By Julius J. Brecht
For the Journal

The state of Alaska Division of Banking, Securities and Corporations is considering proposing a replacement of the present Alaska Securities Act. Immediate questions arise: Why the change? To what extent will the act be changed?

In 1959, Alaska became a state and was the first state to adopt the Uniform Securities Act of 1956.

Since Alaska's enactment, approximately 37 states have subscribed to that 1956 act in one form or another. Several other states subscribe to a related, later update to the 1956 act proposed in 1985.

In essence, a state securities act, such as the Alaska Securities Act, regulates the offer and sale of securities, e.g., a stock or a bond. It also regulates those who are involved in that offer and sale, e.g., an agent, a broker-dealer or an investment adviser.

If you want to form a small business and raise capital through the sale of stock in your company, or if you are with an established company wishing to increase its capital through such a sale, that transaction is subject to the Alaska Securities Act. The offer of that stock must be registered under the act unless the security or the securities transaction is exempt. Furthermore, the persons through whom the offer is made are subject to the registration provisions of the act as an agent, broker-dealer or investment adviser, unless there is a clear exemption available.

In 1996, Congress saw fit to preempt several segments of securities registration provisions set forth in the laws of the various states. It accomplished this feat through enactment of the National Securities Markets Improvement Act of 1996. Congress later took similar preemptive action regarding litigation procedures in enacting the Securities Litigation Uniform Standards Act of 1998. These preemptive acts had the purpose of providing a uniform approach throughout the country in handling certain registration and litigation matters. Previously, these matters had been handled in varying ways by the various states. Presumably, these actions were taken in the best interest of the investing public.

While admirable in purpose, the consequence of the preemptive acts have been to cause the states to resort to patchwork approaches in adjusting their respective laws. In Alaska's case, the Alaska Securities Act was significantly revised in 1999 to function under the new preemption provisions.

In the meantime, in 2002 the National Conference of Commissioners on Uniform State Laws approved a new Uniform Securities Act. The new act was drafted starting from the premise that the 1956 act needed to be modernized as a consequence of the preemptive acts, as well as significant technological changes in the securities industry and the trend to expand securities transactions interstate and internationally. The drafters also sought to fashion a new securities act that would gain broad support among the states, thus promoting uniformity of approach in state securities regulation across the country.

The new act is grounded in the 1956 act, drawing on its substance and vocabulary. At the same time, the new act takes into consideration the provisions of the 1985 act and federal preemption of certain securities laws accomplished through the 1996 act.

The official prefatory note of the new act states three overall themes: