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H. B. No. 7As IntroducedAs Introduced
125th General Assembly | Regular Session | 2003-2004 |
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REPRESENTATIVE Taylor
A BILL
To amend sections 1701.831, 1707.01, 1707.08, 1707.09, 1707.11, 1707.23, 1707.40, 1707.41,
1707.42, 1707.43, 1707.44, and 2913.02 and to enact
sections 1707.131 and 1707.231 of the Revised Code
to modify the Corporation Law regarding special meetings of shareholders in connection with tender offer, control share acquisition bids; to modify the Securities Law with respect to
securities to which it applies, requirements for registration of securities, the designation of the Secretary of State to receive service of process, the application of remedies under the Securities Law, the
Attorney General's enforcement authority on
behalf of persons injured by a violation,
the statutes of limitations governing an action for
specified violations, and the prohibitions against certain
misleading actions; and to increase the criminal penalty for
certain theft offenses and create a new criminal
aggravated theft offense.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1701.831, 1707.01, 1707.08, 1707.09, 1707.11, 1707.23, 1707.40, 1707.41,
1707.42, 1707.43, 1707.44, and 2913.02 be amended and sections
1707.131 and 1707.231 of the Revised Code be enacted to read as
follows:
Sec. 1701.831. (A) Unless the articles or the regulations
of the issuing public corporation provide that this section does
not apply to control share acquisitions of shares of such
corporation, any control share acquisition of an issuing public
corporation shall be made only with the prior authorization of
the shareholders of such corporation in accordance with this
section. (B) Any person who proposes to make a control share
acquisition shall deliver an acquiring person statement to the
issuing public corporation at the issuing public corporation's
principal executive offices. Such acquiring person statement
shall set forth all of the following: (1) The identity of the acquiring person; (2) A statement that the acquiring person statement is
given pursuant to this section; (3) The number of shares of the issuing public corporation
owned, directly or indirectly, by the acquiring person; (4) The range of voting power, described in division
(Z)(1)(a), (b), or (c) of section 1701.01 of the Revised Code,
under which the proposed control share acquisition would, if
consummated, fall; (5) A description in reasonable detail of the terms of the
proposed control share acquisition; (6) Representations of the acquiring person, together with
a statement in reasonable detail of the facts upon which they are
based, that the proposed control share acquisition, if
consummated, will not be contrary to law, and that the acquiring
person has the financial capacity to make the proposed control
share acquisition. (C)(1) Within ten days after receipt of an acquiring person
statement that complies with division (B) of this section, the
directors of the issuing public corporation shall call a special
meeting of shareholders of the issuing public corporation for the
purpose of voting on the proposed control share acquisition.
Unless Subject to division (C)(2) of this section, unless the acquiring person agrees in writing to another date,
such special meeting of shareholders shall be held within fifty
days after receipt by the issuing public corporation of the
acquiring person statement. If the acquiring person so requests
in writing at the time of delivery of the acquiring person
statement, such special meetings shall be held no sooner than
thirty days after receipt by the issuing public corporation of
the acquiring person statement. Such Subject to division (C)(2) of this section, such special meeting of
shareholders shall be held no later than any other special
meeting of shareholders that is called, after receipt by the
issuing public corporation of the acquiring person statement, in
compliance with this section or section 1701.76, 1701.78, 1701.79, or 1701.83, or
1701.831 of the Revised Code.
(2) If, in connection with a tender offer, an acquiring person increases or decreases the percentage of the class of securities being sought, the consideration offered, or the security dealer's soliciting fee, and the acquiring person is required to hold open the tender offer for at least ten business days from the date that the notice of such change is first published, sent, or given to shareholders pursuant to securities and exchange commission rule 14e-1(b), 17 C.F.R. 240.14e-1(b) promulgated pursuant to section 14(e) of the "Securities Exchange Act of 1934," 82 Stat. 455, 15 U.S.C. 78n(e), then the directors of the issuing public corporation may reschedule the special meeting of shareholders required by division (C)(1) of this section to a date that is not later than the date established by the acquiring person as the closing date of the changed tender offer. (D) Notice of the special meeting of shareholders shall be
given as promptly as reasonably practicable by the issuing public
corporation to all shareholders of record as of the record date
set for such meeting, whether or not entitled to vote thereat at the meeting.
Such The notice shall include or be accompanied by both of the
following: (1) A copy of the acquiring person statement delivered to
the issuing public corporation pursuant to this section; (2) A statement by the issuing public corporation,
authorized by its directors, of its position or recommendation,
or that it is taking no position or making no recommendation,
with respect to the proposed control share acquisition. (E) The acquiring person may make the proposed control
share acquisition if both of the following occur: (1) The shareholders of the issuing public corporation who
hold shares as of the record date of such corporation entitling them to
vote in the
election of directors authorize the acquisition at the
special
meeting held for that purpose at which a quorum is present by an
affirmative vote of a majority of the voting power of such
corporation in the election of directors represented at the
meeting in person or by proxy, and a majority of the portion of
the voting power excluding the voting power of interested
shares represented at the meeting in person or by proxy. A quorum
shall be deemed to be present at the special
meeting if at least a majority of the voting power of the issuing
public corporation in the election of directors is represented at
the
meeting in person or by proxy. (2) The acquisition is consummated, in accordance with
the terms so authorized, no later than three hundred sixty days
following shareholder authorization of the control share
acquisition. (F) Except as expressly provided in this section, nothing
in this section shall be construed to affect or impair any right,
remedy, obligation, duty, power, or authority of any acquiring
person, any issuing public corporation, the directors of any
acquiring person or issuing public corporation, or any other
person under the laws of this or any other state or of the United
States. (G) If any application of any provision of this section is
for any reason held to be illegal or invalid, the illegality or
invalidity shall not affect any legal and valid provision or
application of this section, and the parts and applications of
this section are severable.
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, or any oral, written, or electronic agreement, understanding, or opportunity, 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; (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)(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
(EE)
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
(EE) 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
(CC)(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
(CC)(2) of this
section
are
the only primary beneficiaries; and all trusts of
which the
natural person or persons referred to in division
(CC)(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
(CC)(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.
(DD) "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. (EE) "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 (FF)
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.
(FF)(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.
(GG)(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. (HH) "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. 1707.08. (A) The
transactions enumerated
in
section
1707.06 of the Revised Code may be consummated on
compliance with
this section
and section 1707.11 of the Revised
Code. (B) A description, verified either by the oath of the
person
individual
filing it or of any
person
individual having knowledge
of the facts, shall
be
filed with the division of securities by
the issuer, or by a
majority of the incorporators of
the issuer
prior to election
of
officers if it is an incorporated issuer, or
by a licensed
dealer,
which description shall be on forms
prescribed by the
division and
shall set forth: (A)(1) The name of the issuer;
(B)(2) A brief description of the securities;
(C)(3) The amount of
the securities to be offered after
the
filing of
the description for sale in this state and, if
all the
securities are not to be offered by the person filing the
description, then the respective amounts to be offered by others,
so far as
those amounts are known, and the names and
addresses of
the other offerors;
(D)(4) A brief statement of the facts which show that the
securities
are the subject matter
of
a transaction enumerated in
section 1707.06 of the Revised
Code;
(E)(5) The price at which the securities are to be offered
for
sale.
Registration by description is completed when the
description, together with
a filing fee
of fifty dollars, in
the
form of cash, check,
or United States postal money order,
is
delivered, or mailed by certified
mail with postage prepaid,
to
the division.
(C) The individual who executes the application for
registration by description on behalf of the applicant shall state
the individual's relationship to the applicant and certify all of
the following:
(1) The individual has executed the application on behalf
of the applicant. (2) The individual is fully authorized to execute and file
the application on behalf of the applicant.
(3) The individual is familiar with the applicant's
application. (4) To the best of the individual's knowledge, information,
and belief, the statements made in the application are true, and
the documents submitted with the application are true copies of
the original documents.
(D) A registration by description is effective seven
business days after the division receives the description on
applicable forms, together with a filing fee of fifty dollars, if
no proceeding is pending under section 1707.13 or 1707.131 of the
Revised Code. However, the division may permit an earlier
effective date by rule or by issuing a certificate of
acknowledgment for the registration by description. (E) In order to correct errors or omissions, a registration
by
description may be amended by the person
who
that originally
filed it,
by the filing, in the same manner as in the case of an
original
registration by description, of an amended registration
by
description or of an amendment of the original registration by
description. (F) When transactions in any securities enumerated in section
1707.06 of the Revised Code have been registered and the fees
prescribed by this section have been paid,
the transactions
may
be consummated so long as
the registration remains in
full
force.
Sec. 1707.09. (A)(1) All securities, except those enumerated
in
section 1707.02
of the Revised Code and those that
are
the
subject matter of a transaction permitted by section
1707.03,
1707.04, or 1707.06 of the Revised Code, shall
be qualified in the
manner provided by
this section before being sold in this state. (2) Applications for
that qualification, on forms prescribed
by
the division of securities, shall be made in writing either by
the
issuer of the securities or by any licensed dealer desiring
to
sell them within this state and shall be signed by the
applicant,
sworn to by any
person
individual having knowledge of the facts
stated in the
application, and filed in the office of the
division. (3) The individual who executes the application for
qualification of securities on behalf of the applicant shall state
the individual's relationship to the applicant and certify that:
the individual has executed the application on behalf of the
applicant; the individual is fully authorized to execute and file
the application on behalf of the applicant; the individual is
familiar with the applicant's application; and to the best of the
individual's knowledge, information, and belief, the statements
made in the application are true, and the documents submitted with
the application are true copies of the original documents. (B) The division shall require the applicant
for
qualification of securities to submit to it
the
following
information: (A)(1) The names and addresses of the directors or trustees
and
of the officers of the issuer, if the issuer is a corporation
or
an unincorporated association; of all the members of the
issuer,
if the
issuer is a limited liability company in which
management
is reserved to its
members; of all the managers of the
issuer, if
the issuer is a limited
liability company in which
management is
not reserved to its members;
of all partners, if the
issuer
is a
general or limited partnership or a partnership
association;
and
the name and address of the issuer, if the issuer
is an
individual;
(B)(2) The address of the issuer's principal place of
business
and principal office in this state, if any;
(C)(3) The purposes and general character of the business
actually being transacted, or to be transacted, by the issuer,
and
the purpose of issuing the securities named in the
application;
(D)(4) A statement of the capitalization of the issuer; a
balance sheet made up as of the most recent practicable date,
showing the amount and general character of its assets and
liabilities; a description of the security for the qualification
of which application is being made; and copies of all circulars,
prospectuses, advertisements, or other descriptions of the
securities, that are then prepared by or for the issuer, or by
or
for the applicant if the applicant is not the issuer, or by
or for
both, to be used for distribution or publication in this
state;
(E)(5) A statement of the amount of the issuer's income,
expenses, and fixed charges during the last fiscal year or, if
the
issuer has been in actual business less than one year,
for the
time that the issuer has been in actual business;
(F)(6) A statement showing the price at which the security
is
to be offered for sale;
(G)(7) A statement showing the considerations received or to
be
received by the issuer of the securities purchased or to be
purchased from the issuer and an itemized statement of all
expenses of financing to be paid from those considerations so as
to show the aggregate net amount actually received or to be
received by the issuer;
(H)(8) All other information, including an opinion of
counsel
as to the validity of the securities that are the
subject
matter
of the application, that the division considers
necessary
to
enable it to ascertain whether the securities are
entitled to
qualification;
(I)(9) If the issuer is a corporation, there shall be filed
with the application a certified copy of its articles of
incorporation with all amendments to the articles, if the articles
or
amendments are not already on file in the office of the
secretary
of state; if the issuer is a limited liability company,
there shall
be filed with the application a certified copy of its
articles of
organization with all amendments to the articles, if
the articles or
amendments are not already on file in the office
of the secretary of state;
if the issuer is a trust or trustee,
there shall be
filed with the application a copy of all
instruments by which the
trust was created; and if the issuer is a
partnership or an
unincorporated association, or any other form of
organization,
there shall be filed with the application a copy of
its articles
of partnership or association and of all other papers
pertaining
to its organization, if the articles or other papers
are not
already on file in the office of the secretary of state;
(J)(10) If the application is made with respect to
securities
to
be sold or distributed by or on behalf of the
issuer, or by or
on
behalf of an underwriter, as defined in
division (N) of section
1707.03 of the Revised Code, a statement
showing that the issuer
has received, or will receive at or prior
to the delivery of those
securities, not less than eighty-five per
cent of the aggregate
price at which all those securities are sold
by or on behalf of
the issuer, without deduction for any
additional commission,
directly or indirectly, and without
liability to pay any
additional sum as commission;
(K)(11) If the division so permits with respect to a
security,
an applicant may file with the division, in lieu of the
division's
prescribed forms, a copy of the registration statement
relating to
the security, with all amendments to that statement,
previously
filed with the securities and exchange commission of
the United
States under the
"Securities Act of 1933," as amended,
together
with all
additional data, information, and documents that
the
division
requires.
(C) If the division finds that it is not necessary in the
public
interest and for the protection of investors to require
all
the
information specified in divisions
(A) to (J)(B)(1) to (10) of
this
section, it
may permit the filing of applications for
qualification that
contain the information that it considers
necessary and
appropriate in the public interest and for the
protection of
investors;, but this provision applies only in the
case of
applications for qualification of securities previously
issued and
outstanding that may not be made the subject matter
of
transactions exempt under division (M) of section 1707.03 of
the
Revised Code by reason of the fact that those securities
within
one year were purchased outside this state or within one
year were
transported into this state. (D) All the statements, exhibits, and documents required by
the
division under this section, except properly certified public
documents, shall be verified by the oath of the applicant
for
qualification, of the
issuer, or of any
person
individual having
knowledge of the facts, and in
the
manner and form that may be
required by the division. Failure
or
refusal to comply with the
requests of the division shall be
sufficient reason for a refusal
by the division to register
securities. (E) If it appears to the division that substantially the only
consideration to be paid for any of the securities to be
qualified
is to be intangible property of doubtful value, the
division may
require that the securities be delivered in escrow
to a bank in
this state under the terms that the division may
reasonably
prescribe or require to prevent a deceitful
misrepresentation or
sale of the securities,; that the securities be
subordinated in
favor of those sold for sound value until they
have a value
bearing a reasonable relation to the value of those
sold for sound
value,; or that a legend of warning specifying the
considerations
paid or to be paid for the securities be stamped
or printed on all
advertisements, circulars, pamphlets, or
subscription blanks used
in connection with the sale of any
securities of the same issuer,;
or it may impose a combination of
any two or more of these
requirements. (F) At the time of filing the information prescribed in this
section, the applicant shall pay to the division a filing fee of
one hundred dollars. (G)(1) The division, at any time, as a prerequisite to
qualification, may make an examination of the issuer of securities
sought to be qualified. The applicant for qualification of any
securities may be required by the division to advance sufficient
funds to pay all or any part of the actual expenses of that
examination, an itemized statement of which shall be furnished
the
applicant.
If (2) If the division finds that the business of the
issuer
is
not fraudulently conducted, that the proposed offer or
disposal
of
securities is not on grossly unfair terms, that the
plan of
issuance and sale of the securities referred to in the
proposed
offer or disposal would not defraud or deceive, or tend
to defraud
or deceive, purchasers, and that division
(J)(B)(10) of this
section
applies and has been complied with, the division
shall
notify the
applicant of its findings;, and, upon payment of a
registration fee
of one-tenth of one per cent of the aggregate
price at which the
securities are to be sold to the public in
this
state, which fee,
however, shall in no case be less than one
hundred or more than
one thousand dollars, the division shall
register the
qualification of the securities. (H) An application
for qualification of securities may be
amended by the person filing it at
any
time prior to the
division's action on it either in
registering
the securities for
qualification or in refusing to do
so.
Subsequent to any such
action by the division, the person
who
filed the application may
file with the consent of the division
one or more amendments to it
that shall become effective
upon the
making by the division of the
findings enumerated in
the
next
preceding paragraph
division (G)
of this section,; the giving of notice of
those
findings to the
applicant by the division,; and the payment
by the
applicant of the
additional fee that would have been
payable had
the application, as
it previously became effective,
contained the
amendment. (I) When any securities have been qualified and the fees for
the
qualification have been paid as provided in this section, any
licensed
dealer subsequently may sell the securities under the
qualification, so long as the qualification remains in full
force,
and any dealer of that nature
who
that desires may file with the
division
a written notice of intention to sell the securities or
any
designated portion of them. For that filing, no fee need be
paid.
Sec. 1707.11. (A) Each person that
is not
organized
under the laws of this state, that is
not licensed under section
1703.03 of the
Revised Code, or that does not
have its principal
place of business in this state, shall
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
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
a person on whose behalf the consent is
submitted may be commenced
against the person, in the
proper court of any county in this
state in which a cause of
action 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; (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
person on whose
behalf the consent is
submitted. (C) Notwithstanding any application, form, or other material filed with or submitted to the division that purports to appoint as agent for service of process a person other than the secretary of state, the application, form, or other material shall be considered to appoint the secretary of state as agent for service of process. (D) 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 person on whose
behalf
the consent is submitted or to the
last known address as shown on
the filing
made with the
division. However, failure to mail
such
copy does
not invalidate the service. (D)(E) Notwithstanding any provision of this chapter, or of any
rule adopted by the division of securities under this chapter,
that requires
the submission of a consent to service of process,
the division may provide by
rule for the electronic filing or
submission of a consent to service of
process.
Sec. 1707.131. (A) For purposes of this section, "five per
cent shareholder" means a beneficial owner of five per cent or
more of the issuer's outstanding securities.
(B) The division of securities shall refuse any registration
by description, by qualification, or by coordination if the issuer is in the development stage and either has no
specific business plan or purpose or has indicated that its
business is to engage in a merger or acquisition with an
unidentified company or companies, or other entities or persons.
(C) The division may refuse any registration by description, by qualification, or by coordination if either of the following applies: (1)
The issuer does not disclose in the final offering
circular, prospectus, or form U-7 of the North American securities
administrators association that any future transaction with an
officer, director, five per cent shareholder, manager, trustee, or
general partner will be on terms no less favorable to the issuer
than could be obtained from an independent third party.
(2) The issuer does not disclose both of the following in
the final offering circular, prospectus, or form U-7 of the North
American securities administrators association:
(a) Any outstanding loan from the issuer to an officer,
director, five per cent shareholder, manager, trustee, or general
partner is required to be repaid within six months of the
offering, except for a loan or extension of credit made by a bank.
(b) Any future loan from the issuer to an officer,
director, five per cent shareholder, manager, trustee, or general
partner will be for a bona fide business purpose and approved by a
majority of the disinterested directors, managers, trustees, or general partners, or will be
a type of transaction involving a director or executive officer of
the issuer that is permitted by section 13(k) of the "Securities
Exchange Act of 1934," 116 Stat. 787, 15 U.S.C.A. 78m, as amended.
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 this chapter or
rules adopted under
this chapter by the
division, or defined as
fraudulent in this chapter or rules
adopted under 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
refuse a license applied for by a dealer, salesperson, investment
adviser, or investment adviser representative or 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
that section; (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
immediately 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 this chapter or rules adopted under
this chapter by the
division. The order shall state specifically
the
section or sections of this
chapter or the rule or
rules
adopted under 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 this chapter if
the activities had occurred
in this state.
(J) The remedies provided by this section are cumulative and concurrent with any other remedy provided in this chapter, and the exercise of one remedy does not preclude or require the exercise of any other remedy.
Sec. 1707.231. (A) If the attorney general, by referral from the division of securities, or as a result of complaints or otherwise, has reasonable cause to believe that a person has violated sections 1707.01 to 1707.45 of the Revised Code, the attorney general may bring a class action under Civil Rule 23, as amended, seeking an order granting restitution to persons damaged by a violation of sections 1707.01 to 1707.45 of the Revised Code. (B) The attorney general's exercise of authority pursuant to this section does not require or preclude the exercise of any other authority or remedy in accordance with this chapter.
Sec. 1707.40.
Sections
Except as provided in section
1707.231 of the Revised Code, sections 1707.01 to 1707.45 of the
Revised
Code create no new
civil liabilities, and do not limit or
restrict
common law liabilities for
deception or fraud other than
as
specified in sections 1707.042, 1707.043,
1707.41, 1707.42, and
1707.43 of the Revised Code, and there is no civil
liability for
noncompliance with orders, requirements, rules, or regulations
made by the division of securities under sections 1707.19,
1707.20,
1707.201, and
1707.23 of the Revised Code.
Sec. 1707.41. (A) In addition to the other liabilities
imposed
by law, any person
who
that, by a written or printed
circular,
prospectus, or advertisement, offers any security for
sale, or
receives the profits accruing from such sale, is liable,
to any
person
who
that purchased
such
the security relying on
such
the circular,
prospectus, or advertisement, for the loss or damage
sustained by
such
the relying person by reason of the falsity of
any material
statement contained therein or for the omission
therefrom of
material facts, unless
such
the offeror or person
who
that receives the
profits establishes that
he
the offeror or
person had no
knowledge of the publication
thereof prior to the
transaction complained of, or had just and
reasonable grounds to
believe
such
the statement to be true or the
omitted facts to be
not material.
Whenever (B)(1) Whenever a corporation is
so
liable
as described in
division (A) of this section, each director of the corporation is
likewise liable
unless
he
the director shows that
he
the director
had no knowledge of the publication
complained of, or had just and
reasonable grounds to believe the
statement therein to be true or
the omission of facts to be not
material.
Any such (2) Any director, upon the payment by
him
the
director of a
judgment so obtained against
him
the director, shall be
subrograted to the
rights of the plaintiff against
such
the
corporation, and shall have
the right of contribution for the
payment of
such
the judgment
against
such of his
the director's
fellow directors as would be
individually
liable under this
section.
Lack (C) For purposes of this section, lack of reasonable
diligence in
ascertaining the fact of
such
a publication or the
falsity of any
statement contained in it or of the omission of
such
a material
fact shall be deemed knowledge of
such
the
publication and of the
falsity of any untrue statement in it or of
the omission of
material facts. (D) No action brought against any director, based upon the
liability imposed by this section, shall be brought unless it is
brought within two years after the plaintiff knew, or had reason
to know, of the facts by reason of which the actions of the
person
or the director were unlawful, or within
four
five years after
the
purchase of the securities, whichever is the shorter period,
or,
in the case of an action to enforce a right of contribution
under
this section,
it
the action is brought within two years after the
payment of the judgment for which contribution is sought.
Sec. 1707.42. (A) Whoever, with intent to secure financial
gain to
self, advises and procures any person to purchase any
security, and receives
any
commission or reward for the advice or
services without
disclosing to the purchaser the fact of the
person's agency or
interest in such sales, shall be
liable to the
purchaser for the amount of
the purchaser's damage thereby,
upon
tender of the security to, and suit brought against,
the adviser,
by
the purchaser. No suit shall be brought more
than one year
subsequent
to the purchase. (B) Whoever acts as an investment adviser or investment
adviser
representative in violation of Chapter 1707.
of the
Revised Code shall be liable for
damages resulting from the
violation in an action at law in a court of
competent
jurisdiction. Damages may include consideration paid for the
advice, any loss due to the advice, and all court costs, less the
amount of
any income received from the advice. No person may
bring an action under this
division more than
four
five years
after the rendering of investment advice or two
years after
discovery of facts constituting the violation, whichever is the
shorter period.
Sec. 1707.43.
Every
(A) Subject to divisions (B) and (C) of
this section, every sale or contract for sale made in
violation of
Chapter 1707. of the Revised Code, is voidable at
the election of
the purchaser. The person making such sale or
contract for sale,
and every person
who
that has participated in or
aided the seller
in any way in making such sale or contract for
sale, are jointly
and severally liable to
such
the purchaser, in an
action at law in
any court of competent jurisdiction, upon tender
to the seller in
person or in open court of the securities sold
or of the contract
made, for the full amount paid by
such
the
purchaser and for all
taxable court costs, unless the court
determines that the
violation did not materially affect the
protection contemplated by
the violated provision. (B) No action for the recovery of the purchase price as
provided for in this section, and no other action for any
recovery
based upon or arising out of a sale or contract for sale
made in
violation of Chapter 1707. of the Revised Code, shall be
brought
more than two years after the plaintiff knew, or had
reason to
know, of the facts by reason of which the actions of
the person or
director were unlawful, or more than
four
five years
from the date
of such sale or contract for sale, whichever is the
shorter
period. (C) No purchaser is entitled to the benefit of this section
who
has failed to accept, within thirty days from the date of such
offer, an offer in writing made after two weeks from the date of
such
the sale or contract of sale, by the seller or by any person
who
that
has participated in or aided the seller in any way in
making
such
the
sale or contract of sale, to take back the
security in question
and to refund the full amount paid by
such
the purchaser.
Sec. 1707.44. (A)(1) No person shall engage in any act or
practice that
violates division (A), (B), or (C) of section
1707.14 of the Revised
Code, and no salesperson shall sell
securities in this state without
being licensed pursuant to
section 1707.16 of the Revised Code. (2) No person shall engage in any act or practice that
violates
division (A) of section 1707.141 or section 1707.161 of
the Revised Code. (B) No person shall knowingly make or cause to be made any
false representation concerning a material and relevant fact, in
any oral statement or in any prospectus, circular, description,
application, or written statement, for any of the following
purposes: (1)
Registering securities or transactions, or
exempting
securities or transactions from registration, under this
chapter; (2) Securing the qualification of any securities under
this
chapter; (3) Procuring the licensing of any dealer,
salesperson,
investment adviser, or investment adviser
representative
under
this chapter; (4) Selling any securities in this state; (5) Advising for compensation, as to the value of securities
or as to the
advisability of investing in, purchasing, or selling
securities;
(6) Submitting a notice filing to the division under
division (X) of section 1707.03 or section
1707.092 or 1707.141 of
the Revised Code. (C) No person shall knowingly
sell,
cause
to be sold, offer
for sale, or cause to be offered for
sale, any
security which
comes under any of the following
descriptions: (1) Is not exempt under section 1707.02 of the Revised
Code,
nor the subject matter of one of the transactions exempted
in
section 1707.03, 1707.04, or
1707.34 of the Revised Code,
has not
been registered by
coordination or
qualification,
and is not the
subject matter of a transaction
that has been
registered by
description; (2) The prescribed fees for registering by description, by
coordination, or by qualification have not been paid in respect
to
such security; (3)
Such
The person has been notified by the division, or has
knowledge of the notice, that the right to buy, sell, or
deal in
such security has been suspended or revoked, or that the
registration by description, by coordination, or by qualification
under which it may be sold has been suspended or revoked; (4) The offer or sale is accompanied by a statement that
the
security offered or sold has been or is to be in any manner
indorsed by the division. (D) No person who is an officer, director, or trustee of,
or
a dealer for, any issuer, and who knows such issuer to be
insolvent in that the liabilities of the issuer exceed its
assets,
shall sell any securities of or for any such issuer,
without
disclosing the fact of the insolvency to the
purchaser. (E) No person with intent to aid in the sale of any
securities on behalf of the issuer, shall knowingly make any
representation not authorized by such issuer or at material
variance with statements and documents filed with the division by
such issuer. (F) No person, with intent to deceive, shall sell, cause
to
be sold, offer for sale, or cause to be offered for sale, any
securities of an insolvent issuer, with knowledge that such
issuer
is insolvent in that the liabilities of the issuer
exceed
its
assets, taken at their fair market value. (G) No person in purchasing or selling securities shall
knowingly
engage in any act or practice that is, in this chapter,
declared
illegal, defined as fraudulent, or prohibited. (H) No licensed dealer shall refuse to buy from, sell to,
or
trade with any person because the person appears on a
blacklist
issued by, or is being boycotted by, any foreign
corporate or
governmental entity, nor sell any securities of or
for any issuer
who is known in relation to the issuance or sale
of
such
the
securities to have engaged in such practices. (I) No dealer in securities, knowing that the dealer's
liabilities exceed the reasonable value of the dealer's
assets,
shall accept money or securities, except in payment of or as
security
for an existing debt, from a customer who is ignorant of
the dealer's insolvency, and thereby cause the customer
to lose
any part of the customer's securities or the value
of those
securities, by doing
either of the following without the
customer's consent: (1) Pledging, selling, or otherwise disposing of such
securities, when the dealer has no lien on or any
special property
in such securities; (2) Pledging such securities for more than the amount due,
or otherwise disposing of such securities for the dealer's
own
benefit,
when the dealer has a lien or indebtedness on such
securities. It is an affirmative defense to a charge under this
division
that, at the time the securities involved were pledged,
sold, or
disposed of, the dealer had in the dealer's
possession
or control,
and available for delivery, securities of the same
kinds and in
amounts sufficient to satisfy all customers entitled
to the
securities, upon demand and tender of any amount
due on the
securities. (J) No person, with purpose to deceive, shall make, issue,
publish, or cause to be made, issued, or published any statement
or advertisement as to the value of securities, or as to alleged
facts affecting the value of securities, or as to the financial
condition of any issuer of securities, when the person knows
that
such statement or advertisement is false in any material
respect. (K) No person, with purpose to deceive, shall make,
record,
or publish or cause to be made, recorded, or published, a
report
of any transaction in securities which is false in any
material
respect. (L) No dealer shall engage in any act that violates the
provisions of section
15(c) or 15(g) of the
"Securities Exchange
Act of 1934," 48 Stat. 881, 15
U.S.C.A. 78o(c) or (g), or any rule
or regulation promulgated by the
securities and exchange
commission thereunder. If, subsequent to
October 11, 1994,
additional amendments to section 15(c) or 15(g) are adopted, or
additional
rules or regulations are promulgated pursuant to such
sections, the division
of securities shall, by rule, adopt the
amendments, rules, or regulations,
unless the division finds that
the amendments, rules, or regulations are not
necessary for the
protection of investors or in the public interest. (M)(1) No investment adviser or investment adviser
representative shall do any of the following: (a) Employ any device, scheme, or artifice to defraud
any
person; (b) Engage in any act, practice, or course of business
that
operates or would operate as a fraud or deceit upon any
person; (c) In acting as principal for the investment adviser's or
investment adviser representative's own account, knowingly sell
any security to or purchase any security from a client, or in
acting as salesperson for a person other than such client,
knowingly effect any sale or purchase of any security for the
account of such client, without disclosing to the client in
writing before the completion of the transaction the capacity in
which the investment adviser or investment adviser
representative
is acting and obtaining the consent of the client
to the
transaction. Division (M)(1)(c)
of this section does not apply to
any investment adviser
registered with the securities and exchange
commission under
section 203 of the
"Investment Advisers Act of
1940," 15 U.S.C. 80b-3, or to
any transaction with a customer
of a
licensed dealer or salesperson if the licensed dealer or
salesperson is not acting as an investment adviser or investment
adviser representative in relation to the transaction. (d) Engage in any act, practice, or
course of business that
is fraudulent, deceptive, or
manipulative. The division of
securities may adopt rules
reasonably designed to prevent such
acts, practices, or courses
of business
as
that are fraudulent,
deceptive, or manipulative.
(2) No investment adviser or investment adviser
representative licensed or required to be licensed under this
chapter shall take or have custody of any securities or funds of
any person, except as provided in rules adopted by the division. (3) In the solicitation of clients or prospective clients,
no
person shall make any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made not misleading in light of the circumstances
under
which the statements were made. (N) No person knowingly shall influence, coerce, manipulate,
or mislead any person engaged in the preparation, compilation,
review, or audit of financial statements to be used in the
purchase or sale of securities for the purpose of rendering the
financial statements materially misleading.
Sec. 2913.02. (A) No person, with purpose to deprive the
owner of property or services, shall knowingly obtain or exert
control over either the property or services in any of the
following ways: (1) Without the consent of the owner or person authorized
to
give consent; (2) Beyond the scope of the express or implied consent of
the owner or person authorized to give consent; (B)(1) Whoever violates this section is guilty of theft. (2) Except as otherwise
provided in this division or
division (B)(3), (4), (5), or (6) of
this section, a violation of
this section is petty theft, a
misdemeanor of the first degree.
If the value of the property or
services stolen is five hundred
dollars or more and is less than
five thousand dollars or if the
property stolen is any of the
property listed in section 2913.71
of the Revised Code, a
violation of this section is theft, a
felony of the fifth
degree. If the value of the property or
services stolen is five
thousand dollars or more and is less than
one hundred thousand
dollars, a violation of this
section is grand
theft, a felony of the fourth degree. If the value of the
property or
services stolen is one hundred thousand dollars or
more, a
violation of this section is aggravated theft, a felony of
the
third
second degree.
If the value of the property or services
stolen is one million dollars or more, a violation of this section
is aggravated theft of one million dollars or more, a felony of
the first degree. (3) Except as otherwise provided in division (B)(4),
(5), or
(6)
of this section, if the victim of the offense is an elderly
person or
disabled adult, a violation
of this section is theft
from an elderly person or disabled adult, and
division (B)(3) of
this section applies. Except as
otherwise provided in this
division, theft from an elderly person or disabled
adult is a
felony of the fifth degree. If the value of the property or
services stolen is five hundred dollars or more and is less than
five thousand dollars, theft from an elderly person or disabled
adult is a felony of the fourth degree. If the value of the
property or services stolen is five thousand dollars or more and
is less than twenty-five thousand dollars, theft from an elderly
person or disabled adult is a felony of the third degree. If the
value of the property or services stolen is twenty-five thousand
dollars or more,
theft from an elderly person or disabled adult is
a felony of the
second
first degree. (4) If the property stolen is a firearm or dangerous
ordnance,
a violation of
this section is grand theft, a felony of
the fourth degree. (5) If the property stolen is a motor vehicle,
a violation
of this section
is grand theft of a motor vehicle, a felony of the
fourth degree. (6) If the property stolen is any dangerous drug, a
violation of
this section is theft of drugs, a felony of the
fourth degree,
or, if the offender previously has been convicted
of a felony
drug abuse offense, a felony of the third degree.
Section 2. That existing sections 1701.831, 1707.01, 1707.08, 1707.09, 1707.11, 1707.23, 1707.40,
1707.41, 1707.42, 1707.43, 1707.44, and 2913.02 of the Revised
Code are hereby repealed.
Section 3. Section 1707.01 of the Revised Code is presented in
this act as a composite of the section as amended by both S.B. 32 and Sub. S.B. 108 of
the 124th General Assembly. The General Assembly, applying the
principle stated in division (B) of section 1.52 of the Revised
Code that amendments are to be harmonized if reasonably capable of
simultaneous operation, finds that the composite is the resulting
version of the section in effect prior to the effective date of
the section as presented in this act.
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