04/20/1999 01:37 PM Senate L&C

                  HB 83-ALASKA SECURITIES ACT                                                                                   
                                                                                                                                
CHAIRMAN MACKIE announced HB 83 to be up for consideration.                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG said this bill has received a lot of work                                                               
in the other body.  He said this is a modernization and update of                                                               
our security law.                                                                                                               
                                                                                                                                
SENATOR MACKIE asked if there was any opposition to the bill as it                                                              
is currently written.                                                                                                           
                                                                                                                                
REPRESENTATIVE ROKEBERG answered that there was none and he had                                                                 
contacted all people in the securities industry.                                                                                
                                                                                                                                
CHAIRMAN MACKIE asked Mr. Elder, Division of Banking, to give the                                                               
committee an overview of why they are losing federal funds.                                                                     
                                                                                                                                
MR. TERRY ELDER, Director, Division of Banking, Securities, and                                                                 
Corporations, explained if we did not pass this bill bringing us                                                                
into compliance with federal law, we would lose the ability to                                                                  
require federal public securities, mostly mutual funds, to file                                                                 
notices and pay notice fees.  Those are currently in the range of                                                               
$4 - $5 million and have been growing at a 14 percent annual rate                                                               
over the last several years.  It would be a significant impact on                                                               
the general fund if this were not passed before October 1999 which                                                              
is when our authority to require that filing expires.  He noted how                                                             
both the House and Senate have been working very hard this session                                                              
to find $40 million to cut in the budget and this bill represents                                                               
10 percent of that.                                                                                                             
                                                                                                                                
Number 180                                                                                                                      
                                                                                                                                
The other major impact is on the investment advisory industry,                                                                  
because it changes the way investment advisors are regulated.  In                                                               
the past, they registered with the SEC and with states.  Now, only                                                              
large investment advisors register with SEC; smaller investors only                                                             
register with the state.  If we don't have effective language in                                                                
our Securities Act to regulate investment advisors, especially                                                                  
those that are registered only out-of-state, they would essentially                                                             
be unregulated.                                                                                                                 
                                                                                                                                
In our state, we have about 310 large investment advisors and about                                                             
40 smaller investment advisors registered.  We have over 300                                                                    
investment advisor representatives that are registered, also.                                                                   
Without this legislation, we would no longer be able to register                                                                
them.                                                                                                                           
                                                                                                                                
In addition, it's necessary for us to come into compliance with                                                                 
federal laws.  Also, since we are doing a fairly major upgrade to                                                               
the Securities Act, other changes are being made which would                                                                    
benefit small businesses and their access to capital.  One example                                                              
of that is a new exemption for entrepreneurs who are seeking                                                                    
capital from accredited investors which are defined by federal law                                                              
as being institutions and wealthy individuals.  This would give                                                                 
them an exemption and the ability to use the Internet for                                                                       
advertising. If this bill passes, Alaska entrepreneurs will be able                                                             
to utilize the small business administration case net, an                                                                       
electronic matching service.  Right now they cannot use that.                                                                   
                                                                                                                                
SENATOR LEMAN moved to pass HB 83 from committee with individual                                                                
recommendations.  There were no objections and it was so ordered.