Ohio Administrative Code › Title 1301:6 - Division of Securities › Chapter 1301:6-3 - Registration of Securities; Licensing › Section 1301:6-3-15.1 - Application for investment adviser's license; responsibilities of licensed investment adviser

Current through all regulations passed and filed through July 1, 2024
(A) Definitions. As used in this rule:
(1) "Affiliated person"
			 
									has the same meaning as set forth in section 2(a) (3)
			 of the Investment Company Act of 1940, as amended.
(2) "Assignment" as used in paragraph (H) of
			 this rule includes any direct or indirect transfer or hypothecation of an
			 investment advisory contract by the assignor or of a controlling block of the
			 assignor's outstanding voting securities by a security holder of the assignor;
			 but if the investment adviser is a partnership, no assignment of an investment
			 advisory contract shall be deemed to result from the death or withdrawal of a
			 minority of the members of the investment adviser having only a minority
			 interest in the business of the investment adviser, or from the admission to
			 the investment adviser of one or more members who, after such admission, shall
			 be only a minority of the members and shall have only a minority interest in
			 the business. A transaction which does not result in a change of actual control
			 or management of an investment adviser is not an assignment for purposes of
			 paragraph (H)(1)(b) of this rule.
(3) "Beneficial ownership" will be
			 interpreted in the same manner as it would be under
			 17 C.F.R.
			 240.16a-1(a)(2), as amended,
			 in determining whether a person has beneficial ownership of a
			 security.
(4) The term "company"
			 has the same meaning as in section 202(a)(5) of the Investment Advisers Act of
			 1940 as amended, but does not include a company that is required to be
			 registered under the Investment Company Act of 1940, as amended, but is not
			 registered.
(5) "Control"
			 
									has the same meaning as set forth in section 2(a)(9)
			 of the Investment Company Act of 1940, as amended.
(6) "Discretionary power"
			 
									does
			 not include discretion as to the price at which or the time when a transaction
			 is or is to be effected, if, before the order is given by the investment
			 adviser, the client has directed or approved the purchase or sale of a definite
			 amount of the particular security.
(7) "Entering into," in reference to an
			 investment advisory contract by an investment adviser that is licensed or
			 required to be licensed under Chapter 1707. of the Revised Code does not
			 include an extension or renewal without material change of any such contract
			 which is in effect immediately prior to such extension or renewal.
(8) The term "executive officer" means the
			 president, any vice president in charge of a principal business unit, division
			 or function, such as sales, administration or finance, any other officer who
			 performs a policy-making function, or any other person who performs similar
			 policy-making functions, for the investment adviser.
(9) "Fulcrum fee" 
									means the
			 fee that is paid or earned when the investment company's performance is
			 equivalent to that of the index or other measure of performance.
(10) "Impersonal investment advice" means
			 investment advisory services provided by means of written material or oral
			 statements that do not purport to meet the objectives or needs of specific
			 individuals or accounts.
(11)
			 "Investment advisory contract" means any contract or agreement whereby a person
			 agrees to act as investment adviser to or to manage any investment or trading
			 account of another person other than an investment company registered under
			 Title I of the Investment Company Act of 1940, as amended.
(12) "Investment record" of an appropriate
			 index of securities prices for any period means the sum of the change in the
			 level of the index during such period; and the value, computed consistently
			 with the index, of cash distributions made by companies whose securities
			 comprise the index accumulated to the end of such period; expressed as a
			 percentage of the index level at the beginning of such period. For this
			 purpose, cash distributions on the securities which comprise the index shall be
			 treated as reinvested in the index at least as frequently as the end of each
			 calendar quarter following the payment of the dividend.
(13) "Non-resident investment adviser"
			 means, in the case of an individual, one who resides
			 or has one's principal place of business outside Ohio; in the case of a
			 corporation, one incorporated or having its principal place of business in any
			 place outside Ohio; or, in the case of a partnership or other unincorporated
			 organization or association, one having its principal place of business in any
			 place outside Ohio.
(14) An
			 investment adviser is "primarily engaged in a business or businesses other than
			 advising advisory clients" when, for each of its most recent three fiscal years
			 or for the period of time since organization, whichever is lesser, the
			 investment adviser derived, on an unconsolidated basis, more than fifty per
			 cent of its total sales and revenues and its income or loss before income taxes
			 and extraordinary items, from the other business or businesses.
(15) The term "private investment company"
			 means a company that would be defined as an investment company under section
			 3(a) of the Investment Company Act of 1940, as amended, but for the exception
			 provided from that definition by section 3(c)(1) of such act as
			 amended.
(16) "Qualified client"
			 
									has the same meaning as set forth in rule 205-3, 17
			 CFR 275, promulgated under the "Investment Advisers Act of 1940," as
			 amended.
(17) "Rolling period"
			 
									means a period consisting of a specified number of
			 sub-periods of definite length in which the most recent sub-period is
			 substituted for the earliest sub-period as time passes.
(18) The "specified period" over which the
			 asset value of the company or fund under management is averaged
			 
									means the period over which the investment performance
			 of the company or fund and the investment record of an appropriate index of
			 securities prices or such other measure of investment performance are computed.
			 However, the "specified period" over which the asset value of the company or
			 fund is averaged for the purpose of computing the fulcrum fee may differ from
			 the period over which the asset value is averaged for computing the performance
			 related portion of the fee, only if:
(a) The
			 performance related portion of the fee is computed over a rolling period and
			 the total fee is payable at the end of each sub-period of the rolling period;
			 and
(b) The fulcrum fee is computed
			 on the basis of the asset value averaged over the most recent sub-period or
			 sub-periods of the rolling period.
(19) "Wrap fee program" means a program under
			 which any client is charged a specified fee or fees not based directly upon
			 transactions in a client's account for investment advisory services performed
			 by an investment adviser that is licensed or required to be licensed under
			 Chapter 1707. of the Revised Code, which may include portfolio management or
			 advice concerning the selection of other investment advisers, and execution of
			 client transactions.