Current through Register Vol. 50, No. 9, March 1, 2024
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.
KRS
292.330 requires a person to be registered or
exempt from registration before transacting business involving a security in
Kentucky. This administrative regulation establishes requirements governing the
use of the Internet to distribute information on an available product or
service by securities industry personnel.
Section
1. Securities industry personnel, including a broker-dealer,
investment adviser, broker-dealer agent, or investment adviser representative,
shall not be subject to the registration requirements established in
KRS
292.330 for using the Internet to distribute
information on an available product or service if:
(1) The Internet communication contains a
legend clearly stating that the securities industry personnel in question may
only transact business in those states where they are registered or otherwise
excluded or exempted from state registration requirements;
(2) The Internet communication contains a
mechanism which reasonably ensures that any subsequent interaction between
prospective customers or clients residing in states where the securities
industry personnel are not registered is limited so as to not trigger state
registration or licensing requirements or securities registration requirements.
State registered securities industry personnel shall not be relieved from their
obligation to observe applicable securities registration requirements in any
state in which they transact business;
(3) The Internet communication:
(a) Does not involve the actual offering of
securities trades, or the rendering of personalized investment advice for
compensation over the Internet; and
(b) Is limited to the dissemination of
information on a product or service; and
(4) In case of a broker-dealer agent or
investment adviser representative:
(a) The
agent's or investment adviser representative's affiliation with the
broker-dealer or investment adviser is prominently disclosed within the
Internet communication;
(b) The
broker-dealer or investment adviser with whom the agent or investment adviser
representative is associated retains responsibility for reviewing and approving
the content of the agent's or investment adviser representative's Internet
communication;
(c) The
broker-dealer or investment adviser with whom the agent or investment adviser
representative is associated authorizes the agent's or representative's
Internet distribution of information on the particular product or service
and
(d) In disseminating
information on the Internet, the agents or investment adviser representatives
are acting within the scope of their authority with the broker-dealer or
investment adviser.
Section 2. This administrative regulation
shall:
(1) Extend to the registration
requirements established in
KRS
292.330; and
(2) Not excuse compliance with applicable
antifraud provisions of
KRS
292.320.
