Previous

Sec. 45.55.030. Registration requirements; referrals.

(a) A person may not transact business in this state as a broker-dealer or agent unless the person is registered under this chapter.

(b) A broker-dealer or issuer may not employ an agent unless the agent is registered. The registration of an agent is not effective during a period when the agent is not associated with a particular broker-dealer registered under this chapter or a particular issuer. When an agent begins or terminates a connection with a broker-dealer or issuer, or begins or terminates those activities which make the person an agent, the agent as well as the broker-dealer or issuer shall promptly notify the administrator.

(c) A person may not transact business in this state as a state investment adviser or an investment adviser representative unless

(1) the person is registered as required under this chapter; or

(2) the person does not have a place of business in this state and

(A) the person's only clients in this state are investment companies as defined in 15 U.S.C. 80a-3 (Investment Company Act of 1940), other state investment advisers, federal covered advisers, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets of not less than $1,000,000, governmental agencies or instrumentalities whether acting for themselves or as trustees with investment control, or other institutional investors that are designated by regulation or order of the administrator; or

(B) during the preceding 12 months, the person has not had more than five clients who are residents of this state other than those specified in (A) of this paragraph; in this subparagraph, the number of the person's clients shall be determined under 17 C.F.R. 275.203(b)(3)-1 and 17 C.F.R. 275.222-2, as those regulations exist on or after October 1, 1999.

(d) A registration or notice filing expires one year from its effective date unless renewed earlier.

(e) Except with respect to a federal covered adviser whose only clients are those described in (c)(2) of this section, a federal covered adviser may not conduct an investment advisory business in this state unless the federal covered adviser complies with AS 45.55.040 (h).

(f) A person may not be registered concurrently as an agent of more than one broker-dealer or issuer. The administrator may waive this restriction if the administrator determines that the waiver would not interfere with effective supervision of the agent by the broker-dealer or issuer and the waiver is in the public interest.

(g) A person who is registered or required to be registered as a state investment adviser under this chapter may not employ an investment adviser representative who provides advisory services in or emanating from this state unless the investment adviser representative is registered under this chapter or is exempt from registration, except that the registration of the investment adviser representative is effective only when the representative is employed by a state investment adviser registered under this chapter.

(h) A federal covered adviser who has filed notice under this chapter may not employ, supervise, or associate with an investment adviser representative having a place of business located in this state unless the investment adviser representative is registered under this chapter or is exempt from registration, except that the registration of the investment adviser representative is effective only when the representative is employed by a federal covered adviser.

(i) If an investment adviser representative terminates employment with a state investment adviser or federal covered adviser, the state investment adviser or federal covered adviser shall promptly notify the administrator.

(j) A registered broker-dealer or agent is not considered to be soliciting, offering, or negotiating for the sale of or selling advisory services if the registered broker-dealer or agent refers, as part of a wrap fee, asset allocation, or market-timing program, customers who are residents of this state to a state investment adviser or federal covered adviser that is registered or has made a notice filing in this state.

Sec. 45.55.035. Limited registration of Canadian broker-dealers and agents.

(a) If a broker-dealer is registered under this section and its principal office is located in a province or territory of Canada that provides at least equivalent registration for a broker-dealer that is resident in the United States, a broker-dealer that is resident in Canada and does not have an office or other physical presence in this state may effect transactions in securities with or for or induce or attempt to induce the purchase or sale of a security by a person from Canada who is

(1) temporarily resident in this state and with whom the Canadian broker-dealer had a bona fide broker-dealer-client relationship before the person entered the United States; or

(2) resident in this state and whose transactions are in a self-directed tax-advantaged retirement plan in Canada of which the person is the holder or contributor.

(b) An agent who represents a Canadian broker-dealer registered under this section may, if the agent is registered under this section, effect transactions in securities in this state as permitted for the broker-dealer under (a) of this section.

(c) Subject to the requirements of (a) of this section, a Canadian broker-dealer may register under this section if the broker-dealer

(1) files an application in the form required by the jurisdiction in which the broker-dealer has its principal office;

(2) files a written consent to service of process under AS 45.55.980(g);

(3) is registered as a broker or dealer in good standing in the jurisdiction from which the broker-dealer is effecting transactions into this state and files evidence of the registration; and

(4) is a member of a self-regulating organization or stock exchange in Canada.

(d) An agent may register under this section in order to effect transactions in securities in this state if the agent represents a Canadian broker-dealer that is registered under this section, and the agent

(1) files an application in the form required by the jurisdiction in which the broker-dealer has its principal office;

(2) files a written consent to service of process under AS 45.55.980(g); and

(3) is registered and files evidence of good standing in the jurisdiction from which the agent is effecting transactions into this state.

(e) Registration under this section becomes effective on the 30th day after an application is filed unless it is made effective earlier by the administrator or a denial order is in effect and a proceeding is pending under AS 45.55.060 .

(f) A Canadian broker-dealer registered under this section shall

(1) maintain provincial or territorial registration and membership in good standing in a self-regulating organization or stock exchange;

(2) provide the administrator on request with books and records relating to its business in the state as a broker-dealer;

(3) inform the administrator promptly of any criminal action taken against the broker-dealer or of any finding or sanction imposed on the broker-dealer as a result of regulatory action, including that of a self-regulating organization, involving fraud, theft, deceit, misrepresentation, or similar conduct; and

(4) disclose to its clients in this state that the broker-dealer and its agents are not subject to the full regulatory requirements of this chapter.

(g) An agent of a Canadian broker-dealer registered under this section shall

(1) maintain provincial or territorial registration in good standing; and

(2) inform the administrator promptly of any criminal action taken against the agent or of any finding or sanction imposed on the broker-dealer or agent as a result of regulatory action, including that of a self-regulating organization, involving fraud, theft, deceit, misrepresentation, or similar conduct.

(h) Renewal applications for Canadian broker-dealers and agents under this section must be filed before December 1 each year and may be made by filing the most recent renewal application, if any, filed in the jurisdiction in which the broker-dealer has its principal office or, if a renewal application is not required, the most recent application filed under (c)(1) or (d)(1) of this section.

(i) An applicant for registration or renewal registration under this section shall pay the fee for broker-dealers and agents required by this chapter.

(j) A Canadian broker-dealer or agent registered under this section may not effect transactions in this state except

(1) as permitted under (a) or (b) of this section;

(2) with or through

(A) the issuers of the securities involved in the transactions;

(B) other broker-dealers; or

(C) banks, savings institutions, trust companies, insurance companies, investment companies as defined in 15 U.S.C. 80a-3 (Investment Company Act of 1940), pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees; or

(3) as otherwise permitted by this chapter.

(k) A Canadian broker-dealer or agent registered under this section and acting in accordance with the limitations in (j) of this section is exempt from all of the requirements of this chapter except the anti-fraud provisions under AS 45.55.010 and the requirements of this section. The registration of a Canadian broker-dealer or agent under this section may not be denied, suspended, or revoked except in accordance with the provisions of AS 45.55.060 for a breach of the anti-fraud provisions under AS 45.55.010 or the requirements of this section.

(l) In this section, "Canadian broker-dealer" means a broker-dealer that has its principal office in a province or territory of Canada.

Sec. 45.55.040. Registration procedure; notice filing.

(a) A broker-dealer, agent, investment adviser representative, or state investment adviser may obtain an initial or renewal registration by filing with the administrator an application together with a consent to service of process under AS 45.55.980 (g). The application must contain whatever information the administrator by regulation may require concerning such matters as

(1) the applicant's form and place of organization;

(2) the applicant's proposed method of doing business;

(3) the qualifications and business history of the applicant; in the case of a broker-dealer or state investment adviser, the qualifications and business history of a partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or state investment adviser;

(4) an injunction or administrative order or conviction of a misdemeanor involving a security or any aspect of the securities business and any conviction of a felony;

(5) the applicant's financial condition and history; and

(6) if the applicant is a state investment adviser, any information to be furnished or disseminated to a client or prospective client.

(b) The administrator may by regulation or order require an applicant for initial registration to publish an announcement of the application in one or more specified newspapers published in this state.

(c) A broker-dealer, an agent, an investment adviser representative, and a state investment adviser applicant for initial or renewal registration shall pay a registration fee established by the department by regulation. A person acting as a federal covered adviser in this state shall pay a fee for an initial and renewal notice filing under (h) of this section as required by the administrator by regulation.

(d) A registered broker-dealer, state investment adviser, or a federal covered adviser who has filed notice under this chapter may file an application for registration or notice filing, as applicable, of a successor for the unexpired portion of the year regardless of whether the successor is then in existence. A broker-dealer may file a request to transfer from a previous broker-dealer an agent's unexpired portion of the registration if the provisions of AS 45.55.030 (b) have been met. A state investment adviser may file an application to transfer from a predecessor state investment adviser or federal covered adviser the investment adviser representative's unexpired portion of the registration. The department shall establish by regulation the filing fee for filing applications under this subsection.

(e) The administrator may by regulation or order require a minimum level of capitalization for registered broker-dealers, subject to the limitations of 15 U.S.C. 78o (Securities Exchange Act of 1934), and establish minimum financial requirements for state investment advisers, subject to the limitations of 15 U.S.C. 80b-18a (Investment Advisers Act of 1940). The financial requirements may differ for those state investment advisers who have discretionary authority over or maintain custody of clients' funds or securities and those who do not.

(f) The administrator may by regulation or order require registered broker-dealers and agents to post a bond in an amount the administrator may prescribe subject to the limitations provided in 15 U.S.C. 78o (Securities Exchange Act of 1934). The administrator may determine the conditions of the bond. The administrator shall accept any appropriate deposit of cash or securities from a registered broker-dealer or agent in place of a required bond. A bond may not be required of a registrant whose net capital exceeds the amounts required by the administrator. A bond must provide for suit on it by a person who has a cause of action under AS 45.55.930 and, if required by the administrator by regulation, by a person who has a cause of action not arising under this chapter. A bond must provide that a suit may not be maintained to enforce a liability on the bond unless brought within three years after the sale or other act on which it is based.

(g) The administrator may permit initial and renewal registration and notice filings required for state investment advisers, federal covered advisers, investment adviser representatives, broker-dealers, and agents under this chapter to be filed with the United States Securities and Exchange Commission, the National Association of Securities Dealers, or other similar authority. The administrator may accept uniform securities examinations or other procedures designed to implement a uniform national securities regulatory system or facilitate common practices and procedures among the states, including participation in joint, coordinated securities examinations with other states.

(h) Except with respect to federal covered advisers whose only clients are those described in AS 45.55.030 (c)(2), before acting as a federal covered adviser in this state, a federal covered adviser shall file with the administrator those documents that have been filed with the United States Securities and Exchange Commission as the administrator, by regulation, by order, or otherwise, may require.

(i) The administrator shall by regulation or order specify procedures, fees, and an effective date for registrations, notice filings under this section, transfers of agents, and other registrations or notice filings allowed or required under this chapter.

(j) The administrator may by regulation or order require registered state investment advisers who have custody of or discretionary authority over clients' funds or securities to post a bond in an amount the administrator may establish subject to the limitations provided in 15 U.S.C. 80b-18a (Investment Advisers Act of 1940). The administrator may determine the conditions of the bond. The administrator shall accept any appropriate deposit of cash or securities in place of a required bond. A bond may not be required of a registered state investment adviser whose minimum financial condition, which may be defined by regulation, or net capital exceeds the amounts required by the administrator. A bond must provide for suit on it by a person who has a cause of action under AS 45.55.930 and, if required by the administrator by regulation, by a person who has a cause of action not arising under this chapter. A bond must provide that a suit may not be maintained to enforce a liability on the bond unless brought within three years after the sale or other act on which it is based.

(k) The administrator shall require an applicant for registration under AS 45.55.030 - 45.55.060 to submit the applicant's fingerprints and the fees required by the Department of Public Safety under AS 12.62.160 for criminal justice information and a national criminal history record check. The administrator shall submit the fingerprints and fees to the Department of Public Safety for a report of criminal justice information under AS 12.62 and a national criminal history record check under AS 12.62.400 .

Sec. 45.55.050. Post-registration provisions.

(a) Except as provided under 15 U.S.C. 78o (Securities Exchange Act of 1934), a registered broker-dealer shall make and keep the accounts, correspondence, memoranda, papers, books, and other records that the administrator requires by regulation or order. All required records shall be preserved for three years unless the administrator by regulation prescribes otherwise.

(b) Subject to 15 U.S.C. 78o (Securities Exchange Act of 1934), a registered broker-dealer shall file the financial reports the administrator requires.

(c) If the information contained in a document filed with the administrator is or becomes inaccurate or incomplete in a material respect, the federal covered adviser, state investment adviser, broker-dealer, agent, or investment adviser representative who made the filing shall promptly file a correcting amendment unless notification of the correction is given under AS 45.55.030 (b). If the document is filed with respect to a federal covered adviser, the amendment shall be filed when it is required to be filed with the United States Securities and Exchange Commission unless notification of the correction is given under AS 45.55.030 (b).

(d) All the records referred to in this section are subject at any time to reasonable periodic, special, or other examinations by representatives of the administrator, inside or outside this state, as the administrator considers necessary or appropriate in the public interest or for the protection of investors. For the purpose of avoiding unnecessary duplication of examinations, the administrator, insofar as the administrator considers it practicable in administering this subsection, may cooperate with the securities administrators of other states, the United States Securities and Exchange Commission, and any national securities exchange or national securities association registered under 15 U.S.C. 78a - 78lll (Securities Exchange Act of 1934).

(e) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), an investment adviser representative or state investment adviser shall make and keep the accounts, correspondence, memoranda, papers, books, and other records that the administrator requires by regulation or order. All required records shall be preserved for three years unless the administrator by regulation prescribes otherwise.

(f) The administrator may by regulation or order require that certain information be furnished or disseminated by persons registered or required to be registered as state investment advisers as necessary or appropriate in the public interest or for the protection of investors and advisory clients. The administrator may determine that certain information may be used in whole or partial satisfaction of this requirement if the information complies with 15 U.S.C. 80b-1 - 80b-21 (Investment Advisers Act of 1940) and the rules adopted under that act.

(g) Subject to 15 U.S.C. 80b-18a (Investment Advisers Act of 1940), a state investment adviser shall file the financial reports the administrator requires by regulation or order.

(h) A state investment adviser that has its principal place of business in a state other than this state and the investment adviser representatives of that state investment adviser are exempt from the requirements of (e) of this section if the state investment adviser is registered as an investment adviser in the state where the state investment adviser has its principal place of business and is in compliance with that state's requirements relating to accounts and records.

(i) A broker-dealer and an agent of a broker-dealer shall file with the administrator only the financial reports or other information required to be filed with the United States Securities and Exchange Commission under 15 U.S.C. 78a - 78lll (Securities Exchange Act of 1934).

(j) A state investment adviser that has its principal place of business in a state other than this state and the investment adviser representatives of that state investment adviser shall file with the administrator only the financial reports or other information required by the state in which the state investment adviser maintains its principal place of business if the state investment adviser is licensed in that state and is in compliance with that state's reporting requirements.

(k) A broker-dealer shall comply with the supervision requirements set out in Conduct Rule 3010 of the National Association of Securities Dealers, Inc.

Sec. 45.55.060. Denial, revocation, suspension, cancellation, and withdrawal of registration.

(a) The administrator may by order deny, suspend, or revoke a registration if the administrator finds that the order is in the public interest and that the applicant or registrant or, in the case of a broker-dealer or state investment adviser, a partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the broker-dealer or state investment adviser

(1) has filed an application for registration that, as of its effective date, or as of a date after filing in the case of an order denying effectiveness, was incomplete in a material respect or contained a statement that was, in light of the circumstances under which it was made, false or misleading with respect to a material fact;

(2) has wilfully or repeatedly violated, or failed to comply with, a provision of this chapter or a regulation or order under this chapter;

(3) has been convicted, within the past 10 years, of a misdemeanor involving a security or an aspect of the securities business or a felony; in this paragraph, "convicted" includes a finding of guilt based on a verdict, judgment, plea of guilty, or plea of nolo contendere, if the verdict, judgment, or plea has not been reversed, set aside, or withdrawn, regardless of whether sentence has been imposed;

(4) is permanently or temporarily enjoined by a court from engaging in or continuing conduct or a practice involving an aspect of the securities business;

(5) is the subject of an order of the administrator denying, suspending, or revoking registration as a broker-dealer, agent, state investment adviser, or investment adviser representative;

(6) is the subject of an order entered within the past five years by the securities administrator of another state or by the United States Securities and Exchange Commission denying or revoking registration as a broker-dealer, agent, state investment adviser, investment adviser representative, or the substantial equivalent of those terms as defined in this chapter, or is the subject of an order of the United States Securities and Exchange Commission suspending or expelling the person from a national securities exchange or national securities association registered under 15 U.S.C. 78a - 78lll (Securities Exchange Act of 1934), or is the subject of a United States Postal Service fraud order; but the administrator may not

(A) institute a revocation or suspension proceeding under this paragraph more than one year from the date of the order relied on; and

(B) enter an order under this paragraph on the basis of an order under another state act unless that order was based on facts that would currently constitute a ground for an order under this section;

(7) has engaged in dishonest or unethical practices or conduct in the securities or investment advisory business;

(8) is insolvent, in the sense that liabilities exceed assets, that obligations cannot be met as they mature, or that the business cannot be continued safely for the customers of the applicant or registrant, but the administrator may not enter an order against a broker-dealer or state investment adviser under this paragraph without a finding of insolvency as to the broker-dealer or state investment adviser;

(9) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided in (d) of this section;

(10) has failed to comply with the requirements of AS 45.55.050 to make, keep, or produce records required by the administrator, or to file financial reports or other information the administrator by regulation or order may require; or

(11) is a person whose license renewal is denied under AS 14.43.148 or whose license issuance or renewal is denied under AS 25.27.244 .

(b) The administrator may by order deny, suspend, or revoke any registration if the administrator finds that the order is in the public interest and that the applicant or registrant

(1) has failed reasonably to supervise agents if the applicant or registrant is a broker-dealer, or has failed reasonably to supervise employees and investment adviser representatives if the applicant or registrant is a state investment adviser; or

(2) has failed to pay the proper filing fee; but the administrator may enter only a denial order under this paragraph, and the administrator shall vacate the order when the deficiency is corrected.

(c) The administrator may not institute a suspension or revocation proceeding on the basis of a fact or transaction known to the administrator when registration became effective unless the proceeding is instituted within the next 30 days.

(d) The following provisions govern the application of (a)(9) of this section:

(1) the administrator may not enter an order against a broker-dealer on the basis of the lack of qualification of a person other than

(A) the broker-dealer if the broker-dealer is an individual; or

(B) an agent of the broker-dealer;

(2) the administrator may not enter an order against a state investment adviser on the basis of the lack of qualification of a person other than

(A) the state investment adviser if the state investment adviser is an individual; or

(B) an investment adviser representative who represents the state investment adviser in doing any of the acts that make the state investment adviser a state investment adviser;

(3) the administrator may not enter an order solely on the basis of lack of experience if the applicant or registrant is qualified by training or knowledge or both;

(4) the administrator shall consider that an agent who will work under the supervision of a registered broker-dealer need not have the same qualifications as a broker-dealer;

(5) the administrator shall consider that a state investment adviser is not necessarily qualified solely on the basis of experience as a broker-dealer or agent; if the administrator finds that an applicant for initial or renewal registration as a broker-dealer is not qualified as a state investment adviser, the administrator may by order condition the applicant's registration as a broker-dealer upon the applicant's not transacting business in this state as a state investment adviser;

(6) the administrator may by regulation provide for an examination, which may be written or oral or both, to be taken by any class of or all applicants, including applicants for registration as investment adviser representatives; however, examinations required by this paragraph are not required of a registrant under this chapter who was doing business in this state and was a resident of this state on May 9, 1959.

(e) The administrator may by order summarily postpone or suspend registration pending final determination of a proceeding under this section. Upon the entry of the order, the administrator shall promptly notify the applicant or registrant, and the employer or prospective employer if the applicant or registrant is an agent, that it has been entered and of the reasons for it and that within 15 days after the receipt of a written request the matter will be set for hearing. If no hearing is requested and none is ordered by the administrator, the order remains in effect until it is modified or vacated by the administrator. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing, may modify or vacate the order or extend it until final determination.

(f) If the administrator finds that a registrant or applicant for registration no longer exists or has ceased to do business as a broker-dealer, agent, state investment adviser, or investment adviser representative, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the administrator may by order cancel the registration or application.

(g) Withdrawal from registration as a broker-dealer, agent, state investment adviser, or investment adviser representative becomes effective 30 days after receipt of an application to withdraw or within a shorter period of time as the administrator may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within 30 days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at the time and upon the conditions as the administrator by order determines. If a proceeding is not pending or instituted and withdrawal automatically becomes effective, the administrator may nevertheless institute a revocation or suspension proceeding under (a)(2) of this section within one year after withdrawal is effective and enter a revocation or suspension order as of the last date on which registration was effective.

(h) An order may not be entered under any part of this section except the first sentence of (e) of this section without (1) appropriate prior notice to the applicant or registrant as well as the employer or prospective employer if the applicant or registrant is an agent, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law. To the extent AS 44.62 (Administrative Procedure Act) is not in conflict herewith, it applies to all procedures.

Article 03. REGISTRATION OF SECURITIES

Sec. 45.55.070. Registration requirement.

A person may not offer or sell a security in this state unless

(1) it is registered under this chapter;

(2) the security or transaction is exempted under AS 45.55.900 ; or

(3) it is a federal covered security.

Sec. 45.55.075. Federal covered securities.

(a) Unless otherwise exempt under AS 45.55.900 , a security that is a federal covered security under 15 U.S.C. 77r(b)(2) (Securities Act of 1933) may only be offered for sale and sold into, from, or within the state upon the administrator's receipt of

(1) a copy of the registration statement filed by the issuer with the United States Securities and Exchange Commission or, in place of the registration statement, the Uniform Investment Company Notice Filing Form adopted by North American Securities Administrators Association, Inc., or a similar notice filing form;

(2) a consent to service of process signed by the issuer; and

(3) a notice filing fee as prescribed by the administrator for a notice filing under this section and, if necessary to compute the fee, a report of the value of the federal covered securities offered or sold in this state.

(b) A notice filing under this section may be renewed by filing, before the expiration of an effective notice filing, a renewal notice and filing fee as prescribed by the administrator and, if necessary to compute the fee, a report of the value of the federal covered securities offered or sold in this state. A renewal notice filing is effective on the expiration date of the previous notice filing.

(c) A notice filing under this section may be amended as provided by the administrator by regulation or order. A notice filing may be terminated by an issuer upon providing the administrator with notice of the termination.

(d) With respect to a security that is a covered security under 15 U.S.C. 77r(b)(4)(D) (Securities Act of 1933), the administrator, by regulation or order, may require the issuer to file a notice on United States Securities and Exchange Commission Form D and a consent to service of process signed by the issuer no later than 15 days after the first sale of a covered security in this state and a fee established by the administrator for a notice filing under this section.

(e) The administrator, by regulation or order, may require the filing of any document filed with the United States Securities and Exchange Commission under 15 U.S.C. 77a - 77bbbb (Securities Act of 1933), with respect to a covered security under 15 U.S.C. 77r(b)(3) or (4) (Securities Act of 1933).

(f) The administrator may issue a stop order suspending the offer and sale of a federal covered security, except a federal covered security under 15 U.S.C. 77r(b)(1) (Securities Act of 1933), if the administrator finds that

(1) the stop order is in the public interest; and

(2) there is a failure to comply with a condition established under this section.

(g) The administrator, by regulation or order, may waive any or all of the provisions of this section.

Sec. 45.55.080. Registration by notification.

(a) The following securities may be registered by notification, whether or not they are also eligible for registration by coordination under AS 45.55.090 :

(1) a security whose issuer and predecessors have been in continuous operation for at least five years if

(A) there has been no default during the current fiscal year or within the three preceding fiscal years in the payment of principal, interest, or dividends on a security of the issuer, or any predecessor, with a fixed maturity or a fixed interest or dividend provision; and

(B) the issuer and predecessor during the past three fiscal years have had average net earnings, determined in accordance with generally accepted accounting practices

(i) that are applicable to all securities without a fixed maturity or a fixed interest or dividend provision outstanding at the date the registration statement is filed and equal at least five percent of the amount of these outstanding securities as measured by the maximum offering price or the market price on a day, selected by the registrant, within 30 days before the date of filing the registration statement, whichever is higher, or book value on a day, selected by the registrant, within 90 days of the date of filing the registration statement to the extent that there is neither a readily determinable market price nor a cash offering price;

(ii) that, if the issuer and predecessors have not had any security of the type specified in (i) of this subparagraph outstanding for three full fiscal years, equal at least five percent of the amount, as measured in (i) of this subparagraph, of all securities that will be outstanding if all the securities being offered or proposed to be offered, whether or not they are proposed to be registered or offered in this state, are issued;

(2) a security, other than a certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under the title or lease, registered for nonissuer distribution if

(A) any security of the same class has ever been registered under this chapter; or

(B) the security being registered was originally issued under an exemption under this chapter.

(b) A registration statement under this section must contain the following information and be accompanied by the following documents in addition to the information specified in AS 45.55.110 (c) and the consent to service of process required by AS 45.55.980 (g):

(1) a statement demonstrating eligibility for registration by notification;

(2) with respect to the issuer and any significant subsidiary, its name, address, and form of organization; the state or foreign jurisdiction; the date of its organization; and the general character and location of its business;

(3) with respect to a person on whose behalf a part of the offering is to be made in a nonissuer distribution, the person's name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; and a statement of the reasons for making the offering;

(4) a description of the security being registered;

(5) the information and documents specified in AS 45.55.100 (b)(8), (10), and (12); and

(6) in the case of registration under (a)(2) of this section which does not also satisfy the conditions of (a)(1) of this section, a balance sheet of the issuer as of a date within four months before the filing of the registration statement, and a summary of earnings for each of the two fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet, or for the period of the issuer's and predecessor's existence if less than two years.

(c) If no stop order is in effect and no proceeding is pending under AS 45.55.120 , a registration statement under this section automatically becomes effective at three o'clock Alaska Standard Time in the afternoon of the second full business day after the filing of the registration statement or the last amendment, or at an earlier time as the administrator determines.

Sec. 45.55.090. Registration by coordination.

(a) A security for which a registration statement has been filed under the Securities Act of 1933 or any security for which filing has been made under Regulations A, E, and F pursuant to subsection (b) of sec. 3 of the Securities Act of 1933 in connection with the same offering may be registered by coordination.

(b) A registration statement under this section must contain the following information and be accompanied by the following documents in addition to the information specified in AS 45.55.110 (c) and the consent to service of process required by AS 45.55.980 (g):

(1) one copy of the latest form of prospectus filed under 15 U.S.C. 77a - 77bbbb (Securities Act of 1933);

(2) if the administrator requires, copies of the articles of incorporation and bylaws, or their substantial equivalent, currently in effect; a copy of an agreement with or among underwriters; a copy of an indenture or other instrument governing the issuance of the security to be registered; and a specimen or copy of the security;

(3) if the administrator requests, any other information, or copies of any other documents, filed under 15 U.S.C. 77a - 77bbbb (Securities Act of 1933); and

(4) an undertaking to forward all future amendments to the federal prospectus, other than an amendment which merely delays the effective date of the registration statement, promptly and in any event not later than the first business day after the day they are forwarded to or filed with the United States Securities and Exchange Commission, whichever first occurs.

(c) A registration statement under this section automatically becomes effective at the moment the federal registration statement becomes effective if all the following conditions are satisfied:

(1) no stop order is in effect and no proceeding is pending under AS 45.55.120;

(2) the registration statement has been on file with the administrator for at least 10 days; and

(3) a statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions has been on file for two full business days or a shorter period which the administrator permits and the offering is made within those limitations.

(d) The registrant shall promptly notify the administrator by telephone or telegram of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. "Price amendment" means the final federal amendment which includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent upon the offering price. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the administrator may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this subsection and subsection (c) of this section if the administrator promptly notifies the registrant by telephone or telegram, and promptly confirms by letter or telegram when the administrator notifies by telephone, of the issuance of the order. If the registrant proves compliance with the requirements of this subsection and subsection (c) of this section as to notice and post-effective amendment, the stop order is void as of the time of its entry. The administrator may by regulation or otherwise waive either or both of the conditions specified in (c)(2) and (3) of this section. If the federal registration statement becomes effective before all the conditions in this subsection and subsection (c) of this section are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all the conditions are satisfied. If the registrant advises the administrator of the date when the federal registration statement is expected to become effective, the administrator shall promptly advise the registrant by telephone or telegram at the registrant's expense, whether all the conditions are satisfied and whether the administrator then contemplates the institution of a proceeding under AS 45.55.120 ; but this advice by the administrator does not preclude the institution of the proceeding at any time.

Sec. 45.55.100. Registration by qualification.

(a) A security may be registered by qualification.

(b) A registration statement under this section must contain the following information and be accompanied by the following documents in addition to the information specified in AS 45.55.110 (c) and the consent to service of process required by AS 45.55.980 (g):

(1) with respect to the issuer and any significant subsidiary: its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;

(2) with respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions: the person's name, address, and principal occupation for the past five years; the amount of securities of the issuer held by the person as of a specified date within 30 days of the filing of the registration statement; the amount of the securities covered by the registration statement to which the person has indicated an intent to subscribe; and a description of a material interest in a material transaction with the issuer or a significant subsidiary effected within the past three years or proposed to be effected;

(3) with respect to persons covered by (2) of this subsection: the remuneration paid during the past 12 months and estimated to be paid during the next 12 months, directly or indirectly, by the issuer, together with all predecessors, parents, subsidiaries, and affiliates, to all those persons in the aggregate;

(4) with respect to a person owning of record, or beneficiary if known, 10 percent or more of the outstanding shares of any class of equity security of the issuer: the information specified in (2) of this subsection other than the person's occupation;

(5) with respect to every promoter if the issuer was organized within the past three years: the information specified in (2) of this subsection, an amount paid to the promoter within that period or intended to be paid to the promoter, and the consideration for the payment;

(6) with respect to a person on whose behalf a part of the offering is to be made in a nonissuer distribution: the person's name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of a material interest in a material transaction with the issuer or a significant subsidiary effected within the past three years or proposed to be effected; and a statement of the reasons for making the offering;

(7) the capitalization and long-term debt, on both a current and a pro forma basis, of the issuer and a significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else, for which the issuer or a subsidiary has issued any of its securities within the past two years or is obligated to issue any of its securities;

(8) the kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation from this at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of that person or class; the basis upon which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders' fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering, or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of every underwriter and every recipient of a finder's fee; a copy of any underwriting or selling-group agreement under which the distribution is to be made, or the proposed form of the agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities which are to be offered other than through an underwriter;

(9) the estimated cash proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if a part of the proceeds is to be used to acquire property, including goodwill, other than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of persons who have received commissions in connection with the acquisition, and the amounts of the commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;

(10) a description of a stock option or other security options outstanding, or to be created in connection with the offering, together with the amount of the options held or to be held by every person required to be named in (2), (4), (5), (6), or (8) of this subsection and by a person who holds or will hold 10 percent or more in the aggregate of the options;

(11) the dates of, parties to, and general effect concisely stated of, every management or other material contract made or to be made otherwise than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the past two years, together with a copy of every such contract; and a description of any pending litigation or proceeding to which the issuer is a party and which materially affects its business or assets, including the litigation or proceeding known to be contemplated by governmental authorities;

(12) a copy of a prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date, to be used in connection with the offering;

(13) a specimen or copy of the security being registered; a copy of the issuer's articles of incorporation and bylaws, or their substantial equivalents, as currently in effect; and a copy of any indenture or other instrument covering the security to be registered;

(14) a signed or conformed copy of an opinion of counsel as to the legality of the security being registered, with an English translation if it is in a foreign language, that states whether the security when sold will be legally issued, fully paid, and nonassessable, and, if a debt security, a binding obligation of the issuer;

(15) the written consent of an accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than a public and official document or statement, that is used in connection with the registration statement;

(16) a balance sheet of the issuer as of a date within four months before the filing of the registration statement; a profit and loss statement and analysis or surplus for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet, or for the period of the issuer's and a predecessor's existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the same financial statements which would be required if that business were the registrant; and

(17) the additional information that the administrator requires by regulation or order.

(c) A registration statement under this section becomes effective when the administrator so orders.

(d) The administrator may by regulation or order require as a condition of registration under this section that a prospectus containing a designated part of the information specified in (b) of this section be sent or given to each person to whom an offer is made before or concurrently with whichever of the following occurs first:

(1) the first written offer made to the person, otherwise than by means of a public advertisement, by or for the account of the issuer or any other person on whose behalf the offering is being made, or by an underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by the underwriter or broker-dealer as a participant in the distribution;

(2) the confirmation of a sale made by or for the account of any such person;

(3) payment under the sale; or

(4) delivery of the security under the sale.

Sec. 45.55.110. Provisions applicable to registration and notice filings.

(a) A registration statement or a notice filing under AS 45.55.075 may be filed by the issuer, another person on whose behalf the offering is to be made, or a registered broker-dealer.

(b) A person filing a registration statement or a notice filing under AS 45.55.075 shall pay a filing fee and a registration or notice filing fee in amounts established by the department by regulation. If a registration statement is withdrawn before the effective date or a pre-effective stop order is entered under AS 45.55.120 , the administrator shall retain the filing fee. If a notice filing is withdrawn before the effective date, the administrator shall retain the notice filing fee.

(c) A registration statement must specify

(1) the amount of securities to be offered in this state;

(2) the states in which a registration statement or similar document in connection with the offering has been or is to be filed; and

(3) an adverse order, judgment, or decree entered in connection with the offering by the regulatory authorities in each state or by any court or the United States Securities and Exchange Commission.

(d) A document filed under this chapter within five years preceding the filing of a registration statement or a notice filing under AS 45.55.075 may be incorporated by reference in the registration statement or notice filing to the extent that the document is currently accurate.

(e) The administrator may by regulation or order permit the omission of an item of information or document from a registration statement or a notice filing under AS 45.55.075 .

(f) In the case of a nonissuer distribution, information may not be required under AS 45.55.100 or (j) of this section unless it is known to the person filing the registration statement or to the persons on whose behalf the distribution is to be made, or can be furnished by them without unreasonable effort or expense.

(g) The administrator may by regulation or order require as a condition of registration by qualification or coordination that a security issued within the past three years or to be issued to a promoter for a consideration substantially different from the public offering price, or to a person for a consideration other than cash, be deposited in escrow, and that the proceeds from the sale of the registered security in this state be impounded until the issuer receives a specified amount from the sale of the security either in this state or elsewhere. The administrator may by regulation or order determine the conditions of an escrow or impounding required in this subsection but the administrator may not reject a depository solely because of location in another state.

(h) The administrator may by regulation or order require as a condition of registration that a security registered by qualification or coordination be sold only on a specified form of subscription or sale contract, and that a signed or conformed copy of each contract be filed with the administrator or preserved for any period up to three years specified in the regulation or order.

(i) A notice filing under AS 45.55.075 is effective on receipt by the administrator. A registration statement or a notice filing under AS 45.55.075 is effective for one year from its effective date or any longer period during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer who is still offering part of an unsold allotment or subscription taken by the underwriter or broker-dealer as a participant in the distribution, except during the time a stop order is in effect under AS 45.55.120 . The administrator may establish a different expiration date for purposes of coordination with a national registration or notice filing system. The administrator may by regulation provide for an automatic extension for one additional year of the effective date for notice filings under AS 45.55.075 if the extended expiration date is set at the same time the notice filing is made effective and the notice filing fee reflects the extension. All outstanding securities of the same class as a registered security are considered to be registered for the purpose of any nonissuer transaction if the registration statement is effective and between the thirtieth day after the entry of a stop order suspending or revoking the effectiveness of the registration statement under AS 45.55.120 , if the registration statement did not relate in whole or in part to a nonissuer distribution, and one year from the effective date of the registration statement. A registration statement may not be withdrawn for one year from its effective date if any securities of the same class are outstanding. A registration statement may be withdrawn otherwise only in the discretion of the administrator.

(j) So long as a registration statement is effective, the administrator may by regulation or order require the person who filed the registration statement to file reports, not more often than quarterly, to keep reasonably current the information contained in the registration statement and to disclose the progress of the offering.

(k) A notice filing under AS 45.55.075 relating to a security issued by a face-amount certificate company or a redeemable security issued by an open-end management company or unit investment trust, as those terms are defined in 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), may be amended after its effective date so as to increase the securities specified as proposed to be offered if the notice filing was for a specified dollar amount of securities to be offered in this state and if the total fees were based on the dollar amount of securities to be offered. An amendment becomes effective when the administrator so orders. A person filing an amendment shall pay a fee, calculated in the manner specified in (b) of this section, with respect to the additional securities proposed to be offered.

Sec. 45.55.120. Denial, suspension, and revocation of registration.

(a) The administrator may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the administrator finds that the order is in the public interest and that

(1) the registration statement as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment under AS 45.55.110 (k) as of its effective date, or any report under AS 45.55.110 (j) is incomplete in a material respect or contains a statement that was, in the light of the circumstances under which it was made, false or misleading with respect to a material fact;

(2) a provision of this chapter or a regulation, order, or condition lawfully imposed under this chapter has been wilfully violated, in connection with the offering, by

(A) the person filing the registration statement;

(B) the issuer, a partner, officer, or director of the issuer, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or

(C) any underwriter;

(3) the security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction under another federal or state act applicable to the offering; but the administrator may not

(A) institute a proceeding against an effective registration statement under this paragraph more than one year from the date of the order or injunction relied on; or

(B) enter an order under this paragraph on the basis of an order or injunction entered under another state act unless that order or injunction was based on facts that would currently constitute a ground for a stop order under this section;

(4) the issuer's enterprise or method of business includes or would include activities that are illegal where performed;

(5) the offering has worked or tended to work a fraud upon purchasers or would so operate;

(6) the offering has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participation, or unreasonable amounts of kinds of options;

(7) when a security is sought to be registered by notification, it is not eligible for that registration;

(8) when a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by AS 45.55.090(b)(4); or

(9) the applicant or registrant has failed to pay the proper filing fee; but the administrator may enter only a denial order under this paragraph and the administrator shall vacate the order when the deficiency is corrected.

(b) The administrator may not institute a stop-order proceeding against an effective registration statement on the basis of a fact or transaction known to the administrator when the registration statement became effective unless the proceeding is instituted within the next 30 days.

(c) The administrator may by order summarily postpone or suspend the effectiveness of the registration statement pending final determination of a proceeding under this section. Upon the entry of the order, the administrator shall promptly notify each person specified in (d) of this section that it has been entered and of the reasons for it and that within 15 days after the receipt of a written request the matter will be set for hearing. If no hearing is requested and none is ordered by the administrator, the order remains in effect until it is modified or vacated by the administrator. If a hearing is requested or ordered, the administrator, after notice and opportunity for hearing to each person specified in (d) of this section, may modify or vacate the order or extend it until final determination.

(d) A stop order may not be entered under any part of this section except the first sentence of (c) of this section without

(1) appropriate prior notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;

(2) opportunity for hearing; and

(3) written findings of fact and conclusions of law.

(e) The administrator may vacate or modify a stop order if the administrator finds that the conditions that prompted entry have changed or that it is otherwise in the public interest to do so.

Article 04. MISCELLANEOUS PROVISIONS

Sec. 45.55.130. [Renumbered as AS 45.55.990 ].

Repealed or Renumbered

Sec. 45.55.138. Application to Alaska Native Claims Settlement Act corporations.

The initial issue of stock of a corporation organized under Alaska law pursuant to 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) is not a sale of a security under AS 45.55.070 and 45.55.990(28).

Sec. 45.55.139. Reports of corporations.

A copy of all annual reports, proxies, consents or authorizations, proxy statements, and other materials relating to proxy solicitations distributed, published, or made available by any person to at least 30 Alaska resident shareholders of a corporation that has total assets exceeding $1,000,000 and a class of equity security held of record by 500 or more persons and which is exempted from the registration requirements of AS 45.55.070 by AS 45.55.138 , shall be filed with the administrator concurrently with its distribution to shareholders.

Sec. 45.55.140. [Renumbered as AS 45.55.900 ].

Repealed or Renumbered

Sec. 45.55.150. Sales and advertising literature.

The administrator may by regulation or order establish requirements for or require the filing of a prospectus, a pamphlet, a circular, a form letter, an advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, clients, or prospective clients by an issuer, a state investment adviser, a federal covered adviser, or a broker-dealer, unless

(1) the security or transaction is exempt under AS 45.55.900 and the applicable provision of that section does not place a limitation on sales and advertising literature;

(2) the security is a federal covered security; or

(3) the broker-dealer, state investment adviser, or federal covered adviser is exempt or excluded from the requirements of this section under this chapter or federal law.

Sec. 45.55.155. Viatical settlement interests.

(a) Before the sale of a viatical settlement interest, an issuer shall provide a prospective buyer with information that is sufficient to make an informed investment decision. The issuer shall also provide the information to the administrator upon request if the issuer is not otherwise required to file the information with the administrator. In this subsection, "information that is sufficient to make an informed investment decision" includes state-mandated disclosure forms and a disclosure of any significant factors that may affect the outcome of the investment.

(b) Except as may be required in the course of conduct of the responsibilities of the Department of Commerce, Community, and Economic Development, an issuer of a viatical settlement interest may not disclose to another person the identity of the viator or insured of the insurance policy that is the subject of the viatical settlement interest. The viator may waive this prohibition against disclosure if the waiver is in writing and signed by the viator.

Next