FINANCIAL INSTITUTIONS

[Filed June 15, 2018, 1:48 p.m.]

Preproposal statement of inquiry was filed as WSR 18-08-037.

Title of Rule and Other Identifying Information: The securities division proposes to adjust the filing fees required for initial and renewal applications for registration as an investment adviser, broker-dealer, investment adviser representative, and securities salesperson, in addition to the initial and renewal and notice filing fees for federal covered advisers, upward by ten dollars to defray the costs of administering the Securities Act of Washington, chapter 21.20 RCW, pursuant to RCW 21.20.340 and 43.320.110 as amended by SB 6024 (2018).

Hearing Location(s): On July 26, 2018, at 3:00 p.m., at the Department of Financial Institutions, 150 Israel Road S.W., Room 319, Tumwater, WA 98501.

Date of Intended Adoption: July 27, 2018.

Submit Written Comments to: Faith L. Anderson, Chief of Registration and Regulatory Affairs, Securities Division, Department of Financial Institutions, P.O. Box 9033, Olympia, WA 98507-9033, email faith.anderson@dfi.wa.gov, fax 360-704-6480.

Assistance for Persons with Disabilities: Contact Carolyn Hawkey, phone 360-902-8824, fax 360-902-0524, TTY 360-664-8126, email Carolyn.hawkey@dfi.wa.gov, by July 19, 2018.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: On March 22, 2018, Governor Jay Inslee signed into law SB 6024, which authorizes the director of the department of financial institutions to increase the fees set forth in RCW 21.20.340 upward by no more than fifteen dollars upon a finding that a fee increase is necessary to defray the costs of administering the Securities Act of Washington. The securities division's annual revenues are insufficient to sustain its operations. To address this deficiency, the securities division now proposes to increase the fees associated with initial and renewal applications for registration as an investment adviser, broker-dealer, investment adviser representative, and securities salesperson, in addition to the initial and renewal notice filing fees for federal covered advisers, upward by ten dollars with an effective date of January 1, 2019. The full amount of any fee increase will be allocated to the securities division.

Reasons Supporting Proposal: The securities division's annual revenues are insufficient to sustain its regular operations. The securities division's annual expenditures have exceeded its revenues cumulatively by approximately $14.4 million since fiscal year 2004. The securities division's yearly deficits are projected to continue through fiscal year 2019, resulting in an approximate $7.5 million deficit in fund balance for the division, far below the recommended minimum fund balance of $1.6 million. The proposed fee increase will correct the deficiencies in revenues that have persisted since fiscal year 2004.

Statutory Authority for Adoption: RCW 21.20.340 and 43.320.110 as amended by SB 6024 (2018).

Statute Being Implemented: RCW 21.20.340 and 43.320.110 as amended by SB 6024 (2018).

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

Name of Agency Personnel Responsible for Drafting: Faith L. Anderson, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760; Implementation: Joanne Jones, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760; and Enforcement: William M. Beatty, 150 Israel Road S.W., Tumwater, WA 98501, 360-902-8760.

A school district fiscal impact statement is not required under RCW 28A.305.135.

A cost-benefit analysis is not required under RCW 34.05.328. Pursuant to RCW 34.05.328 (5)(b)(vi), a preliminary cost-benefit analysis is not required because the proposed rule would merely adjust fees pursuant to legislative standards.

This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:

Is exempt under RCW 19.85.025(3) as the rules set or adjust fees under the authority of RCW 19.02.075 or that set or adjust fees or rates pursuant to legislative standards, including fees set or adjusted under the authority of RCW 19.80.045.

Chapter 460-05A WAC

FEES

WAC 460-05A-010Licensing fees.

(1) In accordance with RCW 21.20.340(15), the fees specified in RCW 21.20.340 (6) and (7) are adjusted upward by ten dollars effective January 1, 2019, in order to defray the costs of administering the Securities Act of Washington, chapter 21.20 RCW. Accordingly, the following fees shall apply:

(a) For registration of a broker-dealer or investment adviser, the fee shall be one hundred sixty dollars for original registration and eighty-five dollars for each annual renewal. When an application is denied or withdrawn the director shall retain one half of the fee.

(b) For a federal covered adviser filing pursuant to RCW 21.20.050, the fee shall be one hundred sixty dollars for original notification and eighty-five dollars for each annual renewal. A fee shall not be assessed in connection with converting an investment adviser registration to a notice filing when the investment adviser becomes a federal covered adviser.

(c) For registration of a salesperson or investment adviser representative, the fee shall be fifty dollars for each original registration with each employer and thirty dollars for each annual renewal. When an application is denied or withdrawn the director shall retain one half of the fee.

(2) Upon a finding by the department of financial institutions that the fee increase, or portion thereof, set forth in subsection (1) of this section is not necessary to defray the costs of administering the Securities Act of Washington, chapter 21.20 RCW, the department may waive that portion of the fee attributable to a fee increase under RCW 21.20.340(15).