TITLE 660. DEPARTMENT OF SECURITIES

 

Chapter	Section
1. Organization and Procedures of Securities Commission…………………………….	660:1-1-1
2. Organization and Procedures of Department of Securities…………………………..	660:2-1-1
3. Procedures for the Oklahoma Take-over Disclosure Act of 1985…………………...	[RESERVED]
4. Procedures for the Oklahoma Subdivided Land Sales Code………………………...	660:4-1-1
5. Procedures for the Oklahoma Business Opportunity Sales Act…………………….	[RESERVED]
6. Forms………………………………………………………………………………………	660:6-1-1
10. Oklahoma Securities Act..............................................................................	[REVOKED]
11. Oklahoma Uniform Securities Act of 2004……………………………………………	660:11-1-1
15. Oklahoma Take-over Disclosure Act of 1985………………………………………..	660:15-1-1
20. Oklahoma Subdivided Land Sales Code……………………………………………..	660:20-1-1
25. Oklahoma Business Opportunity Sales Act…………………………………………	660:25-1-1

CHAPTER 1. ORGANIZATION AND PROCEDURES OF SECURITIES COMMISSION

 

Subchapter	Section
1. General Provision…………………………………………………………………………	660:1-1-1
3. Organization……………………………………………………………………………….	660:1-3-1
5. Appeals	660:1-5-1

SUBCHAPTER 1. GENERAL PROVISIONS

Section
660:1-1-1. Purpose
660:1-1-2. Statutory Citations
660:1-1-3. Definitions

660:1-1-1. Purpose

The provisions of this Chapter set forth the organization and procedural rules governing the Oklahoma Securities Commission.

Citations to statutes in this Chapter refer to the most recent codification of Title 71 of the Oklahoma Statutes.

660:1-1-3. Definitions

Unless the context clearly indicates otherwise, or unless defined in this Section, terms used in this Chapter, if defined in the Oklahoma Uniform Securities Act of 2004, the Oklahoma Subdivided Land Sales Code, the Oklahoma Business Opportunity Sales Act or the Oklahoma Take-over Disclosure Act of 1985 shall have the meanings set forth in such acts. The following words and terms, when used in this Chapter, shall have the following meaning, unless the context clearly indicates otherwise:

"Administrator" means the Administrator of the Department of Securities.

"Business Opportunity Act" means the most recent codification of the Oklahoma Business Opportunity Sales Act in Title 71 of the Oklahoma Statutes.

"Commission" means the Oklahoma Securities Commission.

"Department" means the Oklahoma Department of Securities.

"Land Sales Act" means the most recent codification of the Oklahoma Subdivided Land Sales Code in Title 71 of the Oklahoma Statutes.

"NASD" means the National Association of Securities Dealers, Inc.

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the most recent codification of the Oklahoma Uniform Securities Act of 2004 in Title 71 of the Oklahoma Statutes.

"Take-over Act" means the most recent codification of the Oklahoma Take-over Disclosure Act of 1985 in Title 71 of the Oklahoma Statutes.

SUBCHAPTER 3. ORGANIZATION

Section
660:1-3-1. Purpose and organization
660:1-3-2 Commission actions

660:1-3-1. Purpose and organization

The Oklahoma Securities Commission shall be the policy making and governing authority of the Department. The organization of the Commission shall be in accordance with the provisions of Section 1-601 of the Securities Act.

660:1-3-2. Commission actions

(a) All official acts of the Commission shall be evidenced by a written record, and all final orders, decisions, opinions, rules and other written statements of policy or interpretations formulated, adopted or used in the discharge of the function of the Commission shall be available for public inspection.

(b) Official action of the Commission shall not be bound or be prejudiced by any informal statement made or opinion given by the Commission or employees of the Department.

Section
660:1-5-1. Procedures for appeals to the Commission

(a) Scope. The provisions of this Section govern the procedures for appeals by a person aggrieved by a final order of the Administrator filed before the Commission. These procedures shall not be construed to extend or limit the jurisdiction of the Commission or the Administrator as established by law.

(b) Appeal-how and when taken. In matters in which an appeal is permitted by law, the person appealing the order shall file with the Administrator a petition within fifteen (15) days after entry of the order. The Administrator shall submit the petition to the Commission at the next scheduled Commission meeting. The Petition shall specify the party or parties requesting the appeal; shall designate the order or part thereof appealed from; shall request a record on appeal be compiled; shall set forth appellant’s agreement to pay for the preparation of the record on appeal; and shall be signed by the party or parties or counsel for the party or parties. For purposes of this subsection, the term "entry of the order" means the day the final order is mailed or personally delivered to the persons entitled to receive the order.

(c) Record on appeal. Upon receipt of the petition of appeal, the Administrator shall direct the Department to compile the record on appeal. The record on appeal shall consist of the record upon which the final order was issued as described in 660:2-9-7. Upon completion of the record on appeal, the Administrator shall notify the appellant that the record has been completed. Upon payment of the costs of preparation of the record on appeal, copies of the record will be served upon the Commission and all parties to the appeal with a notice of the date that the record was served and the briefing schedule.

(d) Briefing schedule and briefs. The appellant shall file six copies of his opening brief on appeal with the Administrator and serve one copy on all other parties to the appeal within fifteen (15) days of service of the record on appeal. The appellee shall file six copies of his opening brief on appeal with the Administrator and serve one copy on all other parties to the appeal within fifteen (15) days of receipt of the brief of appellant. The Chairperson of the Commission, or his designee, may, upon good cause shown, enlarge these periods as he deems appropriate.

(e) Stay pending review. The filing of an appeal with the Commission does not stay the order of the Administrator pending the appeal.

(f) Motions. All applications or motions made to the Commission in connection with an appeal properly filed before the Commission shall be filed with the Administrator and promptly submitted to the Chairperson of the Commission, or his designee, and be promptly ruled upon by the Chairperson of the Commission, or his designee.

(g) Executive session. Deliberations by the Commission may be held in executive session.

(h) Order on appeal. The Order of the Commission on any appeal shall contain a concise statement of the facts as found by the Commission and a concise statement of the conclusions therefrom and the effective date of the Order.

CHAPTER 2. ORGANIZATION AND PROCEDURES OF DEPARTMENT OF SECURITIES

 

Subchapter	Section
1. General provisions……………………………………………………………………….	660:2-1-1
3. Organization………………………………………………………………………………	660:2-3-1
5. Authority and actions of administrator…………………………………………………	660:2-5-1
7. Investigations……………………………………………………………………………..	660:2-7-1
9. Individual proceeding practices and procedures…………………….………………..	660:2-9-1
11. Procedures for inspecting and/or copying public records………………………….	660:2-11-1
13. Declaratory rulings and interpretive opinions………………………………………..	660:2-13-1

SUBCHAPTER 1. GENERAL PROVISIONS

Section
660:2-1-1. Purpose
660:2-1-2. Statutory citations
660:2-1-3. Definitions

660:2-1-1. Purpose

(a) The provisions of this Chapter set forth the organization and procedural rules governing the Department of Securities and have been adopted for the purpose of complying with 75 O.S., Section 302.

(b) The provisions of this Chapter relating to investigations and hearings shall apply to all investigations and hearings conducted by the Department in the enforcement of the Business Opportunity Act, the Land Sales Act, the Securities Act, and the Take-over Act.

Citations to statutes in this Chapter refer to the most recent codification of Title 71 of the Oklahoma Statutes.

660:2-1-3. Definitions

Unless the context clearly indicates otherwise, or unless defined in this Section, terms used in this Chapter, if defined in the Oklahoma Uniform Securities Act of 2004, the Oklahoma Land Sales Code, the Oklahoma Business Opportunity Sales Act or the Oklahoma Take-over Disclosure Act of 1985 shall have the meanings set forth in such acts. The following words and terms, when used in this Chapter, shall have the following meaning, unless the context clearly indicates otherwise:

"Administrator" means the Administrator of the Department of Securities.

"Business Opportunity Act" means the most recent codification of the Oklahoma Business Opportunity Sales Act in Title 71 of the Oklahoma Statutes.

"Commission" means the Oklahoma Securities Commission.

"Department" means the Oklahoma Department of Securities.

"Hearing Officer" means a person who has been duly appointed by the Administrator to hold hearings and, as required, render proposed orders.

"Land Sales Act" means the most recent codification of the Oklahoma Subdivided Land Sales Code in Title 71 of the Oklahoma Statutes.

"Securities Act" means the most recent codification of the Oklahoma Uniform Securities Act of 2004 in Title 71 of the Oklahoma Statutes.

"Take-over Act" means the most recent codification of the Oklahoma Take-over Disclosure Act of 1985 in Title 71 of the Oklahoma Statutes.

SUBCHAPTER 3. ORGANIZATION

Section
660:2-3-1. Organization

660:2-3-1. Organization

(a) The Department shall be organized in accordance with Section 1-601 of the Securities Act. It shall be the purpose of the Department to implement the policies of the Commission and to enforce the Securities Act in an efficient and effective manner.

(b) The Department shall be organized in the following divisions: 

(1) registration of broker-dealers, agents and investment advisers.

(2) registration of securities.

(3) investigation and enforcement; and

(4) investor education.

(c) The Department shall have as its chief officer an Administrator who shall be charged with the duty of administering and enforcing the acts under the supervision of the Commission and in accordance with its policies.

SUBCHAPTER 5. AUTHORITY AND ACTIONS OF ADMINISTRATOR

Section
 

660:2-5-1. Official actions
660:2-5-2. Register of actions [REVOKED]
660:2-5-3. Settlements
660:2-5-4. Summary orders

(a) All officials acts of the Administrator shall be evidenced by a written record, and all final orders, decisions, opinions, rules and other written statements of policy or interpretations formulated, adopted or used in the discharge of the function of the Administrator shall be available for public inspection.

(b) Official action of the Administrator shall not be bound or be prejudiced by any informal statement made or opinion given by the Administrator, Commission or employees of the Department of Securities.

In order to avoid the expense and time involved in formal legal proceedings, it is the policy of the Administrator to afford persons who have engaged in unlawful acts and practices an opportunity to enter into settlement agreements, when it appears to the Administrator that such procedure fully safeguards the public interest. The Administrator reserves the right in all cases to withhold the privilege of disposition by settlement agreement.

660:2-5-4. Summary orders

The Administrator may issue summary orders pursuant to the provisions set forth in:

(1) Sections 1-306.D, 1-411.F or 1-604 of the Securities Act;

(2) Section 814(D) of the Business Opportunity Act;

(3) Sections 628(D), 634(C), or 660 of the Land Sales Act; or

(4) Subsection (D) of Section 453 of the Take-over Act.

SUBCHAPTER 7. INVESTIGATIONS

Section
660:2-7-1. Initiation
660:2-7-2. Authority [REVOKED]
660:2-7-3. Investigative processes
660:2-7-4. Subpoenas [REVOKED]
660:2-7-5. Testimony [REVOKED]
660:2-7-6. Reports [REVOKED]
660:2-7-7. Enforcement of process [REVOKED]
660:2-7-8. Right to counsel [REVOKED]
660:2-7-9. Termination of investigation

660:2-7-1. Initiation

Investigations may be initiated upon inquiry, request or complaint by members of the public or by the Administrator or the Commission upon their own motion. The request or complaint by a member of the public should be in writing on the form identified in Chapter 6 of this Title, be signed by the complainant and contain a statement setting forth the acts, activities or matters and the name and address of the party or parties against whom they are complaining. No formal procedures are required in making such requests or complaints. The complainant is not regarded as a party, since the Administrator acts only in the public interest. The Administrator shall not take action when the acts, activities or matters complained of are merely matters of private controversy and do not tend to adversely affect the public.

660:2-7-2. Authority [REVOKED]

660:2-7-3. Investigative processes

(a) Authority. Investigations under the statutes administered by the Administrator shall be conducted by representatives designated and duly authorized for this purpose. Such representatives are authorized to exercise and perform the duties of their office in accordance with the statutes of the state of Oklahoma and the regulations of the Administrator, including administration of oaths and affirmations, in any matter under investigation by the Administrator. Nothing in this section shall prohibit the Administrator or his designee from expanding or restricting the scope of any investigation at any time during an investigation.

(b) Investigative hearings. Investigative hearings, as distinguished from hearings in individual proceedings, may be conducted in the course of any investigation undertaken by the Administrator, including inquiries initiated for the purpose of determining whether or not a respondent is complying with an order of the Administrator. Investigative hearings may be held before the Administrator, or his designee, for the purpose of hearing the testimony of witnesses and receiving documents and other data relating to any subject under investigation. Such hearings shall be non-public.

(c) Subpoena to testify or produce records. While the Administrator encourages voluntary cooperation in investigations, the Administrator, or his designee, at any stage of any investigation, may issue a subpoena ordering the person named therein to appear before a designated representative at a designated time and place, including the offices of the Department, to provide testimony by deposition, sworn statement or affidavit and/or to produce documentary evidence relating to any matter under investigation. Such testimony shall only be reduced to writing or otherwise recorded in any manner by the person taking the testimony, or under his direction.

(d) Subpoena to grant access. The Administrator may issue a subpoena to grant access to, to examine, and to copy documents, books or other records of any person being investigated.

(e) Service. Subpoenas shall be served in the manner provided by law.

(f) Written examination. The Administrator, or his designee, may issue an order requiring persons to file a report or statement, or answers in writing and under oath to specific questions, relating to any matter under investigation.

(g) Rights of witness. Any person under investigation, compelled to furnish information or documentary evidence, shall be advised of the purpose and scope of the investigation, subject to the confidentiality requirements provided by law. Any person required to testify shall be entitled to review a copy of the transcript of his own testimony, if transcribed, at the offices of the Department of Securities. Any person required to submit documentary evidence shall be entitled to retain or, on payment of lawfully prescribed cost, to procure a copy of any document produced by such person. Any party compelled to testify or to produce documentary evidence may be accompanied and advised by counsel, provided that such counsel is duly licensed to practice law by the Supreme Court of Oklahoma. Such counsel may question such person briefly at the conclusion of the examination to clarify any of the answers such person has given.

(h) Confidentiality. Information or documents obtained by the Administrator and subpoenas issued in connection with an investigation shall be kept confidential and shall not be made available to the public, unless expressly ordered by the Administrator, disclosed pursuant to the provisions of Subchapter 9 of this Chapter or as otherwise provided by law.

660:2-7-4. Subpoenas [REVOKED]

660:2-7-5. Testimony [REVOKED]

660:2-7-6. Reports [REVOKED]

660:2-7-7. Enforcement of process [REVOKED]

660:2-7-8. Right to counsel [REVOKED]

660:2-7-9. Termination of investigation

Upon completion of investigation, where the facts indicate that no corrective action by the Administrator is warranted, the investigative files shall be closed, without prejudice to reopening. Where remedial action is appropriate, the files may be referred for the initiation of administrative or civil proceedings, or other disposition as may be permitted under law. At any time during or after completion of an investigation, a matter may be referred to a law enforcement agency or another governmental or regulatory entity.

SUBCHAPTER 9. INDIVIDUAL PROCEEDING PRACTICES AND PROCEDURES

Section
660:2-9-1. Hearings in general
660:2-9-2. Initiation of individual proceedings
660:2-9-3. Prehearing proceedings and processes
660:2-9-4. Authority to subpoena witnesses
660:2-9-5. Representation
660:2-9-6. Conduct of hearings
660:2-9-7. Record of hearing
660:2-9-8. Final orders
660:2-9-9. Rehearings
660:2-9-10. Appeals [REVOKED]

660:2-9-1. Hearings in general

(a) Authority. Prior to the issuance of a final order in an individual proceeding, all parties shall be afforded an opportunity for hearing after reasonable notice. The notice shall be in writing and advise the parties of their right to a hearing and their obligation to file an answer, the time period within which a hearing must be requested, and the effect of a failure to file an answer and to request a hearing.

(b) Public hearing. All hearings shall be open to the public but may not be recorded by the public or any respondent by any electronic means.

(c) Hearings on summary orders. The provisions of this Subchapter shall not apply to proceedings for summary orders. The procedures for hearings on summary orders shall be those set forth in:

(1) Sections 1-306.D, 1-411.F, or 1-604.B of the Securities Act;

(2) Section 814(D) of the Business Opportunity Act;

(3) Sections 628(D), 634(C), or 660 of the Land Sales Act; and

(4) Subsections (D) and (E) of Section 453 of the Take-over Act.

660:2-9-2. Initiation of individual proceedings

(a) Request for hearing and answer. The person to whom the notice of opportunity for hearing is addressed shall file with the Administrator a written answer within the time specified in the notice. The answer shall indicate whether the party requests a hearing and shall specifically admit or deny each allegation of the Department or state that the party does not have, and is unable to obtain, sufficient information to admit or deny each allegation. When a person intends in good faith to deny only a part of an allegation, the party shall specify so much of it as is true and shall deny only the remainder. A statement of a lack of information shall have the effect of a denial. Any allegation not denied shall be deemed admitted. Failure of a party to file an answer in compliance with this subsection shall result in the issuance of a final order against that party.

(b) Setting or denial of hearing. Upon receipt of a written request for a hearing, the Administrator shall either promptly schedule a hearing or shall issue a written order denying a hearing.

(c) Time of notice. Notice of all hearings shall be served by regular first class mail or by personal delivery within a time reasonable in light of the circumstances, in advance of the hearing, but not less than forty-five (45) days in advance thereof, to all parties. For good cause shown, any hearing may be rescheduled, provided all persons entitled to notice of such hearing are promptly advised thereof.

(d) Content of notice. The notice of hearing shall contain the following information:

(1) the date, time, place and nature of the hearing;

(2) a statement of the legal authority and jurisdiction under which the hearing is to be held;

(3) a short plain statement of the matters asserted; and

(4) a reference to the particular sections of the statutes and rules involved.

(e) Appointment of hearing officer. The Administrator may delegate authority to a Hearing Officer to conduct an individual proceeding and prepare a proposed order for submission to the Administrator whenever deemed appropriate under the circumstances. The Administrator shall enter into a written contract with each Hearing Officer appointed, which shall govern the terms of appointment.

(f) Authority of presiding officer. The Administrator, or the Hearing Officer, shall have the authority to do all things necessary and appropriate to conduct the individual proceeding. The duties of the Administrator, or the Hearing Officer, include, but are not limited to, the following:

(1) Administering oaths and affirmations;

(2) Issuing subpoenas authorized by law and quashing or modifying any such subpoena;

(3) Receiving relevant evidence and ruling upon the admission of evidence and offers of proof;

(4) Regulating the course of a proceeding and the conduct of the parties and their counsel;

(5) Holding prehearing and other conferences and requiring the attendance at any such conference of any party;

(6) Recusing himself upon a motion of a party based on reasonable grounds, or upon his own motion;

(7) Considering and ruling upon all procedural and other motions, subject to any limitations otherwise specified;

(8) Requiring the filing of briefs, if so desired; and

(9) Requiring the filing of proposed findings of fact and conclusions of law.

(g) Submission of case on documentary record. The Administrator, or the Hearing Officer, may elect not to hold a hearing if all parties agree to submit the case on the documentary record and waive their right to appear.

660:2-9-3. Prehearing proceedings and processes

(a) Scheduling. As soon as is practicable after the request for hearing is received, but in no event later than thirty (30) days after the request for hearing is received, the Administrator, or Hearing Officer, shall enter a scheduling order that is intended to expedite the disposition of the action and insure the fair, orderly and efficient conduct of the proceedings. The parties shall confer in person or by telephone and attempt to prepare a single agreed scheduling order to submit to the Administrator or the Hearing Officer. If the proposed scheduling order is acceptable to the Hearing Officer, no scheduling conference need be held. If the parties are unable to agree, the Hearing Officer shall issue an appropriate scheduling order or hold a scheduling conference in person or by telephone. The scheduling order should establish at least the following:

(1) a schedule of discovery;

(2) any limitations to be placed on discovery;

(3) a preliminary list identifying all witnesses, documents and exhibits intended to be utilized at the hearing; 

(4) identification of any expert witness intended to be called; 

(5) the date for exchanging the documents and exhibits intended to be utilized at the hearing and the final list identifying all witnesses intended to be called at the hearing; and;

(6) such other matters as may aid in the disposition of the matter. 

(b) Discovery. Discovery may be obtained by one or both of the following methods:

(1) A party may serve a written request on any other party requiring the party to produce, within fifteen (15) days, for inspection and copying, any documents or tangible items that are relevant to the subject matter of the individual proceeding and are not privileged; and/or

(2) A party may take the testimony of a witness by oral deposition at the expense of that party. A party desiring to take the deposition shall serve written notice to the witness and all other parties to the proceeding in accordance with 660:2-9-4. Such notice shall state the time and place for taking the deposition and shall be served in order to allow the adverse party sufficient time, by the usual route of travel, to attend, and three (3) days for preparation, exclusive of the date of service of the notice.

(c) Motions in general.

(1) Unless otherwise permitted by these rules or by the Administrator, or the Hearing Officer, motions shall:

(A) be made in writing;

(B) state concisely the question to be determined and be accompanied by any necessary supporting documentation; and

(C) be served on all parties.

(2) A response to a written motion shall be filed within ten (10) days after receipt of the motion but no later than the date and time of the hearing.

(3) The Administrator, or the Hearing Officer, may allow oral argument if it appears necessary to a fuller understanding of the issues presented.

(4) The filing or pendency of a motion does not alter or extend any time period prescribed by this Subchapter or by an order of the Administrator or the Hearing Officer.

(d) Motions for summary decision. A party may move for summary decision as to any substantive issue in the case. The Administrator, or the Hearing Officer, may issue a summary decision if he finds that there is no genuine issue as to any material fact and that the moving party is entitled to prevail as a matter of law.

(e) Prehearing conference.

(1) Upon the request of a party or when the Administrator, or the Hearing Officer, believes it necessary or appropriate, a prehearing conference shall be held, as close to the time of hearing as is reasonable under the circumstances, to address the following matters:

(A) simplification of issues;

(B) the final list of witnesses and exhibits to be utilized at the hearing;

(C) admissions and stipulations of fact;

(D) stipulations regarding admission and authenticity of documents;

(E) requests for official notice;

(F) discovery disputes;

(G) pending motions; and

(H) other matters that will promote the orderly and prompt conduct of the hearing.

(2) At the conclusion of the prehearing conference, a ruling or order shall be entered reciting the action taken. The order shall control the subsequent course of the action unless modified by a subsequent order. The order shall be modified only to prevent manifest injustice.

(f) Failure to appear or participate. Failure to participate and cooperate in the preparation of a scheduling order or prehearing conference order, failure to comply with a scheduling order or prehearing conference order, failure to appear at any hearing or conference, failure to appear substantially prepared, or failure to participate in good faith may result in any of the following sanctions:

(1) striking of any pleading;

(2) a preclusion order;

(3) staying the proceeding;

(4) default judgment; or

(5) such other order as the Administrator, or the Hearing Officer, may deem just and appropriate.

(g) Post prehearing conference. If additional exhibits are discovered after the prehearing conference order is issued or after the date final documents and exhibits are exchanged, the party intending to use them shall immediately notify all other parties and furnish copies of the additional exhibits to such parties. If additional witnesses are discovered, all other parties shall be notified immediately and furnished the nature of the testimony along with the names and addresses of the witnesses. These additional exhibits or the testimony of the additional witnesses shall not be admitted at the hearing without the agreement of all parties or without a showing to the Administrator, or the Hearing Officer, that manifest injustice would be created if the exhibit or witness testimony were not permitted.

(h) Service and filing of papers. Service of papers upon a party shall be made by personal delivery, regular first class mail, facsimile transmission or electronic mail. All papers required to be served by a party shall be filed with the Administrator within the applicable time for service.  When a Hearing Officer is appointed, a person making a filing with the Administrator shall promptly provide to the Hearing Officer a copy of such filing. Papers filed with the Administrator shall be accompanied by a certificate stating the name of the person or persons served, the date of service, the method of service and the mailing address, facsimile telephone number or electronic mail address to which service was made, if not made in person.

(i) Signature and certification. Every filing of a party represented by counsel shall be signed by at least one counsel of record and shall state that counsel’s business address and telephone number. A party who is not represented by counsel shall sign his individual name and state his address and telephone number on every filing. The signature of a counsel or party shall constitute a certification that:

(1) the person signing the filing has read the filing;

(2) to the best of his knowledge, information, and belief, formed after reasonable inquiry, the filing is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and the filing is not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of adjudication; and

(3) If a filing is not signed, the Administrator, or the Hearing Officer, shall strike the filing, unless it is signed promptly after the omission is called to the attention of the party making the filing.

 (j) Computation of time. A paper is filed when it is received by the Administrator. Unless otherwise specifically provided by the Securities Act or this Subchapter, computation of any time period prescribed by this Subchapter, or by an order of the Administrator or the Hearing Officer, begins with the first day following the act or event that initiates the time period. The last day of the time period so computed is included unless it is a Saturday, Sunday, state holiday, or any other day when the Department’s office is not open for public business, in which event the period runs until the end of the next business day. If a notice or other filing is served by mail and the party served is entitled or required to take some action within a prescribed time period after service, the date of mailing is the date of service, and three (3) days shall be added to the prescribed time period.

660:2-9-4. Authority to subpoena witnesses

(a) Subpoenas. Any party to a hearing shall have the right to have subpoenas issued to require the attendance and testimony of witnesses at a designated time and place, or to require the production of documents and tangible items in the possession or under the control of the witness at a designated time and place. A party requesting the issuance of a subpoena shall submit the proposed subpoena in writing to the Administrator or the Hearing Officer, The proposed subpoena shall contain the name and address of the person to be subpoenaed; the name, address and telephone number of the party requesting the subpoena; and if the production of documents or tangible items is sought, a particular description of such documents or tangible items. Where it appears to the Administrator, or the Hearing Officer, that the subpoena sought may be unreasonable, oppressive, excessive in scope, unduly burdensome, or not relevant, he may, in his discretion, as a condition precedent to the issuance of the subpoena, require the party seeking the subpoena to show the general relevance and reasonable scope of the testimony or other evidence sought. If after consideration of all the circumstances, the Administrator, or the Hearing Officer, determines that the subpoena or any of its terms is unreasonable, oppressive, excessive in scope, unduly burdensome or not relevant, he may refuse to issue the subpoena, or issue the subpoena only upon such conditions as fairness requires.

(b)  Service.  Service of the subpoena shall be by personal delivery or by certified mail with a return receipt requested and delivery restricted to the person named in the subpoena. The party requesting the subpoena shall be responsible for, and bear the cost of, service. Appropriate service shall be made at least three (3) calendar days before the person is required to appear.

(c)  Return of service. The party requesting the subpoena shall promptly file a return of service with the Administrator including a certificate signed by the person making service.

(d)  Objection to subpoena. A person who has been served with a subpoena may object to the subpoena by filing a motion to quash with the Administrator within ten (10) days of service of the subpoena or by the date the person is ordered to appear, whichever is earlier.

(e)  Enforcement of subpoenas.

(1) If a person under subpoena fails to appear as required, or fails to produce the documents or tangible items set forth in the subpoena, a party may apply to the Administrator for enforcement of the subpoena.

(2)  An application to the Administrator for enforcement of a subpoena shall be made immediately upon the failure to comply with the subpoena or within such other time period as the Administrator may establish.

(3) Upon a timely request by a party for enforcement of a subpoena, the Administrator may apply to the district court of Oklahoma County or the district court in any other county where service can be obtained to enforce the subpoena as authorized by the Securities Act.

(f) Fees. Non-party witnesses subpoenaed pursuant to this section shall be paid the same fees and mileage as are paid witnesses in the courts of the state of Oklahoma. Such fees shall be paid by the party requesting that the subpoena be issued at the time their testimony is completed.

660:2-9-5. Representation

(a) Right to counsel. Any party shall have the right to appear in person and by counsel, provided, however, that such counsel representing the party must be duly licensed to practice law by the Supreme Court of Oklahoma. Such counsel may be present during the giving of evidence, may have a reasonable opportunity to examine and inspect all documentary evidence, may examine witnesses and may present evidence in his client's behalf.

(b) Notice of appearance. An attorney representing a party shall promptly file a notice of appearance with the Administrator. The notice of appearance shall contain all of the following:

(1) the attorney’s name, address, telephone number, and bar number;

(2) the firm name, address, and telephone number if the attorney is a member of a firm; and

(3) the name, address, and telephone number of the person represented.

(c) Service on attorney. After a notice of appearance has been filed, service of all papers may be made upon the attorney or firm of record and shall be effective as service upon the person represented.

660:2-9-6. Conduct of individual proceeding

(a) Order of proceeding. The hearing shall proceed as follows:

(1)  The Administrator, or the Hearing Officer, shall call the hearing to order;

(2)  the Administrator, or the Hearing Officer, shall briefly explain the purpose and nature of the hearing;

(3)  the Administrator, or the Hearing Officer, may allow the parties to present preliminary matters;

(4)  the Administrator, or the Hearing Officer, may allow the parties to make opening statements;

(5)  the Administrator, or the Hearing Officer, shall state the order of presentation of evidence;

(6)  witnesses shall be sworn or put under affirmation to tell the truth; and

(7) the Administrator, or the Hearing Officer, may allow the parties to present summations and closing argument.

(b) Rules of evidence. The rules of evidence need not be strictly followed or observed by the Administrator, or the Hearing Officer, during the hearing in order to obtain a full and fair disclosure of facts relevant to the matters at issue. However, the admissibility of evidence shall be governed by the provisions of Section 310 of the Administrative Procedures Act.

(c) Official notice. Notice may be taken by the Administrator, or the Hearing Officer, of judicially cognizable facts. In addition, notice may be taken of generally recognized practices, procedures and facts relating to the securities industry. Parties shall be notified either before or during the hearing of the material noticed and they shall be afforded an opportunity to contest the material so noticed. The Administrator, or the Hearing Officer, shall utilize his experience, technical competence and specialized knowledge in evaluating the evidence presented.

(d) Examination of witnesses.

(1) Witnesses shall testify under oath or affirmation. If the Administrator, or the Hearing Officer, determines that a witness is hostile or unresponsive, the Administrator, or the Hearing Officer, may authorize the party calling the witness to proceed as if the witness were under cross-examination.

(2) A party may conduct direct examination or cross-examination of a witness without strict adherence to formal rules of evidence, particularly, the rules on hearsay, in order to obtain a full and fair disclosure of facts relevant to the matters at issue.

(3) Upon request by any party, the Administrator, or the Hearing Officer, may exclude witnesses other than parties from the hearing room when those witnesses are not testifying. A party that is not a natural person may designate an individual as its representative to remain in the hearing room, even though the individual may also be a witness. An expert witness who is to render an opinion based on the testimony given at the hearing may remain in the hearing room during all testimony. The Administrator, or the Hearing Officer, may order the witnesses, parties, their counsel, and any person under their direction not to disclose to any sequestered witness the substance of the testimony, exhibits, or other evidence introduced during the absence of the witness.

(4)  No witness shall testify by telephone or other electronic means unless by agreement of the parties.

660:2-9-7. Record of individual proceeding

(a) Requirement to record. Oral proceedings shall be electronically recorded. Copies of the recordings shall be provided by the Department at the request of any party to the proceeding. Costs of transcription of the recordings shall be borne by the party requesting transcription and shall be paid directly to the person performing the transcription. Parties to any proceeding may have the proceedings recorded and transcribed by a court reporter at their own expense.

(b) Content of record. The record in any hearing shall include the following: 

(1) all pleadings, motions, intermediate rulings and orders;

(2) all evidence received or considered, including a statement of matters officially noted;

(3) questions and offers of proof, objections and rulings thereon;

(4) proposed findings of fact, conclusions of law, and exceptions; 

(5) the proposed order of the Hearing Officer;

(6) all other evidence or data submitted to the Administrator, or the Hearing Officer, in connection with their consideration of the case provided all parties have had access to such evidence; and

(7) the final order of the Administrator.

A final order in any individual proceeding shall be in writing. A final order shall include findings of fact and conclusions of law, separately stated. Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings. If, upon request, a party submits proposed findings of fact, the order shall include a ruling upon each proposed finding. Parties shall be notified either personally or by certified mail, return receipt requested, of any final order.

660:2-9-9. Rehearings

(a) Written request. Any party aggrieved by a final order may request rehearing, reopening or reconsideration if a written request is made therefor within ten days (10) after entry of the final order.

(b) Grounds. In the request for rehearing, reopening or reconsideration, the party shall set forth one or more of the following grounds:

(1) newly discovered or newly available evidence relevant to the issues;

(2) need for additional evidence to adequately develop the facts essential to proper decision;

(3) probable error committed by the Administrator, or the Hearing Officer, in the proceeding or in his decision such as would be ground for reversal on judicial review of the order;

(4) need for further consideration of the issues and the evidence in the public interest; or

(5) a showing that issues not previously considered ought to be examined in order to properly dispose of the matter.

(c) Additional grounds for rehearing. Nothing in these rules shall prevent the Administrator from ordering any matter reheard, reopened or reconsidered in accordance with other applicable statutory provisions or rules or, at any time, on the ground of fraud practiced by the prevailing party or of procurement of the order by perjured testimony or fictitious evidence.

(d) Order granting rehearing. The order granting reconsideration, reopening or rehearing shall set forth the grounds that justify such action.

(e) Scope. The reconsideration, reopening or rehearing shall be confined to those grounds upon which the reconsideration, reopening or rehearing was granted.

660:2-9-10. Appeals [REVOKED]

SUBCHAPTER 11. PROCEDURES FOR INSPECTING AND/OR COPYING PUBLIC RECORDS

Section
660:2-11-1. Purpose
660:2-11-2. Definitions
660:2-11-3. Record Custodians
660:2-11-4. Hours of inspection
660:2-11-5. Procedures for inspection of records
660:2-11-6. Procedures for copying records
660:2-11-7. Fees

660:2-11-1. Purpose

The provisions of this Subchapter set forth the procedures of the Department for public inspection and/or copying of the public records of the Department. Such procedures are established for purposes of complying with the provisions of the Open Records Act as defined in 660:2-11-2 and Section 302 of the Oklahoma Administrative Procedures Act (75 O.S., § 302). Nothing herein is intended to derogate from or be in conflict with the provisions of the Open Records Act. To the extent any provision of this Subchapter is found to be in conflict with any provision of the Open Records Act, the provisions of the Open Records Act shall govern.

The following words and terms, when used in this Subchapter shall have the following meanings, unless the context clearly indicates otherwise:

"Open Records Act" means the Oklahoma Open Records Act, 51 O.S., Sections 24A1 through 24A19.

(a) Authority of record custodians. The persons designated below shall serve as Record Custodians for purposes of the Open Records Act and are hereby charged with responsibility for compliance with that Act pursuant to the procedures set forth in this Section and elsewhere in this Subchapter.

(b) Appointment of Record Custodians. The following officials of the Department are hereby appointed as Record Custodians for the designated records and as such shall have all the powers and duties set forth in this Subchapter and in the Open Records Act:

(1) Administrator - all records of the Department

(2) Deputy Administrator - all records of the Department

(3) Director of Enforcement - all enforcement records of the Department

(4) Director of Registrations and Exemptions - all registration and exemption records of the Department

(5) Director of Licensing - all licensing records of the Department

(c) Substitute Record Custodians. Each of the Record Custodians appointed in subsection (b) of this Section is hereby authorized to designate any other employee of the Department to serve as Record Custodian in the place of the designated Record Custodian. Such substitute Record Custodian shall have the same duties and powers as the Record Custodian set forth above and wherever the term "Record Custodian" is used herein, it shall include any such substitute Record Custodian. Whenever a Record Custodian shall appoint another person as a substitute Record Custodian he or she shall notify the Administrator of such designation and the Administrator shall maintain a register of all such designations.

(d) Duties. All Record Custodians shall protect the public records of the Department from damage and disorganization; prevent excessive disruption of the essential functions of the Department; provide assistance and information upon request; insure efficient and timely action and response to all applications for inspection and/or copying of public records; and shall carry out the procedures adopted by this Department for inspecting and/or copying public records.

(e) Direction of requests to custodians. All members of the public, in seeking access to, or copies of, a public record in accordance with the provisions of the Open Records Act shall address their requests to the Record Custodian charged with responsibility for the maintenance of the record sought to be inspected or copied. Whenever a Record Custodian is presented with a request for inspection or copy of, a public record which record the Record Custodian does not have in his or her possession and which he or she has not been given responsibility to keep and maintain, the Record Custodian shall so advise the person requesting the record. Further, the person making the request shall be informed as to which custodian the request should be addressed, if such is known by the Record Custodian receiving the request.

All public records of the Department shall be available for inspection during the regular business hours of the Department. Such hours shall be 8:00 a.m. to 5:00 p.m., Monday through Friday, except legal holidays.

(a) Requests for inspection. To inspect a public record in the possession of the Department, the person requesting the record shall execute a Form OAD 25 - REQUEST FOR RECORD INSPECTION and deliver it to the Record Custodian responsible for the requested record designated in 660:2-11-3. Such request shall be accompanied by the fees set forth in 660:2-11-7. All record inspection forms must be completed by the person requesting the record and signed by the individual making the request. The Record Custodian may demand reasonable identification of any person requesting a record.

(b) Place of inspection. All inspections of public records shall be performed in the offices of the Department under the supervision of the Record Custodian.

(c) Identification of records. A written request for inspection of a record shall reasonably describe the record sought. In instances where the person requesting the record cannot provide sufficient information to identify a record, the Record Custodian shall assist in making such identification.

(d) Delay or denial of requests for inspection. If the record requested is not available for inspection at the time requested, within three (3) business days following the day the request for inspection is received by the Record Custodian, the Record Custodian shall notify the person requesting the record:

(1) that the record will be available for inspection at a later time by returning Form OAD 26 - RECORD INSPECTION DELAY NOTICE; or

(2) that the record will not be available for inspection, by returning to the person requesting the record a copy of Form OAD 27 - RECORD INSPECTION DENIAL.

(a) Requests for copies. To obtain a copy of a public record in the possession of the Department, the person requesting the copy shall execute a Form OAD 28 - REQUEST FOR RECORD COPY and deliver it to the Record Custodian responsible for the requested record designated in 660:2-11-3; except that no form shall be required for requests made for records which have been reproduced for free public distribution. Such request shall be accompanied by the fees set forth in 660:2-11-7. All record copy forms must be completed by the person requesting the record and signed by the individual making the request. The Record Custodian may demand reasonable identification of any person requesting a record.

(b) Responsibility for making copies. All copies of public records shall be performed by the Record Custodian in the offices of the Department except where the Record Custodian determines that the size or the volume of records to be copied warrants sending the record outside the Department for copying, in which event the copies shall be made at a place selected by the Record Custodian and under the supervision of the Record Custodian.

(c) Identification of records. A written request for copies of a record shall reasonably describe the record sought. In instances where the person requesting the copies cannot provide sufficient information to identify a record, the Record Custodian shall assist in making such identification.

(d) Delay or denial of requests for copies. If the record requested is not available for copying at the time requested, within three (3) business days following the day the request for copies is received by the Record Custodian, the Record Custodian shall notify the person requesting the copies:

(1) that the record will be available for copying at a later time by returning Form OAD 29 - RECORD COPY DELAY NOTICE; or

(2) that the record will not be available for copying, by returning to the person requesting the record a copy of Form OAD 30 - RECORD COPY DENIAL.

660:2-11-7. Fees

(a) Amounts payable. The following are the fees that shall be charged by the Department for copying and/or mechanical reproduction of public records and for the search for public records requested by the public pursuant to the Open Records Act and Section 1-612 of the Securities Act; provided, however, no record search and/or copying charge shall be assessed against officers or employees of the Department who make requests which are reasonably necessary to the performance of their official duties:

(1) Inspection fees. No fee shall be charged for inspection of a public record in the offices of the Department.

(2) Copying fees. The following fees shall be charged for copies of public records:

(A) 8 1/2" by 14" or smaller - $ .25 per page

(B) Larger than 8 1/2" by 14" - $1.00 per page

(C) Certified copy 8 1/2" by 14" or smaller - $1.00 per page

(D) Certified copy larger than 8 1/2" by 14" - $2.00 per page

(3) Fee for mechanical reproduction. For copying any public record which cannot be reproduced by photocopying, such as a computer printout or a blueprint, or where the size of the record to be copied warrants sending the record outside for copying, the person requesting the record shall be charged the actual cost to the Department of such copying, including the cost of labor, materials and equipment.

(4) Search fee. If the person requesting a record is using the record solely for a commercial purpose, a search fee shall be charged equal to $20.00 per hour for the time spent by employees in retrieving the record.

(b) Prepayment of fees. The Record Custodian may require prepayment of estimated fees for requests for public records and shall require prepayment of a fee whenever the estimated amount exceeds $200.00. The prepayment amount shall be an estimate of the costs of copying, mechanical reproduction and/or searching for the record. Any overage or underage in the prepayment amount shall be settled prior to producing the requested record or delivering the copy or mechanical reproduction of the record to the person requesting the record.

 

SUBCHAPTER 13. DECLARATORY RULINGS AND INTERPRETIVE OPINIONS

Section
660:2-13-1. Opinions

660:2-13-1. Opinions

The Administrator and/or Commission may honor requests from interested persons for interpretive opinions and as to the applicability of any rule or order, if it be shown that an actual case, controversy or issue is in contemplation and that unreasonable hardship, loss or delay would result if the matter were not determined in advance. The Administrator in his discretion may honor requests from interested persons for formal interpretive opinions relating to a specific factual circumstance and no-action positions, including consideration of waivers, where appropriate and in the public interest, on the basis of facts stated and submitted in writing, with respect to the provisions of the Securities Act or any rule or statement of policy adopted thereunder, provided such requests satisfy and conform to the following requirements:

(1) Such requests shall be in writing and shall include or be accompanied by all information and material required by any statute, rule or statement of policy under which an exception or exemption may be claimed, including but not limited to, copies of prospectuses or offering circulars if applicable or appropriate.

(2) An original and one copy of the request letter itself shall be submitted and the name of the entity for whom the request is being made along with the specific subsection of the particular statute or the particular rule or statement of policy to which the letter pertains shall be indicated in the upper right-hand corner of the letter.

(3) The letter should contain a brief narrative of the fact situation and should set out all of the facts necessary to reach a conclusion in the matter; however, such narratives should be concise and to the point.

(4) The names of the company or companies, organization or organizations and all other persons involved should be stated and should relate and be limited to a particular factual circumstance. Letters relating to unnamed companies, organizations or persons or to hypothetical situations will not warrant a formal response.

(5) Every such request shall include or be accompanied by a manually signed opinion of legal counsel which briefly and concisely states counsel's understanding, counsel's opinion in the matter, which may be expressed tentatively or conditioned upon concurrence by the Administrator, and the basis for such opinion.

(6) Each request for a no-action position and/or interpretive opinion letter shall be accompanied by payment of a fee in the amount specified in Section 1-612 of the Securities Act.

CHAPTER 3. PROCEDURES FOR THE
OKLAHOMA TAKE-OVER DISCLOSURE ACT OF 1985
[RESERVED]

CHAPTER 4. PROCEDURES FOR THE OKLAHOMA SUBDIVIDED LAND SALES CODE

 

Subchapter	Section
1. General Provisions………………………………………………………………………	660:4-1-1
3. Hearings………………………………………………………………………………….	660:4-3-1

[Authority: 71 O.S., Section 662; 75 O.S., Section 302]

[Source: Codified 12/31/91]

SUBCHAPTER 1. GENERAL PROVISIONS

Section
660:4-1-1. Purpose
660:4-1-2. Statutory citations

660:4-1-1. Purpose

The provisions of this Chapter have been adopted for the purpose of carrying out the provisions of the Oklahoma Subdivided Land Sales Code, 71 O.S., Sections 601 through 667, including the establishment of administrative procedures.

660:4-1-2. Statutory citations

Citations to statutes in this Chapter refer to the most recent codification of the Oklahoma Subdivided Land Sales Code, 71 O.S., Sections 601 through 667.

SUBCHAPTER 3. HEARINGS

Section
660:4-3-1. Reconsideration of Department action

660:4-3-1. Reconsideration of Department action

(a) Review of final order. Any person aggrieved by a final order of the Administrator under the Land Sales Act may obtain a review by the Oklahoma Securities Commission by filing with the Administrator within fifteen (15) days after the entry of its order, a written petition praying that the order be modified or set aside in whole or in part and stating the grounds therefor.

b) Hearing de novo. The application and petition shall within sixty (60) days be heard de novo by the Commission en banc.

(c) Request for oral argument. If petitioner desires to present oral argument on his petition, it shall be affirmatively requested in writing at the time the petition is submitted to the Administrator.

CHAPTER 5. PROCEDURES FOR THE
OKLAHOMA BUSINESS OPPORTUNITY SALES ACT
[RESERVED]

CHAPTER 6. FORMS

 

Subchapter	Section
1. General Provisions........................................................................................	660:6-1-1
3. Forms for General Purposes...........................................................................	660:6-3-1
5. Forms used under the Securities Act..................................………………………	660:6-5-1
7. Forms used under the Take-over Act...............................................................	[RESERVED]
9. Forms used under the Land Sales Act............................................................	660:6-9-1
11. Forms used under the Business Opportunity Act............................................	[RESERVED]

Section
660:6-1-1. Purpose

The provisions of this Chapter have been adopted for the purpose of describing the various forms accepted by the Department for compliance with the various provisions of the acts subject to the jurisdiction of the Administrator.

Section
660:6-3-1. Forms to inspect or copy records
660:6-3-2. Forms to file a complaint

The following forms are required to obtain records of the Department under the Open Records Act:

(1) OAD-25 -- Request for Record Inspection

(2) OAD-26 -- Record Inspection Delay Notice

(3) OAD-27 -- Record Inspection Denial

(4) OAD-28 -- Request for Record Copy

(5) OAD-29 -- Record Copy Delay Notice

(6) OAD 30 -- Record Copy Denial

(a) Form. The following form is used to file a complaint with the Department: OEN-002 -- Complaint Form

(b) Obtaining form. The form listed in Subsection (a) of this Section may be obtained from the Department.

SUBCHAPTER 5. FORMS USED UNDER THE SECURITIES ACT

Section
660:6-5-1. Forms for registration or exemption of securities [AMENDED]
660:6-5-2. Licensing forms [AMENDED]

660:6-5-1. Forms for registration or exemption of securities

(a) The following is a list of forms accepted by the Department in connection with the registration or exemption of securities under the Securities Act:

(1) U-1 -- Uniform Application to Register Securities

(2) U-2 -- Uniform Consent to Service of Process

(3) U-2A -- Uniform Form of Corporate Resolution

(4) U-7 -- Small Corporate Offerings Registration Form

(5) NF -- Uniform Investment Company Notice Filing

(6) USR-1 -- Uniform Sales Report for Issuers

(7) Form D -- Notice of Sale of Securities Pursuant to Regulation D

(8) Oklahoma Accredited Investor Exemption Supplemental Information Form

(b) Obtaining forms.

(1) Copies of forms listed in (a)(1) through (6) of this Section, can be obtained from The North American Securities Administrators Association, Inc. at 10 G Street Northeast, Suite 710, Washington, D.C. 20002 or on the NASAA web site at http://www.nasaa.org/.

(2) Copies of Form D may be obtained from The Public Reference Branch of the main office of the SEC, 450 5th Street, N.W., Washington, D.C. 20549, from any of the regional or branch offices of the SEC, or on the SEC web site at http://www.sec.gov/.

(3) Copies of the form listed in (a)(8) of this Section can be obtained from the Department.

(4) The referenced forms are also available from the Department's website at http://www.securities.ok.gov/.

660:6-5-2. Licensing forms

(a) The following is a list of forms used by the Department in connection with licensing persons as broker-dealers, agents, principals, issuer agents, investment advisers or investment adviser representatives, under the Securities Act:

(1) BD -- Uniform Application for Broker-Dealers, Investment Advisers and Agents

(2) ADV -- Uniform Application for Investment Adviser Registration

(3) U-2 -- Uniform Consent to Service of Process

(4) U-2A -- Uniform Form of Corporate Resolution

(5) U-4 -- Uniform Application for Securities Industry Registration or Transfer

(6) U-5 -- Uniform Application for Termination of Registration

(7) U-10 -- Uniform Examination Request for Non-NASD Candidates

(8) OBD-001 -- Applicant/Management Certification for Non-NASD Principals

(9) OBD-008 -- Application for Renewal of Non-NASD Broker-Dealer Registration

(10) OBD-015 -- Application for Renewal of Issuer Agent Registration

(11) OBD-016 -- Application for Renewal of Non-NASD Broker-Dealer Principal Registration

(12) OBD-018 -- Applicant/Management Certification for Issuer Agents

(13) OBD-019 -- Application for Renewal of Non-NASD Broker-Dealer Agent Registration

(14) OBD-020 -- NonBranch Sales Office Form

(b) Obtaining forms.

(1) Copies of the forms listed in (a)(1) and (2) of this Section, can be obtained from the SEC, 450 5th Street, N.W., Washington, D.C. 20549 or from any of the regional or branch offices of the SEC.

(2) Copies of the forms listed in (a)(1), (5) and (6) of this Section, can be obtained by contacting the NASD, 9509 Key West Avenue, Rockville, Maryland 20850, 301-590-6500.

(3) Copies of forms listed in (a)(3) through (7) of this Section, can be obtained from The North American Securities Administrators Association, Inc. at 10 G Street, Northeast, Suite 710, Washington, D.C. 20002.

4) Copies of forms listed in (a)(8) through (14) of this Section, can be obtained from the Department. 

(5) Many of the referenced forms are available from the Department's website at http://www.securities.ok.gov/.

SUBCHAPTER 7. FORMS USED UNDER THE TAKE-OVER ACT
[RESERVED]

Section
660:6-9-1. Forms for registration of subdivided land
660:6-9-2. Forms for licensing of agents

(a) Forms. The following is a list of forms required by the Department in connection with the registration of subdivided land under the Land Sales Act:

(1) LRF-625 -- Application for Registration of Subdivided Lands

(2) LRF-626A -- Public Offering Statement-Instruction Guide

(3) LRF-626B -- Summary Disclosure Statement Guide

(4) LRF-627 -- Registrants Semi-Annual Report

(b) Obtaining forms. The forms listed above may be obtained from the Department.

(a) Forms. The following is a list of forms required by the Department in connection with the licensing of agents under the Land Sales Act: LRF-632 -- Application for License for Subdivided Land Sales Agent

(b) Obtaining form. The form listed in Subsection (a) may be obtained from the Department.

SUBCHAPTER 11. FORMS USED UNDER THE BUSINESS OPPORTUNITY ACT
[RESERVED]

CHAPTER 10. OKLAHOMA SECURITIES ACT
[REVOKED]

CHAPTER 11. OKLAHOMA UNIFORM SECURITIES ACT OF 2004

 

Subchapter	Section
1. General provisions……..………………………………………………………………...	660:11-1-1
3. Investment Certificate Issuers……….………………………………………………….	660:11-3-1
5. Broker-dealers and agents ..................………………………………………………	660:11-5-1
7. Investment advisers and investment adviser representatives…………………...…..	660:11-7-1
9. Registration of securities ..................………………………………………………...	660:11-9-1
11. Exemptions from securities registration .................……………………………….	660:11-11-1
13. Sales literature ....................………………………………………………………….	660:11-13-1
15. Miscellaneous provisions ..................………………………………………………..	660:11-15-1

SUBCHAPTER 1. GENERAL PROVISIONS

Section
660:11-1-1. Purpose
660:11-1-2. Statutory citations
660:11-1-3. Definitions
660:11-1-4. [RESERVED]
660:11-1-5. [RESERVED]
660:11-1-6. Amendments

660:11-1-1. Purpose

The provisions of this chapter have been adopted for the purpose of carrying out the provisions of the Oklahoma Uniform Securities Act of 2004 including, but not limited to, provisions governing the offer, sale and issuance of securities.

660:11-1-2. Statutory citations

Citations to statutes in this chapter refer to the most recent codification of the Oklahoma Uniform Securities Act of 2004 in Title 71 of the Oklahoma Statutes.

660:11-1-3. Definitions

Unless the context otherwise requires, or unless defined in this section or in 660:11-5-2, terms used in this chapter, if defined in the Securities Act, shall have the meaning as defined in the Securities Act. The following words and terms, when used in this chapter, shall have the following meaning, unless the context clearly indicates otherwise:

"Authorized to do business in Oklahoma" means authorized to do business in Oklahoma pursuant to the Oklahoma Uniform Securities Act of 2004.

"Audited financial statements" means "Certified financial statements."

"Certified financial statements" means financial statements prepared in accordance with generally accepted accounting principles and examined by Independent accountants in accordance with generally accepted auditing standards, accompanied by an opinion as described in 660:11-15-1.

"CFR" means the Code of Federal Regulations.

"CRD" means the NASAA/NASD Central Registration Depository System.

"Date of filing" means the date on which a proper registration statement is filed for purposes of determining the dates of the statements of financial condition to be filed with a registration statement. If amendments to a registration statement are necessary to comply fully with the registration requirements, "date of filing" means the date on which the last amendment is filed.

"FDIC" means the Federal Deposit Insurance Corporation.

"Financial statements" means, but is not limited to, the statement of financial condition, statement of income, and statement of changes in stockholders’ or owners’ equity, as well as all related footnotes and supporting schedules applicable thereto, prepared in accordance with generally accepted accounting principles.

"Independent accountants" means independent certified public accountants. The concept of independence shall be that promulgated by the American Institute of Certified Public Accountants.

"NASAA" means the North American Securities Administrators Association.

"NASD" means the National Association of Securities Dealers, Inc.

"NASDR" means the National Association of Securities Dealers Regulation, Inc.

"1933 Act" means the Securities Act of 1933, as amended.

"1934 Act" means the Securities Exchange Act of 1934, as amended.

"1940 Act" means the Investment Company Act of 1940, as amended.

"Predecessor of an issuer" means:

(A) a person the major portion of whose assets have been acquired directly or indirectly by the issuer, or

(B) a person from which the issuer acquired directly or indirectly the major portion of its assets.

"Promotional or developmental stage company" means an issuer for which any of the following conditions exist:

(A) the company and any predecessors were formed within the twelve-month period ending on the date of the filing of the application for registration;

(B) the company has no significant revenues from the line of business being undertaken with the offering proceeds;

(C) the principal operations to be conducted with offering proceeds have not commenced or have been commenced within the twelve-month period ending on the date of the filing of the application for registration; or

(D) the principal operations to be conducted with offering proceeds have commenced, but the issuer has not demonstrated profitable operations for two of the three fiscal years prior to registration, evidenced by net income determined in accordance with generally accepted accounting principles after taxes, and excluding extraordinary items.

"Prospectus" means a prospectus in a form and containing such information as may be required by the Administrator, including a prospectus filed under the 1933 Act or an offering circular used in connection with an exempt security or transaction regardless of the designation of the document (i.e., prospectus, offering circular, memorandum, etc.).

"Registration statement" means an application for registration of securities under Sections 1-303 and 1-304 of the Securities Act and all documents and exhibits related thereto, including a Prospectus.

"SEC" means the United States Securities and Exchange Commission.

"Securities Act" means the most recent codification of the Oklahoma Uniform Securities Act of 2004 in Title 71 of the Oklahoma Statutes.

"SIPC" means the Securities Investor Protection Corporation.

660:11-1-4. [RESERVED]

660:11-1-5. [RESERVED]

660:11-1-6. Amendments

The Administrator may by order amend the provisions of this chapter to conform references to the Securities Act or to rules promulgated thereunder to numerical redesignations occasioned by legislative or rulemaking activities.

SUBCHAPTER 3. INVESTMENT CERTIFICATE ISSUERS

PART 1. GENERAL PROVISIONS

Section
660:11-3-1. Definitions

PART 3. REPORTING AND ACCOUNTING REQUIREMENTS

660:11-3-21. Loans
660:11-3-22. Valuation of other assets
660:11-3-23. Reserve against bad debts
660:11-3-24. Books and records
660:11-3-25. Reports

PART 5. MISCELLANEOUS PROVISIONS

660:11-3-31. Qualifications of conservator or liquidator
660:11-3-32. Acknowledgment
660:11-3-33. Examination standards

PART 1. GENERAL PROVISIONS

660:11-3-1. Definitions

The following words and terms, when used in this subchapter, shall have the following meaning, unless the context clearly indicates otherwise:

"Allowance" means an allowance for loan losses or a reserve against bad debts.

"Net loans outstanding" means total gross loans outstanding less unearned discount.

"Nonperforming loan" means a loan over 90 days past due with respect to principal and/or interest.

"Uncollectible" means the potential for collection is virtually nonexistent.

"Worthless" means lacking value.

PART 3. REPORTING AND ACCOUNTING REQUIREMENTS

660:11-3-21. Loans

(a) Classifications. Each investment certificate issuer shall observe the following prescribed classification standards of loans:

(1) Loss - all, or a portion, of the loan considered uncollectible or worthless.

(2) Doubtful - all, or a portion, of the loan the ultimate collection of which is doubtful and in which a substantial loss is probable, but not as yet definitely ascertainable in amount.

(3) Substandard - all, or a portion, of the loan not classified as doubtful or loss and which involves more than normal risk due to the financial condition or unfavorable record of the borrower, insufficiency of security, or other factors.

(4) Special mention - loans not warranting classification as substandard, doubtful, or loss but which are of an unusual nature carrying more than the usual risk, and should have the careful attention of management.

(b) Appraisals. Each investment certificate issuer shall perform an in-house appraisal or obtain an appraisal by a licensed independent appraiser of collateral at the time of the origination of each loan. Said appraisal shall be updated by a licensed independent appraiser upon the Administrator's written request upon a change in the economic or market conditions or if the loan becomes nonperforming.

(c) Aging schedules.

(1) The provisions of this subsection shall apply to determining the age of loans. Loans shall be aged on the basis of contract terms in effect at the close of business each month. Account balances not in current status shall be classified in the following categories (assuming monthly payments):

(A) One installment or a portion in excess of 5% of an installment due and unpaid 0 to 30 days past due.

(B) Two installments or one and a portion in excess of 5% of an installment due and unpaid 31 to 60 days past due.

(C) Three installments or two and a portion in excess of 5% of an installment due and unpaid 61 to 90 days past due.

(D) Four installments or three and a portion in excess of 5% of an installment due and unpaid over 90 days past due.

(2) Amortizing real estate loans are to be reported as past due when the borrower is in arrears two or more monthly payments. Such obligations with payments scheduled other than monthly are to be reported as past due when one scheduled payment is due and unpaid for 30 days or more.

(3) Single payment and demand notes providing for the payment of interest at stated intervals are to be reported as past due after one interest payment is due and unpaid for 30 days or more.

(4) Single payment notes providing for the payment of interest at maturity are to be reported as past due after maturity if interest or principal remains unpaid for 30 days or more.

(d) Interest. Loans are to be reported as being in nonaccrual status if:

(1) said loans are maintained on a cash basis because of deterioration in the financial position of the borrower;

(2) payment in full of interest or principal is not expected; or

(3) principal or interest has been in default for a period of 90 days or more unless the obligation is both well secured and in the process of collection. A debt is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt in full, or (2) by the guaranty of a financially responsible party. A debt is "in the process of collection" if collection of the debt is proceeding in due course either through legal action, including judgment enforcement procedures, or, in appropriate circumstances, through collection efforts not involving legal action which are reasonably expected to result in repayment of the debt or in its restoration to a current status.

(e) Charge-offs. Each investment certificate issuer shall charge-off the whole or any part of a loan at such times that said loan is classified by the Administrator as "loss" as defined in (a) above.

660:11-3-22. Valuation of other assets

(a) Real property. Real property shall be recorded on the balance sheet in accordance with generally accepted accounting principles. Each investment certificate issuer shall maintain an appraisal of all real property recorded on the balance sheet. Said appraisal shall be updated by a licensed, independent appraiser upon the Administrator's request if a change in the economic or market conditions occur. If said appraisal indicates that the value of the asset is materially overstated on the balance sheet such that the financial statements are materially misstated, said asset shall be written down to market value upon the written request of the Administrator.

(b) Other assets. All other assets of the investment certificate issuer shall be recorded on the balance sheet in accordance with generally accepted accounting principles.

(c) Charge-offs. Each investment certificate issuer shall charge-off the whole of any other asset, including real property, at such time that said asset is deemed to be lacking in value by the Administrator.

660:11-3-23. Reserve against bad debts

(a) Requirement to maintain reserve. Each investment certificate issuer shall at all times maintain a reserve against bad debts, that is, an Allowance for Loan Losses, in an amount equal to two percent (2%) of the total loans outstanding.

(b) Determination of amount of reserve. As of the end of each quarter, the management of each investment certificate issuer shall evaluate the collectibility of the loan portfolio to bring the Allowance, by means of a charge or credit, to a level adequate to absorb anticipated loan losses. Any recoveries during the reporting period should be credited to the Allowance, and any charge-offs should be charged to the Allowance. With respect to those loans classified as "doubtful" in accordance with 660:11-3-21, the Allowance shall be increased by an amount equal to fifty percent (50%) of the amounts classified as "doubtful." With respect to those loans classified as "substandard" in accordance with 660:11-3-21, the Allowance shall be increased by ten percent (10%) of the amounts of the outstanding loans classified as "substandard."

660:11-3-24. Books and records

(a) Maintenance of books and records. Each investment certificate issuer shall maintain its books and records in such a manner that said books and records will facilitate preparation of financial statements in accordance with generally accepted accounting principles. Said books and records shall be maintained in sufficient detail to afford an analysis of all transactions.

(b) Financial statements. Each investment certificate issuer shall prepare a balance sheet and statement of income at the close of business on the last day of each month. Said financial statements shall be prepared not later than fifteen (15) business days after the end of the accounting period.

660:11-3-25. Reports

(a) Reports required. Each investment certificate issuer shall prepare and file with the Administrator quarterly reports for the quarters other than the quarter ending the fiscal year. Each report shall include the following:

(1) balance sheet and statement of income at the close of business on the last day of the quarter covered by said report;

(2) a schedule of the loans classified as loss, doubtful, substandard or special mention pursuant to 660:11-3-21, to include the loan balance amount of accrued interest and value of collateral for each loan appearing thereon; and

(3) aging schedules as prepared in accordance with 660:11-3-21.

(b) When to file. Each report shall be submitted to the Administrator within thirty (30) days of the end of the quarter for which the report applies.

PART 5. MISCELLANEOUS PROVISIONS

660:11-3-31. Qualifications of conservator or liquidator

A conservator or liquidator, who may be the Administrator of the Department, a member of his staff, or an independent party, appointed under Section 1-308.I.2. of the Securities Act shall be of legal age, of good moral character, a resident of the state of Oklahoma and competent to perform the duties of conservator or liquidator.

660:11-3-32. Acknowledgment

The purpose of Section 1-308.C of the Securities Act is to aid investment certificate issuers in applying for insurance by the FDIC. The prior issuance and continued effectiveness of a registration order shall constitute the written acknowledgment addressed by Section 1-308.C of the Securities Act. A formal acknowledgment for purposes of seeking insurance by the FDIC will be issued by the Administrator upon receipt of a written request therefor. Said request shall be accompanied by a copy of the application filed or to be filed with the FDIC. Upon obtaining membership in the FDIC, an investment certificate issuer shall not be subject to the prospectus preparation and delivery requirements set forth in Section 1-304.E of the Securities Act.

660:11-3-33. Examination standards

Examinations made by the Administrator or designated members of his staff may be performed in reliance upon the American Institute of Certified Public Accountants industry audit guides for financial institutions and federal regulatory guidelines for financial institutions.

SUBCHAPTER 5. BROKER-DEALERS AND AGENTS

PART 1. GENERAL PROVISIONS

Section
660:11-5-1. Purpose
660:11-5-2. Definitions

PART 3. LICENSING PROCEDURES

660:11-5-11. Initial registration
660:11-5-12. Renewal
660:11-5-13. Agent transfer
660:11-5-14. Agent termination
660:11-5-15. Categories of registration
660:11-5-16. Qualification examination requirements
660:11-5-17. Net capital for broker-dealers
660:11-5-18. [RESERVED]
660:11-5-19. Piecemeal filings
660:11-5-20. Cross-border licensing exemption

PART 5. REPORTING REQUIREMENTS

660:11-5-31. Post-registration reporting requirements

PART 7. RECORD KEEPING AND ETHICAL STANDARDS

660:11-5-41. Books and records requirements for broker-dealers
660:11-5-42. Standards of ethical practices for broker-dealers and their agents
660:11-5-42.1. Standards of ethical practices--issuer agents
660:11-5-43. Examination of broker-dealers
660:11-5-44. [RESERVED]
660:11-5-45. Financial statements for broker-dealers

PART 1. GENERAL PROVISIONS

660:11-5-1. Purpose

The rules in this subchapter have been adopted to provide procedures for complying with the provisions of Sections 1-401 through 1-402 of the Securities Act relating to the licensing of broker-dealers and agents under the Securities Act.

660:11-5-2. Definitions

In addition to the terms defined in 660:11-1-3, the following words and terms when used in this subchapter shall have the following meaning, unless the context clearly indicates otherwise:

"Branch office" means any business location of a broker-dealer identified to the public or customers by any means as a location at which a securities business is conducted on behalf of the broker-dealer, excluding any location identified solely in a telephone directory line listing or on a business card or letterhead, which listing, card, or letterhead also sets forth the address and telephone number of the office of the broker-dealer responsible for supervising the activities of the identified location.

"Complaint" means and includes any written statement of a customer or any person acting on behalf of a customer alleging a grievance involving the activities of those persons under the control of the broker-dealer in connection with the solicitation or execution of any transaction or the disposition of securities or funds of that customer.

"Completion of the transaction" means:

(A) In the case of a customer who purchases a security through or from a broker-dealer, except as provided in (B), the time when such customer pays the broker-dealer any part of the purchase price, or, if payment is effected by bookkeeping entry, the time when such bookkeeping entry is made by the broker-dealer for any part of the purchase price;

(B) In the case of a customer who purchases a security through or from a broker-dealer and who makes payments therefor prior to the time when payment is requested or notification is given that payment is due, the time when such broker-dealer delivers the security to or into the account of such customer;

(C) In the case of a customer who sells a security through or to a broker-dealer, except as provided in (D), if any security is not in the custody of the broker-dealer at the time of sale, the time when the security is delivered to the broker-dealer, and if the security is in the custody of the broker-dealer at the time of sale, the time when the broker-dealer transfers the security from the account of such customer;

(D) In the case of a customer who sells a security through or to a broker-dealer and who delivers such security to such broker-dealer prior to the time when delivery is requested or notification is given that delivery is due, the time when such broker-dealer makes payment to or into the account of such customer.

"Customer" means any person who, in the regular course of a broker-dealer's business, has cash or securities in the possession of such broker-dealer. "Customer" shall not include a broker-dealer.

"Direct participation programs" mean programs which provide for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof; excluded from this definition are real estate investment trusts, tax qualified pension and profit sharing plans pursuant to Sections 401 and 403(a) of the Internal Revenue Code and individual retirement plans Section 408 of that code, tax sheltered annuities pursuant to the provisions of Section 403(b) of the Internal Revenue Code and any company including separate accounts registered pursuant to the 1940 Act.

"Investment company and variable contracts products" means:

(A) redeemable securities of companies registered pursuant to the 1940 Act;

(B) securities of closed-end companies registered pursuant to the 1940 Act during the period of original distribution only; and

(C) variable contracts and insurance premium funding programs and other contracts issued by an insurance company except contracts which are exempt securities pursuant to Section 3(a)(8) of the 1933 Act.

"Municipal securities" mean securities which are direct obligations of, or obligations guaranteed as to principal or interest by, a state or any political subdivision thereof, or any agency or instrumentality of a state or any political subdivision thereof, or any municipal corporate instrumentality of one of more states, or any security which is an industrial development bond as defined in Section 3(a)(29) of the 1934 Act.

"Nonbranch sales office" means any business location of the broker-dealer identified to the public or customers by any means as a location at which a securities business is conducted on behalf of the broker-dealer which location is identified solely in a telephone directory line listing or on a business card or letterhead, which listing, card, or letterhead also sets forth the address and telephone number of the office of the broker-dealer responsible for supervising the activities of the identified location.

"Office" means any location where a broker-dealer and/or one or more of its agents regularly conduct the business of handling funds or securities or effecting any transactions in, or inducing or attempting to induce the purchase or sale, of any security.

"Option" means any put, call, straddle or other option or privilege, which is a "security" as defined in Section 2(1) of the 1933 Act, as amended, but shall not include any tender offer, registered warrant, right, convertible security or any other option in respect to which the writer is the issuer of the security which may be purchased or sold upon the exercise of the option.

"OSJ" or "Office of supervisory jurisdiction" means any office designated as directly responsible for the review of the activities of registered agents or associated persons in such office and/or in other offices of the broker-dealer. An office of supervisory jurisdiction would be any business location of a broker-dealer at which one or more of the following functions take place:

(A) order execution and/or market making;

(B) structuring of public offerings or private placements;

(C) maintaining custody of customers' funds and/or securities;

(D) final acceptance (approval) of new accounts on behalf of the broker-dealer;

(E) review and endorsement of customer orders pursuant to 660:11-5-42;

(F) final approval of advertising or sales literature for use by agents of the broker-dealer;

(G) responsibility for supervising the activities of persons associated with the broker-dealer at one or more other offices of the broker-dealer.

"Principal" means:

(A) any individual registered with a registered national securities association as a principal or branch manager of a member, broker or dealer, or any other person who has been delegated supervisory responsibility for the firm or its associated persons; or

(B) any person associated with a non-NASD applicant for registration as a broker-dealer who is or will be actively engaged in the management of the applicant's securities business, including supervision, solicitation, conduct of business or training of persons associated with an applicant for any of these functions, and is designated as a principal by the broker-dealer applicant.

"Public offering price" shall mean the price at which the security involved was offered to the public as set forth in the prospectus of the issuing company.

"Selling group" means any group formed in connection with a public offering, to distribute all or part of an issue of securities by sales made directly to the public by or through members of such selling group, under an agreement which imposes no financial commitment on the members of such group to purchase any such securities except as they may individually or collectively elect to do so.

"Selling syndicate" means any syndicate formed in connection with a public offering, to distribute all or part of an issue of securities by others or sales made directly to the public by or through participants in such syndicate under an agreement which imposes a financial commitment upon the participants in such syndicate to purchase any of such securities.

"Undertaking for Participation in the NASAA/CRD Temporary Agent Transfer Program" means the document entitled "Broker-Dealer Undertaking for Participation in the NASAA/CRD Temporary Agent Transfer Program" which the employing broker-dealer has executed and filed with the CRD.

PART 3. LICENSING PROCEDURES

660:11-5-11. Initial registration

(a) Broker-dealer. Each broker-dealer applying for initial registration pursuant to Section 1-406 of the Securities Act:

(1) who is contemporaneously applying for NASD membership or who is an NASD member:

(A) shall file with the CRD:

(i) a completed Form BD, including Schedules A-E; and

(ii) the filing fee specified in Section 1-612 of the Securities Act.

(B) shall file with the Department, within 60 days of becoming registered, a list of the addresses, telephone numbers and resident agents of all nonbranch sales offices located within the state of Oklahoma.

(2) who is not a current NASD member shall file with the Department:

(A) a completed Form BD, including Schedules A-E;

(B) the filing fee specified in Section 1-612 of the Securities Act;

(C) audited financial statements as required by 660:11-5-45;

(D) documentation of compliance with the minimum capital requirement set forth in Section 1-406.E of the Securities Act and 660:11-5-17;

(E) designation, qualification and registration of a principal as defined in 660:11-5-2 pursuant to (c) of this section;

(F) a list of the addresses, telephone numbers and resident agents of all nonbranch sales offices located within the state of Oklahoma;

(G) a copy of the written supervisory procedures of the broker-dealer; and

(H) any additional documentation, supplemental forms and information as the Administrator may deem necessary.

(b) Broker-dealer agent.

(1) Required documents. Each broker-dealer agent applying for initial registration pursuant to Section 1-406 of the Securities Act shall file:

(A) a completed Form U-4;

(B) the filing fee specified in Section 1-612 of the Securities Act;

(C) proof of successful completion of the applicable examinations specified in 660:11-5-16; and

(D) any additional documentation, supplemental forms and information as the Administrator may deem necessary.

(2) Where to file. An agent applying for registration with an NASD member shall file the documentation required by (1)(A) through (C) of this subsection with the CRD and shall file any additional documentation with the Department. Agents applying for registration with a non-NASD broker-dealer shall file the required documentation with the Department.

(c) Broker-dealer principal.

(1) Required documents. Each person applying for initial registration under the Securities Act as a principal of a broker-dealer who is not a member of the NASD shall file with the Department:

(A) a completed Form U-4;

(B) a $50.00 filing fee;

(C) proof of successful completion of the applicable examinations specified in 660:11-5-16;

(D) an executed Applicant/Management Certification for Non-NASD Principals Form; and

(E) any additional documentation, supplemental forms and information as the Administrator may deem necessary.

(2) Effect of registration. Registration under the Securities Act as a principal of a broker-dealer shall constitute registration as an agent.

(d) Issuer agent. Agents of issuers applying for initial registration in the state of Oklahoma pursuant to Section 1-406 of the Securities Act shall file the following with the Department:

(1) a completed Form U-4;

(2) the fee specified in Section 1-612 of the Securities Act;

(3) proof of successful completion of the applicable examinations specified in 660:11-5-16;

(4) an executed Applicant/Management Certification Form; and

(5) any additional documentation, supplemental forms and information as the Administrator may deem necessary.

(e) Requirement for continued registration. 660:11-5-42, adopted pursuant to Section 1-411.D.13 of the Securities Act, sets forth the standards of ethical practices for broker-dealers and their agents. Paragraph (22) of said rule requires that each broker-dealer establish, maintain and enforce written procedures that will enable it to supervise properly the activities of each registered agent to assure compliance with applicable securities laws, rules, regulations and statements of policy. Therefore, the initial and continued registration of a broker-dealer that is not an NASD member is conditioned upon the designation, qualification and registration of a principal who shall be responsible for the supervision of all agents of the broker-dealer who are registered under the Securities Act. A broker-dealer applicant or registrant may apply for registration of more than one person as a principal of said broker-dealer.

660:11-5-12. Renewal

(a) Broker-dealer. An NASD member shall renew its registration by submitting the renewal fee specified in Section 1-612 of the Securities Act to the CRD. A non-NASD member shall renew its registration by submitting to the Department an Application for Renewal of Non-NASD Broker-Dealer Registration and the renewal fee specified in Section 1-612 of the Securities Act.

(b) Broker-dealer agent. Agents of NASD members shall renew their registrations by submitting the renewal fee specified in Section 1-612 of the Securities Act to the CRD. Agents of non-NASD members shall renew their registrations by submitting an Application for Renewal of Non-NASD Broker-Dealer Agent Registration and the renewal fee specified in Section 1-612 of the Securities Act to the Department.

(c) Broker-dealer principal. Principals of non-NASD members shall renew their registrations by submitting an Application for Renewal of Non-NASD Broker-Dealer Principal Registration and the renewal fee specified in Section 1-612 of the Securities Act to the Department.

(d) Issuer agent. Issuer agents shall renew their registrations by submitting an Application for Renewal of Issuer Agent Registration and the renewal fee specified in Section 1-612 of the Securities Act to the Department.

660:11-5-13. Agent transfer

An agent who wishes to terminate his employment with one registered broker-dealer and thereafter commence employment with another broker-dealer may do so without causing a suspension in the agent's registration if all of the following conditions are met:

(1) Both the terminating and employing broker-dealers are members of the National Association of Securities Dealers, Inc.

(2) The transfer is effected in accordance with the terms and conditions of the NASAA/NASD Central Registration Depository Temporary Agent Transfer Program.

(3) The employing broker-dealer has executed and filed an "Undertaking for Participation in the NASAA/NASD Central Registration Depository TAT Program."

(4) The employing broker-dealer currently is not subject to an order of the Administrator which would otherwise make this section unavailable.

660:11-5-14. Agent termination

(a) Filing requirement. Termination notice pursuant to the requirements of Section 1-408.A of the Securities Act shall be given by filing within thirty calendar (30) days of termination, a completed Uniform Termination Notice For Securities Industry Registration, Form U-5. The Form U-5 for an agent terminating registration with a NASD member shall be filed with the CRD. The Form U-5 for agents terminating registration with a non-NASD broker-dealer shall be filed with the Department.

(b) Responsibility for filing. A completed Form U-5 signed by the employer will be accepted as fulfilling the statutory requirements of both parties. Upon verification that the Form U-5 has not been filed by the broker-dealer, the agent shall notify the Department in writing of said termination.

(c) Effect of failure to file. In the event of termination, the filing of a future application for registration shall not be considered complete until compliance with the termination notice requirements of Section 1-408.A and this section.

660:11-5-15. Categories of registration

(a) Broker-dealers. The Administrator shall register broker-dealers in accordance with the following categories:

(1) General securities - an applicant whose activities in the securities business are not limited.

(2) Investment company and variable contracts products - an applicant whose activities in the securities business are limited to the solicitation, purchase and/or sale of investment company and variable contracts products.

(3) Direct participation programs - an applicant whose activities in the securities business are limited solely to marketing, on behalf of the issuer, direct participation programs.

(4) Options - an applicant whose activities in the securities business include transactions in put or call options with the public.

(5) Municipal securities - an applicant whose activities in the securities business are limited solely to effecting transactions in municipal securities.

(6) Multiple categories - an applicant may be registered in more than one category if qualified to be so registered.

(b) Principals and agents. The Administrator shall register principals of broker-dealers and agents in accordance with the following categories of registration as applicable:

(1) General securities principal or agent - an applicant representing a broker-dealer whose activities in the securities business are not limited.

(2) Investment company and variable contracts products principal or agent - an applicant representing a broker-dealer whose activities in the securities business are limited to the solicitation, purchase and/or sale of investment company and variable contracts products.

(3) Direct participation programs principal or agent - an applicant representing a broker-dealer whose activities in the securities business are limited to marketing, on behalf of the issuer, direct participation programs.

(4) Options principal or agent - an applicant representing a broker-dealer whose activities in the securities business are limited to transactions in put or call options with the public.

(5) Municipal securities principal or agent - an applicant representing a broker-dealer whose activities in the securities business are limited to effecting transactions in municipal securities.

(6) Limited agent - corporate securities - an applicant representing a general securities broker-dealer in the solicitation, purchase, and/or sale of a security, as that term is defined in Section 1-102.32 of the Securities Act, however, such person's activities do not include activities with respect to the following securities unless such person is separately qualified and registered in the category or categories of registration related to these securities:

(A) Municipal securities;

(B) Option securities;

(C) Redeemable securities of companies registered pursuant to the 1940 Act, except for money market funds; and/or

(D) Direct participation programs.

(7) Issuer agent - an applicant whose activities in the securities business are limited solely to effecting transactions for the benefit of an issuer as that term is defined in Section 1-102.19 of the Securities Act.

(8) Multiple categories - an applicant may be registered in more than one category provided he is qualified to be so registered. An applicant qualified solely within one category of registration shall not be qualified to transact business as an agent in any area not prescribed by said category.

660:11-5-16. Qualification examination requirements

(a) Examination requirement. Proof of compliance with the examination requirements of this rule is prerequisite to a complete filing for registration under the Securities Act. 

(b) Examination. Each applicant for registration as a broker-dealer agent, broker-dealer principal or issuer agent must pass the applicable examinations for the desired category of registration. The examinations shall consist of a qualification examination(s) applicable to the category of registration applied for and a uniform state law examination. The Administrator adopts the examinations administered by the NASDR as applicable to each individual registrant by category of registration as the required examinations.

(c) Limitations on licenses. Without regard to the category of registration of one's broker-dealer, if any, the activities of each person registered as a principal or agent are limited to the corresponding category for which they are qualified by examination, unless waived, and for which they are registered under the Securities Act.

(d) Examination categories. Examination categories are as follows:

(1) General securities or government securities - NASD members:

(A) Principals--Series 7, 24 or such other examination(s) determined by the Administrator to be acceptable in lieu thereof and Series 63 or 66.

(B) Agents--Series 7 and 63 or 66

(2) General securities - Non-NASD Members/Issuers:

(A) Principals--Series 7, 24 or such other examination(s) determined by the Administrator to be acceptable in lieu thereof and Series 63 or 66

(B) Agents--Series 7 and 63 or 66

(3) Investment company and variable contract products:

(A) Principals--Series 6, 26 and 63 or 66

(B) Agents--Series 6 and 63 or 66

(4) Direct participation programs:

(A) Principals--Series 22, 39 and 63 or 66

(B) Agents--Series 22 and 63 or 66

(5) Options:

(A) Principals--Series 4, 7 and 63 or Series 4, 62 and 63 or 66

(B) Agents--Series 7 or 42 and 63 or 66

(6) Municipal securities:

(A) Principals--Series 52, 53 and 63 or 66

(B) Agents--Series 52 and 63 or 66

(7) Limited agent - corporate securities--Series 62 and 63 or 66

(8) Assistant agent - order processing--Series 11 and 63 or 66

(e) Change in series number. Should NASDR examination series numbers change, the most current examination series applicable to the category of registration shall apply.

(f) Validity of prior examination scores. The Department will not recognize for purposes of qualification for registration under the Securities Act any NASDR examination score which predates an initial application for registration by more than two (2) years in the absence of continuous NASD registration since examination. The Department will not recognize for purposes of qualification for registration in this state the examination score(s) of any person whose most recent registration as an agent or principal has been terminated with the NASD for a period of two (2) or more years immediately preceding the date of receipt by the Department of a new application for registration under the Securities Act.

(g) Waiver of examination requirement. The Administrator may waive the examination requirements on a case-by-case basis when such action is determined to be consistent with the purposes fairly intended by the policy and provisions of the Securities Act. Requests for waivers shall be in writing setting forth the reasons therefor.

660:11-5-17. Net capital for broker-dealers

(a) General requirement. All broker-dealers registered under the Securities Act shall at all times have and maintain net capital of no less than the highest minimum requirement applicable to each broker-dealer as established by the SEC in 17 CFR 240.15c3-1.

(b) Calculation of "net capital." As used in this subchapter, net capital shall mean the net worth of a broker-dealer calculated according to the formula established by the SEC.

660:11-5-18. [RESERVED]

660:11-5-19. Piecemeal filings

An application for initial registration or renewal of registration as a broker-dealer, broker-dealer agent, broker-dealer principal or issuer agent shall not be deemed to have been filed until all of the documentation required by 660:11-5-11 or 660:11-5-12 is submitted, or is otherwise made available, to the Department and payment of the proper fees is made. Such documentation shall be in completed form.

660:11-5-20. Cross-border licensing exemption.

By authority delegated to the Administrator in Section 1-401.B.1.h of the Securities Act, a Canadian broker-dealer meeting all of the following conditions is determined to be exempt from the registration requirement in Section 1-401.A of the Securities Act:

(1) The broker-dealer is domiciled in Canada, does not have an office or other physical presence in the United States, and is not an office or branch of a broker-dealer domiciled in the United States.

(2) The broker-dealer is registered with or a member of a Canadian self-regulatory organization, stock exchange, or the Bureau des Services Financiers and maintains that registration or membership in good standing.

(3) The broker-dealer and its agents effect transactions in securities with or for, or induce or attempt to induce the purchase or sale of any security by:

(A) an individual from Canada that temporarily resides or is temporarily present in this state and with whom the broker-dealer had a bona fide broker-dealer-customer relationship before the individual entered the United States; or

(B) an individual present in this state whose transactions relate to a self-directed, tax advantaged Canadian retirement plan of which the individual is the holder or contributor.

(4) The broker-dealer prominently discloses in writing to its clients in this state that the broker-dealer and its agents are not subject to the full regulatory requirement of the Securities Act.

(5) Neither the broker-dealer nor its agents disclaim the applicability of Canadian law or jurisdiction to any transaction conducted pursuant to this exemption.

(6) The broker-dealer and its agents comply with the antifraud provisions of the Securities Act and of federal securities laws.

(7) Prior to or contemporaneously with the first transaction in Oklahoma, the broker-dealer must file a consent to service of process on Form U-2 in a manner that effectively appoints the Administrator as agent for service of process.

(8) Any Canadian broker-dealer or agent relying on this exemption shall, upon written request, furnish the Department any information relative to a transaction covered by this Section that the Administrator deems relevant.

PART 5. REPORTING REQUIREMENTS

660:11-5-31. Post-registration reporting requirements

(a) Filing requirement. Pursuant to Section 1-410.B of the Securities Act, all broker-dealers registered under Section 1-406 of the Securities Act who are not NASD members must make post-registration filings with the Department. The Department will not accept incomplete or piecemeal filings. Failure to file a complete report when due may result in the suspension or revocation of registration.

(b) Report content. Such registered broker-dealers shall make one (1) post-registration filing each fiscal year. Said filing shall contain audited financial statements as of the broker-dealer's fiscal year end and the report filing fee specified in Section 1-612 of the Securities Act.

(c) Report filing dates. Post-registration filings become due on the last day of the fiscal period to which they apply; however, a grace period is provided before a filing becomes delinquent. The filing must be made by the last day of the fourth month following the close of the registrant's fiscal year.

PART 7. RECORD KEEPING AND ETHICAL STANDARDS

660:11-5-41. Books and records requirements for broker-dealers

17 CFR § 240.17a-3 and 17 CFR § 240.17a-4 (2003), books and records rules established by the SEC under the 1934 Act, are hereby incorporated by reference as if fully set forth into this Chapter.

660:11-5-42. Standards of ethical practices for broker-dealers and their agents

(a) Purpose. This rule is intended to set forth the standards of ethical practices for broker-dealers and their agents. Any noncompliance with the standards of ethical practices specified in this section will constitute unethical practices in the securities business; however, the following is not intended to be a comprehensive listing of all specific events or conditions that may constitute such unethical practices. The standards shall be interpreted in such manner as will aid in effectuating the policy and provisions of the Securities Act, and so as to require that all practices of broker-dealers, and their agents, in connection with their activities in this state shall be just, reasonable and not unfairly discriminatory.

(b) Standards.

(1) A broker-dealer and his agents, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade. A broker-dealer and his agents shall not violate any federal securities statute or rule or any rule of a national securities exchange or national securities association of which it is a member with respect to any customer, transaction or business effected in this state.

(2) In recommending to a customer the purchase, sale or exchange of any security, the broker-dealer and his agents shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs. Prior to making a recommendation to a customer a broker-dealer shall also make reasonable efforts to obtain information concerning the customer's financial background, tax status, and investment objectives, and such other information used or considered to be reasonable and necessary by such broker-dealer or registered agent in making such recommendation.

(3) Charges, if any, for services performed, including miscellaneous services such as collection of monies due for principal, dividends, or interest, exchange or transfer of securities, appraisals, safekeeping or custody of securities, and other services, shall be reasonable and not unfairly discriminatory between customers.

(4) In "over-the-counter" transactions, whether in "listed" or "unlisted" securities, if a broker-dealer or agent of a broker-dealer buys for his own account from his customer, or sells for his own account to his customer, he shall buy or sell at a price which is fair, taking into consideration all relevant circumstances, including market conditions with respect to such security at the time of the transaction, the expense involved, and the fact that he is entitled to a profit; and if he acts as agent for his customer in any such transaction, he shall not charge his customer more than a fair commission or service charge, taking into consideration all relevant circumstances including market conditions with respect to such security at the time of the transaction, the expense of executing the order and the value of any service he may have rendered by reason of his experience in and knowledge of such security and the market therefor.

(5) No broker-dealer or agent of a broker-dealer shall publish or circulate, or cause to be published or circulated, any notice, circular, advertisement, newspaper article, investment service, or communication of any kind which purports to report any transaction as a purchase or sale of any security unless such broker-dealer believes that such transaction was a bona fide purchase or sale of such security; or which purports to quote the bid price or asked price for any security, unless such broker-dealer believes that such quotation represents a bona fide bid for, or offer of, such security. If nominal quotations are used or given, they shall be clearly stated or indicated to be only nominal quotations.

(6) No broker-dealer or agent of a broker-dealer shall make an offer to buy from or sell to any person any security at a stated price unless such broker-dealer or agent is prepared to purchase or sell, as the case may be, at such price and under such conditions as are stated at the time of such offer to buy or sell.

(7) A broker-dealer, when a member of a selling syndicate or a selling group, shall purchase securities taken in trade at a fair market price at the time of purchase, or shall act as agent in the sale of such securities.

(8) A broker-dealer who in the capacity of paying agent, transfer agent, trustee, or any other similar capacity, has received information as to the ownership of securities, shall under no circumstances make use of such information for the purpose of soliciting purchases, sales or exchanges except at the request and on behalf of the issuer.

(9) No broker-dealer or agent of a broker-dealer shall, directly or indirectly, give, permit to be given, or offer to give, anything of value to any person for the purpose of influencing or rewarding the action of such person in connection with the publication or circulation in any newspaper, investment service, or similar publication, of any matter which has, or is intended to have, an effect upon the market price of any security, provided that this rule shall not be construed to apply to matter which is clearly distinguishable as paid advertising.

(10) A broker-dealer at or before the completion of each transaction with a customer shall give or send to each customer written notification disclosing:

(A) whether such broker-dealer is acting as a broker for such customer and some other person; and

(B) in any case in which such broker-dealer is acting as a broker for such customer or for both such customer and some other person, either the name of the person from whom the security was purchased or to whom it was sold for such customer and the date and the time when such transaction took place or the fact that such information will be furnished upon the request of such customer, and the source and amount of any commission or other remuneration received or to be received by such broker-dealer in connection with the transaction.

(11) A broker-dealer or agent of a broker-dealer controlled by, controlling, or under common control with, the issuer of any security, shall, before entering into any contract with or for a customer for the purchase or sale of such security, disclose to such customer the existence of such control, and if such disclosure is not made in writing, it shall be supplemented by the giving or sending of written disclosure at or before the completion of the transaction.

(12) A broker-dealer or agent of a broker-dealer who is acting as a broker for a customer or for both such customer and some other person, or a broker-dealer who is acting as a dealer and who receives or has promise of receiving a fee from a customer for advising such customer with respect to securities, shall, at or before the completion of any transaction for or with such customer in any security in the primary or secondary distribution of which such broker-dealer is participating or is otherwise financially interested, give such customer written notification of the existence of such participation or interest.

(13) The following standards shall apply to discretionary accounts:

(A) No broker-dealer or agent of a broker-dealer shall effect with or for any customer's account in respect to which such broker-dealer or agent or employee is vested with any discretionary power any transactions of purchase or sale which are excessive in size or frequency in view of the financial resources of such customer and character of such account.

(B) No broker-dealer or agent of a broker-dealer shall exercise any discretionary power in a customer's account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the broker-dealer, as evidenced in writing by the broker-dealer or the partner, officer, or manager duly designated by the broker-dealer, in accordance with (22) of this subsection.

(C) The broker-dealer or the person duly designated shall approve promptly, in writing, each discretionary order entered and shall review all discretionary accounts at frequent intervals in order to detect and prevent transactions which are excessive in size or frequency in view of the financial resources of the customer and the character of the account.

(D) This section shall not apply to discretion as to the price at which or the time when an order given by a customer for the purchase or sale of a definite amount of a specified security shall be executed.

(14) A broker-dealer or agent of a broker-dealer who is participating or who is otherwise financially interested in the primary or secondary distribution of any security which is not admitted to trading on a national securities exchange, shall make no representation that such security is being offered to a customer "at the market" or at a price related to the market price unless such broker-dealer or agent knows or has reasonable grounds to believe that a market for such security exists other than that made, created, or controlled by such broker-dealer or agent, or by any person for whom he is acting or with whom he is associated in such distribution, or any person controlled by, controlling or under common control with such broker-dealer or agent.

(15) No broker-dealer or agent of a broker-dealer shall effect any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device, practice, plan, program, design, or contrivance.

(16) The following standards shall apply to the use of customer funds:

(A) No broker-dealer or person associated with a broker-dealer shall make improper use of a customer's securities or funds.

(B) No broker-dealer or agent of a broker-dealer shall lend, either to himself or to others, securities carried for the account of any customer, unless such broker-dealer or agent shall first have obtained from the customer a separate written authorization permitting the lending of securities thus carried by such broker-dealer or agent; and, regardless of any agreement between the broker-dealer or agent and a customer authorizing the former to lend or pledge such securities, no broker-dealer or agent shall lend or pledge more of such securities than is fair and reasonable in view of the indebtedness of the customer, except such lending as may be specifically authorized under (C) of this paragraph.

(C) No broker-dealer or agent of a broker-dealer shall lend securities carried for the account of any customer which have been fully paid for or which are in excess of the amount which may be loaned in view of the indebtedness of the customer, unless such broker-dealer or agent shall first have obtained from such customer a separate written authorization designating the particular securities to be loaned.

(D) No broker-dealer or agent of a broker-dealer shall hold securities carried for the account of any customer which have been fully paid for or which are in excess of the amount which may be pledged in view of the indebtedness of the customer, unless such securities are segregated and identified by a method which clearly indicates the interest of such customer in those securities.

(E) No broker-dealer or agent of a broker-dealer shall guarantee a customer against loss in any securities account of such customer carried by the broker-dealer or in any securities transaction effected by the broker-dealer or agent with or for such customer.

(F) No broker-dealer or agent of a broker-dealer shall share directly or indirectly in the profits or losses in any account of a customer carried by the broker-dealer or agent or any other broker-dealer or agent, unless such broker-dealer or agent obtains written authorization from the broker-dealer carrying the account; and, a broker-dealer or agent shall share in the profits or losses in any account of such customer only in direct proportion to the financial contributions made to such account by the broker-dealer or agent. Exempt from the direct proportionate share limitation are accounts of the immediate family of such broker-dealer or agent. For purposes of this section, the term "immediate family" shall include parents, mother-in-law or father-in-law, husband or wife, children or any relative to whose support the broker-dealer or agent otherwise contributes directly or indirectly. 

(17) The following standards shall apply to customer credit:

(A) No broker-dealer or agent of a broker-dealer shall take or carry any account or make a transaction for any customer under any arrangement which contemplates or provides for the purchase of any security for the account of the customer or for the sale of any security to the customer where payment for the security is to be made to the broker-dealer by the customer over a period of time in installments or by a series of partial payments, unless:

(i) in the event such broker-dealer acts as an agent or broker in such transaction, he shall immediately, in the regular course of his business, make an actual purchase of the security for the account of the customer, and shall immediately, in the regular course of his business, take possession or control of such security and shall maintain possession or control thereof so long as he remains under obligation to delivery of the security to the customer;

(ii) in the event such broker-dealer acts as a principal in any such transaction, he shall, at the time of such transaction own such security and shall maintain possession or control thereof so long as he remains under obligation to deliver the security to the customer; and

(iii) the provisions of Regulation T of the Federal Reserve Board, if applicable to such broker-dealer, are satisfied.

(B) No broker-dealer, whether acting as a principal or agent, shall, in connection with any transaction referred to in this Standard, make any agreement with his customer under which such broker-dealer shall be allowed to pledge or hypothecate any security involved in such transaction for any amount in excess of the indebtedness of the customer to such broker-dealer.

(18) The following standards shall apply to books and records:

(A) Each broker-dealer shall keep and preserve books, accounts, records, memoranda, and correspondence in conformity with all applicable laws, rules, regulations, and statements of policy promulgated by the Administrator and/or the Commission under the Securities Act.

(B) Each broker-dealer shall keep and preserve in each office of supervisory jurisdiction, as defined in 660:11-5-2, either a separate file of all written complaints of customers and action taken by the broker-dealer, if any, or a separate record of such complaints and clear reference to the files containing the correspondence connected with such complaints as maintained in such office.

(19) A broker-dealer shall make available to inspection by any bona fide regular customer, upon request, the information relative to such broker-dealer's financial condition as disclosed in its most recent balance sheet prepared either in accordance with such broker-dealer's usual practice or as required by the state or federal securities laws, or any rule or regulation promulgated thereunder.

(20) No broker-dealer or agent of a broker-dealer shall offer any security or confirm any purchase or sale of any security, from or to any person not actually engaged in the investment banking or securities business at any price which shows a concession, discount, or other allowance, but shall offer such security and confirm such purchase or sale at a net dollar or basis price.

(21) Selling concessions, discounts, or other allowances, as such, shall be allowed only as consideration for services rendered in distribution and in no event shall be allowed to anyone other than a broker-dealer registered under the Securities Act actually engaged in the investment banking or securities business; provided however, that nothing in this standard shall prevent any broker-dealer from selling any security owned by him to any person at any net price which may be fixed by him unless prevented therefrom by agreement.

(22) The following standards shall apply to supervisory procedures:

(A) Each broker-dealer shall establish, maintain and enforce written procedures which will enable it to supervise properly the activities of each registered agent and associated person to assure compliance with applicable securities laws, rules, regulations and statements of policy promulgated by the Administrator and/or the Commission under the Securities Act.

(B) Final responsibility for proper supervision shall rest with the broker-dealer, the principal(s) of the broker-dealer registered in accordance with 660:11-5-11, and the principal(s) of the broker-dealer in each OSJ, including the main office, and the registered representatives in each non-OSJ branch office designated by the broker-dealer to carry out the supervisory responsibilities assigned to that office by the broker-dealer pursuant to the rules and regulations of the NASD. A copy of the written supervisory procedures shall be kept in each office of supervisory jurisdiction and each non-OSJ branch office.

(C) Each broker-dealer shall be responsible for keeping and preserving appropriate records for carrying out such broker-dealer's supervisory procedures. Each broker-dealer shall review and endorse in writing, on an internal record, all transactions and all correspondence of its registered agents pertaining to the solicitation or execution of any securities transaction.

(D) Each broker-dealer shall review the activities of each office, which shall include the periodic examination of customer accounts to detect and prevent irregularities or abuses and conduct at least an annual inspection of each office of supervisory jurisdiction.

(E) Each broker-dealer shall have the responsibility and duty to ascertain by investigation the good character, business repute, qualifications and experience of any person prior to making such a certification in the application of such person for registration under the Securities Act.

(23) The following standards shall apply to financial information:

(A) Each broker-dealer offering or selling securities not listed on a registered national securities exchange recognized by the Administrator shall have and furnish to customers, on request, a balance sheet of the issuer as of a date within eighteen months, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations, prepared in accordance with generally accepted accounting principles, the names of the issuer's proprietors, partners or officers, the nature of the enterprise of the issuer and any other available information reasonably necessary for evaluating the desirability or the lack of desirability of investing in the securities of the issuer.

(B) Each broker-dealer who, in computation of net capital includes securities not listed on a registered national securities exchange recognized by the Administrator shall also have the information provided for in (A) of this paragraph available and shall, upon request, furnish same to the Department.

(C) All transactions in such securities described in (A) and (B) of this paragraph shall comply with the provisions of Section 1-301 of the Securities Act.

(D) The provisions of (A) of this paragraph shall not be required in unsolicited transactions, except when numerous unsolicited transactions in a particular security are occurring, it shall be the duty and responsibility of the broker-dealer to make reasonable effort to secure and provide to customers upon their written request the information required by the provisions of (A) of this paragraph. Nothing contained in this Section shall be construed to limit the powers of the Administrator under Section 1-204 of the Securities Act. 

660:11-5-42.1. Standards of ethical practices--issuer agents

(a) Purpose. This rule is intended to set forth the standards of ethical practices for issuer agents. Any noncompliance with the standards of ethical practices specified in this section will constitute unethical practices in the securities business; however, the following is not intended to be a comprehensive listing of all specific events or conditions that may constitute such unethical practices. The standards shall be interpreted in such manner as will aid in effectuating the policy and provisions of the Securities Act, and so as to require that all practices of issuer agents, in connection with their activities in this state shall be just, reasonable and not unfairly discriminatory.

(b) Standards.

(1) An issuer agent, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade. Issuer agents shall not violate any federal securities statute or rule or any rule of a national securities exchange or national securities association of which he is a member with respect to any customer, transaction or business effected in this state.

(2) In recommending to a customer the purchase, sale or exchange of any security, an issuer agent shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs. Prior to making a recommendation to a customer an issuer agent shall also make reasonable efforts to obtain information concerning the customer's financial background, tax status, and investment objectives, and such other information used or considered to be reasonable and necessary by such registered agent in making such recommendation.

(3) No issuer agent shall guarantee a customer against loss in any securities transaction effected by the issuer agent with such customer.

660:11-5-43. Examination of broker-dealers

(a) Periodic examinations. The business and records of each broker-dealer registered under the Securities Act may be periodically examined by the Administrator and/or person(s) designated by him at such times and in such scope as the Administrator determines prudent and necessary for the protection of the public. A report of each such examination shall be prepared.

(b) Department access. Each broker-dealer scheduled for examination shall provide the personnel of the Department access to business books, documents, and other records. Each broker-dealer shall provide personnel with office space and facilities to conduct on-site examinations, and assistance in the physical inspection of assets and confirmation of liabilities. Failure of any applicant or registrant to provide such access shall constitute a violation of this section and shall be a basis for denial, suspension or revocation of the registration or application for registration.

660:11-5-44. [RESERVED]

660:11-5-45. Financial statements for broker-dealers

(a) Audited statements. Applications for registration for broker-dealers shall contain audited financial statements for the applicant as of the end of its last fiscal year. Applicants that have been in operation for less than twelve (12) months shall submit an audited statement of financial condition as of a date within ninety (90) days of the date of the filing of the application and an audited statement of income for the period beginning from the date of inception through the date as of which the statement of financial condition is prepared.

(b) Unaudited interim financial statements. If the audited financial statements required by (a) of this section are not current to within ninety (90) days of the date of filing of the application, additional unaudited financial statements shall be submitted covering the period from the beginning of the current fiscal year through a month ending within the 90-day time frame.

(c) Net capital computation. Financial Statements submitted by or on behalf of a broker-dealer shall include a statement of the amount of net capital required by the SEC for the broker-dealer and a schedule presenting a computation of net capital as of each statement of financial condition date. The computation of net capital shall be calculated according to the formula established by the SEC.

(d) Waiver. The Administrator in his discretion may waive any of the requirements of this section on a case-by-case basis when such action is determined to be consistent with the purposes fairly intended by the policy and provisions of the Securities Act. Requests for waivers shall be in writing setting forth the reasons therefor.

SUBCHAPTER 7. INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES

PART 1. GENERAL PROVISIONS

Section
660:11-7-1. Purpose
660:11-7-2. Definitions

PART 3. LICENSING PROCEDURES

660:11-7-11. Initial registration 
660:11-7-12. Renewal
660:11-7-13. Qualification examination requirements
660:11-7-14. [RESERVED]
660:11-7-15. Piecemeal filings
660:11-7-16. Solicitor exemption

PART 5. REPORTING REQUIREMENTS

660:11-7-31. Post-registration reporting requirements

PART 7. RECORD KEEPING AND ETHICAL STANDARDS

660:11-7-41. Record keeping requirements
660:11-7-42. Standards of ethical practices
660:11-7-43. Disclosure requirements
660:11-7-44. Financial statements for investment advisers
660:11-7-45. Examination of investment advisers
660:11-7-46. [RESERVED]
660:11-7-47. Payments for client solicitations
660:11-7-48. Custody requirements for investment advisers

PART 9. SEC COVERED INVESTMENT ADVISERS

660:11-7-51. SEC covered investment adviser notice filing

PART 1. GENERAL PROVISIONS

660:11-7-1. Purpose

The rules in this subchapter are adopted to provide procedures for complying with the provisions of Sections 1-403 and 1-404 of the Securities Act relating to the licensing of investment advisers and investment adviser representatives under the Securities Act.

660:11-7-2. Definitions

In addition to the terms defined in 660:11-1-3, the following words and terms when used in this subchapter shall have the following meaning, unless the context clearly indicates otherwise:

"Impersonal advisory services" means investment advisory services provided solely:

(A) by means of written material or oral statements which do not purport to meet the objectives or needs of specific individuals or accounts;

(B) through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security; or

(C) any combination of the foregoing services.

"Investment company contract" means a contract with an investment company registered under the 1940 Act that meets the requirements of Section 15(c) of that Act.

"Solicitor" means any person who, directly or indirectly, solicits any client for, or refers any client to, an investment adviser.

PART 3. LICENSING PROCEDURES

660:11-7-11. Initial registration

(a) Investment adviser. Investment advisers applying for initial registration pursuant to Section 1-406 of the Securities Act:

(1) shall file with the IARD:

(A) a completed Form ADV, including Schedules A-I; and

(B) the filing fee specified in Section 1-612 of the Securities Act;

(2) shall file with the Department within 30 days from the effective date of registration:

(A) Part 2 of the Form ADV;

(B) audited financial statements as required by 660:11-7-44 unless exempt therefrom;

(C) a copy of the investment advisory contract to be executed by Oklahoma clients; and

(D) any additional documentation, supplemental forms and information as the Administrator may deem necessary; and

(3) if a natural person, must have passed the applicable examinations specified in 660:11-7-13.

(b) Investment adviser representative. Investment adviser representatives applying for initial registration under the Securities Act: 

(1) shall file with the CRD:

(A) a completed Form U-4 if the information on the Form U-4 is not maintained in current form on the CRD;

(B) the filing fee specified in Section 1-612 of the Securities Act; and

(C) any additional documentation, supplemental forms and information as the Administrator may deem necessary; and

(2) must have passed the applicable examinations specified in 660:11-7-13.

660:11-7-12. Renewal

(a) Investment adviser. An investment adviser registered under the Act shall renew its registration by submitting to the IARD the renewal fee specified in Section 1-612 of the Securities Act.

(b) Investment adviser representative. Investment adviser representatives registered under the Act shall renew their registrations by submitting to the CRD the renewal fee specified in Section 1-612 of the Securities Act.

660:11-7-13. Qualification examination requirements

(a) Examination requirement. Proof of compliance with the written examination requirements of this rule is prerequisite to a complete filing for registration under the Securities Act.

(b) Examinations. Any natural person seeking registration as an investment adviser or investment adviser representative must pass the Series 65, or both the Series 66 and Series 7, or such other examination(s) or certifications determined by the Administrator to be acceptable in lieu thereof. The Administrator adopts the examinations as administered by the NASDR as the required examinations.

(c) Change in series number. Should NASDR examination series numbers change, the most current examination series applicable to the category of registration shall apply.

(d) Validity of prior examination scores. For purposes of qualification for registration under the Securities Act, the Department will not recognize any NASDR examination score that predates an application for registration by more than two (2) years in the absence of:

(1) continuous registration as an investment adviser representative in another jurisdiction since examination; or

(2) continuous registration as an agent with the NASD since examination.

(e) Waiver of examination requirement. The Administrator may waive the examination requirement on a case-by-case basis when such action is determined to be consistent with the purposes fairly intended by the policy and provisions of the Securities Act. Requests for waivers shall be in writing setting forth the reasons therefor. 

660:11-7-14. [RESERVED]

660:11-7-15. Piecemeal filings

An application for initial registration or renewal of registration as an investment adviser or investment adviser representative shall not be deemed to have been filed until all of the documentation required by 660:11-7-11 or 660:11-7-12 is submitted, or is otherwise made available, to the Department and payment of the proper fees is made. Such documentation shall be in completed form.

660:11-7-16. Solicitor exemption

By authority delegated to the Administrator in Section 1-404.B.2 of the Securities Act, an individual whose only activity on behalf of an investment adviser is to solicit clients for same is exempt from the requirement to register as an investment adviser representative of such investment adviser if the individual is separately registered as an investment adviser representative of another investment adviser or is individually registered as an investment adviser.

PART 5. REPORTING REQUIREMENTS

660:11-7-31. Post-registration reporting requirements

(a) Filing requirement. Pursuant to Section 1-410.B of the Securities Act, all investment advisers registered under Section 1-406 of the Securities Act must make post-registration filings with the Department. The Department will not accept incomplete or piecemeal filings. The post-registration filing shall contain the financial or operating report fee set forth in Section 1-612 of the Securities Act. Failure to file a complete report when due may result in the suspension or revocation of registration. The Administrator will consider requests that no enforcement action be taken regarding a delinquent filing pursuant to the provisions of 660:2-13-1.

(b) Report content. Registered investment advisers who have custody or possession of clients' funds or securities or require prepayment of advisory fees six (6) months or more in advance and in excess of $500.00 per client shall make one (1) post-registration report each fiscal year. Said filing shall contain the report filing fee specified in Section 1-612 of the Securities Act and an audited statement of financial condition as of the investment adviser's fiscal year end.

(c) Report filing dates. Post-registration filings become due on the last day of the fiscal year to which they apply; however a grace period is provided before a filing becomes delinquent. The filing must be made by the last day of the fourth month following the close of the registrant's fiscal year.

PART 7. RECORD KEEPING AND ETHICAL STANDARDS

660:11-7-41. Record keeping requirements

(a) General requirements.  Every investment adviser registered or required to be registered under the Securities Act shall make and keep true, accurate and current the following books and records:

(1) A journal or journals, including cash receipts and disbursements, records, and any other records of original entry forming the basis of entries in any ledger.

(2) General and auxiliary ledgers (or other comparable records) reflecting asset, liability, reserve, capital, income and expense accounts. In no event shall the general ledger be posted less than once a month.

(3) A record of each order given by the investment adviser for the purchase or sale of any security, of any instruction received by the investment adviser from the client concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or instruction. The record shall show the terms and conditions of the order, instruction, modification or cancellation; shall identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed the order; and shall show the account for which entered, the date of entry, and the bank or broker-dealer by or through whom executed where appropriate. Orders entered pursuant to the exercise of discretionary power shall be so designated.

(4) All check books, bank statements, canceled checks and cash reconciliations of the investment adviser.

(5) All bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser as such.

(6) All trial balances, financial statements prepared in accordance with generally accepted accounting principles, and internal audit working papers relating to the business of such investment adviser. The trial balance shall be prepared no later than fifteen (15) business days after the end of the accounting period.

(7) Originals of all written communications received and copies of all written communications sent by the investment adviser relating to the business of the investment adviser, including, but not limited to:

(A) any recommendation made or proposed to be made and any advice given or proposed to be given,

(B) any receipt, disbursement or delivery of funds or securities, or

(C) the placing or execution of any order to purchase or sell any security; provided, however:

(i) that the investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for the investment adviser, an

(ii) that if the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory service to 2 or more persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if the notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with the copy of the notice, circular or advertisement a memorandum describing the list and the source thereof. 

(8) A list or other record identifying all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client.

(9) A copy of all powers of attorney and other evidences of the granting of any discretionary authority by any client to the investment adviser.

(10) A copy of all agreements entered into by the investment adviser with any client and all other agreements relating to the business of the investment adviser as such, including agreements which set forth the fees to be charged, the manner of computation and method of payment.

(11) A file containing a copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication, including any communication by electronic media, that the investment adviser circulates or distributes, directly or indirectly, to 2 or more persons (other than persons connected with the investment adviser), and if the notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication, including any communication by electronic media, recommends the purchase or sale of a specific security and does not state the reasons for the recommendation, a memorandum of the investment adviser indicating the reasons for the recommendation.

(12) When providing investment advice is the primary business of the investment adviser.

(A) A record of every transaction in a security in which the investment adviser or any advisory representative (as defined in (B) of this paragraph) of the investment adviser has, or by reason of any transaction acquires, any direct or indirect beneficial ownership, except (i) transactions effected in any account over which neither the investment adviser nor the advisory representative of the investment adviser has any direct or indirect influence or control, and (ii) transactions in securities which are direct obligations of the United States. The record shall state the title and amount of the security involved; the date and nature of the transaction (i.e., purchase, sale or other acquisition or disposition); the price at which it was effected; and the name of the broker-dealer or bank with or through whom the transaction was effected. The record may also contain a statement declaring that the reporting or recording of any transaction shall not be construed as an admission that the investment adviser or advisory representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded no later than ten (10) days after the end of the calendar quarter in which the transaction was effected.

(B) For purposes of this paragraph, the following definitions will apply:

(i) The term “advisory representative” shall mean any partner, officer or director of the investment adviser; any employee who participates in any way in the determination of which recommendations shall be made; any employee who, in connection with his duties, obtains any information concerning which securities are being recommended prior to the effective dissemination of the recommendations; and any of the following persons who obtain information concerning securities recommendations being made by the investment adviser prior to the effective dissemination of the recommendations or of the information concerning the recommendations:

(I) any person in a control relationship to the investment adviser,

(II) any affiliated person of a controlling person, and

(III) any affiliated person of an affiliated person.

(ii) “Control” shall mean the power to exercise a controlling influence over the management or policies of a company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company.

(13) When providing investment advice is not the primary business of the investment adviser:

(A) Notwithstanding the provisions of (12) of this subsection, where the investment adviser is primarily engaged in a business or businesses other than advising investment advisory clients, a record must be maintained of every transaction in a security in which the investment adviser or any advisory representative (as defined in (C) of this paragraph) of the investment adviser has, or by reason of any transaction acquires, any direct or indirect beneficial ownership, except:

(i) transactions effected in any account over which neither the investment adviser nor any advisory representative of the investment adviser has any direct or indirect influence or control; and

(ii) transactions in securities which are direct obligations of the United States.

(B) Each record required by (A) of this paragraph shall state the title and amount of the security involved; the date and nature of the transaction (i.e. purchase, sale, or other acquisition or disposition); the price at which it was effected; and the name of the broker-dealer or bank with or through whom the transaction was effected. The record may also contain a statement declaring that the reporting or recording of any transaction shall not be construed as an admission that the investment adviser or advisory representative has any direct or indirect beneficial ownership in the security. A transaction shall be recorded not later than 10 days after the end of the calendar quarter in which the transaction was effected.

(C) For purposes of this paragraph, the following definitions will apply:

(i) The term “advisory representative”, when used in connection with a company primarily engaged in a business or businesses other than advising investment advisory clients, shall mean any partner, officer, director or employee of the investment adviser who participates in any way in the determination of which recommendations shall be made, or whose functions or duties relate to the determination of which securities are being recommended prior to the effective dissemination of the recommendations; and any of the following persons who obtain information concerning securities recommendations being made by the investment adviser prior to the effective dissemination of such recommendations or of the information concerning the recommendations:

(I) any person in a control relationship to the investment adviser,

(II) any affiliated person of a controlling person, and

(III) any affiliated person of an affiliated person.

(ii) “Control” shall mean the power to exercise a controlling influence over the management or policies of a company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company.

(iii) An investment adviser is “primarily engaged in a business or businesses other than advising investment advisory clients” when, for each of its most recent three fiscal years or for the period of time since organization, whichever is lesser, the investment adviser derived from such other business or businesses, on an unconsolidated basis, more than 50% of:

(I) its total sales and revenues, and

(II) its income (or loss) before income taxes and extraordinary items.

(14) A copy of each written statement and each amendment or revision, given or sent to any client or prospective client of the investment adviser, and a record of the dates that each written statement, and each amendment or revision, was given, or offered to be given, to any client or prospective client who subsequently becomes a client.

(15) For each client that was obtained by the adviser by means of a solicitor to whom a cash fee was paid by the adviser:

(A) evidence of a written agreement to which the adviser is a party related to the payment of such fee;

(B) a signed and dated acknowledgment of receipt from the client evidencing the client’s receipt of the investment adviser’s disclosure statement and a written disclosure statement of the solicitor; and

(C) a copy of the solicitor’s written disclosure statement.

(16) All accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of the performance or rate of return of all managed accounts or securities recommendations in any notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication including but not limited to electronic media that the investment adviser circulates or distributes, directly or indirectly, to two or more persons (other than persons connected with the investment adviser); provided, however, that, with respect to the performance of managed accounts, the retention of all account statements, if they reflect all debits, credits, and other transactions in a client’s account for the period of the statement, and all worksheets necessary to demonstrate the calculation of the performance or rate of return of all managed accounts shall be deemed to satisfy the requirements of this paragraph.

(17) A file containing a copy of all written communications received or sent regarding any litigation involving the investment adviser or any investment adviser representative or employee, and regarding any written customer or client complaint.

(18) Written information about each investment advisory client that is the basis for making any recommendation or providing any investment advice to such client.

(19) Written procedures to supervise the activities of employees and investment adviser representatives that are reasonably designed to achieve compliance with applicable securities laws and regulations.

(20) A file containing a copy of each document (other than any notices of general dissemination) that was filed with or received from any state or federal agency or self regulatory organization and that pertains to the registrant or its investment adviser representatives, which file should contain, but is not limited to, all applications, amendments, renewal filings, and correspondence.

(21) Copies, with original signatures of the investment adviser’s appropriate signatory and the investment adviser representative, of each initial Form U-4 and each amendment to Disclosure Reporting Pages (DRPs U-4) must be retained by the investment adviser (filing on behalf of the investment adviser representative) and must be made available for inspection upon regulatory request.

(22) Where the adviser inadvertently held or obtained a client’s securities or funds and returned them to the client within three business days or has forwarded third party checks within 24 hours the adviser will be considered as not having custody but shall keep a ledger or other listing of all securities or funds held or obtained relating to the inadvertent custody disclosing the following information:

(A) issuer;

(B) type of security and series;

(C) date of issue;

(D) for debt instruments, the denomination, interest rate and maturity date;

(E) certificate number, including alphabetical prefix or suffix;

(F) name in which registered;

(G) date given to the adviser;

(H) date sent to client or sender;

(I) form of delivery to client or sender, or copy of the form of delivery to client or sender; and

(J) mail confirmation number, if applicable, or confirmation by client or sender of the fund’s or security’s return.

(23) If an investment adviser obtains possession of securities that are acquired from the issuer in a transaction or chain of transactions not involving any public offering that comply with the exception from custody in (c)(2) of 660:11-7-48, the adviser shall keep the following records:

(A) a record showing the issuer or current transfer agent’s name, address, phone number and other applicable contact information pertaining to the party responsible for recording client interests in the securities; and

(B) a copy of any legend, shareholder agreement or other agreement showing that those securities are transferable only with prior consent of the issuer or holders of the outstanding securities of the issuer.

(b) Special requirements due to type of custody.

(1) Custody as defined in 660:11-7-48.  If an investment adviser has custody, as that term is defined in 660:11-7-48, the records required to be made and kept under (a) of this Section shall include:

(A) a copy of any and all documents executed by the client (including a limited power of attorney) under which the adviser is authorized or permitted to withdraw a client’s funds or securities maintained with a custodian upon the adviser’s instruction to the custodian.

(B) a journal or other record showing all purchases, sales, receipts and deliveries of securities (including certificate numbers) for all accounts and all other debits and credits to the accounts.

(C) a separate ledger account for each client showing all purchases, sales, receipts and deliveries of securities, the date and price of each purchase and sale, and all debits and credits.

(D) copies of confirmations of all transactions effected by or for the account of any client.

(E) a record for each security in which any client has a position, which record shall show the name of each client having any interest in each security, the amount or interest of each client, and the location of each security.

(F) a copy of each of the client’s quarterly account statements, as generated and delivered by the qualified custodian. If the adviser also generates a statement that is delivered to the client, the adviser shall also maintain copies of such statements along with the date such statements were sent to the clients.

(G) if applicable to the adviser’s situation, a copy of the special examination report verifying the completion of the examination by an independent certified public accountant and describing the nature and extent of the examination.

(H) a record of any finding by the independent certified public accountant of any material discrepancies found during the examination.

(I) if applicable, evidence of the client’s designation of an independent representative.

(2) Adviser to pooled investment vehicle.  If an investment adviser has custody because it advises a pooled investment vehicle, the adviser shall also keep the following records:

(A) true, accurate and current account statements;

(B) When the exception set forth in (c)(3) of 660:11-7-48 applies, the records required to be made and kept shall include:

(i) the date(s) of the audit;

(ii) a copy of the audited financial statements; and

(iii) evidence of the mailing of the audited financial to all limited partners, members or other beneficial owners within 120 days of the end of its fiscal year.

(C) When the description set forth in (b)(7) of 660:11-7-48 applies to an investment adviser, the investment adviser is required to make and keep records to include:

(i) a copy of the written agreement with the independent party reviewing all fees and expenses, indicating the responsibilities of the independent third party.

(ii) copies of all invoices and receipts showing approval by the independent party for payment through the qualified custodian.

(3) Trustee.  If an investment adviser has custody because it is acting as the trustee for a beneficial trust as described in (c)(5) of 660:11-7-48 the investment adviser shall also keep the following records until the account is closed or the adviser is no longer acting as trustee:

(A) a copy of the written statement given to each beneficial owner setting forth a description of the requirements of (b) of 660:11-7-48 and the reason why the adviser will not be complying with those requirements; and

(B) a written acknowledgement signed and dated by each beneficial owner, and evidencing receipt of the statement required under (A) of this paragraph.

(c) Managed accounts.  Every investment adviser subject to (b) of this Section who renders any investment supervisory or management service to any client shall, with respect to the portfolio being supervised or managed and to the extent that the information is reasonably available to or obtainable by the investment adviser, make and keep true, accurate and current:

(1) Records showing separately for each client the securities purchased and sold, and the date, amount and price of each purchase and sale.

(2) For each security in which any client has a current position, information from which the investment adviser can promptly furnish the name of each security held by the client, and the current amount or interest of the client.

(d) Client identity.  Any books or records required by this Section may be maintained by the investment adviser in such manner that the identity of any client to whom the investment adviser renders investment supervisory services is indicated by numerical or alphabetical code or some similar designation.

(e) Records retention.  Every investment adviser subject to (a) of this Section shall preserve the following records in the manner prescribed:

(1) All books and records required to be made under the provisions of (a) to (c)(1), inclusive, of this Section (except for books and records required to be made under the provisions of (a)(11) and (a)(16) of this Section), shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on record, the first two years in the principal office of the investment adviser.

(2) Partnership articles and any amendments, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor, shall be maintained in the principal office of the investment adviser and preserved until at least three years after termination of the enterprise.

(3) Books and records required to be made under the provisions of (a)(11) and (a)(16) of this Section shall be maintained and preserved in an easily accessible place for a period of not less than five years, the first two years in the principal office of the investment adviser, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated, directly or indirectly, the notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication including by electronic media.

(4) Books and records required to be made under the provisions of (a)(17)-(22), inclusive, of this Section shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in the principal office of the investment adviser, or for the time period during which the investment adviser was registered or required to be registered in the state, if less.

(5) Notwithstanding other record preservation requirements of this Section, the following records or copies shall be required to be maintained at the business location of the investment adviser from which the customer or client is being provided or has been provided with investment advisory services: (A) records required to be preserved under (a)(3),(a)(7)-(10), (a)(14)-(15), (a)(17)-(19), (b) and (c) inclusive, of this Section, and (B) the records or copies required under the provision of (a)(11) and (a)(16) of this Section which records or related records identify the name of the investment adviser representative providing investment advice from that business location, or which identify the business locations’ physical address, mailing address, electronic mailing address, or telephone number. The records will be maintained for the applicable period described in this Subsection.

(f) Ceasing business.  An investment adviser subject to (a) of this Section, before ceasing to conduct or discontinuing business as an investment adviser shall arrange for and be responsible for the preservation of the books and records required to be maintained and preserved under this Section for the remainder of the period specified in this Section, and shall notify the Administrator in writing of the exact address where the books and records will be maintained during the period.

(g) Format and storage of records.

(1) The records required to be maintained and preserved may be immediately produced or reproduced, and maintained and preserved for the required time, by an investment adviser on:

(A) paper or hard copy form, as those records are kept in their original form; or

(B) micrographic media, including microfilm, microfiche, or any similar medium; or

(C) electronic storage media, including any digital storage medium or system that meets the terms of this section.

(2) The investment adviser must:

(A) arrange and index the records in a way that permits easy location, access, and retrieval of any particular record;

(B) provide promptly any of the following that the Administrator or his representatives may request:

(i) a legible, true, and complete copy of the record in the medium and format in which it is stored;

(ii) a legible, true, and complete printout of the record; and

(iii) means to access, view, and print the records; and

(C) separately store, for the time required for preservation of the original record, a duplicate copy of the record on any medium allowed by this section.

(3) In the case of records created or maintained on electronic storage media, the investment adviser must establish and maintain procedures:

(A) to maintain and preserve the records, so as to reasonably safeguard them from loss, alteration, or destruction;

(B) to limit access to the records to properly authorized personnel and the Administrator and his representatives; and

(C) to reasonably ensure that any reproduction of a non-electronic original record on electronic storage media is complete, true, and legible when retrieved.

(h) Investment supervisory services.  For purposes of this Section, “investment supervisory services” means the giving of continuous advice as to the investment of funds on the basis of the individual needs of each client; and “discretionary power” shall not include discretion as to the price at which or the time when a transaction is or is to be effected, if, before the order is given by the investment adviser, the client has directed or approved the purchase or sale of a definite amount of the particular security.

(i) Compliance with federal law.  Any book or other record made, kept, maintained and preserved in compliance with Rules 17a-3 [17 C.F.R. 240.17a-3] and l7a-4 [17 C.F.R. 240.l7a-4] under the Securities Exchange Act of 1934, which is substantially the same as the book or other record required to be made, kept, maintained and preserved under this Section, shall be deemed to be made, kept, maintained and preserved in compliance with this Section.

(j) Compliance with other state requirements.  Every investment adviser registered or required to be registered under the Securities Act that has its principal place of business in a state other than Oklahoma shall be exempt from the requirements of this section, provided the investment adviser is licensed in the state in which it maintains its principal place of business and is in compliance with that state’s books and records requirements.

660:11-7-42. Standards of ethical practices

(a) Purpose. This rule is intended to set forth the standards of ethical practices for investment advisers and investment adviser representatives. Any noncompliance with the standards set forth in this section will constitute unethical practices in the securities business as the same is set forth in Section 1-411.D.13 of the Securities Act; however, the following is not intended to be a comprehensive listing of all specific events or conditions that may constitute such unethical practices. The standards shall be interpreted in such manner as will aid in effectuating the policy and provisions of the Securities Act, and so as to require that all practices of investment advisers and investment adviser representatives in connection with their activities in this state shall be just, reasonable and not unfairly discriminatory. The standards set forth in this section and the disclosure delivery requirement set forth in 660:11-7-43 shall apply to all investment advisers and investment adviser representatives.

(b) Standards. An investment adviser or investment adviser representative shall not engage in dishonest or unethical practices including, although not limited to, the following:

(1) Recommending to a client to whom investment supervisory, management or consulting services are provided the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known by the investment adviser or investment adviser representative.

(2) Exercising any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within ten (10) business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary power relates solely to the price at which, or the time when, an order involving a definite amount of a specified security shall be executed, or both.

(3) Inducing trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account.

(4) Placing an order to purchase or sell a security for the account of a client without authority to do so.

(5) Placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party trading authorization from the client.

(6) Borrowing money or securities from a client unless the client is a broker-dealer, an affiliate of the investment adviser or investment adviser representative, or a financial institution engaged in the business of loaning funds.

(7) Loaning money to a client unless the investment adviser is a financial institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser or investment adviser representative.

(8) Misrepresenting to any advisory client, or prospective advisory client, the qualifications of the investment adviser or an investment adviser representative or misrepresenting the nature of the advisory services being offered or fees to be charged for such service, or omitting to state a material fact necessary to make the statements made regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading.

(9) Charging a client an unreasonable advisory fee.

(10) Failing to disclose to clients in writing before any advice is rendered any material conflict of interest relating to the investment adviser or any of its employees which could reasonably be expected to impair the rendering of unbiased and objective advice including:

(A) Compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; and

(B) Charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the investment adviser or its employees.

(11) Guaranteeing a client that a specific result will be achieved (gain or no loss) with advice which will be rendered.

(12) Publishing, circulating and distributing any advertisement which does not comply with Reg. § 275.206(4)-1, under the Investment Advisers Act of 1940.

(13) Disclosing the identity, affairs, or investments of any client unless required by law to do so, or unless consented to by the client.

(14) Taking any action, directly or indirectly, with respect to those securities or funds in which any client has any beneficial interest, where the investment adviser has custody or possession of such securities or funds when the investment adviser's action is subject to and does not comply with the requirements of Reg.  § 275.206(4)-2 under the Investment Advisers Act of 1940.

(15) Entering into, extending or renewing any investment advisory contract unless such contract is in writing and discloses, in substance, the services to be provided, the term of the contract, the advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of contract termination or nonperformance, whether the contract grants discretionary power to the investment adviser or investment adviser representative and that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract.

(16) Entering into, extending or renewing any investment advisory contract, if such contract contains any provision that limits or purports to limit any of the following:

(A) the liability of the investment adviser for conduct or omission arising from the advisory relationship that does not conform to the Securities Act, applicable federal statutes, or common law fiduciary standard of care;

(B) remedies available to the client at law or equity or the jurisdiction where any action shall be filed or heard; or

(C) applicability of the laws of Oklahoma with respect to the construction or interpretation of the provisions of the investment advisory contract.

660:11-7-43. Disclosure requirements

(a) Disclosure delivery requirement. In furtherance of compliance with the standards of ethical practices specified in 660:11-7-42, every investment adviser, registered or required to be registered under the Securities Act shall, in accordance with the provisions of this section, furnish each advisory client and prospective advisory client with a written disclosure statement which may be a copy of Part II of its Form ADV including Schedule F, if applicable, or written documents containing at least the information then so required by Part II of the Form ADV including Schedule F, if applicable; provided however, delivery of the required statement need not be made in connection with entering into an investment company contract or a contract for impersonal advisory services.

(b) Time of delivery. An investment adviser shall deliver the statement required by (a) of this section to an advisory client or prospective advisory client.

(1) not less than 48 hours prior to entering into any written or oral investment advisory contract with such client or prospective client, or

(2) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

(c) For purposes of this section, "entering into" does not include an extension or renewal without material change of any investment advisory contract which is in effect immediately prior to such extension or renewal.

(d) Annual delivery requirement. Unless exempted as provided in (a) of this section, an investment adviser annually shall, without charge, deliver or offer in writing to deliver upon written request to each of its advisory clients the statement required by this section. Any statement requested in writing by an advisory client pursuant to an offer required by this subsection must be mailed or delivered within seven (7) days of the receipt of the request.

660:11-7-44. Financial statements for investment advisers

(a) Audited statements. Applications for registration as investment advisers shall contain audited financial statements for the applicant as of the end of its last fiscal year.

(b) Unaudited interim financial statements. If the audited financial statements required in the preceding (a) are not current to within ninety (90) days of the date of filing, additional unaudited financial statements shall be submitted covering the period from the beginning of the current fiscal year through a month ending within the 90-day time frame.

(c) Sole proprietors. Investment advisers who are individuals or sole proprietorships, in lieu of audited financial statements, may provide financial statements that have been prepared in accordance with generally accepted accounting principles and which have been reviewed and reported upon by independent accountants in accordance with the standards for the review of financial statements promulgated by the American Institute of Certified Public Accountants.

(d) Exemption. The financial statement requirements specified in this section shall not apply to an investment adviser unless the investment adviser has custody or possession of clients' funds or securities or requires prepayment of advisory fees six (6) months or more in advance and in excess of $500.00 per client.

(e) Waiver. The Administrator in his discretion may waive any of the requirements of this section on a case-by-case basis when such action is determined to be consistent with the purposes fairly intended by the policy and provisions of the Securities Act. Requests for waivers shall be in writing setting forth the reasons therefor.

660:11-7-45. Examination of investment advisers

(a) Periodic examinations. The business and records of each investment adviser registered under the Securities Act may be periodically examined by the Administrator and/or person(s) designated by him at such times and in such scope as the Administrator determines prudent and necessary for the protection of the public. A report of each such examination shall be prepared.

(b) Department access. Each investment adviser scheduled for examination shall provide the personnel of the Department access to business books, documents, and other records. Each investment adviser shall provide personnel with office space and facilities to conduct on-site examinations, and assistance in the physical inspection of assets and confirmation of liabilities. Failure of any applicant or registrant to provide such access shall constitute a violation of this section and shall be a basis for denial, suspension or revocation of the registration or application for registration.

660:11-7-46. [RESERVED]

660:11-7-47. Payments for client solicitations

(a) Prohibition. An investment adviser required to be registered pursuant to Section 1-403 of the Securities Act shall not pay a cash fee, directly or indirectly, to a solicitor with respect to solicitation activities unless:

(1) the investment adviser is registered under the Securities Act;

(2) the solicitor is registered as an investment adviser representative of this or another investment adviser registered under the Securities Act or separately registered as an investment adviser or under the Securities Act; and

(3) such cash fee is paid pursuant to a written agreement to which the investment adviser is a party.

(b) Written agreement. If soliciting clients is the only service rendered on behalf of an investment adviser, the written agreement required by (a)(3) of this section shall:

(1) describe the solicitation activities to be engaged in by the solicitor on behalf of the investment adviser and the compensation to be received therefor;

(2) contain an undertaking by the solicitor to perform his duties under the agreement in a manner consistent with the instructions of the investment adviser and the provisions of the Securities Act and the rules thereunder; and

(3) require that the solicitor, at the time of any solicitation activities for which compensation is paid or to be paid by the investment adviser, provide the customer with a current copy of the investment adviser's written disclosure statement required by 660:11-7-43 and a separate written disclosure document described in (d) of this section.

(c) Investment adviser responsibilities. The investment adviser shall receive from the client, prior to, or at the time of, entering into any written or oral investment advisory contract with such client, a signed and dated acknowledgment of receipt of the investment adviser's written disclosure statement and the solicitor's written disclosure document. In addition, the investment adviser shall ascertain whether the solicitor has complied with the agreement, and has a reasonable basis for believing that the solicitor has so complied.

(d) Disclosure by solicitor. The separate written disclosure document required to be furnished by the solicitor to the customer pursuant to (b) of this section shall contain the following information:

(1) the name of the solicitor;

(2) the name of the investment adviser;

(3) the nature of the relationship, including any affiliation, between the solicitor and the investment adviser;

(4) a statement that the solicitor will be compensated for his solicitation services by the investment adviser;

(5) the terms of such compensation arrangement, including a description of the compensation paid or to be paid to the solicitor; and

(6) the amount, if any, for the cost of obtaining his account the customer will be charged in addition to the advisory fee, and the differential, if any, among customers with respect to the amount or level of advisory fees charged by the investment adviser if such differential is attributable to the existence of any arrangement pursuant to which the investment adviser has agreed to compensate the solicitor for soliciting customers for, or referring customers to, the investment adviser.

660:11-7-48. Custody requirements for investment advisers