Effective Date of Rule: Thirty-one days after filing.

     Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: No rule may be made unless the director of the department of financial institutions finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of chapter 21.20 RCW. The director hereby makes such a finding with respect to this proposal.

     Purpose: The securities prosecution fund was created by RCW 43.320.115. Fines collected by the Washington securities division are placed in a fund known as the securities prosecution fund. Funds may be made available for payment of costs, expenses and charges incurred in the prosecution of criminal charges arising under the Securities Act, the Commodities Transactions Act, the Franchise Investment Protection Act, and the Business Opportunity Fraud Act. The proposed rule making will codify the procedures to be followed by prosecuting attorneys who seek fund expenditures.

     Statutory Authority for Adoption: RCW 43.320.115.

      Adopted under notice filed as WSR 08-12-101 on June 4, 2008.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.

     Date Adopted: July 24, 2008.

Scott Jarvis

Director

OTS-1539.4

     (2) Application process.

     (a) An applicant shall complete an application form provided by the securities division of the department of financial institutions.

     (b) If the director or his or her designee approves the application, the applicant may be required to complete and submit additional forms and information. If an application is denied, an applicant may submit a request for reconsideration, but the director or his or her designee's subsequent decision is final.

     (c) The attorney general or prosecuting attorney requesting fund expenditures related to a criminal investigation or prosecution must maintain books, records, documents, and other evidence that sufficiently and accurately reflect those expenditures.

     (d) At the closing of each case for which fund expenditures have been approved, the attorney general or prosecuting attorney must submit a closing report to the department of financial institutions. The closing report shall provide an accounting for fund expenditures, summarize the outcome of the case, and certify that all funds have been used for the purpose requested. The closing report shall be submitted within one hundred twenty days of the applicant's fiscal year end. If a closing report is not filed, or if the closing report indicates that funds were not used for the purpose requested, the attorney general or prosecuting attorney is required to repay the funds received from the securities prosecution fund.

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