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PA Bulletin, Doc. No. 99-43

RULES AND REGULATIONS

Title 64--SECURITIES

PART I.  SECURITIES COMMISSION

[64 PA. CODE CHS. 202, 206, 302,
606, 609 AND 610]

Registration of Securities; Registration of Broker-Dealers, Agents and Investment Advisers; Administration

[29 Pa.B. 202]

Statutory Authority

   The Securities Commission (Commission), under the authority contained in sections 202(i), 206(b) and (d), 302(f), 606(d), 609(a) and (c) and 610 of the Pennsylvania Securities Act of 1972 (70 P. S. §§ 1-202(i), 1-206(b) and (d), 1-302(f), 1-606(d), 1-609(a) and (c) and 1-610) (act) amends regulations concerning the subject matter of the act to read as set forth at 28 Pa.B. 3950 (August 15, 1998).

Public Comments

   One public comment was received with respect to amendments to § 302.063 (relating to financial institutions exempt from broker-dealer and agent registration) which was supportive of the amendments. No public comments were received with respect to any other amendments.

Comments of the Independent Regulatory Review Commission (IRRC)

   By letter dated October 15, 1998, IRRC advised the Commission that it had no objections, comments or suggestions with respect to the amendments.

Summary and Purpose of the Amendments

§ 202.092. This amendment updates the accounting terminology used in this regulation.
§ 206.020. This amendment requires a certified public accountant to give a tax opinion in a public offering of interests in a direct participation program, such as oil and gas programs, equipment leasing programs and commodity pools, which are filed with the Commission under section 206 of the act.
§ 302.063. This amendment exempts financial institutions (banks, savings and loans and credit unions) and their representatives from registering as broker-dealers or agents under the act when securities transactions made by these entities and individuals on behalf of customers are performed through a contractual arrangement with a broker-dealer registered under the act even though the transactions may be effected on, or emanate from, the premises of a financial institution where retail deposits are taken.
§ 606.041. This amendment permits the Assistant Director of the Division of Licensing and Compliance to exercise certain Commission powers through delegated authority.
§ 609.032. This amendment updates the accounting terminology used in this regulation and makes it clear that the accounting definitions apply to all financial statements required to be filed under the act or regulations adopted thereunder.
§ 609.033. This amendment requires an accountant's report filed in the auditor's format to follow generally accepted auditing standards and reports filed in an accountant's review and compilation report format to follow the Statements on Standards for Accounting and Review Services of the American Institute of Certified Public Accountants. Public accountants may continue to prepare reports required to be filed for broker-dealers and investment advisers.
§ 609.034. This amendment permits issuers filing a registration statement under section 206 of the act, except issuers of interests in public direct participation programs, to submit 2 years of financial statements instead of 3. In the case of a small business issuer filing under section 206 for a public offering of corporate equity
securities aggregating $1 million or less, the amendment allows use of reviewed financial statements in lieu of an audit. The amendment also requires that the financial statements appearing in a registration statement filed with the Commission under section 205 of the act comply with the relevant requirements of the United States Securities and Exchange Commission.
§ 609.036. The amendment updates accounting terminology used in the regulation.
§ 610.010. The amendment provides for the retention and destruction of records in conformity with schedules promulgated by the Commission which conform to Management Directives issued by the Office of Administration.

Persons Affected by these Amendments

   With respect to amendments to § 202.092 (relating to guaranties of debt securities exempt), recipients of the proceeds of limited obligation revenue bonds issued by governmental instrumentalities who guaranty payments to the governmental instrumentality sufficient to pay the principal and interest on the bonds are affected by these amendments. The proposed changes, however, only update accounting terminology and do not affect the existing requirements of these amendments.

   With respect to amendments to § 206.020 (relating to tax opinion in offerings of limited partnership interests), issuers of interests in public direct participation programs for which a registration statement is filed with the Commission under section 206 of the act are affected.

   With respect to amendments to § 302.063, financial institutions, including banks, savings and loans and credit unions that effect transactions on behalf of customers under a contractual arrangement with a broker-dealer registered under the act are affected.

   With respect to amendments to §§ 606.041 and 610.010 (relating to delegation and substitution; and destruction of documents and records), only the internal administrative affairs of the Commission are affected.

   With respect to amendments to §§ 609.032, 609.033 and 609.036 (relating to definitions; accountants; and financial statements; annual reports), accountants preparing financial statements to be filed with the Commission are affected.

   With respect to amendments to § 609.034 (relating to financial statements), issuers filing a registration statement with the Commission under section 205 or 206 of the act are affected.

Fiscal Impact

   None of the amendments increase costs on the regulated community or the Commonwealth. The Commonwealth will not incur any revenue loss as a result of the amendments. The amendments will decrease regulatory costs to issuers filing a registration statement with the Commission under section 206 of the act.

Paperwork

   None of the amendments impose new paperwork requirements. With respect to issuers filing a registration statement with the Commission under section 206 of the act, there will be a reduction in the amount of financial statements that must be filed.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on July 27, 1998, the Commission submitted a copy of the proposed rulemaking published at 28 Pa.B. 3950 to IRRC and the Chairpersons of the House Committee on Commerce and Economic Development and the Senate Committee on Banking and Insurance for comment and review. In compliance with section 5(b.1) of the Regulatory Review Act, the Commission also provided IRRC and the Committees with copies of all comments received as well as other documentation.

   In preparing its final-form rulemaking, the Commission has considered all comments received from IRRC, the Committees and the public. This final-form rulemaking was deemed approved by the House Committee on Commerce and Economic Development and by the Senate Committee on Banking and Insurance on November 12, 1998. IRRC met on November 19, 1998, and approved the final-form rulemaking.

Availability in Alternative Formats

   These amendments may be made available in alternative formats upon request. The Commission also will receive comments on this final-form rulemaking in alternative formats. TDD users should use the AT&T Relay Center (800) 854-5984. To make arrangements for alternative formats, contact Joseph Shepherd, ADA Coordinator, at (717) 787-6828.

Contact Person

   The contact person is G. Philip Rutledge, Deputy Chief Counsel, Securities Commission, Eastgate Building, 1010 N. Seventh Street, 2nd Floor, Harrisburg, PA 17102-1410, (717) 783-5130.

Order

   The Commission, acting under the authorizing statute, orders that:

   (a)  The regulations of the Commission, 64 Pa. Code Chapters 202, 206, 302, 606, 609 and 610, are amended by amending §§ 202.092, 206.020, 302.063, 606.041, 609.032--609.036 and 610.010 to read as set forth at 28 Pa.B. 3950.

   (b)  The Secretary of the Commission shall submit this order and 28 Pa.B. 3950 to the Office of Attorney General for approval as to form and legality as required by law.

   (c)  The Secretary of the Commission shall certify this order and 28 Pa.B. 3950 and deposit them with the Legislative Reference Bureau as required by law.

   (d)  This order shall take effect upon publication in the Pennsylvania Bulletin.

M. JOANNA CUMMINGS,   
Secretary

   (Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 28 Pa.B. 5920 (December 5, 1998).)

   Fiscal Note: Fiscal Note 50-112 remains valid for the final adoption of the subject regulations.

[Pa.B. Doc. No. 99-43. Filed for public inspection January 8, 1999, 9:00 a.m.]


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