Rhode Island readopts existing rules with substantive exceptions

By Jay Fishman, J.D.

The Rhode Island Department of Business Regulation has readopted its existing securities rules, effective August 22, 2018, primarily to place them under one of three newly created subheadings: (1) pre-licensing requirements; (2) post-licensing requirements; or (3) issuance and registration of securities. The text of most of the rules is not changing except for nomenclature and/or citation to Rhode Island Securities Act or federal securities rule references, to reflect current references. But there are substantive exceptions to the above as follows:

1. The replaced Rule 506 offerings rule adds a new sentence stating that the notice filing must include a Form U-2 if a consent to service of process is not included in the version of Form D comprising the submitted notice. Also, the federal statutory reference for Rule 506 offerings is updated from Securities Act, Section 18(b)(4)(D) to 18(b)(4)(F) to reflect current SEC nomenclature; 
2. A temporary order issued in 2017 and extended to September 30, 2018 which provides a notice filing requirement for issuers making a federal Regulation A, Tier 2 offering becomes a new rule in this replacement package. The temporary order is no longer valid now that the new rule is in effect; 
3. The manual exemption removes Standard and Poors as a nationally recognized securities manual, and adds OTC Markets Group’s OTCQX and OTCQB to the list of recognized manuals that already include Fitch’s and Mergent’s manuals; 
4. A new rule authorizes the Director to permit multiple licensing of sales representatives and investment adviser representatives with unaffiliated broker-dealer and investment adviser firms, respectively, provided that each licensed or registered entity sends the Director a written undertaking containing specified information; 
5. The replaced written examination rule requires sales representative and investment adviser representative applicants to take the new Securities Industry Essentials Exam, along with the already required written exams; and
6. An existing rule setting forth fees for documents or certifications is repealed.