Bill Text: OH HB600 | 2011-2012 | 129th General Assembly | Introduced

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Bill Title: To permit the Division of Securities to order the payment of administrative assessments and investigatory costs, and to issue consent orders, for violations of the Securities Law and to make other changes to that Law relative to the preparation and auditing of financial statements.

Spectrum: Moderate Partisan Bill (Republican 4-1)

Status: (Introduced - Dead) 2012-10-24 - To *Financial Institutions, Housing & Urban Development [HB600 Detail]

Download: Ohio-2011-HB600-Introduced.html

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As Introduced

129th General Assembly Regular Session 2011-2012

H. B. No. 600

Representative Hagan, C. 

Cosponsors: Representatives Amstutz, Stebelton, Stinziano, Wachtmann 

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A BILL

To amend sections 1707.20 and 1707.37 and to enact

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section 1707.191 of the Revised Code to permit the

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Division of Securities to order the payment of

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administrative assessments and investigatory

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costs, and to issue consent orders, for violations

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of the Securities Law and to make other changes to

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that Law relative to the preparation and auditing

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of financial statements.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1707.20 and 1707.37 be amended and	9
section 1707.191 of the Revised Code be enacted to read as	10
follows:	11

Sec. 1707.191.  (A) After notice and opportunity for a	12
hearing conducted in accordance with Chapter 119. of the Revised	13
Code, the division of securities may order the payment of an	14
administrative assessment of not more than ten thousand dollars	15
for any violation of sections 1707.01 to 1707.45 of the Revised	16
Code or of any rule adopted or order issued under those sections.	17
Each violation shall constitute a separate offense. In the case of	18
a continuing violation, each calendar day constitutes a separate	19
offense. The ordering of an administrative assessment pursuant to	20
this division does not preclude the exercise of any other remedy	21
provided under sections 1707.01 to 1707.45 of the Revised Code.	22

(B) In addition to or in lieu of ordering an administrative	23
assessment under division (A) of this section, the division may,	24
with respect to any person who has engaged in an act, practice, or	25
course of business constituting a violation of sections 1707.01 to	26
1707.45 of the Revised Code, do either or both of the following:	27

(1) Order the person to pay any investigatory and related	28
costs incurred by the division, including attorney's and witness	29
fees;	30

(2) Enter into and issue a consent order that compels the	31
person to do one or more of the following:	32

(a) Rescind the transaction related to the violation;

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(b) Disgorge any assets acquired or profits made as a result	34
of the violation;	35

(c) Make restitution, which may include interest not to	36
exceed the criminal usury rate as defined in section 2905.21 of	37
the Revised Code.	38

(C) The division may refer to the attorney general for the	39
collection of any administrative assessment ordered pursuant to	40
division (A) of this section and may take any appropriate action	41
necessary to compel compliance with a consent order issued under	42
division (B) of this section.	43

(D) The ten-thousand-dollar limitation imposed under this	44
section on administrative assessments does not apply to any	45
settlement agreement entered into by the division with the person	46
who is the subject of a violation.	47

Sec. 1707.20.  (A)(1) The division of securities may adopt,	48
amend, and rescind such rules, forms, and orders as are necessary	49
to carry out sections 1707.01 to 1707.45 of the Revised Code,	50
including rules and forms governing registration statements,	51
applications, and reports, and defining any terms, whether or not	52
used in sections 1707.01 to 1707.45 of the Revised Code, insofar	53
as the definitions are not inconsistent with these sections. For	54
the purpose of rules and forms, the division may classify	55
securities, persons, and matters within its jurisdiction, and	56
prescribe different requirements for different classes.	57

(2) Notwithstanding sections 121.71 to 121.76 of the Revised	58
Code, the division may incorporate by reference into its rules any	59
statute enacted by the United States congress or any rule,	60
regulation, or form promulgated by the securities and exchange	61
commission, or by another federal agency, in a manner that also	62
incorporates all future amendments to the statute, rule,	63
regulation, or form.	64

(B) No rule, form, or order may be made, amended, or	65
rescinded unless the division finds that the action is necessary	66
or appropriate in the public interest or for the protection of	67
investors, clients, prospective clients, state retirement systems,	68
or the workers' compensation system and consistent with the	69
purposes fairly intended by the policy and provisions of sections	70
1707.01 to 1707.45 of the Revised Code. In prescribing rules and	71
forms and in otherwise administering sections 1707.01 to 1707.45	72
of the Revised Code, the division may cooperate with the	73
securities administrators of the other states and the securities	74
and exchange commission with a view of effectuating the policy of	75
this section to achieve maximum uniformity in the form and content	76
of registration statements, applications, reports, and overall	77
securities regulation wherever practicable.	78

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

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(1) The form and content of financial statements required	80
under sections 1707.01 to 1707.45 of the Revised Code;	81

(2) The circumstances under which consolidated financial	82
statements will be filed;	83

(3) Whether any required financial statements shall be	84
certifiedaudited by independent or certified public accountants.	85
All financial statements shall be prepared in accordance with	86
generally accepted accounting practicesprinciples and comply with	87
all other requirements specified by rule adopted or order issued	88
under sections 1707.01 to 1707.45 of the Revised Code.	89

(D) All rules and forms of the division shall be published;	90
and in addition to fulfilling the requirements of Chapter 119. of	91
the Revised Code, the division shall prescribe, and shall publish	92
and make available its rules regarding the sale of securities, the	93
administration of sections 1707.01 to 1707.45 of the Revised Code,	94
and the procedure and practice before the division.	95

(E)(1) No provision of sections 1707.01 to 1707.45 of the	96
Revised Code imposing any liability applies to any act done or	97
omitted in good faith in conformity with any rule, form, or order	98
of the division of securities, notwithstanding that the rule,	99
form, or order may later be amended or rescinded or be determined	100
by judicial or other authority to be invalid for any reason,	101
except that the issuance of an order granting effectiveness to a	102
registration under section 1707.09 or 1707.091 of the Revised Code	103
for the purposes of this division shall not be deemed an order	104
other than as the establishment of the fact of registration.	105

(2) No provision of sections 1707.01 to 1707.45 of the	106
Revised Code imposing any liability, penalty, sanction, or	107
disqualification applies to any act done or omitted in good faith	108
in conformity with either of the following:	109

(a) Any provision of sections 1707.01 to 1707.45 of the	110
Revised Code that incorporates by reference a federal statute,	111
rule, regulation, or form;	112

(b) Any rule, form, or order of the division that	113
incorporates by reference a federal statute, rule, regulation, or	114
form.	115

Division (E)(2) of this section applies notwithstanding that	116
the incorporation by reference, or any application of the	117
incorporated provision, is later determined by judicial or other	118
authority to be unconstitutional or invalid for any reason.	119

(F) The division shall, in accordance with Chapter 119. of	120
the Revised Code, adopt rules that set forth the criteria that	121
must be met in order to qualify for a hardship exemption from the	122
requirement that financial statements be audited.	123

Sec. 1707.37. (A) All fees and charges collected under this	124
chapter, including investigatory and related costs recovered	125
pursuant to section 1707.191 of the Revised Code, shall be paid	126
into the state treasury to the credit of the division of	127
securities fund, which is hereby created. All expenses of the	128
division of securities, other than those specified in division (B)	129
of this section, shall be paid from the fund.	130

The fund shall be assessed a proportionate share of the	131
administrative costs of the department of commerce in accordance	132
with procedures prescribed by the director of commerce and	133
approved by the director of budget and management. The assessments	134
shall be paid from the division of securities fund to the division	135
of administration fund.	136

If moneys in the division of securities fund are determined	137
by the director of budget and management and the director of	138
commerce to be in excess of those necessary to defray all the	139
expenses in any fiscal year, the director of budget and management	140
shall transfer the excess to the general revenue fund.	141

(B) There is hereby created in the state treasury the	142
division of securities investor education and enforcement expense	143
fund, which shall consist of all administrative assessments	144
collected pursuant to section 1707.191 of the Revised Code, money	145
received in settlement of any violation of this chapter, and any	146
cash transfers. Money in the fund shall be used to pay expenses of	147
the division of securities relating to education or enforcement	148
for the protection of securities investors and the public. The	149
division may adopt rules pursuant to section 1707.20 of the	150
Revised Code that establish what qualifies as such an expense.	151

Section 2. That existing sections 1707.20 and 1707.37 of the	152
Revised Code are hereby repealed.	153

Section 3. Section 1707.191 of the Revised Code, as enacted	154
by this act, applies only to violations that are committed on or	155
after the effective date of this act.	156