[Filed August 6, 1997, 11:54 a.m.]
Date of Adoption: August 6, 1997.
Purpose: Adoption of WAC 460-44A-300, an exemption from registration for offers and sales of securities to accredited investors which permits public solicitation consistent with the North American Securities Administrators Association (NASAA) model accredited investor exemption.
Statutory Authority for Adoption: RCW 21.20.450.
Other Authority: RCW 21.20.320(17).
Adopted under notice filed as WSR 97-08-061 on April 1, 1997.
Changes Other than Editing from Proposed to Adopted Version: Subsections (4), (5)(b)(iii), and (6)(b)(vi)(B) have been altered to conform the adopted version to the final version of the NASAA model accredited investor exemption. These changes are made for purposes of uniformity, clarity, and readability only. The changes are not substantive or material.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.
Number of Sections Adopted on the Agency's own Initiative: New 1, amended 0, repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.
Number of Sections Adopted using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 1, amended 0, repealed 0.
Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: Pursuant to RCW 21.20.450, no rule may be made unless the director finds the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by policy and provisions of this chapter.
Effective Date of Rule: Thirty-one days after filing.
August 6, 1997
John L. Bley
WAC 460-44A-300 Exemption for offers and sales to accredited investors pursuant to a public solicitation. (1) Any offer or sale of a security by an issuer in a transaction that meets the requirements of this rule and any exemption adopted by the Securities and Exchange Commission pursuant to Section 3(b) of the Securities Act of 1933 which provides for public solicitation of accredited investors, shall be exempt under RCW 21.20.320(17).
(2) Sales of securities shall be made only to persons who are or the issuer reasonably believes are accredited investors. "Accredited investor" shall have the meaning indicated in WAC 460-44A-501(1).
(3) The exemption is not available to an issuer that is in the development stage that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.
(4) The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within twelve months of sale shall be presumed to be with a view to distribution and not for investment, except a resale pursuant to a registration statement effective under RCW 21.20.190 or RCW 21.20.230 or to an accredited investor pursuant to an exemption available under the Securities Act of Washington, chapter 21.20 RCW. Securities issued under this exemption may only be resold pursuant to registration or an exemption under the Securities Act of Washington, chapter 21.20 RCW.
(5)(a) The exemption is not available to an issuer if the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of ten percent or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director or officer of such underwriter:
(i) Within the last five years, has filed a registration statement which is the subject of a currently effective registration stop order entered by any state securities administrator or the United States Securities and Exchange Commission;
(ii) Within the last five years, has been convicted of any criminal offense in connection with the offer, purchase or sale of any security, or involving fraud or deceit;
(iii) Is currently subject to any state or federal administrative enforcement order or judgment, entered within the last five years, finding fraud or deceit in connection with the purchase or sale of any security; or
(iv) Is currently subject to any order, judgment or decree of any court of competent jurisdiction, entered with the last five years, temporarily, preliminarily or permanently restraining or enjoining such party from engaging in or continuing to engage in any conduct or practice involving fraud or deceit in connection with the purchase or sale of any security.
(b) Subsection (5)(a) shall not apply if:
(i) The party subject to the disqualification is licensed or registered to conduct securities related business in the state in which the order, judgment or decree creating the disqualification was entered against such party;
(ii) Before the first offer under this exemption, the state securities administrator, or the court or regulatory authority that entered the order, judgment or decree, waives the disqualification; or
(iii) The issuer establishes that it did not know and in the exercise of reasonable care, based on a factual inquiry, could not have known that a disqualification existed under subsection (5)(a).
(6)(a) A general announcement of the proposed offering may be made by any means.
(b) The general announcement shall include only the following information, unless additional information is specifically permitted by the securities administrator:
(i) The name, address and telephone number of the issuer of the securities;
(ii) The name, a brief description and price (if known) of any security to be issued;
(iii) A brief description of the business of the issuer in twenty-five words or less;
(iv) The type, number and aggregate amount of securities being offered;
(v) The name, address and telephone number of the person to contact for additional information; and
(vi) A statement that:
(A) Sales will only be made to accredited investors;
(B) No money or other consideration is being solicited or will be accepted by way of this general announcement; and
(C) The securities have not been registered with or approved by any state securities agency or the U.S. Securities and Exchange Commission and are being offered and sold pursuant to an exemption from registration.
(7) The issuer, in connection with an offer, may provide information in addition to the general announcement under subsection (6), if such information:
(a) Is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; or
(b) Is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.
(8) No telephone solicitation shall be permitted unless prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.
(9) Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not disqualify the issuer from claiming the exemption under this rule.
(10) The issuer shall file with the administrator a notice of
transaction, a consent to service of process, a copy of the general
announcement, and a fee of three hundred dollars within fifteen days
after the first sale in this state.
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.