WSR 07-23-073

PREPROPOSAL STATEMENT OF INQUIRY

DEPARTMENT OF

FINANCIAL INSTITUTIONS
(Securities Division)

[ Filed November 19, 2007, 1:30 p.m. ]

Subject of Possible Rule Making: The securities division is considering amending its rules in light of proposals by the Securities and Exchange Commission (SEC) to amend its rules concerning the offer or sale of securities in private and limited transactions that are exempt from registration. In particular, the securities division is considering amending the rules set forth in WAC 460-44A-500 through 460-44A-508 and 460-44A-300.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 21.20.450, 21.20.320 (1), (9), (17), and 21.20.340(11).

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The SEC has proposed amendments that would include individuals with $750,000 in investments in the definition of "accredited investor," adjust financial thresholds for inflation, shorten the integration period from six months to ninety days, and adopt a uniform disqualification provision. The SEC has also proposed to mandate electronic filing of Form D and a new exemption for sales to "large accredited investors" through the use of a limited announcement. Because the rules set forth in WAC 460-44A-500 through 460-44A-508 are designed to coordinate with federal Regulation D and the proposed new exemption is similar to WAC 460-44A-300, the division is considering possible amendments in light of the proposed rule making at the federal level.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: The federal SEC also regulates the offer or sale of securities. As mentioned above, the SEC is considering amending similar federal exemptions from registration for private offerings, mandating electronic filing, and adopting a new federal exemption from registration for offers of securities to "large accredited investors" involving a limited announcement of the offering. The SEC has published its first set of rule-making notices on these matters and is expected to publish further rule-making notices prior to the adoption of final rules. The securities division will consider any final rules adopted by the SEC and will seek, where appropriate, to coordinate its own rules with those of the SEC.

Process for Developing New Rule: The division is soliciting comments from interested persons. The SEC is also considering comments received in response to its own rule-making notices.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Faith L. Anderson, Department of Financial Institutions, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, phone (360) 725-7825, fax (360) 704-6480, e-mail fanderson@dfi.wa.gov.

November 16, 2007

Michael E. Stevenson

Director of Securities

Washington State Code Reviser's Office