Kentucky Administrative Regulations › Title 808 - PUBLIC PROTECTION CABINET - DEPARTMENT OF FINANCIAL INSTITUTIONS › Chapter 10 - Securities › Section 808 KAR 10:480 - Books and records of firms employing issuer agents

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				292.336(1)(a), (b)
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				292.500(3) authorizes the
				commissioner to promulgate administrative regulations necessary to carry out
				the provisions of KRS Chapter 292. This administrative regulation establishes
				the books and records a firm employing issuer agents must maintain.
Section 1. Every firm employing issuer
			 agents, who are either registered or required to be registered under the
			 provisions of KRS Chapter 292, to effect transactions in its securities shall
			 make and keep accurate, complete, and current the following books and records
			 relating to these securities transactions:
(1) Records that track all receipts of funds
			 from purchasers of the securities and all disbursements of those funds. The
			 disbursement records shall provide sufficient detail to prepare an actual "Use
			 of Proceeds" tabular display for comparison with the proposed "Use of Proceeds"
			 tabular display required by the Offering Document Guidelines adopted by the
			 department in April 2009. Records shall include bank statements which keep cash
			 receipts and disbursements related to the securities offering separate from
			 other receipts and disbursements of the issuer;
(2) Current financial statements, prepared
			 according to generally accepted accounting principles, for the issuer for the
			 most recent three (3) years (or the life of the issuer if less than three (3)
			 years). These statements shall not be required to be audited, but shall be
			 verified as true and accurate within the actual knowledge of the issuer's chief
			 financial officer (or chief executive officer if the issuer has no specified
			 financial officer);
(3) Employment
			 contracts with agents, if any;
(4)
(a) For any unregistered employees of the
			 firm who contact investors or potential investors, documentation of the manner
			 in which the employee is compensated.
(b) If the employee is compensated by salary
			 and bonus, documentation of the factors used in determining the amount of the
			 bonus;
(5)
(a) Copies of any scripts or other materials
			 used to train agents in the selling of the securities.
(b) Copies of any materials used to train
			 unregistered employees who contact investors or potential investors;
(6)
(a) Copies of any scripts or other materials
			 prepared for use by agents in discussing the securities with potential
			 purchasers.
(b) Copies of materials
			 prepared for use by unregistered employees who contact investors or potential
			 investors;
(7) Copies of
			 any general advertising or promotional material utilized by the issuer during
			 the period of the offering whether or not related directly to the securities
			 offering;
(8) Copies of any
			 prospectus or similar offering document used in the offer or sale of the
			 issuer's securities and, if any document was revised during the offering
			 period, copies of all versions of the document with notation of the dates
			 during which each document was utilized;
(9) All material contracts related to the
			 offering (such as leases, employment contracts, supplier or vendor contracts,
			 turnkey contracts, etc.);
(10) Any
			 professional opinion letters related to the offering (such as those from
			 attorneys, accountants, experts, etc.);
(11) All subscription (or other requests to
			 purchase) materials completed by offerees;
(12) All correspondence to or from potential
			 investors;
(13) Customer files that
			 document contact information for all purchasers of the issuer's securities and
			 containing copies of all correspondence either received from or sent to these
			 purchasers. These files shall also contain any other information necessary to
			 determine that the sales complied with all requirements of any exemptions from
			 registration of the securities claimed by the issuer and with any other
			 applicable administrative regulations, including that the investment is
			 suitable for the purchaser;
(14) A
			 file documenting compliance with the securities laws of all relevant
			 jurisdictions (including the Securities and Exchange Commission if the offering
			 is across state lines) both in the offering and selling of the securities, and
			 in the payment of compensation to the agents; and
(15) A complaint file for the offering which
			 shall contain:
(a) Copies of any written
			 (including electronic transmissions) complaints related to the offering of
			 securities;
(b) A written summary
			 of any oral complaint related to the offering with contact information for the
			 complainant;
(c) Copies of any
			 written responses to complaints; and
(d) A written summary of the disposition of
			 each complaint.