CSHB 486(L&C) AM S: "An Act relating to the Alaska Securities Act; and providing for an effective date."
00CS FOR HOUSE BILL NO. 486(L&C) am S 01 "An Act relating to the Alaska Securities Act; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 14.43.148(h)(1) is amended to read: 05 (1) "license" [MEANS,] 06 (A) means, except as provided in (B) of this paragraph, a 07 license, certificate, permit, registration, or other authorization that, at the time 08 of issuance, will be valid for more than 150 days and that may be acquired 09 from a state agency to perform an occupation, including the following: 10 (i) license relating to boxing or wrestling under 11 AS 05.10; 12 (ii) authorization to perform an occupation regulated 13 under AS 08; 14 (iii) teacher certificate under AS 14.20;
01 (iv) authorization under AS 18.08 to perform emergency 02 medical services; 03 (v) asbestos worker certification under AS 18.31; 04 (vi) boiler operator's license under AS 18.60.395; 05 (vii) certificate of fitness under AS 18.62; 06 (viii) hazardous painting certification under AS 18.63; 07 (ix) certification as a correctional, probation, or parole 08 officer under AS 18.65.245; 09 (x) security guard license under AS 18.65.400 - 10 18.65.490; 11 (xi) license relating to insurance under AS 21.27; 12 (xii) employment agency permit under AS 23.15.330 - 13 23.15.520; 14 (xiii) registration as a broker-dealer, an agent, a state 15 [OR] investment adviser , or an investment adviser representative 16 under AS 45.55.030; 17 (xiv) certification as a pesticide applicator under 18 AS 46.03.320; 19 (xv) certification as a storage tank worker or contractor 20 under AS 46.03.375; 21 (xvi) certification as a water and wastewater works 22 operator under AS 46.30; and 23 (B) does not include 24 (i) a commercial fishing license under AS 16.05.480, 25 including a crewmember fishing license; 26 (ii) a vessel license issued under AS 16.05.490 or 27 16.05.530; 28 (iii) a license issued under AS 47.35; 29 (iv) a business license issued under AS 43.70; 30 (v) an entry permit or interim-use permit issued under 31 AS 16.43; or
01 (vi) a driver's license issued under AS 28.15; 02 * Sec. 2. AS 25.27.244(s)(2) is amended to read: 03 (2) "license" 04 (A) means, except as provided in (B) of this paragraph, a 05 license, certificate, permit, registration, or other authorization that, at the time 06 of issuance, will be valid for more than 150 days and that may be acquired 07 from a state agency to perform an occupation, including the following: 08 (i) license relating to boxing or wrestling under 09 AS 05.10; 10 (ii) authorization to perform an occupation regulated 11 under AS 08; 12 (iii) teacher certificate under AS 14.20; 13 (iv) authorization under AS 18.08 to perform emergency 14 medical services; 15 (v) asbestos worker certification under AS 18.31; 16 (vi) boiler operator's license under AS 18.60.395; 17 (vii) certificate of fitness under AS 18.62; 18 (viii) hazardous painting certification under AS 18.63; 19 (ix) security guard license under AS 18.65.400 - 20 18.65.490; 21 (x) license relating to insurance under AS 21.27; 22 (xi) employment agency permit under AS 23.15.330 - 23 23.15.520; 24 (xii) registration as a broker-dealer, an agent, a state 25 [OR] investment adviser , or an investment adviser representative 26 under AS 45.55.030; 27 (xiii) certification as a pesticide applicator under 28 AS 46.03.320; 29 (xiv) certification as a storage tank worker or contractor 30 under AS 46.03.375; 31 (xv) certification as a water and wastewater works
01 operator under AS 46.30; and 02 (xvi) commercial crewmember fishing license under 03 AS 16.05.480 other than an entry permit or interim-use permit under 04 AS 16.43; 05 (B) does not include 06 (i) a vessel license issued under AS 16.05.490 or 07 16.05.530; 08 (ii) a license issued under AS 47.35; 09 (iii) a business license issued under AS 43.70; 10 (iv) an entry permit or interim-use permit issued under 11 AS 16.43; or 12 (v) a driver's license issued under AS 28.15; 13 * Sec. 3. AS 25.27.244(s)(2), as repealed and reenacted under sec. 148(c), ch. 87, SLA 14 1997, is amended to read: 15 (2) "license" 16 (A) means, except as provided in (B) of this paragraph, a 17 license, certificate, permit, registration, or other authorization that, at the time 18 of issuance, will be valid for more than 150 days and that may be acquired 19 from a state agency to perform an occupation, including the following: 20 (i) license relating to boxing or wrestling under 21 AS 05.10; 22 (ii) authorization to perform an occupation regulated 23 under AS 08; 24 (iii) teacher certificate under AS 14.20; 25 (iv) authorization under AS 18.08 to perform emergency 26 medical services; 27 (v) asbestos worker certification under AS 18.31; 28 (vi) boiler operator's license under AS 18.60.395; 29 (vii) certificate of fitness under AS 18.62; 30 (viii) hazardous painting certification under AS 18.63; 31 (ix) security guard license under AS 18.65.400 -
01 18.65.490; 02 (x) license relating to insurance under AS 21.27; 03 (xi) employment agency permit under AS 23.15.330 - 04 23.15.520; 05 (xii) registration as a broker-dealer, an agent, a state 06 [OR] investment adviser , or an investment adviser representative 07 under AS 45.55.030; 08 (xiii) certification as a pesticide applicator under 09 AS 46.03.320; 10 (xiv) certification as a storage tank worker or contractor 11 under AS 46.03.375; and 12 (xv) certification as a water and wastewater works 13 operator under AS 46.30; 14 (B) does not include 15 (i) a commercial fishing license under AS 16.05.480, 16 including a crewmember fishing license; 17 (ii) a vessel license issued under AS 16.05.490 or 18 16.05.530; 19 (iii) a license issued under AS 47.35; 20 (iv) a business license issued under AS 43.70; 21 (v) an entry permit or interim-use permit issued under 22 AS 16.43; or 23 (vi) a driver's license issued under AS 28.15; 24 * Sec. 4. AS 37.23.050 is amended to read: 25 Sec. 37.23.050. Investment management. The public entities participating 26 in an investment pool under this chapter shall provide for management of investments 27 in the pool by contracting for investment management and related services with 28 (1) a securities broker-dealer registered under AS 45.55.030 and under 29 15 U.S.C. 78o (Securities Exchange Act of 1934); 30 (2) a state [AN] investment adviser registered under AS 45.55.030 or 31 a federal covered adviser that has made a notice filing under AS 45.55.040(h)
01 [AND UNDER 15 U.S.C. 80b3 (INVESTMENT ADVISERS ACT OF 1940)]; 02 (3) the Department of Revenue; or 03 (4) a financial institution that is a state or federally chartered 04 commercial or mutual bank, savings and loan association, or credit union if the 05 institution's [INSTITUTIONS'S] accounts are insured through the appropriate federal 06 insuring agency of the United States [,] and if the institution has trust powers under 07 state or federal law. 08 * Sec. 5. AS 45.55.010 is amended by adding a new subsection to read: 09 (b) A person may not rely on an exemption from registration under 10 AS 45.55.900 or on a security being a federal covered security to avoid the application 11 of (a) of this section. 12 * Sec. 6. AS 45.55.020(b) is amended to read: 13 (b) A state [AN] investment adviser may not enter into, extend, or renew an 14 investment advisory contract unless the contract [IT] provides in writing that 15 (1) the state investment adviser may not be compensated on the basis 16 of a share of capital gains upon or capital appreciation of the funds or a portion of the 17 funds of the client; and 18 (2) [AN ASSIGNMENT OF THE CONTRACT MAY NOT BE MADE 19 BY THE INVESTMENT ADVISER WITHOUT THE CONSENT OF THE OTHER 20 PARTY TO THE CONTRACT; AND 21 (3)] the state investment adviser, if a partnership, shall notify the other 22 party to the contract of a change in the membership of the partnership within a 23 reasonable time after the change. 24 * Sec. 7. AS 45.55.020(c) is amended to read: 25 (c) The provisions of (b)(1) of this section do not prohibit an investment 26 advisory contract that provides for compensation based upon the total value of a fund 27 averaged over a definite period, or as of definite dates or taken as of a definite date. 28 The administrator, on request, may waive the provisions of (b)(1) of this section 29 for investment advisory contracts that conform to the limitations of 15 U.S.C. 80b- 30 5 (Investment Advisers Act of 1940). 31 * Sec. 8. AS 45.55.020(e) is amended to read:
01 (e) A state [AN] investment adviser may not take or have custody of the 02 securities or funds of a client if 03 (1) the administrator , by regulation , prohibits custody ; [,] or 04 (2) in the absence of regulation, the state investment adviser fails to 05 notify the administrator that the adviser has or may have custody. 06 * Sec. 9. AS 45.55 is amended by adding new sections to article 1 to read: 07 Sec. 45.55.023. Unethical business practices of state investment advisers, 08 investment adviser representatives, and federal covered advisers. (a) A person 09 who is a state investment adviser, investment adviser representative, or federal covered 10 adviser is a fiduciary and has a duty to act primarily for the benefit of the client. The 11 provisions of this section apply to federal covered advisers only to the extent that the 12 conduct alleged is fraudulent or deceptive under AS 45.55.010(a) or AS 45.55.020(a), 13 or to the extent otherwise provided by P.L. 104 - 290, 101 Stat. 3416 - 3440 (National 14 Securities Markets Improvement Act of 1996). While the extent and nature of the duty 15 to act primarily for the benefit of the client varies according to the nature of the 16 relationship between an investment adviser and its clients and the circumstances of 17 each case, a state investment adviser, an investment adviser representative, or a federal 18 covered adviser may not engage in dishonest or unethical business practices in the 19 investment advisory business under AS 45.55.060(a)(7), including 20 (1) recommending to a client to whom investment supervisory, 21 management, or consulting services are provided, the purchase, sale, or exchange of 22 a security without reasonable grounds to believe that the recommendation is suitable 23 for the client on the basis of information furnished by the client after reasonable 24 inquiry concerning the client's investment objectives, financial situation and needs, and 25 other information known to the state investment adviser, investment adviser 26 representative, or federal covered adviser; 27 (2) exercising discretionary power in placing an order for the purchase 28 or sale of securities for a client without obtaining written discretionary authority from 29 the client within 10 business days after the date of the first transaction placed under 30 oral discretionary authority unless the discretionary power relates solely to the price 31 at which or the time when an order involving a definite amount of a specified security
01 will be executed, or both; 02 (3) inducing trading in a client's account that is excessive in size or 03 frequency in view of the financial resources, investment objectives, and character of 04 the account if the state investment adviser, investment adviser representative, or federal 05 covered adviser can directly benefit from the number of securities transactions effected 06 in a client's account; 07 (4) placing an order to purchase or sell a security for the account of a 08 client without authority to do so; 09 (5) placing an order to purchase or sell a security for the account of a 10 client upon the instruction of a third party without first having obtained a written third- 11 party trading authorization from the client; 12 (6) borrowing money or securities from a client unless the client is a 13 financial institution engaged in the business of loaning money or the client is an 14 affiliate of the state investment adviser or federal covered adviser borrowing the money 15 or securities; 16 (7) loaning money to a client unless the state investment adviser or 17 federal covered adviser loaning the money is a financial institution engaged in the 18 business of loaning money or the client is an affiliate of the state investment adviser 19 or federal covered adviser; 20 (8) misrepresenting to an advisory client or prospective advisory client 21 the qualifications of the state investment adviser, an employee of the state investment 22 adviser, the investment adviser representative, the federal covered adviser, or an 23 employee of the federal covered adviser; misrepresenting the nature of the advisory 24 services being offered or fees to be charged for a service; or omitting to state a 25 material fact necessary to make the statements made regarding qualifications, services, 26 or fees not misleading in light of the circumstances under which the statements are 27 made; 28 (9) providing a report or recommendation to an advisory client prepared 29 by someone other than the state investment adviser, the investment adviser 30 representative, or the federal covered adviser without disclosing that the report or 31 recommendation was prepared by someone else, except that this prohibition does not
01 apply to a situation where the state investment adviser, investment adviser 02 representative, or federal covered adviser uses published research reports or statistical 03 analyses to render advice or where a state investment adviser, an investment adviser 04 representative, or a federal covered adviser orders the research reports or statistical 05 analyses in the normal course of providing service; 06 (10) charging a client an unreasonable advisory fee; 07 (11) failing to disclose to clients in writing before any advice is 08 rendered a material conflict of interest relating to the state investment adviser, federal 09 covered adviser, an employee of the state investment adviser or federal covered 10 adviser, or the investment adviser representative that could reasonably be expected to 11 impair the rendering of unbiased and objective advice, including 12 (A) compensation arrangements connected with advisory 13 services to a client if the arrangements are in addition to compensation from 14 the client for those services; and 15 (B) charging a client an advisory fee for rendering advice when 16 a commission for executing securities transactions according to that advice will 17 be received by the adviser or the employees or investment adviser 18 representatives of the adviser; 19 (12) guaranteeing a client that a specific investment result will be 20 achieved with the advice given; 21 (13) publishing, circulating, or distributing an advertisement that does 22 not comply with 17 C.F.R. 275.206(4) - 1 adopted under 15 U.S.C. 80b-1 - 80b-21 23 (Investment Advisers Act of 1940); 24 (14) disclosing the identity, affairs, or investments of a client unless 25 required by law or unless consented to by the client; 26 (15) taking action, directly or indirectly, with respect to securities or 27 funds in which a client has a beneficial interest if the state investment adviser or 28 federal covered adviser has custody or possession of the securities or funds and the 29 adviser's action does not comply with the requirements of 17 C.F.R. 275.206(4) - 2 30 adopted under 15 U.S.C. 80b-1 - 80b-2 (Investment Advisers Act of 1940); 31 (16) entering into, extending, or renewing an investment advisory
01 contract unless the contract is in writing and discloses in substance 02 (A) the services to be provided; 03 (B) the term of the contract; 04 (C) the advisory fee, the formula for computing the fee, whether 05 the fee is negotiable, and the amount of the prepaid fee to be returned in the 06 event of contract termination or nonperformance; 07 (D) whether the contract grants discretionary power to the 08 adviser; and 09 (E) that an assignment of the contract may not be made by a 10 state investment adviser without the consent of the other party to the contract; 11 in this subparagraph, "assignment" includes a direct or indirect transfer or 12 hypothecation of an investment advisory contract by the assignor or of a 13 controlling block of the assignor's outstanding voting securities by a security 14 holder of the assignor, but, if the adviser is a partnership, an assignment of an 15 investment advisory contract is not considered to result from the death or 16 withdrawal of a minority of the partners of the adviser having only a minority 17 interest in the business of the adviser, or from the admission to the adviser of 18 one or more partners who, after admission, will be only a minority of the 19 partners and will have only a minority interest in the business; 20 (17) failing, in violation of 15 U.S.C. 80b-4a (Investment Advisers Act 21 of 1940), to establish, maintain, and enforce written policies and procedures reasonably 22 designed to prevent the misuse of material nonpublic information; 23 (18) entering into, extending, or renewing an advisory contract that 24 would violate 15 U.S.C. 80b-5 (Investment Advisers Act of 1940); this paragraph 25 applies to all advisers registered or required to be registered under this chapter, 26 notwithstanding whether the adviser would be exempt from federal registration under 27 15 U.S.C. 80b-3 (Investment Advisers Act of 1940); 28 (19) including in an advisory contract a condition, stipulation, or 29 provision binding a person to waive compliance with a provision of this chapter or 30 15 U.S.C. 80b-1 - 80b-21 (Investment Advisers Act of 1940); or engaging in a practice 31 that would violate 15 U.S.C. 80b-15 (Investment Advisers Act of 1940);
01 (20) engaging in an act, a practice, or a course of business that is 02 fraudulent, deceptive, or manipulative in contravention of 15 U.S.C. 80b-6(4) 03 (Investment Advisers Act of 1940) and the rules adopted under that act, 04 notwithstanding the fact that the state investment adviser may not be registered or 05 required to be registered under 15 U.S.C. 80b-3 (Investment Advisers Act of 1940); 06 (21) engaging in conduct or an act, indirectly, through or by another 07 person, that would be unlawful for the person to do directly under this chapter or a 08 regulation adopted under this chapter; 09 (22) acting as principal for the person's own account, knowingly selling 10 a security to or purchasing a security from a client, acting as broker for a person other 11 than the client, or knowingly effecting a sale or purchase of a security for the account 12 of the client without disclosing to the client in writing before the completion of the 13 transaction the capacity in which the person is acting and without obtaining the written 14 consent of the client to the transaction; the prohibitions in this paragraph do not apply 15 to a transaction with a customer of a broker or dealer if the broker or dealer is not 16 acting as a state investment adviser or federal covered adviser in relation to the 17 transaction. 18 (b) The conduct prohibited by (a) of this section is not exclusive. Engaging 19 in other similar conduct, including nondisclosure, incomplete disclosure, or a deceptive 20 practice, is considered an unethical business practice. With respect to a state 21 investment adviser and a registered investment adviser representative of either a state 22 investment adviser or a federal covered adviser, the federal statutory and regulatory 23 provisions referred to in this section apply to the state investment adviser and the 24 registered investment adviser representative regardless of whether the federal provision 25 limits its application to state investment advisers or federal covered advisors subject 26 to federal registration. With respect to a federal covered adviser, the provisions of this 27 section apply only to the extent permitted under P.L. 104 - 290, 101 Stat. 3416 - 3440 28 (National Securities Markets Improvement Act of 1996) and only when the conduct 29 proscribed involves fraud or deceit within the meaning of AS 45.55.010(a) and 30 45.55.020(a). 31 Sec. 45.55.025. Fraudulent, dishonest, and unethical business practices of
01 broker-dealers. A broker-dealer shall observe high standards of commercial honor 02 and just and equitable principles of trade in the conduct of its business. The acts and 03 practices that are contrary to those standards and principles, that constitute dishonest 04 or unethical practices in the securities business under AS 45.55.060(a), and that are 05 grounds for imposition of administrative fines, censure, denial, suspension, revocation 06 of a registration, or other appropriate disciplinary action include 07 (1) engaging in a pattern of unreasonable and unjustifiable delays in the 08 delivery of securities purchased by the broker-dealer's customers or in the payment 09 upon request of free credit balances reflecting completed transactions of the broker- 10 dealer's customers; 11 (2) inducing in a customer's account trading that is excessive in size 12 or frequency in view of the financial resources and character of the account; 13 (3) recommending to a customer the purchase, sale, or exchange of a 14 security without reasonable grounds to believe that the transaction or recommendation 15 is suitable for the customer based on reasonable inquiry concerning the customer's 16 investment objectives, financial situation, and needs, and other relevant information 17 known by the broker-dealer; 18 (4) executing a transaction on behalf of a customer without 19 authorization to execute the transaction; 20 (5) exercising discretionary power in effecting a transaction for a 21 customer's account without first obtaining written discretionary authority from the 22 customer unless the discretionary power relates solely to the time or price for the 23 execution of orders; 24 (6) executing a transaction in a margin account without securing from 25 the customer a properly executed written margin agreement promptly after the initial 26 transaction in the account; 27 (7) failing to segregate a customer's free securities or securities held in 28 safekeeping; 29 (8) hypothecating a customer's securities without having a lien on the 30 securities unless the broker-dealer receives from the customer a properly executed 31 written consent promptly after the initial transaction, except as permitted by the rules
01 of the United States Securities and Exchange Commission; 02 (9) entering into a transaction with or for a customer at a price not 03 reasonably related to the current market price of the securities or receiving an 04 unreasonable commission or profit; 05 (10) failing to furnish to a customer purchasing securities in a 06 registered offering a final or preliminary prospectus no later than the date of 07 confirmation of the transaction and, if the prospectus is preliminary, failing to furnish 08 a final prospectus within a reasonable time after the effective date of the offering; 09 (11) charging unreasonable or inequitable fees for services performed, 10 including fees for miscellaneous services, such as the collection of money due for 11 principal, dividends, or interest, the exchange or transfer of securities, appraisals, 12 safekeeping, the custody of securities, and other services related to the broker-dealer's 13 securities business; 14 (12) offering to buy from or sell to a person a security at a stated price 15 unless the broker-dealer is prepared to purchase or sell at that price and under the 16 conditions that are stated at the time of the offer to buy or sell; 17 (13) representing that a security is being offered to a customer at 18 market price or at a price relevant to the market price unless the broker-dealer knows 19 or has reasonable grounds to believe that a market for the security exists other than 20 that made, created, or controlled by 21 (A) the broker-dealer; 22 (B) a person for whom the broker-dealer is acting or with whom 23 the broker-dealer is associated in the distribution of the security; or 24 (C) a person controlled by, controlling, or under common 25 control with the broker-dealer; 26 (14) effecting a transaction in, or inducing the purchase or sale of, a 27 security by means of a manipulative, deceptive, or fraudulent device, practice, plan, 28 program, design, or contrivance, including 29 (A) effecting a transaction in a security that does not involve 30 a change in the beneficial ownership; 31 (B) entering an order for the purchase or sale of security with
01 the knowledge that another order of substantially the same price for the sale of 02 the same security has been or will be entered by or for the same or different 03 parties for the purpose of creating a false or misleading appearance of active 04 trading in the security or a false or misleading appearance with respect to the 05 market for the security; nothing in this subparagraph prohibits a broker-dealer 06 from entering a bona fide agency cross transaction for its customers as long as 07 the cross transaction is noted on the confirmation and monthly account 08 statements; 09 (C) effecting alone or with one or more other persons a series 10 of transactions in a security creating actual or apparent active trading in the 11 security or raising or depressing the price of the security for the purpose of 12 inducing the purchase or sale of the security by others; 13 (15) guaranteeing a customer against risk or loss in a securities account 14 of the customer carried by the broker-dealer or in a securities transaction effected by 15 the broker-dealer with or for the customer; 16 (16) publishing or circulating or causing to be published or circulated 17 a notice, a circular, an advertisement, a newspaper article, an investment service, or 18 a communication of any kind that purports to 19 (A) report a transaction as a purchase or sale of a security 20 unless the broker-dealer believes that the transaction described was a bona fide 21 purchase or sale of the security; or 22 (B) quote the bid price or asked price for a security unless the 23 broker-dealer believes that the quotation represents a bona fide bid for, or offer 24 of, the security; 25 (17) making a written or oral advertising or sales presentation that is 26 in any manner deceptive or misleading, including 27 (A) distributing nonfactual data or material, or making a 28 presentation that is based on conjecture or unfounded or unrealistic claims or 29 assertions, in a brochure, flyer, or other display by words, pictures, graphs, or 30 other method designed to supplement, detract from, supersede, or defeat the 31 purpose or effect of a prospectus or disclosure;
01 (B) using supplementary material in connection with the offer 02 of a particular security if the information in the material is not consistent with 03 or adequately supported by the prospectus or is not filed as part of the 04 registration statement; 05 (C) using supplementary material not authorized by the issuer 06 in connection with the offer of a particular security when a prospectus or other 07 offering document required to be delivered in connection with the offer 08 specifically states that supplementary material is not authorized; 09 (18) failing to disclose that the broker-dealer is affiliated with the issuer 10 of a security before entering into a contract with or for a customer for the purchase or 11 sale of the security and, if the disclosure is made orally, failing to provide to the 12 customer written disclosure before the completion of the transaction; 13 (19) failing to make a bona fide offering of all of the securities allotted 14 to a broker-dealer for distribution whether acquired as an underwriter or a selling 15 group member, or from an underwriting or a selling group member participating in the 16 distribution as an underwriter or selling group member; 17 (20) failing or refusing to furnish to a customer, upon reasonable 18 request, information to which the person is entitled or failing or refusing to respond 19 to a formal written request, demand, or complaint; 20 (21) being found by a court or an administrative proceeding of 21 competent jurisdiction to have violated the anti-fraud or registration provisions of 22 federal or any state's securities laws; 23 (22) marking an order ticket or confirmation as unsolicited when, in 24 fact, the transaction was solicited; 25 (23) in connection with the solicitation of a sale or purchase of an over- 26 the-counter non-NASDAQ security, failing to provide promptly the most current prospectus 27 or the most recent periodic report filed under 15 U.S.C. 78m (Securities Exchange Act of 28 1934), when requested to do so by a customer; 29 (24) failing to provide to a customer for a month in which activity has 30 occurred in a customer's account, but in no event less than every three months, a 31 statement of account that contains a value for each over-the-counter non-NASDAQ
01 equity security based on the closing market bid on a certain date; this paragraph 02 applies only if the broker-dealer has been a market maker in that security at any time 03 during the month in which the monthly or quarterly statement is issued; 04 (25) failing to maintain lists of persons who have informed the broker- 05 dealer that the persons do not want to be solicited; 06 (26) conducting business by telephone at unreasonable times; 07 (27) failing to disclose to a person purchasing shares of an investment 08 company on the premises of an insured depository institution that the investment is not 09 covered by the Federal Deposit Insurance Corporation; or 10 (28) failing to comply with an applicable provision of the Conduct 11 Rules of the National Association of Securities Dealers, Inc., or applicable fair 12 practices or ethical standards adopted by the United States Securities and Exchange 13 Commission or by a self-regulatory organization approved by the United States 14 Securities and Exchange Commission. 15 Sec. 45.55.027. Fraudulent, dishonest, and unethical business practices of 16 agents. An agent shall observe high standards of commercial honor and just and 17 equitable principles of trade in the conduct of the agent's business. The acts and 18 practices that are contrary to those standards and principles, that constitute dishonest 19 or unethical practices in the securities business under AS 45.55.060(a), and that are 20 grounds for imposition of administrative fines, censure, denial, suspension, revocation 21 of a registration, or other appropriate disciplinary action include 22 (1) engaging in the practice of lending to or borrowing money or 23 securities from a customer or acting as a custodian for money, securities, or an 24 executed stock power of a customer; 25 (2) effecting securities transactions not recorded on the regular books 26 and records of the broker-dealer that the agent represents unless the transactions are 27 authorized in writing by the broker-dealer before execution of the transactions; 28 (3) establishing or maintaining an account containing fictitious 29 information in order to execute transactions that would otherwise be prohibited; 30 (4) sharing directly or indirectly in profits and losses in the account of 31 a customer without the written authorization of the customer and the broker-dealer that
01 the agent represents; 02 (5) dividing or otherwise splitting the agent's commissions, profits, or 03 other compensation from the purchase and sale of securities with a person who is not 04 also registered in this state as an agent for the same broker-dealer or as a broker-dealer 05 under direct or indirect common control of the broker-dealer or agent unless the person 06 is not required to be registered in order to engage in the securities business in this 07 state; 08 (6) failing to disclose to a customer or prospective customer at the time 09 of the first contact with the customer or prospective customer the name of the principal 10 if different from the name under which the agent is doing business; 11 (7) contacting a person who has requested to be placed on a list of 12 persons who do not want to be contacted by the broker-dealer; 13 (8) conducting business by telephone at unreasonable times. 14 Sec. 45.55.028. Fraudulent, dishonest, and unethical business practices of 15 broker-dealers and agents. Acts and practices of broker-dealers or agents that are 16 considered fraudulent or deceitful acts, practices, or courses of business under 17 AS 45.55.010(a) include 18 (1) entering into a transaction with a customer with regard to a security 19 at an unreasonable price or at a price not reasonably related to the current market price 20 of the security or receiving an unreasonable commission, markup, or profit; 21 (2) contradicting or negating the importance of information contained 22 in a prospectus or other offering material with the intent to deceive or mislead or using 23 an advertising or sales presentation in a deceptive or misleading manner, including 24 using supplementary material that does not consistently reflect or is not supported by 25 information presented in prospectus or offering material required to be delivered in 26 connection with the offer; 27 (3) in connection with the offer, sale, or purchase of a security, falsely 28 misleading a customer to believe that the broker-dealer or agent possesses material, 29 nonpublic information that would affect the value of the security; 30 (4) in connection with the solicitation of a sale or purchase of a 31 security, engaging in a pattern or practice of making contradictory recommendations
01 to different investors with similar investment objectives for some to sell and others to 02 purchase the same security, at or about the same time, when not justified by the 03 particular circumstances of each investor; 04 (5) failing to make a bona fide public offering in accordance with an 05 underwriting agreement of all the securities allotted to a broker-dealer for distribution 06 by using methods such as 07 (A) transferring securities to a customer, another broker-dealer, 08 or a fictitious account with the understanding that the securities will be returned 09 to the broker-dealer or its nominees; or 10 (B) parking or withholding securities; 11 (6) with respect to transactions in securities sold in the over-the-counter 12 market other than those securities listed in the NASDAQ National Market System, 13 (A) conducting sales contests in a particular security; 14 (B) failing or refusing to promptly execute sell orders after a 15 solicited purchase by a customer; 16 (C) soliciting a secondary market transaction when there has not 17 been a bona fide distribution in the primary issuer market; 18 (D) engaging in a pattern of compensating an agent in different 19 amounts for effecting sales and purchases in the same security; 20 (7) effecting a transaction in or inducing the purchase or sale of a 21 security by means of any manipulative, deceptive, or other fraudulent device or 22 contrivance, including the use of boiler room tactics or the use of fictitious accounts; 23 in this paragraph, "boiler room tactics" includes high-pressure sales tactics that have 24 the effect of creating an artificially short period in which the investor must make a 25 decision or that are designed to overcome a customer's reluctance to make an 26 investment, including 27 (A) the use of intensive telephone campaigns or unsolicited calls 28 to persons who are not known by or who do not have an account with the 29 agent or broker-dealer and in which the person is encouraged to make a hasty 30 decision to buy without regard to the person's investment needs and objectives; 31 (B) the use of scripts designed to meet the customer's
01 objections; 02 (C) repeated phone calls; 03 (D) phone calls designed to entrap the customer; 04 (E) threatening tones on the telephone informing the customer 05 that there is little time within which to make a decision; 06 (8) failing to comply with a prospectus delivery requirement adopted 07 under federal law; 08 (9) making a false, misleading, deceptive, or exaggerated representation 09 or prediction in the solicitation or sale of a security, including a statement that 10 (A) the security will be resold or repurchased; 11 (B) the security will be listed or traded on an exchange or 12 established market; 13 (C) purchasing the security will result in an assured, immediate, 14 or extensive increase in value, future market price, or return on investment; or 15 (D) refers to the issuer's financial condition, anticipated 16 earnings, potential growth, or success; 17 (10) failing to disclose a dual agency capacity; or 18 (11) effecting a transaction on terms and conditions other than those 19 stated by the confirmation. 20 * Sec. 10. AS 45.55.030(c) is repealed and reenacted to read: 21 (c) A person may not transact business in this state as a state investment 22 adviser or an investment adviser representative unless 23 (1) the person is registered as required under this chapter; or 24 (2) the person does not have a place of business in this state and 25 (A) the person's only clients in this state are investment 26 companies as defined in 15 U.S.C. 80a-3 (Investment Company Act of 1940), 27 other state investment advisers, federal covered advisers, broker-dealers, banks, 28 trust companies, savings and loan associations, insurance companies, employee 29 benefit plans with assets of not less than $1,000,000, governmental agencies or 30 instrumentalities whether acting for themselves or as trustees with investment 31 control, or other institutional investors that are designated by regulation or
01 order of the administrator; or 02 (B) during the preceding 12 months has not had more than five 03 clients who are residents of this state other than those specified in (A) of this 04 paragraph; in this subparagraph, the number of the person's clients shall be 05 determined under 17 C.F.R. 275.203(b)(3)-1 and 17 C.F.R. 275.222-2. 06 * Sec. 11. AS 45.55.030(d) is amended to read: 07 (d) A [EVERY] registration or notice filing expires one year from its effective 08 date unless renewed earlier . 09 * Sec. 12. AS 45.55.030 is amended by adding new subsections to read: 10 (e) Except with respect to a federal covered adviser whose only clients are 11 those described in (c)(2) of this section, a federal covered adviser may not conduct an 12 investment advisory business in this state unless the federal covered adviser complies 13 with AS 45.55.040(h). 14 (f) A person may not be registered concurrently as an agent of more than one 15 broker-dealer or issuer. The administrator may waive this requirement if the 16 administrator determines that it would not interfere with effective supervision of the 17 agent by the broker-dealer or issuer and the waiver is in the public interest. 18 (g) A person who is registered or required to be registered as a state 19 investment adviser under this chapter may not employ an investment adviser 20 representative who provides advisory services in or emanating from this state unless 21 the investment adviser representative is registered under this chapter or is exempt from 22 registration, except that the registration of the investment adviser representative is not 23 effective during any period when the representative is not employed by a state 24 investment adviser registered under this chapter. 25 (h) A federal covered adviser who has filed notice under this chapter may not 26 employ, supervise, or associate with an investment adviser representative having a 27 place of business located in this state unless the investment adviser representative is 28 registered under this chapter or is exempt from registration, except that the registration 29 of the investment adviser representative is not effective during any period when the 30 representative is not employed by a federal covered adviser. 31 (i) If an investment adviser representative terminates employment with a state
01 investment adviser or federal covered adviser, the state investment adviser or federal 02 covered adviser shall promptly notify the administrator. 03 (j) A registered broker-dealer or agent is not considered to be soliciting, 04 offering, or negotiating for the sale or selling advisory services if the registered broker- 05 dealer or agent refers, as part of a wrap fee, asset allocation, or market-timing program, 06 customers who are residents of this state to a state investment adviser or federal covered 07 adviser that is registered or has made a notice filing in this state. 08 * Sec. 13. AS 45.55 is amended by adding a new section to read: 09 Sec. 45.55.035. Limited registration of Canadian broker-dealers and 10 agents. (a) If a broker-dealer is registered under this section and its principal office 11 is located in a province or territory of Canada that provides at least equivalent 12 registration for a broker-dealer that is resident in the United States, a broker-dealer that 13 is resident in Canada and does not have an office or other physical presence in this 14 state may effect transactions in securities with or for or induce or attempt to induce 15 the purchase or sale of a security by a person from Canada who is 16 (1) temporarily resident in this state and with whom the Canadian 17 broker-dealer had a bona fide broker-dealer-client relationship before the person 18 entered the United States; or 19 (2) resident in this state and whose transactions are in a self-directed 20 tax-advantaged retirement plan in Canada of which the person is the holder or 21 contributor. 22 (b) An agent who represents a Canadian broker-dealer registered under this 23 section may, if the agent is registered under this section, effect transactions in 24 securities in this state as permitted for the broker-dealer under (a) of this section. 25 (c) Subject to the requirements in (a) of this section, a Canadian broker-dealer 26 may register under this section if the broker-dealer 27 (1) files an application in the form required by the jurisdiction in which 28 the broker-dealer has its principal office; 29 (2) files a written consent to service of process under AS 45.55.980(g); 30 (3) is registered as a broker or dealer in good standing in the 31 jurisdiction from which the broker-dealer is effecting transactions into this state and
01 files evidence of the registration; and 02 (4) is a member of a self-regulating organization or stock exchange in 03 Canada. 04 (d) An agent may register under this section in order to effect transactions in 05 securities in this state if the agent represents a Canadian broker-dealer that is registered 06 under this section, and the agent 07 (1) files an application in the form required by the jurisdiction in which 08 the broker-dealer has its principal office; 09 (2) files a written consent to service of process under AS 45.55.980(g); 10 and 11 (3) is registered and files evidence of good standing in the jurisdiction 12 from which the agent is effecting transactions into this state. 13 (e) Registration under this section becomes effective on the 30th day after an 14 application is filed unless it is made effective earlier by the administrator or a denial 15 order is in effect and a proceeding is pending under AS 45.55.060. 16 (f) A Canadian broker-dealer registered under this section shall 17 (1) maintain provincial or territorial registration and membership in 18 good standing in a self-regulating organization or stock exchange; 19 (2) provide the administrator on request with books and records relating 20 to its business in the state as a broker-dealer; 21 (3) inform the administrator promptly of any criminal action taken 22 against the broker-dealer or of any finding or sanction imposed on the broker-dealer 23 as a result of regulatory action, including that of a self-regulating organization, 24 involving fraud, theft, deceit, misrepresentation, or similar conduct; and 25 (4) disclose to its clients in this state that the broker-dealer and its 26 agents are not subject to the full regulatory requirements of this chapter. 27 (g) An agent of a Canadian broker-dealer registered under this section shall 28 (1) maintain provincial or territorial registration in good standing; and 29 (2) inform the administrator promptly of any criminal action taken 30 against the agent or of any finding or sanction imposed on the broker-dealer or agent 31 as a result of regulatory action, including that of a self-regulating organization,
01 involving fraud, theft, deceit, misrepresentation, or similar conduct. 02 (h) Renewal applications for Canadian broker-dealers and agents under this 03 section must be filed before December 1 each year and may be made by filing the 04 most recent renewal application, if any, filed in the jurisdiction in which the broker- 05 dealer has its principal office or, if a renewal application is not required, the most recent 06 application filed under (c)(1) or (d)(1) of this section. 07 (i) An applicant for registration or renewal registration under this section shall 08 pay the fee for broker-dealers and agents required by this chapter. 09 (j) A Canadian broker-dealer or agent registered under this section may not 10 effect transactions in this state except 11 (1) as permitted under (a) or (b) of this section; 12 (2) with or through 13 (A) the issuers of the securities involved in the transactions; 14 (B) other broker-dealers; or 15 (C) banks, savings institutions, trust companies, insurance 16 companies, investment companies as defined in 15 U.S.C. 80a-3 (Investment 17 Company Act of 1940), pension or profit-sharing trusts, or other financial 18 institutions or institutional buyers, whether acting for themselves or as trustees; 19 or 20 (3) as otherwise permitted by this chapter. 21 (k) A Canadian broker-dealer or agent registered under this section and acting 22 in accordance with the limitations in (j) of this section is exempt from all of the 23 requirements of this chapter except the anti-fraud provisions under AS 45.55.010 and 24 the requirements of this section. The registration of a Canadian broker-dealer or agent 25 under this section may not be denied, suspended, or revoked except in accordance with 26 the provisions of AS 45.55.060 for a breach of the anti-fraud provisions under 27 AS 45.55.010 or the requirements of this section. 28 (l) In this section, "Canadian broker-dealer" means a broker-dealer that has its 29 principal office in a province or territory of Canada. 30 * Sec. 14. AS 45.55.040(a) is amended to read: 31 (a) A broker-dealer, agent, [OR] investment adviser representative, or state
01 investment adviser may obtain an initial or renewal registration by filing with the 02 administrator or the administrator's designee an application together with a consent 03 to service of process under AS 45.55.980(g). The application must [SHALL BE 04 ACCOMPANIED BY THE FINGERPRINTS AND A PHOTOGRAPH OF THE 05 APPLICANT AND MUST] contain whatever information the administrator by 06 regulation may require [REQUIRES] concerning such matters as 07 (1) the applicant's form and place of organization; 08 (2) the applicant's proposed method of doing business; 09 (3) the qualifications and business history of the applicant; in the case 10 of a broker-dealer or state investment adviser, the qualifications and business history 11 of a partner, officer, or director, any [A] person occupying a similar status or 12 performing similar functions, or any [A] person directly or indirectly controlling the 13 broker-dealer or state investment adviser; [AND, IN THE CASE OF AN 14 INVESTMENT ADVISER, THE QUALIFICATIONS AND BUSINESS HISTORY OF 15 AN EMPLOYEE;] 16 (4) an injunction or administrative order or conviction of a 17 misdemeanor involving a security or any aspect of the securities business and any 18 conviction of a felony; [AND] 19 (5) the applicant's financial condition and history ; and 20 (6) if the applicant is a state investment adviser, any information 21 to be furnished or disseminated to a client or prospective client . 22 * Sec. 15. AS 45.55.040(b) is amended to read: 23 (b) The administrator may by regulation or order require an applicant for initial 24 registration to publish an announcement of the application in one or more specified 25 newspapers published in this state. [IF NO DENIAL ORDER IS IN EFFECT AND 26 NO PROCEEDING IS PENDING UNDER AS 45.55.060, REGISTRATION 27 BECOMES EFFECTIVE AT NOON ON THE 30TH DAY AFTER AN 28 APPLICATION IS FILED. THE ADMINISTRATOR MAY BY REGULATION OR 29 ORDER SPECIFY AN EARLIER EFFECTIVE DATE, AND THE 30 ADMINISTRATOR MAY BY ORDER DEFER THE EFFECTIVE DATE UNTIL 31 NOON OF THE 30TH DAY AFTER THE FILING OF AN AMENDMENT.]
01 * Sec. 16. AS 45.55.040(c) is repealed and reenacted to read: 02 (c) A broker-dealer, an agent, an investment adviser representative, and a state 03 investment adviser applicant for initial or renewal registration shall pay a registration 04 fee established by the department by regulation. A person acting as a federal covered 05 adviser in this state shall pay a fee for an initial and renewal notice filing under (h) 06 of this section as required by the administrator by regulation. 07 * Sec. 17. AS 45.55.040(d) is repealed and reenacted to read: 08 (d) A registered broker-dealer, state investment adviser, or a federal covered 09 adviser who has filed notice under this chapter may file an application for registration 10 or notice filing, as applicable, of a successor for the unexpired portion of the year 11 regardless of whether the successor is then in existence. A broker-dealer may file a 12 request to transfer from a previous broker-dealer an agent's unexpired portion of the 13 registration if the provisions of AS 45.55.030(b) have been met. A state investment 14 adviser may file an application to transfer from a predecessor state investment adviser 15 or federal covered adviser the investment adviser representative's unexpired portion 16 of the registration. The filing fee for filing applications under this subsection shall be 17 established by the department by regulation. 18 * Sec. 18. AS 45.55.040(e) is repealed and reenacted to read: 19 (e) The administrator may by regulation or order require a minimum level of 20 capitalization for registered broker-dealers, subject to the limitations of 15 U.S.C. 78o 21 (Securities Exchange Act of 1934), and establish minimum financial requirements for 22 state investment advisers, subject to the limitations of 15 U.S.C. 80b-18a (Investment 23 Advisers Act of 1940). The financial requirements may differ for those state 24 investment advisers who have discretionary authority over or maintain custody of 25 clients' funds or securities and those who do not. 26 * Sec. 19. AS 45.55.040(f) is repealed and reenacted to read: 27 (f) The administrator may by regulation or order require registered broker- 28 dealers and agents to post a bond in an amount the administrator may prescribe subject to the 29 limitations provided in 15 U.S.C. 78o (Securities Exchange Act of 1934). The administrator 30 may determine the conditions of the bond. Any appropriate deposit of cash or securities shall 31 be accepted in place of a required bond. A bond may not be required of a registrant whose
01 net capital exceeds the amounts required by the administrator. A bond must provide for suit 02 on it by a person who has a cause of action under AS 45.55.930 and, if required by the 03 administrator by regulation, by a person who has a cause of action not arising under this 04 chapter. A bond must provide that a suit may not be maintained to enforce a liability on the 05 bond unless brought within three years after the sale or other act on which it is based. 06 * Sec. 20. AS 45.55.040(g) is amended to read: 07 (g) The administrator may permit initial and renewal registration and notice 08 filings required for state investment advisers, federal covered advisers, investment 09 adviser representatives, broker-dealers, and agents under this chapter to be filed 10 with the United States Securities and Exchange Commission, the National Association 11 of Securities Dealers , or other similar authority [AUTHORITIES]. The administrator 12 may accept uniform securities examinations or other procedures designed to implement 13 a uniform national securities regulatory system or facilitate common practices and 14 procedures among the states , including participation in joint, coordinated securities 15 examinations with other states . 16 * Sec. 21. AS 45.55.040 is amended to adding new subsections to read: 17 (h) Except with respect to federal covered advisers whose only clients are 18 those described in AS 45.55.030(c)(2), a federal covered adviser shall file with the 19 administrator, before acting as a federal covered adviser in this state, those documents 20 that have been filed with the United States Securities and Exchange Commission as 21 the administrator, by regulation, by order, or otherwise, may require. 22 (i) The administrator shall by regulation or order specify procedures, fees, and 23 an effective date for registrations, notice filings under this section, transfers of agents, 24 and other registrations or notice filings allowed or required under this chapter. 25 (j) The administrator may by regulation or order require registered state 26 investment advisers who have custody of or discretionary authority over clients' funds 27 or securities to post a bond in an amount the administrator may establish subject to the 28 limitations provided in 15 U.S.C. 80b-18a (Investment Advisers Act of 1940). The 29 administrator may determine the conditions of the bond. Any appropriate deposit of 30 cash or securities shall be accepted in place of a required bond. A bond may not be 31 required of a registrant whose minimum financial condition, which may be defined by
01 regulation, or net capital exceeds the amounts required by the administrator. A bond 02 must provide for suit on it by a person who has a cause of action under AS 45.55.930 03 and, if required by the administrator by regulation, by a person who has a cause of 04 action not arising under this chapter. A bond must provide that a suit may not be 05 maintained to enforce a liability on the bond unless brought within three years after 06 the sale or other act on which it is based. 07 * Sec. 22. AS 45.55.050(a) is amended to read: 08 (a) Except as provided under 15 U.S.C. 78o (Securities Exchange Act of 09 1934), a [EVERY] registered broker-dealer [AND INVESTMENT ADVISER] shall 10 make and keep the accounts, correspondence, memoranda, papers, books, and other 11 records that the administrator establishes [PRESCRIBES BY REGULATION]. All 12 required records [SO REQUIRED] shall be preserved for three years unless the 13 administrator by regulation prescribes otherwise [FOR PARTICULAR TYPES OF 14 RECORDS]. 15 * Sec. 23. AS 45.55.050(b) is repealed and reenacted to read: 16 (b) Subject to 15 U.S.C. 78o (Securities Exchange Act of 1934), a registered 17 broker-dealer shall file the financial reports the administrator requires. 18 * Sec. 24. AS 45.55.050(c) is amended to read: 19 (c) If the information contained in a document filed with the administrator is 20 or becomes inaccurate or incomplete in a material respect, the person who made the 21 filing [REGISTRANT] shall promptly file a correcting amendment unless notification 22 of the correction is given under AS 45.55.030(b). If the document is filed with 23 respect to a federal covered adviser, the amendment shall be filed when it is 24 required to be filed with the United States Securities and Exchange Commission 25 unless notification of the correction is given under AS 45.55.030(b). 26 * Sec. 25. AS 45.55.050(d) is amended to read: 27 (d) All the records referred to in [(a) OF] this section are subject at any time 28 to reasonable periodic, special, or other examinations by representatives of the 29 administrator, inside or outside this state, as the administrator considers necessary or 30 appropriate in the public interest or for the protection of investors. For the purpose 31 of avoiding unnecessary duplication of examinations, the administrator, insofar as the
01 administrator considers it practicable in administering this subsection, may cooperate 02 with the securities administrators of other states, the United States Securities and 03 Exchange Commission, and any national securities exchange or national securities 04 association registered under 15 U.S.C. 78a - 78lll ( [THE] Securities Exchange Act of 05 1934 ) . 06 * Sec. 26. AS 45.55.050 is amended by adding a new subsections to read: 07 (e) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), an 08 investment adviser representative or state investment adviser shall make and keep the 09 accounts, correspondence, memoranda, papers, books, and other records that the 10 administrator prescribes. All required records shall be preserved for three years unless 11 the administrator by regulation prescribes otherwise. 12 (f) The administrator may by regulation or order require that certain 13 information be furnished or disseminated by persons registered or required to be 14 registered as state investment advisers as necessary or appropriate in the public interest 15 or for the protection of investors and advisory clients. The administrator may 16 determine that certain information may be used in whole or partial satisfaction of this 17 requirement if the information complies with 15 U.S.C. 80b-1 - 80b-21 (Investment 18 Advisers Act of 1940) and the rules adopted under that act. 19 (g) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), a state 20 investment adviser shall file the financial reports the administrator prescribes. 21 (h) A state investment adviser that has its principal place of business in a state 22 other than this state and the investment adviser representatives of that state investment 23 adviser are exempt from the requirements of (e) of this section if the state investment 24 adviser is registered as an investment adviser in the state where the state investment 25 adviser has its principal place of business and is in compliance with that state's 26 requirements relating to accounts and records. 27 (i) A broker-dealer and an agent of a broker-dealer shall file with the 28 administrator only the financial reports or other information required to be filed with 29 the United States Securities and Exchange Commission under 15 U.S.C. 78a - 78lll 30 (Securities Exchange Act of 1934). 31 (j) A state investment adviser that has its principal place of business in a state
01 other than this state and the investment adviser representatives of that state investment 02 adviser shall file with the administrator only the financial reports or other information 03 required by the state in which the state investment adviser maintains its principal place 04 of business if the state investment adviser is licensed in that state and is in compliance 05 with that state's reporting requirements. 06 (k) A broker-dealer shall comply with the supervision requirements set out in 07 Conduct Rule 3010 of the National Association of Securities Dealers, Inc. 08 * Sec. 27. AS 45.55.060(a) is amended to read: 09 (a) The administrator may by order deny, suspend, or revoke a registration if 10 the administrator finds that the order is in the public interest and that the applicant or 11 registrant or, in the case of a broker-dealer or state investment adviser, a partner, 12 officer, or director, a person occupying a similar status or performing similar functions, 13 or a person directly or indirectly controlling the broker-dealer or state investment 14 adviser 15 (1) has filed an application for registration that, as of its effective date, 16 or as of a date after filing in the case of an order denying effectiveness, was 17 incomplete in a material respect or contained a statement that was, in light of the 18 circumstances under which it was made, false or misleading with respect to a material 19 fact; 20 (2) has wilfully or repeatedly violated or [WILFULLY] failed to 21 comply with a provision of this chapter or a regulation or order under this chapter; 22 (3) has been convicted, within the past 10 years, of a misdemeanor 23 involving a security or an aspect of the securities business [,] or a felony; in this 24 paragraph, "convicted" includes a finding of guilt based on a verdict, judgment, 25 plea of guilty, or plea of nolo contendere, if the verdict, judgment, or plea has not 26 been reversed, set aside, or withdrawn, regardless of whether sentence has been 27 imposed; 28 (4) is permanently or temporarily enjoined by a court from engaging 29 in or continuing [A] conduct or a practice involving an aspect of the securities 30 business; 31 (5) is the subject of an order of the administrator denying, suspending,
01 or revoking registration as a broker-dealer, agent, state [OR] investment adviser , or 02 investment adviser representative ; 03 (6) is the subject of an order entered within the past five years by the 04 securities administrator of another state or by the United States Securities and 05 Exchange Commission denying or revoking registration as a broker-dealer, agent , state 06 [OR] investment adviser, investment adviser representative, or the substantial 07 equivalent of those terms as defined in this chapter, or is the subject of an order of the 08 United States Securities and Exchange Commission suspending or expelling the 09 person from a national securities exchange or national securities association registered 10 under 15 U.S.C. 78a - 78lll ( [THE] Securities Exchange Act of 1934 ) , or is the 11 subject of a United States Post Office fraud order; but the administrator may not 12 (A) institute a revocation or suspension proceeding under this 13 paragraph more than one year from the date of the order relied on; and 14 (B) enter an order under this paragraph on the basis of an order 15 under another state act unless that order was based on facts that [WHICH] 16 would currently constitute a ground for an order under this section; 17 (7) has engaged in dishonest or unethical practices or conduct in the 18 securities or investment advisory business; 19 (8) is insolvent, [EITHER] in the sense that liabilities exceed assets , 20 [OR IN THE SENSE] that the person cannot meet obligations as they mature , or that 21 the person cannot continue in business safely for the customers of the applicant 22 or registrant, [;] but the administrator may not enter an order against a broker-dealer 23 or state investment adviser under this paragraph [CLAUSE] without a finding of 24 insolvency as to the broker-dealer or state investment adviser; [OR] 25 (9) is not qualified on the basis of such factors as training, experience, 26 and knowledge of the securities business, except as otherwise provided in (d) of this 27 section ; 28 (10) has failed to comply with the requirements of AS 45.55.050 to 29 make, keep, or produce records required by the administrator, or to file financial 30 reports or other information the administrator by regulation or order may 31 require; or
01 (11) is a person whose license renewal is denied under AS 14.43.148 02 or whose license issuance or renewal is denied under AS 25.27.244 . 03 * Sec. 28. AS 45.55.060(b) is amended to read: 04 (b) The administrator may by order deny, suspend, or revoke any registration 05 if the administrator finds that the order is in the public interest and that the applicant 06 or registrant 07 (1) has failed reasonably to supervise agents if the applicant or 08 registrant is a broker-dealer , or has failed reasonably to supervise employees and 09 investment adviser representatives if the applicant or registrant is a state [AN] 10 investment adviser; or 11 (2) has failed to pay the proper filing fee; but the administrator may 12 enter only a denial order under this paragraph [CLAUSE], and the administrator shall 13 vacate the order when the deficiency is corrected. 14 * Sec. 29. AS 45.55.060(d) is amended to read: 15 (d) The following provisions govern the application of (a)(9) of this section: 16 (1) the administrator may not enter an order against a broker-dealer on 17 the basis of the lack of qualification of a person other than 18 (A) the broker-dealer if the broker-dealer is an individual; or 19 (B) an agent of the broker-dealer; 20 (2) the administrator may not enter an order against a state [AN] 21 investment adviser on the basis of the lack of qualification of a [ANY] person other 22 than 23 (A) the state investment adviser if the state investment adviser 24 is an individual; or 25 (B) an investment adviser representative [ANOTHER 26 PERSON] who represents the state investment adviser in doing any of the acts 27 that [WHICH] make the state investment adviser a state [AN] investment 28 adviser; 29 (3) the administrator may not enter an order solely on the basis of lack 30 of experience if the applicant or registrant is qualified by training or knowledge or 31 both;
01 (4) the administrator shall consider that an agent who will work under 02 the supervision of a registered broker-dealer need not have the same qualifications as 03 a broker-dealer; 04 (5) the administrator shall consider that a state [AN] investment adviser 05 is not necessarily qualified solely on the basis of experience as a broker-dealer or 06 agent; if [WHEN] the administrator finds that an applicant for initial or renewal 07 registration as a broker-dealer is not qualified as a state [AN] investment adviser, the 08 administrator may by order condition the applicant's registration as a broker-dealer 09 upon the applicant's not transacting business in this state as a state [AN] investment 10 adviser; 11 (6) the administrator may by regulation provide for an examination, 12 which may be written or oral or both, to be taken by any class of or all applicants, 13 including applicants for registration as investment adviser representatives, if [AS 14 WELL AS PERSONS WHO REPRESENT OR WILL REPRESENT AN 15 INVESTMENT ADVISER IN DOING ANY OF THE ACTS WHICH MAKE THE 16 INVESTMENT ADVISER AN INVESTMENT ADVISER, PROVIDED THAT] 17 examinations required by this paragraph are not required of a registrant under this 18 chapter who was doing business in this state and was a resident of this state on May 9, 19 1959. 20 * Sec. 30. AS 45.55.060(f) is amended to read: 21 (f) If the administrator finds that a registrant or applicant for registration no 22 longer exists or has ceased to do business as a broker-dealer, agent , state investment 23 adviser , or investment adviser representative , or is subject to an adjudication of 24 mental incompetence or to the control of a committee, conservator, or guardian, or 25 cannot be located after reasonable search, the administrator may by order cancel the 26 registration or application. 27 * Sec. 31. AS 45.55.060(g) is amended to read: 28 (g) Withdrawal from registration as a broker-dealer, agent, state investment 29 adviser, or investment adviser representative becomes effective 30 days after receipt 30 of an application to withdraw or within a shorter period of time as the administrator 31 may determine, unless a revocation or suspension proceeding is pending when the
01 application is filed or a proceeding to revoke or suspend or to impose conditions upon 02 the withdrawal is instituted within 30 days after the application is filed. If a proceeding 03 is pending or instituted, withdrawal becomes effective at the time and upon the 04 conditions as the administrator by order determines. If a [NO] proceeding is not 05 pending or instituted and withdrawal automatically becomes effective, the administrator 06 may nevertheless institute a revocation or suspension proceeding under (a)(2) of this 07 section within one year after withdrawal is effective and enter a revocation or 08 suspension order as of the last date on which registration was effective. 09 * Sec. 32. AS 45.55.070 is amended to read: 10 Sec. 45.55.070. Registration requirement. A person may not offer or sell a 11 security in this state unless 12 (1) it is registered under this chapter; [OR] 13 (2) the security or transaction is exempted under AS 45.55.900 ; or 14 (3) it is a federal covered security . 15 * Sec. 33. AS 45.55 is amended by adding a new section to read: 16 Sec. 45.55.075. Federal covered securities. (a) Unless otherwise exempt 17 under AS 45.55.900, a security that is a federal covered security under 15 U.S.C. 18 77r(b)(2), as amended (Securities Act of 1933), may only be offered for sale and sold 19 into, from, or within the state upon the administrator's receipt of 20 (1) a copy of the registration statement filed by the issuer with the 21 United States Securities and Exchange Commission, or in place of the registration 22 statement, the Uniform Investment Company Notice Filing Form adopted by North 23 American Securities Administrators Association, Inc., or a similar notice filing form; 24 (2) a consent to service of process signed by the issuer; and 25 (3) a notice filing fee as prescribed by the administrator for a notice 26 filing under this section and, if necessary to compute the fee, a report of the value of 27 the federal covered securities offered or sold in this state. 28 (b) A notice filing under this section may be renewed by filing, before the 29 expiration of an effective notice filing, a renewal notice and filing fee as prescribed 30 by the administrator, and, if necessary to compute the fee, a report of the value of the 31 federal covered securities offered or sold in this state. A renewal notice filing is
01 effective on the expiration date of the previous notice filing. 02 (c) A notice filing under this section may be amended as provided by the 03 administrator by regulation or order. A notice filing may be terminated by an issuer 04 upon providing the administrator with notice of the termination. 05 (d) With respect to a security that is a covered security under 15 U.S.C. 06 77r(b)(4)(D), as amended (Securities Act of 1933), the administrator, by regulation or 07 otherwise, may require the issuer to file a notice on United States Securities and 08 Exchange Commission's Form D and a consent to service of process signed by the 09 issuer no later than 15 days after the first sale of a covered security in this state and 10 a fee established by the administrator for a notice filing under this section. 11 (e) The administrator, by regulation or order, may require the filing of any 12 document filed with the United States Securities and Exchange Commission under 15 13 U.S.C. 77a - 77bbbb, as amended (Securities Act of 1933), with respect to a covered 14 security under 15 U.S.C. 77r(b)(3) or (4), as amended (Securities Act of 1933). 15 (f) The administrator may issue a stop order suspending the offer and sale of 16 a federal covered security, except a federal covered security under 15 U.S.C. 77r(b)(1), 17 as amended (Securities Act of 1933), if the administrator finds that 18 (1) the order is in the public interest; and 19 (2) there is a failure to comply with a condition established under this 20 section. 21 (g) The administrator, by regulation or order, may waive any or all of the 22 provisions of this section. 23 * Sec. 34. AS 45.55.090(b) is amended to read: 24 (b) A registration statement under this section must contain the following 25 information and be accompanied by the following documents in addition to the 26 information specified in AS 45.55.110(c) and the consent to service of process required 27 by AS 45.55.980(g): 28 (1) one copy of the latest form of prospectus filed under 15 U.S.C. 77a 29 - 77bbbb ( [THE] Securities Act of 1933 ) ; 30 (2) if the administrator requires, copies of the articles of incorporation 31 and bylaws, or their substantial equivalent, currently in effect; a copy of an agreement
01 with or among underwriters; a copy of an indenture or other instrument governing the 02 issuance of the security to be registered; and a specimen or copy of the security; 03 (3) if the administrator requests, any other information, or copies of any 04 other documents, filed under 15 U.S.C. 77a - 77bbbb ( [THE] Securities Act of 1933 ) ; 05 and 06 (4) an undertaking to forward all future amendments to the federal 07 prospectus, other than an amendment which merely delays the effective date of the 08 registration statement, promptly and in any event not later than the first business day 09 after the day they are forwarded to or filed with the United States Securities and 10 Exchange Commission, whichever first occurs. 11 * Sec. 35. AS 45.55.110(a) is amended to read: 12 (a) A registration statement or a notice filing under AS 45.55.075 may be 13 filed by the issuer, another person on whose behalf the offering is to be made, or a 14 registered broker-dealer. 15 * Sec. 36. AS 45.55.110(b) is amended to read: 16 (b) A [EVERY] person filing a registration statement or a notice filing under 17 AS 45.55.075 shall pay a filing fee and a registration or notice filing fee in amounts 18 established by the department by regulation. If [WHEN] a registration statement is 19 withdrawn before the effective date or a pre-effective stop order is entered under 20 AS 45.55.120, the administrator shall retain the filing fee. If a notice filing is 21 withdrawn before the effective date, the administrator shall retain the notice filing 22 fee. 23 * Sec. 37. AS 45.55.110(c) is amended to read: 24 (c) A [EVERY] registration statement must specify 25 (1) the amount of securities to be offered in this state; 26 (2) the states in which a registration statement or similar document in 27 connection with the offering has been or is to be filed; and 28 (3) an adverse order, judgment, or decree entered in connection with 29 the offering by the regulatory authorities in each state or by any court or the United 30 States Securities and Exchange Commission. 31 * Sec. 38. AS 45.55.110(d) is amended to read:
01 (d) A document filed under this chapter within five years preceding the filing 02 of a registration statement or a notice filing under AS 45.55.075 may be incorporated 03 by reference in the registration statement or notice filing to the extent that the 04 document is currently accurate. 05 * Sec. 39. AS 45.55.110(e) is amended to read: 06 (e) The administrator may by regulation or order [OTHERWISE] permit the 07 omission of an item of information or document from a registration statement or a 08 notice filing under AS 45.55.075 . 09 * Sec. 40. AS 45.55.110(i) is amended to read: 10 (i) A notice filing under AS 45.55.075 is effective on receipt by the 11 administrator. A [EVERY] registration statement or a notice filing under 12 AS 45.55.075 is effective for one year from its effective date [,] or any longer period 13 during which the security is being offered or distributed in a nonexempted transaction 14 by or for the account of the issuer or other person on whose behalf the offering is 15 being made or by an underwriter or broker-dealer who is still offering part of an 16 unsold allotment or subscription taken by the underwriter or broker-dealer as a 17 participant in the distribution [,] except during the time a stop order is in effect under 18 AS 45.55.120. The administrator may establish a different expiration date for 19 purposes of coordination with a national registration or notice filing system. The 20 administrator may by regulation provide for an automatic extension for one 21 additional year of the effective date for notice filings under AS 45.55.075 if the 22 extended expiration date is set at the same time the notice filing is made effective 23 and the notice filing fee reflects the extension. All outstanding securities of the 24 same class as a registered security are considered to be registered for the purpose of 25 any nonissuer transaction if the registration statement is effective and between the 26 thirtieth day after the entry of a stop order suspending or revoking the effectiveness 27 of the registration statement under AS 45.55.120, if the registration statement did not 28 relate in whole or in part to a nonissuer distribution, and one year from the effective 29 date of the registration statement. A registration statement may not be [WITH] 30 withdrawn for one year from its effective date if any securities of the same class are 31 outstanding. A registration statement may be withdrawn otherwise only in the
01 discretion of the administrator. 02 * Sec. 41. AS 45.55.110(k) is amended to read: 03 (k) A notice filing under AS 45.55.075 [REGISTRATION STATEMENT] 04 relating to a security issued by a face-amount certificate company or a redeemable 05 security issued by an open-end management company or unit investment trust, as those 06 terms are defined in 15 U.S.C. 80a-1 - 80a-64 ( [THE] Investment Company Act of 07 1940 ) , may be amended after its effective date so as to increase the securities specified 08 as proposed to be offered if the notice filing was for a specified dollar amount of 09 securities to be offered in this state and if the total fees were based on the dollar 10 amount of securities to be offered . An amendment becomes effective when the 11 administrator so orders. A [EVERY] person filing [SUCH] an amendment shall pay 12 a [FILING] fee, calculated in the manner specified in (b) of this section, with respect 13 to the additional securities proposed to be offered. 14 * Sec. 42. AS 45.55.139 is amended to read: 15 Sec. 45.55.139. Reports of corporations. A copy of all annual reports, 16 proxies, consents , [OR] authorizations, proxy statements , and other materials relating 17 to proxy solicitations distributed, published , or made available by any person to at least 18 30 Alaska resident shareholders of a corporation that has total assets exceeding 19 $1,000,000 and a class of equity security held of record by 500 or more persons and 20 that [WHICH] is exempted from the registration requirements of AS 45.55.070 by 21 AS 45.55.138 [,] shall be filed with the administrator or the administrator's designee 22 concurrently with its distribution to shareholders. 23 * Sec. 43. AS 45.55.139 is amended by adding a new subsection to read: 24 (b) The administrator or the administrator's designee may by regulation 25 establish and by order enforce requirements relating to disclosure and form of proxies, 26 consents, authorizations, proxy statements, and other materials relating to proxy 27 solicitations described in (a) of this section. Regulations adopted under this section 28 should recognize the social and economic circumstances of shareholders and encourage 29 maximum participation consistent with the requirements of AS 45.55.160. 30 * Sec. 44. AS 45.55.150 is amended to read: 31 Sec. 45.55.150. Sales [FILING OF SALES] and advertising literature. The
01 administrator may by regulation or order establish requirements for or require the 02 filing of a prospectus, a pamphlet, a circular, a form letter, an advertisement, or other 03 sales literature [,] or advertising communication addressed or intended for distribution 04 to prospective investors, [INCLUDING] clients , or prospective clients by an issuer, 05 a state investment adviser, a federal covered adviser, or a broker-dealer, unless 06 (1) the security or transaction is exempt under AS 45.55.900 and 07 the applicable provision of that section does not place a limitation on sales and 08 advertising literature; 09 (2) the security is a federal covered security; or 10 (3) the broker-dealer, state investment adviser, or federal covered 11 adviser is exempt or excluded from the requirements of this section under this 12 chapter or federal law [OF AN INVESTMENT ADVISER]. 13 * Sec. 45. AS 45.55.170 is amended to read: 14 Sec. 45.55.170. Unlawful representations concerning filing, registration , 15 notice, or exemption. (a) Neither the fact that an application for registration under 16 AS 45.55.030 - 45.55.060 , [OR] a registration statement under AS 45.55.070 - 17 45.55.120 , a notice filing under AS 45.55.040(h) or 45.55.075, or proxy material 18 under AS 45.55.139 is filed nor the fact that a person or security is effectively 19 registered constitutes a finding by the administrator that a document filed under this 20 chapter is true, complete, and not misleading. Neither the fact of filing nor the fact 21 that an exemption or exception is available for a security or a transaction means that 22 the administrator has passed in any way upon the merits or qualifications of, or 23 recommended or given approval to, a person, security, or transaction. 24 (b) A person may not make, or cause to be made, to a prospective purchaser, 25 customer, [OR] client , or shareholder of a corporation described in AS 45.55.139 26 a [ANY] representation inconsistent with (a) of this section. 27 * Sec. 46. AS 45.55.900(a) is amended to read: 28 (a) The following securities are exempted from AS 45.55.070 and 45.55.075 : 29 (1) a security, including a revenue obligation, issued or guaranteed by 30 the United States or a territory of the United States, the District of Columbia , a 31 state, a political subdivision of a state or territory , or an agency or corporate or other
01 instrumentality of one or more of the entities described in this paragraph 02 [FOREGOING]; or a certificate of deposit for one or more of the entities described 03 in this paragraph [ANY OF THE FOREGOING]; 04 (2) a security issued or guaranteed by Canada, a Canadian province, a 05 political subdivision of a Canadian province, an agency or corporate or other 06 instrumentality of one or more of the entities described in this paragraph 07 [FOREGOING], or a foreign government with which the United States currently 08 maintains diplomatic relations [,] if the security is recognized as a valid obligation by 09 the issuer or guarantor; 10 (3) a security issued [BY AND REPRESENTING AN INTEREST IN] 11 or [A DEBT OF, OR] guaranteed by [,] a bank organized under the laws of the United 12 States, or by a bank, savings institution, savings and loan association, building and 13 loan association, or trust company organized and supervised under the laws of a state 14 or of the United States , or a security issued by or representing an interest in or a 15 direct obligation of a federal reserve bank ; 16 (4) a commercial paper , note, draft, bill of exchange, or banker's 17 acceptance that arises out of a current transaction or the proceeds of which have been 18 or are to be used for current transactions [,] and that evidences an obligation to pay 19 cash within nine months of the date of issuance, exclusive of days of grace, or a 20 [ANY] renewal of the paper that is likewise limited, or a guarantee of the paper or of 21 the renewal, if the commercial paper , note, draft, bill of exchange, or banker's 22 acceptance is of the type eligible for discount by a federal reserve bank; 23 (5) a security issued in connection with an employee's stock purchase, 24 savings, pension, profit-sharing, or similar employee's benefit plan , or a security 25 issued by or an interest or participation in a church plan, company, or account 26 that is excluded from the definition of an investment company under 15 U.S.C. 27 80a-3(c)(14) (Investment Company Act of 1940) ; 28 (6) a security issued by and representing an interest in or a debt of, or 29 guaranteed by, a federal savings and loan association, or a building and loan or similar 30 association organized under the laws of a state and authorized to do business in this 31 state;
01 (7) a security issued by and representing an interest in or a debt of, or 02 guaranteed by, an insurance company organized under the laws of a state and 03 authorized to do business in this state; but this exemption does not apply to an annuity 04 contract, investment contract, or similar security under which the promised payments 05 are not fixed in dollars but are substantially dependent upon the investment results of 06 a segregated fund or account invested in securities; except that policies or annuity 07 contracts of insurance companies admitted to do business in the state are not subject 08 to this chapter; 09 (8) a security issued or guaranteed by a federal credit union or any 10 credit union, industrial loan association, or similar association organized and supervised 11 under the laws of this state; 12 (9) a security issued or guaranteed by a railroad, other common carrier, 13 public utility, or holding company that is 14 (A) subject to the jurisdiction of the Interstate Commerce 15 Commission; 16 (B) a registered holding company under 15 U.S.C. 79 - 79z-6 17 ( [THE] Public Utility Holding Company Act of 1935 ) or a subsidiary of the 18 company within the meaning of 15 U.S.C. 79 - 79z-6 [THAT ACT]; 19 (C) regulated in respect of its rates and charges by a 20 governmental authority of the United States or a state; or 21 (D) regulated in respect of the issuance or guarantee of the 22 security by a governmental authority of the United States, a state, Canada, or 23 a Canadian province; 24 (10) a security listed or approved for listing upon notice of issuance on 25 the New York Stock Exchange, the American Stock Exchange, the Chicago 26 [MIDWEST] Stock Exchange, the Pacific Coast Stock Exchange, the Philadelphia 27 Stock Exchange, the Chicago Board of Options Exchange, or another [ANY OTHER] 28 securities exchange designated by order of the administrator, or any security designated 29 or approved for designation upon notice of issuance as a national market system 30 security on the National Association of Securities Dealers Automated Quotation 31 National Market System or on any other quotation system designated by order of the
01 administrator, or any other security of the same issuer that is of senior or substantially 02 equal rank; a security called for by subscription rights or warrants so listed or 03 approved; or a warrant or right to purchase or subscribe to an entity described in this 04 paragraph [ANY OF THE FOREGOING]; 05 (11) a security issued by a person organized and operated not for 06 pecuniary [PRIVATE] profit but exclusively for religious, educational, benevolent, 07 charitable, fraternal, social, athletic, or reformatory purposes [,] or as a chamber of 08 commerce or trade or professional association , or a security of a fund that is 09 excluded from the definition of an investment company under 15 U.S.C. 80a- 10 3(c)(10)(B) (Investment Company Act of 1940) ; 11 (12) shares of membership stock in the Alaska Commercial Fishing and 12 Agriculture Bank, and other securities issued by that bank to members or in connection 13 with loans to members ; 14 (13) an equity security issued in connection with the acquisition by 15 a holding company of a bank under 12 U.S.C. 1842(a) (Bank Holding Company 16 Act of 1956) or a savings association, as defined in 12 U.S.C. 1813(b) (Federal 17 Deposit Insurance Act) and the deposits of which are insured by the Federal 18 Deposit Insurance Corporation under 12 U.S.C. 1467(e) (Home Owners' Loan 19 Act) if 20 (A) the acquisition occurs solely as part of a reorganization 21 in which security holders exchange their shares of a bank or savings 22 association for shares of a newly formed holding company with no 23 significant assets other than securities of the bank or savings association 24 and the existing subsidiaries of the bank or savings association; 25 (B) the security holders receive after the reorganization 26 substantially the same proportional interests in the holding company as 27 they held in the bank or savings association except for nominal changes in 28 shareholders' interests resulting from lawful elimination of fractional 29 interests and the exercise of dissenting shareholders' rights under state or 30 federal law; 31 (C) the rights and interests of security holders in the holding
01 company are substantially the same as those in the bank or savings 02 association before the transaction except as may be required by law; and 03 (D) the holding company has substantially the same assets 04 and liabilities on a consolidated basis as the bank or savings association 05 before the transaction . 06 * Sec. 47. AS 45.55.900(b) is amended to read: 07 (b) The following transactions are exempted from AS 45.55.070 and 08 45.55.075 : 09 (1) a transaction between the issuer or other person on whose behalf 10 the offering is made and an underwriter, or among underwriters; 11 (2) a transaction in a bond or other evidence of indebtedness secured 12 by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real 13 estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all 14 the bonds or other evidence of indebtedness, secured under those documents 15 [THEREBY,] is offered and sold as a unit; 16 (3) a transaction by an executor, administrator, sheriff, marshal, 17 receiver, trustee in bankruptcy, guardian, or conservator; 18 (4) an offer or sale to a bank, savings institution, trust company, 19 insurance company, investment company as defined in 15 U.S.C. 80a-1 - 80a-64 ( 20 [THE] Investment Company Act of 1940 ) , pension or profit-sharing trust, or other 21 financial institution or institutional buyer, or to a broker-dealer, whether the purchaser 22 is acting for itself or in some fiduciary capacity; 23 (5) sales by an issuer 24 (A) to no more than 10 persons in this state other than those 25 designated in (4) of this subsection during a period of 12 consecutive months 26 regardless of whether [OR NOT] the seller or any of the buyers is then present 27 in this state [,] if 28 (i) a [NO] commission or other remuneration is not paid 29 or given directly or indirectly for soliciting a prospective buyer in this 30 state; 31 (ii) the total dollar amount invested during a period of
01 12 consecutive months does not exceed $150,000 [$100,000]; 02 (iii) a legend is placed on the certificate or other 03 document evidencing ownership of the security, stating that the security 04 is not registered under this chapter and cannot be resold without 05 registration under this chapter or exemption from it; 06 (iv) offers are made without public solicitation or 07 advertisement; and 08 (v) the issuer files with the administrator a notice 09 specifying the issuer, the security to be sold , and the terms of the offer 10 at least two days before any sales are made; 11 (B) to no more than 25 persons in this state other than those 12 designated in (4) of this subsection during a period of 12 consecutive months 13 regardless of whether [OR NOT] the seller or any of the buyers is then present 14 in this state [,] if 15 (i) the sales are made solely in this state; 16 (ii) before a [ANY] sale, each prospective buyer is 17 furnished access to the information that would be provided to a 18 prospective buyer in a registration under AS 45.55.100, which 19 information shall be furnished to the administrator upon request; 20 (iii) the total dollar amount invested during a period of 21 12 consecutive months does not exceed $750,000 [$500,000]; 22 (iv) commissions or other remuneration meet the 23 requirements of this chapter and are made only to persons registered 24 under AS 45.55.040; 25 (v) a legend is placed on the certificate or other 26 document evidencing ownership of the security, stating that the security 27 is not registered under this chapter and cannot be resold without 28 registration under this chapter or exemption from it; 29 (vi) the issuer obtains a signed agreement from the 30 buyer acknowledging that the buyer is buying for investment purposes 31 and that the securities will not be resold without registration under this
01 chapter; 02 (vii) offers are made without public solicitation or 03 advertisement; and 04 (viii) the issuer files with the administrator a notice 05 specifying the issuer, the security to be sold, and the terms of the offer 06 at least two days before any sales are made; 07 (C) to 10 or fewer persons who are to receive the initial 08 issue of shares of a nonpublicly traded corporation, limited liability 09 company, limited partnership, or limited liability partnership if the 10 requirements of (B)(ii), (iv), (v), and (vii) of this paragraph are met; 11 (D) to the buyer of an enterprise or a business and the 12 assets and liabilities of the enterprise or business if 13 (i) the transfer of stock to the buyer is solely 14 incidental to the sale of the enterprise or business and its assets and 15 liabilities; 16 (ii) the seller provides full access to the buyer of the 17 books and records of the enterprise or business; and 18 (iii) a legend is placed on the certificate or other 19 document evidencing ownership of the security, stating that the 20 security is not registered under this chapter and cannot be resold 21 without registration under this chapter or exemption from it; 22 (6) an offer or sale of a preorganization certificate or subscription if 23 (A) a [NO] commission or other remuneration is not paid or 24 given directly or indirectly for soliciting a prospective subscriber ; [,] 25 (B) the number of subscribers does not exceed 10 ; [,] and 26 (C) a [NO] payment is not made by any subscriber; 27 (7) a transaction under an offer to existing security holders of the 28 issuer, including persons who at the time of the transaction are holders of convertible 29 securities, nontransferable warrants, or transferable warrants exercisable within not 30 more than 90 days of their issuance, if 31 (A) a [NO] commission or other remuneration, other than a
01 standby commission, is not paid or given directly or indirectly for soliciting a 02 security holder in this state ; [,] or 03 (B) the issuer first files a notice specifying the terms of the 04 offer and the administrator does not by order disallow the exemption within the 05 next five full business days; 06 (8) an offer , [(] but not a sale , [)] of a security for which registration 07 statements have been filed under both this chapter and 15 U.S.C. 77a - 77bbbb( 08 [THE] Securities Act of 1933 ) if a [NO] stop order or refusal order is not in effect and 09 a [NO] public proceeding or examination looking toward an order is not pending 10 under either this chapter or 15 U.S.C. 77a - 77bbbb (Securities [THE] Act of 1933) ; 11 (9) an isolated nonissuer transaction, regardless of whether effected 12 through a broker-dealer , if the seller is [OR] not a promoter or controlling person 13 as the administrator may define by regulation or order or if the administrator at 14 the request of the seller waives the requirement that the seller not be a promoter 15 or controlling person ; 16 (10) [A NONISSUER DISTRIBUTION OF AN OUTSTANDING 17 SECURITY IF 18 (A) A RECOGNIZED SECURITIES MANUAL CONTAINS 19 THE NAMES OF THE ISSUER'S OFFICERS AND DIRECTORS, A 20 BALANCE SHEET OF THE ISSUER AS OF A DATE WITHIN 18 21 MONTHS, AND A PROFIT AND LOSS STATEMENT FOR EITHER THE 22 FISCAL YEAR PRECEDING THAT DATE OR THE MOST RECENT YEAR 23 OF OPERATIONS, OR 24 (B) THE SECURITY HAS A FIXED MATURITY OR A 25 FIXED INTEREST OR DIVIDEND PROVISION AND THERE HAS BEEN 26 NO DEFAULT DURING THE CURRENT FISCAL YEAR OR WITHIN THE 27 THREE PRECEDING FISCAL YEARS, OR DURING THE EXISTENCE OF 28 THE ISSUER AND ANY PREDECESSORS IF LESS THAN THREE YEARS, 29 IN THE PAYMENT OF PRINCIPAL, INTEREST, OR DIVIDENDS ON THE 30 SECURITY; 31 (11)] a nonissuer transaction effected by or through a registered broker-
01 dealer under an unsolicited order or offer to buy; however, the administrator may by 02 regulation require that the customer acknowledge on [UPON] a specified form that the sale 03 was unsolicited, and that a signed copy of each form be preserved by the broker- 04 dealer for a specified period; 05 (11) [(12)] a transaction executed by a bona fide pledgee without 06 intending to evade [ANY PURPOSE OF EVADING] this chapter; 07 (12) [(13)] a transaction incident to a right of conversion or a statutory 08 or judicially approved reclassification, recapitalization, reorganization, quasi- 09 reorganization, stock split, reverse stock split, merger, consolidation , or sale of assets [,] if 10 (A) a [NO] commission or other remuneration, other than a 11 standby commission , is not paid or given directly or indirectly for soliciting a 12 security holder in this state; and 13 (B) the issuer files a notice in the form specified by the 14 administrator not less than 30 days before making the offer; 15 (13) [(14)] a stock dividend, regardless of whether the corporation 16 distributing the dividend is the issuer of the stock [OR NOT], if nothing of value is 17 given by stockholders for the dividend other than the surrender of a right to a cash or 18 property dividend when each stockholder may elect to take the dividend in cash or 19 property or in stock; 20 (14) [(15)] an act incident to a class vote by stockholders, under the 21 certificate of incorporation or the applicable corporation statute, on a merger, 22 consolidation, reclassification of securities , or sale of securities of another corporation; 23 (15) [(16)] the offer or sale by a registered broker-dealer, acting either 24 as principal or agent, of securities previously sold and distributed to the public if the 25 securities 26 (A) [THE SECURITIES] are sold at prices reasonably related 27 to the current market price at the time of sale, and, if the broker-dealer is 28 acting as agent, the commission collected by the broker-dealer on account of 29 the sale is not in excess of usual and customary commissions collected with 30 respect to securities and transactions having comparable characteristics; 31 (B) [THE SECURITIES] do not constitute the whole or a part
01 of an unsold allotment to or subscription or participation by the broker-dealer 02 as an underwriter of the securities or as a participant in the distribution of the 03 securities by the issuer, by an underwriter , or by a person or group of persons 04 in substantial control of the issuer or of the outstanding securities of the class 05 being distributed; and 06 (C) [THE SECURITIES] have been lawfully sold and 07 distributed in this state under this chapter; 08 (16) [(17)] offers or sales of certificates of interest or participation in 09 oil, gas, or mining rights, titles , or leases, or in payments out of production under such 10 rights, titles , or leases, if the purchasers 11 (A) are or have been during the preceding two years engaged 12 primarily in the business of exploring for, mining, producing, or refining oil, 13 gas, or minerals; or 14 (B) have been found by the administrator upon written 15 application to be substantially engaged in the business of exploring for, mining, 16 producing, or refining oil, gas, or minerals so as not to require the protection 17 provided by AS 45.55.070 ; 18 (17) a nonissuer transaction by a registered agent of a registered 19 broker-dealer, and a resale transaction by a sponsor of a unit investment trust 20 registered under 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), in 21 a security of a class that has been outstanding in the hands of the public for at 22 least 90 days if, at the time of the transaction, 23 (A) the issuer of the security is actually engaged in business 24 and not in the organization stage or in bankruptcy or receivership and is 25 not a blank check, blind pool, or shell company whose primary plan of 26 business is to engage in a merger or combination of the business with, or 27 an acquisition of, an unidentified person or persons; 28 (B) the security is sold at a price reasonably related to the 29 current market price of the security; 30 (C) the security does not constitute the whole or part of an 31 unsold allotment to, or a subscription or participation by, the
01 broker-dealer as an underwriter of the security; 02 (D) a nationally recognized securities manual, which may be 03 designated by rule or order of the administrator, or a document filed with 04 the United States Securities and Exchange Commission that is publicly 05 available through the United States Securities and Exchange Commission's 06 electronic data gathering and retrieval system, contains 07 (i) a description of the business and operations of the 08 issuer; 09 (ii) the names of the issuer's officers and directors, 10 if any, or, in the case of an issuer not domiciled in the United 11 States, the corporate equivalents of such persons in the issuer's 12 country of domicile; 13 (iii) an audited balance sheet of the issuer as of a 14 date within 18 months or, in the case of a reorganization or merger 15 where parties to the reorganization or merger had that audited 16 balance sheet, a pro forma balance sheet; and 17 (iv) an audited income statement for each of the 18 issuer's immediately preceding two fiscal years or for the period of 19 existence of the issuer if the issuer has been in existence for less 20 than two years or, in the case of a reorganization or merger where 21 the parties to the reorganization or merger had that audited income 22 statement, a pro forma income statement; and 23 (E) the issuer of the security has a class of equity securities 24 listed on a national securities exchange registered under 15 U.S.C. 78a - 25 78lll (Securities Exchange Act of 1934) or designated for trading on the 26 National Association of Securities Dealers Automated Quotation System, 27 unless the issuer of the security 28 (i) is a unit investment trust registered under 15 29 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940); 30 (ii) including predecessors, has been engaged in 31 continuous business for a least three years; or
01 (iii) has total assets of at least $2,000,000 based on an 02 audited balance sheet as of a date within 18 months or, in the case 03 of a reorganization or merger where parties to the reorganization 04 or merger had that balance sheet, a pro forma balance sheet; 05 (18) an offer or a sale of a security by an issuer, that has a specific 06 business plan or purpose, is not in the development stage, and has not indicated 07 that its business plan is to engage in a merger or acquisition with an unidentified 08 company or other entity or person, under the following conditions: 09 (A) sales of securities are made only to persons who are or 10 the issuer reasonably believes are accredited investors as defined in 11 17 C.F.R. 230.501(a); 12 (B) the issuer reasonably believes that all purchasers are 13 purchasing for investment and not with the view to or for sale in 14 connection with a distribution of the security; a resale of a security sold in 15 reliance on this exemption within 12 months of sale is presumed to be with 16 a view to distribution and not for investment, except a resale under a 17 registration statement under AS 45.55.070 - 45.55.120 or to an accredited 18 investor under an exemption available under this chapter; 19 (C) the exemption in this paragraph is not available to an 20 issuer if the issuer, a predecessor of the issuer, an affiliated issuer, a 21 director, an officer, or a general partner of the issuer, a beneficial owner 22 of 10 percent or more of a class of the issuer's equity securities, a 23 promoter of the issuer presently connected with the issuer in any capacity, 24 an underwriter of the securities to be offered, or a partner, a director, or 25 an officer of the underwriter 26 (i) within the last five years has filed a registration 27 statement that is the subject of a currently effective registration 28 stop order entered by a state securities administrator or the United 29 States Securities and Exchange Commission; 30 (ii) within the last five years has been convicted of a 31 criminal offense in connection with the offer, purchase, or sale of
01 a security, of a criminal offense involving fraud or deceit, or of a 02 felony; 03 (iii) is currently subject to a state or federal 04 administrative enforcement order or judgment entered within the 05 last five years finding fraud or deceit in connection with the 06 purchase or sale of a security; or 07 (iv) is currently subject to an order, judgment, or 08 decree of a court of competent jurisdiction entered within the last 09 five years, temporarily, preliminarily, or permanently restraining 10 or enjoining the party from engaging in or continuing to engage in 11 conduct or a practice involving fraud or deceit in connection with 12 the purchase or sale of a security; 13 (D) the nonavailability of the exemption under (C) of this 14 paragraph does not apply if 15 (i) the party subject to the disqualification is licensed 16 or registered to conduct securities related business in the state in 17 which the order, judgment, or decree creating the disqualification 18 was entered against the party; 19 (ii) before the first offer under this exemption, the 20 state securities administrator or the court or regulatory authority 21 that entered the order, judgment, or decree waives the 22 disqualification; or 23 (iii) the issuer establishes that it did not know and, 24 in the exercise of reasonable care, based on a factual inquiry, could 25 not have known that a disqualification existed under this 26 paragraph; 27 (E) a general announcement of the proposed offering may 28 be made by any means and may include only the following information 29 unless additional information is specifically permitted by the 30 administrator: 31 (i) the name, address, and telephone number of the
01 issuer of the security; 02 (ii) the name, a brief description, and the price, if 03 known, of the security to be issued; 04 (iii) a brief description in 25 words or less of the 05 business of the issuer; 06 (iv) the type, number, and aggregate amount of 07 securities being offered; 08 (v) the name, address, and telephone number of the 09 person to contact for additional information; 10 (vi) a statement that sales will be made only to 11 accredited investors; 12 (vii) a statement that money or other consideration 13 is not being solicited or will not be accepted by way of this general 14 announcement; and 15 (viii) a statement that the securities have not been 16 registered with or approved by a state securities agency or the 17 United States Securities and Exchange Commission and are being 18 offered and sold under an exemption from registration; 19 (F) the issuer in connection with any offer may provide 20 information in addition to the general announcement under (E) of this 21 paragraph if the information is delivered 22 (i) through an electronic database that is restricted 23 to persons who have been prequalified as accredited investors; or 24 (ii) to a prospective purchaser that the issuer 25 reasonably believes is an accredited investor; 26 (G) a telephone solicitation is not permitted unless, before 27 placing the call, the issuer reasonably believes that the prospective 28 purchaser being solicited is an accredited investor; 29 (H) dissemination of the general announcement of the 30 proposed offering to persons who are not accredited investors will not 31 disqualify the issuer from claiming this exemption;
01 (I) the issuer must file a notice of the transaction with the 02 administrator, a copy of the general announcement, and the fee for 03 exemption filings established by regulation within 15 days after the first 04 sale in this state; 05 (19) an offer to repay, under AS 45.55.930, the buyer of a security 06 if the offeror first files with the administrator a notice specifying the terms of the 07 offer at least two days before the offer is made; 08 (20) a transaction involving only family members who are related, 09 including related by adoption, within the fourth degree of affinity or 10 consanguinity . 11 * Sec. 48. AS 45.55.900 is amended by adding a new subsection to read: 12 (g) An offer on the Internet by an issuer is exempt from the registration 13 provisions of AS 45.55.070 and the advertising regulations adopted under this chapter 14 and does not preclude the issuer from relying on other available exemptions for offers 15 provided under this chapter if 16 (1) the offer directly discloses, in a format and at a prominent place in 17 the offer and in an advertisement of the offer on the Internet, that the securities are not 18 being offered to persons in this state; 19 (2) the offer is not otherwise specifically directed to a person in this 20 state by or on behalf of the issuer; and 21 (3) a sale of the issuer's securities is not made in this state as a result 22 of the offer. 23 * Sec. 49. AS 45.55.910 is amended by adding a new subsection to read: 24 (e) All investigative files are confidential, except that they must be disclosed 25 by the administrator as required for discovery in an administrative or a judicial 26 proceeding. 27 * Sec. 50. AS 45.55.915 is amended to read: 28 Sec. 45.55.915. Reimbursement of expenses incident to examination or 29 investigation . (a) The administrator may require an [AN] issuer, broker-dealer, 30 agent, investment adviser representative, federal covered adviser, or state 31 investment adviser to [SHALL] reimburse the administrator for actual travel expenses
01 and per diem incurred in connection with an examination or investigation [INCIDENT 02 TO A REGISTRATION] under this chapter. 03 (b) The administrator may by regulation or order adopt a schedule of charges 04 for annual examination and investigation [FEES] of issuers, broker-dealers, agents, 05 investment adviser representatives, federal covered advisers, and state investment 06 advisers. 07 (c) If an issuer, broker-dealer, agent, investment adviser representative, 08 federal covered adviser, or state investment adviser fails to pay the fees and expenses 09 provided for in this section, the fees and expenses shall be paid out of the funds of the 10 administrator in the same manner as other disbursements made by the administrator. 11 The amounts paid from the funds of the administrator are a lien on [UPON] all of the 12 assets and property in this state of the issuer, broker-dealer, agent, investment adviser 13 representative, federal covered adviser, or state investment adviser , and the amount 14 may be recovered by the attorney general on behalf of the state. 15 (d) Failure of the issuer, broker-dealer, agent, investment adviser 16 representative, or state investment adviser to pay fees and expenses under this section 17 is a wilful violation of this chapter , and the violation falls within the provisions of 18 AS 45.55.060, 45.55.120, 45.55.920 , and 45.55.925. 19 * Sec. 51. AS 45.55.925(a) is amended to read: 20 (a) In addition to the civil penalties assessed under AS 45.55.920, a person 21 who wilfully violates a provision of this chapter except AS 45.55.030(e), 45.55.040(h), 22 45.55.075, or 45.55.160 [AS 45.55.160], or who wilfully violates a regulation or order 23 under this chapter, or who wilfully violates AS 45.55.160 knowing the statement made 24 to be false or misleading in a material respect or the omission to be misleading by any 25 material respect, upon conviction, is punishable by a fine of not more than $5,000, or 26 by imprisonment for not less than one year nor more than five years, or both. Upon 27 conviction of an individual for a felony under this chapter, imprisonment for not less 28 than one year is mandatory. However, an individual may not be imprisoned for the 29 violation of a regulation or order if the individual proves that the individual had no 30 knowledge of the regulation or order. An indictment or information may not be 31 returned under this chapter more than five years after the alleged violation.
01 * Sec. 52. AS 45.55.930(a) is amended to read: 02 (a) A person is liable to the person buying the security from the person for the 03 consideration paid for the security, together with interest at eight percent [SIX PER 04 CENT] a year or the stated rate of the security if the security has a stated, fixed 05 rate less than eight percent, from the date of payment, costs, and reasonable attorney 06 [ATTORNEYS'] fees, less the amount of income received on the security, on [UPON] 07 the tender of the security, or for damages if the buyer [SELLER] no longer owns the 08 security, if the seller offers or sells a security 09 (1) other than a federal covered security, [OFFERS OR SELLS A 10 SECURITY] in violation of AS 45.55.030(a), 45.55.070, or 45.55.170(b) or of a 11 regulation or order under AS 45.55.150 that requires the filing of sales literature before 12 it is used, or of a condition imposed under AS 45.55.100(d) or 45.55.110(g) or (h) ; [,] 13 or 14 (2) [OFFERS OR SELLS A SECURITY] by means of an untrue 15 statement of a material fact, or omits to state a material fact, the omission of which 16 makes a statement misleading. 17 * Sec. 53. AS 44.55.930(b) is amended to read: 18 (b) Damages are the amount that would be recoverable on [UPON] a tender 19 less the value of the security when the buyer disposed of it and interest at eight 20 percent [SIX PER CENT] a year , or the stated rate of the security if the security 21 had a stated, fixed rate less than eight percent, from the date of disposition. 22 * Sec. 54. AS 45.55.930(f) is amended to read: 23 (f) A person may not sue under this section more than three years after the 24 contract of sale , except as otherwise provided in this subsection. For a violation 25 of (a)(2) of this section or AS 45.55.010, an action under this section may be 26 started within three years after the sale or two years after the person bringing the 27 action discovered or should have discovered the facts on which the action is based, 28 whichever is later. Failure to start an action on a timely basis is an affirmative 29 defense . A person may not sue under this section if the buyer received 30 (1) [IF THE BUYER RECEIVED] a written offer, before suit and at 31 a time when the buyer owned the security, to refund the consideration paid together
01 with interest at eight percent [SIX PER CENT] a year , or the stated rate of the 02 security if the security has a stated, fixed rate less than eight percent, from the 03 date of payment, less the amount of income received on the security, and the buyer 04 failed to accept the offer within 30 days of its receipt ; [,] or 05 (2) [IF THE BUYER RECEIVED] the offer before suit and at a time 06 when buyer did not own the security [,] unless the buyer rejected the offer in writing 07 within 30 days of its receipt. 08 * Sec. 55. AS 45.55.930(g) is amended to read: 09 (g) A person who makes or engages in the performance of a contract in 10 violation of a provision of this chapter or a regulation or an order under this chapter, 11 or who acquires a purported right under the contract with knowledge of the facts by 12 reason of which its making or performance is in violation of this chapter , may not 13 base a suit on the contract. 14 * Sec. 56. AS 45.55.930 is amended by adding new subsections to read: 15 (j) Notwithstanding the time limitation in (f) of this section, an action under 16 this section may be started after receipt of a written offer described in (a) of this 17 section if the buyer accepted the payment offer within 30 days after receipt of the offer 18 and has not been paid the full amount offered. 19 (k) An offer to repay the buyer under this section involves the offer or sale of 20 a security, and the transaction must be registered under this chapter or exempt from 21 registration under AS 45.55.900. 22 * Sec. 57. AS 45.55.935(a) is amended to read: 23 (a) The administrator shall adopt regulations, consistent with the provisions of 24 this chapter, governing administrative hearings conducted by the administrator or a 25 designee of the administrator for the following: 26 (1) orders issued under AS 45.55.120, 45.55.900(d), or 45.55.920; in 27 these instances, the administrator shall promptly send a notice of opportunity for 28 hearing to the issuer of the securities and to all persons who have filed with the 29 department a notice of intention to sell the securities or to all respondents named in 30 the order if the order deals with something other than securities ; and 31 (2) orders issued under AS 45.55.060; before the administrator enters
01 an order under AS 45.55.060, the administrator shall send to the person involved a 02 notice of opportunity for hearing; if the person involved is an agent or investment 03 adviser representative , then the administrator shall , in addition , notify the employing 04 broker-dealer, state investment adviser, federal covered adviser [ADVISOR], or 05 issuer. 06 * Sec. 58. AS 45.55.950(a) is amended to read: 07 (a) The administrator may make, adopt, amend, and rescind the regulations, 08 forms, policies, and orders that are necessary to carry out this chapter, including 09 regulations , policies, and forms governing registration statements, applications, notice 10 filings, and reports, and defining terms regardless of [,] whether the terms are [OR 11 NOT] used in this chapter if [INSOFAR AS] the definitions of the terms are not 12 inconsistent with this chapter. For the purpose of regulations and forms, the 13 administrator may classify securities, persons, and matters within the jurisdiction of the 14 administrator [,] and prescribe different requirements for different classes. 15 * Sec. 59. AS 45.55.950(b) is amended to read: 16 (b) A regulation, form, policy, or order may not be made, adopted, amended, 17 waived, or rescinded unless the administrator finds that the action is necessary or 18 appropriate in the public interest or for the protection of investors and consistent with 19 the purposes fairly intended by the policy and provisions of this chapter. In adopting , 20 amending, rescinding, or waiving regulations , policies, and forms , the administrator 21 may cooperate with the securities administrators of the other states , self-regulatory 22 organizations, and the United States Securities and Exchange Commission with a 23 view to carrying out [EFFECTUATING] the policy of this section to achieve 24 maximum uniformity in the form , [AND] content , examination, and processing of 25 registration statements, applications, notice filings, and reports wherever practicable , 26 including participating in joint coordinated securities examinations with other 27 states . 28 * Sec. 60. AS 45.55.950(c) is amended to read: 29 (c) All financial statements required to be filed shall be prepared in 30 accordance with generally accepted accounting practices. The administrator may by 31 regulation or order prescribe
01 (1) the form and content of financial statements required under this 02 chapter; 03 (2) the circumstances under which consolidated financial statements 04 shall be filed; and 05 (3) whether any required financial statements shall be certified by 06 independent or certified public accountants. 07 * Sec. 61. AS 45.55.950(d) is amended to read: 08 (d) A provision of this chapter imposing liability does not apply to an act done 09 or omitted in good faith in conformity with a regulation, form, policy, or order of the 10 administrator, notwithstanding that the regulation, form, policy, or order may be later 11 amended or rescinded or be determined by judicial or other authority to be invalid. 12 * Sec. 62. AS 45.55.970(b) is amended to read: 13 (b) The administrator shall keep a register of all applications for registration 14 and registration statements that [WHICH] are or have ever been effective under this 15 chapter , all notice filings under this chapter, and all denial, suspension, or revocation 16 orders that [WHICH] have been entered under this chapter. The register must 17 [SHALL] be open for public inspection. 18 * Sec. 63. AS 45.55.970(c) is amended to read: 19 (c) The information contained in or filed with a registration statement, 20 application, notice filing, or report may be made available to the public under the 21 regulations adopted by the administrator. 22 * Sec. 64. AS 45.55.970(e) is amended to read: 23 (e) The administrator may honor requests from interested persons for 24 interpretative opinions and may establish appropriate fees by regulation . 25 * Sec. 65. AS 45.55.980(a) is amended to read: 26 (a) Unless the persons are exempt elsewhere in this chapter, AS 45.55.010, 27 45.55.025, 45.55.027, 45.55.028, 45.55.030(a), 45.55.035, 45.55.070, 45.55.075, 28 45.55.170, and 45.55.930 apply to persons who sell or offer to sell when an offer to 29 (1) [AN OFFER TO] sell is made in this state; or 30 (2) [AN OFFER TO] buy is made and accepted in this state. 31 * Sec. 66. AS 45.55.980(b) is amended to read:
01 (b) Unless the persons are exempt elsewhere in this chapter, AS 45.55.010, 02 45.55.025, 45.55.027, 45.55.028, 45.55.030(a), 45.55.035, and 45.55.170 apply to 03 persons who buy or offer to buy when an offer to 04 (1) [AN OFFER TO] buy is made in this state; or 05 (2) [AN OFFER TO] sell is made and accepted in this state. 06 * Sec. 67. AS 45.55.980(c) is amended to read: 07 (c) For the purpose of this section, an offer to sell or to buy is made in this 08 state, whether or not either party is then present in this state, when the offer 09 (1) originates from this state; 10 (2) is directed by the offeror to this state and received at the place to 11 which it is directed, or at a post office in this state in the case of a mailed offer; 12 (3) is for an interest or participation in an oil, gas, or mining right, title, 13 or lease on land in the state, including submerged land, regardless of where the offer 14 is made; 15 (4) is for an interest or participation in payments out of production 16 under an oil, gas, or mining right, title , or lease on land in the state, including 17 submerged land, regardless of where the offer is made; or 18 (5) is for an interest or participation in real property located in the 19 state, or in a domestic corporation , a domestic limited liability company, [OR] a 20 domestic limited partnership , or a domestic limited liability partnership ; jurisdiction 21 under this paragraph may be exercised only when the exercise is not inconsistent with 22 the constitution of this state or of the United States. 23 * Sec. 68. AS 45.55.980(f) is amended to read: 24 (f) AS 45.55.020, 45.55.023, 45.55.030(c), 45.55.030(e), 45.55.040(h), and 25 45.55.170, so far as state investment advisers , federal covered advisers, and 26 investment adviser representatives are concerned, apply when any act instrumental 27 in effecting prohibited conduct is done in this state, regardless of whether [OR NOT] 28 either party is then present in this state. 29 * Sec. 69. AS 45.55.980(g) is amended to read: 30 (g) An [EVERY] applicant for registration under this chapter , an [AND 31 EVERY] issuer that proposes to offer a security in this state through a person acting
01 on an agency basis in the common law sense , and a person making a notice filing 02 under this chapter shall file with the administrator, in the form that the administrator 03 prescribes by regulation, an irrevocable consent appointing the administrator or a 04 successor in office to be the applicant's or issuer's attorney to receive service of lawful 05 process in a civil suit, an action, or a proceeding against the applicant or issuer or a 06 successor executor or administrator that [WHICH] arises under this chapter or a 07 regulation or order under this chapter after the consent has been filed [,] with the same 08 force and validity as if served personally on the person filing the consent. A person 09 who has filed a [FILES THE] consent in connection with a previous registration or 10 notice filing need not file another. Service may be made by leaving a copy of the 11 process in the office of the administrator, but it is not effective unless 12 (1) the plaintiff, who may be the administrator in a suit, action, or 13 proceeding instituted by the administrator, immediately sends notice of the service and 14 a copy of the process by registered mail to the defendant or respondent at the last 15 address on file with the administrator; and 16 (2) the plaintiff's affidavit of mailing is filed in the case on or before 17 the return day of the process, if any, or within the further time that [WHICH] the 18 court allows. 19 * Sec. 70. AS 45.55.990(2) is amended to read: 20 (2) "agent" means an individual other than a broker-dealer who 21 represents a broker-dealer or an issuer in effecting or attempting to effect purchase or 22 sale of securities; a partner, an officer, or a director of a broker-dealer or issuer, or a 23 person occupying a similar status or performing similar functions, is an agent only if 24 the person otherwise comes within this definition; "agent" does not include an 25 individual who represents 26 (A) an issuer in effecting transactions 27 (i) [(A)] in a security exempted by AS 45.55.900(a) 28 [AS 45.55.900(a)(1) - (5)]; 29 (ii) [(B)] exempted by AS 45.55.900(b) ; 30 (iii) in a covered security as described in 15 U.S.C. 31 78r(b)(3) and (4)(D) (Securities Act of 1933) ; or
01 (iv) [(C)] with existing employees, partners, or directors 02 of the issuer if a [NO] commission or other remuneration is not paid 03 or given directly or indirectly for soliciting any person in this state; or 04 (B) a broker-dealer in effecting transactions in this state 05 described in 15 U.S.C. 78o(h)(2) and (3) (Securities Exchange Act of 1934) ; 06 * Sec. 71. AS 45.55.990(3) is amended to read: 07 (3) "broker-dealer" means a person engaged in the business of effecting 08 transactions in securities for the account of others or for the person's own account; 09 "broker-dealer" does not include 10 (A) an agent; 11 (B) an issuer; 12 (C) a bank, savings institution, or trust company; 13 (D) a person who has no place of business in this state if the 14 person effects transactions in this state exclusively with or through 15 (i) the issuers of the securities involved in the 16 transactions; 17 (ii) other broker-dealers; or 18 (iii) banks, savings institutions, trust companies, 19 insurance companies, investment companies as defined in 15 U.S.C. 20 80a-1 - 80a-64 ( [THE] Investment Company Act of 1940 ) , pension or 21 profit-sharing trusts, or other financial institutions or institutional 22 buyers, whether acting for themselves or as trustees; or 23 (E) a person who has no place of business in this state if , during 24 a period of 12 consecutive months , the person does not effect more than 15 25 transactions at the initiation and direction of the customer and on behalf 26 of residents of this state regardless of whether the residents are then 27 present in this state and does not direct any [MORE THAN 15] offers 28 initiated by the person to sell or buy into this state in any manner to persons 29 other than those specified in (D) of this paragraph regardless of whether [OR 30 NOT] the offeror or any offeree is then present in this state; 31 * Sec. 72. AS 45.55.990(9) is amended to read:
01 (9) "person" means an individual, a corporation, a partnership, a 02 limited liability company, a limited partnership, a limited liability partnership, an 03 association, a joint-stock company, a trust in which [WHERE] the interests of the 04 beneficiaries are evidenced by a security, an unincorporated organization, a 05 government, or a political subdivision of a government; 06 * Sec. 73. AS 45.55.990(11) is repealed and reenacted to read: 07 (11) "Securities Act of 1933" means 15 U.S.C. 77a - 77bbbb; 08 * Sec. 74. AS 45.55.990(12) is amended to read: 09 (12) "security" means a note; stock; treasury stock; bond; debenture; 10 evidence of indebtedness; certificate of interest or participation in any profit-sharing 11 agreement; a limited liability company interest under AS 10.50 , notwithstanding the 12 limitations of AS 45.08.103(c) ; collateral-trust certificate [CERTIFICATES]; 13 preorganization certificate or subscription; transferable share; investment contract; 14 voting-trust certificate; certificate of deposit for a security; [A] certificate of interest 15 or participation in an oil, gas, or mining title or lease or in payments out of production 16 under the title or lease or in any sale of or indenture or bond or contract for the 17 conveyance of land or any interest in land; [AN] option on a contract for the future 18 delivery of agricultural or mineral commodities or any other commodity offered or sold 19 to the public and not regulated by the Commodity Futures Trading Commission; 20 however, the contract or option is not subject to the provisions of AS 45.55.070 if it 21 is sold or purchased on the floor of a bona fide exchange or board of trade and offered 22 or sold to the public by a broker-dealer or agent registered under this chapter; 23 investment of money or money's worth including goods furnished or services 24 performed in the risk capital of a venture with the expectation of some benefit to the 25 investor where the investor has no direct control over the investment or policy decision 26 of the venture; or, in general, any interest or instrument commonly known as a 27 "security," or any certificate of interest or participation in, temporary or interim 28 certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, 29 any of the foregoing; "security" does not include an insurance or endowment policy 30 or annuity contract under which an insurance company promises to pay a fixed or 31 variable sum of money either in a lump sum or periodically for life or for some other
01 specified period; 02 * Sec. 75. AS 45.55.990 is amended by adding new paragraphs to read: 03 (14) "advisory client" means a person to whom services are provided 04 under an investment advisory contract; 05 (15) "advisory fee" means the fee for providing services under an 06 investment advisory contract; 07 (16) "advisory services" means advising a person as to the value of 08 securities or their purchase or sale, whether through the issuance of analyses or reports 09 or otherwise; 10 (17) "Bank Holding Company Act of 1956" means 12 U.S.C. 1841 - 11 1850; 12 (18) "clients who are natural persons" means natural persons who are 13 clients of a state investment adviser or federal covered adviser, except that natural 14 persons with at least $500,000 under management with the state investment adviser or 15 federal covered adviser or with a net worth of at least $1,000,000 at the time they 16 initially contract for services described in (23)(A)(i) of this section are not considered 17 natural persons for the purpose of determining under (23)(A)(ii) if a supervised person 18 provides the services described under (23)(A)(i) of this section to natural persons; 19 (19) "federal covered adviser" means a person who is registered with 20 the United States Securities and Exchange Commission under 15 U.S.C. 80b-3 21 (Investment Advisers Act of 1940); "federal covered adviser" does not include a person 22 that is excluded from the definition of "state investment adviser" under (35)(B) of this 23 section; 24 (20) "federal covered security" means a security that is a covered 25 security under 15 U.S.C. 77r(b), as amended (Securities Act of 1933), or regulations 26 adopted under that Act; 27 (21) "Federal Deposit Insurance Act" means 12 U.S.C. 1811 - 1835a; 28 (22) "Home Owners' Loan Act" means 12 U.S.C. 1461 - 1470; 29 (23) "investment adviser representative" 30 (A) means a natural person who 31 (i) makes a recommendation or otherwise renders advice
01 regarding securities; manages accounts or portfolios of clients; 02 determines which recommendation or advice regarding securities should 03 be given; solicits, offers, or negotiates for the sale of or sells advisory 04 services; or supervises employees who perform an activity described in 05 this sub-subparagraph; and 06 (ii) is a supervised person of a state investment adviser 07 that is registered or required to be registered under this chapter if a 08 substantial portion of the business of the supervised person is providing 09 to clients who are natural persons the service described in (i) of this 10 subparagraph, or who has a place of business located in this state and 11 is a supervised person of a federal covered adviser if a substantial 12 portion of the business of the supervised person is providing to clients 13 who are natural persons the services described in (i) of this 14 subparagraph; 15 (B) means other persons who are not otherwise covered by this 16 paragraph but who are designated by regulation or order of the administrator; 17 (C) except persons covered by (37)(A)(ii) of this section, does 18 not include a person that would not be defined as an investment adviser 19 representative under 17 C.F.R. 275.203A-3 adopted under 15 U.S.C. 80b-3a 20 (Investment Advisers Act of 1940); 21 (24) "Investment Advisers Act of 1940" means 15 U.S.C. 80b-1 - 80b- 22 21; 23 (25) "investment advisory business" means a business in which a 24 person receives compensation primarily for providing advisory services; 25 (26) "investment advisory contract" means a contract in which one 26 person receives consideration from another person primarily for providing advisory 27 services; 28 (27) "Investment Company Act of 1940" means 15 U.S.C. 80a-1 - 80a- 29 64; 30 (28) "NASDAQ" means National Association of Securities Dealers 31 Automatic Quotation System;
01 (29) "National Securities Markets Improvement Act of 1996" means 02 P.L. 104 - 290, 101 Stat. 3416 - 3440; 03 (30) "notice filing" means a filing made under AS 45.55.040(h) or 04 45.55.075 unless the context indicates otherwise; 05 (31) "place of business" of a state investment adviser, investment 06 adviser representative, or federal covered adviser means 07 (A) an office at which the state investment adviser, federal 08 covered adviser, or investment adviser representative regularly provides 09 advisory services, solicits, meets with, or otherwise communicates with clients; 10 and 11 (B) another location that is held out to the general public as a 12 location at which the state investment adviser, federal covered adviser, or 13 investment adviser representative provides advisory services, solicits, meets 14 with, or otherwise communicates with clients; 15 (32) "principal place of business" of a state investment adviser, 16 investment adviser representative, or federal covered adviser means the executive 17 office of the state investment adviser, investment adviser representative, or federal 18 covered adviser from which the officers, partners, or managers of the state investment 19 adviser, investment adviser representative, or federal covered adviser direct, control, 20 and coordinate the activities of the state investment adviser, investment adviser 21 representative, or federal covered adviser; 22 (33) "Securities Exchange Act of 1934" means 15 U.S.C. 78a - 78lll; 23 (34) "securities business" means a business that provides the services 24 provided by 25 (A) state investment advisers, federal covered advisers, or 26 investment adviser representatives; or 27 (B) broker-dealers, issuers, or agents of broker-dealers or 28 issuers; 29 (35) "state investment adviser" 30 (A) means 31 (i) a person who, for compensation, engages in the
01 business of advising others, either directly or through publications or 02 writings, as to the value of securities or as to the advisability of 03 investing in, purchasing, or selling securities, or who, for compensation 04 and as a part of a regular business, issues or promulgates analyses or 05 reports concerning securities, or who, for compensation, engages in this 06 state in the business of managing an investment or trading account in 07 securities for other persons; 08 (ii) a financial planner or other person who, as an 09 integral component of other financially related services, provides the 10 services described in (i) of this subparagraph to others for compensation 11 and as part of a business or who holds out to provide the services 12 described in (i) of this subparagraph to others for compensation; 13 (B) does not include 14 (i) an investment adviser representative; 15 (ii) a bank or a bank holding company as defined in 12 16 U.S.C. 1841 (Bank Holding Company Act of 1956) that is not an 17 investment company, savings institution, or trust company; 18 (iii) a lawyer, an accountant, an engineer, or a teacher 19 whose performance of the services described in (A)(i) of this paragraph 20 is incidental to the practice of the person's profession; 21 (iv) a broker-dealer or its agent whose performance of 22 the services described in (A)(i) of this paragraph is incidental to the 23 conduct of business as a broker-dealer or an agent and who receives no 24 special compensation for the services; 25 (v) a publisher of a bona fide newspaper, news column, 26 newsletter, news magazine, or business or financial publication or 27 service, whether communicated in hard copy form, by electronic means, 28 or otherwise, that does not consist of the rendering of advice on the 29 basis of the specific investment situation of each client; 30 (vi) a person that is a federal covered adviser; 31 (vii) a person whose sole clients are the person's spouse,
01 parents, children, or siblings by blood or adoption, and who does not 02 hold out to provide the services described in (A)(i) of this paragraph to 03 the general public; 04 (viii) other persons not within the intent of this 05 paragraph whom the administrator may designate by regulation or order; 06 (36) "substantial portion of the business" means that more than 10 07 percent of the clients of a supervised person during the preceding 12 months are clients 08 who are natural persons to whom the supervised person is providing the services 09 described in (23)(A)(i) of this section; 10 (37) "supervised person" 11 (A) means 12 (i) a partner, an officer, a director, or another person 13 occupying a similar status or performing similar functions, an employee 14 of a state investment adviser or federal covered adviser, or another 15 person who provides services described in (23)(A)(i) of this section to 16 clients on behalf of the state investment adviser or federal covered 17 adviser if the person is subject to the supervision and control of the 18 state investment adviser or federal covered adviser; 19 (ii) a third-party natural person employed primarily to 20 solicit, offer, or negotiate for the sale of or to sell the services described 21 in (23)(A)(i) of this section for a state investment adviser or federal 22 covered adviser, even if the person is not subject to the supervision or 23 control of the state investment adviser or federal covered adviser; 24 (B) does not include a person who 25 (i) does not on a regular basis solicit, meet with, or 26 otherwise communicate with clients of a state investment adviser or 27 federal covered adviser as a normal and ordinary part of the duties of 28 the person; or 29 (ii) provides the services described in (23)(A)(i) of this 30 section only by means of written material or oral statements that do not 31 claim to meet the objectives or needs of specific individuals or
01 accounts. 02 * Sec. 76. AS 45.55.995 is amended to read: 03 Sec. 45.55.995. Short title. This chapter may be cited as the Alaska Securities 04 Act [OF 1959]. 05 * Sec. 77. AS 45.55.020(d) and 45.55.990(6) are repealed. 06 * Sec. 78. TRANSITION: REGULATIONS. Notwithstanding sec. 82 of this Act, the 07 Department of Commerce and Economic Development may immediately proceed to adopt 08 regulations necessary to implement the changes made by this Act. The regulations take effect 09 under AS 44.62 (Administrative Procedure Act), but not before November 1, 1998. 10 * Sec. 79. Section 3 of this Act takes effect only if AS 25.27.244(s)(2) is repealed and 11 reenacted under sec. 148(c), ch. 87, SLA 1997. 12 * Sec. 80. Section 78 of this Act takes effect immediately under AS 01.10.070(c). 13 * Sec. 81. If sec. 3 of this Act takes effect, it takes effect on the effective date of the 14 repeal and reenactment of AS 25.27.244(s)(2) under sec. 148(c), ch. 87, SLA 1997. 15 * Sec. 82. Except as provided in secs. 80 and 81 of this Act, this Act takes effect 16 November 1, 1998.