WSR 98-18-032

PERMANENT RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

(Securities Division)

[Filed August 26, 1998, 10:55 a.m.]

Date of Adoption: August 26, 1998.

Purpose: To amend WAC 460-44A-050 to address the scope of the term "issuer isolated transaction" in addition to the term "nonissuer isolated transaction" currently defined in the rule. Once amended, the rule will more completely explain the scope of the isolated transaction exemption of RCW 21.20.320(1) relating to both issuer as well as nonissuer transactions. Only nonissuer isolated transactions are currently addressed by the rule.

Citation of Existing Rules Affected by this Order: Amending WAC 460-44A-050.

Statutory Authority for Adoption: RCW 21.20.450.

Adopted under notice filed as WSR 98-15-110 on July 20, 1998.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, amended 1, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 1, repealed 0.

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.

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

August 26, 1998

John L. Bley

Director

OTS-2325.1

AMENDATORY SECTION (Amending Order SD-130-77, filed 11/23/77)

WAC 460-44A-050  Isolated ((nonissuer)) transactions--Sales not involving a public offering. ((A nonissuer)) (1) An "isolated transaction" within the meaning of RCW 21.20.320(1) includes:

(((1))) (a) Subject to the limitation of (b) of this subsection, any sale of an outstanding security by or on behalf of a person not in control of the issuer or controlled by the issuer or under common control with the issuer and not involving a distribution((. A transaction is presumed to be "isolated" if));

(b) Any sale satisfying the requirements of (a) of this subsection that is effected through a broker-dealer, provided that it is one of not more than three such transactions effected by or through the broker-dealer in this state during the prior twelve months;

(((2))) (c) Any sale of an outstanding security by or on behalf of a person in control of the issuer or controlled by the issuer or under common control with the issuer if the sale is effected pursuant to:

(i) Brokers' transactions in accordance with section 4(4) of the Securities Act of 1933 and Rule 144 thereunder; or

(ii) Any other transaction not effected through a broker-dealer and not involving a distribution, if the sale, including any other sales of securities of the same class during the prior twelve months inside or outside this state by the person, does not exceed 1% of the outstanding shares or units of that class; or

(d) Any sale of a security by or on behalf of an issuer that is one of not more than three such transactions inside or outside this state during the prior twenty-four months.

An exemption provided by (a), (b), (c), or (d) of this subsection shall not be available for any offering made in a manner inconsistent with the limitations set forth in (a), (b), (c), or (d) of this subsection, respectively.

(2) "Sales not involving a public offering," within the meaning of RCW 21.20.320(1), is interpreted by the director in a manner consistent with section 4(2) of the federal Securities Act of 1933 and Securities and Exchange Commission Securities Act Release No. 4552.

Note: Pursuant to RCW 21.20.320(1), the director has promulgated a rule "establishing a nonpublic offering exemption" at WAC 460-44A-506.

[Order SD-130-77, § 460-44A-050, filed 11/23/77.]