OF THIS CHAPTER OR ANY RULE
ADOPTED UNDER THIS CHAPTER.
(10) THE LICENSEE HAS COMMITTED ANY COERCIVE, FRAUDULENT, OR DISHONEST
ACT, OR MADE ANY UNTRUE, DECEPTIVE, OR MISLEADING STATEMENT, IN CONNECTION
WITH A VIATICAL TRANSACTION OR A PROPOSED VIATICAL TRANSACTION.
(B) BEFORE THE SUPERINTENDENT REFUSES TO ISSUE A LICENSE UNDER
THIS CHAPTER, OR SUSPENDS, REVOKES, OR REFUSES TO RENEW THE LICENSE OF A
VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT REPRESENTATIVE, OR VIATICAL
SETTLEMENT BROKER, THE SUPERINTENDENT SHALL PROVIDE THE LICENSEE OR APPLICANT
WITH NOTICE AND AN OPPORTUNITY FOR HEARING AS PROVIDED IN CHAPTER
119. of the Revised Code, EXCEPT AS FOLLOWS:
(1)(a) ANY NOTICE OF OPPORTUNITY FOR HEARING, THE HEARING
OFFICER'S FINDINGS AND RECOMMENDATIONS, OR THE SUPERINTENDENT'S ORDER SHALL BE
SERVED BY CERTIFIED MAIL AT THE LAST KNOWN ADDRESS OF THE LICENSEE OR
APPLICANT. SERVICE SHALL BE EVIDENCED BY RETURN RECEIPT SIGNED BY ANY PERSON.
FOR PURPOSES OF THIS SECTION, THE "LAST KNOWN ADDRESS" IS THE ADDRESS THAT
APPEARS IN THE LICENSING RECORDS OF THE DEPARTMENT OF INSURANCE.
(b) IF THE CERTIFIED MAIL ENVELOPE IS RETURNED WITH AN
ENDORSEMENT SHOWING THAT SERVICE WAS REFUSED, OR THAT THE ENVELOPE WAS
UNCLAIMED, THE NOTICE AND ALL SUBSEQUENT NOTICES REQUIRED BY CHAPTER
119. of the Revised Code MAY BE SERVED BY ORDINARY MAIL TO THE LAST KNOWN ADDRESS OF THE
LICENSEE OR APPLICANT. THE MAILING SHALL BE EVIDENCED BY A CERTIFICATE OF
MAILING. SERVICE IS DEEMED COMPLETE AS OF THE DATE OF SUCH CERTIFICATE
PROVIDED THAT THE ORDINARY MAIL ENVELOPE IS NOT RETURNED BY THE POSTAL
AUTHORITIES WITH AN ENDORSEMENT SHOWING FAILURE OF DELIVERY. THE TIME PERIOD
IN WHICH TO REQUEST A HEARING, AS PROVIDED IN CHAPTER 119. of the Revised Code,
BEGINS TO RUN ON THE DATE OF MAILING.
(c) IF SERVICE BY ORDINARY MAIL FAILS, THE SUPERINTENDENT MAY
CAUSE A SUMMARY OF THE SUBSTANTIVE PROVISIONS OF THE NOTICE TO BE PUBLISHED
ONCE A WEEK FOR THREE CONSECUTIVE WEEKS IN A NEWSPAPER OF GENERAL CIRCULATION
IN THE COUNTY WHERE THE LAST KNOWN PLACE OF RESIDENCE OR BUSINESS OF THE
LICENSEE OR APPLICANT
IS LOCATED. THE NOTICE IS CONSIDERED SERVED ON THE DATE OF THE THIRD
PUBLICATION.
(d) ANY NOTICE REQUIRED TO BE SERVED UNDER CHAPTER 119.
of the Revised Code SHALL ALSO BE SERVED UPON THE ATTORNEY OF THE LICENSEE OR APPLICANT BY
ORDINARY MAIL IF THE
ATTORNEY HAS ENTERED AN APPEARANCE IN THE MATTER.
(e) THE SUPERINTENDENT MAY, AT ANY TIME, PERFECT SERVICE ON A
LICENSEE OR APPLICANT BY PERSONAL DELIVERY OF THE NOTICE BY AN EMPLOYEE OF THE
DEPARTMENT.
(f) NOTICES REGARDING THE SCHEDULING OF HEARINGS AND ALL OTHER
MATTERS NOT DESCRIBED IN DIVISION (B)(1)(a) OF THIS
SECTION SHALL BE SENT BY ORDINARY MAIL TO THE LICENSEE OR APPLICANT AND TO THE
ATTORNEY OF THE LICENSEE OR APPLICANT.
(2) ANY SUBPOENA FOR THE APPEARANCE OF A WITNESS OR THE PRODUCTION OF
DOCUMENTS OR OTHER EVIDENCE AT A HEARING, OR FOR THE PURPOSE OF TAKING
TESTIMONY FOR USE AT A HEARING, SHALL BE SERVED BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, BY AN ATTORNEY OR BY AN EMPLOYEE OF THE DEPARTMENT
DESIGNATED BY THE SUPERINTENDENT. SUCH SUBPOENAS SHALL BE ENFORCED IN THE
MANNER PROVIDED IN SECTION 119.09 of the Revised Code. NOTHING IN THIS SECTION SHALL BE
CONSTRUED AS LIMITING THE SUPERINTENDENT'S OTHER STATUTORY POWERS TO ISSUE
SUBPOENAS.
Sec. 3916.30. (A) THE SUPERINTENDENT OF INSURANCE MAY ADOPT RULES
IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE
FOR PURPOSES OF IMPLEMENTING THIS CHAPTER, INCLUDING RULES GOVERNING THE
RELATIONSHIP AND RESPONSIBILITIES OF BOTH INSURERS AND VIATICAL SETTLEMENT
PROVIDERS, VIATICAL SETTLEMENT REPRESENTATIVES, AND VIATICAL SETTLEMENT
BROKERS
DURING THE VIATICATION OF A LIFE INSURANCE POLICY OR CERTIFICATE.
(B) THE SUPERINTENDENT MAY ALSO DO THE FOLLOWING:
(1) ESTABLISH STANDARDS FOR EVALUATING THE REASONABLENESS OF PAYMENTS
UNDER
VIATICAL SETTLEMENT CONTRACTS. THIS AUTHORITY INCLUDES, BUT IS NOT LIMITED
TO,
THE REGULATION OF DISCOUNT RATES USED TO DETERMINE THE AMOUNT PAID IN EXCHANGE
FOR THE ASSIGNMENT, TRANSFER, SALE, DEVISE, OR BEQUEST OF A BENEFIT UNDER A
LIFE INSURANCE POLICY OR CERTIFICATE.
(2) ESTABLISH APPROPRIATE LICENSING REQUIREMENTS AND STANDARDS FOR
CONTINUED LICENSURE FOR VIATICAL SETTLEMENT PROVIDERS, VIATICAL SETTLEMENT
REPRESENTATIVES, AND VIATICAL SETTLEMENT BROKERS;
(3) REQUIRE A BOND OR OTHER MECHANISM FOR ENSURING THE FINANCIAL
ACCOUNTABILITY OF VIATICAL SETTLEMENT PROVIDERS.
Sec. 3916.32. (A) NO PERSON SHALL FAIL TO COMPLY WITH THIS
CHAPTER.
(B) WHOEVER VIOLATES DIVISION (A) OF THIS SECTION IS
DEEMED TO HAVE ENGAGED IN AN UNFAIR AND DECEPTIVE ACT OR PRACTICE IN THE
BUSINESS OF INSURANCE UNDER SECTIONS 3901.19 TO 3901.26 OF THE
REVISED CODE.
Sec. 3916.99. WHOEVER VIOLATES SECTION 3916.02 OF THE REVISED
CODE IS GUILTY OF A FELONY OF THE THIRD DEGREE.
Section 2. That existing sections 1707.01,
1707.02, 1707.11, 1707.15, 1707.151, 1707.16, 1707.17, and 1707.23
and sections 1707.432, 1707.433, 1707.434, 1707.435, 1707.436,
1707.437, 1707.438, and 1707.439 of the Revised Code are hereby repealed.
Section 3. Sections 1 and 2 of this act shall take effect six
months after the effective date of this act.
Section 4. Any person that, on the effective date of this act,
transacts business in this state as a viatical settlement
provider, viatical settlement representative, or viatical
settlement broker may continue to do so pending approval of the
person's application for a license, if the person applies for the
license during the six-month period immediately following the
effective date of this act.
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