|
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.
(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 appellants
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
provisions
. |
660:2-1-1 |
| 3. Organization
|
660:2-3-1 |
| 5. Authority and actions of
administrator
|
660:2-5-1 |
| 7.
Investigations
.. |
660:2-7-1 |
| 9. Individual proceeding practices and
procedures
.
.. |
660:2-9-1 |
| 11. Procedures for inspecting and/or copying public
records
. |
660:2-11-1 |
| 13. Declaratory rulings and interpretive
opinions
.. |
660:2-13-1 |
SUBCHAPTER 1. GENERAL
PROVISIONS
Section
660:2-1-1. Purpose
660:2-1-2. Statutory citations
660:2-1-3. Definitions
660:2-1-1. Purpose
(a) The provisions of this
Chapter set forth the organization and procedural rules governing the
Department of Securities and have been adopted for the purpose of
complying with 75 O.S., Section 302.
(b) The provisions of this
Chapter relating to investigations and hearings shall apply to all
investigations and hearings conducted by the Department in the
enforcement of the Business Opportunity Act, the Land Sales Act, the
Securities Act, and the Take-over Act.
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, the
Oklahoma Business Opportunity Sales Act or the Oklahoma Take-over
Disclosure Act of 1985 shall have the meanings set forth in such acts. The
following words and terms, when used in this Chapter, shall have the
following meaning, unless the context clearly indicates otherwise:
"Administrator" means the Administrator of the
Department of Securities.
"Business Opportunity Act" means the most recent
codification of the Oklahoma Business Opportunity Sales Act in Title 71
of the Oklahoma Statutes.
"Commission" means the Oklahoma Securities
Commission.
"Department" means the Oklahoma Department of
Securities.
"Hearing Officer" means a person who has been
duly appointed by the Administrator to hold hearings and, as required,
render proposed orders.
"Land Sales Act" means the most recent
codification of the Oklahoma Subdivided Land Sales Code in Title 71 of
the Oklahoma Statutes.
"Securities Act" means the most recent
codification of the Oklahoma Uniform Securities Act of 2004 in Title 71
of the Oklahoma Statutes.
"Take-over Act" means the most recent
codification of the Oklahoma Take-over Disclosure Act of 1985 in Title
71 of the Oklahoma Statutes.
SUBCHAPTER 3. ORGANIZATION
Section
660:2-3-1. Organization
660:2-3-1. Organization
(a) The Department shall be organized in accordance
with Section 1-601 of the Securities Act. It shall be the purpose of the
Department to implement the policies of the Commission and to enforce
the Securities Act in an efficient and effective manner.
(b) The Department shall be organized in the following
divisions:
(1) registration of broker-dealers, agents and
investment advisers.
(2) registration of securities.
(3) investigation and enforcement; and
(4) investor education.
(c) The Department shall have as its chief officer an
Administrator who shall be charged with the duty of administering and
enforcing the acts under the supervision of the Commission and in
accordance with its policies.
SUBCHAPTER 5. AUTHORITY AND
ACTIONS OF ADMINISTRATOR
Section
660:2-5-1. Official actions
660:2-5-2. Register of actions [REVOKED]
660:2-5-3. Settlements
660:2-5-4. Summary orders
660:2-5-1. Official actions
(a) All officials acts of the
Administrator shall be evidenced by a written record, and all final
orders, decisions, opinions, rules and other written statements of
policy or interpretations formulated, adopted or used in the discharge
of the function of the Administrator shall be available for public
inspection.
(b) Official action of the
Administrator shall not be bound or be prejudiced by any informal
statement made or opinion given by the Administrator, Commission or
employees of the Department of Securities.
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
The Administrator may issue summary orders pursuant to
the provisions set forth in:
(1) Sections 1-306.D, 1-411.F or 1-604 of the
Securities Act;
(2) Section 814(D) of the Business Opportunity Act;
(3) Sections 628(D), 634(C), or 660 of the Land Sales
Act; or
(4) Subsection (D) of Section 453 of the Take-over
Act.
SUBCHAPTER 7. INVESTIGATIONS
Section
660:2-7-1. Initiation
660:2-7-2. Authority
[REVOKED]
660:2-7-3. Investigative processes
660:2-7-4. Subpoenas
[REVOKED]
660:2-7-5. Testimony [REVOKED]
660:2-7-6. Reports
[REVOKED]
660:2-7-7. Enforcement of process [REVOKED]
660:2-7-8.
Right to counsel [REVOKED]
660:2-7-9. Termination of investigation
660:2-7-1. Initiation
Investigations may be initiated upon inquiry, request or
complaint by members of the public or by the Administrator or the
Commission upon their own motion. The request or complaint by a member of
the public should be in writing on the form identified in Chapter 6 of
this Title, be signed by the complainant and contain a statement setting
forth the acts, activities or matters and the name and address of the
party or parties against whom they are complaining. No formal procedures
are required in making such requests or complaints. The complainant is not
regarded as a party, since the Administrator acts only in the public
interest. The Administrator shall not take action when the acts,
activities or matters complained of are merely matters of private
controversy and do not tend to adversely affect the public.
660:2-7-2. Authority [REVOKED]
660:2-7-3. Investigative processes
(a) Authority. Investigations under the statutes
administered by the Administrator shall be conducted by representatives
designated and duly authorized for this purpose. Such representatives
are authorized to exercise and perform the duties of their office in
accordance with the statutes of the state of Oklahoma and the
regulations of the Administrator, including administration of oaths and
affirmations, in any matter under investigation by the Administrator.
Nothing in this section shall prohibit the Administrator or his designee
from expanding or restricting the scope of any investigation at any time
during an investigation.
(b) Investigative hearings. Investigative hearings, as
distinguished from hearings in individual proceedings, may be conducted
in the course of any investigation undertaken by the Administrator,
including inquiries initiated for the purpose of determining whether or
not a respondent is complying with an order of the Administrator.
Investigative hearings may be held before the Administrator, or his
designee, for the purpose of hearing the testimony of witnesses and
receiving documents and other data relating to any subject under
investigation. Such hearings shall be non-public.
(c) Subpoena to testify or produce records. While the
Administrator encourages voluntary cooperation in investigations, the
Administrator, or his designee, at any stage of any investigation, may
issue a subpoena ordering the person named therein to appear before a
designated representative at a designated time and place, including the
offices of the Department, to provide testimony by deposition, sworn
statement or affidavit and/or to produce documentary evidence relating
to any matter under investigation. Such testimony shall only be reduced
to writing or otherwise recorded in any manner by the person taking the
testimony, or under his direction.
(d) Subpoena to grant access. The Administrator may
issue a subpoena to grant access to, to examine, and to copy documents,
books or other records of any person being investigated.
(e) Service. Subpoenas shall be served in the manner
provided by law.
(f) Written examination. The Administrator, or his
designee, may issue an order requiring persons to file a report or
statement, or answers in writing and under oath to specific questions,
relating to any matter under investigation.
(g) Rights of witness. Any person under investigation,
compelled to furnish information or documentary evidence, shall be
advised of the purpose and scope of the investigation, subject to the
confidentiality requirements provided by law. Any person required to
testify shall be entitled to review a copy of the transcript of his own
testimony, if transcribed, at the offices of the Department of
Securities. Any person required to submit documentary evidence shall be
entitled to retain or, on payment of lawfully prescribed cost, to
procure a copy of any document produced by such person. Any party
compelled to testify or to produce documentary evidence may be
accompanied and advised by counsel, provided that such counsel is duly
licensed to practice law by the Supreme Court of Oklahoma. Such counsel
may question such person briefly at the conclusion of the examination to
clarify any of the answers such person has given.
(h) Confidentiality. Information or documents obtained
by the Administrator and subpoenas issued in connection with an
investigation shall be kept confidential and shall not be made available
to the public, unless expressly ordered by the Administrator, disclosed
pursuant to the provisions of Subchapter 9 of this Chapter or as
otherwise provided by law.
660:2-7-4. Subpoenas [REVOKED]
660:2-7-5. Testimony [REVOKED]
660:2-7-6. Reports [REVOKED]
660:2-7-7. Enforcement of process [REVOKED]
660:2-7-8. Right to counsel [REVOKED]
660:2-7-9. Termination of investigation
Upon completion of investigation, where the facts
indicate that no corrective action by the Administrator is warranted, the
investigative files shall be closed, without prejudice to reopening. Where
remedial action is appropriate, the files may be referred for the
initiation of administrative or civil proceedings, or other disposition as
may be permitted under law. At any time during or after completion of an
investigation, a matter may be referred to a law enforcement agency or
another governmental or regulatory entity.
SUBCHAPTER 9. INDIVIDUAL
PROCEEDING PRACTICES AND PROCEDURES
Section
660:2-9-1. Hearings in general
660:2-9-2. Initiation of
individual proceedings
660:2-9-3. Prehearing proceedings and
processes
660:2-9-4. Authority to subpoena witnesses
660:2-9-5.
Representation
660:2-9-6. Conduct of hearings
660:2-9-7. Record of
hearing
660:2-9-8. Final orders
660:2-9-9.
Rehearings
660:2-9-10. Appeals [REVOKED]
660:2-9-1. Hearings in general
(a) Authority. Prior to the issuance of a final order in an
individual proceeding, all parties shall be afforded an opportunity for
hearing after reasonable notice. The notice shall be
in writing and advise the parties of their right to a hearing and their
obligation to file an answer, the time period within which a hearing
must be requested, and the effect of a failure to file an answer and to
request a hearing.
(b) Public hearing. All hearings shall be open to the
public but may not be recorded by the public or any respondent by any
electronic means.
(c) Hearings on summary orders. The provisions of this
Subchapter shall not apply to proceedings for summary orders. The
procedures for hearings on summary orders shall be those set forth in:
(1) Sections 1-306.D, 1-411.F, or 1-604.B of the
Securities Act;
(2) Section 814(D) of the Business Opportunity Act;
(3) Sections 628(D), 634(C), or 660 of the Land Sales
Act; and
(4) Subsections (D) and (E) of Section 453 of the
Take-over Act.
660:2-9-2. Initiation of individual proceedings
(a) Request for hearing and answer.
The person to whom
the notice of opportunity for hearing is addressed shall file with the
Administrator a written answer within the time specified in the
notice. The answer shall indicate whether the party requests a hearing
and shall specifically admit or deny each allegation of the Department
or state that the party does not have, and is unable to obtain,
sufficient information to admit or deny each allegation. When a person
intends in good faith to deny only a part of an allegation, the party
shall specify so much of it as is true and shall deny only the
remainder. A statement of a lack of information shall have the effect of
a denial. Any allegation not denied shall be deemed admitted.
Failure of a party to file an answer in compliance with this
subsection shall result in the issuance of a final order against that
party.
(b) Setting or denial of hearing.
Upon receipt of a
written request for a hearing, the Administrator shall either promptly
schedule a hearing or shall issue a written order denying a hearing.
(c) Time of notice.
Notice of all
hearings shall be served by regular first class mail or by personal
delivery within a time reasonable in light of the circumstances, in
advance of the hearing, but not less than forty-five (45) days in
advance thereof, to all parties. For
good cause shown, any hearing may be rescheduled, provided all persons
entitled to notice of such hearing are promptly advised thereof. (d)
Content of notice. The notice of hearing shall
contain the following information:
(1) the date, time, place and nature of the hearing;
(2) a statement of the legal authority and
jurisdiction under which the hearing is to be held;
(3) a short plain statement of the matters asserted;
and
(4) a reference to the particular sections of the
statutes and rules involved.
(e) Appointment of hearing officer.
The Administrator
may delegate authority to a Hearing Officer to conduct an individual
proceeding and prepare a proposed order for submission to the
Administrator whenever deemed appropriate under the circumstances. The
Administrator shall enter into a written contract with each Hearing
Officer appointed, which shall govern the terms of appointment.
(f) Authority of presiding officer.
The
Administrator, or the Hearing Officer, shall have the authority to do
all things necessary and appropriate to
conduct the
individual proceeding. The
duties of the Administrator, or the Hearing Officer, include, but are
not limited to,
the following:
(1) Administering oaths and affirmations;
(2)
Issuing
subpoenas authorized by law and quashing or modifying any such
subpoena;
(3) Receiving relevant evidence and ruling upon the
admission of evidence and offers of proof;
(4) Regulating the course of a proceeding and the
conduct of the parties and their counsel;
(5) Holding prehearing and other conferences and
requiring the attendance at any such conference of any party;
(6)
Recusing himself
upon a motion of a party based on reasonable grounds, or upon his
own motion;
(7) Considering and ruling upon all procedural and
other motions, subject to any limitations otherwise specified;
(8) Requiring the filing of briefs, if so desired;
and (9) Requiring the filing of proposed findings of fact
and conclusions of law.
(g) Submission of case on documentary record. The
Administrator, or the Hearing Officer, may elect not to hold a hearing
if all parties agree to submit the case on the documentary record and
waive their right to appear.
660:2-9-3. Prehearing proceedings and processes
(a) Scheduling.
As soon as is
practicable after the request for hearing is received, but in no event
later than thirty (30) days after the request for hearing is received,
the Administrator, or Hearing Officer, shall enter a scheduling order
that is intended to expedite the disposition of the action and insure
the fair, orderly and efficient conduct of the proceedings. The parties
shall confer in person or by telephone and attempt to prepare a single
agreed scheduling order to submit to the Administrator or the Hearing
Officer. If the proposed scheduling order is acceptable to the Hearing
Officer, no scheduling conference need be held. If the parties are
unable to agree, the Hearing Officer shall issue an appropriate
scheduling order or hold a scheduling conference in person or by
telephone. The scheduling order should establish at least the following:
(1)
a schedule of
discovery;
(2)
any limitations
to be placed on discovery;
(3) a preliminary list identifying all witnesses,
documents and exhibits intended to be utilized at the hearing;
(4) identification of any expert witness intended to
be called;
(5)
the date for
exchanging the documents and exhibits intended to be utilized at the
hearing and the final list identifying all witnesses intended to be
called at the hearing; and;
(6)
such other
matters as may aid in the disposition of the matter.
(b)
Discovery. Discovery may be obtained by one or
both of the following methods:
(1)
A party may
serve a written request on any other party requiring the party to
produce, within fifteen (15) days, for inspection and copying, any
documents or tangible items that are relevant to the subject matter
of the individual proceeding and are not privileged; and/or
(2)
A party may take
the testimony of a witness by oral deposition at the expense of that
party. A party desiring to take the deposition shall serve written
notice to the witness and all other parties to the proceeding in
accordance with 660:2-9-4. Such notice shall state the time and
place for taking the deposition and shall be served in order to
allow the adverse party sufficient time, by the usual route of
travel, to attend, and three (3) days for preparation, exclusive of
the date of service of the notice.
(c)
Motions in general.
(1)
Unless otherwise
permitted by these rules or by the Administrator, or the Hearing
Officer, motions shall:
(A)
be made in
writing;
(B)
state concisely
the question to be determined and be accompanied by any necessary
supporting documentation; and
(C)
be served on all
parties.
(2)
A response to a
written motion shall be filed within ten (10) days after receipt of
the motion but no later than the date and time of the hearing.
(3)
The
Administrator, or the Hearing Officer, may allow oral argument if it
appears necessary to a fuller understanding of the issues presented.
(4)
The filing or
pendency of a motion does not alter or extend any time period
prescribed by this Subchapter or by an order of the Administrator or
the Hearing Officer.
(d) Motions for summary decision.
A party may
move for summary decision as to any substantive issue in the case. The
Administrator, or the Hearing Officer, may issue a summary decision if
he finds that there is no genuine issue as to any material fact and that
the moving party is entitled to prevail as a matter of law.
(e) Prehearing conference.
(1)
Upon the request
of a party or when the Administrator, or the Hearing Officer,
believes it necessary or appropriate, a prehearing conference shall
be held, as close to the time of hearing as is reasonable under the
circumstances, to address the following matters:
(A)
simplification
of issues; (B)
the final
list of witnesses and exhibits to be utilized at the hearing;
(C)
admissions
and stipulations of fact;
(D)
stipulations regarding admission and authenticity of documents;
(E)
requests for official notice;
(F)
discovery disputes;
(G)
pending motions; and
(H)
other matters that will promote the orderly and prompt conduct
of the hearing.
(2)
At the
conclusion of the prehearing conference, a ruling or order shall be
entered reciting the action taken. The order shall control the
subsequent course of the action unless modified by a subsequent
order. The order shall be modified only to prevent manifest
injustice.
(f) Failure to appear or
participate.
Failure to participate and cooperate in the preparation of a scheduling
order or prehearing conference order, failure to comply with a
scheduling order or prehearing conference order, failure to appear at
any hearing or conference, failure to appear substantially prepared, or
failure to participate in good faith may result in any of the following
sanctions:
(1)
striking of any
pleading; (2)
a preclusion
order; (3)
staying the
proceeding; (4)
default
judgment; or (5)
such other order
as the Administrator, or the Hearing Officer, may deem just and
appropriate.
(g) Post prehearing conference.
If additional
exhibits are discovered after the prehearing conference order is issued
or after the date final documents and exhibits are exchanged, the party
intending to use them shall immediately notify all other parties and
furnish copies of the additional exhibits to such parties. If additional
witnesses are discovered, all other parties shall be notified
immediately and furnished the nature of the testimony along with the
names and addresses of the witnesses. These additional exhibits or the
testimony of the additional witnesses shall not be admitted at the
hearing without the agreement of all parties or without a showing to the
Administrator, or the Hearing Officer, that manifest injustice would be
created if the exhibit or witness testimony were not permitted.
(h) Service and filing
of papers. Service
of papers upon a party shall be made by personal delivery, regular first
class mail, facsimile transmission or electronic mail. All papers
required to be served by a party shall be filed with the Administrator
within the applicable time for service. When a Hearing Officer is
appointed, a person making a filing with the Administrator shall
promptly provide to the Hearing Officer a copy of such filing. Papers
filed with the Administrator shall be accompanied by a certificate
stating the name of the person or persons served, the date of service,
the method of service and the mailing address, facsimile telephone
number or electronic mail address to which service was made, if not made
in person.
(i) Signature
and certification.
Every filing of a party
represented by counsel shall be signed by at least one counsel of record
and shall state that counsels business address and telephone number. A
party who is not represented by counsel shall sign his individual name
and state his address and telephone number on
every filing. The signature of a counsel or party shall constitute a
certification that:
(1) the person signing the filing has read
the filing;(2)
to
the best of his knowledge, information, and belief, formed after
reasonable inquiry, the filing is well grounded in fact and is
warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law; and the filing
is not made for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of adjudication;
and
(3)
If
a filing is not signed, the Administrator, or the Hearing Officer,
shall strike the filing, unless it is signed promptly after the
omission is called to the attention of the party making the filing.
(j)
Computation of time.
A paper is filed when it is received by the Administrator. Unless
otherwise specifically provided by the Securities Act or this
Subchapter, computation of any time period prescribed by this
Subchapter, or by an order of the Administrator or the Hearing Officer,
begins with the first day following the act or event that initiates the
time period. The last day of the time period so computed is included
unless it is a Saturday, Sunday, state holiday, or any other day when
the Departments office is not open for public business, in which event
the period runs until the end of the next business day. If a notice or
other filing is served by mail and the party served is entitled or
required to take some action within a prescribed time period after
service, the date of mailing is the date of service, and three (3) days
shall be added to the prescribed time period.
660:2-9-4. Authority to subpoena witnesses
(a) Subpoenas. Any
party to a hearing shall have the right to have subpoenas issued to
require the attendance and testimony of witnesses at a designated time
and place, or to require the production of documents and tangible items
in the possession or under the control of the witness at a designated
time and place. A party requesting the issuance of a subpoena shall
submit the proposed subpoena in writing to the Administrator or the
Hearing Officer, The proposed subpoena shall contain the name and
address of the person to be subpoenaed; the name, address and telephone
number of the party requesting the subpoena; and if the production of
documents or tangible items is sought, a particular description of such
documents or tangible items. Where it appears to the Administrator, or
the Hearing Officer, that the subpoena sought may be unreasonable,
oppressive, excessive in scope, unduly burdensome, or not relevant, he
may, in his discretion, as a condition precedent to the issuance of the
subpoena, require the party seeking the subpoena to show the general
relevance and reasonable scope of the testimony or other evidence
sought. If after consideration of all the circumstances, the
Administrator, or the Hearing Officer, determines that the subpoena or
any of its terms is unreasonable, oppressive, excessive in scope, unduly
burdensome or not relevant, he may refuse to issue the subpoena, or
issue the subpoena only upon such conditions as fairness requires.
(b) Service. Service of the
subpoena shall be by personal delivery or by certified mail with a
return receipt requested and delivery restricted to the person named in
the subpoena. The party requesting the subpoena shall be responsible
for, and bear the cost of, service. Appropriate service shall be made at
least three (3) calendar days before the person is required to appear.
(c) Return of service. The party
requesting the subpoena shall promptly file a return of service with the
Administrator including a certificate signed by the person making
service.
(d) Objection to subpoena. A person who
has been served with a subpoena may object to the subpoena by filing a
motion to quash with the Administrator within ten (10) days of service
of the subpoena or by the date the person is ordered to appear,
whichever is earlier.
(e) Enforcement of subpoenas.
(1)
If a person under
subpoena fails to appear as required, or fails to produce the
documents or tangible items set forth in the subpoena, a party may
apply to the Administrator for enforcement of the subpoena.
(2) An
application to the Administrator for enforcement of a subpoena shall
be made immediately upon the failure to comply with the subpoena or
within such other time period as the Administrator may establish.
(3)
Upon a timely
request by a party for enforcement of a subpoena, the Administrator
may apply to the district court of Oklahoma County or the district
court in any other county where service can be obtained to enforce
the subpoena as authorized by the Securities Act.
(f) Fees.
Non-party witnesses
subpoenaed pursuant to this section shall be paid the same fees and
mileage as are paid witnesses in the courts of the state of Oklahoma.
Such fees shall be paid by the party requesting that the subpoena be
issued at the time their testimony is completed.
660:2-9-5. Representation
(a) Right to counsel. Any party shall have the right to
appear in person and by counsel, provided, however, that such counsel
representing the party must be duly licensed to practice law by the
Supreme Court of Oklahoma. Such counsel may be present during the giving
of evidence, may have a reasonable opportunity to examine and inspect
all documentary evidence, may examine witnesses and may present evidence
in his client's behalf.
(b) Notice of appearance. An attorney representing a
party shall promptly file a notice of appearance with the Administrator.
The notice of appearance shall contain all of the following:
(1) the attorneys name, address, telephone number,
and bar number;
(2) the firm name, address, and telephone number if
the attorney is a member of a firm; and
(3) the name, address, and telephone number of the
person represented.
(c) Service on attorney. After a notice of appearance
has been filed, service of all papers may be made upon the attorney or
firm of record and shall be effective as service upon the person
represented.
660:2-9-6. Conduct of individual
proceeding
(a)
Order of proceeding. The hearing shall
proceed as follows:
(1) The Administrator, or
the Hearing Officer, shall call the hearing to order;
(2) the Administrator, or
the Hearing Officer, shall briefly explain the purpose and nature of the
hearing;
(3) the Administrator, or
the Hearing Officer, may allow the parties to present preliminary
matters;
(4) the Administrator, or
the Hearing Officer, may allow the parties to make opening statements;
(5) the Administrator, or
the Hearing Officer, shall state the order of presentation of evidence;
(6) witnesses shall be
sworn or put under affirmation to tell the truth; and
(7)
the
Administrator, or the Hearing Officer, may allow the parties to present
summations and closing argument.
(b) Rules of evidence.
The rules of
evidence need not be strictly followed or observed by the Administrator,
or the Hearing Officer, during the hearing in order to obtain a full and
fair disclosure of facts relevant to the matters at issue. However, the
admissibility of evidence shall be governed by the provisions of Section
310 of the Administrative Procedures Act.
(c) Official notice.
Notice may be taken
by the Administrator, or the Hearing Officer, of judicially cognizable
facts. In addition, notice may be taken of generally recognized
practices, procedures and facts relating to the securities industry.
Parties shall be notified either before or during the hearing of the
material noticed and they shall be afforded an opportunity to contest
the material so noticed. The Administrator, or the Hearing Officer,
shall utilize his experience, technical competence and specialized
knowledge in evaluating the evidence presented.
(d) Examination of witnesses.
(1)
Witnesses shall testify
under oath or affirmation. If the Administrator, or the Hearing
Officer, determines that a witness is hostile or unresponsive, the
Administrator, or the Hearing Officer, may authorize the party
calling the witness to proceed as if the witness were under
cross-examination. (2)
A party may
conduct direct examination or cross-examination of a witness without
strict adherence to formal rules of evidence, particularly, the
rules on hearsay, in order to obtain a full and fair disclosure of
facts relevant to the matters at issue.
(3) Upon
request by any party, the Administrator, or the Hearing Officer, may
exclude witnesses other than parties from the hearing room when
those witnesses are not testifying. A party that is not a natural
person may designate an individual as its representative to remain
in the hearing room, even though the individual may also be a
witness. An expert witness who is to render an opinion based on the
testimony given at the hearing may remain in the hearing room during
all testimony. The Administrator, or the Hearing Officer, may order
the witnesses, parties, their counsel, and any person under their
direction not to disclose to any sequestered witness the substance
of the testimony, exhibits, or other evidence introduced during the
absence of the witness.
(4)
No witness shall testify by telephone or other
electronic means unless by agreement of the parties.
660:2-9-7. Record of individual
proceeding
(a) Requirement to record.
Oral proceedings
shall be electronically recorded. Copies of the recordings shall be
provided by the Department at the request of any party to the
proceeding. Costs of transcription of the recordings shall be borne by
the party requesting transcription and shall be paid directly to the
person performing the transcription. Parties to any proceeding may have
the proceedings recorded and transcribed by a court reporter at their
own expense.
(b) Content of record.
The record in any
hearing shall include the following:
(1) all pleadings, motions, intermediate rulings
and orders;
(2)
all evidence
received or considered, including a statement of matters officially
noted;
(3)
questions and
offers of proof, objections and rulings thereon;
(4)
proposed
findings of fact, conclusions of law, and exceptions;
(5)
the proposed
order of the Hearing Officer;
(6)
all other
evidence or data submitted to the Administrator, or the Hearing
Officer, in connection with their consideration of the case provided
all parties have had access to such evidence; and
(7)
the final order
of the Administrator.
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 5:00 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.
Such request shall be accompanied by the fees set forth in 660:2-11-7.
All record inspection forms must be completed by the person requesting
the record and signed by the individual making the request. The Record
Custodian may demand reasonable identification of any person requesting
a record.
(b) Place of inspection.
All inspections of public records shall be performed in the offices of
the Department under the supervision of the Record Custodian.
(c) Identification of
records. A written request for inspection of a record shall
reasonably describe the record sought. In instances where the person
requesting the record cannot provide sufficient information to identify
a record, the Record Custodian shall assist in making such
identification.
(d) Delay or denial of
requests for inspection. If the record requested is not available
for inspection at the time requested, within three (3) business days
following the day the request for inspection is received by the Record
Custodian, the Record Custodian shall notify the person requesting the
record:
(1) that the record will be
available for inspection at a later time by returning Form OAD 26
- RECORD INSPECTION DELAY NOTICE; or
(2) that the record will not
be available for inspection, by returning to the person requesting the
record a copy of Form OAD 27 - RECORD INSPECTION DENIAL.
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 660:2-11-7. All record copy forms
must be completed by the person requesting the record and signed by the
individual making the request. The Record Custodian may demand
reasonable identification of any person requesting a record.
(b) Responsibility for
making copies. All copies of public records shall be performed by
the Record Custodian in the offices of the Department except where the
Record Custodian determines that the size or the volume of records to be
copied warrants sending the record outside the Department for copying,
in which event the copies shall be made at a place selected by the
Record Custodian and under the supervision of the Record Custodian.
(c) Identification of
records. A written request for copies of a record shall reasonably
describe the record sought. In instances where the person requesting the
copies cannot provide sufficient information to identify a record, the
Record Custodian shall assist in making such identification.
(d) Delay or denial of
requests for copies. If the record requested is not available for
copying at the time requested, within three (3) business days following
the day the request for copies is received by the Record Custodian, the
Record Custodian shall notify the person requesting the copies:
(1) that the record will be
available for copying at a later time by returning Form OAD 29 -
RECORD COPY DELAY NOTICE; or
(2) that the record will not
be available for copying, by returning to the person requesting the
record a copy of Form OAD 30 - RECORD COPY DENIAL.
660:2-11-7. Fees
(a) Amounts payable. The following are the fees that
shall be charged by the Department for copying and/or mechanical
reproduction of public records and for the search for public records
requested by the public pursuant to the Open Records Act and Section
1-612 of the Securities Act; provided, however, no record search and/or
copying charge shall be assessed against officers or employees of the
Department who make requests which are reasonably necessary to the
performance of their official duties:
(1) Inspection fees. No fee shall be charged for
inspection of a public record in the offices of the Department.
(2) Copying fees. The following fees shall be charged
for copies of public records:
(A) 8 1/2" by 14" or smaller - $ .25 per page
(B) Larger than 8 1/2" by 14" - $1.00 per page
(C) Certified copy 8 1/2" by 14" or smaller - $1.00
per page
(D) Certified copy larger than 8 1/2" by 14" -
$2.00 per page
(3) Fee for mechanical reproduction. For copying any
public record which cannot be reproduced by photocopying, such as a
computer printout or a blueprint, or where the size of the record to
be copied warrants sending the record outside for copying, the person
requesting the record shall be charged the actual cost to the
Department of such copying, including the cost of labor, materials and
equipment.
(4) Search fee. If the person requesting a record is
using the record solely for a commercial purpose, a search fee shall
be charged equal to $20.00 per hour for the time spent by employees in
retrieving the record.
(b) Prepayment of fees. The Record Custodian may
require prepayment of estimated fees for requests for public records and
shall require prepayment of a fee whenever the estimated amount exceeds
$200.00. The prepayment amount shall be an estimate of the costs of
copying, mechanical reproduction and/or searching for the record. Any
overage or underage in the prepayment amount shall be settled prior to
producing the requested record or delivering the copy or mechanical
reproduction of the record to the person requesting the record.
SUBCHAPTER 13. DECLARATORY
RULINGS AND INTERPRETIVE OPINIONS
Section
660:2-13-1. Opinions
660:2-13-1. Opinions
The Administrator and/or Commission may honor requests
from interested persons for interpretive opinions and as to the
applicability of any rule or order, if it be shown that an actual case,
controversy or issue is in contemplation and that unreasonable hardship,
loss or delay would result if the matter were not determined in advance.
The Administrator in his discretion may honor requests from interested
persons for formal interpretive opinions relating to a specific factual
circumstance and no-action positions, including consideration of
waivers, where appropriate and in the public interest, on the basis of
facts stated and submitted in writing, with respect to the provisions of
the Securities Act or any rule or statement of policy adopted
thereunder, provided such requests satisfy and conform to the following
requirements:
(1) Such requests shall be in writing and shall
include or be accompanied by all information and material required by
any statute, rule or statement of policy under which an exception or
exemption may be claimed, including but not limited to, copies of
prospectuses or offering circulars if applicable or appropriate.
(2) An original and one copy of the request letter
itself shall be submitted and the name of the entity for whom the
request is being made along with the specific subsection of the
particular statute or the particular rule or statement of policy to
which the letter pertains shall be indicated in the upper right-hand
corner of the letter.
(3) The letter should contain a brief narrative of
the fact situation and should set out all of the facts necessary to
reach a conclusion in the matter; however, such narratives should be
concise and to the point.
(4) The names of the company or companies,
organization or organizations and all other persons involved should be
stated and should relate and be limited to a particular factual
circumstance. Letters relating to unnamed companies, organizations or
persons or to hypothetical situations will not warrant a formal
response.
(5) Every such request shall include or be
accompanied by a manually signed opinion of legal counsel which
briefly and concisely states counsel's understanding, counsel's
opinion in the matter, which may be expressed tentatively or
conditioned upon concurrence by the Administrator, and the basis for
such opinion.
(6) Each request for a no-action position and/or
interpretive opinion letter shall be accompanied by payment of a fee
in the amount specified in Section 1-612 of the Securities Act.
CHAPTER 3. PROCEDURES FOR THE
OKLAHOMA TAKE-OVER
DISCLOSURE ACT OF 1985
[RESERVED]
CHAPTER 4. PROCEDURES FOR THE
OKLAHOMA SUBDIVIDED LAND SALES CODE
[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
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
660:6-3-2. Forms to file a
complaint
(a) Form. The following
form is used to file a complaint with the Department: OEN-002 --
Complaint Form
(b) Obtaining form. The
form listed in Subsection (a) of this Section may be obtained from the
Department.
SUBCHAPTER 5. FORMS USED UNDER THE SECURITIES ACT
Section
660:6-5-1. Forms for registration or exemption of securities
[AMENDED]
660:6-5-2. Licensing forms [AMENDED]
660:6-5-1. Forms for registration or exemption of
securities
(a) The following is a list of forms accepted by the
Department in connection with the registration or exemption of
securities under the Securities Act:
(1) U-1 -- Uniform Application to Register Securities
(2) U-2 -- Uniform Consent to Service of Process
(3) U-2A -- Uniform Form of Corporate Resolution
(4) U-7 -- Small Corporate Offerings Registration
Form
(5) NF -- Uniform Investment Company Notice Filing
(6) USR-1 -- Uniform Sales Report for Issuers
(7) Form D -- Notice of Sale of Securities Pursuant
to Regulation D
(8) Oklahoma Accredited Investor Exemption
Supplemental Information Form
(b) Obtaining forms.
(1) Copies of forms listed in (a)(1) through (6) of
this Section, can be obtained from The North American Securities
Administrators Association, Inc. at 10 G Street Northeast, Suite 710,
Washington, D.C. 20002 or on the NASAA web site at http://www.nasaa.org/.
(2) Copies of Form D may be obtained from The Public
Reference Branch of the main office of the SEC, 450 5th Street, N.W.,
Washington, D.C. 20549, from any of the regional or branch offices of
the SEC, or on the SEC web site at http://www.sec.gov/.
(3) Copies of the form listed in (a)(8) of this
Section can be obtained from the Department.
(4) The referenced forms are also available from the
Department's website at http://www.securities.ok.gov/.
660:6-5-2. Licensing forms
(a) The following is a list of forms used by the
Department in connection with licensing persons as broker-dealers,
agents, principals, issuer agents, investment advisers or investment
adviser representatives, under the Securities Act:
(1) BD -- Uniform Application for Broker-Dealers,
Investment Advisers and Agents
(2) ADV -- Uniform Application for Investment Adviser
Registration
(3) U-2 -- Uniform Consent to Service of Process
(4) U-2A -- Uniform Form of Corporate Resolution
(5) U-4 -- Uniform Application for Securities
Industry Registration or Transfer
(6) U-5 -- Uniform Application for Termination of
Registration
(7) U-10 -- Uniform Examination Request for Non-NASD
Candidates
(8) OBD-001 -- Applicant/Management Certification for
Non-NASD Principals
(9) OBD-008 -- Application for Renewal of Non-NASD
Broker-Dealer Registration
(10) OBD-015 -- Application for Renewal of Issuer
Agent Registration
(11) OBD-016 -- Application for Renewal of Non-NASD
Broker-Dealer Principal Registration
(12) OBD-018 -- Applicant/Management Certification
for Issuer Agents
(13) OBD-019 -- Application for Renewal of Non-NASD
Broker-Dealer Agent Registration
(14) OBD-020 -- NonBranch Sales Office Form
(b) Obtaining forms.
(1) Copies of the forms listed in (a)(1) and (2) of
this Section, can be obtained from the SEC, 450 5th Street, N.W.,
Washington, D.C. 20549 or from any of the regional or branch offices
of the SEC.
(2) Copies of the forms listed in (a)(1), (5) and (6)
of this Section, can be obtained by contacting the NASD, 9509 Key West
Avenue, Rockville, Maryland 20850, 301-590-6500.
(3) Copies of forms listed in (a)(3) through (7) of
this Section, can be obtained from The North American Securities
Administrators Association, Inc. at 10 G Street, Northeast, Suite 710,
Washington, D.C. 20002.
4) Copies of forms listed in (a)(8) through (14) of
this Section, can be obtained from the Department.
(5) Many of the referenced forms are available from
the Department's website at http://www.securities.ok.gov/.
SUBCHAPTER 7. FORMS USED UNDER THE
TAKE-OVER ACT
[RESERVED]
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
(4) LRF-627 -- Registrants
Semi-Annual Report
(b) Obtaining forms. The
forms listed above may be obtained from the Department.
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]
CHAPTER 11. OKLAHOMA UNIFORM
SECURITIES ACT OF 2004
| Subchapter |
Section |
| 1. General
provisions
..
... |
660:11-1-1 |
| 3. Investment Certificate
Issuers
.
. |
660:11-3-1 |
| 5. Broker-dealers and agents ..................
|
660:11-5-1 |
| 7. Investment advisers and investment adviser
representatives
...
.. |
660:11-7-1 |
| 9. Registration of securities ..................
... |
660:11-9-1 |
| 11. Exemptions from securities registration .................
. |
660:11-11-1 |
| 13. Sales literature ....................
. |
660:11-13-1 |
| 15. Miscellaneous provisions ..................
.. |
660:11-15-1 |
SUBCHAPTER 1. GENERAL
PROVISIONS
Section
660:11-1-1. Purpose
660:11-1-2. Statutory
citations
660:11-1-3. Definitions
660:11-1-4.
[RESERVED]
660:11-1-5. [RESERVED]
660:11-1-6. Amendments
660:11-1-1. Purpose
The provisions of this chapter have been adopted for the
purpose of carrying out the provisions of the Oklahoma Uniform Securities
Act of 2004 including, but not limited to, provisions governing the offer,
sale and issuance of securities.
660:11-1-2. Statutory citations
Citations to statutes in this chapter refer to the most
recent codification of the Oklahoma Uniform Securities Act of 2004 in
Title 71 of the Oklahoma Statutes.
660:11-1-3. Definitions
Unless the context otherwise requires, or unless defined
in this section or in 660:11-5-2, terms used in this chapter, if defined
in the Securities Act, shall have the meaning as defined in the Securities
Act. The following words and terms, when used in this chapter, shall have
the following meaning, unless the context clearly indicates otherwise:
"Authorized to do business in Oklahoma" means
authorized to do business in Oklahoma pursuant to the Oklahoma Uniform
Securities Act of 2004.
"Audited financial statements" means "Certified
financial statements."
"Certified financial statements" means financial
statements prepared in accordance with generally accepted accounting
principles and examined by Independent accountants in accordance with
generally accepted auditing standards, accompanied by an opinion as
described in 660:11-15-1.
"CFR" means the Code of Federal Regulations.
"CRD" means the NASAA/NASD Central Registration
Depository System.
"Date of filing" means the date on which a
proper registration statement is filed for purposes of determining the
dates of the statements of financial condition to be filed with a
registration statement. If amendments to a registration statement are
necessary to comply fully with the registration requirements, "date of
filing" means the date on which the last amendment is filed.
"FDIC" means the Federal Deposit Insurance
Corporation.
"Financial statements" means, but is not limited
to, the statement of financial condition, statement of income, and
statement of changes in stockholders or owners equity, as well as all
related footnotes and supporting schedules applicable thereto, prepared
in accordance with generally accepted accounting principles.
"Independent accountants" means independent
certified public accountants. The concept of independence shall be that
promulgated by the American Institute of Certified Public Accountants.
"NASAA" means the North American Securities
Administrators Association.
"NASD" means the National Association of
Securities Dealers, Inc.
"NASDR" means the National Association of
Securities Dealers Regulation, Inc.
"1933 Act" means the Securities Act of 1933, as
amended.
"1934 Act" means the Securities Exchange Act of
1934, as amended.
"1940 Act" means the Investment Company Act of
1940, as amended.
"Predecessor of an issuer" means:
(A) a person the major portion of whose assets have
been acquired directly or indirectly by the issuer, or
(B) a person from which the issuer acquired directly
or indirectly the major portion of its assets.
"Promotional or developmental stage company"
means an issuer for which any of the following conditions exist:
(A) the company and any predecessors were formed
within the twelve-month period ending on the date of the filing of the
application for registration;
(B) the company has no significant revenues from the
line of business being undertaken with the offering proceeds;
(C) the principal operations to be conducted with
offering proceeds have not commenced or have been commenced within the
twelve-month period ending on the date of the filing of the
application for registration; or
(D) the principal operations to be conducted with
offering proceeds have commenced, but the issuer has not demonstrated
profitable operations for two of the three fiscal years prior to
registration, evidenced by net income determined in accordance with
generally accepted accounting principles after taxes, and excluding
extraordinary items.
"Prospectus" means a prospectus in a form and
containing such information as may be required by the Administrator,
including a prospectus filed under the 1933 Act or an offering circular
used in connection with an exempt security or transaction regardless of
the designation of the document (i.e., prospectus, offering circular,
memorandum, etc.).
"Registration statement" means an application
for registration of securities under Sections 1-303 and 1-304 of the
Securities Act and all documents and exhibits related thereto, including
a Prospectus.
"SEC" means the United States Securities and
Exchange Commission.
"Securities Act" means the most recent
codification of the Oklahoma Uniform Securities Act of 2004 in Title 71
of the Oklahoma Statutes.
"SIPC" means the Securities Investor Protection
Corporation.
660:11-1-4. [RESERVED]
660:11-1-5. [RESERVED]
660:11-1-6. Amendments
The Administrator may by order amend the provisions of
this chapter to conform references to the Securities Act or to rules
promulgated thereunder to numerical redesignations occasioned by
legislative or rulemaking activities.
SUBCHAPTER 3. INVESTMENT
CERTIFICATE ISSUERS
PART 1. GENERAL PROVISIONS
Section
660:11-3-1. Definitions
PART 3. REPORTING AND ACCOUNTING REQUIREMENTS
660:11-3-21. Loans
660:11-3-22. Valuation of other
assets
660:11-3-23. Reserve against bad debts
660:11-3-24. Books and
records
660:11-3-25. Reports
PART 5. MISCELLANEOUS PROVISIONS
660:11-3-31. Qualifications of conservator or
liquidator
660:11-3-32. Acknowledgment
660:11-3-33. Examination
standards
PART 1. GENERAL PROVISIONS
660:11-3-1. Definitions
The following words and terms, when used in this
subchapter, shall have the following meaning, unless the context clearly
indicates otherwise:
"Allowance" means an allowance for loan losses
or a reserve against bad debts.
"Net loans outstanding" means total gross loans
outstanding less unearned discount.
"Nonperforming loan" means a loan over 90 days
past due with respect to principal and/or interest.
"Uncollectible" means the potential for
collection is virtually nonexistent.
"Worthless" means lacking value.
PART 3. REPORTING AND ACCOUNTING REQUIREMENTS
660:11-3-21. Loans
(a) Classifications. Each investment certificate issuer
shall observe the following prescribed classification standards of
loans:
(1) Loss - all, or a portion, of the loan considered
uncollectible or worthless.
(2) Doubtful - all, or a portion, of the loan the
ultimate collection of which is doubtful and in which a substantial
loss is probable, but not as yet definitely ascertainable in amount.
(3) Substandard - all, or a portion, of the loan not
classified as doubtful or loss and which involves more than normal
risk due to the financial condition or unfavorable record of the
borrower, insufficiency of security, or other factors.
(4) Special mention - loans not warranting
classification as substandard, doubtful, or loss but which are of an
unusual nature carrying more than the usual risk, and should have the
careful attention of management.
(b) Appraisals. Each investment certificate issuer
shall perform an in-house appraisal or obtain an appraisal by a licensed
independent appraiser of collateral at the time of the origination of
each loan. Said appraisal shall be updated by a licensed independent
appraiser upon the Administrator's written request upon a change in the
economic or market conditions or if the loan becomes nonperforming.
(c) Aging schedules.
(1) The provisions of this subsection shall apply to
determining the age of loans. Loans shall be aged on the basis of
contract terms in effect at the close of business each month. Account
balances not in current status shall be classified in the following
categories (assuming monthly payments):
(A) One installment or a portion in excess of 5% of
an installment due and unpaid 0 to 30 days past due.
(B) Two installments or one and a portion in excess
of 5% of an installment due and unpaid 31 to 60 days past due.
(C) Three installments or two and a portion in
excess of 5% of an installment due and unpaid 61 to 90 days past
due.
(D) Four installments or three and a portion in
excess of 5% of an installment due and unpaid over 90 days past due.
(2) Amortizing real estate loans are to be reported
as past due when the borrower is in arrears two or more monthly
payments. Such obligations with payments scheduled other than monthly
are to be reported as past due when one scheduled payment is due and
unpaid for 30 days or more.
(3) Single payment and demand notes providing for the
payment of interest at stated intervals are to be reported as past due
after one interest payment is due and unpaid for 30 days or more.
(4) Single payment notes providing for the payment of
interest at maturity are to be reported as past due after maturity if
interest or principal remains unpaid for 30 days or more.
(d) Interest. Loans are to be reported as being in nonaccrual status if:
(1) said loans are maintained on a cash basis because
of deterioration in the financial position of the borrower;
(2) payment in full of interest or principal is not
expected; or
(3) principal or interest has been in default for a
period of 90 days or more unless the obligation is both well secured
and in the process of collection. A debt is "well secured" if it is
secured (1) by collateral in the form of liens on or pledges of real
or personal property, including securities, that have a realizable
value sufficient to discharge the debt in full, or (2) by the guaranty
of a financially responsible party. A debt is "in the process of
collection" if collection of the debt is proceeding in due course
either through legal action, including judgment enforcement
procedures, or, in appropriate circumstances, through collection
efforts not involving legal action which are reasonably expected to
result in repayment of the debt or in its restoration to a current
status.
(e) Charge-offs. Each investment certificate issuer
shall charge-off the whole or any part of a loan at such times that said
loan is classified by the Administrator as "loss" as defined in (a)
above.
660:11-3-22. Valuation of other assets
(a) Real property. Real property shall be recorded on
the balance sheet in accordance with generally accepted accounting
principles. Each investment certificate issuer shall maintain an
appraisal of all real property recorded on the balance sheet. Said
appraisal shall be updated by a licensed, independent appraiser upon the
Administrator's request if a change in the economic or market conditions
occur. If said appraisal indicates that the value of the asset is
materially overstated on the balance sheet such that the financial
statements are materially misstated, said asset shall be written down to
market value upon the written request of the Administrator.
(b) Other assets. All other assets of the investment
certificate issuer shall be recorded on the balance sheet in accordance
with generally accepted accounting principles.
(c) Charge-offs. Each investment certificate issuer
shall charge-off the whole of any other asset, including real property,
at such time that said asset is deemed to be lacking in value by the
Administrator.
660:11-3-23. Reserve against bad debts
(a) Requirement to maintain reserve. Each investment
certificate issuer shall at all times maintain a reserve against bad
debts, that is, an Allowance for Loan Losses, in an amount equal to two
percent (2%) of the total loans outstanding.
(b) Determination of amount of reserve. As of the end
of each quarter, the management of each investment certificate issuer
shall evaluate the collectibility of the loan portfolio to bring the
Allowance, by means of a charge or credit, to a level adequate to absorb
anticipated loan losses. Any recoveries during the reporting period
should be credited to the Allowance, and any charge-offs should be
charged to the Allowance. With respect to those loans classified as
"doubtful" in accordance with 660:11-3-21, the Allowance shall be
increased by an amount equal to fifty percent (50%) of the amounts
classified as "doubtful." With respect to those loans classified as
"substandard" in accordance with 660:11-3-21, the Allowance shall be
increased by ten percent (10%) of the amounts of the outstanding loans
classified as "substandard."
660:11-3-24. Books and records
(a) Maintenance of books and records. Each investment
certificate issuer shall maintain its books and records in such a manner
that said books and records will facilitate preparation of financial
statements in accordance with generally accepted accounting principles.
Said books and records shall be maintained in sufficient detail to
afford an analysis of all transactions.
(b) Financial statements. Each investment certificate
issuer shall prepare a balance sheet and statement of income at the
close of business on the last day of each month. Said financial
statements shall be prepared not later than fifteen (15) business days
after the end of the accounting period.
660:11-3-25. Reports
(a) Reports required. Each investment certificate
issuer shall prepare and file with the Administrator quarterly reports
for the quarters other than the quarter ending the fiscal year. Each
report shall include the following:
(1) balance sheet and statement of income at the
close of business on the last day of the quarter covered by said
report;
(2) a schedule of the loans classified as loss,
doubtful, substandard or special mention pursuant to 660:11-3-21, to
include the loan balance amount of accrued interest and value of
collateral for each loan appearing thereon; and
(3) aging schedules as prepared in accordance with
660:11-3-21.
(b) When to file. Each report shall be submitted to the
Administrator within thirty (30) days of the end of the quarter for
which the report applies.
PART 5. MISCELLANEOUS PROVISIONS
660:11-3-31. Qualifications of conservator or
liquidator
A conservator or liquidator, who may be the Administrator
of the Department, a member of his staff, or an independent party,
appointed under Section 1-308.I.2. of the Securities Act shall be of legal
age, of good moral character, a resident of the state of Oklahoma and
competent to perform the duties of conservator or liquidator.
660:11-3-32. Acknowledgment
The purpose of Section 1-308.C of the Securities Act is
to aid investment certificate issuers in applying for insurance by the
FDIC. The prior issuance and continued effectiveness of a registration
order shall constitute the written acknowledgment addressed by Section
1-308.C of the Securities Act. A formal acknowledgment for purposes of
seeking insurance by the FDIC will be issued by the Administrator upon
receipt of a written request therefor. Said request shall be accompanied
by a copy of the application filed or to be filed with the FDIC. Upon
obtaining membership in the FDIC, an investment certificate issuer shall
not be subject to the prospectus preparation and delivery requirements set
forth in Section 1-304.E of the Securities Act.
660:11-3-33. Examination standards
Examinations made by the Administrator or designated
members of his staff may be performed in reliance upon the American
Institute of Certified Public Accountants industry audit guides for
financial institutions and federal regulatory guidelines for financial
institutions.
SUBCHAPTER 5. BROKER-DEALERS AND
AGENTS
PART 1. GENERAL PROVISIONS
Section
660:11-5-1. Purpose
660:11-5-2. Definitions
PART 3. LICENSING PROCEDURES
660:11-5-11. Initial registration
660:11-5-12.
Renewal
660:11-5-13. Agent transfer
660:11-5-14. Agent
termination
660:11-5-15. Categories of registration
660:11-5-16.
Qualification examination requirements
660:11-5-17. Net capital for
broker-dealers
660:11-5-18. [RESERVED]
660:11-5-19. Piecemeal
filings
660:11-5-20. Cross-border licensing exemption
PART 5. REPORTING REQUIREMENTS
660:11-5-31. Post-registration reporting requirements
PART 7. RECORD KEEPING AND ETHICAL STANDARDS
660:11-5-41. Books and records requirements for
broker-dealers
660:11-5-42. Standards of ethical practices for
broker-dealers and their agents
660:11-5-42.1. Standards of ethical
practices--issuer agents
660:11-5-43. Examination of
broker-dealers
660:11-5-44. [RESERVED]
660:11-5-45. Financial
statements for broker-dealers
PART 1. GENERAL PROVISIONS
660:11-5-1. Purpose
The rules in this subchapter have been adopted to provide
procedures for complying with the provisions of Sections 1-401 through
1-402 of the Securities Act relating to the licensing of broker-dealers
and agents under the Securities Act.
660:11-5-2. Definitions
In addition to the terms defined in 660:11-1-3, the
following words and terms when used in this subchapter shall have the
following meaning, unless the context clearly indicates otherwise:
"Branch office" means any business location of a
broker-dealer identified to the public or customers by any means as a
location at which a securities business is conducted on behalf of the
broker-dealer, excluding any location identified solely in a telephone
directory line listing or on a business card or letterhead, which
listing, card, or letterhead also sets forth the address and telephone
number of the office of the broker-dealer responsible for supervising
the activities of the identified location.
"Complaint" means and includes any written
statement of a customer or any person acting on behalf of a customer
alleging a grievance involving the activities of those persons under the
control of the broker-dealer in connection with the solicitation or
execution of any transaction or the disposition of securities or funds
of that customer.
"Completion of the transaction" means:
(A) In the case of a customer who purchases a
security through or from a broker-dealer, except as provided in (B),
the time when such customer pays the broker-dealer any part of the
purchase price, or, if payment is effected by bookkeeping entry, the
time when such bookkeeping entry is made by the broker-dealer for any
part of the purchase price;
(B) In the case of a customer who purchases a
security through or from a broker-dealer and who makes payments
therefor prior to the time when payment is requested or notification
is given that payment is due, the time when such broker-dealer
delivers the security to or into the account of such customer;
(C) In the case of a customer who sells a security
through or to a broker-dealer, except as provided in (D), if any
security is not in the custody of the broker-dealer at the time of
sale, the time when the security is delivered to the broker-dealer,
and if the security is in the custody of the broker-dealer at the time
of sale, the time when the broker-dealer transfers the security from
the account of such customer;
(D) In the case of a customer who sells a security
through or to a broker-dealer and who delivers such security to such
broker-dealer prior to the time when delivery is requested or
notification is given that delivery is due, the time when such
broker-dealer makes payment to or into the account of such customer.
"Customer" means any person who, in the regular
course of a broker-dealer's business, has cash or securities in the
possession of such broker-dealer. "Customer" shall not include a
broker-dealer.
"Direct participation programs" mean programs
which provide for flow-through tax consequences regardless of the
structure of the legal entity or vehicle for distribution including, but
not limited to, oil and gas programs, real estate programs, agricultural
programs, cattle programs, condominium securities, Subchapter S
corporate offerings and all other programs of a similar nature,
regardless of the industry represented by the program, or any
combination thereof; excluded from this definition are real estate
investment trusts, tax qualified pension and profit sharing plans
pursuant to Sections 401 and 403(a) of the Internal Revenue Code and
individual retirement plans Section 408 of that code, tax sheltered
annuities pursuant to the provisions of Section 403(b) of the Internal
Revenue Code and any company including separate accounts registered
pursuant to the 1940 Act.
"Investment company and variable contracts
products" means:
(A) redeemable securities of companies registered
pursuant to the 1940 Act;
(B) securities of closed-end companies registered
pursuant to the 1940 Act during the period of original distribution
only; and
(C) variable contracts and insurance premium funding
programs and other contracts issued by an insurance company except
contracts which are exempt securities pursuant to Section 3(a)(8) of
the 1933 Act.
"Municipal securities" mean securities which are
direct obligations of, or obligations guaranteed as to principal or
interest by, a state or any political subdivision thereof, or any agency
or instrumentality of a state or any political subdivision thereof, or
any municipal corporate instrumentality of one of more states, or any
security which is an industrial development bond as defined in Section
3(a)(29) of the 1934 Act.
"Nonbranch sales office" means any business
location of the broker-dealer identified to the public or customers by
any means as a location at which a securities business is conducted on
behalf of the broker-dealer which location is identified solely in a
telephone directory line listing or on a business card or letterhead,
which listing, card, or letterhead also sets forth the address and
telephone number of the office of the broker-dealer responsible for
supervising the activities of the identified location.
"Office" means any location where a
broker-dealer and/or one or more of its agents regularly conduct the
business of handling funds or securities or effecting any transactions
in, or inducing or attempting to induce the purchase or sale, of any
security.
"Option" means any put, call, straddle or other
option or privilege, which is a "security" as defined in Section 2(1) of
the 1933 Act, as amended, but shall not include any tender offer,
registered warrant, right, convertible security or any other option in
respect to which the writer is the issuer of the security which may be
purchased or sold upon the exercise of the option.
"OSJ" or "Office of supervisory
jurisdiction" means any office designated as directly responsible
for the review of the activities of registered agents or associated
persons in such office and/or in other offices of the broker-dealer. An
office of supervisory jurisdiction would be any business location of a
broker-dealer at which one or more of the following functions take
place:
(A) order execution and/or market making;
(B) structuring of public offerings or private
placements;
(C) maintaining custody of customers' funds and/or
securities;
(D) final acceptance (approval) of new accounts on
behalf of the broker-dealer;
(E) review and endorsement of customer orders
pursuant to 660:11-5-42;
(F) final approval of advertising or sales literature
for use by agents of the broker-dealer;
(G) responsibility for supervising the activities of
persons associated with the broker-dealer at one or more other offices
of the broker-dealer.
"Principal" means:
(A) any individual registered with a registered
national securities association as a principal or branch manager of a
member, broker or dealer, or any other person who has been delegated
supervisory responsibility for the firm or its associated persons; or
(B) any person associated with a non-NASD applicant
for registration as a broker-dealer who is or will be actively engaged
in the management of the applicant's securities business, including
supervision, solicitation, conduct of business or training of persons
associated with an applicant for any of these functions, and is
designated as a principal by the broker-dealer applicant.
"Public offering price" shall mean the price at
which the security involved was offered to the public as set forth in
the prospectus of the issuing company.
"Selling group" means any group formed in
connection with a public offering, to distribute all or part of an issue
of securities by sales made directly to the public by or through members
of such selling group, under an agreement which imposes no financial
commitment on the members of such group to purchase any such securities
except as they may individually or collectively elect to do so.
"Selling syndicate" means any syndicate formed
in connection with a public offering, to distribute all or part of an
issue of securities by others or sales made directly to the public by or
through participants in such syndicate under an agreement which imposes
a financial commitment upon the participants in such syndicate to
purchase any of such securities.
"Undertaking for Participation in the NASAA/CRD
Temporary Agent Transfer Program" means the document entitled
"Broker-Dealer Undertaking for Participation in the NASAA/CRD Temporary
Agent Transfer Program" which the employing broker-dealer has executed
and filed with the CRD.
PART 3. LICENSING
PROCEDURES
660:11-5-11. Initial registration
(a) Broker-dealer. Each broker-dealer applying for
initial registration pursuant to Section 1-406 of the Securities Act:
(1) who is contemporaneously applying for NASD
membership or who is an NASD member:
(A) shall file with the CRD:
(i) a completed Form BD, including Schedules A-E;
and
(ii) the filing fee specified in Section 1-612 of
the Securities Act.
(B) shall file with the Department, within 60 days
of becoming registered, a list of the addresses, telephone numbers
and resident agents of all nonbranch sales offices located within
the state of Oklahoma.
(2) who is not a current NASD member shall file with
the Department:
(A) a completed Form BD, including Schedules A-E;
(B) the filing fee specified in Section 1-612 of
the Securities Act;
(C) audited financial statements as required by
660:11-5-45;
(D) documentation of compliance with the minimum
capital requirement set forth in Section 1-406.E of the Securities
Act and 660:11-5-17;
(E) designation, qualification and registration of
a principal as defined in 660:11-5-2 pursuant to (c) of this
section;
(F) a list of the addresses, telephone numbers and
resident agents of all nonbranch sales offices located within the
state of Oklahoma;
(G) a copy of the written supervisory procedures of
the broker-dealer; and
(H) any additional documentation, supplemental
forms and information as the Administrator may deem necessary.
(b) Broker-dealer agent.
(1) Required documents. Each broker-dealer agent
applying for initial registration pursuant to Section 1-406 of the
Securities Act shall file:
(A) a completed Form U-4;
(B) the filing fee specified in Section 1-612 of
the Securities Act;
(C) proof of successful completion of the
applicable examinations specified in 660:11-5-16; and
(D) any additional documentation, supplemental
forms and information as the Administrator may deem necessary.
(2) Where to file. An agent applying for registration
with an NASD member shall file the documentation required by (1)(A)
through (C) of this subsection with the CRD and shall file any
additional documentation with the Department. Agents applying for
registration with a non-NASD broker-dealer shall file the required
documentation with the Department.
(c) Broker-dealer principal.
(1) Required documents. Each person applying for
initial registration under the Securities Act as a principal of a
broker-dealer who is not a member of the NASD shall file with the
Department:
(A) a completed Form U-4;
(B) a $50.00 filing fee;
(C) proof of successful completion of the
applicable examinations specified in 660:11-5-16;
(D) an executed Applicant/Management Certification
for Non-NASD Principals Form; and
(E) any additional documentation, supplemental
forms and information as the Administrator may deem necessary.
(2) Effect of registration. Registration under the
Securities Act as a principal of a broker-dealer shall constitute
registration as an agent.
(d) Issuer agent. Agents of issuers applying for
initial registration in the state of Oklahoma pursuant to Section 1-406
of the Securities Act shall file the following with the Department:
(1) a completed Form U-4;
(2) the fee specified in Section 1-612 of the
Securities Act;
(3) proof of successful completion of the applicable
examinations specified in 660:11-5-16;
(4) an executed Applicant/Management Certification
Form; and
(5) any additional documentation, supplemental forms
and information as the Administrator may deem necessary.
(e) Requirement for continued registration.
660:11-5-42, adopted pursuant to Section 1-411.D.13 of the Securities
Act, sets forth the standards of ethical practices for broker-dealers
and their agents. Paragraph (22) of said rule requires that each
broker-dealer establish, maintain and enforce written procedures that
will enable it to supervise properly the activities of each registered
agent to assure compliance with applicable securities laws, rules,
regulations and statements of policy. Therefore, the initial and
continued registration of a broker-dealer that is not an NASD member is
conditioned upon the designation, qualification and registration of a
principal who shall be responsible for the supervision of all agents of
the broker-dealer who are registered under the Securities Act. A
broker-dealer applicant or registrant may apply for registration of more
than one person as a principal of said broker-dealer.
660:11-5-12. Renewal
(a) Broker-dealer. An NASD member shall renew its
registration by submitting the renewal fee specified in Section 1-612 of
the Securities Act to the CRD. A non-NASD member shall renew its
registration by submitting to the Department an Application for Renewal
of Non-NASD Broker-Dealer Registration and the renewal fee specified in
Section 1-612 of the Securities Act.
(b) Broker-dealer agent. Agents of NASD members shall
renew their registrations by submitting the renewal fee specified in
Section 1-612 of the Securities Act to the CRD. Agents of non-NASD
members shall renew their registrations by submitting an Application for
Renewal of Non-NASD Broker-Dealer Agent Registration and the renewal fee
specified in Section 1-612 of the Securities Act to the Department.
(c) Broker-dealer principal. Principals of non-NASD
members shall renew their registrations by submitting an Application for
Renewal of Non-NASD Broker-Dealer Principal Registration and the renewal
fee specified in Section 1-612 of the Securities Act to the Department.
(d) Issuer agent. Issuer agents shall renew their
registrations by submitting an Application for Renewal of Issuer Agent
Registration and the renewal fee specified in Section 1-612 of the
Securities Act to the Department.
660:11-5-13. Agent transfer
An agent who wishes to terminate his employment with
one registered broker-dealer and thereafter commence employment with
another broker-dealer may do so without causing a suspension in the
agent's registration if all of the following conditions are met:
(1) Both the terminating and employing broker-dealers
are members of the National Association of Securities Dealers, Inc.
(2) The transfer is effected in accordance with the
terms and conditions of the NASAA/NASD Central Registration Depository
Temporary Agent Transfer Program.
(3) The employing broker-dealer has executed and
filed an "Undertaking for Participation in the NASAA/NASD Central
Registration Depository TAT Program."
(4) The employing broker-dealer currently is not
subject to an order of the Administrator which would otherwise make
this section unavailable.
660:11-5-14. Agent termination
(a) Filing requirement. Termination notice pursuant to
the requirements of Section 1-408.A of the Securities Act shall be given
by filing within thirty calendar (30) days of termination, a completed
Uniform Termination Notice For Securities Industry Registration, Form
U-5. The Form U-5 for an agent terminating registration with a NASD
member shall be filed with the CRD. The Form U-5 for agents terminating
registration with a non-NASD broker-dealer shall be filed with the
Department.
(b) Responsibility for filing. A completed Form U-5
signed by the employer will be accepted as fulfilling the statutory
requirements of both parties. Upon verification that the Form U-5 has
not been filed by the broker-dealer, the agent shall notify the
Department in writing of said termination.
(c) Effect of failure to file. In the event of
termination, the filing of a future application for registration shall
not be considered complete until compliance with the termination notice
requirements of Section 1-408.A and this section.
660:11-5-15. Categories of registration
(a) Broker-dealers. The Administrator shall register
broker-dealers in accordance with the following categories:
(1) General securities - an applicant whose
activities in the securities business are not limited.
(2) Investment company and variable contracts
products - an applicant whose activities in the securities business
are limited to the solicitation, purchase and/or sale of investment
company and variable contracts products.
(3) Direct participation programs - an applicant
whose activities in the securities business are limited solely to
marketing, on behalf of the issuer, direct participation programs.
(4) Options - an applicant whose activities in the
securities business include transactions in put or call options with
the public.
(5) Municipal securities - an applicant whose
activities in the securities business are limited solely to effecting
transactions in municipal securities.
(6) Multiple categories - an applicant may be
registered in more than one category if qualified to be so registered.
(b) Principals and agents. The Administrator shall
register principals of broker-dealers and agents in accordance with the
following categories of registration as applicable:
(1) General securities principal or agent - an
applicant representing a broker-dealer whose activities in the
securities business are not limited.
(2) Investment company and variable contracts
products principal or agent - an applicant representing a
broker-dealer whose activities in the securities business are limited
to the solicitation, purchase and/or sale of investment company and
variable contracts products.
(3) Direct participation programs principal or agent
- an applicant representing a broker-dealer whose activities in the
securities business are limited to marketing, on behalf of the issuer,
direct participation programs.
(4) Options principal or agent - an applicant
representing a broker-dealer whose activities in the securities
business are limited to transactions in put or call options with the
public.
(5) Municipal securities principal or agent - an
applicant representing a broker-dealer whose activities in the
securities business are limited to effecting transactions in municipal
securities.
(6) Limited agent - corporate securities - an
applicant representing a general securities broker-dealer in the
solicitation, purchase, and/or sale of a security, as that term is
defined in Section 1-102.32 of the Securities Act, however, such
person's activities do not include activities with respect to the
following securities unless such person is separately qualified and
registered in the category or categories of registration related to
these securities:
(A) Municipal securities;
(B) Option securities;
(C) Redeemable securities of companies registered
pursuant to the 1940 Act, except for money market funds; and/or
(D) Direct participation programs.
(7) Issuer agent - an applicant whose activities in
the securities business are limited solely to effecting transactions
for the benefit of an issuer as that term is defined in Section
1-102.19 of the Securities Act.
(8) Multiple categories - an applicant may be
registered in more than one category provided he is qualified to be so
registered. An applicant qualified solely within one category of
registration shall not be qualified to transact business as an agent
in any area not prescribed by said category.
660:11-5-16. Qualification examination
requirements
(a) Examination requirement. Proof of compliance with
the examination requirements of this rule is prerequisite to a complete
filing for registration under the Securities Act.
(b) Examination. Each applicant for registration as a
broker-dealer agent, broker-dealer principal or issuer agent must pass
the applicable examinations for the desired category of registration.
The examinations shall consist of a qualification examination(s)
applicable to the category of registration applied for and a uniform
state law examination. The Administrator adopts the examinations
administered by the NASDR as applicable to each individual registrant by
category of registration as the required examinations.
(c) Limitations on licenses. Without regard to the
category of registration of one's broker-dealer, if any, the activities
of each person registered as a principal or agent are limited to the
corresponding category for which they are qualified by examination,
unless waived, and for which they are registered under the Securities
Act.
(d) Examination categories. Examination categories are
as follows:
(1) General securities or government securities -
NASD members:
(A) Principals--Series 7, 24 or such other
examination(s) determined by the Administrator to be acceptable in
lieu thereof and Series 63 or 66.
(B) Agents--Series 7 and 63 or 66
(2) General securities - Non-NASD Members/Issuers:
(A) Principals--Series 7, 24 or such other
examination(s) determined by the Administrator to be acceptable in
lieu thereof and Series 63 or 66
(B) Agents--Series 7 and 63 or 66
(3) Investment company and variable contract
products:
(A) Principals--Series 6, 26 and 63 or 66
(B) Agents--Series 6 and 63 or 66
(4) Direct participation programs:
(A) Principals--Series 22, 39 and 63 or 66
(B) Agents--Series 22 and 63 or 66
(5) Options:
(A) Principals--Series 4, 7 and 63 or Series 4, 62
and 63 or 66
(B) Agents--Series 7 or 42 and 63 or 66
(6) Municipal securities:
(A) Principals--Series 52, 53 and 63 or 66
(B) Agents--Series 52 and 63 or 66
(7) Limited agent - corporate securities--Series 62
and 63 or 66
(8) Assistant agent - order processing--Series 11 and
63 or 66
(e) Change in series number. Should NASDR examination
series numbers change, the most current examination series applicable to
the category of registration shall apply.
(f) Validity of prior examination scores. The
Department will not recognize for purposes of qualification for
registration under the Securities Act any NASDR examination score which
predates an initial application for registration by more than two (2)
years in the absence of continuous NASD registration since examination.
The Department will not recognize for purposes of qualification for
registration in this state the examination score(s) of any person whose
most recent registration as an agent or principal has been terminated
with the NASD for a period of two (2) or more years immediately
preceding the date of receipt by the Department of a new application for
registration under the Securities Act.
(g) Waiver of examination requirement. The
Administrator may waive the examination requirements on a case-by-case
basis when such action is determined to be consistent with the purposes
fairly intended by the policy and provisions of the Securities Act.
Requests for waivers shall be in writing setting forth the reasons therefor.
660:11-5-17. Net capital for broker-dealers
(a) General requirement. All broker-dealers registered
under the Securities Act shall at all times have and maintain net
capital of no less than the highest minimum requirement applicable to
each broker-dealer as established by the SEC in 17 CFR 240.15c3-1.
(b) Calculation of "net capital." As used in this
subchapter, net capital shall mean the net worth of a broker-dealer
calculated according to the formula established by the SEC.
660:11-5-18. [RESERVED]
660:11-5-19. Piecemeal filings
An application for initial registration or renewal of
registration as a broker-dealer, broker-dealer agent, broker-dealer
principal or issuer agent shall not be deemed to have been filed until all
of the documentation required by 660:11-5-11 or 660:11-5-12 is submitted,
or is otherwise made available, to the Department and payment of the
proper fees is made. Such documentation shall be in completed form.
660:11-5-20. Cross-border licensing exemption.
By authority delegated to the Administrator in Section
1-401.B.1.h of the Securities Act, a Canadian broker-dealer meeting all
of the following conditions is determined to be exempt from the
registration requirement in Section 1-401.A of the Securities Act:
(1) The broker-dealer is domiciled in Canada, does
not have an office or other physical presence in the United States,
and is not an office or branch of a broker-dealer domiciled in the
United States.
(2) The broker-dealer is registered with or a member
of a Canadian self-regulatory organization, stock exchange, or the
Bureau des Services Financiers and maintains that registration or
membership in good standing.
(3) The broker-dealer and its
agents effect transactions in securities with or for, or induce or
attempt to induce the purchase or sale of any security by:
(A) an individual from Canada that temporarily
resides or is temporarily present in this state and with whom the
broker-dealer had a bona fide broker-dealer-customer relationship
before the individual entered the United States; or
(B) an individual present in this state whose
transactions relate to a self-directed, tax advantaged Canadian
retirement plan of which the individual is the holder or
contributor.
(4) The broker-dealer prominently discloses in
writing to its clients in this state that the broker-dealer and its
agents are not subject to the full regulatory requirement of the
Securities Act.
(5) Neither the broker-dealer nor its agents disclaim
the applicability of Canadian law or jurisdiction to any transaction
conducted pursuant to this exemption.
(6) The broker-dealer and its agents comply with the
antifraud provisions of the Securities Act and of federal securities
laws.
(7) Prior to or contemporaneously with the first
transaction in Oklahoma, the broker-dealer must file a consent to
service of process on Form U-2 in a manner that effectively appoints
the Administrator as agent for service of process.
(8) Any Canadian broker-dealer or agent relying on
this exemption shall, upon written request, furnish the Department any
information relative to a transaction covered by this Section that the
Administrator deems relevant.
PART 5. REPORTING
REQUIREMENTS
660:11-5-31. Post-registration reporting
requirements
(a) Filing requirement. Pursuant to Section 1-410.B of
the Securities Act, all broker-dealers registered under Section 1-406 of
the Securities Act who are not NASD members must make post-registration
filings with the Department. The Department will not accept incomplete
or piecemeal filings. Failure to file a complete report when due may
result in the suspension or revocation of registration.
(b) Report content. Such registered broker-dealers
shall make one (1) post-registration filing each fiscal year. Said
filing shall contain audited financial statements as of the
broker-dealer's fiscal year end and the report filing fee specified in
Section 1-612 of the Securities Act.
(c) Report filing dates. Post-registration filings
become due on the last day of the fiscal period to which they apply;
however, a grace period is provided before a filing becomes delinquent.
The filing must be made by the last day of the fourth month following
the close of the registrant's fiscal year.
PART 7. RECORD KEEPING AND ETHICAL STANDARDS
660:11-5-41. Books and records requirements for
broker-dealers
17 CFR § 240.17a-3 and 17 CFR § 240.17a-4 (2003), books
and records rules established by the SEC under the 1934 Act, are hereby
incorporated by reference as if fully set forth into this Chapter.
660:11-5-42. Standards of ethical practices for
broker-dealers and their agents
(a) Purpose. This rule is intended to set forth the
standards of ethical practices for broker-dealers and their agents. Any
noncompliance with the standards of ethical practices specified in this
section will constitute unethical practices in the securities business;
however, the following is not intended to be a comprehensive listing of
all specific events or conditions that may constitute such unethical
practices. The standards shall be interpreted in such manner as will aid
in effectuating the policy and provisions of the Securities Act, and so
as to require that all practices of broker-dealers, and their agents, in
connection with their activities in this state shall be just, reasonable
and not unfairly discriminatory.
(b) Standards.
(1) A broker-dealer and his agents, in the conduct of
his business, shall observe high standards of commercial honor and
just and equitable principles of trade. A broker-dealer and his agents
shall not violate any federal securities statute or rule or any rule
of a national securities exchange or national securities association
of which it is a member with respect to any customer, transaction or
business effected in this state.
(2) In recommending to a customer the purchase, sale
or exchange of any security, the broker-dealer and his agents shall
have reasonable grounds for believing that the recommendation is
suitable for such customer upon the basis of the facts, if any,
disclosed by such customer as to his other security holdings and as to
his financial situation and needs. Prior to making a recommendation to
a customer a broker-dealer shall also make reasonable efforts to
obtain information concerning the customer's financial background, tax
status, and investment objectives, and such other information used or
considered to be reasonable and necessary by such broker-dealer or
registered agent in making such recommendation.
(3) Charges, if any, for services performed,
including miscellaneous services such as collection of monies due for
principal, dividends, or interest, exchange or transfer of securities,
appraisals, safekeeping or custody of securities, and other services,
shall be reasonable and not unfairly discriminatory between customers.
(4) In "over-the-counter" transactions, whether in
"listed" or "unlisted" securities, if a broker-dealer or agent of a
broker-dealer buys for his own account from his customer, or sells for
his own account to his customer, he shall buy or sell at a price which
is fair, taking into consideration all relevant circumstances,
including market conditions with respect to such security at the time
of the transaction, the expense involved, and the fact that he is
entitled to a profit; and if he acts as agent for his customer in any
such transaction, he shall not charge his customer more than a fair
commission or service charge, taking into consideration all relevant
circumstances including market conditions with respect to such
security at the time of the transaction, the expense of executing the
order and the value of any service he may have rendered by reason of
his experience in and knowledge of such security and the market
therefor.
(5) No broker-dealer or agent of a broker-dealer
shall publish or circulate, or cause to be published or circulated,
any notice, circular, advertisement, newspaper article, investment
service, or communication of any kind which purports to report any
transaction as a purchase or sale of any security unless such
broker-dealer believes that such transaction was a bona fide purchase
or sale of such security; or which purports to quote the bid price or
asked price for any security, unless such broker-dealer believes that
such quotation represents a bona fide bid for, or offer of, such
security. If nominal quotations are used or given, they shall be
clearly stated or indicated to be only nominal quotations.
(6) No broker-dealer or agent of a broker-dealer
shall make an offer to buy from or sell to any person any security at
a stated price unless such broker-dealer or agent is prepared to
purchase or sell, as the case may be, at such price and under such
conditions as are stated at the time of such offer to buy or sell.
(7) A broker-dealer, when a member of a selling
syndicate or a selling group, shall purchase securities taken in trade
at a fair market price at the time of purchase, or shall act as agent
in the sale of such securities.
(8) A broker-dealer who in the capacity of paying
agent, transfer agent, trustee, or any other similar capacity, has
received information as to the ownership of securities, shall under no
circumstances make use of such information for the purpose of
soliciting purchases, sales or exchanges except at the request and on
behalf of the issuer.
(9) No broker-dealer or agent of a broker-dealer
shall, directly or indirectly, give, permit to be given, or offer to
give, anything of value to any person for the purpose of influencing
or rewarding the action of such person in connection with the
publication or circulation in any newspaper, investment service, or
similar publication, of any matter which has, or is intended to have,
an effect upon the market price of any security, provided that this
rule shall not be construed to apply to matter which is clearly
distinguishable as paid advertising.
(10) A broker-dealer at or before the completion of
each transaction with a customer shall give or send to each customer
written notification disclosing:
(A) whether such broker-dealer is acting as a
broker for such customer and some other person; and
(B) in any case in which such broker-dealer is
acting as a broker for such customer or for both such customer and
some other person, either the name of the person from whom the
security was purchased or to whom it was sold for such customer and
the date and the time when such transaction took place or the fact
that such information will be furnished upon the request of such
customer, and the source and amount of any commission or other
remuneration received or to be received by such broker-dealer in
connection with the transaction.
(11) A broker-dealer or agent of a broker-dealer
controlled by, controlling, or under common control with, the issuer
of any security, shall, before entering into any contract with or for
a customer for the purchase or sale of such security, disclose to such
customer the existence of such control, and if such disclosure is not
made in writing, it shall be supplemented by the giving or sending of
written disclosure at or before the completion of the transaction.
(12) A broker-dealer or agent of a broker-dealer who
is acting as a broker for a customer or for both such customer and
some other person, or a broker-dealer who is acting as a dealer and
who receives or has promise of receiving a fee from a customer for
advising such customer with respect to securities, shall, at or before
the completion of any transaction for or with such customer in any
security in the primary or secondary distribution of which such
broker-dealer is participating or is otherwise financially interested,
give such customer written notification of the existence of such
participation or interest.
(13) The following standards shall apply to
discretionary accounts:
(A) No broker-dealer or agent of a broker-dealer
shall effect with or for any customer's account in respect to which
such broker-dealer or agent or employee is vested with any
discretionary power any transactions of purchase or sale which are
excessive in size or frequency in view of the financial resources of
such customer and character of such account.
(B) No broker-dealer or agent of a broker-dealer
shall exercise any discretionary power in a customer's account
unless such customer has given prior written authorization to a
stated individual or individuals and the account has been accepted
by the broker-dealer, as evidenced in writing by the broker-dealer
or the partner, officer, or manager duly designated by the
broker-dealer, in accordance with (22) of this subsection.
(C) The broker-dealer or the person duly designated
shall approve promptly, in writing, each discretionary order entered
and shall review all discretionary accounts at frequent intervals in
order to detect and prevent transactions which are excessive in size
or frequency in view of the financial resources of the customer and
the character of the account.
(D) This section shall not apply to discretion as
to the price at which or the time when an order given by a customer
for the purchase or sale of a definite amount of a specified
security shall be executed.
(14) A broker-dealer or agent of a broker-dealer who
is participating or who is otherwise financially interested in the
primary or secondary distribution of any security which is not
admitted to trading on a national securities exchange, shall make no
representation that such security is being offered to a customer "at
the market" or at a price related to the market price unless such
broker-dealer or agent knows or has reasonable grounds to believe that
a market for such security exists other than that made, created, or
controlled by such broker-dealer or agent, or by any person for whom
he is acting or with whom he is associated in such distribution, or
any person controlled by, controlling or under common control with
such broker-dealer or agent.
(15) No broker-dealer or agent of a broker-dealer
shall effect any transaction in, or induce the purchase or sale of,
any security by means of any manipulative, deceptive or other
fraudulent device, practice, plan, program, design, or contrivance.
(16) The following standards shall apply to the use
of customer funds:
(A) No broker-dealer or person associated with a
broker-dealer shall make improper use of a customer's securities or
funds.
(B) No broker-dealer or agent of a broker-dealer
shall lend, either to himself or to others, securities carried for
the account of any customer, unless such broker-dealer or agent
shall first have obtained from the customer a separate written
authorization permitting the lending of securities thus carried by
such broker-dealer or agent; and, regardless of any agreement
between the broker-dealer or agent and a customer authorizing the
former to lend or pledge such securities, no broker-dealer or agent
shall lend or pledge more of such securities than is fair and
reasonable in view of the indebtedness of the customer, except such
lending as may be specifically authorized under (C) of this
paragraph.
(C) No broker-dealer or agent of a broker-dealer
shall lend securities carried for the account of any customer which
have been fully paid for or which are in excess of the amount which
may be loaned in view of the indebtedness of the customer, unless
such broker-dealer or agent shall first have obtained from such
customer a separate written authorization designating the particular
securities to be loaned.
(D) No broker-dealer or agent of a broker-dealer
shall hold securities carried for the account of any customer which
have been fully paid for or which are in excess of the amount which
may be pledged in view of the indebtedness of the customer, unless
such securities are segregated and identified by a method which
clearly indicates the interest of such customer in those securities.
(E) No broker-dealer or agent of a broker-dealer
shall guarantee a customer against loss in any securities account of
such customer carried by the broker-dealer or in any securities
transaction effected by the broker-dealer or agent with or for such
customer.
(F) No broker-dealer or agent of a broker-dealer
shall share directly or indirectly in the profits or losses in any
account of a customer carried by the broker-dealer or agent or any
other broker-dealer or agent, unless such broker-dealer or agent
obtains written authorization from the broker-dealer carrying the
account; and, a broker-dealer or agent shall share in the profits or
losses in any account of such customer only in direct proportion to
the financial contributions made to such account by the
broker-dealer or agent. Exempt from the direct proportionate share
limitation are accounts of the immediate family of such
broker-dealer or agent. For purposes of this section, the term
"immediate family" shall include parents, mother-in-law or
father-in-law, husband or wife, children or any relative to whose
support the broker-dealer or agent otherwise contributes directly or
indirectly.
(17) The following standards shall apply to customer
credit:
(A) No broker-dealer or agent of a broker-dealer
shall take or carry any account or make a transaction for any
customer under any arrangement which contemplates or provides for
the purchase of any security for the account of the customer or for
the sale of any security to the customer where payment for the
security is to be made to the broker-dealer by the customer over a
period of time in installments or by a series of partial payments,
unless:
(i) in the event such broker-dealer acts as an
agent or broker in such transaction, he shall immediately, in the
regular course of his business, make an actual purchase of the
security for the account of the customer, and shall immediately,
in the regular course of his business, take possession or control
of such security and shall maintain possession or control thereof
so long as he remains under obligation to delivery of the security
to the customer;
(ii) in the event such broker-dealer acts as a
principal in any such transaction, he shall, at the time of such
transaction own such security and shall maintain possession or
control thereof so long as he remains under obligation to deliver
the security to the customer; and
(iii) the provisions of Regulation T of the
Federal Reserve Board, if applicable to such broker-dealer, are
satisfied.
(B) No broker-dealer, whether acting as a principal
or agent, shall, in connection with any transaction referred to in
this Standard, make any agreement with his customer under which such
broker-dealer shall be allowed to pledge or hypothecate any security
involved in such transaction for any amount in excess of the
indebtedness of the customer to such broker-dealer.
(18) The following standards shall apply to books and
records:
(A) Each broker-dealer shall keep and preserve
books, accounts, records, memoranda, and correspondence in
conformity with all applicable laws, rules, regulations, and
statements of policy promulgated by the Administrator and/or the
Commission under the Securities Act.
(B) Each broker-dealer shall keep and preserve in
each office of supervisory jurisdiction, as defined in 660:11-5-2,
either a separate file of all written complaints of customers and
action taken by the broker-dealer, if any, or a separate record of
such complaints and clear reference to the files containing the
correspondence connected with such complaints as maintained in such
office.
(19) A broker-dealer shall make available to
inspection by any bona fide regular customer, upon request, the
information relative to such broker-dealer's financial condition as
disclosed in its most recent balance sheet prepared either in
accordance with such broker-dealer's usual practice or as required by
the state or federal securities laws, or any rule or regulation
promulgated thereunder.
(20) No broker-dealer or agent of a broker-dealer
shall offer any security or confirm any purchase or sale of any
security, from or to any person not actually engaged in the investment
banking or securities business at any price which shows a concession,
discount, or other allowance, but shall offer such security and
confirm such purchase or sale at a net dollar or basis price.
(21) Selling concessions, discounts, or other
allowances, as such, shall be allowed only as consideration for
services rendered in distribution and in no event shall be allowed to
anyone other than a broker-dealer registered under the Securities Act
actually engaged in the investment banking or securities business;
provided however, that nothing in this standard shall prevent any
broker-dealer from selling any security owned by him to any person at
any net price which may be fixed by him unless prevented therefrom by
agreement.
(22) The following standards shall apply to
supervisory procedures:
(A) Each broker-dealer shall establish, maintain
and enforce written procedures which will enable it to supervise
properly the activities of each registered agent and associated
person to assure compliance with applicable securities laws, rules,
regulations and statements of policy promulgated by the
Administrator and/or the Commission under the Securities Act.
(B) Final responsibility for proper supervision
shall rest with the broker-dealer, the principal(s) of the
broker-dealer registered in accordance with 660:11-5-11, and the
principal(s) of the broker-dealer in each OSJ, including the main
office, and the registered representatives in each non-OSJ branch
office designated by the broker-dealer to carry out the supervisory
responsibilities assigned to that office by the broker-dealer
pursuant to the rules and regulations of the NASD. A copy of the
written supervisory procedures shall be kept in each office of
supervisory jurisdiction and each non-OSJ branch office.
(C) Each broker-dealer shall be responsible for
keeping and preserving appropriate records for carrying out such
broker-dealer's supervisory procedures. Each broker-dealer shall
review and endorse in writing, on an internal record, all
transactions and all correspondence of its registered agents
pertaining to the solicitation or execution of any securities
transaction.
(D) Each broker-dealer shall review the activities
of each office, which shall include the periodic examination of
customer accounts to detect and prevent irregularities or abuses and
conduct at least an annual inspection of each office of supervisory
jurisdiction.
(E) Each broker-dealer shall have the
responsibility and duty to ascertain by investigation the good
character, business repute, qualifications and experience of any
person prior to making such a certification in the application of
such person for registration under the Securities Act.
(23) The following standards shall apply to financial
information:
(A) Each broker-dealer offering or selling
securities not listed on a registered national securities exchange
recognized by the Administrator shall have and furnish to customers,
on request, a balance sheet of the issuer as of a date within
eighteen months, and a profit and loss statement for either the
fiscal year preceding that date or the most recent year of
operations, prepared in accordance with generally accepted
accounting principles, the names of the issuer's proprietors,
partners or officers, the nature of the enterprise of the issuer and
any other available information reasonably necessary for evaluating
the desirability or the lack of desirability of investing in the
securities of the issuer.
(B) Each broker-dealer who, in computation of net
capital includes securities not listed on a registered national
securities exchange recognized by the Administrator shall also have
the information provided for in (A) of this paragraph available and
shall, upon request, furnish same to the Department.
(C) All transactions in such securities described
in (A) and (B) of this paragraph shall comply with the provisions of
Section 1-301 of the Securities Act.
(D) The provisions of (A) of this paragraph shall
not be required in unsolicited transactions, except when numerous
unsolicited transactions in a particular security are occurring, it
shall be the duty and responsibility of the broker-dealer to make
reasonable effort to secure and provide to customers upon their
written request the information required by the provisions of (A) of
this paragraph. Nothing contained in this Section shall be construed
to limit the powers of the Administrator under Section 1-204 of the
Securities Act.
660:11-5-42.1. Standards of ethical practices--issuer
agents
(a) Purpose. This rule is intended to set forth the
standards of ethical practices for issuer agents. Any noncompliance with
the standards of ethical practices specified in this section will
constitute unethical practices in the securities business; however, the
following is not intended to be a comprehensive listing of all specific
events or conditions that may constitute such unethical practices. The
standards shall be interpreted in such manner as will aid in
effectuating the policy and provisions of the Securities Act, and so as
to require that all practices of issuer agents, in connection with their
activities in this state shall be just, reasonable and not unfairly
discriminatory.
(b) Standards.
(1) An issuer agent, in the conduct of his business,
shall observe high standards of commercial honor and just and
equitable principles of trade. Issuer agents shall not violate any
federal securities statute or rule or any rule of a national
securities exchange or national securities association of which he is
a member with respect to any customer, transaction or business
effected in this state.
(2) In recommending to a customer the purchase, sale
or exchange of any security, an issuer agent shall have reasonable
grounds for believing that the recommendation is suitable for such
customer upon the basis of the facts, if any, disclosed by such
customer as to his other security holdings and as to his financial
situation and needs. Prior to making a recommendation to a customer an
issuer agent shall also make reasonable efforts to obtain information
concerning the customer's financial background, tax status, and
investment objectives, and such other information used or considered
to be reasonable and necessary by such registered agent in making such
recommendation.
(3) No issuer agent shall guarantee a customer
against loss in any securities transaction effected by the issuer
agent with such customer.
660:11-5-43. Examination of broker-dealers
(a) Periodic examinations. The business and records of
each broker-dealer registered under the Securities Act may be
periodically examined by the Administrator and/or person(s) designated
by him at such times and in such scope as the Administrator determines
prudent and necessary for the protection of the public. A report of each
such examination shall be prepared.
(b) Department access. Each broker-dealer scheduled for
examination shall provide the personnel of the Department access to
business books, documents, and other records. Each broker-dealer shall
provide personnel with office space and facilities to conduct on-site
examinations, and assistance in the physical inspection of assets and
confirmation of liabilities. Failure of any applicant or registrant to
provide such access shall constitute a violation of this section and
shall be a basis for denial, suspension or revocation of the
registration or application for registration.
660:11-5-44. [RESERVED]
660:11-5-45. Financial statements for
broker-dealers
(a) Audited statements. Applications for registration
for broker-dealers shall contain audited financial statements for the
applicant as of the end of its last fiscal year. Applicants that have
been in operation for less than twelve (12) months shall submit an
audited statement of financial condition as of a date within ninety (90)
days of the date of the filing of the application and an audited
statement of income for the period beginning from the date of inception
through the date as of which the statement of financial condition is
prepared.
(b) Unaudited interim financial statements. If the
audited financial statements required by (a) of this section are not
current to within ninety (90) days of the date of filing of the
application, additional unaudited financial statements shall be
submitted covering the period from the beginning of the current fiscal
year through a month ending within the 90-day time frame.
(c) Net capital computation. Financial Statements
submitted by or on behalf of a broker-dealer shall include a statement
of the amount of net capital required by the SEC for the broker-dealer
and a schedule presenting a computation of net capital as of each
statement of financial condition date. The computation of net capital
shall be calculated according to the formula established by the SEC.
(d) Waiver. The Administrator in his discretion may
waive any of the requirements of this section on a case-by-case basis
when such action is determined to be consistent with the purposes fairly
intended by the policy and provisions of the Securities Act. Requests
for waivers shall be in writing setting forth the reasons therefor.
SUBCHAPTER 7. INVESTMENT
ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES
PART 1. GENERAL PROVISIONS
Section
660:11-7-1. Purpose
660:11-7-2. Definitions
PART 3. LICENSING PROCEDURES
660:11-7-11. Initial registration
660:11-7-12.
Renewal
660:11-7-13. Qualification examination
requirements
660:11-7-14. [RESERVED]
660:11-7-15. Piecemeal
filings
660:11-7-16. Solicitor exemption
PART 5. REPORTING REQUIREMENTS
660:11-7-31. Post-registration reporting requirements
PART 7. RECORD KEEPING AND ETHICAL STANDARDS
660:11-7-41. Record keeping requirements
660:11-7-42. Standards of
ethical practices
660:11-7-43. Disclosure requirements
660:11-7-44.
Financial statements for investment advisers
660:11-7-45. Examination
of investment advisers
660:11-7-46. [RESERVED]
660:11-7-47. Payments
for client solicitations
660:11-7-48.
Custody requirements for investment advisers
PART 9. SEC COVERED INVESTMENT ADVISERS
660:11-7-51. SEC covered investment adviser notice filing
PART 1. GENERAL PROVISIONS
660:11-7-1. Purpose
The rules in this subchapter are adopted to provide
procedures for complying with the provisions of Sections 1-403 and 1-404
of the Securities Act relating to the licensing of investment advisers and
investment adviser representatives under the Securities Act.
660:11-7-2. Definitions
In addition to the terms defined in 660:11-1-3, the
following words and terms when used in this subchapter shall have the
following meaning, unless the context clearly indicates otherwise:
"Impersonal advisory services" means investment
advisory services provided solely:
(A) by means of written material or oral statements
which do not purport to meet the objectives or needs of specific
individuals or accounts;
(B) through the issuance of statistical information
containing no expression of opinion as to the investment merits of a
particular security; or
(C) any combination of the foregoing services.
"Investment company contract" means a contract
with an investment company registered under the 1940 Act that meets the
requirements of Section 15(c) of that Act.
"Solicitor" means any person who, directly or
indirectly, solicits any client for, or refers any client to, an
investment adviser.
PART 3. LICENSING PROCEDURES
660:11-7-11. Initial registration
(a) Investment adviser. Investment advisers applying
for initial registration pursuant to Section 1-406 of the Securities
Act:
(1) shall file with the IARD:
(A) a completed Form ADV, including Schedules A-I;
and
(B) the filing fee specified in Section 1-612 of
the Securities Act;
(2) shall file with the Department within 30 days
from the effective date of registration:
(A) Part 2 of the Form ADV;
(B) audited financial statements as required by
660:11-7-44 unless exempt therefrom;
(C) a copy of the investment advisory contract to
be executed by Oklahoma clients; and
(D) any additional documentation, supplemental
forms and information as the Administrator may deem necessary; and
(3) if a natural person, must have passed the
applicable examinations specified in 660:11-7-13.
(b) Investment adviser representative. Investment
adviser representatives applying for initial registration under the
Securities Act:
(1) shall file with the CRD:
(A) a completed Form U-4 if the information on the
Form U-4 is not maintained in current form on the CRD;
(B) the filing fee specified in Section 1-612 of
the Securities Act; and
(C) any additional documentation, supplemental
forms and information as the Administrator may deem necessary; and
(2) must have passed the applicable examinations
specified in 660:11-7-13.
660:11-7-12. Renewal
(a) Investment adviser. An investment adviser
registered under the Act shall renew its registration by submitting to
the IARD the renewal fee specified in Section 1-612 of the Securities
Act.
(b) Investment adviser representative. Investment
adviser representatives registered under the Act shall renew their
registrations by submitting to the CRD the renewal fee specified in
Section 1-612 of the Securities Act.
660:11-7-13. Qualification examination
requirements
(a) Examination requirement. Proof of compliance with
the written examination requirements of this rule is prerequisite to a
complete filing for registration under the Securities Act.
(b) Examinations. Any natural person seeking
registration as an investment adviser or investment adviser
representative must pass the Series 65, or both the Series 66 and Series
7, or such other examination(s) or certifications determined by the
Administrator to be acceptable in lieu thereof. The Administrator adopts
the examinations as administered by the NASDR as the required
examinations.
(c) Change in series number. Should NASDR examination
series numbers change, the most current examination series applicable to
the category of registration shall apply.
(d) Validity of prior examination scores. For purposes
of qualification for registration under the Securities Act, the
Department will not recognize any NASDR examination score that predates
an application for registration by more than two (2) years in the
absence of:
(1) continuous registration as an investment adviser
representative in another jurisdiction since examination; or
(2) continuous registration as an agent with the NASD
since examination.
(e) Waiver of examination requirement. The
Administrator may waive the examination requirement on a case-by-case
basis when such action is determined to be consistent with the purposes
fairly intended by the policy and provisions of the Securities Act.
Requests for waivers shall be in writing setting forth the reasons therefor.
660:11-7-14. [RESERVED]
660:11-7-15. Piecemeal filings
An application for initial registration or renewal of
registration as an investment adviser or investment adviser representative
shall not be deemed to have been filed until all of the documentation
required by 660:11-7-11 or 660:11-7-12 is submitted, or is otherwise made
available, to the Department and payment of the proper fees is made. Such
documentation shall be in completed form.
660:11-7-16. Solicitor exemption
By authority delegated to the Administrator in Section
1-404.B.2 of the Securities Act, an individual whose only activity on
behalf of an investment adviser is to solicit clients for same is exempt
from the requirement to register as an investment adviser representative
of such investment adviser if the individual is separately registered as
an investment adviser representative of another investment adviser or is
individually registered as an investment adviser.
PART 5. REPORTING REQUIREMENTS
660:11-7-31. Post-registration reporting
requirements
(a) Filing requirement. Pursuant to Section 1-410.B of
the Securities Act, all investment advisers registered under Section
1-406 of the Securities Act must make post-registration filings with the
Department. The Department will not accept incomplete or piecemeal
filings. The post-registration filing shall contain the financial or
operating report fee set forth in Section 1-612 of the Securities Act.
Failure to file a complete report when due may result in the suspension
or revocation of registration. The Administrator will consider requests
that no enforcement action be taken regarding a delinquent filing
pursuant to the provisions of 660:2-13-1.
(b) Report content. Registered investment advisers who
have custody or possession of clients' funds or securities or require
prepayment of advisory fees six (6) months or more in advance and in
excess of $500.00 per client shall make one (1) post-registration report
each fiscal year. Said filing shall contain the report filing fee
specified in Section 1-612 of the Securities Act and an audited
statement of financial condition as of the investment adviser's fiscal
year end.
(c) Report filing dates. Post-registration filings
become due on the last day of the fiscal year to which they apply;
however a grace period is provided before a filing becomes delinquent.
The filing must be made by the last day of the fourth month following
the close of the registrant's fiscal year.
PART 7. RECORD KEEPING AND ETHICAL STANDARDS
660:11-7-41. Record keeping requirements
(a)
General requirements. Every investment adviser registered or required
to be registered under the Securities Act shall make and keep true,
accurate and current the following books and records:
(1)
A journal or
journals, including cash receipts and disbursements, records, and
any other records of original entry forming the basis of entries in
any ledger.
(2)
General and
auxiliary ledgers (or other comparable records) reflecting asset,
liability, reserve, capital, income and expense accounts. In no
event shall the general ledger be posted less than once a month.
(3)
A record of each
order given by the investment adviser for the purchase or sale of
any security, of any instruction received by the investment adviser
from the client concerning the purchase, sale, receipt or delivery
of a particular security, and of any modification or cancellation of
any such order or instruction. The record shall show the terms and
conditions of the order, instruction, modification or cancellation;
shall identify the person connected with the investment adviser who
recommended the transaction to the client and the person who placed
the order; and shall show the account for which entered, the date of
entry, and the bank or broker-dealer by or through whom executed
where appropriate. Orders entered pursuant to the exercise of
discretionary power shall be so designated.
(4)
All check books,
bank statements, canceled checks and cash reconciliations of the
investment adviser.
(5)
All bills or
statements (or copies thereof), paid or unpaid, relating to the
business of the investment adviser as such.
(6)
All trial
balances, financial statements prepared in accordance with generally
accepted accounting principles, and internal audit working papers
relating to the business of such investment adviser. The trial
balance shall be prepared no later than fifteen (15) business days
after the end of the accounting period.
(7)
Originals of all
written communications received and copies of all written
communications sent by the investment adviser relating to the
business of the investment adviser, including, but not limited to:
(A)
any
recommendation made or proposed to be made and any advice given or
proposed to be given,
(B)
any receipt,
disbursement or delivery of funds or securities, or
(C)
the placing or
execution of any order to purchase or sell any security; provided,
however:
(i)
that the
investment adviser shall not be required to keep any unsolicited
market letters and other similar communications of general
public distribution not prepared by or for the investment
adviser, an
(ii)
that if the
investment adviser sends any notice, circular or other
advertisement offering any report, analysis, publication or
other investment advisory service to 2 or more persons, the
investment adviser shall not be required to keep a record of the
names and addresses of the persons to whom it was sent; except
that if the notice, circular or advertisement is distributed to
persons named on any list, the investment adviser shall retain
with the copy of the notice, circular or advertisement a
memorandum describing the list and the source thereof.
(8)
A list or other
record identifying all accounts in which the investment adviser is
vested with any discretionary power with respect to the funds,
securities or transactions of any client.
(9)
A copy of all
powers of attorney and other evidences of the granting of any
discretionary authority by any client to the investment adviser.
(10)
A copy of all
agreements entered into by the investment adviser with any client
and all other agreements relating to the business of the investment
adviser as such, including agreements which set forth the fees to be
charged, the manner of computation and method of payment.
(11)
A file
containing a copy of each notice, circular, advertisement, newspaper
article, investment letter, bulletin, or other communication,
including any communication by electronic media, that the investment
adviser circulates or distributes, directly or indirectly, to 2 or
more persons (other than persons connected with the investment
adviser), and if the notice, circular, advertisement, newspaper
article, investment letter, bulletin, or other communication,
including any communication by electronic media, recommends the
purchase or sale of a specific security and does not state the
reasons for the recommendation, a memorandum of the investment
adviser indicating the reasons for the recommendation.
(12)
When providing
investment advice is the primary business of the investment adviser.
(A)
A record of every
transaction in a security in which the investment adviser or any
advisory representative (as defined in (B) of this paragraph) of the
investment adviser has, or by reason of any transaction acquires,
any direct or indirect beneficial ownership, except (i) transactions
effected in any account over which neither the investment adviser
nor the advisory representative of the investment adviser has any
direct or indirect influence or control, and (ii) transactions in
securities which are direct obligations of the United States. The
record shall state the title and amount of the security involved;
the date and nature of the transaction (i.e., purchase, sale or
other acquisition or disposition); the price at which it was
effected; and the name of the broker-dealer or bank with or through
whom the transaction was effected. The record may also contain a
statement declaring that the reporting or recording of any
transaction shall not be construed as an admission that the
investment adviser or advisory representative has any direct or
indirect beneficial ownership in the security. A transaction shall
be recorded no later than ten (10) days after the end of the
calendar quarter in which the transaction was effected.
(B)
For purposes of
this paragraph, the following definitions will apply:
(i) The
term advisory representative shall mean any partner, officer
or director of the investment adviser; any employee who
participates in any way in the determination of which
recommendations shall be made; any employee who, in connection
with his duties, obtains any information concerning which
securities are being recommended prior to the effective
dissemination of the recommendations; and any of the following
persons who obtain information concerning securities
recommendations being made by the investment adviser prior to
the effective dissemination of the recommendations or of the
information concerning the recommendations:
(I)
any person in a control relationship to the
investment adviser,
(II)
any
affiliated person of a controlling person, and
(III)
any
affiliated person of an affiliated person.
(ii)
Control
shall mean the power to exercise a controlling influence over
the management or policies of a company. Any person who owns
beneficially, either directly or through one or more controlled
companies, more than 25% of the voting securities of a company
shall be presumed to control such company.
(13)
When providing
investment advice is not the primary business of the investment
adviser:
(A)
Notwithstanding
the provisions of (12) of this subsection, where the investment
adviser is primarily engaged in a business or businesses other than
advising investment advisory clients, a record must be maintained of
every transaction in a security in which the investment adviser or
any advisory representative (as defined in (C) of this paragraph) of
the investment adviser has, or by reason of any transaction
acquires, any direct or indirect beneficial ownership, except:
(i)
transactions
effected in any account over which neither the investment
adviser nor any advisory representative of the investment
adviser has any direct or indirect influence or control; and
(ii)
transactions
in securities which are direct obligations of the United States.
(B)
Each record
required by (A) of this paragraph shall state the title and amount
of the security involved; the date and nature of the transaction
(i.e. purchase, sale, or other acquisition or disposition); the
price at which it was effected; and the name of the broker-dealer or
bank with or through whom the transaction was effected. The record
may also contain a statement declaring that the reporting or
recording of any transaction shall not be construed as an admission
that the investment adviser or advisory representative has any
direct or indirect beneficial ownership in the security. A
transaction shall be recorded not later than 10 days after the end
of the calendar quarter in which the transaction was effected.
(C)
For purposes of
this paragraph, the following definitions will apply:
(i)
The term
advisory representative, when used in connection with a
company primarily engaged in a business or businesses other than
advising investment advisory clients, shall mean any partner,
officer, director or employee of the investment adviser who
participates in any way in the determination of which
recommendations shall be made, or whose functions or duties
relate to the determination of which securities are being
recommended prior to the effective dissemination of the
recommendations; and any of the following persons who obtain
information concerning securities recommendations being made by
the investment adviser prior to the effective dissemination of
such recommendations or of the information concerning the
recommendations:
(I)
any
person in a control relationship to the investment adviser,
(II)
any
affiliated person of a controlling person, and
(III)
any
affiliated person of an affiliated person.
(ii)
Control
shall mean the power to exercise a controlling influence over
the management or policies of a company. Any person who owns
beneficially, either directly or through one or more controlled
companies, more than 25% of the voting securities of a company
shall be presumed to control such company.
(iii)
An
investment adviser is primarily engaged in a business or
businesses other than advising investment advisory clients
when, for each of its most recent three fiscal years or for the
period of time since organization, whichever is lesser, the
investment adviser derived from such other business or
businesses, on an unconsolidated basis, more than 50% of:
(I)
its
total sales and revenues, and
(II)
its
income (or loss) before income taxes and extraordinary
items.
(14)
A copy of each
written statement and each amendment or revision, given or sent to
any client or prospective client of the investment adviser, and a
record of the dates that each written statement, and each amendment
or revision, was given, or offered to be given, to any client or
prospective client who subsequently becomes a client.
(15)
For each client
that was obtained by the adviser by means of a solicitor to whom a
cash fee was paid by the adviser:
(A)
evidence of a
written agreement to which the adviser is a party related to the
payment of such fee; (B)
a signed
and dated acknowledgment of receipt from the client evidencing the
clients receipt of the investment advisers disclosure statement
and a written disclosure statement of the solicitor; and
(C)
a copy of the
solicitors written disclosure statement.
(16)
All accounts,
books, internal working papers, and any other records or documents
that are necessary to form the basis for or demonstrate the
calculation of the performance or rate of return of all managed
accounts or securities recommendations in any notice, circular,
advertisement, newspaper article, investment letter, bulletin, or
other communication including but not limited to electronic media
that the investment adviser circulates or distributes, directly or
indirectly, to two or more persons (other than persons connected
with the investment adviser); provided, however, that, with respect
to the performance of managed accounts, the retention of all account
statements, if they reflect all debits, credits, and other
transactions in a clients account for the period of the statement,
and all worksheets necessary to demonstrate the calculation of the
performance or rate of return of all managed accounts shall be
deemed to satisfy the requirements of this paragraph.
(17)
A file
containing a copy of all written communications received or sent
regarding any litigation involving the investment adviser or any
investment adviser representative or employee, and regarding any
written customer or client complaint.
(18)
Written information
about each investment advisory client that is the basis for making
any recommendation or providing any investment advice to such
client.
(19) Written
procedures to supervise the activities of employees and investment
adviser representatives that are reasonably designed to achieve
compliance with applicable securities laws and regulations.
(20)
A file
containing a copy of each document (other than any notices of
general dissemination) that was filed with or received from any
state or federal agency or self regulatory organization and that
pertains to the registrant or its investment adviser
representatives, which file should contain, but is not limited to,
all applications, amendments, renewal filings, and correspondence.
(21)
Copies, with
original signatures of the investment advisers 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 clients securities or
funds and returned them to the client within three business days or
has forwarded third party checks within 24 hours the adviser will be
considered as not having custody but shall keep a ledger or other
listing of all securities or funds held or obtained relating to the
inadvertent custody disclosing the following information:
(A) issuer;
(B) type of security
and series;
(C)
date of issue;
(D)
for debt instruments, the denomination, interest rate and
maturity date;
(E) certificate number,
including alphabetical prefix or suffix;
(F) name in which
registered;
(G) date given to the
adviser;
(H) date sent to client
or sender;
(I) form of delivery to
client or sender, or copy of the form of delivery to client or sender;
and
(J) mail
confirmation number, if applicable, or confirmation by client or
sender of the funds or securitys 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 agents name, address,
phone number and other applicable contact information pertaining
to the party responsible for recording client interests in the
securities; and
(B)
a copy of
any legend, shareholder agreement or other agreement showing
that those securities are transferable only with prior consent
of the issuer or holders of the outstanding securities of the
issuer.
(b)
Special requirements
due to type of custody.
(1)
Custody as
defined in 660:11-7-48. If an investment adviser has custody, as
that term is defined in 660:11-7-48, the records required to
be made and kept under (a) of this Section shall include:
(A)
a copy of
any and all documents executed by the client (including a
limited power of attorney) under which the adviser is authorized
or permitted to withdraw a clients funds or securities
maintained with a custodian upon the advisers 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 clients 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 advisers 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 clients designation of an
independent representative.
(2)
Adviser to
pooled investment vehicle. If an investment adviser has custody
because it advises a pooled investment vehicle, the adviser shall
also keep the following records:
(A)
true,
accurate and current account statements;
(B)
When the
exception set forth in (c)(3) of 660:11-7-48 applies, the
records required to be made and kept shall include:
(i)
the
date(s) of the audit;
(ii)
a copy
of the audited financial statements; and
(iii)
evidence
of the mailing of the audited financial to all limited
partners, members or other beneficial owners within 120 days
of the end of its fiscal year.
(C)
When the
description set forth in (b)(7) of 660:11-7-48 applies to an
investment adviser, the investment adviser is required to make
and keep records to include:
(i)
a
copy of the written agreement with the independent party
reviewing all fees and expenses, indicating the
responsibilities of the independent third party.
(ii)
copies of all invoices and receipts showing approval by
the independent party for payment through the qualified
custodian.
(3)
Trustee. If an
investment adviser has custody because it is acting as the trustee
for a beneficial trust as described in (c)(5) of 660:11-7-48 the
investment adviser shall also keep the following records until the
account is closed or the adviser is no longer acting as trustee:
(A)
a copy of
the written statement given to each beneficial owner setting
forth a description of the requirements of (b) of 660:11-7-48
and the reason why the adviser will not be complying with those
requirements; and
(B)
a written
acknowledgement signed and dated by each beneficial owner, and
evidencing receipt of the statement required under (A) of this
paragraph.
(c)
Managed accounts.
Every investment adviser subject to (b) of this Section who renders any
investment supervisory or management service to any client shall, with
respect to the portfolio being supervised or managed and to the extent
that the information is reasonably available to or obtainable by the
investment adviser, make and keep true, accurate and current:
(1)
Records showing
separately for each client the securities purchased and sold, and
the date, amount and price of each purchase and sale.
(2)
For each
security in which any client has a current position, information
from which the investment adviser can promptly furnish the name of
each security held by the client, and the current amount or interest
of the client.
(d)
Client identity.
Any books or records required by this Section may be maintained by the
investment adviser in such manner that the identity of any client to
whom the investment adviser renders investment supervisory services is
indicated by numerical or alphabetical code or some similar designation.
(e)
Records retention.
Every investment adviser subject to (a) of this Section shall preserve
the following records in the manner prescribed:
(1)
All books and
records required to be made under the provisions of (a) to (c)(1),
inclusive, of this Section (except for books and records required to
be made under the provisions of (a)(11) and (a)(16) of this
Section), shall be maintained and preserved in an easily accessible
place for a period of not less than five years from the end of the
fiscal year during which the last entry was made on record, the
first two years in the principal office of the investment adviser.
(2)
Partnership
articles and any amendments, articles of incorporation, charters,
minute books, and stock certificate books of the investment adviser
and of any predecessor, shall be maintained in the principal office
of the investment adviser and preserved until at least three years
after termination of the enterprise.
(3)
Books and
records required to be made under the provisions of (a)(11) and
(a)(16) of this Section shall be maintained and preserved in an
easily accessible place for a period of not less than five years,
the first two years in the principal office of the investment
adviser, from the end of the fiscal year during which the investment
adviser last published or otherwise disseminated, directly or
indirectly, the notice, circular, advertisement, newspaper article,
investment letter, bulletin, or other communication including by
electronic media.
(4)
Books and
records required to be made under the provisions of (a)(17)-(22),
inclusive, of this Section shall be maintained and preserved in an
easily accessible place for a period of not less than five years
from the end of the fiscal year during which the last entry was made
on such record, the first two years in the principal office of the
investment adviser, or for the time period during which the
investment adviser was registered or required to be registered in
the state, if less.
(5)
Notwithstanding
other record preservation requirements of this Section, the
following records or copies shall be required to be maintained at
the business location of the investment adviser from which the
customer or client is being provided or has been provided with
investment advisory services: (A) records required to be preserved
under (a)(3),(a)(7)-(10), (a)(14)-(15), (a)(17)-(19), (b) and (c)
inclusive, of this Section, and (B) the records or copies required
under the provision of (a)(11) and (a)(16) of this Section which
records or related records identify the name of the investment
adviser representative providing investment advice from that
business location, or which identify the business locations
physical address, mailing address, electronic mailing address, or
telephone number. The records will be maintained for the applicable
period described in this Subsection.
(f)
Ceasing business.
An investment adviser subject to (a) of this Section, before ceasing to
conduct or discontinuing business as an investment adviser shall arrange
for and be responsible for the preservation of the books and records
required to be maintained and preserved under this Section for the
remainder of the period specified in this Section, and shall notify the
Administrator in writing of the exact address where the books and
records will be maintained during the period.
(g)
Format and storage
of records.
(1)
The records
required to be maintained and preserved may be immediately produced
or reproduced, and maintained and preserved for the required time,
by an investment adviser on:
(A)
paper or
hard copy form, as those records are kept in their original
form; or
(B)
micrographic
media, including microfilm, microfiche, or any similar medium;
or
(C)
electronic
storage media, including any digital storage medium or system
that meets the terms of this section.
(2)
The investment
adviser must:
(A)
arrange and
index the records in a way that permits easy location, access,
and retrieval of any particular record;
(B)
provide
promptly any of the following that the Administrator or his
representatives may request:
(i)
a
legible, true, and complete copy of the record in the medium
and format in which it is stored;
(ii)
a
legible, true, and complete printout of the record; and
(iii)
means to
access, view, and print the records; and
(C)
separately
store, for the time required for preservation of the original
record, a duplicate copy of the record on any medium allowed by
this section.
(3)
In the case of
records created or maintained on electronic storage media, the
investment adviser must establish and maintain procedures:
(A)
to maintain
and preserve the records, so as to reasonably safeguard them
from loss, alteration, or destruction;
(B)
to limit
access to the records to properly authorized personnel and the
Administrator and his representatives; and
(C)
to
reasonably ensure that any reproduction of a non-electronic
original record on electronic storage media is complete, true,
and legible when retrieved.
(h)
Investment
supervisory services.
For purposes of this Section, investment supervisory services means
the giving of continuous advice as to the investment of funds on the
basis of the individual needs of each client; and discretionary power
shall not include discretion as to the price at which or the time when a
transaction is or is to be effected, if, before the order is given by
the investment adviser, the client has directed or approved the purchase
or sale of a definite amount of the particular security.
(i)
Compliance with
federal law.
Any book or other record made, kept, maintained and preserved in
compliance with Rules 17a-3 [17 C.F.R. 240.17a-3] and l7a-4 [17 C.F.R.
240.l7a-4] under the Securities Exchange Act of 1934, which is
substantially the same as the book or other record required to be made,
kept, maintained and preserved under this Section, shall be deemed to be
made, kept, maintained and preserved in compliance with this Section.
(j)
Compliance with
other state requirements.
Every investment adviser registered or required to be registered under
the Securities Act that has its principal place of business in a state
other than Oklahoma shall be exempt from the requirements of this
section, provided the investment adviser is licensed in the state in
which it maintains its principal place of business and is in compliance
with that states books and records requirements.
660:11-7-42. Standards of ethical practices
(a) Purpose. This rule is intended to set forth the
standards of ethical practices for investment advisers and investment
adviser representatives. Any noncompliance with the standards set forth
in this section will constitute unethical practices in the securities
business as the same is set forth in Section 1-411.D.13 of the
Securities Act; however, the following is not intended to be a
comprehensive listing of all specific events or conditions that may
constitute such unethical practices. The standards shall be interpreted
in such manner as will aid in effectuating the policy and provisions of
the Securities Act, and so as to require that all practices of
investment advisers and investment adviser representatives in connection
with their activities in this state shall be just, reasonable and not
unfairly discriminatory. The standards set forth in this section and the
disclosure delivery requirement set forth in 660:11-7-43 shall apply to
all investment advisers and investment adviser representatives.
(b) Standards. An investment adviser or investment
adviser representative shall not engage in dishonest or unethical
practices including, although not limited to, the following:
(1) Recommending to a client to whom investment
supervisory, management or consulting services are provided the
purchase, sale or exchange of any security without reasonable grounds
to believe that the recommendation is suitable for the client on the
basis of information furnished by the client after reasonable inquiry
concerning the client's investment objectives, financial situation and
needs, and any other information known by the investment adviser or
investment adviser representative.
(2) Exercising any discretionary power in placing an
order for the purchase or sale of securities for a client without
obtaining written discretionary authority from the client within ten
(10) business days after the date of the first transaction placed
pursuant to oral discretionary authority, unless the discretionary
power relates solely to the price at which, or the time when, an order
involving a definite amount of a specified security shall be executed,
or both.
(3) Inducing trading in a client's account that is
excessive in size or frequency in view of the financial resources,
investment objectives and character of the account.
(4) Placing an order to purchase or sell a security
for the account of a client without authority to do so.
(5) Placing an order to purchase or sell a security
for the account of a client upon instruction of a third party without
first having obtained a written third-party trading authorization from
the client.
(6) Borrowing money or securities from a client
unless the client is a broker-dealer, an affiliate of the investment
adviser or investment adviser representative, or a financial
institution engaged in the business of loaning funds.
(7) Loaning money to a client unless the investment
adviser is a financial institution engaged in the business of loaning
funds or the client is an affiliate of the investment adviser or
investment adviser representative.
(8) Misrepresenting to any advisory client, or
prospective advisory client, the qualifications of the investment
adviser or an investment adviser representative or misrepresenting the
nature of the advisory services being offered or fees to be charged
for such service, or omitting to state a material fact necessary to
make the statements made regarding qualifications, services or fees,
in light of the circumstances under which they are made, not
misleading.
(9) Charging a client an unreasonable advisory fee.
(10) Failing to disclose to clients in writing before
any advice is rendered any material conflict of interest relating to
the investment adviser or any of its employees which could reasonably
be expected to impair the rendering of unbiased and objective advice
including:
(A) Compensation arrangements connected with
advisory services to clients which are in addition to compensation
from such clients for such services; and
(B) Charging a client an advisory fee for rendering
advice when a commission for executing securities transactions
pursuant to such advice will be received by the investment adviser
or its employees.
(11) Guaranteeing a client that a specific result
will be achieved (gain or no loss) with advice which will be
rendered.
(12) Publishing, circulating and distributing any
advertisement which does not comply with Reg. § 275.206(4)-1, under
the Investment Advisers Act of 1940.
(13) Disclosing the identity, affairs, or investments
of any client unless required by law to do so, or unless consented to
by the client.
(14) Taking any action, directly or indirectly, with
respect to those securities or funds in which any client has any
beneficial interest, where the investment adviser has custody or
possession of such securities or funds when the investment adviser's
action is subject to and does not comply with the requirements of Reg.
§ 275.206(4)-2 under the Investment
Advisers Act of 1940.
(15) Entering into, extending or renewing any
investment advisory contract unless such contract is in writing and
discloses, in substance, the services to be provided, the term of the
contract, the advisory fee, the formula for computing the fee, the
amount of prepaid fee to be returned in the event of contract
termination or nonperformance, whether the contract grants
discretionary power to the investment adviser or investment adviser
representative and that no assignment of such contract shall be made
by the investment adviser without the consent of the other party to
the contract.
(16) Entering into, extending or renewing any
investment advisory contract, if such contract contains any provision
that limits or purports to limit any of the following:
(A) the liability of the investment adviser for
conduct or omission arising from the advisory relationship that does
not conform to the Securities Act, applicable federal statutes, or
common law fiduciary standard of care;
(B) remedies available to the client at law or
equity or the jurisdiction where any action shall be filed or heard;
or
(C) applicability of the laws of Oklahoma with
respect to the construction or interpretation of the provisions of
the investment advisory contract.
660:11-7-43. Disclosure requirements
(a) Disclosure delivery requirement. In furtherance of
compliance with the standards of ethical practices specified in
660:11-7-42, every investment adviser, registered or required to be
registered under the Securities Act shall, in accordance with the
provisions of this section, furnish each advisory client and prospective
advisory client with a written disclosure statement which may be a copy
of Part II of its Form ADV including Schedule F, if applicable, or
written documents containing at least the information then so required
by Part II of the Form ADV including Schedule F, if applicable; provided
however, delivery of the required statement need not be made in
connection with entering into an investment company contract or a
contract for impersonal advisory services.
(b) Time of delivery. An investment adviser shall
deliver the statement required by (a) of this section to an advisory
client or prospective advisory client.
(1) not less than 48 hours prior to entering into any
written or oral investment advisory contract with such client or
prospective client, or
(2) at the time of entering into any such contract,
if the advisory client has a right to terminate the contract without
penalty within five business days after entering into the contract.
(c) For purposes of this section, "entering into" does
not include an extension or renewal without material change of any
investment advisory contract which is in effect immediately prior to
such extension or renewal.
(d) Annual delivery requirement. Unless exempted as
provided in (a) of this section, an investment adviser annually shall,
without charge, deliver or offer in writing to deliver upon written
request to each of its advisory clients the statement required by this
section. Any statement requested in writing by an advisory client
pursuant to an offer required by this subsection must be mailed or
delivered within seven (7) days of the receipt of the request.
660:11-7-44. Financial statements for investment
advisers
(a) Audited statements. Applications for registration
as investment advisers shall contain audited financial statements for
the applicant as of the end of its last fiscal year.
(b) Unaudited interim financial statements. If the
audited financial statements required in the preceding (a) are not
current to within ninety (90) days of the date of filing, additional unaudited financial statements shall be submitted covering the period
from the beginning of the current fiscal year through a month ending
within the 90-day time frame.
(c) Sole proprietors. Investment advisers who are
individuals or sole proprietorships, in lieu of audited financial
statements, may provide financial statements that have been prepared in
accordance with generally accepted accounting principles and which have
been reviewed and reported upon by independent accountants in accordance
with the standards for the review of financial statements promulgated by
the American Institute of Certified Public Accountants.
(d) Exemption. The financial statement requirements
specified in this section shall not apply to an investment adviser
unless the investment adviser has custody or possession of clients'
funds or securities or requires prepayment of advisory fees six (6)
months or more in advance and in excess of $500.00 per client.
(e) Waiver. The Administrator in his discretion may
waive any of the requirements of this section on a case-by-case basis
when such action is determined to be consistent with the purposes fairly
intended by the policy and provisions of the Securities Act. Requests
for waivers shall be in writing setting forth the reasons therefor.
660:11-7-45. Examination of investment advisers
(a) Periodic examinations. The business and records of
each investment adviser registered under the Securities Act may be
periodically examined by the Administrator and/or person(s) designated
by him at such times and in such scope as the Administrator determines
prudent and necessary for the protection of the public. A report of each
such examination shall be prepared.
(b) Department access. Each investment adviser
scheduled for examination shall provide the personnel of the Department
access to business books, documents, and other records. Each investment
adviser shall provide personnel with office space and facilities to
conduct on-site examinations, and assistance in the physical inspection
of assets and confirmation of liabilities. Failure of any applicant or
registrant to provide such access shall constitute a violation of this
section and shall be a basis for denial, suspension or revocation of the
registration or application for registration.
660:11-7-46. [RESERVED]
660:11-7-47. Payments for client solicitations
(a) Prohibition. An investment adviser required to be
registered pursuant to Section 1-403 of the Securities Act shall not pay
a cash fee, directly or indirectly, to a solicitor with respect to
solicitation activities unless:
(1) the investment adviser is registered under the
Securities Act;
(2) the solicitor is registered as an investment
adviser representative of this or another investment adviser
registered under the Securities Act or separately registered as an
investment adviser or under the Securities Act; and
(3) such cash fee is paid pursuant to a written
agreement to which the investment adviser is a party.
(b) Written agreement. If soliciting clients is the
only service rendered on behalf of an investment adviser, the written
agreement required by (a)(3) of this section shall:
(1) describe the solicitation activities to be
engaged in by the solicitor on behalf of the investment adviser and
the compensation to be received therefor;
(2) contain an undertaking by the solicitor to
perform his duties under the agreement in a manner consistent with the
instructions of the investment adviser and the provisions of the
Securities Act and the rules thereunder; and
(3) require that the solicitor, at the time of any
solicitation activities for which compensation is paid or to be paid
by the investment adviser, provide the customer with a current copy of
the investment adviser's written disclosure statement required by
660:11-7-43 and a separate written disclosure document described in
(d) of this section.
(c) Investment adviser responsibilities. The investment
adviser shall receive from the client, prior to, or at the time of,
entering into any written or oral investment advisory contract with such
client, a signed and dated acknowledgment of receipt of the investment
adviser's written disclosure statement and the solicitor's written
disclosure document. In addition, the investment adviser shall ascertain
whether the solicitor has complied with the agreement, and has a
reasonable basis for believing that the solicitor has so complied.
(d) Disclosure by solicitor. The separate written
disclosure document required to be furnished by the solicitor to the
customer pursuant to (b) of this section shall contain the following
information:
(1) the name of the solicitor;
(2) the name of the investment adviser;
(3) the nature of the relationship, including any
affiliation, between the solicitor and the investment adviser;
(4) a statement that the solicitor will be
compensated for his solicitation services by the investment adviser;
(5) the terms of such compensation arrangement,
including a description of the compensation paid or to be paid to the
solicitor; and
(6) the amount, if any, for the cost of obtaining his
account the customer will be charged in addition to the advisory fee,
and the differential, if any, among customers with respect to the
amount or level of advisory fees charged by the investment adviser if
such differential is attributable to the existence of any arrangement
pursuant to which the investment adviser has agreed to compensate the
solicitor for soliciting customers for, or referring customers to, the
investment adviser.
660:11-7-48.
Custody requirements for investment advisers
(a)
Definitions.
For purposes of this Section:
(1)
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.
(A)
Custody includes:
(i)
possession
of client funds or securities unless received inadvertently and
returned to the sender promptly, but in any case within three
business days of receiving them;
(ii)
any arrangement (including a general power of attorney) under
which you are authorized or permitted to withdraw client funds
or securities maintained with a custodian upon your 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 type of pooled investment vehicle, or
trustee of a trust) that gives you or your 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 24 hours of receipt and the adviser
maintains the records required under 660:11-7-41.
(2)
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 you; and (C)
does
not have, and has not had within the past two years, a material
business relationship with you.
(3)
Qualified custodian means the following independent institutions
or entities that are not affiliated with the adviser by any direct
or indirect common control and have not had a material business
relationship with the adviser in the previous two years:
(A) A
bank or savings association that has deposits insured by the Federal
Deposit Insurance Corporation under the Federal Deposit Insurance
Act; (B) A
registered broker-dealer holding the client assets in customer
accounts; (C) A
registered futures commission merchant registered under Section
4f(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.
(b)
Safekeeping
required.
If you are an investment adviser registered or required to be
registered, it is unlawful and deemed to be a fraudulent, deceptive,
or manipulative act, practice or course of business for you 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 clients name;
or (B)
in
accounts that contain only your clients funds and
securities, under your name as agent or trustee for the
clients.
(3)
Notice to
clients.
If you open an account with a qualified custodian on your
clients behalf, either under the clients name or under your
name as agent, you promptly notify the client in writing of the
qualified custodians name, address, and the manner in which the
funds or securities are maintained, when the account is opened
and following any changes to this information.
(4)
Account statements.
Account statements must be sent to clients, either:
(A) by
a qualified custodian. The investment adviser has a
reasonable basis 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; or
(B) by
the investment adviser.
(i) The
investment adviser sends an account statement, at least
quarterly, to each client for whom the investment
adviser has custody of funds or securities, identifying
the amount of funds and of each security of which the
investment adviser has custody at the end of the period
and setting forth all transactions during that period;
and (ii)
An independent certified public accountant verifies all
client funds and securities by actual examination at
least once during each calendar year at a time chosen by
the accountant without prior notice or announcement to
the adviser and that is irregular from year to year, and
files a copy of the auditors report and financial
statements with the Administrator within 30 days after
the completion of the examination, along with a letter
stating that it has examined the funds and securities
and describing the nature and extent of the examination;
and (iii)
The independent certified public accountant, upon
finding any material discrepancies during the course of
the examination, notifies the Administrator within one
business day of the finding, by means of a facsimile
transmission or electronic mail, followed by first class
mail, directed to the attention of the Administrator;
(C) Special
rule for limited partnerships and limited liability
companies.
If you are a general partner of a limited partnership (or
managing member of a limited liability company, or hold a
comparable position for another type of pooled investment
vehicle), the account statements required under (b)(4) of
this Section must be sent to each limited partner (or member
or other beneficial owner or their independent
representative).
(5)
Independent
representatives.
A client may designate an independent
representative to receive, on his behalf, notices and account
statements as required under (b)(3) and (b)(4) of this Section.
(6)
Direct fee deduction.
An adviser who has custody as defined
in (a)(1)(A)(ii) of this Section by having fees directly
deducted from client accounts must also provide the following
safeguards:
(A)
Written authorization. The investment adviser must have
written authorization from the client to deduct advisory
fees from the account held with the qualified custodian;
(B)
Notice of fee deduction. Each time a fee is directly
deducted from a client account, the investment adviser must
concurrently:
(i) send
the qualified custodian an invoice of the amount of the
fee to be deducted from the clients account; and
(ii) send
the client an invoice 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.
(C)
Notice of safeguards.
The investment adviser notifies
the Administrator in writing that the investment adviser
intends to use the safeguards provided in (A) and (B) of
this paragraph. Such notification is required to be given on
Form ADV. (D)
Waiver of audited financial statements. An investment
adviser having custody solely because it meets the
definition of custody as defined in (a)(1)(A)(ii) of this
Section and who complies with the safekeeping requirements
in (b)(1)-(6) of this Section will not be required to meet
the financial requirements for custodial advisers as set
forth in 660:11-7-31.
(7)
Pooled Investments.
An investment adviser who has custody
as defined in (a)(1)(A)(iii) of this Section and
who does not meet the exception provided under (c)(3) of this
Section must, in addition to the safeguards set forth in
(b)(1)-(5) of this Section also comply with the following:
(A)
Engage an Independent Party. Hire an Independent Party to
review all fees, expenses and capital withdrawals from the
pooled accounts; (B)
Review of fees. 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.
(C)
For purposes of this paragraph, an Independent Party means
a person that:
(i) is
engaged by you to act as a gatekeeper for the payment of
fees, expenses and capital withdrawals from the pooled
investment;
(ii) does
not control and is not controlled by and is not under
common control with you; and
(iii) does
not have, and has not had within the past two years, a
material business relationship with you.
(D)
Notice of safeguards. The investment adviser notifies the
Administrator in writing that the investment adviser intends
to use the safeguards provided in (A) and (B) of this
paragraph. Such notification is required to be given on Form
ADV. (E)
Waiver of audited financial statements. An investment
adviser having custody solely because it meets the
definition of custody as defined in (a)(1)(A)(iii)
of this Section and who complies with the safekeeping
requirements in (b)(1)-(5) and (7) of this Section will not
be required to meet the financial requirements for custodial
advisers as set forth in 660:11-7-31.
(8)
Investment Adviser or Investment Adviser Representative as
Trustee.
When a trust retains an investment adviser; investment adviser
representative; or employee, director or owner of an investment
adviser as trustee and the investment adviser acts as the
investment adviser to that trust, the investment adviser will:
(A)
[Notice of safeguards] notify the Administrator in writing
that the investment adviser intends to use the safeguards
provided in (B) and (C) of this paragraph. Such notification
is required to be given on Form ADV.
(B)
[Invoice requirement] send to the grantor of the trust, the
attorney for the trust if it is a testamentary trust, the
co-trustee (other than the investment adviser; investment
adviser representative; or employee, director or owner of
the investment adviser); or a defined beneficiary of the
trust, at the same time that it sends any invoice to the
qualified custodian, an invoice showing the amount of the
trustees' fee or investment management or advisory fee, the
value of the assets on which the fees were based, and the
specific manner in which the fees were calculated.
(C)
[Agreement requirement] enter into a written agreement with
a qualified custodian which specifies:
(i)
[Payment of fees] that the qualified custodian will not
deliver trust securities to the investment adviser, any
investment adviser representative or employee, director
or owner of the investment adviser, nor will transmit
any funds to the investment adviser; any investment
adviser representative or employee; director or owner of
the investment adviser, except that the qualified
custodian may pay trustees' fees to the trustee and
investment management or advisory fees to investment
adviser, provided that:
(I)
the grantor of the trust or attorneys for the trust,
if it is a testamentary trust, the co-trustee (other
than the investment adviser; investment adviser
representative; or employee, director or owner of
the investment adviser); or a defined beneficiary of
the trust has authorized the qualified custodian in
writing to pay those fees;
(II)
the statements for those fees show the amount of the
fees for the trustee and, in the case of statements
for investment management or advisory fees, show the
value of the trust assets on which the fee is based
and the manner in which the fee was calculated; and
(III)
the qualified custodian agrees to send to the
grantor of the trust, the attorneys for a
testamentary trust, the co-trustee (other than the
investment adviser; investment adviser
representative; or employee, director or owner of
the investment adviser); or a defined beneficiary of
the trust, at least quarterly, a statement of all
disbursements from the account of the trust,
including the amount of investment management fees
paid to the investment adviser and the amount of
trustees' fees paid to the trustee.
(ii)
[Distribution of assets] except as otherwise set forth
in (b)(8)(C)(i) of this Section, that the qualified
custodian may transfer funds or securities, or both, of
the trust only upon the direction of the trustee (who
may be the investment adviser; investment adviser
representative; or employee, director or owner of the
investment adviser), who the investment adviser has duly
accepted as an authorized signatory. The grantor of the
trust or attorneys for the trust, if it is a
testamentary trust, the co-trustee (other than the
investment adviser; investment adviser representative;
or employee, director or owner of the investment
adviser); or a defined beneficiary of the trust, must
designate the authorized signatory for management of the
trust. The direction to transfer funds or securities, or
both, can only be made to the following:
(I)
to a trust company, bank trust department or
brokerage firm independent of the investment adviser
for the account of the trust to which the assets
relate; (II)
to the named grantors or to the named beneficiaries
of the trust;
(III)
to a third person independent of the investment
adviser in payment of the fees or charges of the
third person including, but not limited to:
(a)
attorney's, accountant's, or qualified
custodian's fees for the trust; and
(b)
taxes, interest, maintenance or other expenses,
if there is property other than securities or
cash owned by the trust;
(IV)
to third persons independent of the investment
adviser for any other purpose legitimately
associated with the management of the trust; or
(V)
to a broker-dealer in the normal course of portfolio
purchases and sales, provided that the transfer is
made on payment against delivery basis or payment
against trust receipt.
(D)
[Waiver of audited financial statements] not be required to
meet the financial requirements for custodial advisers as
set forth in 660:11-7-31 if the investment adviser has
custody solely because it meets the definition of custody as
defined in (a)(1)(A)(iii) of this Section and who complies
with the safekeeping requirements in (b)(1)-(5) and (8) of
this Section.
(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 Investment Company
Act of 1940 [15 U.S.C. 80a-5(a)(1)] (mutual fund), you may use
the mutual funds transfer agent I n lieu of a qualified
custodian for purposes of complying with (b) of this Section;
(2)
Certain privately offered securities.
(A)
You are not required to comply with (b) 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, the
audited financial statements are distributed as described in
(3) of this Subsection, and the investment adviser notifies
the Administrator in writing that the investment adviser
intends to provide audited financial statements. Such
notification is required to be given on Form ADV.
(3)
Limited partnerships subject to annual audit. You
are not required to comply with (b)(3) of this Section with
respect to the account of a limited partnership (or limited
liability company, or another type of pooled investment vehicle)
that is subject to audit at least annually 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. The investment adviser must also notify
the Administrator in writing that the investment adviser intends
to employ the use of the audit safeguards described in (2)(B) of
this subsection. Such notification is required to be given on
Form ADV. (4)
Registered investment companies.
You are not required to comply with this Section with respect to
the account of an investment company registered under the
Investment Company Act of 1940 [15 U.S.C. 80a-1 to 80a-64].
(5)
Beneficial Trusts.
An investment adviser is not required to comply with
safekeeping requirements of (b) of this Section or 660:11-7-31
if the investment adviser has custody solely because the
investment adviser, investment adviser representative or
employee, director or owner of the investment adviser is a
trustee for a beneficial trust, if all of the following
conditions are met for each trust:
(A)
The beneficial owner of the trust is a parent, a
grandparent, a spouse, a sibling, a child or a grandchild of
the trustee. These relationships shall include step
relationships.
(B)
For each account under (A) of this paragraph you comply with
the following:
(i)
You provide
a written statement to each beneficial owner of the
account setting forth a description of the requirements
of (b) of this Section and the reasons why you will not
be complying with those requirements.
(ii) You
obtain from each beneficial owner a signed and dated
statement acknowledging the receipt of the written
statement required under (i) of this subparagraph.
(iii) You
maintain a copy of both documents described in (i) and
(ii) of this subparagraph until the
account is closed or you are no longer trustee.
(6)
Any adviser who intends to have custody of client funds or
securities but is not able to utilize a qualified custodian as
defined in (a) of this Section must first obtain approval from
the Administrator and must comply with all of the applicable
safekeeping provisions under (b) of this Section including
taking responsibility for those provisions that are designated
to be performed by a qualified custodian.
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, including Schedules
A-I, 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.
SUBCHAPTER 9. REGISTRATION OF
SECURITIES
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(3) of the 1933 Act and Rule 174 adopted by
the SEC (17 C.F.R. 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
developmental stage companies
(a) Definition. For purposes of this section a
"promotional or developmental stage company" means any entity that meets
the definition in 660:11-1-3.
(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 developmental 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
developmental stage company as defined in 660:11-1-3, 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.
SUBCHAPTER 11. EXEMPTIONS FROM
SECURITIES 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
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:
"Class" means the lowest level of subdivision of
the securities offered by an issuer.
"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.
"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.
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) Standard & Poor's Corporation Records
(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 developmental stage company as defined
in 660:11-1-3, 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 this state's
securities laws.
(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(6) thereof; or any offer or sale of securities
offered or sold in compliance with the 1933 Act, Regulation D, Rules
230.504 and/or 230.505, including any offer or sale made exempt by
application of Rule 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, including the Appendix thereto.
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; and
(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
(3)(b) 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
(a) Preliminary statement. On April 27, 1997, the NASAA
adopted the Model Accredited Investor Exemption ("MAIE"). MAIE provides
exemption from securities registration only for offers and sales to
accredited investors. The MAIE rests on the premise that accredited
investors are capable of fending for themselves in information gathering
and conducting "due diligence" on potential investments in companies
before making an investment. Under authority of Section 401(b)(22) of
the Oklahoma Securities Act, 71 O.S. §§ 1-17, 101-103, 201-204, 301-307,
401-413, 501, 701-703 (Supp. 1998), repealed effective July 1, 2004, the
Administrator issued an order granting such an exemption, effective
March 8, 1999, that is known as the Oklahoma Accredited Investor
Exemption.
(b) Definitions. The following terms, when used in this
section, shall have the meanings as such terms are defined in the NASAA
Statement Of Policy Regarding Corporate Securities Definitions, adopted
April 27, 1997.
(1) "Issuer in the Development Stage"; and
(2) "Promoters"
(c) Exemption. Under the authority of Section 2-103 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
order, 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 exemption from securities registration under the
Securities Act.
(3) When exemption is unavailable.
(A) The exemption is not available to an Issuer
that is in the Development Stage 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 of the issuer's Promoters 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 (5), 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 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 CRF §
230.254 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 CRF § 230.255; or
(C) an offering document that contains the
information required to be furnished in 17 CRF § 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 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 United
States Securities and Exchange Commission, 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.
(b) Terms of notice filing. The issuer shall file with
the Administrator no later than fifteen (15) days after the first sale
of a security in this state for which a notice is required under (a) of
this section:
(1) one copy of the notice of sales on Form D as most
recently filed with the SEC, and the Appendix thereto;
(2) a consent to service of process on Form U-2 and
(if applicable) Form U-2A; and
(3) the notice filing fee required by Section
1-612.A.19 of the Securities Act.
SUBCHAPTER 13. SALES
LITERATURE
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), other public media and any other written
communication distributed or made generally available to customers or
the public including, but not limited to, prospectuses, 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 package" means all submissions
of Sales Literature to the Department under one posting or delivery
relating to a specific issue of securities.
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 the Sales Literature Package, the fee
specified in Section 1-612 of the Securities Act and a representation 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-----."
(b) Exemption from filing. 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 changes in a
name, personnel, location, ownership, offices, business structure,
officers or partners, telephone or teletype numbers; and
(5) Sales Literature filed with and approved by the
NASD.
(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 is subject to the provisions of Section 1-501 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 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. 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.
SUBCHAPTER 15. MISCELLANEOUS
PROVISIONS
Section
660:11-15-1. General rules for presentation of financial
statements
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.
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.
660:20-1-3. 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
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 reports, has paid all proper costs of
examinations of the subdivider conducted by the Administrator or his
representatives, pays an annual renewal fee and renewal is requested by a
letter signed by the registrant. The annual renewal fee shall be Two
Hundred Fifty Dollars ($250.00) plus Ten Dollars ($10.00) for each 100
lots or fraction thereof previously registered remaining to be offered in
the state of Oklahoma at renewal.
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
The following words and terms, when used in this Chapter
or the Business Opportunity Act, 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 securities 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
Section
660:25-7-1. Interpretive opinion requests
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 therefor.
|
