NOTICE OF PROPOSED CHANGES ON SECURITIES
IN THE REGULATIONS OF THE DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT

BRIEF DESCRIPTION

The Department of Commerce, Community, and Economic Development proposes regulation changes to implement SB126, to require notice filings for federal crowdfunding offerings, and to require that notice filings for Regulation D, Rule 506 offerings be filed electronically.

The Department of Commerce, Community, and Economic Development proposes to adopt regulation changes in Title 3, Chapter 8, of the Alaska Administrative Code, dealing with securities, including the following:

1. 3 AAC 08.086 is proposed to be added to require notice filings for offerings relying on the            federal crowdfunding exemption.
2. 3 AAC 08.506 is proposed to be amended to require notice filings for Regulation D, Rule 506 offerings be filed electronically using the Electronic Filing Depository (“EFD”) system provided by the North American Securities Administrators Association (“NASAA”).
3. 3 AAC 08.520 is proposed to be amended to expand the definition of general solicitation and advertisement for Regulation D offerings to include advertising on a publically accessible website.
4. 3 AAC 08.810 is proposed to be added to implement SB126 by clarifying the notice filing procedure for offerings claiming the intrastate crowdinvesting exemption in AS 45.55.175.  
5. 3 AAC 08.820 is proposed to be added to implement SB126 by requiring an issuer relying on the crowdinvesting exemption in AS 45.55.175 to provide prospective purchasers with certain disclosures. This section also specifies that an issuer must require investors sign an acknowledgment of risk.
6. 3 AAC 08.830 is proposed to be added to implement SB126 by clarifying the terms of an escrow agreement for offerings relying on the crowdinvesting exemption in AS 45.55.175.
7. 3 AAC 08.840 is proposed to be added to implement SB126 by specifying how offerings relying on the crowdinvesting exemption in AS 45.55.175 may be advertised and solicited.
8. 3 AAC 08.850 is proposed to be added to implement SB126 by clarifying what constitutes evidence of state residency for purchasers of securities relying on the crowdinvesting exemption in AS 45.55.175.
9. 3 AAC 08.860 is proposed to be added to implement SB126 by clarifying the recordkeeping requirements related to an offering relying on the crowdinvesting exemption in AS 45.55.175.
10. 3 AAC 08.870 is proposed to be added to implement SB126 by clarifying the requirements to advertise, sell, or offer securities on a website operated by an issuer in an offering relying on the crowdinvesting exemption in AS 45.55.175.
11. 3 AAC 08.880 is proposed to be added to implement SB126 by requiring a notice filing for a third party website that advertises securities relying on the crowdinvesting exemption in AS 45.55.175.
12. 3 AAC 08.910(1)(A) is proposed to be repealed and readopted to remove “Standard and Poor’s Standard Corporation Descriptions” and to add “OTCQX Market” and “OTCQB Market” to the list of nationally recognized securities manuals under AS 45.55.900(b)(17).
13. 3 AAC 08.920 is proposed to be amended to require a nonrefundable $150 notice filing fee for an offering relying on the crowdinvesting exemption in AS 45.55.175, a nonrefundable $50 notice filing fee for a third party website that advertises securities relying on the crowdinvesting exemption in AS 45.55.175, and a nonrefundable $50 notice filing fee for an offering relying on the federal crowdfunding exemption.
14. 3 AAC 08.950 is proposed to be amended to add a definition for “EFD system.”

You may comment on the proposed regulation changes, including the potential costs to private persons of complying with the proposed changes, by submitting written comments to Emily Gaffney, Regulations Specialist, Division of Banking and Securities, Department of Commerce, Community, and Economic Development, P.O. Box 110807, Juneau, AK 99811-0807. Additionally, the Department of Commerce, Community, and Economic Development will accept comments by facsimile at (907) 465-1230 and by electronic mail at dbsregs@alaska.gov. Comments may also be submitted through the Alaska Online Public Notice System by accessing this notice on the system and using the comment link. The comments must be received not later than 4:30 p.m. on September 7, 2016.

You may submit written questions relevant to the proposed action to Emily Gaffney by electronic mail at dbsregs@alaska.gov or by mail at P.O. Box 110807, Juneau, AK 99811-0807. The questions must be received at least 10 days before the end of the public comment period. The Department of Commerce, Community, and Economic Development will aggregate its response to substantially similar questions and make the questions and responses available on the Alaska Online Public Notice System and the Division of Banking and Securities’ website at https://www.commerce.alaska.gov/web/dbs. The Department of Commerce, Community, and Economic Development may, but is not required to, answer written questions received after the 10-day cut-off date and before the end of the comment period.

If you are a person with a disability who needs a special accommodation in order to participate in this process, please contact Emily Gaffney at dbsregs@alaska.gov or (907) 465-6338 not later than August 26, 2016, to ensure that any necessary accommodation can be provided.

A copy of the proposed regulation changes is available on the Division of Banking and Securities’ website at https://www.commerce.alaska.gov/web/dbs and the Alaska Online Public Notice System. You may also request a copy by contacting Emily Gaffney at dbsregs@alaska.gov or (907) 465-6338.

After the public comment period ends, the Department of Commerce, Community, and Economic Development will either adopt the proposed regulation changes or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final regulation may be different from that of the proposed regulation. You should comment during the time allowed if your interests could be affected. Written comments and questions received are public records and are subject to public inspection.

Statutory authority: AS 45.55.950

Statutes being implemented, interpreted, or made specific: AS 45.55.075; AS 45.55.110; AS 45.55.139; AS 45.55.175; AS 45.55.910; AS 45.55.950; AS 45.55.980; AS 45.55.990.

Fiscal information: The proposed regulation changes are not expected to require an increased appropriation.

Date:   August 2, 2016                    /s/Emily Gaffney, Regulations Specialist

ADDITIONAL REGULATION NOTICE INFORMATION
(AS 44.62.190(d))

Adopting agency: Department of Commerce, Community, and Economic Development.  

General subject of regulation: securities.

Citation of regulation: 3 AAC 08.086; 3 AAC 08.506; 3 AAC 08.520; 3 AAC 08.810; 3 AAC 08.820; 3AAC 08.830; 3 AAC 08.840; 3 AAC 08.850; 3 AAC 08.860; 3 AAC 08.870; 3 AAC 08.880; 3 AAC 08.910; 3 AAC 08.920; 3 AAC 08.950.

Department of Law file number: JU2016200666.

Reason for the proposed action: implement SB126, effective October 16, 2016; require notice filings for federal crowdfunding offerings; and require that notice filings for Regulation D, Rule 506 offerings be filed through the Electronic Filing Depository system.

Appropriation/Allocation: none.

Estimated annual cost to comply with the proposed action to:

• A private person: a nonrefundable fee of $150 for a person filing a notice under AS 45.55.175; a nonrefundable fee of $50 for a person filing a notice under 3 AAC 08.086; a nonrefundable fee of $50 for a person filing a notice under 3 AAC 08.880.

• Another state agency:  none.

• A municipality: none.

Cost of implementation to the state agency and available funding: no costs are expected in FY2017 or in subsequent years.

The name of the contact person for the regulation:

The origin of the proposed action: Division of Banking and Securities.

Date: August 2, 2016

Prepared by Emily Gaffney, Regulations Specialist