WSR 16-10-032 PROPOSED RULES DEPARTMENT OF FINANCIAL INSTITUTIONS (Securities Division) [Filed April 26, 2016, 2:46 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 16-01-118.
Title of Rule and Other Identifying Information: The securities division is proposing rules to preserve filing requirements in connection with offerings conducted under newly adopted federal crowdfunding rules so that it may provide oversight of these offerings in the interest of investor protection. The proposed rules would be codified at WAC 460-18A-210.
Hearing Location(s): Department of Financial Institutions (DFI), 150 Israel Road S.W., Tumwater, WA 98501, on June 7, 2016, at 10:00 a.m.
Date of Intended Adoption: June 8, 2016.
Submit Written Comments to: Nathan Quigley, DFI, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, e-mail Nathan.Quigley@dfi.wa.gov, fax (360) 704-6463, by June 7, 2016.
Assistance for Persons with Disabilities: Contact Carolyn Hawkey by May 31, 2016, TTY (360) 664-8126 or (360) 902-8760.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Title III of the Jumpstart Our Business Startups (JOBS) Act amended Section 4 of the Securities Act of 1933 to create a new federal exemption for offerings of securities in crowdfunding campaigns. On October 30, 2015, the Securities and Exchange Commission adopted final rules that will implement this new exemption. See Regulation Crowdfunding, Release Nos. 33-9974; 34-76324, available at http://www.sec.gov/rules/final/2015/33-9974.pdf. The JOBS Act further amended Securities Act Section 18 (b)(4) to preempt the ability of states to require registration of crowdfunding offerings conducted pursuant to federal law. However, states retain the authority to require notice filings of crowdfunding offerings if a state is the principal place of business of the issuer or if a state is home to purchasers of fifty percent or more of the aggregate value of the securities offered in the crowdfunding campaign. The securities division is now proposing rules to require the filing of a notice filing form, a consent to service of process, and the fees that would otherwise be required in connection with the registration of these securities offerings but for preemption by the Securities and Exchange Commission. The proposed notice filing form is available on the division's web site at http://www.dfi.wa.gov/rulemaking/notice-filing-requirements-connection-federal-crowdfunding-rules.
Statute Being Implemented: Chapter 21.20 RCW.
Rule is necessary because of federal law, 15 U.S.C. § 77r.
Name of Proponent: DFI, securities division, governmental.
Name of Agency Personnel Responsible for Drafting: Nathan Quigley, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760; Implementation: Scott Jarvis, Director, DFI, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760; and Enforcement: William 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. A small business economic impact statement is not required under RCW 19.85.025(3) as the proposed rules would adopt, amend, or repeal a filing or related process requirement for applying to an agency for a license or permit.
A cost-benefit analysis is not required under RCW 34.05.328. DFI is not one of the agencies listed in RCW 34.05.328.
April 26, 2016
Scott Jarvis
Director
NEW SECTION
WAC 460-18A-210 Notice filing requirements for federal crowdfunding offerings.
The following provisions apply to offerings made under federal Regulation Crowdfunding and Section 18(b)(4) of the Securities Act of 1933:
(1) Initial filing.
(a) An issuer that offers and sells securities in this state in an offering exempt under federal Regulation Crowdfunding shall file the following with the Securities Administrator of the Department of Financial Institutions or his or her designee:
(i) A completed Uniform Notice of Federal Crowdfunding Offering form or copies of all documents filed with the Securities and Exchange Commission;
(ii) A consent to service of process on Form U-2 if not filing on the Uniform Notice of Federal Crowdfunding Offering form; and
(iii) The filing fee prescribed by RCW 21.20.340 (1)(a).
(b) If the issuer has its principal place of business in this state, the filing required under subsection (a) of this section shall be filed with the Securities Administrator when the issuer makes its initial Form C filing concerning the offering with the Securities and Exchange Commission. If the issuer does not have its principal place of business in this state but residents of this state have purchased fifty percent or greater of the aggregate amount of the offering, the filing required under subsection (a) of this section shall be filed when the issuer becomes aware that such purchases have met this threshold and in no event later than fifteen days from the date of completion of the offering.
(c) The initial notice filing is effective for twelve months from the date of the filing with the Securities Administrator.
(2) Renewal. For each additional twelve-month period in which the same offering is continued, an issuer conducting an offering under federal Regulation Crowdfunding may renew the unsold portion of its notice filing by filing the following on or before the expiration of the notice filing:
(a) A completed Uniform Notice of Federal Crowdfunding Offering form marked "renewal" and/or a cover letter or other document requesting renewal;
(b) The renewal fee prescribed by RCW 21.20.340 (1)(a) to renew the unsold portion of securities for which a filing fee has previously been paid; and
(c) If the amount of securities subject to the notice filing is being increased, the fee prescribed by RCW 21.20.340 (1)(a) to cover the increase in the amount of securities to be offered.
(3) Amendment. An issuer may increase the amount of securities offered in this state by submitting a completed Uniform Notice of Federal Crowdfunding Offering form marked "amendment" or other document describing the transaction and a fee calculated pursuant to RCW 21.20.340 (1)(a) to cover the increase in the amount of securities being offered prior to selling additional securities in this state.
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