Legislature(1999 - 2000)
03/10/1999 01:27 PM House JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
March 10, 1999
1:27 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Joe Green
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 5
"An Act relating to vouchers for education; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 3
"An Act relating to controlled substances and to the possession and
distribution of certain chemicals."
- MOVED CSHB 3(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 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."
- MOVED CSHB 83(JUD) OUT OF COMMITTEE
CONFIRMATIONS WERE DISCUSSED IN THE JOINT MEETING.
(* First public hearing)
PREVIOUS ACTION
BILL: HB 5
SHORT TITLE: VOUCHER SYSTEM FOR EDUCATION
SPONSOR(S): REPRESENTATIVES(S) KOHRING, Coghill
Jrn-Date Jrn-Page Action
1/19/99 19 (H) PREFILE RELEASED 1/8/99
1/19/99 19 (H) READ THE FIRST TIME - REFERRAL(S)
1/19/99 19 (H) HES, FINANCE
2/05/99 147 (H) COSPONSOR(S): COGHILL
2/10/99 184 (H) SS INTRODUCED-REFERRALS
2/10/99 184 (H) READ THE FIRST TIME - REFERRAL(S)
2/10/99 184 (H) HES, FINANCE
2/16/99 (H) HES AT 3:00 PM CAPITOL 106
2/16/99 (H) HEARD AND HELD
2/23/99 (H) HES AT 3:00 PM CAPITOL 106
2/23/99 (H) WAIVED OUT OF COMMITTEE
2/23/99 (H) MINUTE(HES)
2/24/99 306 (H) HES REFERRAL WAIVED
2/24/99 307 (H) JUD REFERRAL ADDED
2/24/99 307 (H) REFERRED TO JUD
3/03/99 (H) JUD AT 1:00 PM CAPITOL 120
3/03/99 (H) HEARD AND HELD
3/03/99 (H) MINUTE(JUD)
3/10/99 (H) JUD AT 1:15 PM CAPITOL 120
BILL: HB 3
SHORT TITLE: DRUGS: POSSESSION OF LISTED CHEMICALS
SPONSOR(S): REPRESENTATIVES(S) BRICE
Jrn-Date Jrn-Page Action
1/19/99 18 (H) PREFILE RELEASED 1/8/99
1/19/99 18 (H) READ THE FIRST TIME - REFERRAL(S)
1/19/99 18 (H) JUDICIARY, FINANCE
2/17/99 (H) JUD AT 1:00 PM CAPITOL 120
2/17/99 (H) HEARD AND HELD
2/17/99 (H) MINUTE(JUD)
3/03/99 (H) JUD AT 1:00 PM CAPITOL 120
3/03/99 (H) SCHEDULED BUT NOT HEARD
3/10/99 (H) JUD AT 1:15 PM CAPITOL 120
BILL: HB 83
SHORT TITLE: ALASKA SECURITIES ACT
SPONSOR(S): LABOR & COMMERCE BY REQUEST
Jrn-Date Jrn-Page Action
2/08/99 163 (H) READ THE FIRST TIME - REFERRAL(S)
2/08/99 164 (H) L&C, JUD
2/17/99 (H) L&C AT 3:15 PM CAPITOL 17
2/17/99 (H) HEARD AND HELD
2/17/99 (H) MINUTE(L&C)
2/19/99 (H) L&C AT 3:15 PM CAPITOL 17
2/19/99 (H) HEARD AND HELD
2/19/99 (H) MINUTE(L&C)
2/22/99 (H) L&C AT 3:15 PM CAPITOL 17
2/22/99 (H) MOVED CSHB 83(L&C) OUT OF COMMITTEE
2/22/99 (H) MINUTE(L&C)
2/24/99 294 (H) L&C RPT COMMITTEE SUBSTITUTE(L&C)
2DP 5NR
2/24/99 296 (H) DP: ROKEBERG, MURKOWSKI; NR: HALCRO,
2/24/99 296 (H) SANDERS, BRICE, CISSNA, HARRIS
2/24/99 297 (H) ZERO FISCAL NOTE (DCED)
3/03/99 (H) JUD AT 1:00 PM CAPITOL 120
3/03/99 (H) SCHEDULED BUT NOT HEARD
3/10/99 (H) JUD AT 1:15 PM CAPITOL 120
WITNESS REGISTER
ANNE D. CARPENETI, Assistant Attorney General
Legal Services Section-Juneau
Criminal Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3428
POSITION STATEMENT: Answered questions regarding the proposed
committee substitute for HB 3.
REPRESENTATIVE TOM BRICE
Alaska State Legislature
Capitol Building, Room 426
Juneau, Alaska 99801
Telephone: (907) 465-3466
POSITION STATEMENT: Sponsor of HB 3.
FRANKLIN TERRY ELDER, Director
Division of Banking, Securities and Corporations
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, Alaska 99811-0907
Telephone: (907) 465-2521
POSITION STATEMENT: Testified in support of HB 83.
VINCENT USERA, Assistant Attorney General
Commercial Section
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Testified on HB 83.
COLLEEN MURPHY, M.D., Appointee
to the Violent Crimes Compensation Board
2811 Illiamna Avenue
Anchorage, Alaska 99517
Telephone: (Not provided)
POSITION STATEMENT: Testified on her appointment to the Violent
Crimes Compensation Board.
LESLIE D. WHEELER, Appointee
to the Violent Crimes Compensation Board
P.O. Box 878885
Wasilla, Alaska 99687
Telephone: (Not provided)
POSITION STATEMENT: Testified on her appointment to the Violent
Crimes Compensation Board.
JOSEPH N. FAULHABER, Appointee
to the Board of Governors of the Alaska Bar
105 Adak Avenue
Fairbanks, Alaska 99701
Telephone: (907) 457-2010
POSITION STATEMENT: Testified on his appointment to the Board of
Governors of the Alaska Bar.
STEPHEN B. WALLACE, Appointee
to the Violent Crimes Compensation Board
P.O. Box 4054
Kodiak, Alaska 99615
Telephone: (907) 487-2420
POSITION STATEMENT: Testified on his appointment to the Violent
Crimes Compensation Board.
ACTION NARRATIVE
TAPE 99-11, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 1:27 p.m. Members present at the call to order
were Representatives Kott, Green, James, Murkowski, Croft and
Kerttula. Representative Rokeberg arrived at 1:32 p.m.
SSHB 5 - VOUCHER SYSTEM FOR EDUCATION
Number 0140
CHAIRMAN KOTT announced the first order of business is SSHB 5, "An
Act relating to vouchers for education; and providing for an
effective date."
CHAIRMAN KOTT stated that Article VII, section 1, of the state
constitution commits the state to the pursuit of a public, not a
private institutional school system. It is there in black and
white. In addition, the constitutional language eliminates
substantial barriers that would negatively impact the health and
welfare of students attending private institutions. He recognizes
that the state constitution is somewhat silent on that and
construed that meaning by going back to the state constitution
convention. More importantly, Article VII prohibits the direct
transfer of state funds for religious or private institutions. In
addition, he doesn't believe that in the bill itself the state is
hostile towards private institutions. However, he does believe
that the bill is not totally neutral. A voucher system would
promote enrollment in a private school setting while negatively
impacting the public school environment addressed in Article VII.
In addition, in relation to how the funds would be spent, he
concluded that they would either subsidize or entirely fund those
students who receive them via the voucher system. The amount is
not known because it would be subject to legislative appropriation.
The money associated with the voucher system and those who would
use it would be a direct benefit to those institutions.
Furthermore, based on how the dispersement of funds would occur, it
would be hard to get around the idea of directly supporting that
religious or private institution. It could not be skirted by
giving the money to the parents who in turn would pay the
institution. In conclusion, he noted as he reviewed the state
constitution and looked at some of the case law, this cannot be
pursued statutorily. It is an issue that deals with the
constitution in scope.
Number 0442
REPRESENTATIVE GREEN asked Chairman Kott whether he came across any
jurisdictions subsequent to the rendering of the state supreme
court that are different.
CHAIRMAN KOTT replied there are a number of cases that were
reviewed in other states that were somewhat appropriate, but it is
more appropriate to look at cases within Alaska. He noted when
looking at those cases, it is important to review the state
constitutions to see how they marry up. In this case, it doesn't
marry up to the Alaska Constitution. It was delineated during the
state constitution convention. There was a whole argument of
funding private institutions and/or where should private
institutions be on the pecking order of providing an education for
the children of the state.
Number 0593
REPRESENTATIVE MURKOWSKI noted her appreciation of Chairman Kott's
summation. Anyway she looked at a voucher system, she couldn't
come up with anything without directly or indirectly benefitting a
particular institution.
Number 0673
CHAIRMAN KOTT stated he doesn't see how this particular measure can
be dealt with in statute. The correct vehicle is a constitutional
amendment. Although the few cases to refer to in Alaska aren't
identical, they are identical enough to fail in a challenge based
on constitutional grounds and to have set a precedent.
Number 0722
REPRESENTATIVE JAMES noted her agreement with Chairman Kott's
assessment. She doesn't agree, however, that a constitutional
amendment is needed to design a system to allocated monies to each
child to go to a school somewhere. The constitution says the state
should provide an education which means money should be provided
for every child in the district, not for just those who sign up for
public school. The state has a responsibility to ensure that the
children are educated and parents should have a choice. Public
schools cannot serve every child. There are children above and
below the norm that need a separate kind of education. She noted,
if a public school allocates $5,000 per student for a public
education, certainly a voucher for $5,000 should not be given
because of the fixed and other costs involved in maintaining a
school system. The only portion that should go to a child via a
voucher should be just the cost that would be eliminated in the
public system because that child isn't there anymore.
Number 0841
REPRESENTATIVE ROKEBERG noted his agreement with Chairman Kott's
analysis in terms of the Framers of the state constitution and the
meaning of the Sheldon Jackson case. At the time of the state
constitution convention, there were a large number of private
schools operating in the state. He is also drawn to the comments
made by Representative James because he recognizes the state's
dilemma. He also recognizes the dilemma of how the bill was
transmitted to the House Judiciary Committee and the desire of the
House Health, Education and Social Services Committee to get an
opinion and for it to be returned to them. He is also troubled by
the comments made by the sponsor's staff that any court decision of
a program would have to be tied to a constitutional amendment. If
that is true, not only will a constitutional amendment need to be
put before the voters but a vehicle to design a program that meets
the merits of that constitutional amendment will need to be
attached to it. He asked Chairman Kott whether his staff looked
into the connection between a constitutional amendment and the
design of a voucher program.
CHAIRMAN KOTT replied no.
REPRESENTATIVE ROKEBERG asked Chairman Kott what the committee will
do now with the bill.
CHAIRMAN KOTT replied, as noted at the last meeting, if the bill
was found to have constitutional problems, it will not go back to
the House Health, Education and Social Services Committee. If that
committee wants to deal with it via a constitutional amendment, it
will probably come to this committee at some time. If that
committee wants to pursue another bill aside from a voucher system,
that is fine. It is his intent to lay the bill aside and he
believes it is the intent of the sponsor to withdraw it.
Number 1042
REPRESENTATIVE GREEN stated, as a member of the House Health,
Education and Social Services Committee, that is the proper course.
Number 1056
REPRESENTATIVE KERTTULA noted her agreement with Chairman Kott's
analysis and thanked him.
CHAIRMAN KOTT thanked the committee members for spending the time
on this issue and not getting involved with the public policy
question, but looking at it from a constitutional aspect.
CHAIRMAN KOTT said the bill will be laid aside.
HB 3 - DRUGS: POSSESSION OF LISTED CHEMICALS
Number 1099
CHAIRMAN KOTT announced the next order of business is HB 3, "An Act
relating to controlled substances and to the possession and
distribution of certain chemicals."
CHAIRMAN KOTT indicated there is a proposed committee substitute
(1-LS0040\H, Luckhaupt, 3/8/99) and called for a motion to adopt
it.
Number 1117
REPRESENTATIVE GREEN made a motion to adopt the proposed committee
substitute for HB 3 (1-LS0040\H, Luckhaupt, 3/8/99). There being
no objection, it was so adopted.
Number 1135
CHAIRMAN KOTT explained the changes in the proposed committee
substitute. Section 1 now states that possession with intent is a
class A felony in the second degree. An attempt would, therefore,
drop to a class B felony correcting the anomaly in the statutes.
Language was also added to include "immediate precursor", a term of
art referencing certain chemical types primarily in the
methamphetamine statutes. Section 5 was also eliminated that
required the reporting by retailers. The new Section 5 is a list
of chemicals that are used in the manufacturing of controlled
substances in violation of AS 11.71.
Number 1223
REPRESENTATIVE CROFT noted that the registration requirement was
also eliminated.
Number 1235
REPRESENTATIVE GREEN referred to the listed chemicals in Section 5
and wondered whether the possession of a similar type of chemical
with paraphernalia would be enough to go back to a class B felony.
Number 1272
REPRESENTATIVE CROFT said, "It's two different approaches to that.
We try in Section 5 to say listed chemicals and chemicals that are
used in the manufacture they include. And, so that's one way we
give them a hook to maybe even charge the A. At least, it would be
if I have beakers and a unlisted chemicals that they can show are
in fact constituents of--of meth, that I would be able to do an
attempt of this crime, which is the crimes in A and attempt would
be a B."
REPRESENTATIVE GREEN stated a charge could fall back to an class B
felony, if a class A felony doesn't make it. That sounds good.
Number 1310
REPRESENTATIVE ROKEBERG said he is a little disappointed and
concerned about the list of chemicals in Section 5 and the
reference to it in Section 2. The language reads in Section 2,
"(c) In this section, 'listed chemical' means a chemical described
under AS 11.71.200." The term "a" is singular. He said, "I think
we're right back to the--the mom's got the iodine problem and
that's really, really troublesome on any (indisc.). And, we had
the discussion at the last committee hearing that the Legislative
Counsel about the (indisc.) case that we can't adopt by reference.
We're trapped in this perhaps case that demands some legislative
over--overturning. In terms of adopting by reference, we've found
ourselves in that problem because we can't refer with federal--with
federal list of changes, dynamic, on-going, organic basis for the
changes. We have to be stuck with listing all the stuff in
statute. And, I'm very (indisc.). Could you speak to the problems
encountered in doing that? I mean it's really a problem to me."
Number 1375
REPRESENTATIVE CROFT said, "Well, I can, Mr. Chairman. It's an
important public policy decision that I think you and I disagree
on. Obviously, with this draft before us, you could propose an
amendment that would do that." The issue is, can the statutes be
amended in an area where people will go to jail for a long time
for something that happens outside of this body. It is a problem
that arose in the changes to the building and/or plumbing codes.
He said, "Can we allow the third annual or twenty-fifth annual
meeting of the plumbers association in Las Vegas to change our
statutes? With all respect to what they do at the twenty-fifth
annual meeting of the plumbers in Las Vegas, I don't yet know if I
want to adopt some, all or none of what they've done. And, when we
say in a statute as is amended from time to time by this or other
private, or semi-public or public group, even the federal, we're
going to make our own decisions about what our law contains..."
Number 1437
REPRESENTATIVE ROKEBERG interjected and stated the departments
adopt additions by regulation. They are not adopted in a vacuum or
in blank.
REPRESENTATIVE CROFT replied the legislature has proposed to put in
statute the building code as it is adopted from time to time. And
the legislature has proposed to put in statute that the departments
may adopt building codes by regulation. He thinks it is
appropriate to adopt by regulation. It is troublesome enough in
the building code area and even more troublesome when someone could
be sent away for a long time.
Number 1480
REPRESENTATIVE ROKEBERG said the building codes are adopted on a
periodic basis after an Administrative Procedure Act (APA) review.
They are not adopted totally be reference. The concept is adopted
by reference, but there is a regulatory process taken to update
them. There is a review and public comment overcoming any of the
arguments. He reiterated he is troubled by Section 2(c) and
wondered whether it restricts the list to this particular chapter
or offense or is there a sideboard. He wants a sideboard or fence
put around the list so that it doesn't slop over into general use.
He reiterated he is troubled by the language in Section 2(c) and
would like to see it word smithed so that it only applies to the
intent. He wondered whether AS 11.71.020 refers only to the
offense it references.
Number 1603
REPRESENTATIVE GREEN stated it seems a definition is being added on
page 2, line 7, "(4) possesses a listed chemical with intent to
manufacture any...". In other words, if a person has a bottle of
iodine to take care of a scratch, there is no intent because that
person doesn't have the paraphernalia to manufacture
methamphetamine.
CHAIRMAN KOTT asked Ms. Carpeneti whether she agrees with
Representative Green's assessment.
ANNE D. CARPENETI, Assistant Attorney General, Legal Services
Section-Juneau, Criminal Division, Department of Law, replied yes
she agrees with Representative Green's assessment. "Listed
chemical" is added to page 2, line 7 and is being defined in AS
11.71.020. She is not aware of the term being used in any other
area of criminal law.
Number 1670
REPRESENTATIVE ROKEBERG asked whether AS 11.71 deals with
methamphetamine.
REPRESENTATIVE CROFT stated the only statute that concerns this
list is in the methamphetamine statute. He said, "We don't
'criminalize' possession of a listed chemical with intent to
produce cocaine or whatever. The only time we ever use it in
statute is on page 2, lines 7-12, where we say possessing a listed
chemical with intent to manufacture meth or an immediate precursor.
So, while it sounded generic, it is only ever referenced in the
meth statute."
Number 1710
REPRESENTATIVE ROKEBERG asked what will be done about "ecstasy" and
other street compounds that come along. He wondered whether there
will be multiple lists in the statutes.
REPRESENTATIVE CROFT said, "In those areas because of the special
dangers of meth labs, we've chosen to take the step down into
listed chemicals. And, under any other drug, we penalize the
manufacture, actual manufacture, possession with intent to
distribute, possession at a lower level and in some cases attempted
manufacture. This listed chemical step has only really been done
in meth because of the dangers of meth labs and the dangers of
using these listed chemical in the preparation process.
Number 1742
REPRESENTATIVE MURKOWSKI asked whether AS 11.71 specifically deals
with the manufacture of methamphetamine.
REPRESENTATIVE CROFT replied AS 11.71 is the general controlled
substances area of Chapter 71. There could be a listed chemicals
for methamphetamine because it's only ever used in the
methamphetamine statute. It is in effect that already.
Number 1767
REPRESENTATIVE ROKEBERG noted it is common in drafting language to
refer to definitions that are applicable to certain sections or
subsections in chapters. He appreciates the comments made by
Representative Green and Ms. Carpeneti regarding the intent. He
wants to make sure it is clear.
Number 1812
REPRESENTATIVE KERTTULA noted that there has to be the intent to
manufacture methamphetamine and the list sets out exactly what a
person has to have.
REPRESENTATIVE ROKEBERG stated the problem here is the
constitutional right to accuse someone with the intent to
manufacture with the possession of one of these chemicals.
CHAIRMAN KOTT stated that is a potential problem, but proving
intentional behavior is extremely difficult.
Number 1845
REPRESENTATIVE CROFT referred to Section 11.71.020 and noted the
only time "listed chemical" is said in the proposed committee
substitute is on page 2, lines 7-12. Therefore, whether a
housewife possess a listed chemical with the intent to manufacture
methamphetamine or an immediate precursor that housewife is in, and
if not, that housewife is out.
CHAIRMAN KOTT said that is his understanding as well.
MS. CARPENETI said it is actually limited to this one particular
paragraph of this section.
Number 1890
REPRESENTATIVE GREEN said, "On that same issue, when we go back to
the schedule where there are harmful products--I mean there's two
to three pages in here where they're by themselves listed and it's
under a heading that says, 'a substance shall be placed on schedule
A, if it is found under the statute to have the highest degree of
danger or probable danger to the person in public'. Iodine
certainly wouldn't fall under that category, and so it's listed
separately over here which as we've said just applies to this
particular section. It's not one of these nasty bad guys that's
listed here over a general purpose, so says my counsel."
Number 1922
MS. CARPENETI stated the head of the drug enforcement unit in
Anchorage thinks it is an excellent draft and appreciates the
efforts.
REPRESENTATIVE CROFT stated the sponsor likes the draft.
Number 1940
REPRESENTATIVE TOM BRICE, Alaska State Legislature, sponsor of HB
3, expressed his appreciation for the work done by the committee
and Representative Croft, and announced his support of the proposed
committee substitute.
Number 1962
REPRESENTATIVE GREEN made a motion to move the proposed committee
substitute to HB 3 (1-LS0040\H, Luckhaupt, 3/8/99) from the
committee with individual recommendations and the attached zero
fiscal note. There being no objection, CSHB 3(JUD) was so moved
from the House Judiciary Standing Committee.
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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