Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/17/2018 09:00 AM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB307 | |
| HB355 | |
| HB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 170 | TELECONFERENCED | |
| += | HB 355 | TELECONFERENCED | |
| += | HB 307 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 170-AK SECURITIES ACT; PENALTIES; CRT. RULES
10:06:20 AM
CHAIR COGHILL announced the consideration of HB 170. [SCS CSHB
170(L&C) was before the committee.] He noted who was available
to answer questions.
10:07:29 AM
REPRESENTATIVE SAM KITO III, Alaska State Legislature, Juneau,
Alaska, Chair of the House Labor and Commerce Committee that
sponsored HB 170, stated that the bill updates the Alaska
Securities Act and provides the legal framework for selling
securities in Alaska to Alaskans. It includes provisions for
crowdfunding, registration of securities and sales force,
enforcement actions for violating the Alaska Securities Act, and
education. It ensures that Alaska is keeping up with the
securities industry.
10:08:37 AM
CHRYSTAL KOENEMAN, Staff, Representative Sam Kito III, Alaska
State Legislature, Juneau, Alaska, stated that the current
Alaska Securities Act has been in place since 1961. The Act is
out of date and includes provisions for things like notification
by telegraph. The bill also separates the securities statutes
from the Alaska Native Claims Settlement Act and related
statutes to facilitate a better understanding of each. It deters
investment scams using Alaska entities or harming Alaskans. It
helps protect older and vulnerable adults from financial
exploitation and requires financial professionals to report
suspected exploitation and gives them immunity.
10:10:26 AM
KRISTY NAYLOR, Acting Director, Division of Banking and
Securities, Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, stated that HB 170 is
important to the operation of the division, to their regulation
of securities in Alaska, and to Alaskan consumers. She noted
th
The bill updates the 1961 law to better align with current
industry practices. Most importantly, it enhances the consumer
protection and enforcement provisions in current law.
HB 170 is about protecting consumers and effectively punishing
bad actors who prey on Alaskans. The existing low administrative
civil and criminal penalties are so insufficient they are not a
deterrent but rather are seen by some as a cost of doing
business. The bill solves this problem by increasing
administrative civil and criminal penalties for those who harm
Alaskans, especially vulnerable adults and seniors. Recent
investigations of fraud have involved millions of dollars in
losses yet current enforcement provisions allow a maximum
penalty of just $25,000 per violation. The new law increases the
penalty up to $100,000 per violation and more if the victim is a
senior or vulnerable adult and allows the division to bar bad
actors from the securities industry in Alaska. The division
could order restitution for victims and brokers and advisors
would be required to report suspected financial exploitation to
both the Division of Banking and Securities and to Adult
Protective Services. She cited examples of recent and ongoing
cases to demonstrate the need for enhanced tools for
enforcement, penalties, and consumer protections.
10:16:50 AM
CHAIR COGHILL asked if the Alaska-specific provisions are
readily identified.
MS. NAYLOR said 80-90 percent of the bill is based on the
Uniform Securities Act. The existing Alaska-specific provisions
were retained, but since more were added they took that
opportunity to rearrange the Act to make if more user friendly.
10:18:12 AM
BRIAN PINKSTON, Owner, Bright Road Wealth Management, Anchorage,
Alaska, stated that as a member of the securities industry he
supports further regulation. He spends time every day helping
clients work through things they bought and don't understand. It
is important to have stronger criminal protections for seniors,
especially those with diminished capacity. This is relevant for
Alaska because Alzheimer cases in Alaska are expected to
increase 54.9 percent by 2025. The Alzheimer's Association
reports that Alaska is number one in the nation for seniors with
Alzheimer's.
10:21:36 AM
DAVID GOTTSTEIN, President and Chief Investment Officer, Dynamic
Capital Management Inc., Anchorage, Alaska, said he was speaking
in support of HB 170 and wanted to applaud the Banking and
Securities Division for advancing the proposal. He said a large
portion of the securities industry operates at the most modest
fiduciary standard so it's important to have strong penalties in
place to protect investors when those modest standards are
broken. Every year big investment institutions are fined for
their misconduct but the individuals who offered the poor advise
aren't penalized. It's the shareholders that pay the penalties
so it's important to have these tools in the toolbox for the
banking and securities regulators to push back.
MR. GOTTSTEIN said he was pleased that the bill keeps the
existing exemptions that makes it easier for small businesses to
start and raise capital. He also applauds the efforts to protect
the elderly because this is a growing and important area.
CHAIR COGHILL asked Ms. Naylor to be prepared to discuss the
Alaska-specific provisions at the next hearing.
10:25:16 AM
SENATOR COSTELLO highlighted that the previous division
director, Kevin Anselm, worked very hard on this bill. She said
she considers it the unsung hero of the session. It's been
through the process before but there are compelling reasons for
giving it a thorough vetting.
10:26:08 AM
CHAIR COGHILL held HB 170 in committee for future consideration.