WSR 02-19-092

PROPOSED RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

[ Filed September 17, 2002, 12:20 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 02-15-069.

Title of Rule: Amendments to WAC 460-16A-205 to update existing and adopt new North American Securities Administrators Association (NASAA) guidelines and statements of policy.

Purpose: The Washington Securities Division uses guidelines and policies created by NASAA as the basis for regulating certain offerings and licensees. These guidelines and policies are periodically updated and occasionally new guidelines and policies are adopted. This amendment would update Washington's regulations to reflect the latest versions of all previously adopted guidelines. It would also adopt NASAA's risk disclosure guidelines and guidelines for general obligation financing by religious organizations for the first time. This will facilitate greater uniformity with the many other states that rely on NASAA guidelines and policies.

Statutory Authority for Adoption: RCW 21.20.450.

Statute Being Implemented: RCW 21.20.450.

Summary: WAC 460-16A-205 (1)(f), (h), (k), (m), (n), (p), (s), (t), and (u) would be amended to adopt the most recent version of the subject NASAA guidelines and codified in those subsections. New subsection (1)(w) would adopt the "general obligation financing by religious denomination guidelines," while new subsection (1)(x) would adopt the "risk disclosure guidelines."

Reasons Supporting Proposal: Many states rely on NASAA guidelines and policies as the basis for their regulations. This proposal will facilitate greater uniformity with those states and decrease the possibility of an issuer being subjected to conflicting or inconsistent regulations.

Name of Agency Personnel Responsible for Drafting: William M. Beatty, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760; Implementation: Helen Howell, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760; and Enforcement: Deborah R. Bortner, 210 11th Avenue S.W., Olympia, WA 98504, (360) 902-8760.

Name of Proponent: Department of Financial Institutions, Securities Division, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: The Washington Securities Division uses guidelines and policies created by NASAA as the basis for regulating certain offerings and licensees. These guidelines and policies are periodically updated and occasionally new guidelines and policies are adopted. This amendment would update Washington's regulations to reflect the latest versions of all previously adopted guidelines. It would also adopt NASAA's risk disclosure guidelines and guidelines for general obligation financing by religious organizations for the first time. Many states rely on NASAA guidelines and policies as the basis for their regulations. This proposal will facilitate greater uniformity with those states and decrease the possibility of an issuer being subjected to conflicting or inconsistent regulations.

Proposal Changes the Following Existing Rules: WAC 460-16A-205 (1)(f), (h), (k), (m), (n), (p), (s), (t), and (u) would be amended to adopt the most recent version of the subject NASAA guidelines codified in those subsections. New subsection (1)(w) would adopt the "general obligation financing by religious denomination guidelines," while new subsection (1)(x) would adopt the "risk disclosure guidelines."

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposal does not impose additional costs on business.

RCW 34.05.328 does not apply to this rule adoption. The Department of Financial Institutions is not one of the agencies listed in RCW 34.05.328.

Hearing Location: Department of Financial Institutions, Securities Division, Executive Conference Room, 210 11th Avenue S.W., Suite 300, Olympia, WA 98504, on October 23, 2002, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Darlene Christianson by October 21, 2002, TDD (360) 664-8126 or (360) 902-8760.

Submit Written Comments to: William M. Beatty, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, fax (360) 704-6923, e-mail bbeatty@dfi.wa.gov, by October 22, 2002.

Date of Intended Adoption: October 23, 2002.

September 13, 2002

Helen P. Howell

Director

OTS-5798.1


AMENDATORY SECTION(Amending WSR 98-17-013, filed 8/10/98, effective 9/10/98)

WAC 460-16A-205   Adoption of NASAA statements of policy.   (1) In order to promote uniform regulation, the administrator adopts the following North American Securities Administrators Association (NASAA) statements of policy for offerings registering pursuant to RCW 21.20.180 or 21.20.210:

(a) Registration of publicly offered cattle feeding programs, as adopted September 17, 1980;

(b) Registration of commodity pool programs, as adopted with amendments through August 30, 1990;

(c) Equipment programs, as adopted with amendments through October 24, 1991;

(d) Registration of oil and gas programs, as adopted with amendments through October 24, 1991;

(e) Real estate investment trusts, as adopted with amendments through September 29, 1993;

(f) Real estate programs, as adopted with amendments through ((October 24, 1991)) September 29, 1993;

(g) Loans and other material affiliated transactions, as adopted with amendments through November 18, 1997;

(h) Options and warrants, as adopted with amendments through ((November 18, 1997)) September 28, 1999;

(i) Registration of direct participation programs - omnibus guidelines, as adopted March 29, 1992;

(j) Mortgage program guidelines, as adopted September 10, 1996;

(k) Church bonds, as adopted ((April 29, 1981)) April 14, 2002;

(l) Health care facility offerings, pertaining to the offering of nonprofit health care facility bonds, as adopted April 5, 1985;

(m) Corporate securities definitions, as adopted ((April 27, 1997)) September 28, 1999;

(n) Impoundment of proceeds, as adopted with amendments through ((April 27, 1997)) September 28, 1999;

(o) Preferred stock, as adopted with amendments through April 27, 1997;

(p) Promotional shares, as adopted ((November 18, 1997)) September 28, 1999, except that the term promotional shares shall be limited to those equity securities which were issued within the last three years and that all promotional shares in excess of twenty-five percent of the shares to be outstanding upon completion of the offering may be required to be deposited in escrow absent adequate justification that escrow of such shares is not in the public interest and not necessary for the protection of investors;

(q) Registration of asset-backed securities, as adopted October 25, 1995, except for offerings registering or required to register pursuant to chapter 460-33A WAC or RCW 21.20.705 through 21.20.855;

(r) Promoters' equity investment, as adopted with amendments through April 27, 1997;

(s) Specificity in use of proceeds, as adopted ((April 27, 1997)) September 28, 1999;

(t) Underwriting expenses, underwriter's warrants, selling expenses, and selling security holders, as adopted with amendments through ((April 27, 1997)) September 28, 1999;

(u) Unsound financial condition, as adopted ((April 27, 1997)) September 28, 1999; ((and))

(v) Unequal voting rights, as adopted October 24, 1991;

(w) Guidelines for general obligation financing by religious denominations, as adopted April 17, 1994; and

(x) Risk disclosure guidelines, as adopted September 9, 2001.

(2) An offering registering pursuant to RCW 21.20.180 or 21.20.210 that falls within one or more of the statements of policy listed in subsection (1) of this section must comply with the requirements of said statement of policy or policies.

(3) The statements of policy referred to in subsection (1) of this section are found in CCH NASAA Reports published by Commerce Clearing House. Copies are also available at the office of the securities administrator.

[Statutory Authority: RCW 21.20.450. 98-17-013, 460-16A-205, filed 8/10/98, effective 9/10/98; 96-11-017, 460-16A-205, filed 5/6/96, effective 6/6/96; 95-17-068, 460-16A-205, filed 8/16/95, effective 9/16/95; 93-01-075, 460-16A-205, filed 12/14/92, effective 1/14/93; 91-04-008, 460-16A-205, filed 1/25/91, effective 2/25/91.]

Washington State Code Reviser's Office