SB 108-AK SECURITIES ACT; PENALTIES; CRT. RULES  1:39:30 PM CHAIR MCGUIRE announced the consideration of SB 108. She noted that this is the first hearing and the committee is considering CSSB 108(L&C). 1:39:58 PM KEVIN ANSELM, Director, Division of Banking and Securities, Department of Commerce, Community and Economic Development (DCCED), introduced SB 108 on behalf of the administration. She informed the committee that the bill separates securities statutes from the Alaska Native Claims Settlement Act (ANCSA) statutes to reduce confusion and improve understanding of both acts. It recognizes and incorporates current industry standards and terms. It synthesizes with other states' laws to make it easier for businesses, entrepreneurs, and investors to understand their rights, responsibilities, and opportunities in Alaska through adopting many of the Uniform Securities Act provisions from the 2002 model act. The bill deters investment scams and harm to Alaskans by increasing civil penalties and providing resources from those penalties for investor, consumer, or entrepreneurial education. SB 108 also enhances penalties against people who harm older Alaskans. MS. ANSELM offered to review the summary of changes from version A to version W and the sectional analysis. 1:41:13 PM SENATOR COGHILL requested a review of the changes. CHAIR MCGUIRE asked Ms. Anselm to review the changes and noted that Senator Micciche joined the committee. 1:41:34 PM MS. ANSELM read the following summary of changes between version A and version W of SB 108. Structural Changes. The order of the sections has been reorganized. SB 108A was drafted with the new AS 45.56 Alaska Securities Act at the beginning of the bill with other statutes amended in numerical order at the end. SB 108 CS W now follows the order of the statutes amended beginning with Title 06. Drafting. Legislative Counsel made conforming drafting and legal improvements throughout the bill including consolidating definitions into Article 7, Sec 45.56.740 or citing to existing definitions in other statutes. Sec. 1 - 24. Renumbered from SB108A and moved to the front of the bill. SB 108 A, Sec. 7. AS 21.42.315(k) is deleted because 'variable annuity' is removed from the definition of security (see Article 7 Definitions) Sec. 25. Chapter 56. Alaska Securities Act (pg. 14) Article 1. General Provisions. No changes. Article 2. Exemptions from Registration of Securities.  Small intrastate securities offerings (referred to as "Crowdfunding") was removed at the request of Senate Labor and Commerce (SB 126 contains similar provisions) Article 3. Registration of Securities and Notice  Filing of Federal Covered Securities. No substantive changes. Article 4. Broker-dealers, Agents, Investment  Advisers, Investment Adviser Representatives, and  Federal Covered Investment Advisers. No substantive changes. Article 5. Fraud and Liabilities. No substantive changes. Article 6. Administration and Judicial Review. (pp.  66-86)    Sec. 45.56.605(e) relating to the securities education and training fund was moved to a new Sec. 45.56.625  Securities investor education and training fund. Sec. 45.56.625 Jurisdiction contents were combined with Sec. 45.56.635 Applicability of the chapter. Sec. 45.56.660. Civil liability and Sec 45.56.665  Rescission Offers. The legal rate of interest for rescission and civil enforcement is the legal rate of interest under AS 09.30.970 or eight percent a year,  whichever is greater. (Bold is new) Article 7. Miscellaneous and Additional General  Provisions.    Sec. 45.56.900. Definitions.    (23) Older Person (formerly Older Alaskan)- a natural person that is age 60 or older (adapted from AS 47.26.290(6)) (32) Security - "variable annuity" is deleted from the definition Sections 26- 35. No substantive changes.  1:44:49 PM SENATOR COGHILL asked if the two statutes were separated for ease of application. MS. ANSELM confirmed that it will be much easier for the public and the corporations if the statutes relating to securities are lifted out of the statutes that relate to the Alaska Native Claims Settlement Act proxy solicitations. SENATOR COGHILL asked why variable annuity was removed. MS. ANSELM said the insurance industry is concerned that including variable annuity in the Securities Act would result in more regulation over that section of the industry. The division does not agree and the topic will likely be discussed in the future. SENATOR WIELECHOWSKI asked how variable annuities will be regulated in Alaska MS. ANSELM replied the same as they are now, which is through the Insurance Act. SENATOR WIELECHOWSKI asked if that is standard practice among states. MS. ANSELM said they're regulated a variety of ways and it's something the division wants to vet further before bringing the issue up again. SENATOR WIELECHOWSKI asked if the division has had many complaints about the way variable annuities are dealt with in Alaska. MS. ANSELM said there have been complaints and often they bridge insurance and securities because variable annuity sales people are often also registered as securities sales people. She reported that the two divisions work well together to address the complaints. CHAIR MCGUIRE informed the committee that Renee Wardlaw with the Department of Law and Kristy Naylor with the Division of Banking and Securities are available to answer questions. SENATOR COGHILL asked if either has concerns with the bill. 1:48:54 PM KRISTY NAYLOR, Securities Examiner, Division of Banking and Securities, Department of Commerce, Community and Economic Development (DCCED), stated the department has no concerns with the way SB 108 is drafted. 1:49:23 PM CHAIR MCGUIRE closed public testimony on SB 108. 1:49:36 PM SENATOR COGHILL moved to report the CS for SB 108(L&C) from committee with individual recommendations and attached fiscal note(s). CHAIR MCGUIRE announced that without objection, CSSB 108(L&C) is reported from Senate Judiciary Standing Committee.