KRS § 292.412 — KY Code / Title XXV / Chapter 292 / Section 292.412
292.412 Registration of securities Internet Web site operators
Status: in_force

292.412 Registration of securities Internet Web site operators.

(1) This section applies to registrants operating an Internet Web site pursuant to KRS

292.411(1)(r).

(2) Broker-dealers registered pursuant to KRS 292.330 and operating an Internet Web

site, pursuant to KRS 292.411(1)(r), shall make an annual notice filing with the

department on a form prescribed by the commissioner, but shall be otherwise

exempt from the provisions of this section.

(3) In lieu of the registration requirements of KRS 292.330, a person may apply for

registration with the department as an Internet Web site operator by filing an

application on a form prescribed by the commissioner that shall include the

following:

(a) The Internet Web site operator is a business entity organized pursuant to the

laws of Kentucky, authorized to do business in Kentucky, and engaged

exclusively in intrastate offers and sales of securities in Kentucky;

(b) The Internet Web site operator is solely engaged in the business of operating

an Internet Web site in accordance with this section and KRS 292.411(1)(r);

(c) The identity, location, and contact information for the Internet Web site

operator and any director, executive officer, general partner, managing

member, or other person with management authority designated by the

commissioner;

(d) A statement that the Internet Web site operator or any director, executive

officer, general partner, managing member, or other person with management

authority of the Internet Web site operator has never been subject to any

conviction, order, judgment, decree, or other action specified in the Securities

Act of 1933 Rule 17 C.F.R. sec. 230.506(d); and

(e) Any other documents, certifications, or information the commissioner may

require to administer and enforce the requirements of this section.

(4) (a) An Internet Web site operator registered pursuant to this section shall:

1. Charge a fee to an issuer for an offering of securities on the Internet Web

site only in a:

a. Fixed amount for each offering;

b. Variable amount based on the length of time that securities are

offered on the Internet Web site; or

c. Combination of the fixed and variable amounts; and

2. Comply with any other requirements that the commissioner, by

administrative regulation or order, determines is necessary or

appropriate in the public interest or for the protection of investors.

(b) An Internet Web site operator registered pursuant to this section shall not:

1. Offer investment advice or recommendations;

2. Solicit purchases, sales, or offers to buy the securities offered or

displayed on its Internet Web site;

3. Compensate employees, agents, or other persons for the solicitation of

securities or the sale of securities displayed or referenced on the Internet

Web site;

4. Be compensated based on the amount of securities sold;

5. Identify, promote, or otherwise refer to any individual security offered

on its Internet Web site in any advertising for the Internet Web site; or

6. Hold, manage, possess, or handle purchaser funds or securities.

(5) Each application filed pursuant to subsection (3) of this section shall be

accompanied by the filing fee established by the commissioner and a surety bond

filed with the application in an amount satisfactory to the commissioner, but no less

than fifty thousand dollars ($50,000). The surety bond shall be in favor of the

Commonwealth and shall secure payment of costs, fines, and damages to any person

determined by the commissioner, after a hearing conducted in accordance with KRS

Chapter 13B, to be aggrieved by an Internet Web site operator's violation of this

section and KRS 292.411.

(6) Registration as an Internet Web site operator shall expire annually. Subsequent

registration may be issued upon filing of a written renewal application, on a form

prescribed by the commissioner and upon payment of the renewal fee established by

the commissioner.

(7) Each Internet Web site operator registered pursuant to the section shall make and

keep all accounts, correspondence, memoranda, papers, books, and other records

which the commissioner prescribes by administrative regulation or order. All

required records shall be:

(a) Preserved for three (3) years, unless the commissioner, by administrative

regulation or order, prescribes otherwise for specified types of records; and

(b) 1. Kept within this state; or

2. At the request of the commissioner be made available at any time for

examination by the department in the principal office of the registrant, or

by production of exact copies to the department.

(8) The commissioner may conduct examinations of any Internet Web site operator

registered pursuant to this section:

(a) 1. At a date and time specified by the commissioner; and

2. Within the scope determined by the commissioner;

(b) Without prior notice to the Internet Web site operator; and

(c) The Internet Web site operator shall pay the reasonable expense attributable to

any examination, not to exceed an amount prescribed by the commissioner by

administrative regulation.

(9) If any change occurs that results in an Internet Web site operator no longer meeting

the minimum requirements for registration as set forth in this section, the Internet

Web site operator shall provide notice of such change to the commissioner as soon

as practicable after discovery. Within thirty (30) days of delivery of the notice

provided in this subsection, the Internet Web site operator shall, unless otherwise

permitted or directed by the commissioner, cease and desist from operating an

Internet Web site operator pursuant to KRS 292.411(1)(r).

(10) The commissioner may deny, refuse to renew, condition, limit, suspend, or revoke

the registration of an Internet Web site operator for any of the grounds set forth in

KRS 292.337, which are applicable to a broker-dealer, agent, investment adviser, or

investment adviser representative.

(11) Except as provided in subsection (12) of this section, the commissioner shall not

issue an order pursuant to subsection (10) of this section without appropriate notice

to the applicant or registrant, opportunity for a hearing, and written findings of fact

and conclusions of law in accordance with KRS Chapter 13B.

(12) The commissioner may take emergency action against an applicant or registrant, in

accordance with the provisions set forth in KRS 13B.125, if such action is in the

public interest and there is substantial evidence of a violation of law that constitutes

an immediate danger to the public health, safety, or welfare.