Ohio Administrative Code › Title 1301:6 - Division of Securities › Chapter 1301:6-3 - Registration of Securities; Licensing › Section 1301:6-3-19 - Deceptive practices and good business repute

Current through all regulations passed and filed through July 1, 2024
(A) No dealer or salesperson shall:
(1) Engage in any pattern of unreasonable or
			 unjustified delay in the delivery of securities sold;
(2) Induce trading in a customer's account
			 which is excessive in size or frequency in view of the financial resources of
			 the customer or character of the account;
(3) Execute a transaction on behalf of a
			 customer without authority to do so;
(4) Exercise any discretionary authority in
			 selling, pledging, hypothecating or purchasing securities for a customer
			 without first obtaining a manually signed, written authorization from the
			 customer, unless the discretionary authority relates solely to the time or
			 price for execution of orders;
(5)
			 Sell, purchase, or recommend the sale or purchase of any security without
			 reasonable grounds to believe that the transaction or recommendation is
			 suitable for the customer, based upon reasonable inquiry concerning the
			 customer's investment objectives, financial situation and needs, and any other
			 relevant information known to dealer or salesperson;
(6)
									Place the
			 financial or other interest of the dealer or salesperson ahead of the interest
			 of the retail customer, recommend the sale or purchase of any security without
			 a reasonable basis to believe that the recommendation is in the best interest
			 of the retail customer based on the customer's investment profile and the
			 potential risks, rewards, and costs associated with the recommendation, or
			 otherwise fail to comply with the obligations set forth in "Regulation Best
			 Interest," as set forth in rule
			 17 C.F.R.
			 240.15l-1;
(7) Sell, purchase,
			 effect any transaction in or induce the purchase or sale of any security by
			 means of any device, practice, plan, program, design or contrivance declared to
			 be manipulative, deceptive or fraudulent and recognized as such in courts of
			 law or equity, or by any administrative tribunal, state or federal, on or after
			 July 22, 1929, or by the rules, by-laws, code of ethics or other published
			 standard of any self-regulatory association of securities dealers or
			 salesperson of which the dealer or salesperson was a member at the time of the
			 transaction;
(8) Share any commission, discount, or other
			 remuneration from the purchase or sale of a security with any person not
			 licensed as a dealer or salesperson in Ohio or in the jurisdiction where the
			 purchase or sale of the security took place:
(a) Notwithstanding the provisions of
			 paragraph (A)(7) of this rule, a dealer or salesperson:
(i) May share a commission, discount, or
			 other remuneration from the purchase or sale of a security with:
(a) A bank, as that term is defined in
			 division (O) of section
			 1707.01 of
			 the Revised Code;
(b) A bank
			 holding company approved by the board of governors of the federal reserve bank
			 pursuant to the Bank Holding Company Act of 1956,
			 12
			 U.S.C. 1841, as amended; or
(c) A financial holding company approved by
			 the board of governors of the federal reserve bank pursuant to the Bank Holding
			 Company Act of 1956,
			 12
			 U.S.C. 1841, as amended;
(ii) May provide to an employee of a bank
			 compensation for the referral of a customer if the compensation is a nominal
			 one-time cash fee of a fixed dollar amount and the payment of the fee is not
			 contingent on whether the referral results in a purchase or sale of a
			 security.
(9) Enter into any
			 transaction with or for a customer at a price not reasonably related to the
			 current market price of the security involved in the transaction;
(10)
			 Fail to disclose, in writing, to a customer prior to the sale of a security
			 that the dealer or salesperson controls, is controlled by, is under common
			 control with, or is affiliated with the issuer of that security;
(11)
			 Borrow any money or securities from a customer other than for obligations of
			 dealers arising out of customary option transactions, activity in margin
			 accounts, the maintenance of customer free credit balances, delivery failures
			 in the ordinary course of business, loans from banks and other insured
			 financial institutions, and deposits made pursuant to written subordination
			 agreements or pursuant to securities loan agreements made to cover short
			 positions;
(12) Sell or otherwise dispose of any security upon
			 representations contrary to the statements contained in the application for
			 registration or for qualification by exemption or in a manner contrary to the
			 terms of any order of the division relating to the securities;
(13)
			 Execute any transaction in a margin account without first securing from the
			 customer a manually signed, written margin agreement;
(14)
			 Share directly or indirectly in profits or losses in the account of any
			 customer without the written authorization of the customer and the dealer which
			 the salesperson represents;
(15) Receive any
			 commission, discount or other remuneration in excess of that provided for in
			 Chapter 1707. of the Revised Code;
(16) Fail to furnish
			 to a customer purchasing securities in an offering either a final prospectus or
			 a preliminary prospectus and additional documents which would include all
			 information required for a final prospectus, no later than the date of
			 confirmation of the transaction;
(17) Represent to a
			 customer that the dealer or salesperson will guarantee any person against
			 losses in any securities transaction;
(18) For securities
			 not listed on a recognized securities exchange or quoted on an automated
			 quotation system, fail to make reasonably available upon request to any person
			 financial statements and related disclosures of the issuer, a profit and loss
			 statement of the issuer, the names of the issuer's proprietor, partners or
			 officers, the nature of the business of the issuer and any other information
			 available to the dealer reasonably necessary for evaluating the desirability or
			 lack of desirability of investing in the securities of an issuer, which
			 information shall not be dated not more than fifteen months prior to the date
			 of delivery by the dealer or salesperson;
(19) Establish or
			 maintain an account containing fictitious information in order to execute
			 transactions which would otherwise be prohibited; or
(20) Effect any
			 securities transaction not recorded on the regular books or records of the
			 dealer which the salesperson represents, unless the transaction is authorized
			 in writing by the dealer prior to execution of the transaction.