HB 83: "An Act relating to the licensing of, acts and practices of, notice filings required of, duties of, registration of, capitalization of, financial requirements for, bonding of, coordinated securities examinations of, recordkeeping by, and documents filed by certain securities occupations; relating to public entity investment pools; relating to investment advisory contracts; relating to the examination of records of certain securities occupations; relating to federal covered securities; relating to the registration of securities; relating to the general exemptions for securities and transactions; relating to offers of securities on the Internet; relating to the confidentiality of investigative files under the Alaska Securities Act; relating to the payment by certain securities occupations of expenses and fees of investigations and examinations; relating to petitions to superior court by the administrator to reduce civil penalties to judgment; exempting certain violations of the Alaska Securities Act from criminal penalties; relating to time limitations in bringing court actions for violations of the Alaska Securities Act; relating to the affirmative defense of timeliness in court actions relating to securities; prohibiting certain lawsuits involving buyers of securities; relating to time limitations for bringing court actions involving the receipt of a written offer related to securities; relating to offers to repay buyers of securities; relating to notification of certain securities occupations regarding administrative hearings; relating to fees established by the administrator; relating to a sale, a purchase, or an offer to sell or purchase under the Alaska Securities Act; relating to the locations of offers to buy or sell; relating to consent to service; amending the Alaska Securities Act definitions of 'agent,' 'broker-dealer,' 'person,' 'Securities Act of 1933,' and 'security;' defining for purposes of the Alaska Securities Act 'advisory client,' 'advisory fee,' 'advisory services,' 'Bank Holding Company Act of 1956,' 'clients who are natural persons,' 'federal covered adviser,' 'federal covered security,' 'Federal Deposit Insurance Act,' 'Home Owners' Loan Act,' 'investment adviser representative,' 'Investment Advisers Act of 1940,' 'investment advisory business,' 'investment advisory contract,' 'Investment Company Act of 1940,' 'NASDAQ,' 'National Securities Markets Improvement Act of 1996,' 'notice filing,' 'place of business,' 'principal place of business,' 'Securities Exchange Act of 1934,' 'securities business,' 'state investment adviser,' 'substantial portion of the business,' 'supervised person,' and 'viatical settlement'; relating to the title of the Alaska Securities Act; relating to the definitions in the Alaska Securities Act of 'assignment' and 'investment adviser'; relating to implementation of the changes to the Alaska Securities Act; and providing for an effective date."
00HOUSE BILL NO. 83 01 "An Act relating to the licensing of, acts and practices of, notice filings 02 required of, duties of, registration of, capitalization of, financial requirements for, 03 bonding of, coordinated securities examinations of, recordkeeping by, and 04 documents filed by certain securities occupations; relating to public entity 05 investment pools; relating to investment advisory contracts; relating to the 06 examination of records of certain securities occupations; relating to federal 07 covered securities; relating to the registration of securities; relating to the 08 general exemptions for securities and transactions; relating to offers of securities 09 on the Internet; relating to the confidentiality of investigative files under the 10 Alaska Securities Act; relating to the payment by certain securities occupations 11 of expenses and fees of investigations and examinations; relating to petitions to 12 superior court by the administrator to reduce civil penalties to judgment; 13 exempting certain violations of the Alaska Securities Act from criminal penalties; 14 relating to time limitations in bringing court actions for violations of the Alaska
01 Securities Act; relating to the affirmative defense of timeliness in court actions 02 relating to securities; prohibiting certain lawsuits involving buyers of securities; 03 relating to time limitations for bringing court actions involving the receipt of a 04 written offer related to securities; relating to offers to repay buyers of securities; 05 relating to notification of certain securities occupations regarding administrative 06 hearings; relating to fees established by the administrator; relating to a sale, 07 a purchase, or an offer to sell or purchase under the Alaska Securities Act; 08 relating to the locations of offers to buy or sell; relating to consent to service; 09 amending the Alaska Securities Act definitions of 'agent,' 'broker-dealer,' 'person,' 10 'Securities Act of 1933,' and 'security;' defining for purposes of the Alaska 11 Securities Act 'advisory client,' 'advisory fee,' 'advisory services,' 'Bank Holding 12 Company Act of 1956,' 'clients who are natural persons,' 'federal covered 13 adviser,' 'federal covered security,' 'Federal Deposit Insurance Act,' 'Home 14 Owners' Loan Act,' 'investment adviser representative,' 'Investment Advisers Act 15 of 1940,' 'investment advisory business,' 'investment advisory contract,' 'Investment 16 Company Act of 1940,' 'NASDAQ,' 'National Securities Markets Improvement Act 17 of 1996,' 'notice filing,' 'place of business,' 'principal place of business,' 18 'Securities Exchange Act of 1934,' 'securities business,' 'state investment adviser,' 19 'substantial portion of the business,' 'supervised person,' and 'viatical settlement'; 20 relating to the title of the Alaska Securities Act; relating to the definitions in 21 the Alaska Securities Act of 'assignment' and 'investment adviser'; relating to 22 implementation of the changes to the Alaska Securities Act; and providing for 23 an effective date." 24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 25 * Section 1. AS 14.43.148(h)(1) is amended to read: 26 (1) "license" 27 (A) means, except as provided in (B) of this paragraph, a 28 license, certificate, permit, registration, or other authorization that, at the time 29 of issuance, will be valid for more than 150 days and that may be acquired 30 from a state agency to perform an occupation, including the following: 31 (i) license relating to boxing or wrestling under
01 AS 05.10; 02 (ii) authorization to perform an occupation regulated 03 under AS 08; 04 (iii) teacher certificate under AS 14.20; 05 (iv) authorization under AS 18.08 to perform emergency 06 medical services; 07 (v) asbestos worker certification under AS 18.31; 08 (vi) boiler operator's license under AS 18.60.395; 09 (vii) certificate of fitness under AS 18.62; 10 (viii) hazardous painting certification under AS 18.63; 11 (ix) certification as a municipal correctional, 12 correctional, probation, or parole officer under AS 18.65.245; 13 (x) security guard license under AS 18.65.400 - 14 18.65.490; 15 (xi) license relating to insurance under AS 21.27; 16 (xii) employment agency permit under AS 23.15.330 - 17 23.15.520; 18 (xiii) registration as a broker-dealer, an agent, a state 19 [OR] investment adviser , or an investment adviser representative 20 under AS 45.55.030; 21 (xiv) certification as a pesticide applicator under 22 AS 46.03.320; 23 (xv) certification as a storage tank worker or contractor 24 under AS 46.03.375; 25 (xvi) certification as a water and wastewater works 26 operator under AS 46.30; and 27 (B) does not include 28 (i) a commercial fishing license under AS 16.05.480, 29 including a crewmember fishing license; 30 (ii) a vessel license issued under AS 16.05.490 or 31 16.05.530;
01 (iii) a license issued under AS 47.35; 02 (iv) a business license issued under AS 43.70; 03 (v) an entry permit or interim-use permit issued under 04 AS 16.43; or 05 (vi) a driver's license issued under AS 28.15; 06 * Sec. 2. AS 25.27.244(s)(2) is amended to read: 07 (2) "license" 08 (A) means, except as provided in (B) of this paragraph, a 09 license, certificate, permit, registration, or other authorization that, at the time 10 of issuance, will be valid for more than 150 days and that may be acquired 11 from a state agency to perform an occupation, including the following: 12 (i) license relating to boxing or wrestling under 13 AS 05.10; 14 (ii) authorization to perform an occupation regulated 15 under AS 08; 16 (iii) teacher certificate under AS 14.20; 17 (iv) authorization under AS 18.08 to perform emergency 18 medical services; 19 (v) asbestos worker certification under AS 18.31; 20 (vi) boiler operator's license under AS 18.60.395; 21 (vii) certificate of fitness under AS 18.62; 22 (viii) hazardous painting certification under AS 18.63; 23 (ix) security guard license under AS 18.65.400 - 24 18.65.490; 25 (x) license relating to insurance under AS 21.27; 26 (xi) employment agency permit under AS 23.15.330 - 27 23.15.520; 28 (xii) registration as a broker-dealer, an agent, a state 29 [OR] investment adviser , or an investment adviser representative 30 under AS 45.55.030; 31 (xiii) certification as a pesticide applicator under
01 AS 46.03.320; 02 (xiv) certification as a storage tank worker or contractor 03 under AS 46.03.375; 04 (xv) certification as a water and wastewater works 05 operator under AS 46.30; and 06 (xvi) commercial crewmember fishing license under 07 AS 16.05.480 other than an entry permit or interim-use permit under 08 AS 16.43; 09 (B) does not include 10 (i) a vessel license issued under AS 16.05.490 or 11 16.05.530; 12 (ii) a license issued under AS 47.35; 13 (iii) a business license issued under AS 43.70; 14 (iv) an entry permit or interim-use permit issued under 15 AS 16.43; or 16 (v) a driver's license issued under AS 28.15; 17 * Sec. 3. AS 25.27.244(s)(2), as repealed and reenacted under sec. 148(c), ch. 87, SLA 18 1997, as amended by sec. 53, ch. 132, SLA 1998, is amended to read: 19 (2) "license" 20 (A) means, except as provided in (B) of this paragraph, a 21 license, certificate, permit, registration, or other authorization that, at the time 22 of issuance, will be valid for more than 150 days and that may be acquired 23 from a state agency to perform an occupation, including the following: 24 (i) license relating to boxing or wrestling under 25 AS 05.10; 26 (ii) authorization to perform an occupation regulated 27 under AS 08; 28 (iii) teacher certificate under AS 14.20; 29 (iv) authorization under AS 18.08 to perform emergency 30 medical services; 31 (v) asbestos worker certification under AS 18.31;
01 (vi) boiler operator's license under AS 18.60.395; 02 (vii) certificate of fitness under AS 18.62; 03 (viii) hazardous painting certification under AS 18.63; 04 (ix) security guard license under AS 18.65.400 - 05 18.65.490; 06 (x) license relating to insurance under AS 21.27; 07 (xi) employment agency permit under AS 23.15.330 - 08 23.15.520; 09 (xii) registration as a broker-dealer, an agent, a state 10 [OR] investment adviser , or an investment adviser representative 11 under AS 45.55.030; 12 (xiii) certification as a pesticide applicator under 13 AS 46.03.320; 14 (xiv) certification as a storage tank worker or contractor 15 under AS 46.03.375; and 16 (xv) certification as a water and wastewater works 17 operator under AS 46.30; 18 (B) does not include 19 (i) a commercial fishing license under AS 16.05.480, 20 including a crewmember fishing license; 21 (ii) a vessel license issued under AS 16.05.490 or 22 16.05.530; 23 (iii) a license issued under AS 47.35; 24 (iv) a business license issued under AS 43.70; 25 (v) an entry permit or interim-use permit issued under 26 AS 16.43; or 27 (vi) a driver's license issued under AS 28.15; 28 * Sec. 4. AS 37.23.050 is amended to read: 29 Sec. 37.23.050. Investment management. The public entities participating 30 in an investment pool under this chapter shall provide for management of investments 31 in the pool by contracting for investment management and related services with
01 (1) a securities broker-dealer registered under AS 45.55.030 and under 02 15 U.S.C. 78o (Securities Exchange Act of 1934); 03 (2) a state [AN] investment adviser registered under AS 45.55.030 or 04 a federal covered adviser that has made a notice filing under AS 45.55.040(h) 05 [AND UNDER 15 U.S.C. 80b3 (INVESTMENT ADVISERS ACT OF 1940)]; 06 (3) the Department of Revenue; or 07 (4) a financial institution that is a state or federally chartered 08 commercial or mutual bank, savings and loan association, or credit union if the 09 institution's accounts are insured through the appropriate federal insuring agency of the 10 United States [,] and if the institution has trust powers under state or federal law. 11 * Sec. 5. AS 45.55.010 is amended by adding a new subsection to read: 12 (b) A person may not rely on an exemption from registration under 13 AS 45.55.900 or on a security being a federal covered security to avoid the application 14 of (a) of this section. 15 * Sec. 6. AS 45.55.020(b) is amended to read: 16 (b) A state [AN] investment adviser may not enter into, extend, or renew an 17 investment advisory contract unless the contract [IT] provides in writing that 18 (1) the state investment adviser may not be compensated on the basis 19 of a share of capital gains upon or capital appreciation of the funds or a portion of the 20 funds of the client; and 21 (2) [AN ASSIGNMENT OF THE CONTRACT MAY NOT BE MADE 22 BY THE INVESTMENT ADVISER WITHOUT THE CONSENT OF THE OTHER 23 PARTY TO THE CONTRACT; AND 24 (3)] the state investment adviser, if a partnership, shall notify the other 25 party to the contract of a change in the membership of the partnership within a 26 reasonable time after the change. 27 * Sec. 7. AS 45.55.020(c) is amended to read: 28 (c) The provisions of (b)(1) of this section do not prohibit an investment 29 advisory contract that provides for compensation based upon the total value of a fund 30 averaged over a definite period, or as of definite dates or taken as of a definite date. 31 The administrator, on request, may waive the provisions of (b)(1) of this section
01 for investment advisory contracts that conform to the limitations of 15 U.S.C. 80b- 02 5 (Investment Advisers Act of 1940). 03 * Sec. 8. AS 45.55.020(e) is amended to read: 04 (e) A state [AN] investment adviser may not take or have custody of the 05 securities or funds of a client if 06 (1) the administrator , by regulation , prohibits custody ; [,] or 07 (2) in the absence of regulation, the state investment adviser fails to 08 notify the administrator that the adviser has or may have custody. 09 * Sec. 9. AS 45.55 is amended by adding new sections to article 1 to read: 10 Sec. 45.55.023. Unethical business practices of state investment advisers, 11 investment adviser representatives, and federal covered advisers. (a) A person 12 who is a state investment adviser, investment adviser representative, or federal covered 13 adviser is a fiduciary and has a duty to act primarily for the benefit of the client. The 14 provisions of this section apply to federal covered advisers only to the extent that the 15 conduct alleged is fraudulent or deceptive under AS 45.55.010(a) or 45.55.020(a), or 16 to the extent otherwise provided by P.L. 104 - 290, 101 Stat. 3416 - 3440 (National 17 Securities Markets Improvement Act of 1996). While the extent and nature of the duty 18 to act primarily for the benefit of the client varies according to the nature of the 19 relationship between an investment adviser and its clients and the circumstances of 20 each case, a state investment adviser, an investment adviser representative, or a federal 21 covered adviser may not engage in dishonest or unethical practices or conduct in the 22 investment advisory business under AS 45.55.060(a)(7), including 23 (1) recommending to a client to whom investment supervisory, 24 management, or consulting services are provided the purchase, sale, or exchange of a 25 security without reasonable grounds to believe that the transaction or recommendation 26 is suitable for the client on the basis of information furnished by the client after 27 reasonable inquiry concerning the client's investment objectives, financial situation and 28 needs, and other information known by the state investment adviser, investment adviser 29 representative, or federal covered adviser; 30 (2) exercising discretionary power in placing an order for the purchase 31 or sale of securities for a client without obtaining written discretionary authority from
01 the client within 10 business days after the date of the first transaction placed under 02 oral discretionary authority unless the discretionary power relates solely to the price 03 at which or the time when an order involving a definite amount of a specified security 04 will be executed, or both; 05 (3) in a client's account inducing trading that is excessive in size or 06 frequency in view of the financial resources, investment objectives, and character of 07 the account if the state investment adviser, investment adviser representative, or federal 08 covered adviser can directly benefit from the number of securities transactions effected 09 in a client's account; 10 (4) placing an order to purchase or sell a security for the account of a 11 client without authority to do so; 12 (5) placing an order to purchase or sell a security for the account of a 13 client upon the instruction of a third party without first having obtained a written third- 14 party trading authorization from the client; 15 (6) borrowing money or securities from a client unless the client is a 16 financial institution engaged in the business of loaning money or the client is an 17 affiliate of the state investment adviser or federal covered adviser borrowing the money 18 or securities; 19 (7) loaning money to a client unless the state investment adviser or 20 federal covered adviser loaning the money is a financial institution engaged in the 21 business of loaning money or the client is an affiliate of the state investment adviser 22 or federal covered adviser; 23 (8) misrepresenting to an advisory client or prospective advisory client 24 the qualifications of the state investment adviser, an employee of the state investment 25 adviser, the investment adviser representative, the federal covered adviser, or an 26 employee of the federal covered adviser; misrepresenting the nature of the advisory 27 services being offered or fees to be charged for a service; or omitting to state a 28 material fact necessary to make the statements made regarding qualifications, services, 29 or fees not misleading in light of the circumstances under which the statements are 30 made; 31 (9) providing a report or recommendation to an advisory client prepared
01 by someone other than the state investment adviser, the investment adviser 02 representative, or the federal covered adviser without disclosing that the report or 03 recommendation was prepared by someone else, except that this prohibition does not 04 apply to a situation where the state investment adviser, investment adviser 05 representative, or federal covered adviser uses published research reports or statistical 06 analyses to render advice or where a state investment adviser, an investment adviser 07 representative, or a federal covered adviser orders the research reports or statistical 08 analyses in the normal course of providing service; 09 (10) charging a client an unreasonable advisory fee; 10 (11) failing to disclose to a client in writing before any advice is 11 rendered a material conflict of interest relating to the state investment adviser, federal 12 covered adviser, an employee of the state investment adviser or federal covered 13 adviser, or the investment adviser representative that could reasonably be expected to 14 impair the rendering of unbiased and objective advice, including 15 (A) compensation arrangements connected with advisory 16 services to a client if the arrangements are in addition to compensation from 17 the client for those services; and 18 (B) charging a client an advisory fee for rendering advice when 19 a commission for executing securities transactions according to that advice will 20 be received by the adviser or the employees or investment adviser 21 representatives of the adviser; 22 (12) guaranteeing a client that a specific investment result will be 23 achieved with the advice given; 24 (13) publishing, circulating, or distributing an advertisement that does 25 not comply with 17 C.F.R. 275.206(4) - 1 adopted under 15 U.S.C. 80b-1 - 80b-21 26 (Investment Advisers Act of 1940), as that regulation exists on or after the effective 27 date of this Act; 28 (14) disclosing the identity, affairs, or investments of a client unless 29 required by law or unless consented to by the client; 30 (15) taking action, directly or indirectly, with respect to securities or 31 funds in which a client has a beneficial interest if the state investment adviser, federal
01 covered adviser, or investment adviser representative has custody or possession of the 02 securities or funds and the adviser's action does not comply with the requirements of 03 17 C.F.R. 275.206(4) - 2 adopted under 15 U.S.C. 80b-1 - 80b-2 (Investment Advisers 04 Act of 1940), as that regulation exists on or after the effective date of this Act; 05 (16) entering into, extending, or renewing an investment advisory 06 contract unless the contract is in writing and discloses in substance 07 (A) the services to be provided; 08 (B) the term of the contract; 09 (C) the advisory fee, the formula for computing the fee, whether 10 the fee is negotiable, and the amount of the prepaid fee to be returned in the 11 event of contract termination or nonperformance; 12 (D) whether the contract grants discretionary power to the 13 adviser; and 14 (E) that an assignment of the contract may not be made by a 15 state investment adviser without the consent of the other party to the contract; 16 in this subparagraph, "assignment" includes a direct or indirect transfer or 17 hypothecation of an investment advisory contract by the assignor or of a 18 controlling block of the assignor's outstanding voting securities by a security 19 holder of the assignor, but, if the adviser is a partnership, an assignment of an 20 investment advisory contract is not considered to result from the death or 21 withdrawal of a minority of the partners of the adviser having only a minority 22 interest in the business of the adviser, or from the admission to the adviser of 23 one or more partners who, after admission, will be only a minority of the 24 partners and will have only a minority interest in the business; 25 (17) failing, in violation of 15 U.S.C. 80b-4a (Investment Advisers Act 26 of 1940), to establish, maintain, and enforce written policies and procedures reasonably 27 designed to prevent the misuse of material nonpublic information; 28 (18) entering into, extending, or renewing an advisory contract that 29 would violate 15 U.S.C. 80b-5 (Investment Advisers Act of 1940); this paragraph 30 applies to all state investment advisers registered or required to be registered under this 31 chapter and to all investment adviser representatives registered or required to be
01 registered under this chapter, notwithstanding whether the adviser or representative 02 would be exempt from federal registration under 15 U.S.C. 80b-3 (Investment Advisers 03 Act of 1940); 04 (19) including in an advisory contract a condition, stipulation, or 05 provision binding a person to waive compliance with a provision of this chapter or 06 15 U.S.C. 80b-1 - 80b-21 (Investment Advisers Act of 1940); or engaging in a practice 07 that would violate 15 U.S.C. 80b-15 (Investment Advisers Act of 1940); 08 (20) engaging in an act, a practice, or a course of business that is 09 fraudulent, deceptive, or manipulative in contravention of 15 U.S.C. 80b-6(4) 10 (Investment Advisers Act of 1940) and the rules adopted under that act, 11 notwithstanding the fact that the state investment adviser may not be registered or 12 required to be registered under 15 U.S.C. 80b-3 (Investment Advisers Act of 1940); 13 (21) engaging in conduct or an act, either indirectly or through or by 14 another person, that would be unlawful for the person to do directly under this chapter 15 or a regulation adopted under this chapter; 16 (22) acting as principal for the person's own account, knowingly selling 17 a security to or purchasing a security from a client, acting as broker for a person other 18 than the client, or knowingly effecting a sale or purchase of a security for the account 19 of the client without disclosing to the client in writing before the completion of the 20 transaction the capacity in which the person is acting and without obtaining the written 21 consent of the client to the transaction; the prohibitions in this paragraph do not apply 22 to a transaction with a customer of a broker-dealer if the broker-dealer is not acting 23 as a state investment adviser or federal covered adviser in relation to the transaction. 24 (b) The conduct listed in (a) of this section is not the exclusive conduct 25 prohibited by (a) of this section. Engaging in other similar conduct, including 26 nondisclosure, incomplete disclosure, or a deceptive practice, is considered unethical 27 practice or conduct under AS 45.55.060(a)(7). The federal statutory and regulatory 28 provisions referred to in this section apply to a state investment adviser and a 29 registered investment adviser representative of either a state investment adviser or a 30 federal covered adviser, regardless of whether the federal provisions limits their 31 application to state investment advisers or federal covered advisors subject to federal
01 registration. With respect to a federal covered adviser, the provisions of this section 02 apply only to the extent permitted under P.L. 104 - 290, 101 Stat. 3416 - 3440 03 (National Securities Markets Improvement Act of 1996) and only when the conduct 04 proscribed involves fraud or deceit within the meaning of AS 45.55.010(a) and 05 45.55.020(a). 06 Sec. 45.55.025. Fraudulent, dishonest, and unethical business practices of 07 broker-dealers and agents. A broker-dealer and an agent shall observe high 08 standards of commercial honor and just and equitable principles of trade in the conduct 09 of their business. The acts and practices that are contrary to those standards and 10 principles, that constitute dishonest or unethical practices in the securities business 11 under AS 45.55.060(a), and that are grounds for imposition of administrative fines, 12 censure, denial, suspension, revocation of a registration, or other appropriate 13 disciplinary action include 14 (1) engaging in a pattern of unreasonable and unjustifiable delays in the 15 delivery of securities purchased by the broker-dealer's customers or in the payment 16 upon request of free credit balances reflecting completed transactions of the broker- 17 dealer's customers; 18 (2) inducing in a customer's account trading that is excessive in size 19 or frequency in view of the financial resources and character of the account; 20 (3) recommending to a customer the purchase, sale, or exchange of a 21 security without reasonable grounds to believe that the transaction or recommendation 22 is suitable for the customer based on reasonable inquiry concerning the customer's 23 investment objectives, financial situation, and needs, and other relevant information 24 known by the broker-dealer or agent; 25 (4) executing a transaction on behalf of a customer without 26 authorization to execute the transaction; 27 (5) exercising discretionary power in effecting a transaction for a 28 customer's account without first obtaining written discretionary authority from the 29 customer unless the discretionary power relates solely to the time or price for the 30 execution of orders; 31 (6) executing a transaction in a margin account without securing from
01 the customer a properly executed written margin agreement promptly after the initial 02 transaction in the account; 03 (7) failing to segregate a customer's free securities or securities held in 04 safekeeping; 05 (8) hypothecating a customer's securities without having a lien on the 06 securities unless the broker-dealer or agent receives from the customer a properly 07 executed written consent promptly after the initial transaction, except as permitted by 08 the rules of the United States Securities and Exchange Commission; 09 (9) entering into a transaction with or for a customer at a price not 10 reasonably related to the current market price of the securities or receiving an 11 unreasonable commission or profit; 12 (10) failing to furnish to a customer purchasing securities in a 13 registered offering a final or preliminary prospectus no later than the date of 14 confirmation of the transaction and, if the prospectus is preliminary, failing to furnish 15 a final prospectus within a reasonable time after the effective date of the offering; 16 (11) charging unreasonable or inequitable fees for services performed, 17 including fees for miscellaneous services, such as the collection of money due for 18 principal, dividends, or interest, the exchange or transfer of securities, appraisals, 19 safekeeping, the custody of securities, and other services related to the broker-dealer's 20 securities business; 21 (12) offering to buy from or sell to a person a security at a stated price 22 unless the broker-dealer is prepared to purchase or sell at that price and under the 23 conditions that are stated at the time of the offer to buy or sell; 24 (13) representing that a security is being offered to a customer at 25 market price or at a price relevant to the market price unless the broker-dealer or agent 26 knows or has reasonable grounds to believe that a market for the security exists other 27 than that made, created, or controlled by 28 (A) the broker-dealer; 29 (B) a person for whom the broker-dealer is acting or with whom 30 the broker-dealer is associated in the distribution of the security; or 31 (C) a person controlled by, controlling, or under common
01 control with the broker-dealer; 02 (14) effecting a transaction in, or inducing the purchase or sale of, a 03 security by means of a manipulative, deceptive, or fraudulent device, practice, plan, 04 program, design, or contrivance, including 05 (A) effecting a transaction in a security that does not involve 06 a change in the beneficial ownership; 07 (B) entering an order for the purchase or sale of a security with 08 the knowledge that another order of substantially the same price for the sale of 09 the same security has been or will be entered by or for the same or different 10 parties for the purpose of creating a false or misleading appearance of active 11 trading in the security or a false or misleading appearance with respect to the 12 market for the security; nothing in this subparagraph prohibits a broker-dealer 13 from entering a bona fide agency cross transaction for its customers as long as 14 the cross transaction is noted on the confirmation and monthly account 15 statements; 16 (C) effecting alone or with one or more other persons a series 17 of transactions in a security creating actual or apparent active trading in the 18 security or raising or depressing the price of the security for the purpose of 19 inducing the purchase or sale of the security by others; 20 (15) guaranteeing a customer against risk or loss in a securities account 21 of the customer carried by the broker-dealer or in a securities transaction effected by 22 the broker-dealer or agent with or for the customer; 23 (16) publishing or circulating or causing to be published or circulated 24 a notice, a circular, an advertisement, a newspaper article, an investment service, or 25 a communication of any kind that purports to 26 (A) report a transaction as a purchase or sale of a security 27 unless the broker-dealer or agent believes that the transaction described was a 28 bona fide purchase or sale of the security; or 29 (B) quote the bid price or asked price for a security unless the 30 broker-dealer believes that the quotation represents a bona fide bid for, or offer 31 of, the security;
01 (17) making a written or oral advertising or sales presentation that is 02 in any manner deceptive or misleading, including 03 (A) distributing nonfactual data or material, or making a 04 presentation that is based on conjecture or unfounded or unrealistic claims or 05 assertions, in a brochure, flyer, or other display by words, pictures, graphs, or 06 other method designed to supplement, detract from, supersede, or defeat the 07 purpose or effect of a prospectus or disclosure; 08 (B) using supplementary material in connection with the offer 09 of a particular security if the information in the material is not consistent with 10 or adequately supported by the prospectus or is not filed as part of the 11 registration statement; 12 (C) using supplementary material not authorized by the issuer 13 in connection with the offer of a particular security when a prospectus or other 14 offering document required to be delivered in connection with the offer 15 specifically states that supplementary material is not authorized; 16 (18) failing to disclose that the broker-dealer or agent is affiliated with 17 the issuer of a security before entering into a contract with or for a customer for the 18 purchase or sale of the security and, if the disclosure is made orally, failing to provide 19 to the customer written disclosure before the completion of the transaction; 20 (19) failing to make a bona fide offering of all of the securities allotted 21 to a broker-dealer for distribution, whether acquired as an underwriter or a selling 22 group member or from an underwriting or a selling group member participating in the 23 distribution as an underwriter or selling group member; 24 (20) failing or refusing to furnish to a customer, upon reasonable 25 request, information to which the person is entitled or failing or refusing to respond 26 to a formal written request, demand, or complaint; 27 (21) being found by a court or an administrative proceeding of 28 competent jurisdiction to have violated the anti-fraud or registration provisions of 29 federal securities laws or of the securities law of a state; 30 (22) marking an order ticket or confirmation as unsolicited when, in 31 fact, the transaction was solicited;
01 (23) in connection with the solicitation of a sale or purchase of an over- 02 the-counter non-NASDAQ security, failing to provide promptly the most current prospectus 03 or the most recent periodic report filed under 15 U.S.C. 78m (Securities Exchange Act of 04 1934), when requested to do so by a customer; 05 (24) failing to provide to a customer for a month in which activity has 06 occurred in a customer's account, but in no event less than every three months, a 07 statement of account that contains a value for each over-the-counter non-NASDAQ 08 equity security based on the closing market bid on a certain date; this paragraph 09 applies only if the broker-dealer has been a market maker in that security at any time 10 during the month in which the monthly or quarterly statement is issued; 11 (25) failing to maintain lists of persons who have informed the broker- 12 dealer that the persons do not want to be solicited; 13 (26) conducting business by telephone at unreasonable times; 14 (27) failing to disclose to a person purchasing shares of an investment 15 company on the premises of an insured depository institution that the investment is not 16 covered by the Federal Deposit Insurance Corporation; or 17 (28) failing to comply with an applicable provision of the Conduct 18 Rules of the National Association of Securities Dealers, Inc., or applicable fair 19 practices or ethical standards adopted by the United States Securities and Exchange 20 Commission or by a self-regulatory organization approved by the United States 21 Securities and Exchange Commission. 22 Sec. 45.55.027. Additional fraudulent, dishonest, and unethical business 23 practices of agents. In addition to the acts and practices described in AS 45.55.025, 24 the acts and practices of an agent that constitute dishonest or unethical practices in the 25 securities business under AS 45.55.060(a), that are grounds for imposition of 26 administrative fines, censure, denial, suspension, revocation of a registration, or other 27 appropriate disciplinary action, and that are contrary to the high standards of 28 commercial honor and just and equitable principles of trade to be observed by agents, 29 include 30 (1) engaging in the practice of lending to or borrowing money or 31 securities from a customer or acting as a custodian for money, securities, or an
01 executed stock power of a customer; 02 (2) effecting securities transactions not recorded on the regular books 03 and records of the broker-dealer that the agent represents unless the transactions are 04 authorized in writing by the broker-dealer before execution of the transactions; 05 (3) establishing or maintaining an account containing fictitious 06 information in order to execute transactions that would otherwise be prohibited; 07 (4) sharing directly or indirectly in profits and losses in the account of 08 a customer without the written authorization of the customer and the broker-dealer that 09 the agent represents; 10 (5) dividing or otherwise splitting the agent's commissions, profits, or 11 other compensation from the purchase and sale of securities with a person who is not 12 also registered in this state as an agent for the same broker-dealer or as a broker-dealer 13 under direct or indirect common control of the broker-dealer or agent unless the person 14 is not required to be registered in order to engage in the securities business in this 15 state; 16 (6) failing to disclose to a customer or prospective customer at the time 17 of the first contact with the customer or prospective customer the name of the 18 registered entity if different from the name under which the agent is doing business; 19 (7) contacting a person who has requested to be placed on a list of 20 persons who do not want to be contacted by the broker-dealer. 21 Sec. 45.55.028. Practices of broker-dealers and agents considered 22 fraudulent or deceitful. Acts and practices of broker-dealers or agents that are 23 considered fraudulent or deceitful acts, practices, or courses of business under 24 AS 45.55.010(a) include 25 (1) entering into a transaction with a customer with regard to a security 26 at an unreasonable price or at a price not reasonably related to the current market price 27 of the security, or receiving an unreasonable commission, markup, or profit; 28 (2) contradicting or negating the importance of information contained 29 in a prospectus or other offering material with the intent to deceive or mislead, or 30 using an advertising or sales presentation in a deceptive or misleading manner, 31 including using supplementary material that does not consistently reflect or is not
01 supported by information presented in prospectus or offering material required to be 02 delivered in connection with the offer; 03 (3) in connection with the offer, sale, or purchase of a security, falsely 04 misleading a customer to believe that the broker-dealer or agent possesses material, 05 nonpublic information that would affect the value of the security; 06 (4) in connection with the solicitation of a sale or purchase of a 07 security, engaging in a pattern or practice of making contradictory recommendations 08 to different investors with similar investment objectives for some to sell and others to 09 purchase the same security, at or about the same time, when not justified by the 10 particular circumstances of each investor; 11 (5) failing to make a bona fide public offering in accordance with an 12 underwriting agreement of all the securities allotted to a broker-dealer for distribution 13 by using methods such as 14 (A) transferring securities to a customer, another broker-dealer, 15 or a fictitious account with the understanding that the securities will be returned 16 to the broker-dealer or its nominees; or 17 (B) parking or withholding securities; 18 (6) with respect to transactions in securities sold in the over-the-counter 19 market other than those securities listed in the NASDAQ National Market System, 20 (A) conducting sales contests in a particular security; 21 (B) failing or refusing to promptly execute sell orders after a 22 solicited purchase by a customer; 23 (C) soliciting a secondary market transaction when there has not 24 been a bona fide distribution in the primary issuer market; 25 (D) engaging in a pattern of compensating an agent in different 26 amounts for effecting sales and purchases in the same security; 27 (7) effecting a transaction in or inducing the purchase or sale of a 28 security by means of any manipulative, deceptive, or other fraudulent device or 29 contrivance, including the use of boiler room tactics or the use of fictitious accounts; 30 in this paragraph, "boiler room tactics" includes high-pressure sales tactics that have 31 the effect of creating an artificially short period in which the investor must make a
01 decision or that are designed to overcome a customer's reluctance to make an 02 investment, including 03 (A) the use of intensive telephone campaigns or unsolicited calls 04 to persons who are not known by or who do not have an account with the 05 agent or broker-dealer and in which the person is encouraged to make a hasty 06 decision to buy without regard to the person's investment needs and objectives; 07 (B) the use of scripts designed to meet the customer's 08 objections; 09 (C) repeated phone calls; 10 (D) phone calls designed to entrap the customer; 11 (E) threatening tones on the telephone informing the customer 12 that there is little time within which to make a decision; 13 (8) failing to comply with a prospectus delivery requirement adopted 14 under federal law; 15 (9) making a false, misleading, deceptive, or exaggerated representation 16 or prediction in the solicitation or sale of a security, including a statement that 17 (A) the security will be resold or repurchased; 18 (B) the security will be listed or traded on an exchange or 19 established market; 20 (C) purchasing the security will result in an assured, immediate, 21 or extensive increase in value, future market price, or return on investment; or 22 (D) refers to the issuer's financial condition, anticipated 23 earnings, potential growth, or success; 24 (10) failing to disclose a dual agency capacity; or 25 (11) effecting a transaction on terms and conditions other than those 26 stated by the confirmation. 27 * Sec. 10. AS 45.55.030(c) is repealed and reenacted to read: 28 (c) A person may not transact business in this state as a state investment 29 adviser or an investment adviser representative unless 30 (1) the person is registered as required under this chapter; or 31 (2) the person does not have a place of business in this state and
01 (A) the person's only clients in this state are investment 02 companies as defined in 15 U.S.C. 80a-3 (Investment Company Act of 1940), 03 other state investment advisers, federal covered advisers, broker-dealers, banks, 04 trust companies, savings and loan associations, insurance companies, employee 05 benefit plans with assets of not less than $1,000,000, governmental agencies or 06 instrumentalities whether acting for themselves or as trustees with investment 07 control, or other institutional investors that are designated by regulation or 08 order of the administrator; or 09 (B) during the preceding 12 months, the person has not had 10 more than five clients who are residents of this state other than those specified 11 in (A) of this paragraph; in this subparagraph, the number of the person's 12 clients shall be determined under 17 C.F.R. 275.203(b)(3)-1 and 17 C.F.R. 13 275.222-2, as those regulations exist on or after the effective date of this Act. 14 * Sec. 11. AS 45.55.030(d) is amended to read: 15 (d) A [EVERY] registration or notice filing expires one year from its effective 16 date unless renewed earlier . 17 * Sec. 12. AS 45.55.030 is amended by adding new subsections to read: 18 (e) Except with respect to a federal covered adviser whose only clients are 19 those described in (c)(2) of this section, a federal covered adviser may not conduct an 20 investment advisory business in this state unless the federal covered adviser complies 21 with AS 45.55.040(h). 22 (f) A person may not be registered concurrently as an agent of more than one 23 broker-dealer or issuer. The administrator may waive this restriction if the 24 administrator determines that the waiver would not interfere with effective supervision 25 of the agent by the broker-dealer or issuer and the waiver is in the public interest. 26 (g) A person who is registered or required to be registered as a state 27 investment adviser under this chapter may not employ an investment adviser 28 representative who provides advisory services in or emanating from this state unless 29 the investment adviser representative is registered under this chapter or is exempt from 30 registration, except that the registration of the investment adviser representative is 31 effective only when the representative is employed by a state investment adviser
01 registered under this chapter. 02 (h) A federal covered adviser who has filed notice under this chapter may not 03 employ, supervise, or associate with an investment adviser representative having a 04 place of business located in this state unless the investment adviser representative is 05 registered under this chapter or is exempt from registration, except that the registration 06 of the investment adviser representative is effective only when the representative is 07 employed by a federal covered adviser. 08 (i) If an investment adviser representative terminates employment with a state 09 investment adviser or federal covered adviser, the state investment adviser or federal 10 covered adviser shall promptly notify the administrator. 11 (j) A registered broker-dealer or agent is not considered to be soliciting, 12 offering, or negotiating for the sale of or selling advisory services if the registered 13 broker-dealer or agent refers, as part of a wrap fee, asset allocation, or market-timing 14 program, customers who are residents of this state to a state investment adviser or 15 federal covered adviser that is registered or has made a notice filing in this state. 16 * Sec. 13. AS 45.55 is amended by adding a new section to read: 17 Sec. 45.55.035. Limited registration of Canadian broker-dealers and 18 agents. (a) If a broker-dealer is registered under this section and its principal office 19 is located in a province or territory of Canada that provides at least equivalent 20 registration for a broker-dealer that is resident in the United States, a broker-dealer that 21 is resident in Canada and does not have an office or other physical presence in this 22 state may effect transactions in securities with or for or induce or attempt to induce 23 the purchase or sale of a security by a person from Canada who is 24 (1) temporarily resident in this state and with whom the Canadian 25 broker-dealer had a bona fide broker-dealer-client relationship before the person 26 entered the United States; or 27 (2) resident in this state and whose transactions are in a self-directed 28 tax-advantaged retirement plan in Canada of which the person is the holder or 29 contributor. 30 (b) An agent who represents a Canadian broker-dealer registered under this 31 section may, if the agent is registered under this section, effect transactions in
01 securities in this state as permitted for the broker-dealer under (a) of this section. 02 (c) Subject to the requirements of (a) of this section, a Canadian broker-dealer 03 may register under this section if the broker-dealer 04 (1) files an application in the form required by the jurisdiction in which 05 the broker-dealer has its principal office; 06 (2) files a written consent to service of process under AS 45.55.980(g); 07 (3) is registered as a broker or dealer in good standing in the 08 jurisdiction from which the broker-dealer is effecting transactions into this state and 09 files evidence of the registration; and 10 (4) is a member of a self-regulating organization or stock exchange in 11 Canada. 12 (d) An agent may register under this section in order to effect transactions in 13 securities in this state if the agent represents a Canadian broker-dealer that is registered 14 under this section, and the agent 15 (1) files an application in the form required by the jurisdiction in which 16 the broker-dealer has its principal office; 17 (2) files a written consent to service of process under AS 45.55.980(g); 18 and 19 (3) is registered and files evidence of good standing in the jurisdiction 20 from which the agent is effecting transactions into this state. 21 (e) Registration under this section becomes effective on the 30th day after an 22 application is filed unless it is made effective earlier by the administrator or a denial 23 order is in effect and a proceeding is pending under AS 45.55.060. 24 (f) A Canadian broker-dealer registered under this section shall 25 (1) maintain provincial or territorial registration and membership in 26 good standing in a self-regulating organization or stock exchange; 27 (2) provide the administrator on request with books and records relating 28 to its business in the state as a broker-dealer; 29 (3) inform the administrator promptly of any criminal action taken 30 against the broker-dealer or of any finding or sanction imposed on the broker-dealer 31 as a result of regulatory action, including that of a self-regulating organization,
01 involving fraud, theft, deceit, misrepresentation, or similar conduct; and 02 (4) disclose to its clients in this state that the broker-dealer and its 03 agents are not subject to the full regulatory requirements of this chapter. 04 (g) An agent of a Canadian broker-dealer registered under this section shall 05 (1) maintain provincial or territorial registration in good standing; and 06 (2) inform the administrator promptly of any criminal action taken 07 against the agent or of any finding or sanction imposed on the broker-dealer or agent 08 as a result of regulatory action, including that of a self-regulating organization, 09 involving fraud, theft, deceit, misrepresentation, or similar conduct. 10 (h) Renewal applications for Canadian broker-dealers and agents under this 11 section must be filed before December 1 each year and may be made by filing the 12 most recent renewal application, if any, filed in the jurisdiction in which the broker- 13 dealer has its principal office or, if a renewal application is not required, the most recent 14 application filed under (c)(1) or (d)(1) of this section. 15 (i) An applicant for registration or renewal registration under this section shall 16 pay the fee for broker-dealers and agents required by this chapter. 17 (j) A Canadian broker-dealer or agent registered under this section may not 18 effect transactions in this state except 19 (1) as permitted under (a) or (b) of this section; 20 (2) with or through 21 (A) the issuers of the securities involved in the transactions; 22 (B) other broker-dealers; or 23 (C) banks, savings institutions, trust companies, insurance 24 companies, investment companies as defined in 15 U.S.C. 80a-3 (Investment 25 Company Act of 1940), pension or profit-sharing trusts, or other financial 26 institutions or institutional buyers, whether acting for themselves or as trustees; 27 or 28 (3) as otherwise permitted by this chapter. 29 (k) A Canadian broker-dealer or agent registered under this section and acting 30 in accordance with the limitations in (j) of this section is exempt from all of the 31 requirements of this chapter except the anti-fraud provisions under AS 45.55.010 and
01 the requirements of this section. The registration of a Canadian broker-dealer or agent 02 under this section may not be denied, suspended, or revoked except in accordance with 03 the provisions of AS 45.55.060 for a breach of the anti-fraud provisions under 04 AS 45.55.010 or the requirements of this section. 05 (l) In this section, "Canadian broker-dealer" means a broker-dealer that has its 06 principal office in a province or territory of Canada. 07 * Sec. 14. AS 45.55.040(a) is amended to read: 08 (a) A broker-dealer, agent, [OR] investment adviser representative, or state 09 investment adviser may obtain an initial or renewal registration by filing with the 10 administrator an application together with a consent to service of process under 11 AS 45.55.980(g). The application must [SHALL BE ACCOMPANIED BY THE 12 FINGERPRINTS AND A PHOTOGRAPH OF THE APPLICANT AND MUST] 13 contain whatever information the administrator by regulation may require 14 [REQUIRES] concerning such matters as 15 (1) the applicant's form and place of organization; 16 (2) the applicant's proposed method of doing business; 17 (3) the qualifications and business history of the applicant; in the case 18 of a broker-dealer or state investment adviser, the qualifications and business history 19 of a partner, officer, or director, any [A] person occupying a similar status or 20 performing similar functions, or any [A] person directly or indirectly controlling the 21 broker-dealer or state investment adviser; [AND, IN THE CASE OF AN 22 INVESTMENT ADVISER, THE QUALIFICATIONS AND BUSINESS HISTORY OF 23 AN EMPLOYEE;] 24 (4) an injunction or administrative order or conviction of a 25 misdemeanor involving a security or any aspect of the securities business and any 26 conviction of a felony; [AND] 27 (5) the applicant's financial condition and history ; and 28 (6) if the applicant is a state investment adviser, any information 29 to be furnished or disseminated to a client or prospective client . 30 * Sec. 15. AS 45.55.040(b) is amended to read: 31 (b) The administrator may by regulation or order require an applicant for initial
01 registration to publish an announcement of the application in one or more specified 02 newspapers published in this state. [IF NO DENIAL ORDER IS IN EFFECT AND 03 NO PROCEEDING IS PENDING UNDER AS 45.55.060, REGISTRATION 04 BECOMES EFFECTIVE AT NOON ON THE 30TH DAY AFTER AN 05 APPLICATION IS FILED. THE ADMINISTRATOR MAY BY REGULATION OR 06 ORDER SPECIFY AN EARLIER EFFECTIVE DATE, AND THE 07 ADMINISTRATOR MAY BY ORDER DEFER THE EFFECTIVE DATE UNTIL 08 NOON OF THE 30TH DAY AFTER THE FILING OF AN AMENDMENT.] 09 * Sec. 16. AS 45.55.040(c) is repealed and reenacted to read: 10 (c) A broker-dealer, an agent, an investment adviser representative, and a state 11 investment adviser applicant for initial or renewal registration shall pay a registration 12 fee established by the department by regulation. A person acting as a federal covered 13 adviser in this state shall pay a fee for an initial and renewal notice filing under (h) 14 of this section as required by the administrator by regulation. 15 * Sec. 17. AS 45.55.040(d) is repealed and reenacted to read: 16 (d) A registered broker-dealer, state investment adviser, or a federal covered 17 adviser who has filed notice under this chapter may file an application for registration 18 or notice filing, as applicable, of a successor for the unexpired portion of the year 19 regardless of whether the successor is then in existence. A broker-dealer may file a 20 request to transfer from a previous broker-dealer an agent's unexpired portion of the 21 registration if the provisions of AS 45.55.030(b) have been met. A state investment 22 adviser may file an application to transfer from a predecessor state investment adviser 23 or federal covered adviser the investment adviser representative's unexpired portion 24 of the registration. The department shall establish by regulation the filing fee for filing 25 applications under this subsection. 26 * Sec. 18. AS 45.55.040(e) is repealed and reenacted to read: 27 (e) The administrator may by regulation or order require a minimum level of 28 capitalization for registered broker-dealers, subject to the limitations of 15 U.S.C. 78o 29 (Securities Exchange Act of 1934), and establish minimum financial requirements for 30 state investment advisers, subject to the limitations of 15 U.S.C. 80b-18a (Investment 31 Advisers Act of 1940). The financial requirements may differ for those state
01 investment advisers who have discretionary authority over or maintain custody of 02 clients' funds or securities and those who do not. 03 * Sec. 19. AS 45.55.040(f) is repealed and reenacted to read: 04 (f) The administrator may by regulation or order require registered broker- 05 dealers and agents to post a bond in an amount the administrator may prescribe subject to the 06 limitations provided in 15 U.S.C. 78o (Securities Exchange Act of 1934). The administrator 07 may determine the conditions of the bond. The administrator shall accept any appropriate 08 deposit of cash or securities from a registered broker-dealer or agent in place of a required 09 bond. A bond may not be required of a registrant whose net capital exceeds the amounts 10 required by the administrator. A bond must provide for suit on it by a person who has a 11 cause of action under AS 45.55.930 and, if required by the administrator by regulation, by a 12 person who has a cause of action not arising under this chapter. A bond must provide that 13 a suit may not be maintained to enforce a liability on the bond unless brought within three 14 years after the sale or other act on which it is based. 15 * Sec. 20. AS 45.55.040(g) is amended to read: 16 (g) The administrator may permit initial and renewal registration and notice 17 filings required for state investment advisers, federal covered advisers, investment 18 adviser representatives, broker-dealers, and agents under this chapter to be filed 19 with the United States Securities and Exchange Commission, the National Association 20 of Securities Dealers , or other similar authority [AUTHORITIES]. The administrator 21 may accept uniform securities examinations or other procedures designed to implement 22 a uniform national securities regulatory system or facilitate common practices and 23 procedures among the states , including participation in joint, coordinated securities 24 examinations with other states . 25 * Sec. 21. AS 45.55.040 is amended by adding new subsections to read: 26 (h) Except with respect to federal covered advisers whose only clients are 27 those described in AS 45.55.030(c)(2), before acting as a federal covered adviser in 28 this state, a federal covered adviser shall file with the administrator those documents 29 that have been filed with the United States Securities and Exchange Commission as 30 the administrator, by regulation, by order, or otherwise, may require. 31 (i) The administrator shall by regulation or order specify procedures, fees, and
01 an effective date for registrations, notice filings under this section, transfers of agents, 02 and other registrations or notice filings allowed or required under this chapter. 03 (j) The administrator may by regulation or order require registered state 04 investment advisers who have custody of or discretionary authority over clients' funds 05 or securities to post a bond in an amount the administrator may establish subject to the 06 limitations provided in 15 U.S.C. 80b-18a (Investment Advisers Act of 1940). The 07 administrator may determine the conditions of the bond. The administrator shall 08 accept any appropriate deposit of cash or securities in place of a required bond. A 09 bond may not be required of a registered state investment adviser whose minimum 10 financial condition, which may be defined by regulation, or net capital exceeds the 11 amounts required by the administrator. A bond must provide for suit on it by a person 12 who has a cause of action under AS 45.55.930 and, if required by the administrator 13 by regulation, by a person who has a cause of action not arising under this chapter. 14 A bond must provide that a suit may not be maintained to enforce a liability on the 15 bond unless brought within three years after the sale or other act on which it is based. 16 * Sec. 22. AS 45.55.050(a) is amended to read: 17 (a) Except as provided under 15 U.S.C. 78o (Securities Exchange Act of 18 1934), a [EVERY] registered broker-dealer [AND INVESTMENT ADVISER] shall 19 make and keep the accounts, correspondence, memoranda, papers, books, and other 20 records that the administrator requires [PRESCRIBES] by regulation or order . All 21 required records [SO REQUIRED] shall be preserved for three years unless the 22 administrator by regulation prescribes otherwise [FOR PARTICULAR TYPES OF 23 RECORDS]. 24 * Sec. 23. AS 45.55.050(b) is repealed and reenacted to read: 25 (b) Subject to 15 U.S.C. 78o (Securities Exchange Act of 1934), a registered 26 broker-dealer shall file the financial reports the administrator requires. 27 * Sec. 24. AS 45.55.050(c) is amended to read: 28 (c) If the information contained in a document filed with the administrator is 29 or becomes inaccurate or incomplete in a material respect, the federal covered 30 adviser, state investment adviser, broker-dealer, agent, or investment adviser 31 representative who made the filing [REGISTRANT] shall promptly file a correcting
01 amendment unless notification of the correction is given under AS 45.55.030(b). If 02 the document is filed with respect to a federal covered adviser, the amendment 03 shall be filed when it is required to be filed with the United States Securities and 04 Exchange Commission unless notification of the correction is given under 05 AS 45.55.030(b). 06 * Sec. 25. AS 45.55.050(d) is amended to read: 07 (d) All the records referred to in [(a) OF] this section are subject at any time 08 to reasonable periodic, special, or other examinations by representatives of the 09 administrator, inside or outside this state, as the administrator considers necessary or 10 appropriate in the public interest or for the protection of investors. For the purpose 11 of avoiding unnecessary duplication of examinations, the administrator, insofar as the 12 administrator considers it practicable in administering this subsection, may cooperate 13 with the securities administrators of other states, the United States Securities and 14 Exchange Commission, and any national securities exchange or national securities 15 association registered under 15 U.S.C. 78a - 78lll ( [THE] Securities Exchange Act of 16 1934 ) . 17 * Sec. 26. AS 45.55.050 is amended by adding new subsections to read: 18 (e) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), an 19 investment adviser representative or state investment adviser shall make and keep the 20 accounts, correspondence, memoranda, papers, books, and other records that the 21 administrator requires by regulation or order. All required records shall be preserved 22 for three years unless the administrator by regulation prescribes otherwise. 23 (f) The administrator may by regulation or order require that certain 24 information be furnished or disseminated by persons registered or required to be 25 registered as state investment advisers as necessary or appropriate in the public interest 26 or for the protection of investors and advisory clients. The administrator may 27 determine that certain information may be used in whole or partial satisfaction of this 28 requirement if the information complies with 15 U.S.C. 80b-1 - 80b-21 (Investment 29 Advisers Act of 1940) and the rules adopted under that act. 30 (g) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), a state 31 investment adviser shall file the financial reports the administrator requires by
01 regulation or order. 02 (h) A state investment adviser that has its principal place of business in a state 03 other than this state and the investment adviser representatives of that state investment 04 adviser are exempt from the requirements of (e) of this section if the state investment 05 adviser is registered as an investment adviser in the state where the state investment 06 adviser has its principal place of business and is in compliance with that state's 07 requirements relating to accounts and records. 08 (i) A broker-dealer and an agent of a broker-dealer shall file with the 09 administrator only the financial reports or other information required to be filed with 10 the United States Securities and Exchange Commission under 15 U.S.C. 78a - 78lll 11 (Securities Exchange Act of 1934). 12 (j) A state investment adviser that has its principal place of business in a state 13 other than this state and the investment adviser representatives of that state investment 14 adviser shall file with the administrator only the financial reports or other information 15 required by the state in which the state investment adviser maintains its principal place 16 of business if the state investment adviser is licensed in that state and is in compliance 17 with that state's reporting requirements. 18 (k) A broker-dealer shall comply with the supervision requirements set out in 19 Conduct Rule 3010 of the National Association of Securities Dealers, Inc. 20 * Sec. 27. AS 45.55.060(a) is amended to read: 21 (a) The administrator may by order deny, suspend, or revoke a registration if 22 the administrator finds that the order is in the public interest and that the applicant or 23 registrant or, in the case of a broker-dealer or state investment adviser, a partner, 24 officer, or director, a person occupying a similar status or performing similar functions, 25 or a person directly or indirectly controlling the broker-dealer or state investment 26 adviser 27 (1) has filed an application for registration that, as of its effective date, 28 or as of a date after filing in the case of an order denying effectiveness, was 29 incomplete in a material respect or contained a statement that was, in light of the 30 circumstances under which it was made, false or misleading with respect to a material 31 fact;
01 (2) has wilfully or repeatedly violated , or [WILFULLY] failed to 02 comply with , a provision of this chapter or a regulation or order under this chapter; 03 (3) has been convicted, within the past 10 years, of a misdemeanor 04 involving a security or an aspect of the securities business [,] or a felony; in this 05 paragraph, "convicted" includes a finding of guilt based on a verdict, judgment, 06 plea of guilty, or plea of nolo contendere, if the verdict, judgment, or plea has not 07 been reversed, set aside, or withdrawn, regardless of whether sentence has been 08 imposed; 09 (4) is permanently or temporarily enjoined by a court from engaging 10 in or continuing [A] conduct or a practice involving an aspect of the securities 11 business; 12 (5) is the subject of an order of the administrator denying, suspending, 13 or revoking registration as a broker-dealer, agent, state [OR] investment adviser , or 14 investment adviser representative ; 15 (6) is the subject of an order entered within the past five years by the 16 securities administrator of another state or by the United States Securities and 17 Exchange Commission denying or revoking registration as a broker-dealer, agent , state 18 [OR] investment adviser, investment adviser representative, or the substantial 19 equivalent of those terms as defined in this chapter, or is the subject of an order of the 20 United States Securities and Exchange Commission suspending or expelling the 21 person from a national securities exchange or national securities association registered 22 under 15 U.S.C. 78a - 78lll ( [THE] Securities Exchange Act of 1934 ) , or is the 23 subject of a United States Postal Service [POST OFFICE] fraud order; but the 24 administrator may not 25 (A) institute a revocation or suspension proceeding under this 26 paragraph more than one year from the date of the order relied on; and 27 (B) enter an order under this paragraph on the basis of an order 28 under another state act unless that order was based on facts that [WHICH] 29 would currently constitute a ground for an order under this section; 30 (7) has engaged in dishonest or unethical practices or conduct in the 31 securities or investment advisory business;
01 (8) is insolvent, [EITHER] in the sense that liabilities exceed assets , 02 [OR IN THE SENSE] that [THE PERSON CANNOT MEET] obligations cannot be 03 met as they mature , or that the business cannot be continued safely for the 04 customers of the applicant or registrant, [;] but the administrator may not enter an 05 order against a broker-dealer or state investment adviser under this paragraph 06 [CLAUSE] without a finding of insolvency as to the broker-dealer or state investment 07 adviser; [OR] 08 (9) is not qualified on the basis of such factors as training, experience, 09 and knowledge of the securities business, except as otherwise provided in (d) of this 10 section ; 11 (10) has failed to comply with the requirements of AS 45.55.050 to 12 make, keep, or produce records required by the administrator, or to file financial 13 reports or other information the administrator by regulation or order may 14 require; or 15 (11) is a person whose license renewal is denied under AS 14.43.148 16 or whose license issuance or renewal is denied under AS 25.27.244 . 17 * Sec. 28. AS 45.55.060(b) is amended to read: 18 (b) The administrator may by order deny, suspend, or revoke any registration 19 if the administrator finds that the order is in the public interest and that the applicant 20 or registrant 21 (1) has failed reasonably to supervise agents if the applicant or 22 registrant is a broker-dealer , or has failed reasonably to supervise employees and 23 investment adviser representatives if the applicant or registrant is a state [AN] 24 investment adviser; or 25 (2) has failed to pay the proper filing fee; but the administrator may 26 enter only a denial order under this paragraph [CLAUSE], and the administrator shall 27 vacate the order when the deficiency is corrected. 28 * Sec. 29. AS 45.55.060(d) is amended to read: 29 (d) The following provisions govern the application of (a)(9) of this section: 30 (1) the administrator may not enter an order against a broker-dealer on 31 the basis of the lack of qualification of a person other than
01 (A) the broker-dealer if the broker-dealer is an individual; or 02 (B) an agent of the broker-dealer; 03 (2) the administrator may not enter an order against a state [AN] 04 investment adviser on the basis of the lack of qualification of a [ANY] person other 05 than 06 (A) the state investment adviser if the state investment adviser 07 is an individual; or 08 (B) an investment adviser representative [ANOTHER 09 PERSON] who represents the state investment adviser in doing any of the acts 10 that [WHICH] make the state investment adviser a state [AN] investment 11 adviser; 12 (3) the administrator may not enter an order solely on the basis of lack 13 of experience if the applicant or registrant is qualified by training or knowledge or 14 both; 15 (4) the administrator shall consider that an agent who will work under 16 the supervision of a registered broker-dealer need not have the same qualifications as 17 a broker-dealer; 18 (5) the administrator shall consider that a state [AN] investment adviser 19 is not necessarily qualified solely on the basis of experience as a broker-dealer or 20 agent; if [WHEN] the administrator finds that an applicant for initial or renewal 21 registration as a broker-dealer is not qualified as a state [AN] investment adviser, the 22 administrator may by order condition the applicant's registration as a broker-dealer 23 upon the applicant's not transacting business in this state as a state [AN] investment 24 adviser; 25 (6) the administrator may by regulation provide for an examination, 26 which may be written or oral or both, to be taken by any class of or all applicants, 27 including applicants for registration as investment adviser representatives; 28 however, [AS WELL AS PERSONS WHO REPRESENT OR WILL REPRESENT 29 AN INVESTMENT ADVISER IN DOING ANY OF THE ACTS WHICH MAKE 30 THE INVESTMENT ADVISER AN INVESTMENT ADVISER, PROVIDED THAT] 31 examinations required by this paragraph are not required of a registrant under this
01 chapter who was doing business in this state and was a resident of this state on May 9, 02 1959. 03 * Sec. 30. AS 45.55.060(f) is amended to read: 04 (f) If the administrator finds that a registrant or applicant for registration no 05 longer exists or has ceased to do business as a broker-dealer, agent , state investment 06 adviser , or investment adviser representative , or is subject to an adjudication of 07 mental incompetence or to the control of a committee, conservator, or guardian, or 08 cannot be located after reasonable search, the administrator may by order cancel the 09 registration or application. 10 * Sec. 31. AS 45.55.060(g) is amended to read: 11 (g) Withdrawal from registration as a broker-dealer, agent, state investment 12 adviser, or investment adviser representative becomes effective 30 days after receipt 13 of an application to withdraw or within a shorter period of time as the administrator 14 may determine, unless a revocation or suspension proceeding is pending when the 15 application is filed or a proceeding to revoke or suspend or to impose conditions upon 16 the withdrawal is instituted within 30 days after the application is filed. If a proceeding 17 is pending or instituted, withdrawal becomes effective at the time and upon the 18 conditions as the administrator by order determines. If a [NO] proceeding is not 19 pending or instituted and withdrawal automatically becomes effective, the administrator 20 may nevertheless institute a revocation or suspension proceeding under (a)(2) of this 21 section within one year after withdrawal is effective and enter a revocation or 22 suspension order as of the last date on which registration was effective. 23 * Sec. 32. AS 45.55.070 is amended to read: 24 Sec. 45.55.070. Registration requirement. A person may not offer or sell a 25 security in this state unless 26 (1) it is registered under this chapter; [OR] 27 (2) the security or transaction is exempted under AS 45.55.900 ; or 28 (3) it is a federal covered security . 29 * Sec. 33. AS 45.55 is amended by adding a new section to read: 30 Sec. 45.55.075. Federal covered securities. (a) Unless otherwise exempt 31 under AS 45.55.900, a security that is a federal covered security under 15 U.S.C.
01 77r(b)(2), (Securities Act of 1933), may only be offered for sale and sold into, from, 02 or within the state upon the administrator's receipt of 03 (1) a copy of the registration statement filed by the issuer with the 04 United States Securities and Exchange Commission or, in place of the registration 05 statement, the Uniform Investment Company Notice Filing Form adopted by North 06 American Securities Administrators Association, Inc., or a similar notice filing form; 07 (2) a consent to service of process signed by the issuer; and 08 (3) a notice filing fee as prescribed by the administrator for a notice 09 filing under this section and, if necessary to compute the fee, a report of the value of 10 the federal covered securities offered or sold in this state. 11 (b) A notice filing under this section may be renewed by filing, before the 12 expiration of an effective notice filing, a renewal notice and filing fee as prescribed 13 by the administrator and, if necessary to compute the fee, a report of the value of the 14 federal covered securities offered or sold in this state. A renewal notice filing is 15 effective on the expiration date of the previous notice filing. 16 (c) A notice filing under this section may be amended as provided by the 17 administrator by regulation or order. A notice filing may be terminated by an issuer 18 upon providing the administrator with notice of the termination. 19 (d) With respect to a security that is a covered security under 15 U.S.C. 20 77r(b)(4)(D) (Securities Act of 1933), the administrator, by regulation or order, may 21 require the issuer to file a notice on United States Securities and Exchange 22 Commission's Form D and a consent to service of process signed by the issuer no later 23 than 15 days after the first sale of a covered security in this state and a fee established 24 by the administrator for a notice filing under this section. 25 (e) The administrator, by regulation or order, may require the filing of any 26 document filed with the United States Securities and Exchange Commission under 15 27 U.S.C. 77a - 77bbbb (Securities Act of 1933), with respect to a covered security under 28 15 U.S.C. 77r(b)(3) or (4) (Securities Act of 1933). 29 (f) The administrator may issue a stop order suspending the offer and sale of 30 a federal covered security, except a federal covered security under 15 U.S.C. 77r(b)(1) 31 (Securities Act of 1933), if the administrator finds that
01 (1) the stop order is in the public interest; and 02 (2) there is a failure to comply with a condition established under this 03 section. 04 (g) The administrator, by regulation or order, may waive any or all of the 05 provisions of this section. 06 * Sec. 34. AS 45.55.080(a) is amended to read: 07 (a) The following securities may be registered by notification, whether or not 08 they are also eligible for registration by coordination under AS 45.55.090: 09 (1) a security whose issuer and predecessors have been in continuous 10 operation for at least five years if 11 (A) there has been no default during the current fiscal year or 12 within the three preceding fiscal years in the payment of principal, interest, or 13 dividends on a security of the issuer, or any predecessor, with a fixed maturity 14 or a fixed interest or dividend provision; and 15 (B) the issuer and predecessor during the past three fiscal years 16 have had average net earnings, determined in accordance with generally 17 accepted accounting practices 18 (i) that are applicable to all securities without a fixed 19 maturity or a fixed interest or dividend provision outstanding at the date 20 the registration statement is filed and equal at least five percent of the 21 amount of these outstanding securities as measured by the maximum 22 offering price or the market price on a day, selected by the registrant, 23 within 30 days before the date of filing the registration statement, 24 whichever is higher, or book value on a day, selected by the registrant, 25 within 90 days of the date of filing the registration statement to the 26 extent that there is neither a readily determinable market price nor a 27 cash offering price; 28 (ii) that, if the issuer and predecessors have not had any 29 security of the type specified in (i) of this subparagraph outstanding for 30 three full fiscal years, equal at least five percent of the amount, as 31 measured in (i) of this subparagraph, of all securities that will be
01 outstanding if all the securities being offered or proposed to be offered, 02 whether or not they are proposed to be registered or offered in this 03 state, are issued; 04 (2) a security, other than a certificate of interest or participation in an 05 oil, gas, or mining title or lease or in payments out of production under the title or 06 lease, registered for nonissuer distribution if 07 (A) any security of the same class has ever been registered 08 under this chapter; or 09 (B) the security being registered was originally issued under an 10 exemption under this chapter ; 11 (3) a security that represents a fractional or pooled interest in a 12 viatical settlement contract . 13 * Sec. 35. AS 45.55.090(b) is amended to read: 14 (b) A registration statement under this section must contain the following 15 information and be accompanied by the following documents in addition to the 16 information specified in AS 45.55.110(c) and the consent to service of process required 17 by AS 45.55.980(g): 18 (1) one copy of the latest form of prospectus filed under 15 U.S.C. 77a 19 - 77bbbb ( [THE] Securities Act of 1933 ) ; 20 (2) if the administrator requires, copies of the articles of incorporation 21 and bylaws, or their substantial equivalent, currently in effect; a copy of an agreement 22 with or among underwriters; a copy of an indenture or other instrument governing the 23 issuance of the security to be registered; and a specimen or copy of the security; 24 (3) if the administrator requests, any other information, or copies of any 25 other documents, filed under 15 U.S.C. 77a - 77bbbb ( [THE] Securities Act of 1933 ) ; 26 and 27 (4) an undertaking to forward all future amendments to the federal 28 prospectus, other than an amendment which merely delays the effective date of the 29 registration statement, promptly and in any event not later than the first business day 30 after the day they are forwarded to or filed with the United States Securities and 31 Exchange Commission, whichever first occurs.
01 * Sec. 36. AS 45.55.110(a) is amended to read: 02 (a) A registration statement or a notice filing under AS 45.55.075 may be 03 filed by the issuer, another person on whose behalf the offering is to be made, or a 04 registered broker-dealer. 05 * Sec. 37. AS 45.55.110(b) is amended to read: 06 (b) A [EVERY] person filing a registration statement or a notice filing under 07 AS 45.55.075 shall pay a filing fee and a registration or notice filing fee in amounts 08 established by the department by regulation. If [WHEN] a registration statement is 09 withdrawn before the effective date or a pre-effective stop order is entered under 10 AS 45.55.120, the administrator shall retain the filing fee. If a notice filing is 11 withdrawn before the effective date, the administrator shall retain the notice filing 12 fee. 13 * Sec. 38. AS 45.55.110(c) is amended to read: 14 (c) A [EVERY] registration statement must specify 15 (1) the amount of securities to be offered in this state; 16 (2) the states in which a registration statement or similar document in 17 connection with the offering has been or is to be filed; and 18 (3) an adverse order, judgment, or decree entered in connection with 19 the offering by the regulatory authorities in each state or by any court or the United 20 States Securities and Exchange Commission. 21 * Sec. 39. AS 45.55.110(d) is amended to read: 22 (d) A document filed under this chapter within five years preceding the filing 23 of a registration statement or a notice filing under AS 45.55.075 may be incorporated 24 by reference in the registration statement or notice filing to the extent that the 25 document is currently accurate. 26 * Sec. 40. AS 45.55.110(e) is amended to read: 27 (e) The administrator may by regulation or order [OTHERWISE] permit the 28 omission of an item of information or document from a registration statement or a 29 notice filing under AS 45.55.075 . 30 * Sec. 41. AS 45.55.110(i) is amended to read: 31 (i) A notice filing under AS 45.55.075 is effective on receipt by the
01 administrator. A [EVERY] registration statement or a notice filing under 02 AS 45.55.075 is effective for one year from its effective date [,] or any longer period 03 during which the security is being offered or distributed in a nonexempted transaction 04 by or for the account of the issuer or other person on whose behalf the offering is 05 being made or by an underwriter or broker-dealer who is still offering part of an 06 unsold allotment or subscription taken by the underwriter or broker-dealer as a 07 participant in the distribution, except during the time a stop order is in effect under 08 AS 45.55.120. The administrator may establish a different expiration date for 09 purposes of coordination with a national registration or notice filing system. The 10 administrator may by regulation provide for an automatic extension for one 11 additional year of the effective date for notice filings under AS 45.55.075 if the 12 extended expiration date is set at the same time the notice filing is made effective 13 and the notice filing fee reflects the extension. All outstanding securities of the 14 same class as a registered security are considered to be registered for the purpose of 15 any nonissuer transaction if the registration statement is effective and between the 16 thirtieth day after the entry of a stop order suspending or revoking the effectiveness 17 of the registration statement under AS 45.55.120, if the registration statement did not 18 relate in whole or in part to a nonissuer distribution, and one year from the effective 19 date of the registration statement. A registration statement may not be [WITH] 20 withdrawn for one year from its effective date if any securities of the same class are 21 outstanding. A registration statement may be withdrawn otherwise only in the 22 discretion of the administrator. 23 * Sec. 42. AS 45.55.110(k) is amended to read: 24 (k) A notice filing under AS 45.55.075 [REGISTRATION STATEMENT] 25 relating to a security issued by a face-amount certificate company or a redeemable 26 security issued by an open-end management company or unit investment trust, as those 27 terms are defined in 15 U.S.C. 80a-1 - 80a-64 ( [THE] Investment Company Act of 28 1940 ) , may be amended after its effective date so as to increase the securities specified 29 as proposed to be offered if the notice filing was for a specified dollar amount of 30 securities to be offered in this state and if the total fees were based on the dollar 31 amount of securities to be offered . An amendment becomes effective when the
01 administrator so orders. A [EVERY] person filing [SUCH] an amendment shall pay 02 a [FILING] fee, calculated in the manner specified in (b) of this section, with respect 03 to the additional securities proposed to be offered. 04 * Sec. 43. AS 45.55.150 is amended to read: 05 Sec. 45.55.150. Sales [FILING OF SALES] and advertising literature. The 06 administrator may by regulation or order establish requirements for or require the 07 filing of a prospectus, a pamphlet, a circular, a form letter, an advertisement, or other 08 sales literature [,] or advertising communication addressed or intended for distribution 09 to prospective investors, [INCLUDING] clients , or prospective clients by an issuer, 10 a state investment adviser, a federal covered adviser, or a broker-dealer, unless 11 (1) the security or transaction is exempt under AS 45.55.900 and 12 the applicable provision of that section does not place a limitation on sales and 13 advertising literature; 14 (2) the security is a federal covered security; or 15 (3) the broker-dealer, state investment adviser, or federal covered 16 adviser is exempt or excluded from the requirements of this section under this 17 chapter or federal law [OF AN INVESTMENT ADVISER]. 18 * Sec. 44. AS 45.55.170(a) is amended to read: 19 (a) Neither the fact that an application for registration under AS 45.55.030 - 20 45.55.060 , [OR] a registration statement under AS 45.55.070 - 45.55.120 , or a notice 21 filing under AS 45.55.040(h) or 45.55.075 is filed nor the fact that a person or 22 security is effectively registered constitutes a finding by the administrator that a 23 document filed under this chapter is true, complete, and not misleading. Neither the 24 fact of filing nor the fact that an exemption or exception is available for a security or 25 a transaction means that the administrator has passed in any way upon the merits or 26 qualifications of, or recommended or given approval to, a person, security, or 27 transaction. 28 * Sec. 45. AS 45.55.900(a) is amended to read: 29 (a) The following securities are exempted from AS 45.55.070 and 45.55.075 : 30 (1) a security, including a revenue obligation, issued or guaranteed by 31 the United States or a territory of the United States, the District of Columbia , a
01 state, a political subdivision of a state or territory , or an agency or corporate or other 02 instrumentality of one or more of the entities described in this paragraph 03 [FOREGOING]; or a certificate of deposit for one or more of the entities described 04 in this paragraph [ANY OF THE FOREGOING]; 05 (2) a security issued or guaranteed by Canada, a Canadian province, a 06 political subdivision of a Canadian province, an agency or corporate or other 07 instrumentality of one or more of the entities described in this paragraph 08 [FOREGOING], or a foreign government with which the United States currently 09 maintains diplomatic relations, if the security is recognized as a valid obligation by the 10 issuer or guarantor; 11 (3) a security issued [BY AND REPRESENTING AN INTEREST IN] 12 or [A DEBT OF, OR] guaranteed by [,] a bank organized under the laws of the United 13 States, or by a bank, savings institution, savings and loan association, building and 14 loan association, or trust company organized and supervised under the laws of a state 15 or of the United States , or a security issued by or representing an interest in or a 16 direct obligation of a federal reserve bank ; 17 (4) a commercial paper , note, draft, bill of exchange, or banker's 18 acceptance that arises out of a current transaction or the proceeds of which have been 19 or are to be used for current transactions [,] and that evidences an obligation to pay 20 cash within nine months of the date of issuance, exclusive of days of grace, or a 21 [ANY] renewal of the paper that is likewise limited, or a guarantee of the paper or of 22 the renewal, if the commercial paper , note, draft, bill of exchange, or banker's 23 acceptance is of the type eligible for discount by a federal reserve bank; 24 (5) a security issued in connection with an employee's stock purchase, 25 savings, pension, profit-sharing, or similar employee's benefit plan , or a security 26 issued by or an interest or participation in a church plan, company, or account 27 that is excluded from the definition of an investment company under 15 U.S.C. 28 80a-3(c)(14) (Investment Company Act of 1940) ; 29 (6) a security issued by and representing an interest in or a debt of, or 30 guaranteed by, a federal savings and loan association, or a building and loan or similar 31 association organized under the laws of a state and authorized to do business in this
01 state; 02 (7) a security issued by and representing an interest in or a debt of, or 03 guaranteed by, an insurance company organized under the laws of a state and 04 authorized to do business in this state; but this exemption does not apply to an annuity 05 contract, investment contract, or similar security under which the promised payments 06 are not fixed in dollars but are substantially dependent upon the investment results of 07 a segregated fund or account invested in securities; except that policies or annuity 08 contracts of insurance companies admitted to do business in the state are not subject 09 to this chapter; 10 (8) a security issued or guaranteed by a federal credit union or any 11 credit union, industrial loan association, or similar association organized and supervised 12 under the laws of this state; 13 (9) a security issued or guaranteed by a railroad, other common carrier, 14 public utility, or holding company that is 15 (A) subject to the jurisdiction of the Interstate Commerce 16 Commission or its successor ; 17 (B) a registered holding company under 15 U.S.C. 79 - 79z-6 18 ( [THE] Public Utility Holding Company Act of 1935 ) or a subsidiary of the 19 company within the meaning of 15 U.S.C. 79 - 79z-6 [THAT ACT]; 20 (C) regulated in respect of its rates and charges by a 21 governmental authority of the United States or a state; or 22 (D) regulated in respect of the issuance or guarantee of the 23 security by a governmental authority of the United States, a state, Canada, or 24 a Canadian province; 25 (10) a security listed or approved for listing upon notice of issuance on 26 the New York Stock Exchange, the American Stock Exchange, the Chicago 27 [MIDWEST] Stock Exchange, the Pacific Coast Stock Exchange, the Philadelphia 28 Stock Exchange, the Chicago Board of Options Exchange, or another [ANY OTHER] 29 securities exchange designated by order of the administrator, or any security designated 30 or approved for designation upon notice of issuance as a national market system 31 security on the National Association of Securities Dealers Automated Quotation
01 National Market System or on any other quotation system designated by order of the 02 administrator, or any other security of the same issuer that is of senior or substantially 03 equal rank; a security called for by subscription rights or warrants so listed or 04 approved; or a warrant or right to purchase or subscribe to an entity described in this 05 paragraph [ANY OF THE FOREGOING]; 06 (11) a security issued by a person organized and operated not for 07 pecuniary [PRIVATE] profit but exclusively for religious, educational, benevolent, 08 charitable, fraternal, social, athletic, or reformatory purposes [,] or as a chamber of 09 commerce or trade or professional association , or a security of a fund that is 10 excluded from the definition of an investment company under 15 U.S.C. 80a- 11 3(c)(10)(B) (Investment Company Act of 1940) ; 12 (12) shares of membership stock in the Alaska Commercial Fishing and 13 Agriculture Bank, and other securities issued by that bank to members or in connection 14 with loans to members ; 15 (13) an equity security issued in connection with the acquisition by 16 a holding company of a bank under 12 U.S.C. 1842(a) (Bank Holding Company 17 Act of 1956) or a savings association, as defined in 12 U.S.C. 1813(b) (Federal 18 Deposit Insurance Act) and the deposits of which are insured by the Federal 19 Deposit Insurance Corporation under 12 U.S.C. 1467(e) (Home Owners' Loan 20 Act) if 21 (A) the acquisition occurs solely as part of a reorganization 22 in which security holders exchange their shares of a bank or savings 23 association for shares of a newly formed holding company with no 24 significant assets other than securities of the bank or savings association 25 and the existing subsidiaries of the bank or savings association; 26 (B) the security holders receive after the reorganization 27 substantially the same proportional interests in the holding company as 28 they held in the bank or savings association except for nominal changes in 29 shareholders' interests resulting from lawful elimination of fractional 30 interests and the exercise of dissenting shareholders' rights under state or 31 federal law;
01 (C) the rights and interests of security holders in the holding 02 company are substantially the same as those in the bank or savings 03 association before the transaction except as may be required by law; and 04 (D) the holding company has substantially the same assets 05 and liabilities on a consolidated basis as the bank or savings association 06 before the transaction . 07 * Sec. 46. AS 45.55.900(b) is amended to read: 08 (b) The following transactions are exempted from AS 45.55.070 and 09 45.55.075 : 10 (1) a transaction between the issuer or other person on whose behalf 11 the offering is made and an underwriter, or among underwriters; 12 (2) a transaction in a bond or other evidence of indebtedness secured 13 by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real 14 estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all 15 the bonds or other evidence of indebtedness, secured under those documents 16 [THEREBY], is offered and sold as a unit; 17 (3) a transaction by an executor, administrator, sheriff, marshal, 18 receiver, trustee in bankruptcy, guardian, or conservator; 19 (4) an offer or sale to a bank, savings institution, trust company, 20 insurance company, investment company as defined in 15 U.S.C. 80a-1 - 80a-64 ( 21 [THE] Investment Company Act of 1940 ) , pension or profit-sharing trust, or other 22 financial institution or institutional buyer, or to a broker-dealer, whether the purchaser 23 is acting for itself or in some fiduciary capacity; 24 (5) sales by an issuer 25 (A) to no more than 10 persons in this state other than those 26 designated in (4) of this subsection during a period of 12 consecutive months , 27 regardless of whether [OR NOT] the seller or any of the buyers is then present 28 in this state, if 29 (i) a [NO] commission or other remuneration is not paid 30 or given directly or indirectly for soliciting a prospective buyer in this 31 state;
01 (ii) [THE TOTAL DOLLAR AMOUNT INVESTED 02 DURING A PERIOD OF 12 CONSECUTIVE MONTHS DOES NOT 03 EXCEED $100,000; 04 (iii)] a legend is placed on the certificate or other 05 document evidencing ownership of the security, stating that the security 06 is not registered under this chapter and cannot be resold without 07 registration under this chapter or exemption from it; 08 (iii) [(iv)] offers are made without public solicitation or 09 advertisement; and 10 (iv) [(v)] the issuer files with the administrator a notice 11 specifying the issuer, the security to be sold , and the terms of the offer 12 at least two days before any sales are made; 13 (B) to no more than 25 persons in this state other than those 14 designated in (4) of this subsection during a period of 12 consecutive months , 15 regardless of whether [OR NOT] the seller or any of the buyers is then present 16 in this state, if 17 (i) the sales are made solely in this state; 18 (ii) before a [ANY] sale, each prospective buyer is 19 furnished [ACCESS TO THE] information that is sufficient to make 20 an informed investment decision [WOULD BE PROVIDED TO A 21 PROSPECTIVE BUYER IN A REGISTRATION UNDER 22 AS 45.55.100], which information shall be furnished to the 23 administrator upon request; in this sub-subparagraph, "information 24 that is sufficient to make an informed investment decision" includes 25 a business plan, an income and expense statement, a balance sheet, 26 a statement of risks, and a disclosure of any significant negative 27 factors that may affect the outcome of the investment; 28 (iii) [THE TOTAL DOLLAR AMOUNT INVESTED 29 DURING A PERIOD OF 12 CONSECUTIVE MONTHS DOES NOT 30 EXCEED $500,000; 31 (iv)] commissions or other remuneration meet the
01 requirements of this chapter and are made only to persons registered 02 under AS 45.55.040; 03 (iv) [(v)] a legend is placed on the certificate or other 04 document evidencing ownership of the security, stating that the security 05 is not registered under this chapter and cannot be resold without 06 registration under this chapter or exemption from it; 07 (v) [(vi)] the issuer obtains a signed agreement from the 08 buyer acknowledging that the buyer is buying for investment purposes 09 and that the securities will not be resold without registration under this 10 chapter; 11 (vi) [(vii)] offers are made without public solicitation or 12 advertisement; and 13 (vii) [(viii)] the issuer files with the administrator a 14 notice specifying the issuer, the security to be sold, and the terms of the 15 offer at least two days before any sales are made; 16 (C) to no more than 10 persons who are to receive the initial 17 issue of shares of a nonpublicly traded corporation, limited liability 18 company, limited partnership, or limited liability partnership if the 19 requirements of (B)(ii) - (iv) and (vi) of this paragraph are met; 20 (D) to the buyer of an enterprise or a business and the 21 assets and liabilities of the enterprise or business if 22 (i) the transfer of stock to the buyer is solely 23 incidental to the sale of the enterprise or business and its assets and 24 liabilities; 25 (ii) the seller provides full access to the buyer of the 26 books and records of the enterprise or business; and 27 (iii) a legend is placed on the certificate or other 28 document evidencing ownership of the security, stating that the 29 security is not registered under this chapter and cannot be resold 30 without registration under this chapter or exemption from it; 31 (6) an offer or sale of a preorganization certificate or subscription if
01 (A) a [NO] commission or other remuneration is not paid or 02 given directly or indirectly for soliciting a prospective subscriber ; [,] 03 (B) the number of subscribers does not exceed 10 ; [,] and 04 (C) a [NO] payment is not made by any subscriber; 05 (7) a transaction under an offer to existing security holders of the 06 issuer, including persons who at the time of the transaction are holders of convertible 07 securities, nontransferable warrants, or transferable warrants exercisable within not 08 more than 90 days of their issuance, if 09 (A) a [NO] commission or other remuneration, other than a 10 standby commission, is not paid or given directly or indirectly for soliciting a 11 security holder in this state ; [,] or 12 (B) the issuer first files a notice specifying the terms of the 13 offer and the administrator does not by order disallow the exemption within the 14 next five full business days; 15 (8) an offer , [(] but not a sale , [)] of a security for which registration 16 statements have been filed under both this chapter and 15 U.S.C. 77a - 77bbbb( 17 [THE] Securities Act of 1933 ) if a [NO] stop order or refusal order is not in effect and 18 a [NO] public proceeding or examination looking toward an order is not pending 19 under either this chapter or 15 U.S.C. 77a - 77bbbb (Securities [THE] Act of 1933) ; 20 (9) an isolated nonissuer transaction, regardless of whether effected 21 through a broker-dealer , if the seller is [OR] not a promoter or controlling person 22 as the administrator may define by regulation or order or if the administrator at 23 the request of the seller waives the requirement that the seller not be a promoter 24 or controlling person ; 25 (10) [A NONISSUER DISTRIBUTION OF AN OUTSTANDING 26 SECURITY IF 27 (A) A RECOGNIZED SECURITIES MANUAL CONTAINS 28 THE NAMES OF THE ISSUER'S OFFICERS AND DIRECTORS, A 29 BALANCE SHEET OF THE ISSUER AS OF A DATE WITHIN 18 30 MONTHS, AND A PROFIT AND LOSS STATEMENT FOR EITHER THE 31 FISCAL YEAR PRECEDING THAT DATE OR THE MOST RECENT YEAR
01 OF OPERATIONS, OR 02 (B) THE SECURITY HAS A FIXED MATURITY OR A 03 FIXED INTEREST OR DIVIDEND PROVISION AND THERE HAS BEEN 04 NO DEFAULT DURING THE CURRENT FISCAL YEAR OR WITHIN THE 05 THREE PRECEDING FISCAL YEARS, OR DURING THE EXISTENCE OF 06 THE ISSUER AND ANY PREDECESSORS IF LESS THAN THREE YEARS, 07 IN THE PAYMENT OF PRINCIPAL, INTEREST, OR DIVIDENDS ON THE 08 SECURITY; 09 (11)] a nonissuer transaction effected by or through a registered broker- 10 dealer under an unsolicited order or offer to buy; however, the administrator may by 11 regulation require that the customer acknowledge on [UPON] a specified form that the sale 12 was unsolicited, and that a signed copy of each form be preserved by the broker- 13 dealer for a specified period; 14 (11) [(12)] a transaction executed by a bona fide pledgee without 15 intending to evade [ANY PURPOSE OF EVADING] this chapter; 16 (12) [(13)] a transaction incident to a right of conversion or a statutory 17 or judicially approved reclassification, recapitalization, reorganization, quasi- 18 reorganization, stock split, reverse stock split, merger, consolidation , or sale of assets [, IF] 19 (A) [NO COMMISSION OR OTHER REMUNERATION, 20 OTHER THAN A STANDBY COMMISSION IS PAID OR GIVEN 21 DIRECTLY OR INDIRECTLY FOR SOLICITING A SECURITY HOLDER 22 IN THIS STATE; AND 23 (B) THE ISSUER FILES A NOTICE IN THE FORM 24 SPECIFIED BY THE ADMINISTRATOR NOT LESS THAN 30 DAYS 25 BEFORE MAKING THE OFFER]; 26 (13) [(14)] a stock dividend, regardless of whether the corporation 27 distributing the dividend is the issuer of the stock [OR NOT], if nothing of value is 28 given by stockholders for the dividend other than the surrender of a right to a cash or 29 property dividend when each stockholder may elect to take the dividend in cash or 30 property or in stock; 31 (14) [(15)] an act incident to a statutory [CLASS] vote by security
01 holders [STOCKHOLDERS, UNDER THE CERTIFICATE OF INCORPORATION 02 OR THE APPLICABLE CORPORATION STATUTE,] on a merger, consolidation, 03 reclassification of securities , or sale of assets in consideration of the issuance of 04 securities of another issuer [CORPORATION]; 05 (15) [(16)] the offer or sale by a registered broker-dealer, acting either 06 as principal or agent, of securities previously sold and distributed to the public if the 07 securities 08 (A) [THE SECURITIES] are sold at prices reasonably related 09 to the current market price at the time of sale, and, if the broker-dealer is 10 acting as agent, the commission collected by the broker-dealer on account of 11 the sale is not in excess of usual and customary commissions collected with 12 respect to securities and transactions having comparable characteristics; 13 (B) [THE SECURITIES] do not constitute the whole or a part 14 of an unsold allotment to or subscription or participation by the broker-dealer 15 as an underwriter of the securities or as a participant in the distribution of the 16 securities by the issuer, by an underwriter , or by a person or group of persons 17 in substantial control of the issuer or of the outstanding securities of the class 18 being distributed; and 19 (C) [THE SECURITIES] have been lawfully sold and 20 distributed in this state under this chapter; 21 (16) [(17)] offers or sales of certificates of interest or participation in 22 oil, gas, or mining rights, titles , or leases, or in payments out of production under such 23 rights, titles , or leases, if the purchasers 24 (A) are or have been during the preceding two years engaged 25 primarily in the business of exploring for, mining, producing, or refining oil, 26 gas, or minerals; or 27 (B) have been found by the administrator upon written 28 application to be substantially engaged in the business of exploring for, mining, 29 producing, or refining oil, gas, or minerals so as not to require the protection 30 provided by AS 45.55.070 ; 31 (17) a nonissuer transaction by a registered agent of a registered
01 broker-dealer, and a resale transaction by a sponsor of a unit investment trust 02 registered under 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), in 03 a security of a class that has been outstanding in the hands of the public for at 04 least 90 days if, at the time of the transaction, 05 (A) the issuer of the security is actually engaged in business 06 and not in the organization stage or in bankruptcy or receivership and is 07 not a blank check, blind pool, or shell company whose primary plan of 08 business is to engage in a merger or combination of the business with, or 09 an acquisition of, an unidentified person or persons; 10 (B) the security is sold at a price reasonably related to the 11 current market price of the security; 12 (C) the security does not constitute the whole or part of an 13 unsold allotment to, or a subscription or participation by, the 14 broker-dealer as an underwriter of the security; 15 (D) a nationally recognized securities manual, which may be 16 designated by rule or order of the administrator, or a document filed with 17 the United States Securities and Exchange Commission that is publicly 18 available through the United States Securities and Exchange Commission's 19 electronic data gathering and retrieval system, contains 20 (i) a description of the business and operations of the 21 issuer; 22 (ii) the names of the issuer's officers and directors, 23 if any, or, in the case of an issuer not domiciled in the United 24 States, the corporate equivalents of the issuer's officers and 25 directors in the issuer's country of domicile; 26 (iii) an audited balance sheet of the issuer as of a 27 date within 18 months or, in the case of a reorganization or merger 28 where parties to the reorganization or merger had that audited 29 balance sheet, a pro forma balance sheet; and 30 (iv) an audited income statement for each of the 31 issuer's immediately preceding two fiscal years or for the period of
01 existence of the issuer if the issuer has been in existence for less 02 than two years or, in the case of a reorganization or merger where 03 the parties to the reorganization or merger had that audited income 04 statement, a pro forma income statement; and 05 (E) the issuer of the security has a class of equity securities 06 listed on a national securities exchange registered under 15 U.S.C. 78a - 07 78lll (Securities Exchange Act of 1934) or designated for trading on the 08 National Association of Securities Dealers Automated Quotation System, 09 unless the issuer of the security 10 (i) is a unit investment trust registered under 15 11 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940); 12 (ii) including predecessors, has been engaged in 13 continuous business for at least three years; or 14 (iii) has total assets of at least $2,000,000 based on an 15 audited balance sheet as of a date within 18 months or, in the case 16 of a reorganization or merger where parties to the reorganization 17 or merger had that balance sheet, a pro forma balance sheet; 18 (18) an offer or a sale of a security by an issuer that has a specific 19 business plan or purpose, is not in the development stage, and has not indicated 20 that its business plan is to engage in a merger or acquisition with an unidentified 21 company or other entity or person, under the following conditions: 22 (A) sales of securities are made only to persons who are or 23 the issuer reasonably believes are accredited investors as defined in 24 17 C.F.R. 230.501(a), as that regulation exists on or after the effective date 25 of this Act; 26 (B) the issuer reasonably believes that all purchasers are 27 purchasing for investment and not with the view to or for sale in 28 connection with a distribution of the security; a resale of a security sold in 29 reliance on this exemption within 12 months of sale is presumed to be with 30 a view to distribution and not for investment, except a resale under a 31 registration statement under AS 45.55.070 - 45.55.120 or to an accredited
01 investor under an exemption available under this chapter; 02 (C) the exemption in this paragraph is not available to an 03 issuer if the issuer, a predecessor of the issuer, an affiliated issuer, a 04 director, an officer, or a general partner of the issuer, a beneficial owner 05 of 10 percent or more of a class of the issuer's equity securities, a 06 promoter of the issuer presently connected with the issuer in any capacity, 07 an underwriter of the securities to be offered, or a partner, a director, or 08 an officer of the underwriter 09 (i) within the last five years has filed a registration 10 statement that is the subject of a currently effective registration 11 stop order entered by a state securities administrator or the United 12 States Securities and Exchange Commission; 13 (ii) within the last five years has been convicted of a 14 criminal offense in connection with the offer, purchase, or sale of 15 a security, of a criminal offense involving fraud or deceit, or of a 16 felony; 17 (iii) is currently subject to a state or federal 18 administrative enforcement order or judgment entered within the 19 last five years finding fraud or deceit in connection with the 20 purchase or sale of a security; or 21 (iv) is currently subject to an order, judgment, or 22 decree of a court of competent jurisdiction entered within the last 23 five years, temporarily, preliminarily, or permanently restraining 24 or enjoining the person from engaging in or continuing to engage 25 in conduct or a practice involving fraud or deceit in connection 26 with the purchase or sale of a security; 27 (D) the nonavailability of the exemption under (C) of this 28 paragraph does not apply if 29 (i) the person subject to the disqualification is 30 licensed or registered to conduct securities related business in the 31 state in which the order, judgment, or decree creating the
01 disqualification was entered against the person; 02 (ii) before the first offer under this exemption, the 03 state securities administrator or the court or regulatory authority 04 that entered the order, judgment, or decree waives the 05 disqualification; or 06 (iii) the issuer establishes that it did not know and, 07 in the exercise of reasonable care, based on a factual inquiry, could 08 not have known that a disqualification existed under this 09 paragraph; 10 (E) a general announcement of the proposed offering may 11 be made by any means and may include only the following information 12 unless the administrator specifically permits additional information: 13 (i) the name, address, and telephone number of the 14 issuer of the security; 15 (ii) the name, a brief description, and the price, if 16 known, of the security to be issued; 17 (iii) a brief description in 25 words or less of the 18 business of the issuer; 19 (iv) the type, number, and aggregate amount of 20 securities being offered; 21 (v) the name, address, and telephone number of the 22 person to contact for additional information; 23 (vi) a statement that sales will be made only to 24 accredited investors; 25 (vii) a statement that money or other consideration 26 is not being solicited or will not be accepted by way of this general 27 announcement; and 28 (viii) a statement that the securities have not been 29 registered with or approved by a state securities agency or the 30 United States Securities and Exchange Commission and are being 31 offered and sold under an exemption from registration;
01 (F) the issuer in connection with any offer may provide 02 information in addition to the general announcement under (E) of this 03 paragraph if the information is delivered 04 (i) through an electronic database that is restricted 05 to persons who have been prequalified as accredited investors; or 06 (ii) to a prospective purchaser that the issuer 07 reasonably believes is an accredited investor; 08 (G) a telephone solicitation is not permitted unless, before 09 placing the call, the issuer reasonably believes that the prospective 10 purchaser being solicited is an accredited investor; 11 (H) dissemination of the general announcement of the 12 proposed offering to persons who are not accredited investors does not 13 disqualify the issuer from claiming this exemption; 14 (I) the issuer shall file a notice of the transaction with the 15 administrator, a copy of the general announcement, and the fee for 16 exemption filings established by regulation within 15 days after the first 17 sale in this state; 18 (19) an offer to repay, under AS 45.55.930, the buyer of a security 19 if the offeror first files with the administrator a notice specifying the terms of the 20 offer at least two days before the offer is made; 21 (20) a transaction involving only family members who are related, 22 including related by adoption, within the fourth degree of affinity or 23 consanguinity, or involving only those family members and the corporations, 24 partnerships, limited liability companies, limited partnerships, limited liability 25 partnerships, associations, joint-stock companies, or trusts that are organized, 26 formed, or created by those family members or at the direction of those family 27 members . 28 * Sec. 47. AS 45.55.900 is amended by adding new subsections to read: 29 (g) An offer on the Internet by an issuer is exempt from the registration 30 provisions of AS 45.55.070 and the advertising regulations adopted under this chapter 31 and does not preclude the issuer from relying on other available exemptions for offers
01 provided under this chapter if 02 (1) the offer directly discloses, in a format and at a prominent place in 03 the offer and in an advertisement of the offer on the Internet, that the securities are not 04 being offered to persons in this state; 05 (2) the offer is not otherwise specifically directed to a person in this 06 state by or on behalf of the issuer; and 07 (3) a sale of the issuer's securities is not made in this state as a result 08 of the offer. 09 (h) For any security or transaction or any type of security or transaction, the 10 administrator may by order, waive, withdraw, or modify any of the requirements or 11 conditions of (b)(5) of this section. 12 * Sec. 48. AS 45.55.910 is amended by adding a new subsection to read: 13 (e) Notwithstanding AS 45.55.905(b), all investigative files are confidential, 14 except that they must be disclosed by the administrator as required for discovery in an 15 administrative or a judicial proceeding. 16 * Sec. 49. AS 45.55.915 is amended to read: 17 Sec. 45.55.915. Reimbursement of expenses incident to examination or 18 investigation . (a) The administrator may require an [AN] issuer, broker-dealer, 19 agent, investment adviser representative, federal covered adviser, or state 20 investment adviser to [SHALL] reimburse the administrator for actual travel expenses 21 and per diem incurred in connection with an examination or investigation [INCIDENT 22 TO A REGISTRATION] under this chapter. 23 (b) The administrator may by regulation or order adopt a schedule of charges 24 for annual examination and investigation [FEES] of issuers, broker-dealers, agents, 25 investment adviser representatives, federal covered advisers, and state investment 26 advisers. 27 (c) If an issuer, broker-dealer, agent, investment adviser representative, 28 federal covered adviser, or state investment adviser fails to pay the fees and expenses 29 provided for in this section, the fees and expenses shall be paid out of the funds of the 30 administrator in the same manner as other disbursements made by the administrator. 31 The amounts paid from the funds of the administrator are a lien on [UPON] all of the
01 assets and property in this state of the issuer, broker-dealer, agent, investment adviser 02 representative, federal covered adviser, or state investment adviser , and the amount 03 may be recovered by the attorney general on behalf of the state. 04 (d) Failure of the issuer, broker-dealer, agent, investment adviser 05 representative, or state investment adviser to pay fees and expenses under this section 06 is a wilful violation of this chapter , and the violation falls within the provisions of 07 AS 45.55.060, 45.55.120, 45.55.920 , and 45.55.925. 08 * Sec. 50. AS 45.55.920 is amended by adding a new subsection to read: 09 (e) After an order issued by the administrator under (b) or (c) of this section 10 becomes final and all rights of appeal are exhausted, the administrator may petition the 11 superior court to enter a judgment against a person who is a respondent in the order 12 for the amount of the civil penalty levied against the person. Subject to AS 44.62.570, 13 the filing of the petition for a judgment does not reopen the final order to further 14 substantive review unless the court orders otherwise. A judgment entered under this 15 subsection may be executed on and levied under in the manner provided in AS 09.35. 16 * Sec. 51. AS 45.55.925(a) is amended to read: 17 (a) In addition to the civil penalties assessed under AS 45.55.920, a person 18 who wilfully violates a provision of this chapter except AS 45.55.030(e), 45.55.040(h), 19 45.55.075, or 45.55.160 [AS 45.55.160], or who wilfully violates a regulation or order 20 under this chapter, or who wilfully violates AS 45.55.160 knowing the statement made 21 to be false or misleading in a material respect or the omission to be misleading by any 22 material respect, upon conviction, is punishable by a fine of not more than $5,000, or 23 by imprisonment for not less than one year nor more than five years, or both. Upon 24 conviction of an individual for a felony under this chapter, imprisonment for not less 25 than one year is mandatory. However, an individual may not be imprisoned for the 26 violation of a regulation or order if the individual proves that the individual had no 27 knowledge of the regulation or order. An indictment or information may not be 28 returned under this chapter more than five years after the alleged violation. 29 * Sec. 52. AS 45.55.930(a) is amended to read: 30 (a) A person is liable to the person buying the security from the person for the 31 consideration paid for the security, together with interest at eight percent [SIX PER
01 CENT] a year or the stated rate of the security if the security has a stated, fixed 02 rate less than eight percent, from the date of payment, costs, and reasonable attorney 03 [ATTORNEYS'] fees, less the amount of income received on the security, on [UPON] 04 the tender of the security, or for damages if the buyer [SELLER] no longer owns the 05 security, if the seller offers or sells a security 06 (1) other than a federal covered security, [OFFERS OR SELLS A 07 SECURITY] in violation of AS 45.55.030(a), 45.55.070, or 45.55.170(b) or of a 08 regulation or order under AS 45.55.150 that requires the filing of sales literature before 09 it is used, or of a condition imposed under AS 45.55.100(d) or 45.55.110(g) or (h) ; [,] 10 or 11 (2) [OFFERS OR SELLS A SECURITY] by means of an untrue 12 statement of a material fact, or omits to state a material fact, the omission of which 13 makes a statement misleading. 14 * Sec. 53. AS 44.55.930(b) is amended to read: 15 (b) Damages are the amount that would be recoverable on [UPON] a tender 16 less the value of the security when the buyer disposed of it and interest at eight 17 percent [SIX PER CENT] a year , or the stated rate of the security if the security 18 had a stated, fixed rate less than eight percent, from the date of disposition. 19 * Sec. 54. AS 45.55.930(f) is amended to read: 20 (f) A person may not sue under this section more than three years after the 21 contract of sale , except as otherwise provided in this subsection. For a violation 22 of (a)(2) of this section or AS 45.55.010, an action under this section may be 23 brought within three years after the sale or two years after the person bringing 24 the action discovered or should have discovered the facts on which the action is 25 based, whichever is later. Failure to bring an action on a timely basis is an 26 affirmative defense . A person may not sue under this section if the buyer received 27 (1) [IF THE BUYER RECEIVED] a written offer, before suit and at 28 a time when the buyer owned the security, to refund the consideration paid together 29 with interest at eight percent [SIX PER CENT] a year , or the stated rate of the 30 security if the security has a stated, fixed rate less than eight percent, from the 31 date of payment, less the amount of income received on the security, and the buyer
01 failed to accept the offer within 30 days of its receipt ; [,] or 02 (2) [IF THE BUYER RECEIVED] the offer before suit and at a time 03 when the buyer did not own the security [,] unless the buyer rejected the offer in 04 writing within 30 days of its receipt. 05 * Sec. 55. AS 45.55.930 is amended by adding new subsections to read: 06 (j) Notwithstanding the time limitation in (f) of this section, an action under 07 this section may be started after receipt of a written offer described in (a) of this 08 section if the buyer accepted the payment offer within 30 days after receipt of the offer 09 and has not been paid the full amount offered. 10 (k) An offer to pay the buyer under this section involves the offer or sale of 11 a security, and the transaction must be registered under this chapter or exempt from 12 registration under AS 45.55.900. 13 * Sec. 56. AS 45.55.935(a) is amended to read: 14 (a) The administrator shall adopt regulations, consistent with the provisions of 15 this chapter, governing administrative hearings conducted by the administrator or a 16 designee of the administrator for the following: 17 (1) orders issued under AS 45.55.120, 45.55.900(d), or 45.55.920; in 18 these instances, the administrator shall promptly send a notice of opportunity for 19 hearing to the issuer of the securities and to all persons who have filed with the 20 department a notice of intention to sell the securities; and 21 (2) orders issued under AS 45.55.060; before the administrator enters 22 an order under AS 45.55.060, the administrator shall send to the person involved a 23 notice of opportunity for hearing; if the person involved is an agent or investment 24 adviser representative , then the administrator shall , in addition , notify the employing 25 broker-dealer, state investment adviser, federal covered adviser [ADVISOR], or 26 issuer. 27 * Sec. 57. AS 45.55.970(b) is amended to read: 28 (b) The administrator shall keep a register of all applications for registration 29 and registration statements that [WHICH] are or have ever been effective under this 30 chapter , all notice filings under this chapter, and all denial, suspension, or revocation 31 orders that [WHICH] have been entered under this chapter. The register must
01 [SHALL] be open for public inspection. 02 * Sec. 58. AS 45.55.970(c) is amended to read: 03 (c) The information contained in or filed with a registration statement, 04 application, notice filing, or report may be made available to the public under the 05 regulations adopted by the administrator. 06 * Sec. 59. AS 45.55.970(e) is amended to read: 07 (e) The administrator may honor requests from interested persons for 08 interpretative opinions and may establish appropriate fees by regulation . 09 * Sec. 60. AS 45.55.980(a) is amended to read: 10 (a) Unless the persons are exempt elsewhere in this chapter, AS 45.55.010, 11 45.55.025, 45.55.027, 45.55.028, 45.55.030(a), 45.55.035, 45.55.070, 45.55.075, 12 45.55.170, and 45.55.930 apply to persons who sell or offer to sell when an offer to 13 (1) [AN OFFER TO] sell is made in this state; or 14 (2) [AN OFFER TO] buy is made and accepted in this state. 15 * Sec. 61. AS 45.55.980(b) is amended to read: 16 (b) Unless the persons are exempt elsewhere in this chapter, AS 45.55.010, 17 45.55.025, 45.55.027, 45.55.028, 45.55.030(a), 45.55.035, and 45.55.170 apply to 18 persons who buy or offer to buy when an offer to 19 (1) [AN OFFER TO] buy is made in this state; or 20 (2) [AN OFFER TO] sell is made and accepted in this state. 21 * Sec. 62. AS 45.55.980(c) is amended to read: 22 (c) For the purpose of this section, an offer to sell or to buy is made in this 23 state, whether or not either party is then present in this state, when the offer 24 (1) originates from this state; 25 (2) is directed by the offeror to this state and received at the place to 26 which it is directed, or at a post office in this state in the case of a mailed offer; 27 (3) is for an interest or participation in an oil, gas, or mining right, title, 28 or lease on land in the state, including submerged land, regardless of where the offer 29 is made; 30 (4) is for an interest or participation in payments out of production 31 under an oil, gas, or mining right, title , or lease on land in the state, including
01 submerged land, regardless of where the offer is made; or 02 (5) is for an interest or participation in real property located in the 03 state, or in a domestic corporation , a domestic limited liability company, [OR] a 04 domestic limited partnership , or a domestic limited liability partnership ; jurisdiction 05 under this paragraph may be exercised only when the exercise is not inconsistent with 06 the constitution of this state or of the United States. 07 * Sec. 63. AS 45.55.980(f) is amended to read: 08 (f) AS 45.55.020, 45.55.023, 45.55.030(c), 45.55.030(e), 45.55.040(h), and 09 45.55.170, so far as state investment advisers , federal covered advisers, and 10 investment adviser representatives are concerned, apply when any act instrumental 11 in effecting prohibited conduct is done in this state, regardless of whether [OR NOT] 12 either party is then present in this state. 13 * Sec. 64. AS 45.55.980(g) is amended to read: 14 (g) An [EVERY] applicant for registration under this chapter , an [AND 15 EVERY] issuer that proposes to offer a security in this state through a person acting 16 on an agency basis in the common law sense , and a person making a notice filing 17 under this chapter shall file with the administrator, in the form that the administrator 18 prescribes by regulation, an irrevocable consent appointing the administrator or a 19 successor in office to be the applicant's or issuer's attorney to receive service of lawful 20 process in a civil suit, an action, or a proceeding against the applicant or issuer or a 21 successor executor or administrator that [WHICH] arises under this chapter or a 22 regulation or order under this chapter after the consent has been filed [,] with the same 23 force and validity as if served personally on the person filing the consent. A person 24 who has filed a [FILES THE] consent in connection with a previous registration or 25 notice filing need not file another. Service may be made by leaving a copy of the 26 process in the office of the administrator, but it is not effective unless 27 (1) the plaintiff, who may be the administrator in a suit, action, or 28 proceeding instituted by the administrator, immediately sends notice of the service and 29 a copy of the process by registered mail to the defendant or respondent at the last 30 address on file with the administrator; and 31 (2) the plaintiff's affidavit of mailing is filed in the case on or before
01 the return day of the process, if any, or within the further time that [WHICH] the 02 court allows. 03 * Sec. 65. AS 45.55.990(2) is amended to read: 04 (2) "agent" means an individual other than a broker-dealer who 05 represents a broker-dealer or an issuer in effecting or attempting to effect purchase or 06 sale of securities; a partner, an officer, or a director of a broker-dealer or issuer, or a 07 person occupying a similar status or performing similar functions, is an agent only if 08 the person otherwise comes within this definition; "agent" does not include an 09 individual who represents 10 (A) an issuer in effecting transactions 11 (i) [(A)] in a security exempted by AS 45.55.900(a) 12 [AS 45.55.900(a)(1) - (5)]; 13 (ii) [(B)] exempted by AS 45.55.900(b) ; 14 (iii) in a covered security as described in 15 U.S.C. 15 77r(b)(3) and (4)(D) (Securities Act of 1933) ; or 16 (iv) [(C)] with existing employees, partners, or directors 17 of the issuer if a [NO] commission or other remuneration is not paid 18 or given directly or indirectly for soliciting any person in this state; or 19 (B) a broker-dealer in effecting transactions in this state 20 described in 15 U.S.C. 78o(h)(2) and (3) (Securities Exchange Act of 1934) ; 21 * Sec. 66. AS 45.55.990(3) is amended to read: 22 (3) "broker-dealer" means a person engaged in the business of effecting 23 transactions in securities for the account of others or for the person's own account; 24 "broker-dealer" does not include 25 (A) an agent; 26 (B) an issuer; 27 (C) a bank, savings institution, or trust company; 28 (D) a person who has no place of business in this state if the 29 person effects transactions in this state exclusively with or through 30 (i) the issuers of the securities involved in the 31 transactions;
01 (ii) other broker-dealers; or 02 (iii) banks, savings institutions, trust companies, 03 insurance companies, investment companies as defined in 15 U.S.C. 04 80a-1 - 80a-64 ( [THE] Investment Company Act of 1940 ) , pension or 05 profit-sharing trusts, or other financial institutions or institutional 06 buyers, whether acting for themselves or as trustees; or 07 (E) a person who has no place of business in this state if , during 08 a period of 12 consecutive months , the person does not effect more than 15 09 transactions at the initiation and direction of the customer and on behalf 10 of residents of this state regardless of whether the residents are then 11 present in this state and does not direct any [MORE THAN 15] offers 12 initiated by the person to sell or buy into this state in any manner to persons 13 other than those specified in (D) of this paragraph , regardless of whether [OR 14 NOT] the offeror or any offeree is then present in this state; 15 * Sec. 67. AS 45.55.990(9) is amended to read: 16 (9) "person" means an individual, a corporation, a partnership, a 17 limited liability company, a limited partnership, a limited liability partnership, an 18 association, a joint-stock company, a trust in which [WHERE] the interests of the 19 beneficiaries are evidenced by a security, an unincorporated organization, a 20 government, or a political subdivision of a government; 21 * Sec. 68. AS 45.55.990(11) is repealed and reenacted to read: 22 (11) "Securities Act of 1933" means 15 U.S.C. 77a - 77bbbb, as that 23 act exists on or after the effective date of this Act; 24 * Sec. 69. AS 45.55.990(12) is amended to read: 25 (12) "security" means a note; stock; treasury stock; bond; debenture; 26 evidence of indebtedness; certificate of interest or participation in any profit-sharing 27 agreement; [A] limited liability company interest under AS 10.50 , notwithstanding the 28 limitations of AS 45.08.103(c) ; collateral-trust certificate [CERTIFICATES]; 29 preorganization certificate or subscription; transferable share; investment contract; 30 voting-trust certificate; certificate of deposit for a security; fractional or pooled 31 interest in a viatical settlement contract; [A] certificate of interest or participation
01 in an oil, gas, or mining title or lease or in payments out of production under the title 02 or lease or in any sale of or indenture or bond or contract for the conveyance of land 03 or any interest in land; an option on a contract for the future delivery of agricultural 04 or mineral commodities or any other commodity offered or sold to the public and not 05 regulated by the Commodity Futures Trading Commission; however, the contract or 06 option is not subject to the provisions of AS 45.55.070 if it is sold or purchased on the 07 floor of a bona fide exchange or board of trade and offered or sold to the public by 08 a broker-dealer or agent registered under this chapter; investment of money or money's 09 worth including goods furnished or services performed in the risk capital of a venture 10 with the expectation of some benefit to the investor where the investor has no direct 11 control over the investment or policy decision of the venture; or, in general, any 12 interest or instrument commonly known as a "security," or any certificate of interest 13 or participation in, temporary or interim certificate for, receipt for, guarantee of, or 14 warrant or right to subscribe to or purchase, any of the foregoing; "security" does not 15 include an insurance or endowment policy or annuity contract under which an 16 insurance company promises to pay a fixed or variable sum of money either in a lump 17 sum or periodically for life or for some other specified period; 18 * Sec. 70. AS 45.55.990 is amended by adding new paragraphs to read: 19 (14) "advisory client" means a person to whom services are provided 20 under an investment advisory contract; 21 (15) "advisory fee" means the fee for providing services under an 22 investment advisory contract; 23 (16) "advisory services" means advising a person as to the value of 24 securities or their purchase or sale, whether through the issuance of analyses or reports 25 or otherwise; 26 (17) "Bank Holding Company Act of 1956" means 12 U.S.C. 1841 - 27 1850, as that act exists on or after the effective date of this Act; 28 (18) "clients who are natural persons" means natural persons who are 29 clients of a state investment adviser or federal covered adviser, except that natural 30 persons with at least $750,000 under management with the state investment adviser or 31 federal covered adviser or with a net worth of at least $1,500,000 at the time they
01 initially contract for services described in (23)(A)(i) of this section, and other natural 02 persons who may be designated by regulation or order of the administrator, are not 03 considered natural persons for the purpose of determining under (23)(A)(ii) of this 04 section if a supervised person provides the services described under (23)(A)(i) of this 05 section to natural persons; 06 (19) "federal covered adviser" means a person who is registered with 07 the United States Securities and Exchange Commission under 15 U.S.C. 80b-3 08 (Investment Advisers Act of 1940); "federal covered adviser" does not include a person 09 that is excluded from the definition of "state investment adviser" under (35)(B) of this 10 section; 11 (20) "federal covered security" means a security that is a covered 12 security under 15 U.S.C. 77r(b) (Securities Act of 1933), or regulations adopted under 13 that Act; 14 (21) "Federal Deposit Insurance Act" means 12 U.S.C. 1811 - 1835a, 15 as that act exists on or after the effective date of this Act; 16 (22) "Home Owners' Loan Act" means 12 U.S.C. 1461 - 1470, as that 17 act exists on or after the effective date of this Act; 18 (23) "investment adviser representative" 19 (A) means a natural person who 20 (i) makes a recommendation or otherwise renders advice 21 regarding securities; manages accounts or portfolios of clients; 22 determines which recommendation or advice regarding securities should 23 be given; solicits, offers, or negotiates for the sale of or sells advisory 24 services; or supervises employees who perform an activity described in 25 this sub-subparagraph; and 26 (ii) is a supervised person of a state investment adviser 27 that is registered or required to be registered under this chapter if a 28 substantial portion of the business of the supervised person is providing 29 to clients who are natural persons the services described in (i) of this 30 subparagraph, or who is a supervised person of a federal covered 31 adviser, has a place of business located in this state, and has six or
01 more clients who are natural persons, if a substantial portion of the 02 business of the supervised person is providing to clients who are natural 03 persons the services described in (i) of this subparagraph; 04 (B) means other persons who are not otherwise covered by this 05 paragraph but who are designated by regulation or order of the administrator; 06 (C) except persons covered by (37)(A)(ii) of this section, does 07 not include a person that would not be defined as an investment adviser 08 representative under 17 C.F.R. 275.203A-3 adopted under 15 U.S.C. 80b-3a 09 (Investment Advisers Act of 1940), as that regulation exists on or after the 10 effective date of this Act; 11 (24) "Investment Advisers Act of 1940" means 15 U.S.C. 80b-1 - 80b- 12 21, as that act exists on or after the effective date of this Act; 13 (25) "investment advisory business" means a business in which a 14 person receives compensation primarily for providing advisory services; 15 (26) "investment advisory contract" means a contract in which one 16 person receives consideration from another person primarily for providing advisory 17 services; 18 (27) "Investment Company Act of 1940" means 15 U.S.C. 80a-1 - 80a- 19 64, as that act exists on or after the effective date of this Act; 20 (28) "NASDAQ" means National Association of Securities Dealers 21 Automatic Quotation System; 22 (29) "National Securities Markets Improvement Act of 1996" means 23 P.L. 104 - 290, 101 Stat. 3416 - 3440, as that act exists on or after the effective date 24 of this Act; 25 (30) "notice filing" means a filing made under AS 45.55.040(h) or 26 45.55.075 unless the context indicates otherwise; 27 (31) "place of business" of a state investment adviser, investment 28 adviser representative, or federal covered adviser means 29 (A) an office at which the state investment adviser, federal 30 covered adviser, or investment adviser representative regularly provides 31 advisory services, solicits, meets with, or otherwise communicates with clients;
01 and 02 (B) another location that is held out to the general public as a 03 location at which the state investment adviser, federal covered adviser, or 04 investment adviser representative provides advisory services, solicits, meets 05 with, or otherwise communicates with clients; 06 (32) "principal place of business" of a state investment adviser, 07 investment adviser representative, or federal covered adviser means the executive 08 office of the state investment adviser, investment adviser representative, or federal 09 covered adviser from which the officers, partners, or managers of the state investment 10 adviser, investment adviser representative, or federal covered adviser direct, control, 11 and coordinate the activities of the state investment adviser, investment adviser 12 representative, or federal covered adviser; 13 (33) "Securities Exchange Act of 1934" means 15 U.S.C. 78a - 78lll, 14 as that act exists on or after the effective date of this Act; 15 (34) "securities business" means a business that provides the services 16 provided by 17 (A) state investment advisers, federal covered advisers, or 18 investment adviser representatives; or 19 (B) broker-dealers, issuers, or agents of broker-dealers or 20 issuers; 21 (35) "state investment adviser" 22 (A) means 23 (i) a person who, for compensation, engages in the 24 business of advising others, either directly or through publications or 25 writings, as to the value of securities or as to the advisability of 26 investing in, purchasing, or selling securities, or who, for compensation 27 and as a part of a regular business, issues or promulgates analyses or 28 reports concerning securities, or who, for compensation, engages in this 29 state in the business of managing an investment or trading account in 30 securities for other persons; 31 (ii) a financial planner or other person who, as an
01 integral component of other financially related services, provides the 02 services described in (i) of this subparagraph to others for compensation 03 and as part of a business or who holds out to provide the services 04 described in (i) of this subparagraph to others for compensation; 05 (B) does not include 06 (i) an investment adviser representative; 07 (ii) a savings institution, a trust company, a bank 08 holding company as defined in 12 U.S.C. 1841 (Bank Holding 09 Company Act of 1956), or a bank that is not an investment company; 10 (iii) a lawyer, an accountant, an engineer, or a teacher 11 whose performance of the services described in (A)(i) of this paragraph 12 is incidental to the practice of the person's profession; 13 (iv) a broker-dealer or its agent whose performance of 14 the services described in (A)(i) of this paragraph is incidental to the 15 conduct of business as a broker-dealer or an agent and who does not 16 receive special compensation for the services; 17 (v) a publisher of a bona fide newspaper, news column, 18 newsletter, news magazine, or business or financial publication or 19 service, whether communicated in hard copy form, by electronic means, 20 or otherwise, that does not consist of the rendering of advice on the 21 basis of the specific investment situation of each client; 22 (vi) a person that is a federal covered adviser; 23 (vii) a person whose sole clients are the person's spouse, 24 parents, children, or siblings by blood or adoption, and who does not 25 hold out to provide the services described in (A)(i) of this paragraph to 26 the general public; 27 (viii) other persons not within the intent of this 28 paragraph whom the administrator may designate by regulation or order; 29 (36) "substantial portion of the business" means that more than 10 30 percent of the clients of a supervised person during the preceding 12 months are clients 31 who are natural persons to whom the supervised person is providing the services
01 described in (23)(A)(i) of this section; 02 (37) "supervised person" 03 (A) means 04 (i) a partner, an officer, a director, or another person 05 occupying a similar status or performing similar functions, an employee 06 of a state investment adviser or federal covered adviser, or another 07 person who provides services described in (23)(A)(i) of this section to 08 clients on behalf of the state investment adviser or federal covered 09 adviser if the person is subject to the supervision and control of the 10 state investment adviser or federal covered adviser; 11 (ii) a third-party natural person employed primarily to 12 solicit, offer, or negotiate for the sale of or to sell the services described 13 in (23)(A)(i) of this section for a state investment adviser or federal 14 covered adviser, even if the person is not subject to the supervision or 15 control of the state investment adviser or federal covered adviser; 16 (B) does not include a person who 17 (i) does not on a regular basis solicit, meet with, or 18 otherwise communicate with clients of a state investment adviser or 19 federal covered adviser as a normal and ordinary part of the duties of 20 the person; or 21 (ii) provides the services described in (23)(A)(i) of this 22 section only by means of written material or oral statements that do not 23 claim to meet the objectives or needs of specific individuals or 24 accounts; 25 (38) "viatical settlement" means the purchase of a terminally ill person's 26 life insurance policy for a certain percentage of the policy's face value. 27 * Sec. 71. AS 45.55.995 is amended to read: 28 Sec. 45.55.995. Short title. This chapter may be cited as the Alaska Securities 29 Act [OF 1959]. 30 * Sec. 72. AS 45.55.020(d) and 45.55.990(6) are repealed. 31 * Sec. 73. TRANSITION: REGULATIONS. Notwithstanding sec. 77 of this Act, the
01 Department of Commerce and Economic Development may immediately proceed to adopt 02 regulations necessary to implement the changes made by this Act. The regulations take effect 03 under AS 44.62 (Administrative Procedure Act), but not before the effective date of secs. 1 - 04 2 and 4 - 72 of this Act. 05 * Sec. 74. Section 3 of this Act takes effect only if AS 25.27.244(s)(2) is repealed and 06 reenacted under sec. 148(c), ch. 87, SLA 1997, as amended by sec. 53, ch. 132, SLA 1998. 07 * Sec. 75. Section 73 of this Act takes effect immediately under AS 01.10.070(c). 08 * Sec. 76. If sec. 3 of this Act takes effect, it takes effect on the effective date of the 09 repeal and reenactment of AS 25.27.244(s)(2) under sec. 148(c), ch. 87, SLA 1997, as 10 amended by sec. 53, ch. 132, SLA 1998. 11 * Sec. 77. Except as provided in secs. 75 and 76 of this Act, this Act takes effect 12 October 1, 1999.