Ohio Code 1707.058 – Issuers-disqualification from registration exemption
(A) As used in this section, “affiliated party” means any of the following:
Terms Used In Ohio Code 1707.058
- Beneficial owner: includes any person who directly or indirectly through any contract, arrangement, understanding, or relationship has or shares, or otherwise has or shares, the power to vote or direct the voting of a security or the power to dispose of, or direct the disposition of, the security. See Ohio Code 1707.01
- Conviction: A judgement of guilt against a criminal defendant.
- Dealer: except as otherwise provided in this chapter, means every person, other than a salesperson, who engages or professes to engage, in this state, for either all or part of the person's time, directly or indirectly, either in the business of the sale of securities for the person's own account, or in the business of the purchase or sale of securities for the account of others in the reasonable expectation of receiving a commission, fee, or other remuneration as a result of engaging in the purchase and sale of securities. See Ohio Code 1707.01
- Director: means each director or trustee of a corporation, each trustee of a trust, each general partner of a partnership, except a partnership association, each manager of a partnership association, and any person vested with managerial or directory power over an issuer not having a board of directors or trustees. See Ohio Code 1707.01
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- in writing: includes any representation of words, letters, symbols, or figures; this provision does not affect any law relating to signatures. See Ohio Code 1.59
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Investment adviser: means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of regular business, issues or promulgates analyses or reports concerning securities. See Ohio Code 1707.01
- Issuer: means every person who has issued, proposes to issue, or issues any security. See Ohio Code 1707.01
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- National Credit Union Administration: The federal regulatory agency that charters and supervises federal credit unions. (NCUA also administers the National Credit Union Share Insurance Fund, which insures the deposits of federal credit unions.) Source: OCC
- Person: except as otherwise provided in this chapter, means a natural person, firm, partnership, limited partnership, partnership association, syndicate, joint-stock company, unincorporated association, trust or trustee except where the trust was created or the trustee designated by law or judicial authority or by a will, and a corporation or limited liability company organized under the laws of any state, any foreign government, or any political subdivision of a state or foreign government. See Ohio Code 1707.01
- Property: means real and personal property. See Ohio Code 1.59
- Purchase: means any act by which a purchase is made. See Ohio Code 1707.01
- salesperson: means every natural person, other than a dealer, who is employed, authorized, or appointed by a dealer to sell securities within this state. See Ohio Code 1707.01
- Securities and exchange commission: means the securities and exchange commission established by the Securities Exchange Act of 1934. See Ohio Code 1707.01
- Security: means any certificate or instrument, or any oral, written, or electronic agreement, understanding, or opportunity, that represents title to or interest in, or is secured by any lien or charge upon, the capital, assets, profits, property, or credit of any person or of any public or governmental body, subdivision, or agency. See Ohio Code 1707.01
- State: means any state of the United States, any territory or possession of the United States, the District of Columbia, and any province of Canada. See Ohio Code 1707.01
- Temporary restraining order: Prohibits a person from an action that is likely to cause irreparable harm. This differs from an injunction in that it may be granted immediately, without notice to the opposing party, and without a hearing. It is intended to last only until a hearing can be held.
- United States: includes all the states. See Ohio Code 1.59
(1) Any predecessor to the issuer;
(2) Any affiliated issuer;
(3) Any director, executive officer, other officer participating in the offering, general partner, or managing member of the issuer;
(4) Any beneficial owner of twenty per cent or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power;
(5) Any promoter connected with the issuer in any capacity at the time of the sale;
(6) Any investment manager of an issuer that is a pooled investment fund;
(7) Any general partner or managing member of any investment manager participating in the offering;
(8) Any director, executive officer, or other officer participating in the offering of any investment manager or general partner or managing member of the investment manager participating in the offering.
(B) The exemption from registration provided under section 1707.051 of the Revised Code is not available with respect to an offer, sale, and issuance of securities if the issuer of the securities or any affiliated party:
(1) Has been convicted, within ten years before the offering of any felony or misdemeanor:
(a) In connection with the purchase or sale of any security;
(b) Involving the making of any false filing with the securities and exchange commission or a state securities commissioner; or
(c) Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser, or paid solicitor of purchasers of securities.
(2) Is subject to any order, judgment, or decree of any court of competent jurisdiction, entered within five years before the sale, that, at the time of the sale, restrains or enjoins the person from engaging or continuing to engage in any conduct or practice:
(a) In connection with the purchase or sale of any security;
(b) Involving the making of any false filing with the securities and exchange commission or a state securities commissioner; or
(c) Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser, or paid solicitor of purchasers of securities.
(3) Is subject to a final order of the securities and exchange commission; a state securities commission or an agency or officer of a state performing like functions; a state authority that supervises or examines banks, savings associations, or credit unions; a state insurance commission or an agency or officer of a state performing like functions; an appropriate federal banking agency; the United States commodity futures trading commission; or the national credit union administration that:
(a) At the time of the offering, bars the person from associating with an entity regulated by the commission, authority, agency, or officer; engaging in the business of securities, insurance, or banking; or engaging in savings association or credit union activities; or
(b) Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within ten years before the offering.
(4) Is subject to an order of the securities and exchange commission entered pursuant to 15 U.S.C. § 78o(b), 78o-4(c), 80b-3(e), or 80b-3(f), or an order of a state securities commission or an agency or officer of a state performing like functions, that, at the time of the offering, does any of the following:
(a) Suspends or revokes the person’s license or registration as a broker, dealer, municipal securities dealer, or investment adviser;
(b) Places limitations on the activities, functions, or operations of the person;
(c) Bars the person from being associated with any entity or from participating in the offering of any penny stock.
(5) Is subject to any order of the securities exchange commission, or an order of a state securities commission or an agency or officer of a state performing like functions, entered within ten years before the sale, that, at the time of the sale, orders the person to cease and desist from committing or causing a violation or future violation of any of the following:
(a) Any scienter-based antifraud provision of the federal securities laws, including, but not limited to, 15 U.S.C. § 77q(a)(1), 78j(b), 78o(c)(1), and 80b-6(1), and 17 C.F.R. § 240.10b-5 or any other regulation adopted thereunder;
(b) 15 U.S.C. § 77e, division (C)(1) of section 1707.44 of the Revised Code, or any state securities law that requires the registration of securities;
(c) Any state securities law requiring state registration as a broker dealer, investment adviser, agent, salesperson, investment adviser, or OhioInvests portal;
(d) Any state securities law involving fraudulent, manipulative, or deceptive conduct.
(6) Is suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;
(7) Has filed as a registrant or issuer, or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the securities and exchange commission or a state securities commissioner that, within five years before the sale, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption;
(8) Is, at the time of the sale, the subject of an investigation or proceeding to determine whether a stop order or a suspension order of the type described in division (B)(7) of this section should be issued;
(9) Is subject to a United States postal service false representation order entered within five years before the offering;
(10) Is, at the time of the offering, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States postal service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.
(C) Division (B) of this section does not apply:
(1) With respect to any conviction, order, judgment, decree, suspension, expulsion, or bar that occurred or was issued before the effective date of this section;
(2) Upon a showing of good cause and without prejudice to any other action by the securities and exchange commission or a state securities commissioner, if the division determines that it is not necessary under the circumstance that an exemption be denied;
(3) If, before the relevant offering, the court of regulatory authority that entered the relevant order, judgment, or decree advises in writing that the disqualification under division (B) of this section should not arise as a consequence of the order, judgment, or decree, whether the advice is contained in the relevant judgment, order, or decree or separately to the securities and exchange commission or a state securities commissioner or their staff; or
(4) If the issuer establishes to the division that it did not know and, in the exercise of reasonable care, could not have known that a disqualification existed under division (B) of this section.
(D) For purposes of division (B) of this section, events relating to any affiliated issuer that occurred before the affiliation arose will not be considered disqualifying if the affiliated entity is not either of the following:
(1) In control of the issuer;
(2) Under common control with the issuer by a third party that was in control of the affiliated entity at the time of the events.