Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 21.20.320(9), 21.20.450.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: RCW 21.20.320(9) was amended during the 1997 legislative session to increase the director's exemptive authority from $500,000 to $5,000,000. WAC 460-44A-504 is adopted pursuant to this statutory section and is currently limited to aggregate offering of not more than $500,000. Rule 504 of Regulation D, the federal counterpart to WAC 460-44A-504, is currently available for aggregate offerings of up to $1,000,000.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: The federal Securities and Exchange Commission (SEC) and each of the fifty states and the District of Columbia also regulate this area. Since one of the goals for any amendment to this regulation is increased uniformity, the regulations of those agencies will be taken into account in proposing any changes to this rule.

Process for Developing New Rule: Please see paragraph above. In addition, comments are solicited from the Division's Advisory Board and the WSBA Securities Committee.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting William M. Beatty, Securities Division, Department of Financial Institutions, P.O. Box 9033, Olympia, WA 98507-9033, (360) 902-8760, FAX (360) 704-6923, e-mail bbeatty@dfi.wa.gov, Securities Division Web Site http://www.wa.gov/dfi/securities.

April 2, 1998

Michael E. Stevenson

Securities Administrator