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