WSR 20-01-055
PERMANENT RULES
DEPARTMENT OF
FINANCIAL INSTITUTIONS
(Securities Division)
[Filed December 10, 2019, 10:42 a.m., effective January 10, 2020]
Effective Date of Rule: Thirty-one days after filing.
Purpose: The securities division hereby amends WAC 460-44A-503, which sets forth notice filing requirements for securities offerings made in reliance on federal Regulation D, Rule 506. The securities division amends WAC 460-44A-503 to require that notice filings and fees for securities offerings made in reliance on Rule 506 be submitted electronically through the North American Securities Administrators Association's online electronic filing depository (EFD) system. The securities division is also amending WAC 460-44A-503 to clarify that any amendments to previously filed notice filings concerning Rule 506 offerings must also be filed through EFD.
Launched by the North American Securities Administrators Association in 2014, EFD is an online system that has modernized and streamlined the process of submitting notice filings. It allows issuers to electronically submit Forms D concerning Rule 506 offerings to state securities regulators and pay filing fees. Currently, forty-seven jurisdictions either accept or mandate Rule 506 notice filings made through EFD. The EFD system is in wide use: In 2018, 68,438 new notice filings, 7,435 amendment filings, and 9,308 renewal filings for Rule 506 offerings were made through EFD in those jurisdictions utilizing the system. In Washington alone, the securities division received 3,412 Rule 506 notice filings through EFD in 2018, compared to 577 notice filings on paper.
Citation of Rules Affected by this Order: Amending WAC 460-44A-503.
Statutory Authority for Adoption: RCW 21.20.327, 21.20.450.
Adopted under notice filed as WSR 19-21-042 on October 9, 2019.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at the Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: December 10, 2019.
Charles Clark
Director
AMENDATORY SECTION(Amending WSR 19-04-084, filed 2/4/19, effective 3/7/19)
WAC 460-44A-503Filing of notice and payment of fee.
(1) An issuer offering or selling securities in reliance on WAC 460-44A-504 or 460-44A-506 shall file with the administrator of securities of the department of financial institutions or his or her designee a notice and pay a filing fee as follows:
(a)(i)(A) For an offering of a security in reliance upon the Securities Act of 1933, Regulation D, Rule 230.506(b) and RCW 21.20.327(2) and 21.20.320(1), the issuer shall file a notice on Securities and Exchange Commission Form D marking Rule 506(b) and pay a filing fee of three hundred dollars no later than fifteen days after the first sale of such securities in the state of Washington, unless the end of that period falls on a Saturday, Sunday or holiday, in which case the due date would be the first business day following.
(B) For an offering of a security in reliance upon the Securities Act of 1933, Regulation D, Rule 230.506(c) and RCW 21.20.327(2), the issuer shall file a notice on Securities and Exchange Commission Form D marking Rule 506(c) and pay a filing fee of three hundred dollars no later than fifteen days after the first sale of such securities in the state of Washington, unless the end of that period falls on a Saturday, Sunday or holiday, in which case the due date would be the first business day following.
(C) For an offering in reliance on Securities and Exchange Commission Rule 504 and WAC 460-44A-504, the issuer shall file the initial notice on Securities and Exchange Commission Form D marking Rule 504 and pay a filing fee of fifty dollars no later than ten business days (or such lesser period as the administrator may allow) prior to receipt of consideration or the delivery of a signed subscription agreement by an investor in the state of Washington which results from an offer being made in reliance upon WAC 460-44A-504;
(D) For an offering in reliance on Securities and Exchange Commission Rule 147 or 147A and WAC 460-44A-504, the issuer shall file the initial notice on Washington Securities Division Form WAC 460-44A-504/Rule 147/Rule 147A and pay a filing fee of fifty dollars no later than ten business days (or such lesser period as the administrator may allow) prior to receipt of consideration or the delivery of a signed subscription agreement by an investor in the state of Washington which results from an offer being made in reliance on the exemption of WAC 460-44A-504;
(ii) The issuer shall include with the initial notice a statement indicating:
(A) The date of first sale of securities in the state of Washington; or
(B) That sales have yet to occur in the state of Washington.
(b) The issuer shall file with the administrator or his or her designee such other notices on Form D as are required to be filed with the Securities and Exchange Commission. For purposes of this section, the initial notice on Securities and Exchange Commission Form D shall consist of the notice of sales on Form D filed in paper or electronic format with the Securities and Exchange Commission through the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) in accordance with EDGAR rules set forth in Regulation S-T (17 C.F.R. Part 232).
(c) If the issuer files a notice of sales on Temporary Form D or a copy of the notice of sales on Form D filed in electronic format with the Securities and Exchange Commission, it shall either be manually signed by a person duly authorized by the issuer or a photocopy of a manually signed copy.
(d) By filing for the exemption of WAC 460-44A-504, the issuer undertakes to furnish to the administrator, upon request, the information to be furnished or furnished by the issuer under WAC 460-44A-502 (2)(b) or otherwise to any purchaser that is not an accredited investor. Failure to submit the information in a timely manner will be a ground for denial or revocation of the exemption of WAC 460-44A-504.
(2) An issuer may file an amendment to a previously filed notice of sales on Form D at any time.
(3) An issuer must file an amendment to a previously filed notice of sales on Form D for an offering:
(a) To correct a material mistake of fact or error in the previously filed notice of sales on Form D, as soon as practicable after discovery of the mistake or error;
(b) To reflect a change in the information provided in the previously filed notice of sales on Form D, as soon as practicable after the change, except that no amendment is required to reflect a change that occurs after the offering terminates or a change that occurs solely in the following information:
(i) The address or relationship of the issuer of a related person identified in response to Item 3 of the notice of sales on Form D;
(ii) An issuer's revenues or aggregate net asset value;
(iii) The minimum investment amount, if the change is an increase, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in a decrease of more than ten percent;
(iv) Any address or state(s) of solicitation shown in response to Item 12 of the notice of sales on Form D;
(v) The total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than ten percent;
(vi) The amount of securities sold in the offering or the amount remaining to be sold;
(vii) The number of nonaccredited investors who have invested in the offering, as long as the change does not increase the number to more than thirty-five;
(viii) The total number of investors who have invested in the offering;
(ix) The amount of sales commissions, finders' fees or use of proceeds for payments to executive officers, directors or promoters, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than ten percent; and
(c) Annually, on or before the first anniversary of the filing of the notice of sales on Form D or the filing of the most recent amendment to the notice of sales on Form D, if the offering is continuing at that time.
(4) An issuer that files an amendment to a previously filed notice of sales on Form D must provide current information in response to all requirements of the notice of sales on Form D regardless of why the amendment is filed.
(5) For an offering of a security in reliance upon the Securities Act of 1933, Regulation D, Rule 230.506(b), or made in reliance upon the Securities Act of 1933, Regulation D, Rule 230.506(c), the issuer shall file notices and fees required by this section through the Electronic Filing Depository (EFD) system, operated by the North American Securities Administrators Association. Any amendments to previously filed notices of sales on Form D as permitted or otherwise required by this section shall be filed through EFD.