To amend sections 1707.20 and 1707.37 and to enact section 1707.191 of the Revised Code to permit the Division of Securities to order the payment of administrative assessments and investigatory costs, and to issue consent orders, for violations of the Securities Law and to make other changes to that Law relative to the preparation and auditing of financial statements.

Section 1. That sections 1707.20 and 1707.37 be amended and section 1707.191 of the Revised Code be enacted to read as follows:

Sec. 1707.191.  (A) After notice and opportunity for a hearing conducted in accordance with Chapter 119. of the Revised Code, the division of securities may order the payment of an administrative assessment of not more than ten thousand dollars for any violation of sections 1707.01 to 1707.45 of the Revised Code or of any rule adopted or order issued under those sections. Each violation shall constitute a separate offense. In the case of a continuing violation, each calendar day constitutes a separate offense. The ordering of an administrative assessment pursuant to this division does not preclude the exercise of any other remedy provided under sections 1707.01 to 1707.45 of the Revised Code.

(B) In addition to or in lieu of ordering an administrative assessment under division (A) of this section, the division may, with respect to any person who has engaged in an act, practice, or course of business constituting a violation of sections 1707.01 to 1707.45 of the Revised Code, do either or both of the following:

(1) Order the person to pay any investigatory and related costs incurred by the division, including attorney's and witness fees;

(2) Enter into and issue a consent order that compels the person to do one or more of the following:

(a) Rescind the transaction related to the violation;

(b) Disgorge any assets acquired or profits made as a result of the violation;

(c) Make restitution, which may include interest not to exceed the criminal usury rate as defined in section 2905.21 of the Revised Code.

(C) The division may refer to the attorney general for the collection of any administrative assessment ordered pursuant to division (A) of this section and may take any appropriate action necessary to compel compliance with a consent order issued under division (B) of this section.

(D) The ten-thousand-dollar limitation imposed under this section on administrative assessments does not apply to any settlement agreement entered into by the division with the person who is the subject of a violation.

Sec. 1707.20.  (A)(1) The division of securities may adopt, amend, and rescind such rules, forms, and orders as are necessary to carry out sections 1707.01 to 1707.45 of the Revised Code, including rules and forms governing registration statements, applications, and reports, and defining any terms, whether or not used in sections 1707.01 to 1707.45 of the Revised Code, insofar as the definitions are not inconsistent with these sections. For the purpose of rules and forms, the division may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes.

(2) Notwithstanding sections 121.71 to 121.76 of the Revised Code, the division may incorporate by reference into its rules any statute enacted by the United States congress or any rule, regulation, or form promulgated by the securities and exchange commission, or by another federal agency, in a manner that also incorporates all future amendments to the statute, rule, regulation, or form.

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

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

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

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

(3) Whether any required financial statements shall be certified audited by independent or certified public accountants. All financial statements shall be prepared in accordance with generally accepted accounting practices principles and comply with all other requirements specified by rule adopted or order issued under sections 1707.01 to 1707.45 of the Revised Code.

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

(E)(1) No provision of sections 1707.01 to 1707.45 of the Revised Code imposing any liability applies to any act done or omitted in good faith in conformity with any rule, form, or order of the division of securities, notwithstanding that the rule, form, or order may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason, except that the issuance of an order granting effectiveness to a registration under section 1707.09 or 1707.091 of the Revised Code for the purposes of this division shall not be deemed an order other than as the establishment of the fact of registration.

(2) No provision of sections 1707.01 to 1707.45 of the Revised Code imposing any liability, penalty, sanction, or disqualification applies to any act done or omitted in good faith in conformity with either of the following:

(a) Any provision of sections 1707.01 to 1707.45 of the Revised Code that incorporates by reference a federal statute, rule, regulation, or form;

(b) Any rule, form, or order of the division that incorporates by reference a federal statute, rule, regulation, or form.

Division (E)(2) of this section applies notwithstanding that the incorporation by reference, or any application of the incorporated provision, is later determined by judicial or other authority to be unconstitutional or invalid for any reason.

(F) The division shall, in accordance with Chapter 119. of the Revised Code, adopt rules that set forth the criteria that must be met in order to qualify for a hardship exemption from the requirement that financial statements be audited.

Sec. 1707.37. (A) All fees and charges collected under this chapter, including investigatory and related costs recovered pursuant to section 1707.191 of the Revised Code, shall be paid into the state treasury to the credit of the division of securities fund, which is hereby created. All expenses of the division of securities, other than those specified in division (B) of this section, shall be paid from the fund.

The fund shall be assessed a proportionate share of the administrative costs of the department of commerce in accordance with procedures prescribed by the director of commerce and approved by the director of budget and management. The assessments shall be paid from the division of securities fund to the division of administration fund.

If moneys in the division of securities fund are determined by the director of budget and management and the director of commerce to be in excess of those necessary to defray all the expenses in any fiscal year, the director of budget and management shall transfer the excess to the general revenue fund.

(B) There is hereby created in the state treasury the division of securities investor education and enforcement expense fund, which shall consist of all administrative assessments collected pursuant to section 1707.191 of the Revised Code, money received in settlement of any violation of this chapter, and any cash transfers. Money in the fund shall be used to pay expenses of the division of securities relating to education or enforcement for the protection of securities investors and the public. The division may adopt rules pursuant to section 1707.20 of the Revised Code that establish what qualifies as such an expense.

Section 2. That existing sections 1707.20 and 1707.37 of the Revised Code are hereby repealed.

Section 3. Section 1707.191 of the Revised Code, as enacted by this act, applies only to violations that are committed on or after the effective date of this act.