| 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 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.
660:1-1-2. Statutory
citations
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.
SUBCHAPTER 5. APPEALS
Section
660:1-5-1. Procedures for appeals to the Commission
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.
(1) Brief of appellant.
The brief of the appellant shall contain under appropriate headings
and in the order here indicated:
(A) A table of contents, with page references,
and a table of cases (alphabetically arranged), statutes and
other authorities cited, with references to the pages of the
brief where they are cited.
(B) A statement setting forth any objection to
the jurisdiction of the Department and the grounds for such
objection or a statement that no objection to jurisdiction is
being made.
(C) A statement of the issues presented for
review.
(D) A statement of the case. The statement shall
first indicate briefly the nature of the case, the course of the
proceedings, and its disposition with the Administrator. There
shall follow a statement of the facts relevant to the issues
presented for review, with appropriate references to the record.
No factual statements may be made in the brief unless asserted
at the hearing before the Administrator and a citation to the
record is included.
(E) An argument. The argument may be preceded by
a summary. The argument shall contain the contentions of the
appellant with respect to the issues presented and the reasons
therefor, with citations to the authorities, statutes and parts
of the record upon which the party is relying.
(F) A short conclusion stating the precise
relief sought.
(2) Brief of appellee.
The brief of the appellee shall conform to the requirements of (1)(A)-(F)
of this paragraph, except that a statement of jurisdiction, of the
issues or of the case need not be made unless the appellee is
dissatisfied with the statement of the appellant.
(3) Oral argument.
All parties submitting briefs shall include, either on the cover of the
brief or by separate document filed with the brief, a statement as to
whether oral argument before the Commission is desired.
(4) Length of briefs.
Except by permission of the Chairperson of the Commission, or his
designee, the briefs of the parties shall not exceed thirty (30) pages,
exclusive of the table of contents, table of citations and appendix.
(5) Appendix to brief.
A party to an appeal may submit, contemporaneously with the filing and
service of his brief, an appendix containing copies of material cited in
the brief, such as cases, statutes, treatises, and other authorities or
copies of portions of the record on appeal. Copies of authorities must
reflect the official citation to the authority. Portions of the record
must be accompanied by a citation to the exact location of the material
in the official record on appeal. The appendix shall not contain any
argument or material which should have been more appropriately included
in the brief.
(6) Appeal based on newly discovered evidence.
Any appeal of a final order of the Administrator based in whole or in part
on the grounds that newly discovered evidence has been obtained shall
include in the brief a detailed description of the newly discovered
evidence, a statement setting forth specifically how the new evidence is
relevant, and a detailed explanation of why the evidence could not have
been discovered in a timely fashion prior to the issuance of the final
order by the Administrator. If the Commission determines the newly
discovered evidence should be considered, it shall remand the matter to
the Administrator with instruction to rehear the matter and consider the
newly discovered evidence.
(e) Stay pending review.
The filing of an appeal with the Commission does not stay the order of
the Administrator pending the appeal.
(1) A party aggrieved by a final order of the
Administrator may, upon filing a petition for appeal with the
Commission, apply to the Administrator for a stay pending the appeal.
The Administrator may stay the effect of his order pending the appeal
upon such grounds or upon condition of such undertakings as he deems, in
his discretion, to be appropriate.
(2) If the Administrator denies the application for a
stay, the party may file with the Administrator six copies of an
application for stay to the Commission. The application for stay shall
not be longer than five (5) pages and shall set forth any grounds upon
which the stay is sought. The Administrator may file a statement in
opposition to the application for stay. The Administrator shall forward
copies of the application for stay and any statement in opposition to
the Commission within five (5) days of receipt.
(3) The filing of an application for a stay with the
Administrator or the Commission shall not have the effect of staying the
order of the Administrator. The order of the Administrator shall only be
stayed upon order of the Administrator, the Commission or a court of
appropriate jurisdiction.
(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 |
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, and the Securities Act.
660:2-1-2. Statutory citations
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,
or the Oklahoma Business Opportunity Sales Act 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 designated 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.
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 [REVOKED]
660:2-5-1. Official actions
(a) All official 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.
660:2-5-2. Register of actions [REVOKED]
660:2-5-3. Settlements
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 [REVOKED]
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 the Administrator's 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 the Administrator's 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 the Administrator's 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 testify, to file a sworn statement or affidavit, and/or to produce documentary
evidence relating to any matter under investigation.
(i) Testimony shall only be reduced to writing or recorded at the direction of the Department.
(ii) Documents required by a subpoena shall be produced in the manner, form, and time frame instructed therein.
(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 the Administrator's 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 the person's own testimony, if transcribed, at the offices
of the Department. 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, or disclosed pursuant to the provisions of Subchapter
9 of this Chapter or as otherwise provided by law.
(i) Duty to Supplement.
Any person who has responded to a subpoena must supplement its response
in a timely manner if the person learns that in some material respect
the disclosure or response is incomplete.
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.
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 a hearing has been scheduled, the Administrator, or the Hearing Officer, shall enter a scheduling order that is intended to expedite the disposition of the action and ensure 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. The agreed, proposed scheduling order shall be submitted to the Administrator or the Hearing Officer no later than fifteen (15) days after the hearing has been scheduled. If the parties are unable to agree to a single scheduling order, the parties shall each submit, no later than twenty (20) days after the hearing has been scheduled, a proposed scheduling order to the Administrator or the Hearing Officer who shall issue an appropriate scheduling order or, prior to issuing such order, hold a scheduling conference in person or by telephone. The scheduling order shall 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.
(1) Discovery may be obtained by one or more of the
following methods:
(A) 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 in
the possession, custody or control of the party and relevant to the
subject matter of the individual proceeding and are not privileged.
The number of requests to produce or permit inspection shall not
exceed thirty (30) in number except by agreement of the party being
required to produce or by order of the Administrator, or Hearing
Officer. All documents will be produced at the offices of the Department or at such other place as the parties may agree in writing.
(B) A party may serve on any other party a written
request to admit, for purposes of the pending action only, the truth
of any matters relating to facts, the application of law to fact, or
opinions about either; and the genuineness of any documents
described in the request. Copies of documents shall be served with
the request to admit unless they have been or are otherwise
furnished or made available for inspection and copying. The number
of requests to admit for each party shall not exceed thirty (30) in
number except by agreement of the party being required to respond or
by order of the Administrator or the Hearing Officer. Each matter
upon which an admission is requested shall be separately stated. The
matter is admitted unless, within fifteen (15) days after service of
the request, or within such shorter or longer time as the
Administrator or the Hearing Officer, may allow, the party to whom
the request is directed serves upon the party requesting the
admission a written answer or objection addressed to the matter and
signed by the party. If a matter is not admitted, the answer must
specifically deny it or state in detail why the answering party
cannot truthfully admit or deny it. A denial shall fairly meet the
substance of the requested admission, and when good faith requires
that a party qualify the answer or deny only a part of the matter of
which an admission is requested, the party shall specify so much of it as
is true and qualify or deny the remainder. An answering party may
not give lack of information or knowledge as a reason for failure to
admit or deny unless the party states that the party has made reasonable inquiry
and that the information known or readily obtainable by the party is
insufficient to enable the party to admit or deny. The grounds for an
objection must be stated. A party may not object solely on the
ground that the request presents a genuine issue for trial.
(C) A party may take the testimony of a witness by
deposition at the expense of that party. A party desiring a transcript must make appropriate arrangements with the reporter
or transcriber to order and pay for it. A party desiring to
take the deposition of another party, or an employee thereof, shall
serve written notice to the witness, or his counsel. The notice
shall state the time and place for taking the deposition and shall
be served at least three (3) days before the person is required to
appear. A party desiring to take the deposition of a non-party
witness shall serve the witness with a subpoena in accordance with
660:2-9-4. A copy of the notice or subpoena shall be served on all
other parties to the proceeding by means specified in paragraph (h)
below. Unless otherwise agreed by the parties or ordered by the
Administrator or Hearing Officer, a deposition under this provision
shall not last more than six (6) hours, exclusive of breaks, and
shall be taken only between the hours of 8:00 a.m. and 5:00 p.m. on
a day other than a Saturday or Sunday and on a day other than a
legal holiday.
(2) A party who has responded to a request for
production or request to admit must supplement or correct its
response:
(A) in a timely manner if the party learns that in
some material respect the disclosure or response is incomplete or
incorrect, and if the additional or corrective information has not
otherwise been made known to the other parties during the discovery
process or in writing; or
(B) as ordered by the Administrator, or the Hearing
Officer.
(3) In addition to limitations on discovery set forth in a scheduling order or any law,
regulation, or rule, discovery does not include:
(a) Non-public information or documents from the personnel file of any Department
employee;
(b) Non-public information or documents relating to any investigation conducted by the
Department against unrelated parties;
(c) Non-public information or documents relating to any action brought by the
Department against unrelated parties;
(d) Information or documents relating to any examination conducted by the Department
of unrelated parties;
(e) Information or documents relating to any license applications or determinations made
by the Department of unrelated parties; or
(f) Depositions of Department personnel.
(c) Motions in general.
(1) Unless otherwise permitted by these rules or by
the Administrator or the Hearing Officer motions and responses thereto shall be served on all parties and shall:
(A) be made in writing and shall not exceed twenty
(20) pages;
(B) state concisely the question(s) to be determined;
(C) state with particularity the grounds therefore and the relief or order sought; and
(D) be accompanied by a concise brief or a list of authorities upon which movant relies.
(2) A response to a written motion shall be filed
within fifteen (15) days after receipt of the motion but no later
than one day prior to the date and time of the hearing. A response
to a written motion shall not exceed twenty (20) pages. A reply to a
response to a written motion may be filed within five (5) days after
receipt of the response but no later than the date and time of the
hearing. A reply to a response to a written motion shall not exceed
five (5) pages.
(3) The Administrator or the Hearing Officer may
allow oral argument if it appears necessary to the Administrator or
the Hearing Officer for 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 proceeding
unless modified by a subsequent order. The order shall be modified
only to prevent manifest injustice.
(f) Failure to participate, appear, comply or
cooperate.
A party’s failure to participate in good faith in the preparation of a
scheduling order or prehearing conference order; failure to comply with
a scheduling order or prehearing conference order; failure to comply
with or cooperate in discovery; or failure to appear at, substantially
prepare for, or participate in good faith in, any hearing or conference,
may result in any of the following sanctions:
(1) striking of any pleading in whole or in part;
(2) an order prohibiting a party from supporting
or opposing designated claims or defenses, or from introducing
designated matters in evidence;
(3) an order directing that designated facts be
taken as established for purposes of the proceeding;
(4) staying the proceeding;
(5) default judgment; or
(6) 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 in accordance with the scheduling order. 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 counsel’s name, bar number,
address, email address, and telephone number. A party who is not represented by counsel
shall sign the filing and state the party's name, residential address,
email address, and telephone
number on every filing. The signature of counsel or a 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 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.
(1) Any party to an individual proceeding 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, bar number, address, email address, and telephone number of counsel of record, or
if the party is not represented, the name, address, email 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, the Administrator or
the Hearing Officer may, in the Administrator's or the Hearing Officer's 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, the Administrator or the Hearing Officer may refuse to
issue the subpoena, or issue the subpoena only upon such conditions as
fairness requires.
(2) A party requesting the issuance of a subpoena to an
out-of-state witness may be required to show the relevance of the
information sought and the witness’ contacts with this state as a
condition precedent to the issuance of the subpoena. If after
consideration of all circumstances, the Administrator or the Hearing
Officer determines that the information sought is not relevant or the
witness’ contacts with the state are insufficient to establish
jurisdiction over the witness, he may refuse to issue the subpoena.
(b) Service.
Service of a subpoena in this state shall be by personal delivery or by
certified mail with a return receipt requested and delivery restricted
to the person named in the subpoena. Service shall be made at least
three (3) days before the person is required to appear. Service of a
subpoena outside of this state shall be served by any person in any
manner prescribed for the service of a subpoena in a civil action in the
state in which the subpoena is being served. The party requesting the
subpoena shall be responsible for, and bear the cost of, service.
(c) Proof of service of subpoena.
The party requesting the subpoena shall promptly file a notice with the
Administrator advising that service has been made upon the person named in the subpoena. If
service is effected by mail, the notice shall include a copy of the return receipt reflecting delivery
and acceptance by certified mail, return receipt requested and delivery restricted to the person
named in the subpoena. If service is effected by personal delivery to the person named in the
subpoena, the notice shall include a written, notarized affidavit affirming such delivery by the
person making delivery.
(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.
(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 within twenty (20) days after the witnesses' 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, have a reasonable opportunity to examine and
inspect all documentary evidence, examine witnesses and present
evidence on the 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, email 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, email address, and telephone number of the
person represented.
(c) Service on attorney. After a notice of
appearance has been filed, service of all papers shall be made upon the
attorney of record and shall be effective as service upon the
person represented.
(d) Withdrawal. Any attorney who withdraws from representing a party must file a written
notice of withdrawal with the Department and the Administrator or Hearing Officer and must
serve the notice of withdrawal on all attorneys then of record and on all unrepresented parties.
The notice must contain the effective date of the withdrawal, the current name, address, email
address, and telephone number of each party who will no longer be represented, and, if known,
the name of the person who will represent the party from that time forward. Withdrawal of a
party's attorney after the service of a notice of hearing is not grounds for the continuance of the
hearing unless good cause is shown.
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. The Administrator or the Hearing Officer may take official notice of
judicially cognizable general, technical, or scientific facts. In addition, notice may be taken of
generally recognized practices and procedures relating to the
applicable 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's or
the Hearing Officer experience, technical competence,
and specialized knowledge may be used 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 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 or by order of
the Administrator or the Hearing Officer.
(5) The Administrator or the Hearing Officer may question any witness provided that all
parties shall have the right of cross-examination of those witnesses.
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.
660:2-9-8. Final orders
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.
660:2-11-2. Definitions
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.
660:2-11-3. Record Custodians
(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.
660:2-11-4. Hours of inspection
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 4:30 p.m., Monday through Friday, except
legal holidays.
660:2-11-5. Procedures for inspection of records
(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. 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 or a designee.
(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, the Record Custodian
shall, no later than seven (7) business days prior to the record inspection date, 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.
660:2-11-6. Procedures for copying records
(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
Section 1-612 of the Securities Act. All record copy forms must be completed by the person
requesting the record and signed by the individual making the request.
The Record Custodian or a designee 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 or a designee in
the offices of the Department except where the Record Custodian or a designee
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 or a designee and
under the supervision of the Record Custodian, or a designee.
(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, or a designee, 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,
the Record Custodian or a designee shall, no later than seven
(7) business days prior to the requested copy date, 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. Any person requesting
copies of public records shall pay the fees specified in Section 1-612 of the Securities Act
prior to receipt of the records.
(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 records solely for a commercial purpose,
a search fee shall be charged as set forth in Section 1-612 of the Securities Act 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
[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] |
SUBCHAPTER 1.
GENERAL PROVISIONS
Section
660:6-1-1. Purpose
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.
SUBCHAPTER 3.
FORMS FOR GENERAL PURPOSES
Section
660:6-3-1. Forms to inspect or copy records
660:6-3-2. Forms to file a complaint
660:6-3-1. Forms to inspect or copy records
(a) Forms. 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
(b) Obtaining forms. The referenced forms are available on the Department's website at
https://www.securities.ok.gov/.
660:6-3-2. Forms to file a complaint
(a) Form. The following form is used to file a
complaint with the Department: Complaint Form.
(b) Obtaining form. The referenced form is
available on the Department's website at https://www.securities.ok.gov/.
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) Forms. 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 Company Offering Registration Form
(5) NF -- Uniform Investment Company Notice Filing
(6) Form D -- Notice of Exempt Offering of Securities
(7) NASAA Model Accredited Investor Exemption Notice of Transaction Form
(8) Oklahoma Accredited Investor Exemption
Supplemental Information Form
(9) Oklahoma Notice of Regulation A Tier 2 Offering
Form (or equivalent uniform form)
(10) Part 1 of Federal Form 1-A
(b) Obtaining forms. The referenced forms are available on the
Department's website at https://www.securities.ok.gov/.
660:6-5-2. Forms for securities industry registration
(a) Forms. The following is a list of forms used by the
Department in connection with registering persons as broker-dealers,
agents, non-FINRA principals, issuer agents, investment advisers or investment
adviser representatives, under the Securities Act:
(1) BD -- Uniform Application for Broker-Dealer Registration
(2) BDW -- Uniform Request for Broker-Dealer Withdrawal
(3) ADV -- Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Advisers
(4) ADV-W -- Uniform Application for Investment Adviser Withdrawal
(5) U-2 -- Uniform Consent to Service of Process
(6) U-2A -- Uniform Form of Corporate Resolution
(7) U4 -- Uniform Application for Securities Industry Registration or Transfer
(8) U5 -- Uniform Termination Notice for Securities Industry Registration
(9) U10 -- Uniform Examination Request for Non-FINRA Candidates
(10) OBD-001 -- Applicant/Management Certification for Non-FINRA Principals
(11) OBD-008 -- Application for Renewal of Non-FINRA Broker-Dealer Registration
(12) OBD-016 -- Application for Renewal of Non-FINRA Broker-Dealer Principal Registration
(13) OBD-018 -- Applicant/Management Certification for Issuer Agents
(14) OBD-019 -- Application for Renewal of Non-FINRA Broker-Dealer Agent Registration
(b) Obtaining forms. The referenced forms are available on the Department's website at https://www.securities.ok.gov/.
SUBCHAPTER 7. FORMS USED UNDER THE TAKE-OVER ACT
[RESERVED]
SUBCHAPTER 9.
FORMS USED UNDER THE LAND SALES ACT
Section
660:6-9-1. Forms for registration of subdivided land
660:6-9-2. Forms for licensing of agents
660:6-9-1. Forms for registration of subdivided land
(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
(b) Obtaining forms. The referenced forms are available on the Department's website at https://www.securities.ok.gov/.
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 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]
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:
"Advisers Act" means the Investment Advisers Act
of 1940.
"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/FINRA Central Registration
Depository system or WEBCRD.
"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.
"FINRA" means the Financial Industry
Regulatory Authority, Inc., the successor to the NASD.
"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.
"IARD" means the FINRA-operated Investment Adviser Registration Depository.
"Independent accountants" means independent
certified public accountants. The concept of independence shall be that
promulgated by the American Institute of Certified Public Accountants.
"Institutional account" means the account of:
(A) a bank, savings and loan association, insurance
company or registered investment company;
(B) an investment adviser registered under the
Securities Act, with another state securities commission (or any
agency or office performing like functions), or with the SEC under
Section 203 of the Advisers Act; or
(C) any other person (whether a natural person,
corporation, partnership, trust or otherwise) with total assets of
at least $50 million.
"NASAA" means the North American Securities
Administrators Association.
"NASD" means the National Association of
Securities Dealers, Inc.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of
1934.
"1940 Act" means the Investment Company Act of
1940.
"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 or 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.
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.
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
660:11-5-21. Supplemental
disclosures
660:11-5-22. Private offering
issuer agent exemption
660:11-5-23. Coordinated
limited offering issuer agent exemption
660:11-5-24. Oklahoma
Accredited Investor issuer agent exemption
660:11-5-25. Registration
relief for military service members and their spouses
660:11-5-26. Merger and acquisition broker 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 the Securities Act
relating to the registration of broker-dealers and agents and to
establish post-registration requirements and standards of ethical
practices for broker-dealers and agents.
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 or the words or terms are defined in another Section:
"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.
"Control" means the power, directly or indirectly, to direct the management or policies of a
company, whether through ownership of securities, by contract, or otherwise. Any person is
presumed to control a company that:
(A) is a director, general partner or officer exercising executive responsibility or having
similar status or functions;
(B) directly or indirectly has the right to vote 25% or more of a class of a voting security
or has the power to sell or direct the sale of 25% or more of a class of voting securities; or
(C) in the case of a partnership, has the right to receive upon dissolution, or has
contributed, 25% or more of the capital.
"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.
"Independent investment adviser" means an investment adviser that is not controlled by,
does not control, and is not under common control with a broker-dealer.
"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-FINRA 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 FINRA
membership or who is a FINRA 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 FINRA 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) 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) proof of applicant’s approved status of
registration or licensure in a jurisdiction in which he has an
office of employment when such registration is required; and
(E) any additional documentation, supplemental
forms and information as the Administrator may deem necessary.
(2) Where to file. An agent applying for
registration with a FINRA 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-FINRA 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 FINRA 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; and
(D) 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 Sections 1-411.D.13 and 1-605.A.2. 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 a
FINRA 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. A FINRA member shall renew
its registration by submitting the renewal fee specified in Section
1-612 of the Securities Act to the CRD. A non-FINRA member shall renew
its registration by submitting to the Department an Application for
Renewal of Non-FINRA Broker-Dealer Registration and the renewal fee
specified in Section 1-612 of the Securities Act.
(b) Broker-dealer agent. Agents of FINRA 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-FINRA
members shall renew their registrations by submitting an Application for
Renewal of Non-FINRA 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-FINRA members shall renew their registrations by submitting an
Application for Renewal of Non-FINRA 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 Financial Industry Regulatory Authority, Inc.
(2) The transfer is effected in accordance with the
terms and conditions of the NASAA/FINRA Central Registration
Depository Temporary Agent Transfer Program.
(3) The employing broker-dealer has executed and
filed an "Undertaking for Participation in the NASAA/FINRA 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 promptly given by filing within thirty (30) days of
termination, a completed Uniform Termination Notice for Securities
Industry Registration, Form U5. The Form U5 for an agent terminating
registration with a FINRA member shall be filed with the CRD. The Form
U5 for agents terminating registration with a non-FINRA broker-dealer
shall be filed with the Department.
(b) Responsibility for filing. A completed Form
U5 signed by the employer will be accepted as fulfilling the statutory
requirements of both parties. Upon verification that the Form U5 has
not been filed by the broker-dealer, the agent shall notify the
Department in writing of said termination.
(c) Amendments. If the information contained in a Form U5 becomes inaccurate or
incomplete, the employer shall promptly file a correcting amendment after learning of the facts
or circumstances giving rise to the amendment.
(d) 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 Section 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 FINRA 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 -
FINRA 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-FINRA 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 FINRA
examination series numbers change, the most current examination series
applicable to the category of registration shall apply. Effective
October 1, 2018, FINRA is implementing a new Securities Industry
Essentials examination (SIE) and revised agent-level qualification
examinations. At that point, it will be necessary for an applicant to
pass the SIE for each examination category in (d)(1) through (4) of this
Section in addition to the examinations listed in each of those
categories. Also effective October 1, 2018, FINRA is retiring the Series
11, 42 and 62 and will no longer permit new registrations in the
examination categories (d)(5) through (8) of this Section.
(f) Validity of prior examination scores.
(1) The Department will not recognize for purposes
of qualification for registration under the Securities Act any FINRA
examination score (other than the SIE) that predates an initial
application for registration by more than two (2) years in the
absence of registration as an agent, principal, broker-dealer,
investment adviser or investment adviser representative since
examination.
(2) The Department will not recognize for purposes
of qualification for registration under the Securities Act the
examination score(s) (other than the SIE) of any person whose most
recent registration as an agent, principal, broker-dealer,
investment adviser or investment adviser representative has been
terminated 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.
(3) With respect to the SIE, the time period for
validity is four (4) years.
(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.
660:11-5-21.
Supplemental disclosures
Every broker-dealer and agent registered under the
Securities Act must keep their application current at all times by
promptly filing amendments supplementing their application after learning
of the facts and circumstances giving rise to the amendments as required
by Section 1-406.B of the Securities Act.
660:11-5-22.
Private offering issuer agent exemption
By authority delegated to the Administrator in Section
1-402.B.9 of the Securities Act, an individual meeting all of the
following conditions is determined to be exempt from the registration
requirement of Section 1-402 of the Securities Act:
(1) The subject offering is conducted in a manner
to be exempt pursuant to Section 1Â202.14 of the Securities Act.
(2) The individual represents the issuer in
functioning as an agent in the subject offering.
(3) The individual is not compensated in connection
with the agent’s participation by the payment of commissions or
other remuneration based, directly or indirectly, on transactions in
those securities.
(4) Such individual has not within the past five
(5) years been subject to the following in connection with a
violation of a state or federal securities law or regulation: an
order denying, suspending or revoking registration or a cease and
desist order of the Administrator; any similar order, judgment, or
decree by another state securities agency, the SEC, or any
self-regulatory securities organization; or an order of any court of
competent jurisdiction temporarily, preliminarily or permanently
enjoining such person.
(5) The exemption is only available with respect to
transactions in the subject offering. However, the individual is not
prohibited from qualifying for this exemption with respect to any
other offering so long as all requirements are satisfied.
660:11-5-23.
Coordinated limited offering issuer agent exemption
By authority delegated to the Administrator in Section
1-402.B.9 of the Securities Act, an individual meeting all of the
following conditions is determined to be exempt from the registration
requirement of Section 1-402 of the Securities Act:
(1) The subject offering is conducted in a manner
to be exempt pursuant to 660:11-11-43.
(2) The individual represents the issuer in
functioning as an agent in the subject offering.
(3) The individual is not compensated in connection
with the agent’s participation by the payment of commissions or
other remuneration based, directly or indirectly, on transactions in
those securities.
(4) Such individual has not within the past five
(5) years been subject to the following in connection with a
violation of a state or federal securities law or regulation: an
order denying, suspending or revoking registration or a cease and
desist order of the Administrator; any similar order, judgment, or
decree by another state securities agency, the SEC, or any
self-regulatory securities organization; or an order of any court of
competent jurisdiction temporarily, preliminarily or permanently
enjoining such person.
(5) The exemption is only available with respect to
transactions in the subject offering. However, the individual is not
prohibited from qualifying for this exemption with respect to any
other offering so long as all requirements are satisfied.
660:11-5-24.
Oklahoma Accredited Investor issuer agent exemption
By authority delegated to the Administrator in Section
1-402.B.9 of the Securities Act, an individual meeting all of the
following conditions is determined to be exempt from the registration
requirements of Section 1-402 of the Securities Act:
(1) The subject offering is conducted in a manner
to be exempt pursuant to 660:11-11-52.
(2) The individual represents the issuer in
functioning as an agent in the subject offering.
(3) The individual is not compensated in connection
with the agent’s participation by the payment of commissions or
other remuneration based, directly or indirectly, on transactions in
those securities.
(4) Such individual has not within the past five
(5) years been subject to the following in connection with a
violation of a state or federal securities law or regulation: an
order denying, suspending or revoking registration or a cease and
desist order of the Administrator; any similar order, judgment, or
decree by another state securities agency, the SEC, or any
self-regulatory securities organization; or an order of any court of
competent jurisdiction temporarily, preliminarily or permanently
enjoining such person.
(5) The exemption is only available with respect to
transactions in the subject offering. However, the individual is not
prohibited from qualifying for this exemption with respect to any
other offering so long as all requirements are satisfied.
660:11-5-25.
Registration relief for military service members and their spouses
(a) Definitions. For purposes of this
Section:
(1) "Military Service Member" means any
member of the Armed Forces or Reserves of the United States,
National Guard of any state, the Military Reserves of any state,
or the Naval Militias of any state.
(2) "Military Spouse" means an
individual who is the current spouse of a Military Service
Member who is on active duty in this state or claims residency
in this state for the six months prior to assignment to active
duty or during the period of active duty.
(b) Initial registration of a military service
member.
(1) The Administrator shall consider the
equivalent education, training, and experience completed by an
applicant while the applicant was a member of the United States
Armed Forces or Reserves, National Guard of any state, the
Military Reserves of any state, or the Naval militias of any
state, and apply it in the manner most favorable toward
satisfying the qualification for registration.
(2) A Military Service Member, who meets the
following requirements, may apply to the Administrator for
expedited review for registration under the Securities Act. An
applicant shall:
(A) Submit a complete application for
registration on the forms prescribed by the Administrator;
(B) Notify the Administrator in writing
that the Military Service Member is seeking expedited review
of the application;
(C) Submit the filing fee specified in
Section 1-612 of the Securities Act except as provided in
(4) of this subsection;
(D) Submit evidence of passing scores on
examinations equivalent to those required by 660:11-5-16;
and
(E) Provide any other documentation as
required by the Administrator.
(3) No applicant for registration under this
Section shall be qualified for expedited review if the applicant
is or has been the subject of disqualifying disciplinary action
as set forth in Section 1-411.D of the Securities Act or has
been discharged for cause from a broker-dealer or investment
adviser.
(4) A Military Service Member who makes an
initial application within one year of completion of military
service may request a waiver of the initial filing fee specified
in Section 1-612 of the Securities Act. An applicant shall, upon
application, notify the Administrator in writing that the
Military Service Member is seeking waiver of the initial filing
fee.
(c) Status of a military service member.
(1) Inactive status of currently registered
agents.
(A) If a registered agent of a
broker-dealer or issuer volunteers for or is called into
active duty as a Military Service Member, the agent shall be
deemed to be on inactive status upon prompt notification to
the Administrator, in writing, of the individual's
activation into military duty. That individual will be
deemed to be reactivated upon the agent's return to active
association with the broker-dealer or issuer. Such agent
shall remain eligible to receive transaction-related
compensation, including continuing commissions. The
associated broker-dealer or issuer also may allow such agent
to enter into an arrangement with another registered agent
of the broker-dealer or issuer to take over and service the
agent's accounts and to share transaction-related
compensation based upon the business generated by such
accounts. However, because such agents are deemed to be
inactive, they may not perform any of the functions and
responsibilities performed by a registered agent.
(B) A registered agent who is deemed to be
on inactive status under (A) of this paragraph shall not be
required to pay the fee specified in Section 1-612 of the
Securities Act during the time of that agent's inactive
status and for one year thereafter.
(C) The relief provided under this
paragraph shall be available only to a registered agent who
is deemed to be on inactive status under (A) of this
paragraph during the period that such agent remains
registered with the broker-dealer or issuer with which the
agent was registered at the beginning of active duty,
regardless of whether the agent returns to active
association with another broker-dealer or issuer upon
completion of the agent's active duty.
(D) The relief provided under this
paragraph shall be available only to an individual
registered as an agent under the Securities Act and only
with respect to the period specified in connection with that
individual's service on active military duty. Further, the
broker-dealer or issuer with whom such agent is registered
shall promptly notify the Administrator, in writing, of such
agent's return to active association with the broker-dealer
or issuer.
(2) Inactive status of sole
proprietorships.
(A) If a broker-dealer that is a sole
proprietor temporarily closes his or her business by reason
of volunteering for or being called into active military
duty, the broker-dealer shall be deemed to be on inactive
status upon prompt notification to the Administrator, in
writing, of the individual's activation into active military
duty.
(B) A sole proprietor Military Service
Member deemed to be on inactive status as set forth in this
paragraph shall not be required to pay the fee as specified
in Section 1-612 of the Act during the pendency of such
inactive status and for one year thereafter.
(C) The relief described in this paragraph
shall be provided only to a sole proprietor Military Service
Member and only with respect to the period specified in
connection with that individual's service on active military
duty. Further, the sole proprietor shall promptly notify the
Administrator, in writing, of his or her return to active
participation in the investment banking or securities
business. The sole proprietor must promptly file an updated
Form U-4.
(3) Status of formerly registered agents.
(A) If an agent who was formerly registered
with a broker-dealer or issuer volunteers for or is called
into active military duty at any time after the date the
individual ceased to be registered with a broker-dealer or
issuer but during the period of validity of the individual's
prior examination scores as set forth in OAC 660:11-5-16
("examination scores validity periods"), the Administrator
shall extend the period of validity of the individual's
scores by the individual’s period of active military
service; provided, the validity of the scores will continue
for no less than one (1) year following the individual's
completion of active military service.
(B) If an individual deemed to be on
inactive status as an agent while serving as a Military
Service Member ceases to be registered with a broker-dealer
or issuer, the Administrator shall extend the individual's
examination scores validity periods by the remaining period
of the individual's active military service.
(C) An individual applying to become
registered with a broker-dealer or issuer within one (1)
year following the completion of the individual's active
military service shall not be required to pay the fee
specified in Section 1-612 of the Securities Act; provided
the fee relief in this subparagraph shall only apply to the
individual's first application for registration during such
period.
(d) Initial registration of a military spouse.
(1) A Military Spouse who meets the following
requirements may apply to the Administrator for expedited review
for registration under the Securities Act. An applicant shall:
(A) Submit a complete application for
registration on the forms prescribed by the Administrator;
(B) Notify the Administrator in writing
that the Military Spouse is seeking expedited review of the
application;
(C) Submit evidence of passing scores on
examinations equivalent to those required by 660:11-5-16;
(D) Submit the filing fee specified in
Section 1-612 of the Securities Act; and
(E) Provide any other documentation as
required by the Administrator.
(2) This subsection does not apply if the
applicant is or has been the subject of disqualifying
disciplinary action as set forth in Section 1-411.D of the
Securities Act or has been discharged for cause from a
broker-dealer or investment adviser.
(3) This subsection does not apply to a
Military Spouse who does not claim residence in the state of
Oklahoma.
660:11-5-26. Merger and acquisition broker exemption
(a) Definitions. For purposes of this Section:
(1) "Control" means the power, directly or indirectly, to direct the management or policies
of a company, whether through ownership of securities, by contract, or otherwise. There is a
presumption of control for any person who:
(A) is a director, general partner, member, or manager of a limited liability company, or
officer exercising executive responsibility (or has similar status or functions);
(B) has the right to vote 20 percent or more of a class of voting securities or the power to
sell or direct the sale of 20 percent or more of a class of voting securities; or;
(C) in the case of a partnership or limited liability company, has the right to receive upon
dissolution, or has contributed, 20 percent or more of the capital.
(2) "Eligible privately held company" means a company meeting both of the following
conditions:
(A) The company does not have any class of securities registered, or required to be
registered, with the SEC under Section 12 of the 1934 Act, 15 U.S.C. 78l, or with respect
to which the company files, or is required to file, periodic information, documents, and
reports under subsection 15(d) of the 1934 Act, 15 U.S.C. 78o(d).
(B) In the fiscal year ending immediately before the fiscal year in which the services of
the Merger and Acquisition Broker are initially engaged with respect to the securities
transaction, the company meets either or both of the following conditions (determined in
accordance with the historical financial accounting records of the company):
(i) The earnings of the company before interest, taxes, depreciation, and
amortization are less than $25,000,000.
(ii) The gross revenues of the company are less than $250,000,000.
(3) "Merger and Acquisition Broker" means any broker-dealer and any person associated
with a broker-dealer engaged in the business of effecting securities transactions solely in
connection with the transfer of ownership of an eligible privately held company, regardless
of whether that broker-dealer acts on behalf of a seller or buyer, through the purchase, sale,
exchange, issuance, repurchase, or redemption of, or a business combination involving,
securities or assets of the eligible privately held company –
(A) if the broker-dealer reasonably believes that upon consummation of the transaction,
any person acquiring securities or assets of the eligible privately held company, acting
alone or in concert, will control and, directly or indirectly, will be active in the
management of the eligible privately held company or the business conducted with the
assets of the eligible privately held company; and
(B) if any person is offered securities in exchange for securities or assets of the eligible
privately held company, such person will, prior to becoming legally bound to
consummate the transaction, receive or have reasonable access to the most recent fiscal
year-end financial statements of the issuer of the securities as customarily prepared by its
management in the normal course of operations and, if the financial statements of the
issuer are audited, reviewed, or compiled, any related statement by the independent
accountant; a balance sheet dated not more than 120 days before the date of the exchange
offer; and information pertaining to the management, business, results of operations for
the period covered by the foregoing financial statements, and any material loss
contingencies of the issuer.
(4) "Public shell company" means a company that at the time of a transaction with an
eligible privately held company:
(A) has any class of securities registered, or required to be registered, with the SEC
under Section 12 of the 1934 Act, 15 U.S.C. 78l, or with respect to which the company
files, or is required to file, periodic information, documents, and reports under subsection
15(d) of the 1934 Act, 15 U.S.C. 78o(d); and
(B) has no or nominal operations; and
(C) has:
(i) no or nominal assets;
(ii) assets consisting solely of cash and cash equivalents; or
(iii) assets consisting of any amount of cash and cash equivalents and nominal
other assets.
(b) Inflation adjustment. On the date that is five years after the date of the enactment of this
Section, and every five years thereafter, each dollar amount in subparagraph (a)(2)(B) shall be
adjusted by:
(1) dividing the annual value of the Employment Cost Index for Wages and Salaries, Private
Industry Workers (or any successor index), as published by the Bureau of Labor Statistics,
for the calendar year preceding the calendar year in which the adjustment is being made by
the annual value of such index (or successor) for the calendar year ending December 31,
2020; and
(2) multiplying such dollar amount by the quotient obtained under (i) of this subsection.
(3) Rounding – Each dollar amount determined under (i) of this subsection shall be rounded
to the nearest multiple of $100,000.
(c) Exemption. Except as provided in paragraphs (d) and (e), a Merger and Acquisition Broker
shall be exempt from registration as a broker-dealer under this Section.
(d) Excluded activities. A merger and acquisition broker is not exempt from registration under
this paragraph if such broker-dealer does any of the following:
(1) Directly or indirectly, in connection with the transfer of ownership of an eligible
privately held company, receives, holds, transmits, or has custody of the funds or securities to
be exchanged by the parties to the transaction.
(2) Engages on behalf of an issuer in a public offering of any class of securities that is
registered, or is required to be registered, with the SEC under Section 12 of the 1934 Act, 15
U.S.C. 78l or with respect to which the issuer files, or is required to file, periodic
information, documents, and reports under subsection 15(d) of the 1934 Act, 15 U.S.C.
78o(d).
(3) Engages on behalf of any party in a transaction involving a public shell company.
(e) Disqualifications. A merger and acquisition broker is not exempt from registration under
this paragraph if such broker-dealer is subject to:
(1) Suspension or revocation of registration under paragraph 15(b)(4) of the 1934 Act, 15
U.S.C. 78o(b)(4);
(2) A statutory disqualification described in paragraph 3(a)(39) of the 1934 Act, 15 U.S.C.
78c(a)(39);
(3) A disqualification under the rules adopted by the SEC under Section 926 of the DoddFrank Wall Street Reform and Consumer Protection Act (15 U.S.C. 77d); or
(4) A final order described in subparagraph (4)(H) of Section 15(b) of the 1934 Act, 15
U.S.C. 78o(b)(4)(H).
(f) Rule of construction. Nothing in this Section shall be construed to limit any other authority
of the Administrator to exempt any person, or any class of persons, from any provision of the
Securities Act or from any provisions of any rule or regulation thereunder.
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 FINRA 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 (2013) and 17 CFR §240.17a-4 (2014),
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) Recommendations
(A) A broker-dealer and his agents shall have
reasonable grounds for believing that a recommended transaction or
investment strategy involving a security or securities is suitable
for such customer based upon the customer’s investment profile. A
customer’s investment profile includes, but is not limited to, the
customer's age, other investments, financial situation and needs,
tax status, investment objectives, investment experience, investment
time horizon, liquidity needs, risk tolerance, and any other
information disclosed by the customer or known to the broker-dealer
or agent.
(B) A broker-dealer and his agents fulfill the
customer-specific suitability obligation for an institutional
account, as defined in 660:11-1-3, if (i) the broker-dealer or agent
has a reasonable basis to believe that the institutional customer is
capable of evaluating investment risks independently, both in
general and with regard to particular transactions and investment
strategies involving a security or securities and (ii) the
institutional customer affirmatively indicates that it is exercising
independent judgment in evaluating the broker-dealer or agent’s
recommendations. Where an institutional customer has delegated
decision-making authority to an agent, such as an investment adviser
or a bank trust department, these factors shall be applied to the
agent.
(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.
(24) The following standards shall apply when a broker-dealer shares an office with an
independent investment adviser that has an investment adviser representative who regularly
conducts business in the office and is not registered as an agent of the broker-dealer.
(A) The broker-dealer and the independent investment adviser shall reduce any
agreement between them to writing.
(B) The broker-dealer shall take appropriate measures, including, but not limited to,
adequate disclosures to eliminate the appearance of an agency relationship between the
broker-dealer and the independent investment adviser when one does not otherwise exist.
(C) The broker-dealer shall comply with all applicable laws requiring the safeguarding
of customer data from the independent investment adviser.
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. Investment adviser representative termination
660:11-7-15. Piecemeal filings
660:11-7-16. Solicitor exemption
660:11-7-17. Registration
exemption for investment advisers to qualifying private funds.
660:11-7-18. Oil and gas
professional exclusion
660:11-7-19. Registration
relief for military service members and their spouses
660:11-7-20. Supplemental
disclosures
660:11-7-21. Errors and Omissions Coverage
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. Information security and privacy
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 the Securities Act
relating to the registration of investment advisers and investment
adviser representatives and the submission of notice filings by SEC
covered investment advisers, and to establish post-registration
requirements and standards of ethical practices for investment advisers
and investment adviser representatives.
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:
"Advisory affiliate" means an advisory affiliate as defined by the Glossary of Terms for the Form ADV.
"IARD" means the FINRA-operated Investment
Adviser Registration Depository.
"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.
"Office" means any location where an investment adviser and/or one or more of its
investment adviser representatives regularly conduct business relating to investment advisory
services.
"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; and
(B) the filing fee specified in Section 1-612 of
the Securities Act;
(2) shall file with the Department:
(A) a list of the addresses, telephone numbers and
resident representatives of all branch offices located within the
state of Oklahoma, and if the principal office of the investment
adviser is located in Oklahoma, all branch offices located
elsewhere;
(B) audited financial statements as required by
660:11-7-44 unless exempt therefrom;
(C) a copy of each form of investment advisory
contract to be executed by Oklahoma clients and if the principal
office of the investment adviser is located in Oklahoma, a copy of
each form of investment advisory contract to be executed by any
other clients;
(D) prior to the effective date of registration, proof that
the applicant maintains an errors and omissions insurance policy in the amount of at least
$1 million per claim from an insurer authorized to transact insurance in the state of
Oklahoma or from any other insurer approved by the Administrator according to
standards established by 660:11-7-21; and
(E) 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 or updated Form U-4;
(B) the filing fee specified in Section 1-612 of
the Securities Act;
(C) proof of applicant's approved status of
registration or licensure in a jurisdiction in which he has an
office of employment where such registration is required; and
(D) any additional documentation, supplemental
forms, and information as the Administrator may deem necessary;
(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 Section 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 FINRA as the required examinations.
(c) Change in series number. Should FINRA
examination series numbers change, the most current examination series
applicable to the category of registration shall apply. Effective
October 1, 2018, FINRA is implementing a new Securities Industry
Essentials (SIE) examination and revised agent-level qualification
exams. At that point, it will be necessary for an applicant to pass the
SIE in addition to the Series 66 and Series 7 as an alternative to
passing the Series 65.
(d) Validity of prior examination scores.
(1) The Department will not recognize for purposes
of qualification for registration under the Securities Act any FINRA
examination score(s) that predates an initial application for
registration by more than two (2) years in the absence of
registration as an investment adviser representative, an investment
adviser, agent, principal or broker-dealer since examination.
(2) The Department will not recognize for purposes
of qualification for registration under the Securities Act the
examination score(s) of any person whose most recent registration as
an investment adviser, investment adviser representative, agent,
principal or broker-dealer has been terminated for a period of two
(2) years immediately preceding the date of receipt by the
Department of a new application for registration under the
Securities Act.
(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. Investment adviser representative termination
(a) Filing requirement. Termination notice pursuant to the requirements of Section 1-408.A of
the Securities Act shall be promptly given by filing within thirty (30) days of termination, a
completed Uniform Termination Notice for Securities Industry Registration, Form U5. The
Form U5 for an investment adviser shall be filed with IARD.
(b) Responsibility for filing. A completed Form
U5 signed by the investment adviser will be
accepted as fulfilling the statutory requirements of both parties. Upon verification that the Form
U5 has not been filed by the investment adviser, the investment adviser representative shall
notify the Department in writing of the termination.
(c) Amendments. If the information contained in a Form
U5 becomes inaccurate or
incomplete, the investment adviser shall promptly file a correcting amendment after learning of
the facts or circumstances giving rise to the amendment.
(d) 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 of the Securities Act.
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.
660:11-7-17.
Registration exemption for investment advisers to qualifying private
funds.
(a) Definitions. For purposes of this
regulation, the following definitions shall apply:
(1) “Private fund” means an issuer that would
be an investment company, as defined in section 3 of the 1940 Act,
but for section 3(c)(1) or 3(c)(7) of the 1940 Act, as provided in
Section 202(a)(29) of the Advisers Act.
(2) “Private fund adviser” means an investment
adviser who provides advice solely to one or more qualifying private
funds and has assets under management in the United States of less
than $150,000,000.
(3) “Qualifying private fund” means a private
fund that meets the definition of a qualifying private fund in SEC
Rule 203(m)-1, 17 C.F.R. 275.203(m)-1. The term may include an
issuer that may be treated as a private fund for purposes of the
exemption provided by SEC Rule 203(m)-1, 17 C.F.R. 275.203(m)-1.
(b) Exemption for private fund advisers. A
private fund adviser shall be exempt from the registration requirements
of Section 1-403 if the private fund adviser satisfies each of the
following conditions:
(1) neither the private fund adviser nor any of its
advisory affiliates are subject to a disqualification as described
in Rule 262 of SEC Regulation A, 17 C.F.R. § 230.262;
(2) the private fund adviser files with the state as
a notice each report and amendment thereto that an exempt reporting
adviser is required to file with the Securities and Exchange
Commission pursuant to SEC Rule 204-4, 17 C.F.R. § 275.204-4; and
(3) the private fund adviser pays the fees specified
in Section 1-612.A.5.
(c) Federal covered investment advisers. If a
private fund adviser is registered with the Securities and Exchange
Commission, the adviser shall not be eligible for this exemption and
shall comply with the state notice filing requirements applicable to
federal covered investment advisers in Section 1-405.
(d) Investment adviser representatives. A person
is exempt from the registration requirements of Section 1-404 if he or
she is employed by or associated with an investment adviser that is
exempt from registration in this state pursuant to this rule and does
not otherwise act as an investment adviser representative.
(e) Electronic filing. The report filings
described in paragraph (b)(2) above shall be made electronically through
the IARD. A report shall be deemed filed when the report and the fee
required by Section 1-612.A.5 are filed and accepted by the IARD on the
state's behalf.
660:11-7-18. Oil and
gas professional exclusion
By authority delegated to the Administrator in Section
1-102.17.f of the Securities Act, the following persons shall be
excluded from the definition of "investment adviser" only when giving
advice, analyses, interpretations or reports that relate to interests in
oil, gas, or other mineral leases: a professional geologist,
professional engineer or professional geophysicist and professional
petroleum landman who is engaged in the business of exploring for and/or
producing oil and gas or other valuable minerals as an ongoing business.
660:11-7-19.
Registration relief for military service members and their spouses
(a) Definitions. For purposes of this Section:
(1) "Military Service Member" means any member of
the Armed Forces or Reserves of the United States, National Guard of
any state, the Military Reserves of any state, or the Naval Militias
of any state.
(2) "Military Spouse" means an individual who is
the current spouse of a Military Service Member who is on active
duty in this state or claims residency in this state for the six
months prior to assignment to active duty or during the period of
active duty.
(b) Initial registration of a military service member.
(1) The Administrator shall consider the equivalent
education, training, and experience completed by an applicant while
the applicant was a member of the United States Armed Forces or
Reserves, National Guard of any state, the Military Reserves of any
state, or the Naval militias of any state, and apply it in the
manner most favorable toward satisfying the qualification for
registration.
(2) A Military Service Member, who meets the
following requirements, may apply to the Administrator for expedited
review for registration under the Securities Act. An applicant
shall:
(A) Submit a complete application for
registration on the forms prescribed by the Administrator;
(B) Notify the Administrator in writing that
the Military Service Member is seeking expedited review of the
application;
(C) Submit the filing fee specified in Section
1-612 of the Securities Act except as provided in (4) of this
subsection;
(D) Submit evidence of passing scores on
examinations equivalent to those required by 660:11-7-13; and
(E) Provide any other documentation as required
by the Administrator.
(3) No applicant for registration under this
Section shall be qualified for expedited review if the applicant is
or has been the subject of disqualifying disciplinary action as set
forth in Section 1-411.D of the Securities Act or has been
discharged for cause from a broker-dealer or investment adviser.
(4) A Military Service Member who makes an initial
application within one year of completion of military service may
request a waiver of the initial filing fee specified in Section
1-612 of the Securities Act. An applicant shall, upon application,
notify the Administrator in writing that the Military Service Member
is seeking waiver of the initial filing fee.
(c) Status of a military service member.
(1) Inactive status of currently registered
investment adviser representatives.
(A) If a registered investment adviser
representative of an investment adviser volunteers for or is
called into active duty as a Military Service Member, the
investment adviser representative shall be deemed to be on
inactive status upon prompt notification to the Administrator,
in writing, of the individual's activation into active military
duty. That individual will be deemed reactivated upon the
investment adviser representative's return to active association
with the investment adviser. The associated investment adviser
also may allow such investment adviser representative to enter
into an arrangement with another registered investment adviser
representative of the investment adviser to take over and
service the investment adviser representative's accounts and to
share compensation based upon the business generated by such
accounts. However, because such investment adviser
representatives are deemed inactive, they may not perform any of
the functions and responsibilities performed by a registered
investment adviser representative.
(B) A registered investment adviser
representative who is deemed to be on inactive status under this
paragraph shall not be required to pay the fee specified in
Section 1Â612 of the Securities Act during the time of that
investment adviser representative's inactive status and for one
year thereafter.
(C) The relief provided under this paragraph
shall be available only to a registered investment adviser
representative who is deemed to be on inactive status under (A)
of this paragraph during the period that such investment adviser
representative remains registered with the investment adviser
with which the investment adviser representative was registered
at the beginning of active duty, regardless of whether the
investment adviser representative returns to active association
with another investment adviser upon completion of the
investment adviser representative's active duty.
(D) The relief provided under this paragraph
shall be available only to an individual registered as an
investment adviser representative under the Securities Act and
only with respect to the period specified in connection with
that investment adviser representative's service on active
military duty. Further, the investment adviser with whom such
investment adviser representative is registered shall promptly
notify the Administrator, in writing, of such investment adviser
representative's return to active association with the
investment adviser.
(2) Inactive status of sole proprietorships.
(A) If an investment adviser that is a sole
proprietor temporarily closes his or her business by reason of
volunteering for or being called into active military duty, the
investment adviser shall be deemed to be on inactive status upon
prompt notification to the Administrator, in writing, of the
individual's activation into active military duty.
(B) A sole proprietor Military Service Member
deemed to be on inactive status as set forth in this paragraph
shall be relieved of any other filing requirements under this
subchapter during the pendency of the individual's inactive
status.
(C) A sole proprietor Military Service Member
deemed to be on inactive status as set forth in this paragraph
shall not be required to pay the fee as specified in Section
1-612 of the Securities Act during the pendency of such inactive
status and for one year thereafter.
(D) The relief described in this paragraph
shall be provided only to a sole proprietor Military Service
Member and only with respect to the period specified in
connection with his or her service on active military duty.
Further, the sole proprietor shall promptly notify the
Administrator, in writing, of his or her return to active
participation in the investment banking or securities business.
The sole proprietor must promptly file an updated Form ADV and
Form U-4.
(3) Status of formerly registered investment
adviser representatives.
(A) If an individual who was formerly
registered as an investment adviser representative volunteers
for or is called into active military duty at any time within
two years after the date the individual ceased to be registered
with an investment adviser, but during the period of validity of
the individual's prior examination scores as set forth in OAC
660:11-7-13 ("examination scores validity periods"), the
Administrator shall extend the period of validity of the
individual's scores by the individual's period of active
military service; provided, the validity of the scores will
continue for no less than one (1) year following the
individual's completion of active military service.
(B) If an individual deemed to be on inactive
status as an investment adviser representative while serving as
a Military Service Member ceases to be registered with an
investment adviser, the Administrator shall extend the
individual's examination scores validity periods by the
remaining period of the individual's active military service.
(C) An individual applying to become associated
with an investment adviser within one (1) year following the
completion of the individual's active military service shall not
be required to pay the fee specified in Section 1-612 of the
Securities Act; provided the fee relief in this subparagraph
shall only apply to the individual's first application for
registration during such period.
(d) Initial registration of a military spouse.
(1) A Military Spouse who meets the following
requirements may apply to the Administrator for expedited review for
registration under the Securities Act. An applicant shall:
(A) Submit a complete application for
registration on the forms prescribed by the Administrator;
(B) Notify the Administrator in writing that
the Military Spouse is seeking expedited review of the
application;
(C) Submit evidence of passing scores on
examinations equivalent to those required by 660:11-7-13;
(D) Submit the filing fee specified in Section
1-612 of the Securities Act; and
(E) Provide any other documentation as required
by the Administrator.
(2) This subsection does not apply if the applicant
is or has been the subject of disqualifying disciplinary action as
set forth in Section 1-411.D of the Securities Act or has been
discharged for cause from a broker-dealer or investment adviser.
(3) This subsection does not apply to a Military
Spouse who does not claim residence in the state of Oklahoma.
660:11-7-20.
Supplemental disclosures
Every investment adviser and investment adviser
representative registered under the Securities Act must keep their
application current at all times by promptly filing amendments
supplementing their application after learning of the facts or circumstances giving rise to the
amendment as required by Section 1-406.B of the Securities Act.
660:11-7-21.
Errors and Omissions Coverage
(a) Every investment adviser who is required to maintain an errors and omissions insurance
policy under 660:11-7-11 must submit proof of an errors and omissions insurance policy to the
Department as a condition of registration.
(b) Every investment adviser registered under Section 1-406 of the Securities Act must submit
proof of an errors and omissions insurance policy annually as set forth in 660:11-7-31.
(c) If subject to 660:11-7-11, proof of insurance may be demonstrated by submitting to the
Department an attestation of compliance on a form approved by the Administrator and a policy
declaration page, or a certificate of liability coverage specifying errors and omissions coverage.
For purposes of compliance with 660:11-7-31, proof of insurance may be demonstrated by
submitting to the Department an attestation of compliance on a form available on the
Department’s website.
(1) An attestation must include:
(A) The name of the insurer;
(B) The policy number;
(C) Name of the insured; licensee; and
(D) Date of the policy period.
(2) For purposes of compliance with this Section, 660:11-7-11, and 660:11-7-31, a policy
may not contain exclusions for investment management services performed in this state or
for persons performing investment management services in this state.
(3) The requirements for this insurance may be fulfilled by a policy provided through
membership in a professional association so long as the requirements are otherwise met, or at
the discretion of the Administrator.
(4) The requirements for this insurance may be fulfilled by the policies of one or more
insurance carriers which policies together meet such requirements.
(d) For purposes of this rule, policies written by admitted or authorized insurers, registered
surplus lines insurers, and registered risk retention and purchasing groups will satisfy the errors
and omissions requirements of 660:11-7-11 and 660:11-7-31.
(e) Every investment adviser registered under Section 1-406 of the Securities Act shall
immediately notify the Department in writing if its errors and omissions insurance policy is
cancelled, terminated, or substantially modified.
PART 5. REPORTING REQUIREMENTS
660:11-7-31.
Post-registration reporting requirements
(a) Form ADV Amendments. Every investment adviser
registered under Section 1-406 of the Securities Act must amend its Form
ADV each year by filing an annual updating amendment within 90 days of
the end of its fiscal year. In addition, every investment adviser
registered under Section 1-406 of the Securities Act must amend its Form
ADV by promptly filing additional amendments (other-than-annual
amendments) if required by the written instructions to Form ADV.
(b) Proof of Errors and Omissions Coverage. Every investment adviser registered under
Section 1-406 of the Securities Act must submit proof of an errors and omissions insurance
policy meeting the requirements of 660:11-7-11(a)(2)(D) to the Department each year within 90
days of the end of its fiscal year. The proof must be submitted in compliance with 660:11-7-21.
(c) Financial Reports.
(1) Filing requirement. Pursuant to Section
1-410.B of the Securities Act, every investment adviser registered
under Section 1-406 of the Securities Act who has custody, as that
term is defined in 660:11-7-48, of clients' funds or securities or
requires prepayment of advisory fees six (6) months or more in
advance and in excess of $1,200.00 per client shall file a
post-registration financial report with the Department each fiscal
year.
(2) Report content. Financial reports shall
contain the financial or operating 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.
(3) Report filing dates. Financial reports
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 within 90 days of the end of the
registrant's fiscal year.
(4) Amendment. If the information contained
in a financial report is or becomes inaccurate or incomplete in a
material respect, the investment adviser shall promptly file a
correcting amendment.
(d) Incomplete or Delinquent Filings. The
Department will not accept incomplete or piecemeal filings. Failure to
make a required filing before it becomes delinquent may result in the
suspension or revocation of registration.
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. The financial statements shall include a balance
sheet prepared in accordance with generally accepted accounting principles, an income
statement, a cash flow statement, and a net worth computation.
(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, and
(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 paragraph (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. The written agreement,
acknowledgment, and solicitor disclosure statement will be considered to be in
compliance with this paragraph if such documents are in compliance with Rule
275.206(4)-3 of the Advisers Act of 1940.
(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) Recommendations.
(A) Written information about each investment
advisory client that is the basis for making any recommendation
or providing any investment advice to such client.
(B) A record evidencing that the account record
of each client consisting of the information described in (A) of
this paragraph has been furnished by the investment adviser to
the client within thirty days of the signing of an investment
advisory contract, and thereafter at intervals no greater than
thirty-six months. The account record shall include or be
accompanied by prominent statements that the client should mark
any corrections and return the account record to the adviser and
that the client should notify the advisor of any changes to
information contained in the account record as they occur in the
future.
(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. The following standards shall apply
to supervisory procedures:
(A) Regardless of its size or complexity, every
investment adviser registered or required to be registered under
the Securities Act must adopt and implement supervisory
procedures that are tailored specifically to their business and
must address the activities of all its investment adviser
representatives and associated persons. Supervisory procedures
must be in writing and must be reasonably designed to achieve
compliance with applicable securities laws and the rules of the
Oklahoma Department of Securities. Ultimate responsibility for
supervision rests with the investment adviser.
(B) Written supervisory procedures must
identify who has supervisory responsibilities, a record of each
associated person who has supervisory responsibilities and the
date assigned, and procedures for each business line and
applicable securities laws for which each supervisor is
responsible.
(C) All written supervisory procedures should
specifically identify the individual to perform a supervisory
function; what specifically the supervisor will review; when or
how often the review will take place and how the supervisor's
review will be documented.
(D) Every investment adviser must maintain a
copy of each prior version of its written supervisory procedures
for a minimum of five years.
(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 drawn by clients and made payable to third parties within
three business days of receipt, the adviser shall keep a ledger or
other listing of all securities or funds held or obtained including
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 received by 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.
(24) A copy of the investment adviser's Physical Security and Cybersecurity Policies and
Procedures and Privacy Policy required by 660:11-7-46. In addition to the investment
adviser's recordkeeping requirements under subsections (e) and (g) of this Section, the
investment adviser shall maintain:
(A) A current copy of these policies and procedures either in hard copy in a separate
location or stored on electronic storage media that is separate from and not dependent on
access to the investment adviser's computers or a network;
(B) All records documenting the investment adviser's compliance with 660:11-7-46,
including, but not limited to, evidence of the annual review of the policies and
procedures; and
(C) A record of any violation of 660:11-7-46 and of any action taken as a result of the
violation.
(25) Copies of the brochures required by 660:11-7-43 including a list of all clients or
perspective clients to whom the brochures were provided and the date the brochures were
provided.
(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)(4)
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)(5)
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.
(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 as the records are kept in their regular form for the required time, by an investment adviser on:
(A) paper or hard copy 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 1934 Act, 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 Section is intended to set forth the standards of ethical practices for investment advisers and investment adviser representatives.
The standards set forth in this Section apply to federal covered investment advisers and investment adviser representatives of federal covered investment advisers only to the
extent that application is permitted by the National Securities Markets Improvement Act of 1996 (Pub. L. No. 104-290). 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.
(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 profile.
(A) A client's investment profile includes, but is not limited to, the client's age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information disclosed by the client or known to the investment adviser or investment adviser representative.
(B) Institutional clients.
(i) An investment adviser or an investment adviser representative fulfills the customer-specific suitability obligation for an institutional account, as defined in 660:11-1-3, if
(I) the investment adviser or investment adviser representative has a reasonable basis to believe that the institutional client is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies involving a security or securities and
(II) the institutional client affirmatively indicates that it is exercising independent judgment in evaluating the investment adviser or investment adviser representative's recommendations.
(ii) Where an institutional client has delegated decision-making authority to an agent, such as an investment adviser or a bank trust department, these factors shall be applied to the agent.
(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) Providing a report or recommendation to any advisory client prepared by someone other than the investment adviser without disclosing the source.
(10) Charging a client an unreasonable advisory fee.
(11) 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 compensation for effecting securities transactions pursuant to such advice will be received by the investment adviser or its employees or affiliated persons.
(12) Guaranteeing a client that a specific result will be achieved (gain or no loss) with advice which will be rendered.
(13) Publishing, circulating and distributing any advertisement which does not comply with Reg. A § 275.206(4)-1 under the Advisers Act.
(14) Disclosing the identity, affairs, or investments of any client unless required by law to do so, or unless consented to by the client.
(15) 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 does not comply with the requirements of Reg. A § 275.206(4)-2 under the Advisers Act.
(16) 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.
(17) 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.
(18) Failing to adopt, implement, and follow written supervisory procedures that are tailored specifically to their business and that:
(A) address the activities of all its investment adviser representatives and associated persons;
(B) identify who has supervisory responsibilities, including a record of each associated person who has supervisory responsibilities and the date assigned, and procedures for each business line and applicable securities laws for which each supervisor is responsible; and
(C) specifically identify the individual to perform a supervisory function; what specifically the supervisor will review; when or how often the review will take place and how the supervisor's review will be documented.
(19) Engaging in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of the Securities Act or any section thereunder.
(20) Accessing a client's account by using the client's own unique identifying information such as username and password.
(21) Failing to establish, maintain, and enforce required policies or procedures.
(22) Knowingly selling any security to or purchasing any security from a client while acting as principal for its own advisory account, or knowingly effecting any sale or purchase of any security for the account of the client while acting as broker-dealer for a person other than the client, without disclosing to the client in writing before the completion of the transaction the capacity in which it is acting and obtaining the consent of the client to the transaction.
(A) The prohibitions of this paragraph (22) shall not apply to any transactions with a customer of a broker-dealer if the broker-dealer is not acting as an investment adviser in relation to the transaction.
(B) The prohibition of this paragraph (22) shall not apply to any transaction with a customer of a broker-dealer if the broker-dealer acts as an investment adviser solely:
(i) by means of publicly distributed written materials or publicly made oral statements;
(ii) by means of written materials or oral statements not purporting to meet the objectives or needs of specific individuals or accounts;
(iii) through the issuance of statistical information containing no expressions of opinion as to the investment merits of a particular security; or
(iv) any combination of the foregoing services.
(C) Publicly distributed written materials or publicly made oral statements shall disclose that, if the purchaser of the advisory communication uses the investment adviser's services in connection with the sale or purchase of a security which is a subject of the communication, the investment adviser may act as principal for its own account or as agent for another person. Compliance by the investment adviser with the foregoing disclosure requirement shall not relieve it of any other disclosure obligations under the Securities Act.
(D) The prohibition of this paragraph (22) shall not apply to an investment adviser effecting an agency cross transaction for an advisory client provided the following conditions are met:
(i) The advisory client executes a written consent prospectively authorizing the investment adviser to effect agency cross transactions for such client;
(ii) Before obtaining such written consent from the client, the investment adviser makes full written disclosure to the client that, with respect to agency cross transactions, the investment adviser will act as broker-dealer for, receive commissions from, and have a potentially conflicting division of loyalties and responsibilities regarding both parties to the transactions;
(iii) At or before the completion of each agency cross transaction, the investment adviser or any other person relying on this subparagraph sends the client a written confirmation. The written confirmation shall include:
(I) A statement of the nature of the transaction;
(II) The date the transaction took place;
(III) An offer to furnish, upon request, the time when the transaction took place; and
(IV) the source and amount of any other remuneration the investment adviser received or will receive in connection with the transaction. In the case of a purchase, if the investment adviser was not participating in a tender offer, the written confirmation shall state whether the investment adviser has been receiving or will receive any other remuneration and that the investment adviser will furnish the source and amount of such remuneration to the client upon the client's written consent.
(iv) At least annually, and with or as part of any written statement or summary of the account from the investment adviser, the investment adviser or any other person relying on this subparagraph (D) send each client a written disclosure statement identifying:
(I) The total number of agency cross transactions during the period for the client since the date of the last such statement or summary; and
(II) The total amount of all commissions or other remuneration the investment adviser received or will receive in connection with agency cross transactions for the client during such period.
(v) Each written disclosure and confirmation required by this subparagraph (D) must include a conspicuous statement that the client may revoke the written consent required under (i) of this subparagraph (D) at any time by providing written notice to the investment adviser.
(vi) No agency cross transaction may be effected in which the same investment adviser recommended the transaction to both any seller and any purchaser.
(vii) Nothing in the subparagraph (D) shall be construed to relieve an investment adviser or investment adviser representative from acting in the best interests of the client, including fulfilling his duty with respect to the best price and execution for the particular transaction for the client nor shall it relieve any investment adviser or investment adviser representative of any other disclosure obligations imposed by the Securities Act.
(E) Definitions for purposes of this paragraph (22).
(i) "Agency cross transaction for an advisory client" means a transaction in which a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlling, controlled by, or under common control with such investment adviser, including an investment adviser representative, acts as a broker-dealer for both the advisory client and another person on the other side of the transaction. When acting in such capacity such person is required to be registered as a broker-dealer in this state unless excluded from the definition.
(ii) "Publicly distributed written materials" means written materials which are distributed to 35 or more persons who pay for those materials.
(iii) "Publicly made oral statements" means oral statements made simultaneously to 35 or more persons who pay for access to those statements.
(23) Sharing an office with a person who is not an advisory affiliate without:
(A) reducing any agreement with the unaffiliated person to writing;
(B) taking appropriate measures, including, but not limited to, adequate disclosures to eliminate the appearance of an agency relationship with the unaffiliated person when one does not otherwise exist; and
(C) complying with all applicable Oklahoma and federal laws requiring the safeguarding of customer data from disclosure to the unaffiliated person.
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:
(1) a brochure that may be a copy of Part 2A of its
Form ADV or a written document containing the information required
by Part 2A of Form ADV;
(2) a copy of its Part 2B brochure supplement for
each individual
(A) providing investment advice and having
direct contact with clients in this state; or
(B) exercising discretion over assets of
clients in this state, even if no direct contact is involved;
(3) a copy of any Part 2A Appendix 1 wrap fee
brochure if the investment adviser sponsors or participates in wrap
fee accounts;
(4) a summary of material changes, if any, which
may be included in Form ADV Part 2 or given as a separate document;
and
(5) such other information as the Administrator may
require.
(b) Brochure compliance with Form ADV. Any
brochure or brochure supplement required by (a) of this Section must
comply with the language, organizational format, and filing requirements
specified in the Instructions to Form ADV, Part 2, except that a change
in an advisory fee constitutes a material change that triggers the need
to file an amendment to the Form ADV Part 2A.
(c) Delivery.
(1) Initial delivery. An investment adviser
shall deliver the documents required by (a) of this Section to an
advisory client or prospective advisory client:
(A) not less than 48 hours prior to entering into
any written investment advisory contract with such client or
prospective client, or
(B) 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.
(2) Annual delivery. An investment adviser,
except as provided in (3) of this subsection, must:
(A) Deliver within 120 days of the end of its
fiscal year free copies of any updated brochure and brochure
supplement that include or are accompanied by a summary of material
changes; or
(B) Deliver a summary of material changes that
includes an offer to provide a copy of any updated brochure and
brochure supplement and information on how the client may obtain a
copy of such documents. Should a client request a copy of any
updated brochures or brochure supplements under this subsection, the
requested documents must be mailed or delivered within seven (7)
days of the receipt of the request.
(3) Exceptions. Delivery of any documents
required by (1) and (2) of this subsection need not be made to:
(A) a client who is an officer, employee or other
person related to the adviser that would be a qualified client of
the adviser under 17 CFR § 275.205-3(d)(1)(iii);
(B) clients who receive only impersonal advice and
who pay less than $500 in fees per year;
(C) an investment company registered under the 1940
Act; or
(D) a business development company as defined in
the 1940 Act and whose advisory contract meets the requirements of
section 15(c) of that Act.
(4) Electronic delivery. Delivery of any
brochure and brochure supplement may be made electronically if the
investment adviser:
(A) in the case of an initial delivery to a
potential client, obtains a verification that a readable copy of the
documents were received by the client;
(B) in the case of other than initial deliveries,
obtains each client’s prior consent to provide the documents
electronically;
(C) prepares the electronically delivered documents
in the format prescribed in (a) of this Section and instructions to
Form ADV Part 2;
(D) delivers the documents in a format that can be
retained by the client in either electronic or paper form; and
(E) establishes procedures to supervise personnel
transmitting the brochure and any supplements and prevents
violations of this Section.
(d) Other disclosures. Nothing in this Section shall
relieve any investment adviser from any obligation pursuant to any
provision of the Securities Act or the rules thereunder or other federal
or state law to disclose any information to its advisory clients or
prospective advisory clients not specifically required by this Section.
(e) "Entering into" exclusion. 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.
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. Information security and privacy
(a) Physical security and cybersecurity policies and procedures. Every investment adviser
registered or required to be registered shall establish, implement, update, and enforce written
physical security and cybersecurity policies and procedures reasonably designed to ensure the
confidentiality, integrity, and availability of physical and electronic records and information.
The policies and procedures must be tailored to the investment adviser’s business model, taking
into account the size of the firm, type(s) of services provided, and the number of locations of the
investment adviser.
(1) The physical security and cybersecurity policies and procedures must:
(A) Protect against reasonably anticipated threats or hazards to the security or integrity
of client records and information;
(B) Ensure that the investment adviser safeguards confidential client records and
information; and
(C) Protect any records and information the release of which could result in harm or
inconvenience to any client.
(2) The physical security and cybersecurity policies and procedures must cover at least five
functions:
(A) Identify. Develop the organizational understanding to manage information security
risk to systems, assets, data, and capabilities;
(B) Protect. Develop and implement the appropriate safeguards to ensure delivery of
critical infrastructure services;
(C) Detect. Develop and implement the appropriate activities to identify the occurrence
of an information security event;
(D) Respond. Develop and implement the appropriate activities to take action regarding
a detected information security event; and
(E) Recover. Develop and implement the appropriate activities to maintain plans for
resilience and to restore any capabilities or services that are impaired due to an
information security event.
(3) The investment adviser must review, no less frequently than annually, and modify, as
needed, these policies and procedures to ensure the adequacy of the security measures and
the effectiveness of their implementation.
(b) Privacy policy. The investment adviser must deliver upon the investment adviser’s
engagement by a client, and on an annual basis thereafter, a privacy policy to each client that is
reasonably designed to aid in the client’s understanding of how the investment adviser collects
and shares, to the extent permitted by state and federal law, non-public personal information. The
investment adviser must promptly update and deliver to each client an amended privacy policy if
any of the information in the policy becomes inaccurate.
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;
(3) such cash fee is paid pursuant to a written
agreement to which the investment adviser is a party; and
(4) the only compensation paid for a referral of
investment advisory clients to a solicitor other than one registered
as an investment adviser representative of this investment adviser
is paid to an investment adviser registered under the Securities Act
or a federal covered investment adviser who has filed a notice under
Section 1-405 of the Securities Act.
(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 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
(a) Definitions. For purposes of this
Subchapter:
(1) "Control" means the power, directly or
indirectly, to direct the management or policies of a person whether
through ownership of securities, by contract, or otherwise. Control
includes:
(A) Each of the investment adviser's officers,
partners, or directors exercising executive responsibility (or
persons having similar status or functions) is presumed to
control the investment adviser;
(B) A person is presumed to control a
corporation if the person:
(i) directly or indirectly has the right to
vote twenty-five (25) percent or more of a class of the
corporation's voting securities; or
(ii) has the power to sell or direct the
sale of twenty-five (25) percent or more of a class of the
corporation's voting securities;
(C) A person is presumed to control a
partnership if the person has the right to receive upon
dissolution, or has contributed, twenty-five (25) percent or
more of the capital of the partnership;
(D) A person is presumed to control a limited
liability company if the person:
(i) directly or indirectly has the right to
vote twenty-five (25) percent or more of a class of the
interests of the limited liability company;
(ii) has the right to receive upon
dissolution, or has contributed, twenty-five (25) percent or
more of the capital of the limited liability company;
(iii) is an elected manager of the limited
liability company; or
(E) A person is presumed to control a trust if
the person is a trustee or managing agent of the trust.
(2) "Custody" means holding, directly or
indirectly, client funds or securities, or having any authority to
obtain possession of them or the ability to appropriate them. The
investment adviser has custody if a related person holds, directly
or indirectly, client funds or securities, or has any authority to
obtain possession of them, in connection with advisory services the
investment adviser provides to clients.
(A) Custody includes:
(i) possession of client funds or
securities unless the investment adviser receives them
inadvertently and returns them to the sender within three
(3) business days of receiving them and the investment
adviser maintains the records required under
660:11-7-41(a)(22);
(ii) any arrangement (including a general
power of attorney) under which an investment adviser is
authorized or permitted to withdraw client funds or
securities maintained with a custodian upon the investment
adviser's instruction to the custodian; and
(iii) any capacity (such as general partner
of a limited partnership, managing member of a limited
liability company or a comparable position for another for
another type of pooled investment vehicle, or trustee of a
trust) that gives the investment adviser or its supervised
person legal ownership of or access to client funds or
securities.
(B) Receipt of checks drawn by clients and made
payable to unrelated third parties will not meet the definition
of custody if forwarded to the third party within three (3)
business days of receipt and the investment adviser maintains
the records required under 660:11-7-41(a)(22).
(3) "Independent certified public accountant"
means a certified public accountant that meets the standards of
independence described in rule 2-01(b) and (c) of Regulation S-X [17
CFR 210.2-01(b) and (c)].
(4) "Independent party" means a person
that:
(A) is engaged by the investment adviser to act
as a gatekeeper for the payment of fees, expenses and capital
withdrawals from the pooled investment;
(B) does not control and is not controlled by
and is not under common control with the investment adviser;
(C) does not have, and has not had within the
past two years, a material business relationship with the
investment adviser; and
(D) shall not negotiate or agree to have
material business relations or commonly controlled relations
with an investment adviser for a period of two years after
serving as the person engaged in an independent party agreement.
(5) "Independent representative" means a
person who:
(A) acts as agent for an advisory client,
including in the case of a pooled investment vehicle, for
limited partners of a limited partnership, members of a limited
liability company, or other beneficial owners of another type of
pooled investment vehicle and by law or contract is obliged to
act in the best interest of the advisory client or the limited
partners, members, or other beneficial owners;
(B) does not control, is not controlled by, and
is not under common control with the investment adviser; and
(C) does not have, and has not had within the
past two years, a material business relationship with the
investment adviser.
(6) "Qualified custodian" means the
following:
(A) A bank or savings association that has
deposits insured by the Federal Deposit Insurance Corporation
under the Federal Deposit Insurance Act;
(B) A broker-dealer registered in this
jurisdiction and with the SEC holding the client assets in
customer accounts;
(C) A registered futures commission merchant
registered under Section 6f(a) of the Commodity Exchange Act,
holding the client assets in customer accounts, but only with
respect to clients' funds and security futures, or other
securities incidental to transactions in contracts for the
purchase or sale of a commodity for future delivery and options
thereon; and
(D) A foreign financial institution that
customarily holds financial assets for its customers, provided
that the foreign financial institution keeps the advisory
clients' assets in customer accounts segregated from its
proprietary assets.
(7) "Related person" means any person,
directly or indirectly, controlling or controlled by the investment
adviser, and any person that is under common control with the
investment adviser.
(b) Safekeeping required. It is unlawful and
deemed to be a fraudulent, deceptive, or manipulative act, practice, or
course of business for an investment adviser, registered or required to
be registered, to have custody of client funds or securities unless:
(1) Notice to Administrator. The
investment adviser notifies the Administrator promptly in
writing that the investment adviser has or may have custody.
Such notification is required to be given on Form ADV.
(2) Qualified custodian. A qualified
custodian maintains those funds and securities:
(A) in a separate account for each client under
that client's name; or
(B) in accounts that contain only the
investment adviser's clients' funds and securities, under the
investment adviser's name as agent or trustee for the clients,
or, in the case of a pooled investment vehicle that the
investment adviser manages, in the name of the pooled investment
vehicle.
(3) Notice to clients. If an investment
adviser opens an account with a qualified custodian on its client's
behalf, under the client's name, under the name of the investment
adviser as agent, or under the name of a pooled investment vehicle,
the investment adviser must notify the client in writing of the
qualified custodian's name, address, and the manner in which the
funds or securities are maintained, promptly when the account is
opened and following any changes to this information. If the
investment adviser sends account statements to a client to which the
investment adviser is required to provide this notice, the
investment adviser must include in the notification provided to that
client and in any subsequent account statement the investment
adviser sends that client a statement urging the client to compare
the account statements from the custodian with those from the
investment adviser.
(4) Account statements.
The investment adviser has a reasonable basis, after due
inquiry, for believing that the qualified custodian sends an
account statement, at least quarterly, to each client for which
it maintains funds or securities, identifying the amount of
funds and of each security in the account at the end of the
period and setting forth all transactions in the account during
that period.
(5) Special rule for limited partnerships
and limited liability companies. If the investment adviser
or a related person is a general partner of a limited
partnership (or managing member of a limited liability company,
or holds a comparable position for another type of pooled
investment vehicle),
(A) the account statements required under (4)
of this subsection must be sent to each limited partner (or
member or other beneficial owner), and
(B) the investment adviser must:
(i) enter into a written agreement with an
independent party who is obliged to act in the best interest
of the limited partners, members, or other beneficial owners
to review all fees, expenses, and capital withdrawals from
the pooled accounts;
(ii) send all invoices or receipts to the
independent party, detailing the amount of the fee,
expenses, or capital withdrawal and the method of
calculation such that the independent party can:
(I) determine that the payment is in
accordance with the pooled investment vehicle standards
(generally the partnership agreement or membership
agreement) and
(II) forward, to the qualified
custodian, approval for payment of the invoice with a
copy to the investment adviser.
(6) Independent verification. The
client funds and securities of which the investment adviser has
custody are verified by actual examination at least once during
each calendar year, by an independent certified public
accountant, pursuant to a written agreement between the
investment adviser and the independent certified public
accountant, at a time that is chosen by the independent
certified public accountant without prior notice or announcement
to the investment adviser and that is irregular from year to
year. The written agreement must provide for the first
examination to occur within six months of becoming subject to
this paragraph, except that, if the investment adviser maintains
client funds or securities pursuant to this Section as a
qualified custodian, the agreement must provide for the first
examination to occur no later than six months after obtaining
the internal control report. The written agreement must require
the independent certified public accountant to:
(A) file a certificate on Form ADV-E with
the Administrator within 120 days of the time chosen by the
independent certified public accountant in this paragraph,
stating that it has examined the funds and securities and
describing the nature and extent of the examination;
(B) notify the Administrator within one
business day of the finding of any material discrepancies
during the course of the examination, by means of a
facsimile transmission or electronic mail, followed by first
class mail, directed to the attention of the Administrator;
and
(C) file within four (4) business days of
the resignation or dismissal from, or other termination of,
the engagement, or removing itself or being removed from
consideration for being reappointed, Form ADV-E accompanied
by a statement that includes:
(i) the date of such resignation,
dismissal, removal, or other termination, and the name,
address, and contact information of the independent
certified public accountant; and
(ii) an explanation of any problems
relating to examination scope or procedure that
contributed to such resignation, dismissal, removal, or
other termination.
(7) Investment advisers acting as qualified
custodians. If the investment adviser maintains, or if the
investment adviser has custody because a related person
maintains, client funds or securities pursuant to this Section
as a qualified custodian in connection with advisory services
the investment adviser provides to clients, the investment
adviser must obtain, or receive from its related person, within
six months of becoming subject to this paragraph and thereafter
no less frequently than once each calendar year a written
internal control report prepared by an independent certified
public accountant:
(A) The internal control report must
include an opinion of an independent certified public
accountant as to whether controls have been placed in
operation as of a specific date, and are suitably designed
and are operating effectively to meet control objectives
relating to custodial services, including the safeguarding
of funds and securities held by either the investment
adviser or a related person on behalf of the investment
adviser's clients, during the year; and
(B) The independent certified public
accountant must verify that the funds and securities are
reconciled to a custodian other than the investment adviser
or the investment adviser's related person.
(8) Independent representatives. A
client may designate an independent representative to receive,
on his behalf, notices and account statements as required under
(3) and (4) of this subsection.
(c) Exceptions.
(1) Shares of mutual funds. With respect
to shares of an open-end company as defined in Section 5(a)(1)
of the 1940 Act [15 U.S.C. 80a-5(a)(1)] ("mutual fund"), the
investment adviser may use the mutual fund's transfer agent in
lieu of a qualified custodian for purposes of complying with (b)
of this Section.
(2) Certain privately offered securities.
(A) The investment adviser is not required
to comply with (b)(2) of this Section with respect to
securities that are:
(i) acquired from the issuer in a
transaction or chain of transactions not involving any
public offering;
(ii) uncertificated, and ownership
thereof is recorded only on books of the issuer or its
transfer agent in the name of the client; and
(iii) transferable only with prior
consent of the issuer or holders of the outstanding
securities of the issuer.
(B) Notwithstanding (A) of this paragraph,
the provisions of this paragraph are available with respect
to securities held for the account of a limited partnership
(or limited liability company, or other type of pooled
investment vehicle) only if the limited partnership is
audited and the audited financial statements are distributed
as described in (4) of this subsection, and the investment
adviser notifies the Administrator in writing that the
investment adviser intends to provide audited financial
statements as described in (4) of this subsection. Such
notification is required to be given on Form ADV.
(3) Fee deduction. Notwithstanding
(b)(6) of this Section, an investment adviser is not required to
obtain an independent verification of client funds and
securities maintained by a qualified custodian if all of the
following are met:
(A) The investment adviser has custody of
the funds and securities solely as a consequence of its
authority to make withdrawals from client accounts to pay
its advisory fee;
(B) The investment adviser has written
authorization from the client to deduct advisory fees from
the account held with the qualified custodian;
(C) Each time a fee is directly deducted
from a client account, the investment adviser concurrently:
(i) sends the independent party
designated pursuant to (b)(5)(B)(i) of this Section an
invoice or statement of the amount of the fee to be
deducted from the client's account; and
(ii) sends the client an invoice or
statement itemizing the fee. Itemization includes the
formula used to calculate the fee, the amount of assets
under management the fee is based on, and the time
period covered by the fee.
(D) The investment adviser notifies the
Administrator in writing that the investment adviser intends
to use the safeguards provided in this paragraph. Such
notification is required to be given on Form ADV.
(4) Limited partnerships subject to annual
audit. An investment adviser is not required to comply with
(b)(3) and (b)(4) of this Section and shall be deemed to have
complied with (b)(6) of this Section with respect to the account
of a limited partnership (or limited liability company, or
another type of pooled investment vehicle) if each of the
following conditions are met:
(A) The adviser sends to all limited
partners (or members or other beneficial owners) at least
quarterly, a statement showing:
(i) the total amount of all additions
to and withdrawals from the fund as a whole as well as
the opening and closing value of the fund at the end of
the quarter based on the custodian's records;
(ii) a listing of all long and short
positions on the closing date of the statement in
accordance with FASB Rule ASC 946-210-50; and
(iii) the total amount of additions to
and withdrawals from the fund by the investor as well as
the total value of the investor's interest in the fund
at the end of the quarter.
(B) At least annually the fund is subject
to an audit and distributes its audited financial statements
prepared in accordance with generally accepted accounting
principles to all limited partners (or members or other
beneficial owners) within 120 days of the end of its fiscal
year;
(C) The audit is performed by an
independent certified public accountant;
(D) Upon liquidation, the adviser
distributes the fund's final audited financial statements
prepared in accordance with generally accepted accounting
principles to all limited partners (or members or other
beneficial owners) and the Administrator promptly after the
completion of such audit;
(E) The written agreement with the
independent certified public accountant must require the
independent certified public accountant to, upon resignation
or dismissal from, or other termination of, the engagement,
or upon removing itself or being removed from consideration
for being reappointed, notify the Administrator within four
business days accompanied by a statement that includes:
(i) The date of such resignation,
dismissal, removal, or other termination, and the name,
address, and contact information of the independent
certified public accountant; and
(ii) An explanation of any problems
relating to audit scope or procedure that contributed to
such resignation, dismissal, removal, or other
termination.
(F) The investment adviser must also notify
the Administrator in writing that the investment adviser
intends to employ the use of the statement delivery and
audit safeguards described in this paragraph. Such
notification is required to be given on Form ADV.
(5) Registered investment companies.
The investment adviser is not required to comply with this
Section with respect to the account of an investment company
registered under the 1940 Act [15 U.S.C. 80a-1 to 80a-64].
(6) Delivery to Related Persons.
Sending an account statement under (b)(5) of this Section or
distributing audited financial statements under (4) of this
subsection shall not satisfy the requirements of this Section if
such account statements or financial statements are sent solely
to limited partners (or members or other beneficial owners) that
themselves are limited partnerships (or limited liability
companies, or another type of pooled investment vehicle) and are
related persons of the investment adviser.
PART 9. SEC COVERED INVESTMENT ADVISERS
660:11-7-51. SEC covered investment adviser notice
filing
(a) Initial filing. A federal covered investment
adviser making its initial notice filing in the state of Oklahoma
pursuant to Section 1-405 of the Securities Act:
(1) shall file with the IARD:
(A) a new or amended Form ADV, designating Oklahoma
on Item 2.B of Part 1A; and
(B) the investment adviser notice filing fee set
forth in Section 1-612 of the Securities Act; and
(2) shall comply with existing federal requirements
with regard to the Part 2 of the Form ADV.
(b) Renewal. Federal covered investment advisers
who have made a notice filing pursuant to Section 1-405 of the
Securities Act may renew their notice by submitting to the IARD the
investment adviser notice filing fee set forth in Section 1-612 of the
Securities Act.
PART 1. GENERAL PROVISIONS
Section
660:11-9-1. [RESERVED]
660:11-9-2. Amendments
PART 3. REGISTRATION PROCEDURES
660:11-9-11. Filing by
coordination
660:11-9-12. Content of
registration statement
660:11-9-13. Amendments to
registration statements
660:11-9-14. Financial
statements
660:11-9-15. Change of
accountant preceding or during effectiveness
660:11-9-16. Abandoned filings
PART 5. GUIDELINES AND POLICIES APPLICABLE TO OFFERINGS
OF REGISTERED SECURITIES
660:11-9-31. Prospectus delivery
requirement
660:11-9-32. Impound agreements
660:11-9-33. Special
requirements for promotional or developmental stage companies
660:11-9-34. NASAA guidelines
660:11-9-35. Limitations on
offering expenses and remuneration
660:11-9-36. Promoters' and
organizers' equity contributions
PART 7. REPORTING REQUIREMENTS
660:11-9-51. Registration
renewal and sales reporting requirements
660:11-9-52. [RESERVED]
660:11-9-53. Special
examinations of registrations
PART 1. GENERAL PROVISIONS
660:11-9-1. [RESERVED]
660:11-9-2. Amendments
The Administrator may by order amend the provisions of
this subchapter to conform references to the Securities Act or to rules
promulgated thereunder to numerical redesignations occasioned by
legislative or rulemaking activities.
PART 3. REGISTRATION PROCEDURES
660:11-9-11. Filing by coordination
An offering of securities for which an application for
registration is not filed with and received by the Department prior to
SEC effectiveness shall not be deemed to be in connection with the same
offering of securities and therefore shall not be eligible for
registration in the state of Oklahoma pursuant to Section 1-303 of the
Securities Act.
660:11-9-12. Content of registration statement
In addition to the other requirements set forth in the
Securities Act and the rules and regulations promulgated thereunder, a
registration statement filed under the provisions of Sections 1-303 and
1-304 of the Securities Act shall contain the information that would be
required in a registration statement filed with the SEC under Section 5
of the 1933 Act, as amended. Except for offerings attempting to register
by use of the Form U-7, the registration statement shall be on the form
that the issuer would be entitled to use if filing under the 1933 Act
and in accordance with the specified instructions of said form.
660:11-9-13. Amendments to registration statements
(a) Requirement to amend. A correcting amendment
to an effective Registration Statement shall be prepared and submitted
to the Department any time that the information contained therein
becomes inaccurate or incomplete in any material respect. The
responsibility for identifying and reporting a material change lies with
the registrant. Any of the following changes are likely to be the basis
for filing a correcting amendment; however, the following is not
intended to be a comprehensive listing of specific events or conditions
which might give rise to such a filing:
(1) changes in officers, directors and other
management personnel identified in the Registration Statement,
including those persons who would have been identified in the
Registration Statement had the change occurred prior to making the
initial filing;
(2) a change of 10% or more in the equity ownership
of the issuer by persons identified in the Registration Statement as
principal security holders or by persons who would have been so
described had the change occurred prior to making the initial
filing;
(3) changes in the issuer's aims, objectives,
business enterprise, operations or activities;
(4) a change in any designated Use of Proceeds item;
(5) impairment of the issuer's assets, the issuer's
insolvency or the filing of a petition for bankruptcy by or for the
issuer;
(6) management's intention to dispose of a
significant portion of an issuer's assets, or the actual occurrence
of such disposal;
(7) changes in the compensation arrangements
described in the Registration Statement for promoters, general
partners or sponsors of the issuer, including controlling persons of
such promoters, general partners or sponsors, who are identified in
the Registration Statement, or who would have been so identified had
a change occurred prior to making the initial filing;
(8) changes in underwriting terms;
(9) any agreement in principle to enter into a
business combination;
(10) changes in the industry, the economy, or in laws
or regulations governing the industry, if disclosures in the
Registration Statement are affected by the changes or if the
condition resulting from such changes would have resulted in a
disclosure requirement had the changes occurred prior to making the
initial filing.
(b) Time of filing and undertaking.
(1) Every Registration Statement shall contain an
undertaking by the applicant to file correcting amendments to the
Registration Statement whenever the information in the Registration
Statement becomes inaccurate or incomplete in any material respect
by the earlier of:
(A) two business days after filing such amendment
with the SEC, or
(B) fifteen business days following the event
giving rise to the amendment.
(2) If not registered with the SEC, registrants shall
file an amended Registration Statement if required within fifteen
(15) business days following the event giving rise to the amendment,
and in no event, not less often than annually as a part of the
Annual Report required by 660:11-9-51.
(c) Contents of filing. Each filing of a
correcting amendment to a Registration Statement shall contain a copy of
each item of the Registration Statement which has been changed, with all
changes clearly marked. To be complete, a filing of a correcting
amendment to the Registration Statement shall contain a report of
material changes setting forth a summary of each material change and
indicating the location of such change in the documents filed. Neither
the Administrator nor any member of his staff shall be held to have
taken notice of any item of material change not summarized in such a
report.
(d) Effect of failure to amend. Solicitation of
prospective investors through utilization of a Prospectus containing
information which is inaccurate or incomplete in any material respect is
a violation of Section 1-501 of the Securities Act and constitutes a
basis for suspending or revoking the effectiveness of a Registration
Statement under Section 1-306.A.7.a of the Securities Act. Failure to
report to the Department and disclose to prospective investors a
material change that occurs after the effective date of a Registration
Statement and prior to the sale of a security is a violation of Section
1-501 of the Securities Act and a basis for the suspension or revocation
of the registration under Section 1-306.A.7.a of the Securities Act.
Nothing in this section shall be construed to require any open-end
investment company registered under the 1940 Act and the Securities Act
to disclose fluctuations in its investment portfolio.
660:11-9-14. Financial statements
(a) Section 1-304 filings. Except for
applications made on the Form U-7, registration statements filed
pursuant to Section 1-304 of the Securities Act shall contain Audited
Financial Statements of the issuer for its last two (2) fiscal years.
Registration statements filed with applications made on the Form U-7
shall contain the financial statements specified in the instructions to
the Form U-7.
(b) Unaudited interim financial statements. If
the Audited Financial Statements or unaudited Financial Statements
required in (a) of this section are not current to within four (4)
months of the Date of Filing of the registration statement, additional
unaudited Financial Statements as of the issuer's last fiscal quarter or
any later date designated by the Administrator shall be included.
(c) Multiple financial statements. If more than
one balance sheet or more than one statement of income is required to be
filed pursuant to (a) of this section, the statement shall be in
comparative columnar form, the date or periods applicable to each column
shall be clearly shown, and columns relating to unaudited Financial
Statements shall be clearly designated "Unaudited."
(d) Acquisitions. If any part of the proceeds of
the offering is to be applied to the purchase of any business, the same
Financial Statements required in (a) of this section shall be filed for
the business to be acquired. When appropriate for full and fair
disclosure, the Administrator may require pro forma combined Financial
Statements.
(e) Application of Regulation S-X. As to
definitions, qualifications of accountants, content of accountant's
certificates, requirements for consolidated or combined statements, and
actual form and content of Financial Statements, the Administrator shall
apply Regulation S-X of the SEC (17 C.F.R. Part 210) in its most
currently amended form as of the date of the filing of the application
to all Financial Statements filed with the Department in connection with
the registration of securities.
(f) Financial statements incorporated by reference.
Where Financial Statements in a prospectus are incorporated by reference
from another document, the Administrator may require that such other
document be filed with the Department and be delivered to investors with
the prospectus.
(g) Application of antifraud provisions. Any
Financial Statement distributed in connection with the offer or sale of
securities under the Act shall be subject to the provisions of Section
1-501 of the Act. Any Financial Statement filed with the Department
shall be subject to the provisions of Section 1-505 of the Act.
660:11-9-15. Change of accountant preceding or during
effectiveness
(a) Materiality of event. One of the foundations
of the administration of the disclosure requirements of securities law
is reliance upon the reports of independent accountants regarding the
financial statements of registrants. These reports provide the assurance
of an outside expert's examination and opinion, thereby substantially
enhancing the reliability of financial statements. Consequently, the
resignation or dismissal of the principal auditing firm during a period
immediately preceding or contemporaneous with an application for
registration of securities in this state is considered to be of material
importance.
(b) Procedure. If during the 18 months preceding
registration and/or during the period of effective registration, the
principal accountant or firm auditing the registrant's financial
statements resigns or is dismissed, the following shall be required:
(1) Issuers which are SEC reporting companies shall
file a copy of all Form 8-K's filed with the SEC during the 18
months preceding their filing with the Department as well as any
that may be filed during the period of registration with the
Department.
(2) All other issuers as a condition for initial and
continuing registration, shall provide the following information to
the Department:
(A) the date of such resignation or dismissal;
(B) disclosure of any disagreements with the former
accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure to
which the accountant would have made reference in his report in
connection with the audits of the two most recent fiscal years and
any subsequent interim period preceding the dismissal or
resignation. Each disagreement should be disclosed whether it was
resolved to the accountant's satisfaction or not;
(C) any principal accountant's report on the
financial statements for any of the past two years containing a
disclaimer of opinion or an adverse or qualified opinion; and
(D) a statement that the decision to change
accountants was recommended or approved by either:
(i) the Audit Committee of the Board of
Directors, if the issuer has such a committee; or,
(ii) the Board of Directors, if the issuer has no
such committee.
(3) The registrant shall request the former
accountant to furnish a letter addressed to the Administrator
stating whether or not he agrees with the statements made by the
registrant and, if not, stating the respects in which he does not
agree. The former accountant's letter shall be attached as an
exhibit to the information required in (b)(2) of this Section.
660:11-9-16. Abandoned filings
An application for registration of securities pursuant to
Sections 1-303 or 1-304 of the Securities Act shall be deemed abandoned
if such registration is not effective in the state of Oklahoma within
one year from the date of receipt by the Department of the initial
filing of the application for registration. Once deemed abandoned, the
original application shall not be reinstated. A new application
including the registration statement, appropriate exhibits and filing
fees shall be required.
PART 5. GUIDELINES AND POLICIES APPLICABLE TO OFFERINGS
OF REGISTERED SECURITIES
660:11-9-31. Prospectus delivery requirement
No offer or sale of any security registered under the
Securities Act may be made unless concurrent with the initial
solicitation or immediately thereafter there is furnished to the
prospective purchaser, a prospectus, in such form and containing such
information as may be required pursuant to the Securities Act or the
rules and regulations promulgated thereunder or by order of the
Administrator, which prospectus has been previously filed with and
approved by the Administrator for use; provided, no prospectus shall be
required in connection with offers or sales of securities or
transactions exempted by Sections 1-201 through 1-203 of the Securities
Act, except as may be specifically required by such Act or the rules and
regulations promulgated thereunder or by order of the Administrator. In
addition, after the effective date of the registration statement in the
state of Oklahoma, all broker-dealers and agents effecting transactions
in the securities registered under the Securities Act shall be required
to deliver a prospectus prior to or concurrently with any transaction in
said securities for the same time periods specified in Section 4(a)(3) of
the 1933 Act and Rule 174 adopted by the SEC (17 CFR § 230.174) in its
most currently amended form as of the date of the filing of the
application. Nothing in this rule obviates the need for registrants to
comply with the provisions of Section 1-501 of the Securities Act.
660:11-9-32. Impound agreements
(a) General requirements. In any instance where
impoundment of the proceeds of sale of securities is determined to be in
the public interest and necessary for the protection of investors, as a
condition of registration the Administrator may require that the
registrant deposit a specific percentage or amount of the proceeds from
the sale of the registrant's securities in an acceptable depository
pursuant to a written agreement between the registrant issuer and the
depository. The proceeds shall be retained therein until a specific sum
has been accumulated and the terms and conditions of the agreement have
been performed.
(b) Filing requirement. Each impound agreement
shall be negotiated between the depositor and the depository and an
executed copy filed with the Administrator.
(c) Required provisions. Each such impound
agreement shall substantially comply with the following guidelines and
shall contain the following terms or information:
(1) the date of the agreement;
(2) the names and addresses of the depositor and the
depository;
(3) the specified percentage or amount of gross
proceeds from the sale of the securities involved to be deposited;
(4) the aggregate sum to be accumulated;
(5) the date on or before which such accumulation
shall be completed;
(6) the conditions under which the impounded funds
are to be released to the depositor, or are to be refunded to the
persons entitled thereto, and by whom and in what manner such
refunding is to be effected;
(7) a provision that interest and other earnings, if
any, from the impounded funds shall be distributed to the public
investors if the impounded offering proceeds are refunded;
(8) a statement that neither release nor refunding of
the impounded funds is to be effected unless and until the depositor
has given the Administrator and/or Commission ten (10) days written
notice of the action to be taken. To be complete, such notice shall
contain a sworn affidavit from the applicant that all the terms of
the escrow agreement have been properly fulfilled.
(d) Prohibited provisions. An impound agreement
will not be acceptable, except upon unusual circumstances with prior
approval of the Department, if the agreement:
(1) provides for the depositor to make any levy or
assessment or to apply any lien on or against the impounded funds.
It is the intent and purpose hereof that all charges, fees, and
costs incurred in respect to the impound agreement and its
performance be charged to and be borne by the depositor;
(2) provides for or permits credit towards or
inclusion in the specific sum to be accumulated of any monies
deposited in the account, including interest or other earnings
directly attributable to the impounded funds, if such monies
constitute proceeds of any transaction or were derived from sources
other than sales of the depositor's securities;
(3) provides for any rights of the depositor to
require release of, or obligation on the part of the depository to
release all or any part of the impounded funds, except after
accumulation in the fund of a specific sum on or before the date
fixed by the impound agreement for the accumulation to be completed.
660:11-9-33. Special requirements for promotional or
development stage companies
(a) Definition. For purposes of this section a
"promotional or development stage company" means any entity that meets
the definition in 660:11-11-1.
(b) Requirements. Registration statements filed
under Section 1-305 of the Securities Act or any exhibits filed
therewith relating to securities of a promotional or development stage
company must demonstrate in addition to meeting any other requirements
that may apply, the issuer's ability to meet the following requirements:
(1) Taking into consideration the minimum net
proceeds of the offering, past earnings, and accounts receivable, of
the issuer, the prospectus must demonstrate the issuer's ability to
operate for a period of at least six months without additional
capital; or based on a business plan filed supplementally, the
issuer must demonstrate its ability to operate for a period of at
least 12 months. Any registrant may request that such business plan
not be deemed filed with the registration statement and may request
that it be held in confidence. A prospectus relating to an offering
of debt securities must demonstrate the issuer's ability to service
the debt. This can be demonstrated by submission of a compilation.
(2) No more than 25% of the proceeds of the offering
net of offering costs shall be paid as remuneration to promoters,
executive officers, directors or shareholders owning 10% or more of
any class of outstanding stock of the issuer.
(3) The prospectus must demonstrate compliance with
660:11-9-35 regarding limitations on offering expenses and
remuneration and with the NASAA statement of policy regarding
promotional shares.
(4) Issuers shall not have granted, and shall agree
not to grant in the future, options to acquire securities of the
same class as those being offered, at an exercise price that is less
than 85% of the fair market value of the securities at the time of
the grant of the option. The prospectus shall disclose the dilution
that would result from the exercise of all outstanding warrants or
options to acquire securities of the same class as those being
offered.
(5) The use of offering proceeds must be disclosed
with specificity in the prospectus.
(c) Waiver provisions. The Administrator in his
or her discretion may waive any of the above requirements upon written
request of the registrant, if the Administrator finds that the
requirement is not necessary to protect the public interest under the
circumstances. Any such request shall be filed with the registration
statement and shall indicate the reasons why the requirement is not
necessary under the circumstances described in the registration
statement.
660:11-9-34. NASAA guidelines
(a) Application of guidelines. The Administrator
in his discretion may apply any Statements of Policy or guidelines
adopted by NASAA, or its successors, to a registration of securities
pursuant to the Securities Act.
(b) Cross-reference sheet. Issuers, or
interested persons on the issuer's behalf, shall prepare a
cross-reference sheet setting out each section of the statement of
policy or guideline applied by the Administrator pursuant to this rule,
and reflecting the document and page numbers where compliance with each
section of the statement of policy or guideline is disclosed. Any
variance or failure to comply with particular sections of an applicable
statement of policy or guideline shall be noted by the issuer or his
attorney, and the reasons for the variance shall be fully stated.
(c) Waiver provisions. The Administrator in his
discretion may waive any of the requirements of the statements of policy
or guidelines upon written request of the registrant, if the
Administrator finds that the requirement is not necessary to protect the
public interest under the circumstances. Any such request shall be filed
with the registration statement and shall indicate the reasons why the
requirement is not necessary under the circumstances described in the
registration statement.
660:11-9-35. Limitations on offering expenses and
remuneration
(a) Issuer expenses. Expenses incurred by an
issuer of securities (including the sponsor or general partners of a
limited partnership expended or being reimbursed from partnership funds)
in connection with an offering of securities shall not exceed 20% of the
amount of securities actually sold. Such expenses shall include, but are
not necessarily limited to, the following:
(1) Sales commissions or discounts, including expense
allowances and warrants issued gratis or at nominal prices.
(2) Finders fees, advisory fees and similar fees
however designated.
(3) Promotional or carried interests granted, or sold
at a price substantially different from the public offering price,
to an underwriter, broker-dealer or agent.
(4) Organizational expenses of recently formed
issuers.
(5) Advertising directly associated with the sale of
the public offering being registered.
(6) Accountant's and attorney's fees for services in
connection with the issue and sale of the securities and their
qualification for sale under applicable laws and regulations.
(7) The cost of prospectuses, circulars and other
documents required to comply with such laws and regulations.
(8) Other expenses directly incurred in connection
with such qualifications and compliance with such laws and
regulations (filing fees and investigation fees prior to
registration).
(9) Cost of authorizing and preparing the securities
and documents relating thereto, including issue taxes and stamps.
(10) Charges of transfer agents, registrars,
indenture trustees, escrow holders, depositories, auditors, and of
engineers, appraisers, and other experts.
(11) Those expenses required to be itemized in Part
II of a registration statement filed with the SEC, and with an
application for registration by coordination pursuant to Section
1-303 of the Securities Act.
(b) Underwriters' or broker-dealers' remuneration.
Remuneration received directly or indirectly by any underwriter,
broker-dealer, agent, or any other person performing similar functions,
for effecting or attempting to effect transactions in securities, shall
not exceed 15% of the sales price of the securities sold in each
transaction, regardless of by whom such remuneration is paid. Further,
the aggregate amount of remuneration received directly or indirectly by
all underwriters, broker-dealers, agents, or other persons performing
similar functions for effecting or attempting to effect transactions in
securities, shall not exceed 15% of the aggregate amount of securities
actually sold. For the purpose of this rule (including (a) of this
section and 660:11-9-36) an interstate (or other jurisdiction) offering
of securities shall be viewed in its entirety. Remuneration shall
include, but is not necessarily limited to, the following:
(1) Sales commissions or discounts, including expense
allowances and warrants issued gratis or at nominal prices.
(2) Finders fees, advisory fees and similar fees,
however designated.
(3) Promotional or carried interests granted, or sold
at a price substantially different from the public offering price.
(c) Disclosure of expenses and remuneration. The
aggregate amounts (or good faith estimates of such amounts) of sales
commission and offering expenses paid by an issuer of securities as
discussed in (a) of this section and remuneration to be received by the
seller of securities as discussed in (b) of this section, shall be
clearly disclosed in the prospectus, offering circular, private
placement memorandum or other offering document.
(d) Waiver. Where good cause is shown, the
Administrator may waive or modify the percentage limitations set forth
in this section. Consideration of such requests shall be on a
case-by-case basis and only pursuant to a written request setting forth
the reasons therefor.
660:11-9-36. Promoters' and organizers' equity
contributions
(a) Requirement. Where an issuer is a
promotional or development stage company as defined in 660:11-11-1, the
ratio of equity investment by promoters or insiders must be determined
as reasonable and equitable in light of the facts and circumstances
presented in each particular case. Cases where the fair value of such
equity investment is less than 10% of the total offering are
discouraged, and in such instances, the proponents of the registration
shall have the burden of establishing that the offering is being made
without unfair or unreasonable amounts of promoters' profits or
participation, as provided in Section 1-306.A.7.b of the Securities Act.
(b) Presumption. In those instances where only
5% or more has been contributed by promoters or organizers, but where
they have entered into bona fide and binding subscription contracts
exercisable within one year with the new enterprises for capital stock
representing the difference between the amount contributed and 10%, then
the burden of proof will be deemed to have been satisfied.
(c) Determination of equity investment. The fair
value of equity investment shall be deemed to mean the total of all sums
conveyed to the issuer in the form of paid-in or contributed cash or
other assets with an established or determinable value. In those cases
where the issuer has experienced losses from operations, the fair value
of equity investment shall be the net worth of the issuer as of the date
of the proposed offering determined in accordance with generally
accepted accounting principles.
(d) Burden of proof. The burden of justifying as
equitable the quantity of promotional securities to be issued for assets
so conveyed, and of establishing reasonable or market value of said
assets, shall rest with the applicant.
PART 7. REPORTING REQUIREMENTS
660:11-9-51. Registration renewal and sales reporting
requirements
(a) Registration renewal. Pursuant to Section
1-305.H of the Securities Act, every registration statement ordered
effective is effective for one (1) year after its effective date, and
certain registration statements may be effective for any longer period
during which the security is being offered. Registration statements, the
effectiveness of which is to continue beyond one (1) year from their
effective date, must have their effectiveness renewed annually. A
renewal of the effectiveness of a registration statement may be obtained
by submitting a registration renewal report to keep the information
contained in the registration statement reasonably current and by paying
appropriate fees.
(1) Time of filing. Each registration renewal
report shall be submitted no more than thirty (30) days before or
thirty (30) days after each anniversary of the registration
effective date.
(2) Content. Each registration renewal report
submitted shall contain:
(A) a written summary of any substantive changes in
the registration statement since the later of the date of
registration or the latest filing of a registration renewal report;
and
(B) a copy of the latest post-effective amendment
to the registration statement as filed with the SEC that has been
marked for changes from the prior version of the registration
statement as filed with the SEC; or, if not registered with the SEC,
the proposed amendment to the registration statement that has been
marked for changes from the prior version of the registration
statement as filed with the Department.
(3) Examination of report. The Department
shall conduct a special examination of each registration renewal
report filed. The purpose for such special examination shall be to
evaluate the reported changes in the registration statement and to
determine whether the registration should continue. The examination
report shall consist of notification to the registrant of the status
of the registration.
(4) Fee. Each registration renewal report
filed shall include the examination fee set forth in Section 1-612.B
of the Securities Act.
(b) Sales reporting. Pursuant to Section 1-305.I
of the Securities Act, and so long as a registration statement is
effective, the Administrator may require the applicant, the issuer, or
the broker-dealer to file reports not more often than quarterly to
disclose the progress of the offering. Unless the Administrator requires
more frequent sales reporting by request as to a specific registered
security, a person who has filed a registration statement that has been
ordered effective shall file one (1) registration sales report to
disclose the progress of the offering for the initial one (1) year
period of effectiveness and for each one (1) year renewal period of
effectiveness thereafter.
(1) Time of filing. Each registration sales
report shall be submitted no later than thirty (30) days after each
anniversary of the effective date of the registration, or no later
than thirty (30) days after the termination of the offering,
whichever is earlier.
(2) Content. Each registration sales report
submitted shall contain:
(A) the file number of the registration of
securities to which the registration sales report relates;
(B) a statement as to whether the offering has been
completed; and
(C) the dollar amount of each class of securities
sold in the state for the entire one (1) year period of the
registration, or from the beginning of the one (1) year period of
registration through the completion of the offering, as applicable,
in substantially the following form:
Balance unsold at beginning of period $
ADD: Additional authorizations
LESS: Amount sold during period
Balance unsold at end of period $
(3) Fee. Each registration sales report filed
shall include the issuer sales report fee as required in Section
1-612 of the Securities Act.
(c) Piecemeal filings. Any report required under
this section is not considered filed if it is incomplete. Piecemeal
filings shall not be accepted.
660:11-9-52. [RESERVED]
660:11-9-53. Special examinations of registrations
(a) Examination of application. The Department
shall conduct a special examination of each application for registration
under Sections 1-303 and 1-304 of the Securities Act to determine the
adequacy of disclosure and to fulfill the Department's obligations under
Section 1-306 of the Securities Act. This examination shall be based
upon material contained in the Registration Statement and any other
documentation which the applicant may be required to submit. Each
application for registration shall be accompanied by the examination fee
set forth in Section 1-612.B of the Securities Act. The examination
report shall consist of the Department's written comments regarding the
filing.
(b) On-site examinations of issuers. The
business and records of issuers registered pursuant to Sections 1-303
and 1-304 of the Securities Act may be subject to periodic on-site
examinations by the Administrator, and/or his designee, at such times as
he determines necessary for the protection of the public. The Division
of Registrations shall prepare a special report of every such
examination.
(c) Department access. Each issuer scheduled for
examination shall provide the personnel of the Department access to
business books, documents, and other records. Each issuer 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
comply with any provision hereof shall constitute a violation of this
section and shall be a basis for denial, suspension or revocation of the
registration or application for registration.
PART 1. GENERAL PROVISIONS
Section
660:11-11-1. Definitions
660:11-11-2. Commissions
660:11-11-3. Number of
purchasers
660:11-11-4. Integration of
offerings
PART 3. EXEMPT SECURITIES
660:11-11-21. Not for profit
debt securities notice filing
PART 5. EXEMPT TRANSACTIONS
660:11-11-40. Manual
exemption
660:11-11-41. [RESERVED]
660:11-11-42. Interpretation
of 'existing security holders'
660:11-11-43. Coordinated
limited offering exemption
660:11-11-44. [RESERVED]
660:11-11-45. [RESERVED]
660:11-11-46. [RESERVED]
660:11-11-47. [RESERVED]
660:11-11-48. [RESERVED]
660:11-11-49. Nonissuer
transaction exemption for certain exchange-listed securities
660:11-11-50. [RESERVED]
660:11-11-51. Cross-border
transactions exemption
660:11-11-52. Oklahoma
Accredited Investor Exemption
660:11-11-53. Exemption for
offers but not sales
PART 7. FEDERAL COVERED SECURITIES
660:11-11-60. Investment
company notices
660:11-11-61. Regulation D
Rule 506 notice filing
660:11-11-62. Regulation A
Tier 2 federal covered security notice filing
PART 1. GENERAL PROVISIONS
660:11-11-1. Definitions
The following words and terms, when used in this
subchapter, shall have the following meaning, unless the context clearly
indicates otherwise:
"Affiliate" means a person who, directly or indirectly, controls, is controlled, by, or is under
common control with a person as defined in this Section.
"Associate" means, when used to indicate a relationship with a person, includes:
(A) corporations, legal entities, other than the issuer or majority-owned subsidiaries of
the issuer, of which a person is an officer, director, partner, or a direct or indirect, legal or
beneficial owner of five percent (5%) or more of any class of equity securities.
(B) trusts or other estates in which a person has a substantial beneficial interest or for
which a person serves as a trustee or in a similar capacity; and
(C) a person's spouse and relatives, by blood or by marriage, if that person is a promoter
of the issuer, its subsidiaries, its affiliates, or its parent.
"Class" means the lowest level of subdivision of
the securities offered by an issuer.
"Control" means the power to direct or influence the direction of the management or policies
of a person, directly or indirectly, through the ownership of voting securities, by contract or
otherwise. A presumption of control exists for any person who:
(A) is a director, general partner, member, manager, or officer exercising executive
responsibility or has similar status or functions;
(B) has the right to vote twenty percent (20%) or more of a class of voting securities; or
(C) in the case of a partnership or limited liability company, has contributed or has the
right to receive upon dissolution twenty percent (20%) or more of the capital.
"Enterprise" means a corporation, general
partnership, limited partnership, joint venture and any other formal or
informal entity, association or arrangement (other than a sponsor) in
which the investors' rights, interests or participation constitute
"securities" as defined by Section 1-102 of the Securities Act.
"Equity securities" means, including, but not limited to shares of common stock or similar
securities, convertible securities, warrants, and options or rights that may be converted into or
exercised to purchase shares of common stock or similar securities.
"Net earnings" means the issuer's after-tax earnings, excluding extraordinary and
nonrecurring items, determined in accordance with generally accepted accounting principles.
"Person" means an individual, corporation, business trust, estate, trust, partnership, limited
liability company, limited liability partnership, association, joint venture, government;
governmental subdivision, agency, or instrumentality; public corporation; or any legal or
commercial entity.
"Promoter" means:
(A) a person, including, but not limited to, who:
(i) alone or in conjunction with one or more persons, directly, or indirectly, took the
initiative in founding or organizing the issuer or controls the issuer;
(ii) directly or indirectly, receives, as consideration for property or for services
rendered, five percent (5%) or more of any class of the issuer's equity securities or five
percent (5%) or more of the proceeds from the sale of any class of the issuer's equity
securities;
(iii) is an officer or director for the issuer;
(iv) legally or beneficially owns, directly or indirectly, five percent (5%) or more of
any class of the issuer's equity securities; or
(v.) is an affiliate or an associate of a person specified in i through iv of this
subparagraph.
(B) A promoter does not include:
(i) a person who receives securities or proceeds solely as underwriting compensation
unless that person otherwise comes within the terms;
(ii) an unaffiliated institutional investor, who purchased the issuer's equity securities
more than one year prior to the filing date of the issuer's registration statement; or
(iii) at the Administrator's discretion, an unaffiliated institutional investor, who
purchased the issuer's equity securities on an arm's-length basis within one year prior
to the filing date of the issuer's registration statement.
"Promotional or Development Stage Company" means an issuer:
(A) that is not listed, or authorized for listing, on the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Market, or a securities exchange that
the SEC determines under Section 18(b)(1) of the 1933 Act has substantially similar
listing standards;
(B) that has had annual net earnings for each of the last two (2) consecutive fiscal years
before the public offering that have been less than five percent (5%) of the aggregate
public offering; or
(C) that has had average, annual net earnings for the last five (5) fiscal years before the
public offering that have been less than five percent (5%) of the aggregate public
offering.
"Promotional shares" means equity securities that:
(A) A promotional or development stage company has issued within five (5) years before
the filing of the registration statement or will issue to its promotors for cash or other
consideration, including services rendered, patents, copyrights, and other intangibles; or
(B) An issuer that is not a promotional or development stage company has issued within
three (3) years before the filing of the registration statement or will issue to promotors for
cash or other consideration, including services rendered, patents, copyrights, and other
intangibles.
"Sponsor" means any natural person, corporation,
general partnership, limited partnership, joint venture or other entity
which is directly or indirectly instrumental in organizing an enterprise
or which will manage or participate in the management of an enterprise.
"Unaffiliated institutional investor" means the following investors if not affiliated with the
issuer:
(A) an institutional investor as defined in 1-102(13) of the Securities Act; and
(B) a business development company as defined in Section 2(a)(48) of the 1940 Act.
660:11-11-2. Commissions
(a) Definition. As used in Sections 1-202 and
1-402 of the Securities Act, the term "commission" shall mean any
economic benefit paid or given, directly or indirectly, for the
offering, selling or purchasing of a security whether in the form of
money or its equivalent, or any real or personal property or interest
therein, or otherwise. Such economic benefit shall be presumed to be
paid or given for the offer, sale or purchase of a security if the
amount of such benefit is based on the amount of securities offered,
sold or purchased or is an inducement for an offer, sale or purchase.
(b) Exceptions. Notwithstanding (a) of this
section, the following do not constitute a commission:
(1) Benefit for property purchased or services
performed.
(A) A benefit paid or given, whether or not such
benefit is paid from the proceeds of the sale of a security of an
enterprise or is related to the sale of a security of an enterprise,
if such benefit is paid or given for property purchased or services
performed so long as:
(i) the property or services are reasonably
related to the present or proposed business of the enterprise,
and
(ii) the amount or value of the benefit paid or
given is competitive with the amounts charged or paid in the
same or comparable areas by persons not affiliated with the
enterprise who are engaged in the business of rendering
comparable services or providing comparable property.
(B) Payment to independent third party professional
engineers, geologists, accountants, attorneys, or such other persons
for professional services rendered or to be rendered for the
enterprise does not constitute a commission.
(2) Promotional or other interest of sponsor.
(A) Any promotional or other interest of a sponsor
of an enterprise in the revenues, assets or equity of the enterprise
which is proportionately greater than the capital invested by such
sponsor in the enterprise or the total costs and expenses of the
enterprise borne by or charged to such sponsor, if:
(I) the interest received is reasonable or
customary in the industry in which the enterprise operates or
proposes to operate; and
(ii) the sponsor or entity receiving such
interest has or will have substantial duties unrelated to the
sale of a security in connection with the enterprise.
(B) For the purpose of this paragraph, the type and
amount of interests allowed under any applicable guidelines adopted
by NASAA or any other guidelines adopted by the Department for
public offerings registered with the Department shall be presumed
reasonable and customary.
(3) Compensation to officer, director, partner or
employee. The payment of compensation to an officer, director,
partner or employee of an enterprise or its sponsor if:
(A) such payment is not directly or indirectly
related to the offer or sale of a security;
(B) the officer, director, partner or employee is a
bona fide officer, director, partner or employee who has substantial
duties that are unrelated to the sale of a security; and
(C) the officer, director, partner or employee's
activity involving the offer or sale of a security is strictly
incidental to such person's bona fide primary work duties.
(c) Presumptions. No presumption shall arise
that a benefit constitutes a commission if the relevant conditions
described in (b) of this section are not satisfied. The burden of
proving that the conditions of this rule have been met remains with the
person claiming an exemption addressed by this rule.
660:11-11-3. Number of purchasers
(a) Exclusions. For purposes of computing the
number of persons to whom sales of the issuer's securities are made
pursuant to Sections 1-202.14 and 1-202.16 of the Securities Act, sales
to the following purchasers shall be excluded:
(1) any relative, spouse or relative of the spouse of
a purchaser who has the same principal residence as such purchaser;
(2) any trust or estate in which a purchaser and any
of the persons related to him as specified in (1) of this subsection
or (3) of this subsection collectively have more than 50% of the
beneficial interest (excluding contingent interests);
(3) any corporation or other organization of which a
purchaser and any of the persons related to him as specified in (1)
or (2) of this subsection collectively are beneficial owners of more
than 50 percent of the equity securities (excluding directors'
qualifying shares) or equity interests.
(b) Entities as purchasers. A corporation,
partnership, or other entity shall be counted as one purchaser. If,
however, that entity is organized for the specific purpose of acquiring
the securities offered and is not an accredited investor as defined in
Section 501 of Regulation D, then, each beneficial owner of equity
interests or equity securities in such entity shall count as a separate
purchaser.
(c) Sales to certain clients or customers. Sales
to clients of an investment adviser, customers of a broker or dealer, a
trust administered solely by a bank trust department or persons with
similar relationships, shall be considered as separate sales for
purposes of this section regardless of the amount of discretion given to
the investment adviser, broker or dealer, bank trust department, or
other persons to act on behalf of the client, customer or trust.
(d) Joint or common ownership. A sale to persons
who acquire the securities as joint tenants, or as tenants in common,
shall be counted as sales to each tenant unless otherwise covered by the
rules of attribution provided by this section.
660:11-11-4. Integration of offerings
(a) General. An offering made by an issuer
attempting to rely on the exemptions from registration provided by
Sections 1-202.14 of the Securities Act and/or 660:11-11-43 must be
separate and distinct from any other offering. Offers and sales of an
offering will be deemed integrated with offers and sales of another
offering when a review of the integration factors provided by (b) of
this section indicates that the offers and sales are part of a larger
offering. Integration may occur between two (2) claimed exempt offerings
as well as between a claimed exempt offering and a registered offering.
(b) Factors. The following five (5) factors are
deemed relevant to a determination as to whether or not two (2)
different offerings are in fact integrated and thus part of a larger
offering:
(1) the different offerings are part of single plan
of financing;
(2) the offerings involve the issuance of the same
class of security;
(3) the offerings are made at or about the same time;
(4) the same type of consideration is to be received;
(5) the offerings are made for the same general
purpose.
(c) Case by case determination. Determination as
to whether or not integration has occurred between two offerings shall
be made on a case by case basis. The presence of all the integration
factors shall not be required to establish the integration of two (2)
offerings.
PART 3. EXEMPT SECURITIES
660:11-11-21. Not for profit debt securities notice
filing
(a) Securities exempt. With respect to the offer
or sale of a note, bond, debenture, or other evidence of indebtedness,
such issuers relying upon the exemption from registration provided in
Section 1-201.7 of the Securities Act shall file a notice with the
Administrator at least ten (10) full business days prior to the first
offering of sale pursuant to such claim. Such exemption shall become
effective ten (10) full business days after the filing of a complete
notice if the Administrator has not disallowed the exemption.
(b) Notice information. The notice required in
(a) shall specify, in writing, the material terms of the proposed offer
or sale to include, although not limited to, the following:
(1) the identity of the issuer;
(2) the amount and type of securities to be sold
pursuant to the exemption;
(3) a description of the use of proceeds of the
securities; and
(4) the person or persons by whom offers and sales
will be made.
(c) Notice requirements. The following items
must be included as a part of the notice in (a):
(1) the offering statement, if any;
(2) a consent to service of process on Form U-2 and
(if applicable) Form U-2A; and
(3) the fee required by Section 1-612 of the
Securities Act.
(d) Sales and advertising literature. All
proposed sales and advertising literature to be used in connection with
the proposed offer or sale of the securities shall be filed with the
Administrator only upon request.
(e) NASAA Statements of Policy or guidelines.
The Statements of Policy or guidelines adopted by NASAA may be applied,
as applicable, to the proposed offer or sale of a security for which a
notice must be filed pursuant to this rule. Failure to comply with the
provisions of an applicable Statement of Policy or guideline promulgated
by NASAA may serve as the grounds for disallowance of the exemption from
registration provided by Section 1-201.7 of the Securities Act.
(f) Waiver. The Administrator may waive any term
or condition set forth in this rule.
PART 5. EXEMPT TRANSACTIONS
660:11-11-40. Manual exemption
(a) Recognized securities manuals. The
publications which shall be recognized by the Administrator for purposes
of the exemption from registration set forth in Section 1-202.2.d of the
Securities Act shall be as follows:
(1) Best's Insurance Reports, Life-Health
(2) Mergent’s Industrial Manual
(3) Mergent’s International Manual
(4) OTC Markets Group Inc. with respect to
securities included in the OTCQX and OTCQB markets.
(b) Additional requirements. To be eligible for
the exemption from registration provided by Section 1-202.2.d of the
Securities Act, the following additional conditions must be met:
(1) All information specified as required to be
contained in the recognized securities manuals pursuant to Section
1-202.2.d of the Securities Act must be given to the purchaser with
the confirmation by providing the purchaser with a copy of either:
(A) the information contained in the manual
listing; or
(B) the information maintained by the
broker-dealer effecting the transaction that is required to be
kept by such broker-dealer pursuant to the requirements of SEC
Rule 15c2-11 promulgated under the provisions of the 1934 Act.
(2) The information required under (1) of this
subsection must be reasonably current in all material respects. The
time for determining whether the information is current is at the
date of the particular sale not the date the manual listing is
published. For purposes of this paragraph, the term "reasonably
current" shall have the meaning set forth in SEC Rule 15c2-11.
(3) The financial statements of the issuer required
pursuant to Section 1-202.2.d of the Securities Act must be audited
by an independent public accountant in accordance with generally
accepted auditing standards, presenting fairly, in all material
respects, the financial condition of the issuer; provided, if the
issuer is an entity formed and operating under the laws of a foreign
jurisdiction, the financial statements shall be audited in
accordance with the auditing standards applicable in its
jurisdiction of formation and operation.
(4) The issuer of the security, including any
predecessors, has either:
(A) been in continuous business or operations
for at least two (2) years, unless the issuer is an insurance
company in which event it shall have been in business for at
least five (5) years; or
(B) had a class of equity securities registered
under Section 1-301 of the Securities Act within the past five
(5) years.
(C) As used in this paragraph, "business or
operations" means actual activities related to its current
business or operations and shall not include merely holding
funds or assets for future use.
(5) Sales must be made by a broker-dealer, either
as principal or agent, who is registered under the provisions of
Section 1-401 of the Securities Act.
(6) The securities must be offered or sold at a
price reasonably related to the current market price of such
securities.
(7) The securities must be issued and outstanding.
The exemption is not available for issuer transactions. For purposes
of this paragraph, "issuer" shall include all officers, directors
and controlling (5% or more) shareholders of the issuer.
(8) The security does not constitute the whole or
any part of an unsold allotment to, or subscription or participation
by, the broker-dealer as an underwriter of the security.
(c) Restriction for promotional or developmental
stage companies. This exemption may not be used to evade the
registration requirements of Section 1-301 of the Securities Act.
Accordingly, transactions in reliance on this exemption for the
securities of an issuer which is a promotional or development stage
company as defined in 660:11-11-1, involving securities that have not
been registered for offer or sale in the state of Oklahoma and which
securities would not have met the requirements for registration set
forth in Sections 1-303 or 1-304 of the Securities Act and the rules
promulgated thereunder, had the securities been filed for registration
pursuant to such sections of the Securities Act, may be deemed to have
violated this requirement unless proven otherwise.
(d) Exemption. The requirements of (b)(1) of
this Section, shall not apply to the sale of the securities of an issuer
who has net tangible assets in excess of $10,000,000.00 (U.S.) as
determined by its most recent audited financial statements. For foreign
issuers, the net tangible asset value may be determined by applying the
exchange rate in effect as of the date of the financial statement relied
upon unless there has been a material change in such exchange rate after
the date of the financial statement that would reduce by greater than
20% the value in U.S. dollars. In that event, the exchange rate applied
should be the rate effective as of the last day of the preceding month.
Nothing in this Section shall release the broker-dealer effecting the
transaction from its obligation to maintain the information required by
SEC Rule 15c2-11 and to deliver any such information to any person
involved in a transaction effected in the security, upon request by such
person.
660:11-11-41. [RESERVED]
660:11-11-42. Interpretation of 'existing security
holders'
For purposes of the exemption from registration set forth
in Section 1-202.15 of the Securities Act, the term "existing security
holder" shall not include a person who is a security holder of an issuer
only by the receipt of securities as a gift by said issuer;
consequently, the exemption from registration set forth in Section
1-202.15 of the Securities Act would not be available in connection with
transactions to such security holders. For purposes of this rule, a
distribution of securities shall be deemed to be a gift if the security
holder does not give consideration in exchange for the securities.
660:11-11-43. Coordinated limited offering exemption
(a) Preliminary notes.
(1) Nothing in this exemption is intended to or
should be construed as in any way relieving issuers or persons
acting on behalf of issuers from providing disclosure to prospective
investors adequate to satisfy the antifraud provisions of the
Securities Act.
(2) In view of the objective of this Section and
the purposes and policies underlying the Securities Act, the
exemption is not available to any issuer with respect to any
transaction which, although in technical compliance with this
Section, is part of a plan or scheme to evade registration or the
conditions or limitations explicitly stated in this Section.
(3) Nothing in this Section is intended to relieve
registered broker-dealers or agents from the due diligence,
suitability, or know your customer standards or any other
requirements of law otherwise applicable to such registered persons.
(b) Terms of the exemption. By authority
delegated to the Administrator in Section 1-203 of the Securities Act,
the following transactions are determined to be classes of transactions
for which registration is not necessary or appropriate for the
protection of investors and are exempt from Sections 1-301 and 1-504 of
the Securities Act: any offer or sale of securities exempted from
Section 5 of the 1933 Act pursuant to Section 4(a)(5) thereof; or any
offer or sale of securities offered or sold in compliance with the 1933
Act, under SEC Regulation D, Rule 504 [17 C.F.R. § 230.504], including
any offer or sale made exempt by application of SEC Regulation D, Rule
508(a) [17 C.F.R. § 230.508(a)]; provided the following further
conditions and limitations are satisfied:
(1) offering expenses do not exceed those allowed
for securities registered pursuant to the provisions of this title;
(2) no general advertising or general solicitation
is used; and
(3) the issuer files with the Administrator no
later than fifteen (15) days after the first sale of securities
subject to the Securities Act one (1) signed copy of the notice of
sales on Form D as most recently filed with the SEC, . Such filing
shall also include the following:
(A) an undertaking by the issuer to furnish to
the Administrator, upon written request, the information
furnished by the issuer to offerees;
(B) unless otherwise available, a consent to
service of process on Form U-2 and (if applicable) Form U-2A;
and
(C) the notice of exemption fee required by
Section 1-612.A.12 of the Securities Act.
(c) Substantial compliance. A failure to comply
with a term, condition or requirement of (b)(3) of this Section will not
result in the loss of the exemption from the requirements of Section
1-301 of the Securities Act for any offer or sale to a particular
individual or entity if the person relying on the exemption shows:
(1) the failure to comply did not pertain to a
term, condition or requirement directly intended to protect that
particular individual or entity;
(2) the failure to comply was insignificant with
respect to the offering as a whole; and
(3) a good faith and reasonable attempt was made to
comply with all applicable terms, conditions and requirements of
(b)(3) of this Section.
(d) Action by Administrator. Where an exemption
is established only through reliance upon (c) of this Section, the
failure to comply shall nonetheless be actionable by the Administrator
under the Securities Act.
(e) Reliance on other exemptions. Transactions
that are exempt under this Section may not be combined with offers and
sales exempt under any other rule or any section of the Securities Act;
however, nothing in this limitation shall act as an election. Should for
any reason the offer and sale fail to comply with all of the conditions
of this exemption, the issuer may claim the availability of any other
applicable exemption.
(f) Waiver of terms. The Administrator may, by
rule or order, increase the number of purchasers or waive any other
conditions of this exemption.
(g) Title. The exemption authorized by this
section shall be known and may be cited as the "Oklahoma Coordinated
Limited Offering Exemption".
660:11-11-44. [RESERVED]
660:11-11-45. [RESERVED]
660:11-11-46. [RESERVED]
660:11-11-47. [RESERVED]
660:11-11-48. [RESERVED]
660:11-11-49. Nonissuer transaction exemption for
certain exchange-listed securities
By authority delegated to the Administrator in Section
1-203 of the Securities Act, the following transactions are determined
to be classes of transactions for which registration is not necessary or
appropriate for the protection of investors and are exempt from Sections
1-301 and 1-504 of the Securities Act: any nonissuer transaction
involving a security issued and outstanding and listed or approved for
listing upon notice of issuance on Tier 1 of the Chicago Stock Exchange
or involving any security of the same issuer that is of senior or
substantially equal rank, or that differs only in terms of voting
rights, from the security so listed, or any warrant, option or right to
purchase or subscribe to any such security so long as the standards for
such listing remain substantially the same.
660:11-11-50. [RESERVED]
660:11-11-51. Cross-border transactions exemption
By authority delegated to the Administrator in Section
1-203 of the Securities Act, transactions effected by a Canadian
broker-dealer and its agents that meet the requirements for exemption
from registration pursuant to 660:11-5-20 are determined to be classes
of transactions for which registration is not necessary or appropriate
for the protection of investors and are exempt from Sections 1-301 and
1-504 of the Securities Act.
660:11-11-52. Oklahoma Accredited Investor Exemption
Under the authority of Section
1-203 of the Securities Act, transactions meeting the following
conditions are exempt from Sections 1-301 and 1-504 of the Securities
Act:
(1) Sales only to accredited investors. Sales
of securities shall be made only to persons who are or the issuer
reasonably believes are accredited investors. For purposes of this
Section, an "accredited investor" is a person who meets the definition
set forth in 17 CFR § 230.501(a).
(2) Investment intent. The issuer reasonably
believes that all purchasers are purchasing for investment and not
with the view to or for sale in connection with a distribution of
the security. Any resale of a security sold in reliance on this
exemption within 12 months of sale shall be presumed to be with a
view to distribution and not for investment, except a resale
pursuant to a registration statement effective under Sections 1-303
or 1-304 of the Securities Act or to an accredited investor pursuant to an exemption from securities
registration under the Securities Act.
(3) When exemption is unavailable.
(A) The exemption is not available to a promotional or development stage company that either has no specific
business plan or purpose or has indicated that its business plan is
to engage in a merger or acquisition with an unidentified company or
companies, or other entity or person.
(B) The exemption is not available to an issuer if
the issuer, any of the issuer's predecessors, any affiliated issuer,
any of the issuer's directors, officers, general partners,
beneficial owners of 10% or more of any class of its equity
securities, any promoters of the issuer presently connected with
the issuer in any capacity, any underwriter of the securities to be
offered, or any partner, director or officer of such underwriter:
(i) within the last five years, has filed a
registration statement that is the subject of a currently
effective registration stop order entered by any state
securities administrator or the SEC;
(ii) within the last five years, has been
convicted of any criminal offense in connection with the offer,
purchase or sale of any security, or involving fraud or deceit;
(iii) is currently subject to any state or
federal administrative enforcement order or judgment, entered
within the last five years, finding fraud or deceit in
connection with the purchase or sale of any security; or
(iv) is currently subject to any order, judgment
or decree of any court of competent jurisdiction, entered within
the last five years, temporarily, preliminarily or permanently
restraining or enjoining such party from engaging in or
continuing to engage in any conduct or practice involving fraud
or deceit in connection with the purchase or sale of any
security.
(C) Subparagraph (3)(B) shall not apply if:
(i) the party subject to the disqualification is
licensed or registered to conduct securities related business in
the state in which the order, judgment or decree creating the
disqualification was entered against such party;
(ii) before the first offer under this exemption,
the state securities administrator, or the court or regulatory
authority that entered the order, judgment, or decree, waives
the disqualification; or
(iii) the issuer establishes that it did not know
and in the exercise of reasonable care, based on a factual
inquiry, could not have known that a disqualification existed
under this paragraph.
(4) General announcement.
(A) A general announcement of the proposed offering
may be made by any means.
(B) The general announcement shall include only the
following information, unless additional information is specifically
permitted by the Administrator:
(i) The name, address and telephone number of the
issuer of the securities;
(ii) The name, a brief description and price (if
known) of any security to be issued;
(iii) A brief description of the business of the
issuer in 25 words or less;
(iv) The type, number and aggregate amount of
securities being offered;
(v) The name, address and telephone number of the
person to contact for additional information; and
(vi) A statement that:
(I) sales will only be made to accredited
investors;
(II) no money or other consideration is being
solicited or will be accepted by way of this general
announcement; and
(III) the securities have not been registered
with or approved by any state securities agency or the SEC and
are being offered and sold pursuant to an exemption from
registration.
(5) Additional information. The issuer, in
connection with an offer, may provide information in addition to the
general announcement under (4), if such information:
(A) is delivered through an electronic database
that is restricted to persons who have been prequalified as
accredited investors; or
(B) is delivered after the issuer reasonably
believes that the prospective purchaser is an accredited investor.
(6) Telephone solicitation.
(A) No telephone solicitation shall be permitted
unless prior to placing the call, the issuer reasonably believes
that the prospective purchaser to be solicited is an accredited
investor.
(B) Dissemination of the general announcement of
the proposed offering to persons who are not accredited investors
shall not disqualify the issuer from claiming the exemption under
this order.
(7) Notice filing. The issuer shall file a
notice of the transaction with the Department within 15 days after
the first sale of securities subject to the Act. The notice must
include the following: an executed copy of the NASAA Model
Accredited Investor Exemption Uniform Notice of Transaction; the
Oklahoma Accredited Investor Exemption Supplemental Information
Form; a consent to service of process on Form U-2 and (if
applicable) Form U-2A; a copy of the general announcement; and a fee
as set forth in Section 1-612 of the Securities Act.
(8) Disqualifying provision. Failure to comply
with (7) of this section shall not result in the loss of
availability of the subject exemption unless the issuer, any of its
predecessors or affiliates have been subject to a cease and desist
order of the Administrator or any order, judgment, or decree by
another state securities agency, the SEC or any court of competent
jurisdiction temporarily, preliminarily or permanently enjoining
such person for failure to comply with a notice filing requirement
for a comparable exemption. This provision shall not apply if the
Administrator determines, upon a showing of good cause, that it is
not necessary under the circumstances that the exemption be denied.
Requests for waivers of the disqualifying provision of this
subsection shall be in writing setting forth the reasons therefor.
660:11-11-53. Exemption for offers but not sales
Terms of the exemption. By authority delegated to the
Administrator in Sections 1-202.18 and 1-203 of the Securities Act, the
following transactions are determined to be classes of transactions for
which registration is not necessary or appropriate for the protection of
investors and are exempt from Sections 1-301 and 1-504 of the Securities
Act: an offer to sell, but not a sale, of a security exempt from
registration under the 1933 Act if:
(1) a registration statement has been filed under
this act, but is not effective,
(2) the offeror is not aware of a stop order that has
been issued by the Administrator under this act and does not know of
an audit, inspection, or proceeding by the Department that may
culminate in a stop order is by the offeror to be pending; and
(3) the offer consists only of:
(A) publication or distribution of a solicitation of
interest document that complies with the requirements of 17 CFR § 230.555 and any subsequent oral communications with prospective
investors and other broadcasts, also permitted by said section;
(B) a preliminary offering circular that complies
with the requirements of 17 CFR § 230.254; or
(C) an offering document that contains the
information required to be furnished in 17 CFR § 230.502(b)(2).
PART 7. FEDERAL COVERED SECURITIES
660:11-11-60. Investment company notices
(a) Notice requirement. Pursuant to Section
1-302.A of the Securities Act, prior to the offer in this state of a
Class of security of an investment company that is registered, or that
has filed a registration statement, under the Investment Company Act of
1940, that is not otherwise exempt under Sections 1-201 through 1-203 of
the Securities Act, the issuer must file a notice with the Administrator
relating to such Class of security.
(b) Content of notice. Each required notice
shall include the following:
(1) a properly completed Form NF;
(2) a consent to service of process on Form U-2 and
(if applicable) Form U-2A; and
(3) the filing fee set forth in Section 1-612.C of
the Securities Act.
(c) Other documents. Documents other than those
required in (b) of this section, unless specifically requested by the
Department, should not be filed with the Department. Documents that
should be filed with the Department only if specifically requested
include, but are not limited to, registration statements, prospectuses,
amendments, statements of additional information, quarterly reports,
annual reports, and sales literature.
(d) Renewal of notice. The effectiveness of a
notice required pursuant to (a) of this section may be renewed each year
for an additional one (1) year period of effectiveness by filing on or
before the expiration of the effectiveness of such notice:
(1) a properly completed Form NF clearly indicating
the state file number of the Notice to be renewed; and
(2) the filing fee required by Section 1-612.C of the
Securities Act.
660:11-11-61. Regulation D Rule 506 federal covered
security notice filing
(a) Notice requirement. Issuers offering a
security in this state in reliance upon Section 1-301.1 of the
Securities Act by reason of compliance with Regulation D, Rule 506,
adopted by the SEC, shall be required to file a notice with the
Administrator pursuant to the authority of Section 1-302.C of the
Securities Act if a sale of a security in this state occurs as a result
of such offering. Such notice shall be filed no later than fifteen (15)
days after the first sale of a security in this state for which a notice
is required.
(b) Content of notice filing. Each required
notice shall include the following:
(1) one copy of the notice of sales on Form D as most
recently filed with the SEC;
(2) the notice filing fee required by Section
1-612.A.19 of the Securities Act.
660:11-11-62. Regulation A Tier 2 federal covered
security notice filing
(a) Notice requirement. Issuers offering a
security in this state in reliance upon Section 1-301.1 of the
Securities Act by reason of compliance with Tier 2 of Regulation A,
adopted by the SEC, shall be required to file a notice with the
Administrator pursuant to the authority of Section 1 302.C. of the
Securities Act. Such notice shall be filed prior to the first offer of
securities in this state that is subsequent to qualification of the
offering statement by the SEC.
(b) Content of notice. Each required notice
shall include the following:
(1) a copy of Part I of Federal Form 1-A in
conjunction with a completed Oklahoma Notice of Regulation A - Tier
2 Offering form (or equivalent uniform form), or copies of all
documents filed with the SEC;
(2) a consent to service of process (if such is not
included in the submitted Notice form); and,
(3) the notice filing fee required by Section
1-612.A.19. of the Securities Act.
Section
660:11-13-1. Purpose
660:11-13-2. Definitions
660:11-13-3. Filing
requirements
660:11-13-4. Content
660:11-13-1. Purpose
The rules of this subchapter are adopted to provide
procedures for complying with the provisions of Section 1-504 of the
Securities Act relating to sales literature.
660:11-13-2. Definitions
The following words and terms, when used in this
subchapter, shall have the following meaning, unless the context clearly
indicates otherwise:
"Sales literature" means material published, or
designed for use, in a newspaper, magazine or other periodical, radio,
television, telephone solicitation or tape recording, videotaped
display, signs, billboards, motion pictures, telephone directories
(other than routine listings), website, other public media and any other
written or electronic communication distributed or made generally
available to customers or the public and used in connection with the
offer or sale of securities or the services of a broker-dealer or
investment adviser. Sales literature includes, but is not limited to,
prospectuses, pamphlets, circulars, form letters, market letters,
telemarketing scripts, seminar texts, research reports, surveys,
performance reports or summaries and reprints or excerpts of any other
advertisement, sales literature or published material.
"Sales literature package" means all submissions
of Sales Literature to the Department under one posting or delivery
relating to a specific issue of securities or the services of one or
more specific broker-dealers or investment advisers.
660:11-13-3. Filing requirements
(a) Requirement of filing. Section 1-504 of the
Securities Act requires a filing of all Sales Literature for review and
response by the Administrator before use or distribution in Oklahoma. A
complete filing shall consist of:
(1) the Sales Literature Package,
(2) the fee specified in Section 1-612 of the
Securities Act, and
(3) a representation:
(A) by the applicant, issuer or broker-dealer,
that reads substantially as follows: "I ------hereby attest and
affirm that the enclosed sales literature or advertising package
contains no false or misleading statements or misrepresentations
of material facts, and that all information set forth therein is
in conformity with the Company's most recently amended
registration statement as filed with the Oklahoma Department of
Securities on or about-----.", or
(B) by the applicant, broker-dealer or
investment adviser, that reads substantially as follows: "I
------hereby attest and affirm that the enclosed sales
literature or advertising package contains no false or
misleading statements or misrepresentations of material facts,
and that all information set forth therein is in conformity with
the provider's current information on file with the Oklahoma
Department of Securities."
(b) Exclusions. The following types of Sales
Literature are excluded from the filing requirements set forth in this
Section:
(1) Sales Literature which does nothing more than
identify a broker-dealer and/or offer a specific security at a
stated price;
(2) Internal communications that are not distributed
to the public;
(3) Prospectuses, preliminary prospectuses,
prospectus supplements and offering circulars which have been filed
with the Department as part of a registration statement, including a
final printed copy if clearly identified as such;
(4) Sales Literature solely related to the name of
the entity and its personnel, location, ownership, offices, business
structure, lines of business, officers or partners, or contact
information; and
(5) Sales Literature as defined in 660:11-13-2 that
is subject to the regulation of FINRA or the SEC and in compliance
with the pertinent regulatory requirements
(c) Piecemeal filings. The Department will not
approve any Sales Literature Package until a complete filing is
received. Piecemeal filings will not be accepted and will result in the
disapproval of any materials submitted therewith.
660:11-13-4. Content
(a) Application of antifraud provisions. Sales
Literature used in any manner in connection with the offer and sale of
securities or the offer of brokerage or advisory services is subject to
the provisions of Section 1-501 and/or 1-502 of the Securities Act,
whether or not such Sales Literature is required to be filed pursuant to
Section 1-504 of the Securities Act or 660:11-13-3. Further, Sales
Literature filed with the Department is subject to the provisions of
Sections 1-501 and/or 1-502 and 1-505 of the Securities Act. Sales
Literature should be prepared accordingly and should not contain any
ambiguity, exaggeration or other misstatement or omission of material
fact, which might confuse or mislead an investor.
(b) Prohibited disclosures.
(1) Unless stating that the Commission, Administrator
or Department has not approved the merits of the securities offering or
the Sales Literature, no Sales Literature shall contain a reference to
the Commission or the Department unless such reference is specifically
required in a Departmental Prospectus Guide or requested by the
Administrator.
(2) An investment adviser is prohibited from
publishing, circulating or distributing any Sales Literature that:
(A) refers, directly or indirectly, to any
testimonial concerning the investment adviser or any advice,
analysis, report, or other service rendered by such investment
adviser;
(B) refers to past specific recommendations of the
investment adviser that were or would have been profitable unless
the investment adviser provides:
(i) all past recommendations made during the
immediately preceding period of not less than one year,
(ii) additional information sufficient for a
reader to evaluate the adviser’s performance to include, but not
be limited to, the name of each such security recommended, the
date and nature of each such recommendation (e.g., whether to
buy, sell or hold), the market price at that time, the price at
which the recommendation was to be acted upon, and the market
price of each such security as of the most recent practicable
date, and
(iii) a disclaimer to the effect that past
performance does not guarantee future success;
(C) represents that any graph, chart, formula or
other device offered can in and of itself be used to make trading
decisions without prominently disclosing in the advertisement any
limitations or difficulties in its use; or
(D) contains any statement to the effect that any
report, analysis, or service is free unless such report, analysis or
other service actually is or will be furnished entirely free and
without any condition or obligation, directly or indirectly.
SUBCHAPTER 15.
MISCELLANEOUS PROVISIONS
Section
660:11-15-1. General rules for
presentation of financial statements
660:11-15-2. Protection from financial exploitation
660:11-15-1. General rules for presentation of
financial statements
(a) Asset values. The following rules shall
apply in presenting asset values in all Financial Statements filed with
the Department:
(1) A unilateral "write-up" of assets above
historical cost is not considered in accordance with generally
accepted accounting principles. Financial Statements containing a
"write-up" of assets to appraisal values (irrespective of the
soundness of the appraisal) shall not be accepted.
(2) A registrant acquiring assets in an "arms-length"
transaction, solely or partly for its own capital stock, should
record the transaction in its Financial Statements at either:
(A) the fair market value of the shares of stock
given in consideration;
(B) the fair market value of the asset so acquired;
or
(C) The amount selected should be one that has the
preponderance of evidence substantiating its selection.
(3) Where a parent company (one owning more than 50%
of other companies) or a subsidiary company or an affiliated company
is the registrant, consolidated or combined Financial Statements
shall be submitted. The consolidated statements must conform to
generally accepted accounting principles and result in the
elimination of "write-ups" or appraisal amounts not represented by
"arms-length" transactions.
(4) Where the "promoters" of a registrant have
transferred assets to the registrant solely or partly for capital
stock, the tests referred to in (1), (2) and (3) of this subsection
must be applied so as to result in either no "write-up" or one not
greater than would have resulted from a transaction carried out at
"arms-length." The registrant shall make full disclosure of all
pertinent facts and substantiate the values used in its Financial
Statements if not representing "historical cost" of acquisition from
third parties.
(b) Opinion of independent accountants. Audited
Financial Statements shall be accompanied by an opinion of the
Independent Accountant. The opinion letter shall be dated, shall be
manually signed, shall identify without detailed enumeration the
Financial Statements covered by the opinion, shall state that the
examination was conducted in accordance with generally accepted auditing
standards and shall express the Independent Accountant's opinion as to
the fairness or unfairness of the Financial Statements in accordance
with generally accepted accounting principles or his inability to
express such an opinion.
660:11-15-2. Protection from financial exploitation
(a) Definitions. The following words and terms, when used in this Section shall have the following meanings, unless the context clearly indicates otherwise:
"Account" means any account of a broker-dealer or investment adviser for which a Protected Adult has the authority to transact business.
"Agencies" means the one or more of the following: the Oklahoma Department of Human Services, the office of the district attorney in the county in which the suspected exploitation occurred, or the local municipal police or sheriff’s department.
"Financial exploitation" means:
(A) the wrongful or unauthorized taking, withholding, appropriation or use of money, assets or property of a protected adult; or
(B) any act or omission taken by a person, including through the use of a power of attorney, guardianship, conservatorship or any other authority, regarding a protected adult, to:
(i) obtain control, through the use of intimidation, undue influence, coercion, harassment, duress, deception, false representation or false pretense, over the protected adult’s money, assets or property; or
(ii) convert money, assets or property of the protected adult.
"Protected adult" means:
(A) an individual 62 years of age or older; or
(B) an incapacitated person or a vulnerable adult as such terms are defined in the Protective Services for Vulnerable Adults Act in Title 43A of the Oklahoma Statutes.
(b) Agency Disclosures. As required by the Protective Services for Vulnerable Adults Act in Title 43A of the Oklahoma Statutes, if a broker-dealer or investment adviser reasonably believes that financial exploitation of a protected adult in this state has occurred, is occurring, may have been attempted, is being attempted, or will be attempted, the broker-dealer or investment adviser shall promptly notify one or more of the Agencies.
(c) Third-Party Disclosures. If a broker-dealer or investment adviser reasonably believes that financial exploitation relating to a protected adult has occurred, is occurring, may have been attempted, is being attempted, or will be attempted, in and/or from this state, the broker-dealer or investment adviser may notify any third-party previously designated by the protected adult or any other third party that is reasonably associated with the protected adult.
(d) Temporary Hold on Disbursements.
(1) A broker-dealer or investment adviser transacting business in and/or from this state with a protected adult may place a temporary hold on a transaction in and/or a disbursement of funds or securities from an account of such protected adult or an account on which such protected adult is a beneficiary if:
(A) the broker-dealer or investment adviser reasonably believes that financial exploitation of a protected adult has occurred, is occurring, has been attempted, or will be attempted; and
(B) the broker-dealer or investment adviser:
(i) immediately, but in no event more than two business days after the date the temporary hold is first placed provides oral or written notification, which may be electronic, of the temporary hold and the reason therefor to all parties authorized to transact business in the account; any third party previously designated by the protected adult to be contacted; and the Oklahoma Department of Securities; and
(ii) immediately initiates an internal review of the suspected or attempted financial exploitation of the protected adult, as necessary.
(2) Any temporary hold of a transaction or disbursement of funds or securities as authorized by this subsection will expire upon the earlier of:
(A) a determination by the broker-dealer or investment adviser that the transaction or disbursement of funds or securities will not result in financial exploitation of the protected adult; or
(B) not later than fifteen business days after the date on which the broker-dealer or investment adviser first placed the temporary hold on the transaction or disbursement of funds or securities, unless the broker-dealer or investment adviser’s internal review of the facts and circumstances supports its reasonable belief that financial exploitation of the protected adult has occurred, is occurring, has been attempted, or will be attempted, in which case the broker-dealer or investment adviser may extend the temporary hold to not later than twenty-five business days after the date the broker-dealer or investment adviser first placed the temporary hold on the transaction or disbursement of the funds or securities; or
(C) at any time, an agency of competent jurisdiction or a court of competent jurisdiction may terminate or extend a temporary hold authorized by this subsection.
(e) Disclosure exceptions. Notwithstanding subsections (c) and (d) above, a notification permitted or required by this section shall not be made to any person the broker-dealer or investment adviser reasonably believes has engaged, is engaged, or will engage, in suspected or attempted financial exploitation of the protected adult.
(f) Immunity from administrative liability. A broker-dealer or investment adviser that, in good faith and exercising reasonable care, complies with this section shall be immune from any administrative liability imposed through an action by the Department that might otherwise arise from a disclosure, placing a temporary hold on a transaction or disbursement of funds or securities, or providing access to records in accordance with this section.
(g) Records. A broker-dealer or investment adviser shall retain and provide access to or copies of records that are relevant to the suspected or attempted financial exploitation of a protected adult to the Oklahoma Department of Human Services and to law enforcement, either as part of a referral to, or upon request of, the Oklahoma Department of Human Services or law enforcement. The records may include historical records as well as records relating to the most recent transaction or transactions that may comprise financial exploitation of a protected adult. Nothing in this provision shall limit or otherwise impede the authority of the Administrator of the Oklahoma Department of Securities to access or examine the books and records of broker-dealers and investment advisers as otherwise provided by law.
CHAPTER 15.
OKLAHOMA TAKE-OVER DISCLOSURE ACT OF 1985
[Authority: 71 O.S., Section 457]
[Source: Codified 12-31-91]
SUBCHAPTER 1.
GENERAL PROVISIONS
Section
660:15-1-1. Purpose
660:15-1-2.
Statutory citations
660:15-1-3. Definitions
660:15-1-1. Purpose
The provisions of this Chapter have been adopted for the
purpose of carrying out the provisions of the Oklahoma Take-over
Disclosure Act of 1985 in compliance with Section 457 of that Act,
including provisions governing take-over offers.
660:15-1-2. Statutory citations
Citations to statutes in this Chapter refer to the most
recent codification of the Oklahoma Take-over Disclosure Act of 1985, 71
O.S., Sections 451 through 462.
660:15-1-3. Definitions
The following words and terms, when used in this Chapter,
shall have the following meaning, unless the context clearly indicates
otherwise:
"Take-over Act" means the most recent
codification of the Oklahoma Take-over Disclosure Act of 1985, 71 O.S.,
Sections 451 through 462.
SUBCHAPTER 3.
REGISTRATION
Section
660:15-3-1. Review of take-over offer
materials
660:15-3-2. Financial statements
660:15-3-3. Summary
suspension of take-over offer
660:15-3-4. Time limits
660:15-3-1. Review of take-over offer materials
The Administrator may require only those disclosures
which are factual in nature, and may not require disclosures which
involve an evaluation of the underlying fairness of the take-over offer
nor shall the Administrator apply subjective standards as to the
fairness of the take-over offer in his review.
660:15-3-2. Financial statements
If the offeror is other than a natural person, such
offeror shall file audited financial statements for its last two (2)
fiscal years. If the offeror's audited financial statements are not
current to within four (4) months of the date of filing of the
registration statement, the offeror shall submit reviewed financial
statements for the interim period. The financial statements shall be
prepared in accordance with generally accepted accounting principles and
examined by independent accountants in accordance with generally
accepted auditing standards and accompanied by an opinion of the
accountants making such examination.
660:15-3-3. Summary suspension of take-over offer
(a) Pursuant to subsection D of Section 453 of the
Take-over Act, the Administrator may summarily suspend the effectiveness
of a take-over offer. Such an action shall be based solely upon a
determination that:
(1) the registration statement required to be filed
under Section 453 of the Take-over Act does not contain all the
information required to be included under subsection F of Section
453 of the Take-over Act; or
(2) the take-over materials provided to offerees do
not provide full disclosure to offerees of all material information
concerning the take-over offer.
(b) The summary suspension shall be in effect only
until a final determination is made by the Administrator following the
hearing held pursuant to subsection E of Section 453 of the Take-over
Act and in accordance with 660:15-3-4.
660:15-3-4. Time limits
Notwithstanding subsection E of Section 453 of the
Take-over Act which provides that the Administrator may by rule or order
prescribe different time limits than those specified in subsection E in
connection with the suspension of a take-over offer following a hearing,
the determination by the Administrator of whether to suspend a take-over
offer must be made prior to the expiration of twenty (20) business days
following the filing of the registration statement in connection with
such take-over offer.
CHAPTER 20.
OKLAHOMA SUBDIVIDED LAND SALES CODE
[Authority: 71 O.S., Section 662]
[Source: Codified 12-31-91]
SUBCHAPTER 1.
GENERAL PROVISIONS
Section
660:20-1-1. Purpose
660:20-1-2.
Statutory citations
660:20-1-3. Definitions
660:20-1-1. Purpose
The provisions of this Chapter have been adopted for the
purpose of carrying out the provisions of the Oklahoma Subdivided Land
Sales Code in compliance with Section 662 of that Act, including rules
governing applications and reports and defining terms.
660:20-1-2. 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.
660:20-1-3. Definitions
Unless the context otherwise requires, or unless defined
in this Section, terms used in this Chapter, if defined in the Land
Sales Code, shall have the meaning as defined in the Land Sales Code. The following words and terms, when used in this Chapter,
shall have the following meaning, unless the context clearly indicates
otherwise:
"Department" means the Oklahoma Department of
Securities.
"Land Sales Act" means-the most recent
codification of the Oklahoma Subdivided Land Sales Code, 71 O.S.,
Sections 601 through 667.
"OILSR" means the Office of Interstate Land
Sales Registration of the United States Department of Housing and Urban
Development.
"Vacation certificates" means any material
associated with a plan whereby a prospective purchaser would be entitled
to lodging, food or other amenities and that is used by subdividers or
their agents or distributors or any other person to induce prospective
purchasers to visit the subdivision or attend or submit to a sales
presentation by a subdivider or its agents or its distributors or any
other person.
SUBCHAPTER 3.
REGISTRATION OF SUBDIVIDED LAND
Section
660:20-3-1. Registration procedure
660:20-3-2. Financial statements
660:20-3-3. Public offering
statement
660:20-3-4. Renewal procedures
660:20-3-1. Registration procedure
(a) Applications filed with OILSR. Application
for registration of subdivided land shall be made by submitting to the
Administrator at the office of the Department two (2) complete copies of
a full registration filed with the OILSR and the OILSR certificate of
registration, provided, however, that only one copy of the exhibits to
the OILSR filing shall be filed with the Administrator.
(b) Applications on Form LRF-625. In the event
subdivided lands are not to be registered with the OILSR, then a
registration shall be undertaken by filing with the Administrator a
completed Form LRF-625, adopted by the Administrator as the application
form for registration of subdivided lands.
(c) Exhibits and additional information. Any
information required by Section 625 of the Land Sales Act which is not
included, or not sufficiently covered in the form of OILSR registration,
or any condensed version thereof, shall be covered, expanded or
explained by attaching additional sheets to the copies of the OILSR form
of registration when necessary and where appropriate. All instruments,
documents and other exhibits required by Section 625 of the Land Sales
Act shall be included in the registration and those not otherwise
attached or included in the form of registration required by OILSR must
be added and attached as exhibits to the copies of the registration
submitted to the Administrator for filing with the Department. Only one
of each required exhibit shall be filed and such exhibits shall include.
when applicable, but shall not be limited to the following.
(1) When the subdeveloper is a corporation or limited
partnership, or if applicable a joint stock company, or business
trust, which must be domesticated in Oklahoma to do business in
Oklahoma, a copy of a certificate of domestication issued by the
Secretary of State of Oklahoma, or if applicable other evidence of
authority to do business in Oklahoma.
(2) If the subdivider is an unincorporated
association, joint stock company, business trust or a general
partnership using a fictitious name or any other form of business
organization which may not file with the Secretary of state of
Oklahoma, but which may be required to file copies of a trust
instrument or certificates of fictitious name or a similar document
with the clerk of the Oklahoma District Court in districts where
company offices are located, real estate is owned or business is
principally conducted, then a certified copy of each such filed
document shall be attached as an exhibit.
(3) If the subdivider is a trustee, a certified copy
of all instruments by which the trust was created or declared, and
in which it is accepted and acknowledged.
(4) If the subdivider is a partnership or
unincorporated association, or joint stock company or similar form
of business organization, a certified copy of its articles of
partnership or association and all other papers pertaining to
formation and governance of the organization.
(5) An executed "Consent to Service of Process"
irrevocably appointing the Administrator of the Department or his
successor in office. as attorney to receive service of any lawful
process in any noncriminal suit, action or proceeding against the
applicant or his successor, executor or administrator which arises
under the Land Sales Act or any rule or order issued thereunder
after the Consent has been filed, with the same validity as if
served personally on the person filing the Consent, all as provided
in Subsection A of Section 664 of the Land Sales Act, and such
"Consent to Service of Process" should be generally in the form of
the Uniform Form U-2 promulgated and recommended by the North
American Securities Administrators Association.
(6) A uniform form of "Corporate Resolution," or in
the case of another form of business organization, a substantially
similar and appropriate resolution, as applicable generally in the
form of the Uniform Form U-2A as promulgated by the North American
Securities Administrators Association.
(7) A list of all persons who are intended or
expected to represent or assist the subdivider in selling or
disposing the subdivided land to Oklahoma residents.
(8) A copy of agency franchise agreements, sales
agreements and a copy of any agreements between the subdivider and
salesmen and brokers.
(9) A detailed statement of the plan under which the
subdivider proposes to develop the subdivision, offer and sell lots
and generally transact business, sworn to or affirmed by an officer
of the subdivider or a person occupying a similar position.
(10) A copy of all advertising material intended to
be used for distribution, publication, or otherwise in connection
with the subdivided land.
(11) An exact description of the real estate to be
sold.
(12) A map or plat prepared by an independent,
registered professional land surveyor showing the boundaries,
dimensions, setback lines, roads, utility easements, public
easements and all other similar information regarding the subdivided
land including all common areas and lots of the subdivision.
(13) Copies of all zoning restrictions and deed
restrictions affecting any of the subdivided land included in the
filing.
(14) Copies of conveyances, bearing public record
book and page number, by which the subdivider or owner acquired
title. If the subdivider does not own the property, also attach
copies of all instruments which give the subdivider authority to
sell.
(15) Copies of all instruments presently creating
liens, mortgages, encumbrances, reservations or defects upon or
otherwise affecting the use or title of land included in the filing.
The documents shall reflect the book and page number of the public
records where they are recorded.
(16) A list of units by lot number and section
number, as applicable, which relates each lot to all improvements
which are dependent upon future performance according to any promise
made by the subdivider.
(17) An up-to-date, current copy of either a master
title insurance policy providing coverage for the purchasers of lots
or a specimen copy of individual title insurance policies which will
provide coverage for the purchasers of lots and an independent, as
described in Section 625 of the Land Sales Act, attorney's title
opinion regarding title to the subdivided land included in the
filing and a consent to use the opinion in connection with the
registration.
(18) A copy of the sales contract, including contract
for a deed if applicable, to be used.
(19) A copy of any note, including mortgage note, to
be used.
(20) A copy of the deed or other instrument to be
used by the subdivider in conveying title to the purchasers.
(21) A copy of any mortgage trust escrow agreement.
(22) A copy of any improvement escrow agreement.
(23) A copy of an independent licensed engineer's
report regarding the soil and topography of the subdivided land, and
a consent to use the report in connection with the registration.
(24) A copy of any and all contracts for franchises
with public utility companies or copies of all documents and
instruments providing arrangement for services and facilities in
lieu of those provided by any public utility companies.
(25) A copy of any and all completion bonds,
performance bonds and agreements with public authorities which
guarantee completion of improvements.
(26) A copy of all contracts or agreements to be used
between any salesmen and the ultimate purchaser.
(27) An opinion of counsel regarding the legality of
the proposed offering of subdivided land and a consent to use such
opinion in connection with the registration.
(28) Audited financial statements including a
schedule of real estate assets, and a consent to use the opinion of
the independent accountant in connection with the registration.
(29) Three (3) copies of the Public Offering
Statement, for which the federal Property Report with supplements
may be used.
(d) Filing fee. Each Application for
Registration shall be accompanied by payment to the Department of the
statutory filing fee of Two Hundred Fifty Dollars ($250.00) plus One
Dollar ($1.00) for each lot included in the offering.
(e) Examination fees. After filing the
Application for Registration and prior to the registration becoming
effective, the subdivider shall deposit with the Department, upon
request by the Administrator, such amounts as may be reasonably expected
to be incurred as expenses by the Administrator and/or his designated
representative(s) in the investigation of the subdivision as provided in
any or all parts of Subsection E of Section 627 of the Land Sales Act.
660:20-3-2. Financial statements
Whenever required by the Land Sales Act or any provision
of this Chapter, financial statements shall mean a statement of
financial position, a statement of income, a statement of retained
earnings, a statement of changes in financial position and, when
required elsewhere or otherwise required by the Administrator, a
separately certified schedule of real estate assets. The separately
certified schedule of real estate assets shall disclose real estate held
in sufficient detail to identify the subdivided land being offered in
Oklahoma and separate parcels thereof acquired at different times or at
different costs per acre; the schedule shall disclose the number of
acres in each such parcel; the date each such parcel was acquired; the
original cost for each such parcel; the amounts of any improvements
capitalized and added to the cost basis of each such parcel; and the
total amount of the historical cost basis of each such parcel; the
amounts of any improvements capitalized and added to the cost basis of
each such parcel; and the total amount of historical cost basis of each
such parcel, with improvements, adjusted for a depreciation of
improvements. All financial statements shall be prepared in accordance
with generally accepted accounting principles and practices, unless
otherwise provided by the Administrator, and shall be audited and
certified by independent accountants, unless otherwise provided
elsewhere or by the Administrator.
660:20-3-3. Public offering statement
(a) Receipt for public offering statement. The
subdivider shall use a Public Offering Statement as provided and
required in Section 626.A of the Land Sales Act and prepared in the
manner instructed by Form LRF-625.A, adopted by the Administrator as the
"Public Offering Statement-Instruction Guide." The subdivider shall
obtain and retain a receipt as provided and required therein. The
receipt may be in such form as the subdivider chooses, but it shall not
contain or constitute a release of any kind and shall cover and pertain
only to the receipt of a copy of the Public Offering Statement by the
purchaser. Also, the receipt shall state and disclose that the Oklahoma
Public Offering Statement includes and consists of a Summary Disclosure
Statement, a Property Report as defined hereinafter, and, if applicable,
Oklahoma Supplement to the Property Report; and the receipt shall
acknowledge that the purchaser received a copy of each of the documents
and instruments comprising the Oklahoma Public Offering Statement. The
receipt should also state the name of the person from whom the Oklahoma
Public Offering Statement was received by the purchaser, the address
where it was received and the date when it was received. There also
should be a place for the purchaser to sign and a place separately
provided for the purchaser to write in the date he signed the receipt.
The failure to obtain and retain such a fully completed receipt in
compliance with the requirements of Section 626.A of the Land Sales Act
shall give rise to a presumption on the part of the Administrator that a
Public Offering Statement was not delivered and provided to a purchaser
according to law.
(b) Federal Property Report. In cases where a
full registration of the subdivided land is filed with the OILSR for use
in Oklahoma, the federal Property Report used in connection with the
OILSR filing shall be submitted accompanied by a Summary Disclosure
Statement and, together, the two documents shall be used as the Oklahoma
Public Offering Statement.
(c) Summary Disclosure Statement. The Summary
Disclosure Statement required by Section 626.6 of the Land Sales Act
should be prepared in a manner consistent with this Section and as
instructed by FORM LRF-626.B, adopted by the Administrator as the
"Summary Disclosure Statement Guide." The Summary Disclosure Statement
should be on 8 1/2" x 11" letter size, white paper and the smallest
lettering thereon should be no smaller than uppercase, "capital,"
standard, elite typewriter size type. The Summary Disclosure Statement
may be typewritten, printed, mimeographed or otherwise produced, but it
should be legible and should conform to the minimum standards set out
herein. The Summary Disclosure Statement should be no more than four (4)
pages long. It may be made by using both the front and back of two (2)
sheets, which shall be counted as four (4) pages. The Summary Disclosure
Statement should contain and set out in brief, succinct, and concise
language, using plain English and emphasizing the most negative aspects
and greatest risk factors to the purchaser, a summary of the information
required in Section 626.B of the Land Sales Act, except that no
financial statements of the subdivider shall be required in the Summary
Disclosure Statement. In addition to the other information required to
be contained in the Summary Disclosure Statement, it shall contain the
following additional two (2) items:
(1) a statement of the kind of title the purchaser
will have upon completion of payment for any of the subdivided land
and a description of what happens if the purchaser defaults on any
payments and all forfeitures which may occur; and
(2) a schedule, in tabular, columnar form, showing
the date on which the subdivided land was acquired by the
subdivider, or the date on which each parcel of the subdivided lands
was acquired if not all acquired at the same time and the number of
acres in each parcel; a column showing the amounts paid for each
parcel of the subdivided land; a column showing the cost of all
improvements made by the subdivider on each parcel of the subdivided
land; a column showing the total historical cost basis, adjusted for
any depreciation of improvements, of each parcel of the subdivided
land; and a column showing the proposed total sales price of all
lots in each parcel of the subdivided lands. Every item in the
Summary Disclosure Statement should be referenced to the part,
section and page number, when applicable, of the Property Report, or
main body of the Public Offering Statement, wherein elaboration,
explanation and additional information regarding that item can be
found. The questions which should be set out and answered in the
Summary Disclosure Statement are as follows:
(A) If I have any questions or there is trouble
where do I find the seller and his representatives? Here include the
name, principal address and telephone number of the subdivider, his
offices and agents in this state.
(B) What does this land look like and how large
will the development be? Here include a general description of the
subdivided land including a statement of the total number of lots to
be offered.
(C) If a purchaser decides later to sell his lot,
what kind of help can he get selling it and what kind of local
property market can he expect? Here include the assistance, if any,
that the subdivider, his agents or affiliates will provide to the
purchaser in the resale of the property and the extent to which the
subdivider, his agents or affiliates will be in competition in the
event of resale.
(D) What kind of rights or title to the land do I
get immediately and what kind of title do I have after the lot is
paid for? Here include material terms of any encumbrances,
easements, mortgages and liens. Also include the plans and efforts
to remove such liens, encumbrances or mortgages and the results of
the success or failure thereof.
(E) What kind of taxes and assessments will I have
to pay? Here include the material terms of all existing taxes and
existing or proposed special taxes or assessments, including
required membership fees or dues, which affect the subdivided lands.
(F) How can I use this property? Here include
material zoning restrictions, restrictive covenants and other
regulations affecting the use of the land. Also include the intended
use for which the land is sold and material physical limitations and
restrictions of the land relative to the intended use.
(G) What kind of utilities and other improvements
now exist on the land and what kind are promised for the future?
Here include information about existing or proposed improvements
including, but not limited to, streets, water supply, levees,
drainage control systems, irrigation systems, sewage disposal
systems and customary utilities and the estimated cost. date of
completion and responsibility for construction and maintenance of
existing and proposed improvements which are referred to in
connection with the offering or disposition of any lot in the
subdivided lands.
(H) What is the soil and climate like? Here include
topographic and climatic characteristics of the subdivided lands and
adjacent area.
(I) What hospitals, churches, fire stations, police
protection and other community services are available? Here include
the existing provisions for access of the subdivision to community
fire protection, the location of primary and secondary schools, the
proximity to the municipalities and the population thereof, the
improvements installed or to be installed, including off-site and
on-site community and recreational facilities, by whom they were or
are to be installed, maintained or paid for, and an estimate of
completion thereof.
(J) What happens if I fail to make any payments, or
if I make my payments but the seller fails to pay on his mortgage?
Can any of my rights in the land be forfeited? Here include the kind
of title the purchaser will have upon completion of payment for any
of the subdivided land and what happens if the purchaser defaults on
any payments and all forfeitures which may occur. Also describe any
and all "take-out" provisions for all mortgages or state that there
are none and state the possible consequences.
(K) What kind of value did this land have prior of
the present development and how much is being spent to improve it?
Here provide a schedule, in tabular, columnar form, showing the date
on which the subdivided lands were acquired by the subdivider, or
the date on which each parcel of the subdivided land was acquired if
all not acquired at the same time and the number of acres in each
parcel; a column showing the amounts paid for each parcel of the
subdivided land; a column showing the costs of all improvements made
by the subdivider on each parcel of the subdivided land; a column
showing the total historical cost basis, adjusted for any
depreciation of improvements, of each parcel of the subdivided land;
and a column showing the proposed total sales price of all lots in
each parcel of subdivided land.
(d) Supplement. In the event any item of information
required by Section 626.B of the Land Sales Act is not contained in the
format of the federal Property Report, or is not included in sufficient
detail to constitute adequate disclosure, then a supplement to the
Property Report shall be prepared, in the same format, in which
additional sufficient information is provided and disclosed to satisfy
the requirements of Section 626.B of the Land Sales Act in a form and
manner acceptable to the Administrator- and such supplement shall be
used with the Summary Disclosure Statement and the main body of the
Property Report as part of the Oklahoma Public Offering Statement.
660:20-3-4. Renewal procedures
Upon the expiration of an effective registration the
Administrator may renew the registration for an additional period of one
(1) year provided the registrant is in compliance with the Land Sales
Act, has filed all reports required by the Administrator, including
periodic and supplemental updates and sales reports, pays an examination fee of Two Hundred Fifty Dollars ($250.00), and renewal is requested by
a letter signed by the registrant.
SUBCHAPTER 5.
REGISTRATION OF SUBDIVIDED LAND SALES AGENTS
Section
660:20-5-1. Application for license
660:20-5-2. Renewal of license
660:20-5-3. Records and reports
660:20-5-1. Application for license
(a) Application. An application for a subdivided
land sales agent license shall be made by filing with the Administrator
a completed Form LRF-632, adopted by the Administrator as the
"APPLICATION FOR LICENSE FOR SUBDIVIDED LAND SALES AGENT."
(b) Additional requirements. In addition to the
completed Form LRF-632, the following items will be required before a
license will be issued:
(1) an affidavit signed by the supervising broker for
the subdivision within ninety (90) days from the date of applying
for the Oklahoma Subdivided Land Sales Agent license, affirming the
type of real estate license held by the applicant and that he is a
licensee in good standing; and
(2) payment to the Oklahoma Department of Securities
of the required filing fee specified in Section 652 of the Land
Sales Act.
660:20-5-2. Renewal of license
Every subdivided land sales license may be renewed by
submitting proof that the applicant holds a valid, current real estate
broker's or real estate sales associate's license, the renewal fee
specified in Section 652 of the Land Sales Act, and a submission of a
letter signed by the applicant requesting such renewal. Proof of a
valid, current real estate broker's or real estate sales associate's
license should consist of an affidavit dated within ninety (90) days of
the requested renewal date and signed by the supervising broker for the
subdivision. The affidavit shall affirm the kind of license held by the
applicant and that he is a licensee in good standing. The proof should
also consist of a photostatic copy or picture of the applicant's current
real estate license issued by the appropriate regulatory authority.
Every such renewal shall be for a period of one (1) year. Applications
for renewal will be accepted anytime within sixty (60) days prior to the
expiration date of a license.
660:20-5-3. Records and reports
Every agent shall make and keep, for each subdivider he
represents, a monthly report. A copy of each monthly report shall be
provided by the agent to the subdivider for retention by the subdivider
for at least six (6) years, and for the first three (3) years in a
readily accessible location. Such monthly report shall be provided to
the subdivider within fifteen (15) days following the last day of the
month covered by the report. Each monthly report shall set out the name
and address of the agent and the subdivider and state the period of time
covered by the report and shall be signed by the agent; shall identify
and list all lots which have been sold by the agent for the subdivider
during the month covered; shall state the name and address of the
purchaser or purchasers of each lot; shall state the date and address of
each sale; shall state the amount paid for each lot; and shall state the
gross amount of the commission earned by the agent for each lot sold.
SUBCHAPTER 7.
EXAMINATIONS
Section
660:20-7-1. Expenses of on-site examination of subdivider
660:20-7-2. Expenses of examination of licensed agents
660:20-7-1. Expenses of on-site examination of
subdivider
Charges for an on-site examination of a subdivision
conducted by the Department pursuant to Section 627 of the Land Sales
Act shall be paid by the person being examined as set forth in Section
652 of the Land Sales Act.
[Source: Amended at 9 Ok Reg 301 1, eff 7-15-92]
660:20-7-2. Expenses of examination of licensed agents
Charges for an examination of the business and records
of a licensed agent shall be paid by the agent whose business is
examined as set forth in Section 652 of the Land Sales Act.
[Source: Amended at 9 Ok Reg 301 1, eff 7-15-92]
SUBCHAPTER 9.
ADVERTISING GUIDELINES
Section
660:20-9-1. Application of Land Sales Act
660-20-9-2. Filing procedures
660:20-9-3. Approval or rejection of advertising
660-20-9-4. Presumptions concerning advertising
660:20-9-5. Legend requirement
660:20-9-6. Review of advertising
660-20-9-7. Standards of review
660-20-9-8. Guidelines for advertising
660:20-9-9. Approval of promotional plans
660:20-9-1. Application of Land Sales Act
Advertising pertaining to activities of or in a
subdivision for which a Registration Statement has been filed with the
Department, such as advertising material on home construction, home
sales, motels, industrial parks, etc. used or employed by subdivider is
subject to Department approval when it pertains to the entire
subdivision and will be used for the promotion or disposition of land
therein.
660:20-9-2. Filing procedures
(a) Transmittal Letter. Every advertisement
submitted to the Department, either as a part of a Registration
Statement or as a subsequent filing, shall be accompanied by a letter of
transmittal which gives a brief, written description of each
advertisement filed with the Department to assure that all future
correspondence and orders concerning the advertisement will clearly
identify the advertisement in question. The letter of transmittal shall
be signed by the subdivider or his duly authorized representative and
shall verify that the statements made and the representations contained
therein have been reviewed and the advertisement is truthful and correct
to the best of his knowledge and belief with regard to the statements
contained therein.
(b) Fee. Each letter of transmittal shall be
accompanied by payment of a fee in the amount of Ten Dollars ($10.00)
payable to the Department.
(c) Time of filing. All advertising except
advertising related to subdivided land or transactions exempt pursuant
to Sections 622 and 623 of the Land Sales Act shall be filed with the
Administrator not later than ten (10) days prior to its use and shall
not be used until a copy thereof has been approved for use by the
Administrator except advertising which the Administrator exempts by rule
or order.
(d) File number. All advertising filed with the
Department either with the original registration statement or by
subsequent filing shall be assigned a number by the Department in order
that the Department or the registrant may refer by the number to any
specific piece of advertising. When advertising relates to more than one
subdivision owned by the same person or entity, or different persons or
entities, but being sold through a common sales agent, an identifying
designation shall be assigned such materials but this designation shall
not be construed to permit filings related to subdivisions or portions
of subdivisions which are not registered with this Department.
660:20-9-3. Approval or rejection of advertising
(a) Presumptive approval. Where an order of
rejection or investigation is not entered within ten (10) days of its
receipt by this Department, the advertising will be deemed approved
unless the applicant has consented in writing to a delay.
(b) Rejection. The rejection of any advertising
material by the Administrator shall constitute final action and any
correction or amendment to a subsequent filing of advertising material
which has been disapproved must be resubmitted.
660:20-9-4. Presumptions concerning advertising
It will be presumed that:
(1) All advertising filed for approval will be used
within six (6) months of said filing, to offer for sale or to induce
persons to acquire interest in the title to all lands which are
described in or referred to in the material or supporting data filed
with the Department unless express limitation is made.
(2) All advertising published, disseminated or
broadcast by or in behalf of an owner or entity owning more than one
subdivision is being used to offer lands in all subdivisions
registered by such owner or entity unless express limitation is made
by such owner or entity, to the Department or by the Department.
(3) All advertising published, disseminated by, or
broadcast on behalf of a sales agent is being used to offer lands in
all subdivisions for which said person is a sales agent unless an
express limitation is made to or by the Department.
660:20-9-5. Legend requirement
The subdivider shall print on advertising material
approved for use the following legend:
"OKLAHOMA OFFEREES SHOULD OBTAIN AN OKLAHOMA PUBLIC
OFFERING STATEMENT FROM THE DEVELOPER AND READ IT BEFORE SIGNING ANY
DOCUMENTS. THE OKLAHOMA SECURITIES COMMISSION NEITHER RECOMMENDS THE
PURCHASE OF THE PROPERTY NOR APPROVES THE MERITS OF THE OFFERING."
660:20-9-6. Review of advertising
When advertising is accepted for filing, the same,
together with all supporting data and facts discovered upon
investigation or inquiry, shall be examined by the designated personnel
of the Department to determine whether the same is ready for final
review by the Administrator. If additional information is needed before
a determination can properly be entered by the Department, it shall be
the Division of Registrations' duty to see that any matter requiring
investigation is referred for investigation.
660:20-9-7. Standards of review
(a) Authority of Administrator. In reviewing the
advertising submitted by a registrant under the Land Sales Act, the
Administrator shall determine whether the submitted material makes a
full and fair disclosure or is false and misleading within the intent
and meaning of the law, by examining the form, language and content of
the material and supporting data and any other available information as
to ascertain whether the express and implied representations therein are
true and make full and fair disclosure. If it does not appear that the
said representations are true and fair disclosure as to all subdivided
lands to which the filing relates, no order of approval will be entered
and the Administrator will enter such orders or rejection or take such
action as may be necessary.
(b) Implied representations and presumptions.
Any inference reasonably to be drawn from advertising or promotional
material will be considered to be a positive assertion unless the
inference is negated therein in clear and unmistakable terms, or unless
adequate safeguards have been provided by the owner to reasonably
guarantee the occurrence of the thing inferred. Advertising or
promotional material will be judged on the basis of the positive
representations contained therein and the reasonable inferences to be
drawn therefrom. Unless the contrary affirmatively appears in
advertising or promotional material the following inferences will be
assumed to have been intended in each case mentioned; to-wit:
(1) When homesites or building lots are advertised,
the inference is that said lots are immediately usable for such
purpose without any further improvement or development by the
prospective purchaser and that there is an adequate potable water
supply available; that the lands have been approved for installation
of septic tanks or that an adequate sewage disposal system is
installed; that no further major draining, fill-in or subsurface
improvement is necessary to construct dwellings, except for
reasonable preparation for construction; that the individual
homesites or building lots are accessible by automobile without
additional expense to the purchaser over existing right-of-way and
that no other fact or circumstance exists to prohibit the use of the
lots as a homesite or building lot.
(2) When title insurance, abstract or attorney's
opinion is advertised, the inference is that the seller can and will
convey fee simple title free and clear of all liens, encumbrances
and defects except those which are disclosed in writing to the
prospective purchaser prior to purchase.
(3) When lands are advertised as usable for any
particular purpose other than homesites or building lots, the
inference is that said lots or parcels are immediately accessible
and usable for such purpose by purchaser without the necessity for
draining, fill-in or other improvement prior to putting the lands to
use for such purpose, except for reasonable preparation for
construction, and that no fact or circumstance exists to prohibit
the immediate use of said lands for such purposes.
(4) When any recreational facility, improvement,
accommodation or privilege is advertised, the inference is that the
same is on the lands at the present time and available without
restriction to the purchasers of lots at no additional expense.
(5) When improvements are advertised, the inference
is that the same are completed.
660:20-9-8. Guidelines for advertising
No precise rules to determine what material is
misleading, or that a plan of sale or development lacks adequate
safeguards and assurances to prospective purchasers, can be made which
will be applicable in all situations. Without any intent to limit its
consideration or determination to the general standards herein set forth
and without any attempt to compel any particular form or method of
advertising, promotion, development or sale of subdivided lands, the
standards set forth in this Section are adopted as a guide to persons
preparing to file advertising material and to be used by Department
personnel in reviewing advertising materials submitted pursuant to
Section 653 of the Land Sales Act.
(1) General guidelines. The following
guidelines apply to all advertising or sales literature:
(A) Claims or representations contained in the
advertising shall be accurate and provable.
(B) Advertising shall not misrepresent the facts or
create misleading impressions.
(C) Advertising shall not use statements,
photographs, or sketches portraying the use to which advertised land
can be put unless the land can be put to such use without
unreasonable cost.
(D) Advertising shall not make a derogatory or
unfair reference to competitive developments or properties.
(E) Advertising shall not contain asterisks or any
other reference symbol as a means of contradicting or substantially
changing any previously made statement or as a means of obscuring
material facts.
(F) Advertising shall not use names or trade styles
which imply that they are nonprofit research organizations, public
bureaus, groups, etc. when such is not the case. Advertising of such
an organization shall be prohibited when the true nature of the plan
of sale or ownership is misrepresented or concealed.
(G) Maps, plats or representations shall clearly
indicate the estimated date that the development will be completed.
If completion dates are over a period of years, then a series of
shadings, outlines, or coding may be used to indicate estimated
dates of completion.
(2) Distances. The following standards apply
to advertising relating to distances:
(A) When a community is referred to, advertising
must include the location of the subdivision and the mileage from
the approximate geographical center of the subdivision in road miles
to the approximate geographical center of the community.
(B) Where a facility is referred to, advertising
shall disclose with reasonable specificity, the location of such
facility in relation to the geographic center of the subdivision.
(C) Advertising shall not use such terms as
"minutes away,” "short distance,” “only miles" and "near" and terms
of similar import to indicate distance unless the actual distance in
road miles is used in conjunction with such terms.
(D) When the company offers more than one
subdivision in a single advertising piece, or an offering exceeding
five miles in length or width, advertising shall carry a disclaimer
as follows:
"Distances indicated are from the location
mentioned to (club house, center of subdivision, or other pertinent
or prominent points); each purchaser should check the exact location
of the property being offered him in relation to the club house,
subdivision or other prominent locations."
(3) Sketches and pictorial representations.
The following guidelines apply to sketches and pictures used in
advertising:
(A) Advertisements shall not use artists' sketches
to portray proposed improvements or nonexistent scenes without an
indication that such portrayal is an artist's sketch and that
the improvements or scenes must be representative and state that
such rendering is an artist's conception.
(B) Advertising shall not contain before and after
pictures for comparative purposes without an accurate, detailed,
comparative analysis of such pictures.
(4) Improvements and facilities. The following
guidelines apply to advertising about improvements of facilities
connected with subdivided land:
(A) Advertising of improvements on or to the
property which are not completed must state in unmistakable terms
that the improvements are merely proposed or under construction.
Advertising of improvements on or to the property which are not
completed must state precisely the anticipated price to the consumer
to complete and the date of the promised completion.
(B) Advertising shall not make reference to a
public facility unless money has been budgeted for actual
construction of such facility and is available to the public
authority having the responsibility of construction or an actual
disclosure of the existing facts concerning a public facility is
made.
(C) Advertising shall not refer to public
facilities under study unless it is fully disclosed that the
facility is merely proposed and under study and provided that no
reference is made to the location or route of the facility until
such has been decided by the responsible public authority.
(D) Advertising shall not contain a statement,
photograph, or sketch relating to a facility for recreation, sports
or other activities not presently in existence, unless it is stated
that the facility is not completed or is merely proposed. If such a
facility exists and it is not located within the subdivision the
distance by conventional automobile must be given.
(5) Roads, streets, waterways. The following
guidelines apply to advertising about roads, streets or waterways
connected with subdivided land:
(A) Advertising which refers to "roads" and
"streets" shall make affirmative disclosure as to the nature of the
roads and streets, such as paved, gravel or dirt. To be described as
improved or paved, a road and a street shall be constructed and
surfaced according to county, city, or other acceptable authority
specifications or satisfactory guarantees made for such construction
and surfacing.
(B) Advertising shall not refer to property as
waterfront unless the property being offered actually fronts on a
canal or other body of water.
(C) Advertising which uses the term "canal" shall
disclose the approximate width and approximate depth of water in the
canal and whether or not it provides access to open water.
(6) Special risks. The following risks shall
be included, if applicable, in advertising related to subdivided
land:
(A) Advertising shall disclose if the land or any
part of it is regularly flooded or substantially covered by standing
water for extended periods of time during the year, unless adequate
drainage is assured by bonding or other means acceptable to the
Department.
(B) Advertising shall disclose if the land or any
part of it is subject to mudslides, rockslides or other natural
phenomena.
(7) Access and easements. The following
guidelines apply to advertising describing access and easements
relating to subdivided land:
(A) Advertising of land which does not have
available legal access to the purchaser shall disclose that fact
and-its effect.
(B) Advertising which refers to legal access shall
be accompanied by phraseology to indicate whether the access is
usable as a passage for conventional automobiles.
(C) Advertising shall not refer to the existence of
a road easement or a road right-of-way unless the easement or
right-of-way has been dedicated to -the public or to appropriate
property owners and recorded in the public records -of the county
where the property is located.
(D) Advertising which indicates the size of the
tract offered shall indicate the size and kind of all easements to
which the property may be subject. If the property is subject to
easements which are unusual in size, this fact shall also be noted.
Maps, plats, representations, or drawings shall indicate the
dimensions of the tract and all easements.
(8) Consideration, prices, values and additional
costs. The following guidelines apply to advertising relating to
consideration, prices, values and additional costs of subdivided
land:
(A) Land shall not be advertised as "free" if the
prospective purchaser is required to give any consideration
therefor. Land shall not be advertised for "closing costs only" when
these costs are substantially more than normal, or when additional
land has to be purchased at a higher price to render the land
usable.
(B) Advertising which refers to a property exchange
privilege shall state clearly any qualification concerning the
exchange privilege.
(C) Advertising shall not refer to a predevelopment
sale at a lower price because the land has not yet been developed
unless there is a plan of development, and a subdivision plat has
been recorded, or reasonable assurance is available that the plan
will be completed.
(D) Advertising shall not indicate a discount on
property that appears to effect a price reduction from the
advertised price. A discount may be given for quantity purchases,
cash, larger payments, or for any reasonable basis. The purpose of
this standard is to eliminate the use of fictitious pricing and
illusory discount.
(E) Advertising shall not contain statements
concerning future price increases by the subdeveloper which are not
specific as to amount and as to the date of the announced increase.
Any such date shall be in the reasonable future and the increased
price shall be maintained for a reasonable length of time.
(F) Advertising shall not make predictions of
specific or immediate price or value increases of lots or parcels or
units of advertised lands over which the subdivider does not have
control.
(G) Forecasts of future events or population trends
contained in advertising shall be made by qualified persons based
upon objective criteria and shall pertain to the offering.
(H) Advertising shall be considered misleading if
it infers or implies that the subdivider will resell or repurchase
the property being offered at some future time unless the subdivider
has made an undertaking with the Department to resell or repurchase
property for or on behalf of purchasers and has given reasonable
assurances to the Department to demonstrate his ability to perform
this undertaking.
(I) Advertising shall be deemed misleading if it
represents that the property being offered for sale may be
subdivided or resubdivided unless it includes all necessary and
relevant information regarding the cost and feasibility of future
subdividing.
(J) Advertising which contains statements regarding
taxes and the amounts thereof shall employ the latest available
figures.
(K) The word "guarantee" or phrase "guaranteed
refund" or phrases of a similar import shall not be approved in
advertising unless the refund is unconditional.
660:20-9-9. Approval of promotional plans
(a) Vacation certificates. Vacation
certification shall be submitted to the Department and shall meet the
advertising standards in this Subsection. Any vacation certificate used
must be submitted with component parts, i.e., registration card, letter
of congratulations, reservation form, confirmation form, signs, etc.
(1) The registration card will disclose eligibility
requirements such as age limitation, affinity group, residency,
marital status, proof of age, transportation, date of expiration.
(2) Letter of congratulations will contain seasonal
charge, refund deposit, date of expiration, and cost of the
certificate.
(3) The following must be prominently disclosed:
"While on your vacation you will be invited to attend a land sales
presentation by (name of subdeveloper) for its property registered
by the state of Oklahoma. Attendance is/is not required to make this
certificate valid." Certificates, advertising or other promotional
material shall disclose the terms, conditions and prerequisites to
use and enjoyment of a visitation program, including the following:
(A) Eligibility requirements such as age
limitations, affinity groups, residency, marital status, proof of
age.
(B) Statement indicating state taxes are not
included.
(C) Statement indicating whether transportation,
food, lodging or other incidental expenses are included.
(D) Statement from the vacation certificate holder
containing the following:
I have read the terms and conditions and have
understood them fully.
Signed _______________________ (Prospective
purchaser)
(b) Promotional meetings. If a land sales
presentation is to be used in connection with the vacation plan, the
standards of this Subsection shall be used as a guide in determining
whether or not the nature and manner of conducting the meeting are such
as to fully disclose all significant facts concerning the subdivision.
(1) If the meeting is to be held within the state of
Oklahoma, the Department shall be notified in writing not less than
fifteen (15) days before said meeting and shall be supplied with the
names of the real estate brokers and/or agents involved. If the
meeting is to be held outside the state of Oklahoma the subdeveloper
is not required to give notice of meetings unless the Administrator
so specifically requests. In all cases a written script of any and
all slide and film presentations shall be submitted to the
Administrator at least ten (10) days prior to their intended use.
(2) Department personnel as authorized by the
Administrator shall have free access to the meeting and
presentations.
(3) The advertising in the meeting is subject to the
standards of advertising contained within this Subchapter.
(4) A false or dummy buyer shall not be used to
initiate sales or buying climate or for any other purpose, nor shall
it be indicated that lots, parcels, units of interest have been
sold, when in fact, they have not been sold.
(5) An oral statement to a prospective purchaser at
the meeting shall be consistent with written material approved by
the Department.
(6) A prospective buyer who expresses a desire or
intent to leave the meeting at any time during or after the meeting
shall not be impeded from departing, pressured to remain, or denied
any benefit promised in exchange for attending the meeting,
including any transportation.
CHAPTER 25.
OKLAHOMA BUSINESS OPPORTUNITY SALES ACT
SUBCHAPTER 1.
GENERAL PROVISIONS
Section
660:25-1-1. Purpose
660:25-1-2.
Statutory citations
660:25-1-3. Definitions
660:25-1-1. Purpose
The rules of this Chapter have been adopted for the
purpose of carrying out the provisions of the Oklahoma Business
Opportunity Sales Act in compliance with Section 816 of that Act,
including rules governing disclosure documents, applications and reports
and defining terms.
660:25-1-2. Statutory citations
Citations to statutes in this Chapter refer to the most
recent codification of the Oklahoma Business Opportunity Sales Act, 71
O.S., Sections 801 through 827.
660:25-1-3. Definitions
Unless the context otherwise requires, or unless defined in this Section, terms used in this
Chapter, if defined in the Business Opportunity Act, shall have the meaning as defined in the
Business Opportunity Act. The following words and terms, when
used in this Chapter, shall have the following meaning, unless the context clearly indicates
otherwise.
"Business Opportunity Act" means the most recent
codification of the Oklahoma Business Opportunity Sales Act in Title 71
of the Oklahoma Statutes.
"Sales literature and advertising" means
material published in, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone solicitation or tape
recording, videotape display, signs, billboards, motion pictures,
telephone directories (other than standard listings), other public media
or any other written communication distributed or made generally
available to customers or the public including but not limited to
pamphlets, circulars, form letters, seminar texts, research reports,
surveys, performance reports or summaries and reprints or excerpts of
other sales literature or advertising to include publications in
electronic format.
"Sales literature or advertising package" means
all submissions to the Administrator under one posting or delivery
relating to a specific business opportunity.
SUBCHAPTER 3.
REGISTRATION REQUIREMENTS
Section
660:25-3-1. Registration filing fee
660:25-3-2. Renewal of registration and sales reports
660:25-3-1. Registration filing fee
Every seller seeking registration of a business
opportunity shall pay the filing fee specified in Section 807.C of the
Business Opportunity Act.
660:25-3-2. Renewal of registration and sales reports
(a) Renewal of registration. In addition to
filing a current disclosure document, all sellers seeking renewal of a
registration shall submit a report indicating the total number of
purchasers in the state of Oklahoma and the total amount of
consideration received therefrom since the effective date of the initial
registration. The renewal fee specified in Section 807.E of the Business
Opportunity Act shall accompany each request for renewal of
registration.
(b) Post-registration sales reports. All
registrants shall submit sales reports to the Administrator. Each report
shall be accompanied by the report filing fee specified in Section 807.E
of the Business Opportunity Act and shall contain a statement of the
total number of purchasers in the state of Oklahoma and the total amount
of consideration received therefrom since the effective date of the
initial registration. Said reports are due no later than six (6) months
from the effective date of registration or the effective date of the
renewal of a registration.
SUBCHAPTER 5.
SALES LITERATURE OR ADVERTISING
Section
660:25-5-1. Filing of sales literature
660:25-5-1. Filing of sales literature
(a) Filing requirement. All sales literature and
advertising must be filed with and responded to by the Administrator
prior to use. A filing shall include the sales literature or advertising
package, the review fee specified in Section 807.F of the Business
Opportunity Act and a representation by the seller that reads
substantially as follows: "I hereby attest and affirm that the enclosed
sales literature or advertising package contains no false or misleading
statements or misrepresentations of material facts, and that all
information contained therein is in conformity with the most recent
disclosure document relating to the particular business opportunity
offered thereby on file with the Administrator."
(b) Exemption. The disclosure document filed
with the Administrator as part of the registration process pursuant to
Section 806 of the Business Opportunity Act is exempted from the filing
requirement specified in subsection (a) of this Section.
(c) Content. Sales literature and advertising
used in any manner in connection with the offer and sale of business opportunities
is subject to the provisions of Section 819 whether or not such sales
literature and advertising is required to be filed pursuant to this
rule. Furthermore, sales literature and advertising filed with the
Administrator is subject to the provisions of Section 820 of the
Business Opportunity Act.
(d) Prohibited disclosure. No sales literature
or advertising shall contain a reference to the Oklahoma Securities
Commission, the Oklahoma Department of Securities or the Administrator
unless so requested by the Administrator.
SUBCHAPTER 7. OPINIONS
660:25-7-1. Interpretive opinion requests
The Administrator in his discretion may honor requests
from interested persons for interpretive opinions or no-action positions
relating to a specific factual circumstance with respect to the Business
Opportunity Act or any rule or statement of policy adopted thereunder.
Requests relating to unnamed entities or persons or to hypothetical
situations will not warrant a response. Such requests shall be in
writing, shall set out all the facts necessary to reach a conclusion in
the matter and shall be accompanied by the fee specified in Section
817.D of the Business Opportunity Act. Each request should also be
accompanied by a signed opinion of legal counsel which states counsel's
opinion in the matter, which may be expressed tentatively or conditioned
upon concurrence by the Administrator, and the basis therefore.
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