Legislature(1999 - 2000)
03/10/1999 01:27 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 83 - ALASKA SECURITIES ACT CHAIRMAN KOTT announced the next order of business is HB 83, "An Act relating to the licensing of, acts and practices of, notice filings required of, duties of, registration of, capitalization of, financial requirements for, bonding of, coordinated securities examinations of, recordkeeping by, and documents filed by certain securities occupations; relating to public entity investment pools; relating to investment advisory contracts; relating to the examination of records of certain securities occupations; relating to federal covered securities; relating to the registration of securities; relating to the general exemptions for securities and transactions; relating to offers of securities on the Internet; relating to the confidentiality of investigative files under the Alaska Securities Act; relating to the payment by certain securities occupations of expenses and fees of investigations and examinations; relating to petitions to superior court by the administrator to reduce civil penalties to judgment; exempting certain violations of the Alaska Securities Act from criminal penalties; relating to time limitations in bringing court actions for violations of the Alaska Securities Act; relating to the affirmative defense of timeliness in court actions relating to securities; prohibiting certain lawsuits involving buyers of securities; relating to time limitations for bringing court actions involving the receipt of a written offer related to securities; relating to offers to repay buyers of securities; relating to notification of certain securities occupations regarding administrative hearings; relating to fees established by the administrator; relating to a sale, a purchase, or an offer to sell or purchase under the Alaska Securities Act; relating to the locations of offers to buy or sell; relating to consent to service; amending the Alaska Securities Act definitions of 'agent,' 'broker-dealer,' 'person,' 'Securities Act of 1933,' and 'security;' defining for purposes of the Alaska Securities Act 'advisory client,' 'advisory fee,' 'advisory services,' 'Bank Holding Company Act of 1956,' 'clients who are natural persons,' 'federal covered adviser,' 'federal covered security,' 'Federal Deposit Insurance Act,' 'Home Owners' Loan Act,' 'investment adviser representative,' 'Investment Advisers Act of 1940,' 'investment advisory business,' 'investment advisory contract,' 'Investment Company Act of 1940,' 'NASDAQ,' 'National Securities Markets Improvement Act of 1996,' 'notice filing,' 'place of business,' 'principal place of business,' 'Securities Exchange Act of 1934,' 'securities business,' 'state investment adviser,' 'substantial portion of the business,' 'supervised person,' and 'viatical settlement'; relating to the title of the Alaska Securities Act; relating to the definitions in the Alaska Securities Act of 'assignment' and 'investment adviser'; relating to implementation of the changes to the Alaska Securities Act; and providing for an effective date." CHAIRMAN KOTT indicated the committee will take up CSHB 83(L&C), and called on Representative Norman Rokeberg, sponsor of the bill. Number 2042 REPRESENTATIVE ROKEBERG stated this particular legislation has been before the House of Representatives before. It has been modified to remove some of the Alaska Native Claims Settlement Act (ANCSA) corporation provisions that generated amendments from the Senate causing the bill to perish in conference committee last year. Viatical settlements were added to the bill, then removed by the House Labor and Commerce Committee. They generated some controversy and there is another bill to cover that issue. The department of Commerce and Economic Development has asked that the title be amendment due to an oversight. He provided a copy of the amendment to the committee members. The bill allows the state to collect $3.9 million in annual fees from the securities industry, particularly mutual funds. It is mandatory that this legislation pass and is signed by the Governor to continue to receive these fees. He suggested hearing from Franklin Terry Elder from the Division of Banking, Securities and Corporations to explain the bill. Number 2118 FRANKLIN TERRY ELDER, Director, Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, said Representative Rokeberg has hit the appropriate highlights. The bill is necessary to bring the Alaska Securities Act into compliance with federal law and the changes in 1996. The federal government gave the states three years to amend their statutes and regulations to allow for notice filings and fees for federal covered securities and federal covered advisors, brand new entities created by the federal government in 1996. Seventy percent of the bill does just that. The language was drafted by the North American Securities Administrators Association (NASAA), the organization that creates the Uniform Securities Act, and has been adopted by over 40 states to date. The other 30 percent of the bill is non-NSMIA (National Securities Markets Improvement Act) related, but relate to changes in exemptions that will improve the ability of Alaskan business to access credit markets. Number 2178 CHAIRMAN KOTT thanked Mr. Elder for his summarization. Number 2183 REPRESENTATIVE GREEN asked Mr. Elder whether he is responsible for putting the fine presentation together. MR. ELDER replied it was a common effort with Representative Rokeberg. Number 2201 REPRESENTATIVE ROKEBERG stated there are other letters of support from security advisors and other agents who are covered by this bill. He has also had several contacts with the Anchorage Bull and Bear Club, an informal organization that represents the stock brokers, account executives and investment bankers in the Anchorage area. The letters will be added to the bill packet. In spite of the length of the bill, Representative Murkowski has read it. It has been reviewed and has been given a good length of coverage in the House Labor and Commerce Committee both this year and last year. He is confident that it is a good piece of legislation. He asked Mr. Elder to comment on anything in the bill that pertains to legal ramifications that might be of interest to this committee. Number 2288 MR. ELDER referred to the sections dealing with civil liabilities in AS 45.55.930. Currently, there is a three year statutory limitation from the date of a transaction that governs the liability of a seller of securities to a buyer of securities. Within that three year period, a buyer can sue a seller if it was sold unregistered, for example. The bill changes it from three years after the sell or two years from the discovery of the fraudulence. In addition, the interest rate went from a flat 6 percent to 8 percent or the stated rate of the security, if lower than 8 percent. MR. ELDER further stated that the bill changes the ability of the division to petition the superior court to reduce a civil penalty to judgment without a (indisc.) hearing after an order has become totally final and all rights of appeal have been exhausted. CHAIRMAN KOTT stated Amendment 1 needs to be adopted. It reads as follows: Page 1, line 1 AFTER: "licensing of" INSERT: "and revocation of licenses of" Number 2373 REPRESENTATIVE JAMES made a motion to adopt Amendment 1. There being no objection, it was so adopted. REPRESENTATIVE GREEN asked Mr. Usera from the Department of Law whether he sees any problems that the committee should be aware of. VINCENT USERA, Assistant Attorney General, Commercial Section, Civil Division, Department of Law, indicated in the negative. Number 2406 REPRESENTATIVE GREEN made a motion to move CSHB 83(L&C), as amended, from the committee with individual recommendations and the attached zero fiscal note. There being no objection, CSHB 83(JUD) was so moved from the House Judiciary Standing Committee. [The committee took a brief at-ease in order to prepare for the Joint meeting at which the confirmations were discussed.]
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