PROPOSED RULEMAKING
SECURITIES COMMISSION
[64 PA. CODE CHS. 203, 205, 207, 209, 210, 303, 504, 602, 603, 604, 609 AND 1001]
Rescission of Forms and Other Technical Amendments
[36 Pa.B. 3542]
[Saturday, July 8, 2006]The Securities Commission (Commission), under sections 203(d), (o) and (p), 205, 206, 301, 303, 504, 603(a) and 609 of the Pennsylvania Securities Act of 1972 (act) (70 P. S. §§ 1-203(d), (o) and (p), 1-205, 1-206, 1-301, 1-303, 1-504, 1-603(a) and 1-609) and section 4 of the Takeover Disclosure Law (70 P. S. § 74), proposes to amend regulations concerning the act and the Takeover Disclosure Law (70 P. S. §§ 71--85) to read as set forth in Annex A.
Summary and Purpose of Regulations
The Commission proposes to amend § 203.041 (relating to limited offerings) by rescinding Form E and adding language to refer to Form E.
The Commission proposes to amend § 203.151 (relating to proxy materials) by rescinding Form 203-O and adding language to refer to Form 203-O.
The Commission proposes to amend § 203.161 (relating to debt securities of nonprofit organizations) by rescinding Form 203-P and adding language to refer to Form 203-P.
The Commission proposes to amend § 205.021 (relating to registration by coordination) by rescinding Form R and adding language to refer to Form R.
The Commission proposes to amend § 207.101 (relating to effective period of registration statement) by rescinding Form 207-J and adding language to refer to Form 207-J.
The Commission proposes to amend § 209.010 (relating to required records; report on sales of securities and use of proceeds) by rescinding Form 209 and adding language to refer to Form 209.
The Commission proposes to amend § 210.010 (relating to retroactive registration of certain investment company securities) by rescinding Form 210 and adding language to refer to Form 210.
The Commission proposes to amend § 303.051 (relating to surety bonds) by rescinding Form U-SB.
The Commission proposes to amend § 504.060 (relating to rescission offers) by rescinding Form RO and adding language to refer to Form RO.
The Commission proposes to amend § 602.022 (relating to denial for abandonment) by adding ''investment adviser representative'' to the list the Commission may order denied for abandonment.
The Commission proposes to amend § 603.011 (relating to filing requirements) by adding language to state that forms are available on the Commission's website at www.psc.state.pa.us.
The Commission proposes to rescind § 604.013 (relating to interim guidelines for the registration of associated persons--statement of policy), an interim guideline for the registration of associated persons.
The Commission proposes to rescind § 604.014 (relating to interim guidelines for the qualification and examination of associated persons--statement of policy), an interim guideline for the qualification and examination of associated persons.
The Commission proposes to rescind § 604.015 (relating to interim guidelines for the effectiveness of registration of associated persons--statement of policy), an interim guideline for the effectiveness of registration of associated persons.
The Commission proposes to amend § 604.016 (relating to guidelines for waivers of Uniform Securities Agent State Law Examination (Series 63), Uniform Investment Adviser Law Examination (Series 65) and General Securities Representative Non-Member Examination (Series 2)--statement of policy) by changing ''associated persons'' to ''investment adviser representatives'' and updating delegated authority.
The Commission proposes to amend § 604.020 (relating to broker-dealers, investment advisers, broker-dealer agents and investment adviser representatives using the Internet for general dissemination of information on products and services--statement of policy) by changing ''associated persons'' to ''investment adviser representatives.''
The Commission proposes to amend § 609.010 (relating to use of prospective financial statements) by updating the citation referencing accredited investors to conform to the Federal act.
The Commission proposes to amend § 1001.010 (relating to takeover offeror report regarding participating broker-dealers) by rescinding Form TDL-1 and adding language to refer to Form TDL-1.
Persons Affected by this Proposed Rulemaking
No groups will be adversely affected by this proposed rulemaking. These regulatory actions will streamline the regulatory process and clarify regulations.
Fiscal Impact
The proposed rulemaking is cost neutral.
Paperwork
No additional paperwork will be required.
Effective Date
The proposed amendments will become effective upon publication in the Pennsylvania Bulletin as final-form amendments.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 20, 2006, the Commission submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Commerce and Economic Development and the Senate Committee on Banking and Insurance. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Commission, the General Assembly and the Governor of comments, recommendations or objections raised.
Availability in Alternative Formats
This proposed rulemaking may be made available in alternative formats upon request. The Commission also will receive comments on this proposed rulemaking in alternative formats. TDD users should use the AT&T Relay Center, (800) 854-5984. To make arrangements for alternative formats, contact Simon J. Dengel, ADA Coordinator, (717) 787-6828.
Contact Person
Interested persons are invited to send comments concerning the proposed rulemaking to Michael J. Byrne, Chief Counsel, Securities Commission, Eastgate Office Building, 1010 North Seventh Street, Harrisburg, PA 17102-1410, (717) 783-5130 within 30 days of publication of this proposed rulemaking.
JEANNE S. PARSONS,
SecretaryFiscal Note: 50-120. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 64. SECURITIES
PART I. SECURITIES COMMISSION
Subpart B. REGISTRATION OF SECURITIES
CHAPTER 203. EXEMPT TRANSACTIONS § 203.041. Limited offerings.
(a) The notice required by section 203(d) of the act (70 P. S. § 1-203(d)) shall be filed with the Commission within the time period specified by that section on the [following] form, designated by the Commission as Form E [:] in accordance with the General Instructions thereto.
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 203-3--203-9, serial pages (262379) to (262380), (297475) to (297476) and (317571) to (317573).)
* * * * * § 203.151. Proxy materials.
* * * * * (c) Except for transactions described in subsection (b), notice shall be given to the Commission for a transaction requiring the filing of proxy materials with the Commission under section 203(o) of the act by filing the [following] form designated by the Commission as Form 203-O in accordance with the General Instructions thereto together with the exemption filing fee specified in section 602(b.1)(v) of the act (70 P. S. § 1-602(b.1) (v))[:].
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 203-15--203-18, serial pages (317579) to (317582).)
* * * * * § 203.161. Debt securities of nonprofit organizations.
(a) A person proposing to offer debt securities under section 203(p) of the act (70 P. S. § 1-203(p)) shall complete and file with the Commission two copies of the [following notice] form, designated by the Commission as Form 203-P in accordance with the General Instructions thereto not later than 5 business days before the issuer receives from any person an executed subscription agreement or other contract to purchase the securities being offered or the issuer receives consideration from any person therefor, whichever is earlier.
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 203-20--203-24, serial pages (317584) to (317588).)
* * * * *
CHAPTER 205. REGISTRATION BY COORDINATION § 205.021. Registration by coordination.
* * * * * (b) In addition to filing the information and form required in subsection (a), issuers in offerings being made in reliance on SEC Regulation A promulgated under section 3(b) of the Securities Act of 1933 (15 U.S.C.A. § 77c(b)) shall execute and file with the Commission within the specified time period the form, designated by the Commission as Form R[, which follows subsection (d)] in accordance with the General Instructions thereto.
* * * * * (Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 205-2--205-11, serial pages (317598) to (317600), (287531) to (217536) and (317601).)
CHAPTER 207. GENERAL REGISTRATION PROVISIONS § 207.101. Effective period of registration statement.
* * * * * (d) Except with respect to an open-end or closed-end investment company, face amount certificate company or unit investment trust, as those persons are classified in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80a-64), the effective period of a section 205 registration statement may be extended beyond the initial 1-year effectiveness period specified in subsection (a)(1) in increments of 1-year periods up to a maximum of 3 years from the initial effectiveness date of the registration statement in this Commonwealth by filing the [following] form designated as Form 207-J in accordance with the General Instructions thereto with the Commission prior to the expiration of the currently effective period of registration. The provisions of this section are not available if the issuer, during the 3 year period from the initial effectiveness date of the registration statement in this Commonwealth, is required to file a new registration statement with Securities and Exchange Commission.
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 207-6 and 207-7, serial pages (317608) and (297501).)
CHAPTER 209. BOOKS, RECORDS AND ACCOUNTS § 209.010. Required records; report on sales of securities and use of proceeds.
* * * * * (c) The form for reports required in subsection (b), except for subsection (b)(2), shall be filed with the Commission on the [following] form, designated by the Commission as Form 209[:] in accordance with the General Instructions thereto.
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 209-3 and 209-4, serial pages (317613) to (317614).)
CHAPTER 210. RETROACTIVE REGISTRATION § 210.010. Retroactive registration of certain investment company securities.
(a) An open-end or closed-end investment company, face amount certificate company or unit investment trust, as those persons are classified in the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1--80b-21), which, during the effective period of registration under section 205 or 206 of the act (70 P. S. §§ 1-205 or 1-206) sold securities in this Commonwealth in excess of the aggregate amount registered for sale in this Commonwealth under section 205 or 206, may apply to the Commission on Form 210 [following this section] in accordance with the General Instructions thereto to register the securities retroactive to the date of the initial registration.
* * * * * (Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 210-2--210-5, serial pages (317616), (200123) to (200124) and (317617).)
Subpart C. REGISTRATION OF BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES AND NOTICE FILINGS BY FEDERALLY-COVERED ADVISERS
CHAPTER 303. REGISTRATION PROCEDURE § 303.051. Surety bonds.
* * * * * (Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 303-17--303-20, serial pages (268825) to (268828).)
* * * * *
Subpart E. ENFORCEMENT
CHAPTER 504. TIME LIMITATIONS ON
RIGHTS OF ACTION§ 504.060. Rescission offers.
(a) A person proposing to make an offer under section 504(d) or (e) of the act (70 P. S. § 1-504(d) or (e)) shall follow the procedure for the registration of securities by qualification, as described in sections 206 and 207 of the act (70 P. S. §§ 1-206 and 1-207). The forms required to be filed and time periods for Commission action shall be those applicable to registration by qualification, except that it shall be noted [in Item 4 of Form 206] at the top of Form R that the offer is a rescission offer. The Commission may, upon petition by the proposed offeror, waive or modify any requirement for the registration if it finds the requirement burdensome and not necessary for the protection of investors.
(b) Compliance with the procedures in subsection (a) is waived:
(1) For a person making a rescission offer for possible violations of the act if the securities which are the subject of the rescission offer were sold to and purchased by no more than 35 persons in this Commonwealth during 12 consecutive [months, the] months. The person making the rescission offer [files Commission Form RO] shall file the form designated by the Commission as Form RO in accordance with the General Instructions requesting waiver of the procedures in subsection (a) accompanied by disclosure materials prepared to satisfy the [anti-fraud] antifraud provisions of section 401(b) of the act (70 P. S. § 1-401(b)) which will be given to each rescission offeree, and the waiver request is not denied within one of the following time periods:
* * * * * [(f) The following form has been designated by the Commission as Form RO:]
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 504-4--504-9, serial pages (317644) to (317646), (262465) to (262466) and (317647).)
Subpart F. ADMINISTRATION
CHAPTER 602. FEES § 602.022. Denial for abandonment.
The Commission may order an application for registration of securities or an application for registration as a broker-dealer, investment adviser, [or] agent or investment adviser representative denied upon the failure of the applicant, within 60 days after written notice warning [such] the applicant that an application will be denied and deemed abandoned, to respond to any request for additional information required under the act or the provisions thereunder or otherwise to complete the showing required for action upon the application; or the applicant may with the consent of the Commission withdraw the application. Upon denial for abandonment, there shall be no refund of any filing fee paid prior to the date of abandonment.
CHAPTER 603. ADMINISTRATIVE FILES § 603.011. Filing requirements.
* * * * * (h) Required forms will be available on the Commission's website at www.psc.state.pa.us. In addition, forms are available in paper format from the Commission.
CHAPTER 604. INTERPRETATIVE OPINIONS OF COMMISSION--STATEMENT OF POLICY § 604.013. [Interim guidelines for the registration of associated persons--statement of policy] (Reserved).
[(a) An application for initial registration as an associated person of an investment adviser shall contain the information requested in and shall be made on Uniform Application for Securities Industry Registration or Transfer (Form U-4), or a successor form. The associated person and the investment adviser shall complete and file with the Commission one copy of Form U-4 and exhibits accompanied by the requisite filing fee in section 602(d.1) of the act (70 P. S. § 1-602(d.1)), and passing results of the examinations required by § 303.032 (relating to qualification of and examination requirement for investment advisers and associated persons).
(b) Every investment adviser for whom associated persons are to be registered shall obtain from the associated person and maintain the following information with respect to each associated person:
(1) Name, address, date of birth, social security number and the starting date of employment or other association with the investment adviser.
(2) Complete educational background and a complete statement of the associated person's principal business, occupation or employment for the preceding 10 years, including reason for leaving each prior employment.
(3) A record of any denial of registration, disciplinary action taken or sanction imposed by a Federal or State agency, by a National securities exchange or a National securities association, or by a foreign country governing or regulating any aspect of the business of securities, commodities or banking.
(4) A record of convictions for a felony or misdemeanor, except minor traffic offenses, of which the associated person has been the subject.
(c) Every investment adviser shall ensure that each applicant for registration as an associated person is familiar with the sections of the act and regulations governing associated persons and investment advisers. Further, the investment adviser shall have taken appropriate steps to verify the items and attachments contained in Form U-4.
(d) An associated person and an investment adviser shall take all necessary steps to ensure that material information contained in Form U-4 remains current and accurate. In the event that a material statement made in the Form U-4 becomes incorrect or incomplete, the associated person and the investment adviser shall file with the Commission an amendment to Form U-4 within 30 days of the occurrence of the event which requires the filing of the amendment.]
§ 604.014. [Interim guidelines for the qualification and examination of associated persons--statement of policy] (Reserved).
[(a) No individual may be registered as an associated person unless the person has:
(1) Received a passing grade on the following:
(i) The securities examination for registered representatives or supervisors (Series 2, 7, 8 or 24), or successor examinations thereto, administered by the National Association of Securities Dealers, Inc., within 2 years prior to the date of filing an application for registration, or has previously passed the Series 2, 7, 8 or 24 and has not had a lapse in employment as an investment adviser or associated person or principal or agent of a broker-dealer for a period exceeding 2 years.
(ii) The Uniform Investment Adviser Law Examination (Series 65), or a successor examination thereto, administered by the National Association of Securities Dealers, Inc., within 2 years prior to the date of filing an application for registration, or has previously passed the Series 65, and has not had a lapse in employment as an investment adviser or associated person or principal or agent of a broker-dealer for a period exceeding 2 years.
(2) Satisfied the experience requirement of § 303.032(a)(3) (relating to qualification of and examination requirement for investment advisers and associated persons).
(b) The requirements of subsection (a) do not apply if the conditions in paragraphs (1)--(3) are met:
(1) The individual was identified on a filing on Schedule D of the Uniform Application for Investment Adviser Registration (Form ADV) with the Commission that was current between February 19, 1989 and February 19, 1991.
(2) The individual did not have a lapse in employment with an investment adviser in excess of a period of 2 years after February 19, 1989.
(3) The individual had met the examination and experience requirements in effect prior to February 9, 1991, or the requirements had been waived.]
§ 604.015. [Interim guidelines for the effectiveness of registration of associated persons--statement of policy] (Reserved).
[The Director of the Division of Licensing and Compliance and the Chief of the Licensing Section have the authority to order effective associated person registrations under section 303(a)(ii) of the act (70 P. S. § 1-303(a)(ii)) and to order effective applications to withdraw as an associated person under section 305(f) of the act (70 P. S. § 1-305(f)).]
§ 604.016. Guidelines for waivers of Uniform Securities Agent State Law Examination (Series 63), Uniform Investment Adviser Law Examination (Series 65) and General Securities Representative Non-Member Examination (Series 2)--statement of policy.
(a) Under § 606.041(b)(2) (relating to delegation and substitution), the Commission has delegated to the Director of the Division of Licensing [and Compliance and the Chief of the Licensing Section] the authority to waive the requirement of §§ 303.031 and 303.032 (relating to examination requirements for agents; and qualification of and examination requirements for investment advisers and [associated persons] investment adviser representatives) to take and pass the Series 63, Series 65 and Series 2 examinations administered by the National Association of Securities Dealers (collectively, the ''examination'') or successor examinations.
(b) Without otherwise restricting the discretionary authority granted to Commission staff by § 606.041, the staff persons will consider the factors listed in this subsection in determining whether a waiver from the examination requirements of § 303.031 or § 303.032 would be granted. These factors are set forth for illustrative purposes only and do not constitute the entire range of considerations that may form the basis for granting or denying a waiver request.
(1) Whether the applicant has disciplinary history for which staff persons would place the applicant under the Commission's Special [Associated Person] Investment Adviser Representative or Agent Review Program.
* * * * * § 604.020. Broker-dealers, investment advisers, broker-dealer agents and investment adviser representatives using the Internet for general dissemination of information on products and services--statement of policy.
* * * * * (b) Section 301(c) of the act provides that ''[i]t is unlawful for any person to transact business in this State as an investment adviser unless the person is so registered or registered as a broker-dealer under this act or unless the person is exempted. . . '' Section 301(c) further provides that: [i]t is unlawful for any person to transact business in this State as an [associated person] investment adviser representative unless the person is so registered or exempted from registration. . . ''
* * * * * (f) Broker-dealers, investment advisers, broker-dealer agents (hereinafter, BD agents) and [associated persons] investment adviser representatives (hereinafter, IA reps) who use the Internet to distribute information on available products and services through Internet Communications directed generally to anyone having access to the Internet, will not be deemed to be ''transacting business'' in this Commonwealth for purposes of section 301(a) and (c) of the act based solely on that fact if all the following conditions are met:
* * * * *
CHAPTER 609. REGULATIONS,
FORMS AND ORDERS§ 609.010. Use of prospective financial statements.
* * * * * (c) The use or distribution of prospective financial statements in connection with the following securities offerings is permissible if it complies with section 401 of the act (70 P. S. § 1-401):
* * * * * (6) Offers and sales of securities made to accredited investors as that term is defined in [§ 204.010(d)(5)] Rule 501(a) (17 CFR 230.501(a) (relating to definitions and terms used in Regulation D)) in Regulation D of the Securities Act of 1933 (15 U.S.C.A. §§ 77a--77z-3).
* * * * *
Subpart I. TAKEOVER OFFERORS
CHAPTER 1001. TAKEOVER DISCLOSURES § 1001.010. Takeover offeror report regarding participating broker-dealers.
(a) The Commission has determined that, to carry out the purposes of the Takeover Disclosure Law (70 P. S. §§ 71--85), it is necessary to require the offeror to file, as an exhibit to the registration statement filed under section 4 of the law (70 P. S. § 74), Commission Form TDL-1 in accordance with the General Instructions thereto.
[(b) The Commission has designated the following form as Commission Form TDL-1.]
(Editor's Note: As part of this proposed rulemaking, the Commission is proposing to delete the form which appears in 64 Pa. Code pages 1001-2 and 1001-3, serial pages (317678) to (317679).)
[Pa.B. Doc. No. 06-1269. Filed for public inspection July 7, 2006, 9:00 a.m.]
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