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. 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.
Section
2. All books and records required under Section 1 of this
administrative regulation shall be readily available for inspection by
representatives of the department upon request without notice.
Section 3. The books and records required
under Section 1 of this administrative regulation shall be maintained in a
readily accessible format for a period of at least three (3) years after the
conclusion of the securities offering.
Section
4. Incorporation by Reference.
(1) "Offering Document Guidelines", revised
April 2009, is incorporated by reference.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at the Department of
Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort,
Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.
