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