Legislature(2015 - 2016)

2015-04-13 House Journal

Full Journal pdf

2015-04-13                     House Journal                      Page 0876
HB 194                                                                                                                        
HOUSE BILL NO. 194 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
     "An Act repealing and reenacting the Alaska Securities Act,                                                                
     including provisions relating to exempt securities and                                                                     
     transactions; relating to registration of securities, firms, and agents                                                    
     that offer or sell securities and investment advice; relating to                                                           
     administrative, civil, and criminal enforcement provisions,                                                                
     including restitution and civil penalties for violations; allowing                                                         
     certain civil penalties to be used for an investor training fund;                                                          
     establishing increased civil penalties for harming older Alaskans;                                                         
     retaining provisions concerning corporations organized under the                                                           
     Alaska Native Claims Settlement Act; amending Rules 4, 5, 54,                                                              
     65, and 90, Alaska Rules of Civil Procedure; and providing for an                                                          
     effective date."                                                                                                           
was read the first time and referred to the Labor & Commerce,                                                                   
Judiciary, and Finance Committees.                                                                                              
The following fiscal note(s) apply:                                                                                             

2015-04-13                     House Journal                      Page 0877
1.  Indeterminate, Dept. of Commerce, Community, & Economic                                                                     
The Governor's transmittal letter dated April 11, 2015, follows:                                                                
"Dear Speaker Chenault:                                                                                                         
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to the Alaska Securities                                                        
Act and certain provisions of the Alaska Native Claims Settlement Act                                                           
(ANCSA) proxy solicitations.                                                                                                    
The bill would modify AS 45 by adding a new chapter, AS 45.56,                                                                  
relating to the Alaska Securities Act. The proposed updates would                                                               
modernize and streamline the State's outdated securities laws to                                                                
recognize industry changes and to support new means of raising                                                                  
capital, while enhancing investor protections and remedies. By                                                                  
adopting relevant provisions of the Uniform Securities Act (2002), this                                                         
new Alaska Securities Act would incorporate proven successful                                                                   
practices in the industry but maintain Alaska-specific provisions                                                               
relevant to the unique features of the state. Moreover, the updates                                                             
would eliminate redundant or outdated references and practices.                                                                 
Currently, AS 45.55 governs securities transactions in the state. Since                                                         
its adoption in 1961, there have only been two relevant changes to our                                                          
securities law. In 1999, a portion of the existing law was revised after                                                        
the passage of the National Securities Markets Improvement Act of                                                               
1996. In 2014, Chapter 46, SLA 2014 eliminated several filing                                                                   
requirements for certain securities exemptions, but otherwise left the                                                          
majority of the Alaska Securities Act unchanged. It remains outdated.                                                           
By example, the current version of the Alaska Securities Act limits                                                             
official notification of certain dates to telegram or telephone, but not                                                        
electronic means, and continues to list stock exchanges that have                                                               
merged with other entities or no longer exist. The financial industry                                                           
has changed dramatically in the last 15 years and an entire overhaul of                                                         
the Alaska Securities Act is necessary to put the State's laws governing                                                        
securities transactions in line with other regulatory regimes.                                                                  
Using the Uniform Securities Act as a springboard for changes to the                                                            
Alaska Securities Act, our State benefits from a time-tested regulatory                                                         

2015-04-13                     House Journal                      Page 0878
regime that has been adopted and used in at least 20 other states. By                                                           
incorporating provisions proven to improve the regulation of the                                                                
securities industry in other states into our laws, the state and persons                                                        
doing business here will benefit. Using the Uniform Securities Act for                                                          
the basic framework also provides familiarity to many industry                                                                  
professionals that are familiar with the Alaska Securities Act.                                                                 
Using the Uniform Securities Act as the starting point, the bill would                                                          
incorporate several Alaska-specific provisions aimed at protecting and                                                          
supporting the public and industry. By example, proposed                                                                        
AS 45.56.220 would provide an exemption for small intrastate                                                                    
investment opportunities, commonly referred to as "crowdfunding."                                                               
This would encourage local capital raising without burdensome                                                                   
administrative oversight and still provide necessary protections to                                                             
Alaskan investors. Additionally, most notice filings relating to small                                                          
projects or investments are eliminated, but investor protections are                                                            
The bill would update enforcement provisions by increasing penalties                                                            
for those who violate the Alaska Securities Act, allow restitution to be                                                        
ordered to compensate victims for their losses, and provide for                                                                 
enhanced civil penalties against violators who harm or injure an older                                                          
Alaskan. Further, the bill would direct that a small portion of civil                                                           
penalties may be used to provide investor education to Alaskans.                                                                
The bill also would modify existing provisions related to the treatment                                                         
of ANCSA proxy solicitations in the existing chapter, AS 45.55. These                                                           
limited modifications do not change any substantive law, but instead                                                            
reorganize the existing laws regulating ANCSA proxy solicitations                                                               
into their own chapter, as they are best regulated.                                                                             
I urge your prompt and favorable action on this measure.                                                                        
Bill Walker