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Oregon Bulletin

December 1, 2013

Department of Consumer and Business Services, Division of Finance and Corporate Securities, Chapter 441

Rule Caption: Allows use of an alternate licensing application form for individuals representing issuers of securities.

Adm. Order No.: FCS 5-2013

Filed with Sec. of State: 11-15-2013

Certified to be Effective: 11-15-13

Notice Publication Date: 10-1-2013

Rules Amended: 441-175-0120

Subject: Currently, all securities salespersons, regardless of whether they are employed by a broker-dealer or represent an issuer or owner of securities must submit a complete, multi-state securities application form as part of their salesperson licensing application. The application requires more information than is likely necessary to license salespersons in Oregon who only represent an issuer or owner of securities. This rule grants the department the flexibility to offer those salespersons representing an issuer or owner an option to use a state-specific, streamlined application form.

Rules Coordinator: Shelley Greiner—(503) 947-7484

441-175-0120

Licensing of Salespersons or Representatives to Non-FINRA Broker-Dealers, State or Federal Covered Investment Advisers, Issuers and Owners of Securities

(1) For purposes of ORS 59.175, all salespersons or investment adviser representatives, except salespersons desiring to work for a FINRA broker-dealer, must be licensed as provided in this rule.

(2) A non-FINRA broker-dealer, an issuer, or an owner of securities must submit to the director a complete application to license a salesperson including:

(a) A completed Form U-4 or an alternate form approved by the director;

(b) A licensing fee for each salesperson as set in OAR 441-175-0002;

(c) Official notice of a passing score of the appropriate examinations pursuant to section (5), if required for licensing under this rule; and

(d) If employed by more than one broker-dealer or state or federal covered investment adviser, an undertaking as provided in section (10) of this rule.

(3) A state or federal covered investment adviser must submit to the IARD, if the adviser files with the IARD and the IARD is capable of accepting the application, and otherwise to the director:

(a) A completed Form U-4 or an alternate form approved by the director;

(b) A licensing fee for each investment adviser representative as set in OAR 441-175-0002;

(c) Official notice of a passing score on the appropriate examination, if required for licensing under section (6) of this rule; and

(d) If employed by more than one broker-dealer or state or federal covered investment adviser, an undertaking as provided in section (10) of this rule.

(4) The following salespersons or investment adviser representatives are exempt from the examination requirements of section (5) or (6) of this rule:

(a) Salespersons or investment adviser representatives who have been licensed at any time in Oregon during the two years immediately prior to filing an application for licensing and whose current application is for the same type of license;

(b) Salespersons licensed to an issuer or owner of securities where the securities have been registered pursuant to ORS 59.065 and OAR chapter 441, division 65; and

(c) Salespersons or investment adviser representatives licensed in any jurisdiction during the two years immediately prior to filing an application for licensing in Oregon. For salespersons, this exemption is limited to the extent a salesperson has previously taken and passed the examinations required by section (5) of this rule.

(5) A salesperson to a non-FINRA broker-dealer, or an issuer or owner of securities, who is not exempt from the examination requirements pursuant to section (4) of this rule is required to pass the S-63 with a minimum score of 70 percent. In addition, a salesperson is required to pass, with a minimum score of 70 percent, the specific examination which corresponds to the authorized sales activity as follows:

(a) S-7 for a general securities license;

(b) S-3 for a commodity futures license;

(c) S-6 for an investment company, mutual funds or variable contracts license;

(d) S-22 for a limited partnership or tax shelter license;

(e) S-42 for an options license;

(f) S-52 for a municipal bonds license; or

(g) S-62 for a corporate securities license.

(6)(a) An investment adviser representative to a state or federal covered investment adviser, who is not exempt from the examination requirements pursuant to section (4) or subsection (6)(b) of this rule, is required to pass the examinations in one of the following paragraphs:

(A) If the applicant has passed the S-7 examination, then either the S-65 examination if taken prior to January 1, 2000 or the S-66 examination if taken after January 1, 2000; or

(B) The S-65 examination if taken after January 1, 2000.

(b) The examinations in subsection (6)(a) shall be waived for an individual who currently holds one of the following professional designations:

(A) Chartered Financial Analyst (CFA) granted by the Association for Investment Management and Research;

(B) Certified Financial Planner (CFP) issued by the Certified Financial Planner Board of Standards, Inc.;

(C) Chartered Financial Consultant (ChFC) awarded by The American College, Bryn Mawr, Pennsylvania;

(D) Chartered Investment Counselor (CIC) granted by the Investment Counsel Association of America;

(E) Personal Financial Specialist (PFS) administered by the American Institute of Certified Public Accountants; or

(F) Such other professional designation as the director may by order recognize.

(7) Limited licensed salespersons or investment adviser representatives may only effect transactions in or provide investment advice concerning securities for which their license is issued.

(8) Alternate equivalent examinations will be considered upon a written request to the director, stating the examination to be replaced, the type of examination, and the material covered in the alternate examination. Examinations which have been replaced by a new examination will be accepted as an alternate equivalent examination without written request.

(9) Waiver of the examination requirement will be considered upon a written request to the director. Waivers will be limited to applications showing a minimum of three continuous years of securities related activity immediately prior to the application and a pre-existing business relationship with a person who is now in this state.

(10)(a) A person may be licensed simultaneously in this state as a salesperson with more than one broker-dealer or as an investment adviser representative with a state or federal covered investment adviser if all employers enter into an undertaking on a form approved by the director. The undertaking shall contain the following provisions:

(A) The effective date of the salespersons or investment adviser representatives employment with the respective employers;

(B) Consent by each employer to the employment of the salesperson or investment adviser representative by all other employers;

(C) An agreement by each employer to assume joint and several liability with all other employers for any act or omission of the person during the period of employment which violates the Oregon Securities Law. This agreement will continue until written notice is given to the director of the termination of the employment relationship; and

(D) An agreement that each employer will license the salesperson or investment adviser representative with the director and pay the applicable fees.

(b) No undertaking is required where:

(A) The salesperson is employed by one or more issuers registered under the Investment Company Act of 1940, 15 U.S.C. ¦ 80a-1 et seq, under common management or control; or

(B) The employer, a single entity, is licensed or has filed notice in Oregon as both a broker-dealer and a state or federal covered investment adviser.

(C) Any changes in employment by a salesperson or investment adviser representative which would result in requiring an undertaking or changing the existing undertaking must be immediately filed on a new undertaking form with the director.

(11) Where a salesperson desires to work for an issuer or owner of securities:

(a) The salesperson must be a bona fide officer, director or employee of the issuer or owner. No salesperson may be licensed to more than one issuer or owner of securities simultaneously. No person described in this subsection may be licensed to another issuer or owner of securities until two years from the date of the original licensing or last renewal of the prior offering. However, salespersons licensed to a single issuer to sell a continuing issue may be renewed. A waiver of this subsection may be requested from the director as provided in OAR 441-011-0020;

(b) Persons not otherwise licensed, who are selling securities of an issuer for which notice has been filed pursuant to ORS 59.049(1) or 59.049(2), do not have to meet the requirements of subsection (a) of this section.

(12) Once the requirements of this rule are met, the director shall issue a license, which may be conditioned or restricted pursuant to OAR 441-225-0030, for the salesperson or investment adviser representative unless the director determines that licensing should be denied on one or more grounds as set forth in ORS 59.205 to 59.225.

(13) If the application, the undertaking, any supporting material or any representations made to the director are inaccurate or incomplete in any material respect, the license shall be void.

(14) A salesperson or investment adviser representative license issued pursuant to this rule automatically expires without further action of the director as follows:

(a) The license of an issuers or owners salesperson expires when the securities are no longer authorized for sale;

(b) The license of every salesperson or investment adviser representative licensed to a broker-dealer or state or federal covered investment adviser expires on the same date that the license of the broker-dealer or state investment adviser or the notice filing of the federal covered investment adviser expires.

[ED. NOTE: Forms referenced are available from the agency.]

Stat. Auth.: ORS 59.175

Stats. Implemented: ORS 59.165 & 59.175

Hist.: CC 13, f. 9-19-73, ef. 10-1-73; CC 16, f. 5-13-74, ef. 6-11-74; Renumbered from 815-030-0165.2; CC 9-1986(Temp), f. & ef. 1-16-86; CC 1-1987, f. & ef. 2-4-87; FCS 7-1987(Temp), f. 9-24-87, ef. 9-28-87; FCS 6-1988, f. 3-22-88, cert. ef. 3-25-88; Renumbered from 815-030-0070; FCS 1-1992, f. 1-31-92, cert. ef. 2-1-92; FCS 2-1994, f. & cert. ef. 1-7-94; FCS 5-1999, f. & cert. ef. 12-23-99; FCS 13-2000, f. & cert. ef. 11-6-00; FCS 9-2001, f. & cert. ef. 9-28-01; FCS 2-2003(Temp), f. & cert. ef. 11-26-03 thru 5-21-04; FCS 1-2004, f. & cert. ef. 5-19-04; FCS 1-2012, f. & cert. ef. 7-9-12; FCS 5-2013, f. & cert. ef. 11-15-13


Rule Caption: Clarifies recently enacted exemptions from mortgage loan originator licensing for manufactured structure dealers.

Adm. Order No.: FCS 6-2013

Filed with Sec. of State: 11-15-2013

Certified to be Effective: 11-15-13

Notice Publication Date: 10-1-2013

Rules Adopted: 441-446-0203, 441-446-0230

Rules Amended: 441-446-0100, 441-446-0110, 441-446-0200, 441-446-0210, 441-446-0300

Subject: In 2013, the Legislature enacted House Bill 3482 which in part exempted individuals licensed as manufactured structure dealers from having to obtain a mortgage loan originator license. This rulemaking activity addresses three issues with the bill that needed further clarification. First, the rules would limit the exemption to one limited manufactured structure dealer licensee per park, but allow sales by full manufactured structure dealer licensees not affiliated with the limited manufactured structure dealer. Second, the rules would clarify that a manufactured structure dealer may engage the services of a licensed or registered mortgage loan originator to offer or negotiate loans on the licensee’s behalf once statutory caps were met. Finally, the rules would apply the statutory caps on the number of loans a licensee may hold to loans made on or after the operative date of Oregon’s implementation of the federal S.A.F.E. Act, which was July 31, 2010.

Rules Coordinator: Shelley Greiner—(503) 947-7484

441-446-0100

Purpose and Scope

OAR 441-446-0100 through 441-446-0300 clarify the definitions, rules and requirements pertaining to businesses that engage in the business of selling manufactured structures under ORS chapter 446.

Stat. Auth.: ORS 446.666

Stats. Implemented: ORS 446.661, 446.666

Hist.: BCD 10-2005, f. 4-29-05, cert. ef. 5-1-05; Renumbered from 918-030-0400, FCS 7-2008 f. & cert. ef. 7-28-08; FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0110

Definitions

As used in OAR 441-446-0100 through 441-446-0300 and ORS chapter 446, unless the context clearly indicates otherwise, the following definitions apply:

(1) “Corrected license” means:

(a) A limited manufactured structure dealer license that has been amended by the director to reflect a change in the identified operator of a manufactured dwelling park under ORS 446.706; or

(b) A manufactured structure dealer license that has been amended by the director to reflect an additional place of business, a change in the manufactured structure dealer’s place of business, or a change in the dealer’s business name under ORS 446.716.(2) “Dealer” means a person who is required to be licensed under ORS 446.691, 446.696, 446.701 or 446.706.

(3) “Dealership,” “place of business,” or “business location” means a physical location within the state where a dealer conducts activity described in ORS 446.671.

(4) “Director” means the Director of the Department of Consumer and Business Services.

(5) “Manufactured dwelling buyer’s disclosure form” means the form developed in April 2010 by the director as authorized under ORS 446.260 and made available on the Internet at http://bcd.oregon.gov/programs/mdprogram/mh_buyer_disclosure_040110.pdf (6) “Mortgage loan originator” has the same meaning given to that term in ORS 86A.200.

(7) “NMLS Consumer Access” means the publicly-available compilation of information on licensed and registered mortgage loan originators maintained by the State Regulatory Registry, LLC and made available on the Internet at http://www.nmlsconsumeraccess.org/.

(8) “Residential mortgage loan” has the same meaning given to that term in ORS 86A.200, but for the purposes of OAR chapter 441, division 446, is limited to a personal property loan obtained to purchase a previously owned manufactured dwelling in a manufactured dwelling park.

Stat. Auth.: ORS 446.666

Stat. Implemented: ORS 86A.203, 446.666

Hist.: BCD 16-2006(Temp), f. 6-30-06, cert. ef. 7-1-06 thru 12-28-06; BCD 13-2006, f. 9-29-06, cert. ef. 10-1-06; Renumbered from 918-030-0410, FCS 7-2008 f. & cert. ef. 7-28-08; FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0200

Supplemental or Corrected Licenses

A supplemental or corrected license shall have the same expiration as the limited or dealer license.

Stat. Auth.: ORS 446.666

Stats. Implemented: ORS 446.666 & 446.716

Hist.: BCD 10-2005, f. 4-29-05, cert. ef. 5-1-05; Renumbered from 918-030-0420, FCS 7-2008 f. & cert. ef. 7-28-08; FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0203

Exemptions from Mortgage Loan Originator Licensing

In addition to the provisions contained in ORS 86A.203(2) through (4) relating to the exemption of a dealer from licensing as a mortgage loan originator, the following conditions apply:

(1)(a) Only one limited manufactured structure dealer licensee per manufactured dwelling park may claim the exemption from licensing under ORS 86A.203.

(b) A manufactured structure dealer may offer or negotiate the terms of a residential mortgage loan in a manufactured dwelling park where a limited manufactured structure dealer claims an exemption under ORS 86A.203(2)(f), but the manufactured structure dealer may not acquire or hold an ownership interest in the manufactured dwelling park or in the business entity holding the limited manufactured structure dealer license.

(2)(a) A licensed or registered mortgage loan originator may offer or negotiate terms for a residential mortgage loan on behalf of a dealer who holds the statutory maximum number of loans set out in ORS 86A.203(3) or (4), as applicable to that dealer.

(b) A dealer must verify, whether through NMLS Consumer Access or other means, that the mortgage loan originator retained to complete a transaction under this section meets the requirements of ORS 86A.200 to ORS 86A.239.

(c) This section does not waive any other legal requirements that may apply to a dealer.

(3) For purposes of establishing the maximum number of residential mortgage loans a dealer may offer or negotiate without a mortgage loan originator license, this rule applies to residential mortgage loans made on or after July 31, 2010.

Stat. Auth.: ORS 446.666

Stats. Implemented: ORS 86A.203

Hist.: FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0210

Dealer Requirements

(1) A dealer shall file all required applications for ownership documents and trip permits, or ensure required applications are completed and filed, as required by OAR chapter 918, divisions 550 and 600.

(2) A manufactured structure dealer selling manufactured homes for installation in Oregon shall present each potential buyer of a new manufactured home with the manufactured dwelling buyer’s disclosure form to read and sign prior to the completion of the purchase agreement for a manufactured home. A dealer shall give one copy of the disclosure form, signed by the buyer and the dealer, to the buyer and retain one copy in the dealer’s files for not less than five years from the date of sale. Copies of signed disclosures shall be made available to the director upon request.

(3) A dealer must maintain accurate records for a period of five years from the last date for the transaction, including after the dealer has ceased doing business in the state. A dealer may maintain records in any electronic format capable of being reduced to written form. Records required to be maintained include but are not limited to:

(a) A legible copy of any disclosure statement provided to a purchaser;

(b) A legible copy of any trip permit issued by the dealer;

(c) A record of the names and addresses of all contractors retained or hired by the dealer to engage in any aspect of manufactured structure installation or service work and a record identifying the manufactured structures on which each contractor performed work;

(d) Records of any correction notices the dealer has sent to a manufacturer for repairs arranged by the dealer;

(e) A record of any alterations a dealer made to a manufactured structure prior to sale or as a part of a sales agreement;

(f) A legible copy of all records relating to a sale, including but not limited to confirmation orders, diagrams, purchase options, written agreements, financing applications, financing agreements, change orders, price changes, ownership documents, and applications to record a structure in deed records; (g) A copy of the verification, whether completed through NMLS Consumer Access or by other means, of a mortgage loan originator’s license or registration required by OAR 441-446-0203; and

(h) Records associated with consignment sales.

(4) Records specified under this section must be readily accessible to the director upon request. Records may be stored at the dealer’s principal place of business, an additional place of business indicated on the dealer’s license, or in a location within the state that the dealer may produce the records for the director’s examination.

(5) In addition to the bond or letter of credit requirements in ORS 446.726, a dealer shall authorize their bond or letter of credit company to notify the director upon any change to or cancellation of the insurance required for their dealer license, and notify the director of any change to or cancellation of the bond or letter of credit required for their dealer license.

(6) A dealer shall, within 10 business days, notify the director of any name, ownership, address changes or additions, through a director approved form including any change of registration status with the Secretary of State, and obtain all required licenses.

(7) A dealer shall exercise due care and diligence that is consistent with industry practice in all transactions involving a manufactured structure and shall not, by act or omission, endanger the economic welfare or the health or safety of the public through such transactions.

(8) A dealer shall not engage in conduct which demonstrates habitual disregard for the law.

Stat. Auth.: ORS 446.666

Stats. Implemented: ORS 446.225, 446.260, 446.666, 446.691, 446.696, 446.701, 446.706, 446.716, 446.726, 446.736, 446.741 & 446.751

Hist.: BCD 10-2005, f. 4-29-05, cert. ef. 5-1-05; Renumbered from 918-030-0430, FCS 7-2008 f. & cert. ef. 7-28-08; FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0230

Recordkeeping Requirements for Residential Mortgage Loans

In addition to the recordkeeping requirements contained in 441-446-0210, a dealer that takes an application for a residential mortgage loan must prepare and maintain all documentation related to the loan, including but not limited to the following:

(1) A copy of each loan application form signed by the borrower;

(2) A copy of all documentation relied upon in making the loan decision;

(3) A copy of all documents submitted by a borrower to the dealer in connection with the loan application;

(4) A copy of any documents noting approval or denial of a borrower’s mortgage loan application;

(5) A copy of all correspondence with the borrower in writing or in a format easily converted to writing;

(6) A copy of all Truth in Lending Act disclosure statements required by Regulation Z, 12 C.F.R. Part 1026;

(7) A copy of an authorization signed by the borrower to release credit information to the dealer for evaluating whether to extend credit to the borrower;

(8) A copy of every credit report accessed by the dealer in connection with the loan;

(9) A copy of the retail installment contract signed by both parties, the note, or a copy of another form of agreement signed by the parties evidencing the terms of the transaction for the manufactured structure;

(10) A copy of the purchase agreement signed by the borrower;

(11) A copy of the ownership documents filed with the director under ORS 446.561 et seq.; and

(12) A copy of the borrower’s payment schedule and a copy of receipts for loan payment received by the dealer.

Stat. Auth.: ORS 446.666

Stat. Implemented: ORS 86A.203

Hist.: FCS 6-2013, f. & cert. ef. 11-15-13

441-446-0300

Violations

In addition to any grounds for sanction specified in ORS chapter 446, the director may deny, suspend, revoke or place conditions on a dealer’s license if a dealer:

(1) Fails to maintain records or any other requirements under OAR 441-446-0210;

(2) Engages in conduct which constitutes a Class A misdemeanor or any felony arising out of actions related to the selling, brokering, trading or exchanging of manufactured structures or conviction of such Class A misdemeanor of felony; or

(3) Engages in conduct constituting an unlawful practice under ORS 646.607 or 646.608;

(4) Fails to maintain the required surety bond or letter of credit under ORS 446.721; or

(5) Engages in a pattern or practice of conduct that violates any provision of ORS 86A.203 to 86A.239, 446.003 to 446.200, 446.225 to 446.285, 446.395 to 446.420, and 446.561 to 446.756 or any rules adopted thereunder.

Stat. Auth.: ORS 446.741

Stats. Implemented: ORS 446.666, 446.741, 446.746, 446.751 & 446.756

Hist.: BCD 10-2005, f. 4-29-05, cert. ef. 5-1-05; Renumbered from 918-030-0490, FCS 7-2008 f. & cert. ef. 7-28-08; FCS 6-2013, f. & cert. ef. 11-15-13

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2012.

2.) Copyright 2013 Oregon Secretary of State: Terms and Conditions of Use

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