WSR 11-09-078

PROPOSED RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS
(Securities Division)

[ Filed April 19, 2011, 5:06 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 11-06-061.

Title of Rule and Other Identifying Information: Amendments to WAC 460-16A-205 to update previously adopted NASAA guidelines and statements of policy.

Hearing Location(s): Department of Financial Institutions, 150 Israel Road S.W., Tumwater, WA 98501, on June 1, 2011, at 10:00 a.m.

Date of Intended Adoption: June 1, 2011.

Submit Written Comments to: Jill Vallely, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, e-mail jill.vallely@dfi.wa.gov, fax (360) 704-7035, by May 31, 2011.

Assistance for Persons with Disabilities: Contact Jill Vallely, by May 31, 2011, TTY (360) 664-8126 or (360) 902-8760.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The Washington securities division uses guidelines and policies adopted by the North American Securities Administrators Association (NASAA) as the basis for regulating certain offerings and licensees. NASAA periodically amends these guidelines and policies. The proposed rule amendment would update Washington's regulations to reflect the latest versions of all previously adopted guidelines and policies.

WAC 460-16A-205 (1)(g), (h), (m), (n), (o), (p), (r), (s), (t), (u), and (v) would be amended to adopt the most recent versions of the NASAA guidelines and policies codified in those subsections.

Reasons Supporting Proposal: This rule amendment will create greater uniformity with the many other states that rely on the NASAA guidelines and policies as the basis for regulating certain securities offerings. Adopting the same versions of these policies as other states, rather than continuing to enforce outdated policies in Washington, will reduce confusion among the businesses regulated by the securities division. Securities issuers must comply with registration provisions in all states in which they offer securities. Uniformity will make compliance less burdensome for these issuers, and will facilitate commerce.

Statutory Authority for Adoption: RCW 21.20.450.

Statute Being Implemented: Chapter 21.20 RCW.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Department of financial institutions, securities division, governmental.

Name of Agency Personnel Responsible for Drafting: Jill Vallely, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760; Implementation: Scott Jarvis, Director, Department of Financial Institutions, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760; and Enforcement: William M. Beatty, Director, Securities, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposal does not impose additional costs on business.

A cost-benefit analysis is not required under RCW 34.05.328. The department of financial institutions is not one of [the] agencies listed in RCW 34.05.328.

April 19, 2011

Scott Jarvis

Director

OTS-3933.1


AMENDATORY SECTION(Amending WSR 08-05-003, filed 2/6/08, effective 3/8/08)

WAC 460-16A-205   Adoption of NASAA statements of policy.   (1) In order to promote uniform regulation, the administrator adopts the following North American Securities Administrators Association (NASAA) statements of policy for offerings registering pursuant to RCW 21.20.180 or 21.20.210:

(a) Registration of publicly offered cattle feeding programs, as adopted September 17, 1980;

(b) Registration of commodity pool programs, as adopted with amendments through May 7, 2007;

(c) Equipment programs, as adopted with amendments through May 7, 2007;

(d) Registration of oil and gas programs, as adopted with amendments through May 7, 2007;

(e) Real estate investment trusts, as adopted with amendments through May 7, 2007;

(f) Real estate programs, as adopted with amendments through May 7, 2007;

(g) Loans and other material affiliated transactions, as adopted with amendments through ((November 18, 1997)) March 31, 2008;

(h) Options and warrants, as adopted with amendments through ((September 28, 1999)) March 31, 2008;

(i) Registration of direct participation programs - omnibus guidelines, as adopted with amendments through May 7, 2007;

(j) Mortgage program guidelines, as adopted with amendments through May 7, 2007;

(k) Church bonds, as adopted April 14, 2002;

(l) Health care facility offerings, pertaining to the offering of nonprofit health care facility bonds, as adopted April 5, 1985;

(m) Corporate securities definitions, as adopted ((September 28, 1999)) with amendments through March 31, 2008;

(n) Impoundment of proceeds, as adopted with amendments through ((September 28, 1999)) March 31, 2008;

(o) Preferred stock, as adopted with amendments through ((April 27, 1997)) March 31, 2008;

(p) Promotional shares, as adopted ((September 28, 1999)) with amendments through March 31, 2008, except that the term promotional shares shall be limited to those equity securities which were issued within the last three years and that all promotional shares in excess of twenty-five percent of the shares to be outstanding upon completion of the offering may be required to be deposited in escrow absent adequate justification that escrow of such shares is not in the public interest and not necessary for the protection of investors;

(q) Registration of asset-backed securities, as adopted with amendments through May 7, 2007, except for offerings registering or required to register pursuant to chapter 460-33A WAC or RCW 21.20.705 through 21.20.855;

(r) Promoters' equity investment, as adopted with amendments through ((April 27, 1997)) March 31, 2008;

(s) Specificity in use of proceeds, as adopted ((September 28, 1999)) with amendments through March 31, 2008;

(t) Underwriting expenses, underwriter's warrants, selling expenses, and selling security holders, as adopted with amendments through ((September 28, 1999)) March 31, 2008;

(u) Unsound financial condition, as adopted ((September 28, 1999)) with amendments through March 31, 2008;

(v) Unequal voting rights, as adopted ((October 24, 1991)) with amendments through March 31, 2008;

(w) Guidelines for general obligation financing by religious denominations, as adopted April 17, 1994;

(x) Risk disclosure guidelines, as adopted September 9, 2001;

(y) Church extension fund securities, as adopted with amendments through April 18, 2004; and

(z) Guidelines for cover legends, as adopted October 2, 2004.

(2) An offering registering pursuant to RCW 21.20.180 or 21.20.210 that falls within one or more of the statements of policy listed in subsection (1) of this section must comply with the requirements of said statement of policy or policies.

(3) The statements of policy referred to in subsection (1) of this section are found in CCH NASAA Reports published by Commerce Clearing House. Copies are also available at the office of the securities administrator.

[Statutory Authority: RCW 21.20.450. 08-05-003, 460-16A-205, filed 2/6/08, effective 3/8/08; 02-22-106, 460-16A-205, filed 11/6/02, effective 12/7/02; 98-17-013, 460-16A-205, filed 8/10/98, effective 9/10/98; 96-11-017, 460-16A-205, filed 5/6/96, effective 6/6/96; 95-17-068, 460-16A-205, filed 8/16/95, effective 9/16/95; 93-01-075, 460-16A-205, filed 12/14/92, effective 1/14/93; 91-04-008, 460-16A-205, filed 1/25/91, effective 2/25/91.]

Washington State Code Reviser's Office