Wednesday, September 14, 2011

Arkansas Proposes Securities Rule Amendments

Amendments to align Arkansas securities rules with statutory amendments adopted during the 2011 legislative session were proposed by the Securities Division.

A public hearing on the proposed changes will take place on Tuesday, October 11, 2011 at 10:00 a.m. in the Fourth Floor Hearing Room of the Arkansas Securities Department, 201 East Markham Street, in Little Rock. The anticipated effective date for the rule changes is December 1, 2011.

The more substantive proposals concern the following topics:

* Rule 506

--The state appendix would be eliminated from the notice filing requirement.

--A sales report, no longer referred to as a "final" sales report, containing specific information would be required no later than 15 days after the first Arkansas sale.

--A notice of sales on Form D could be made electronically using the NASAA-adopted EFD system, with each EFD submitted notice signed by the issuer's duly authorized person.

* Investment companies

--Separate notice filings and fees would be required for each portfolio or series but no separate filing or fee would be required for classes of securities.

* Oil, gas & mineral interest limited offering exemption

--Proposed elimination of "sophisticated investor" condition.

* Oil and gas auction exemption

--Proposed elimination of this exemption.

* Securities manual exemption

--Would specify the Division-recognized manuals.

* Isolated non-issuer transaction exemption

--Added conditions would include the "non-issuer controlled person" not directly or indirectly effecting transactions in securities for the issuer's benefit, and the person not being defined as an issuer or underwriter under the Arkansas Securities Act or rules.

* Investment advisers

--Proposed safekeeping requirement rule for investment advisers with custody modeled after NASAA Rule 102(e)(1)-1.

--Supervision requirements would fleshed out in new rule section.

--Brochure rule would be amended.

--Recordkeeping requirements would be added.

--Certain of the financial statement requirements would be moved from the "financial statement" to the "application" rule.

* Broker-dealers and agents

--Supervision requirements would fleshed out in new rule section.

--Certain of the broker-dealer financial statement requirements would be moved from the "financial statement" to the "application" rule.

--Agent written exam rule would be amended and name the required exams.

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