Let's say you have owned and operated a small business in Alaska for some time. You used your own resources to get your business started. Now, you are ready to seek out new investors to assist in further capitalizing your company.

You are prepared to go beyond family in offering common stock in your company to prospective investors. That offering does involve an offer of securities.

The substantive requirements applying to your offering are extensive. However, at this point let's focus on two basic questions: Who regulates such an offering, and why do we have such regulation?

Securities regulation in this country exists at two levels of government - one at the state level and one at the federal level. The first securities act was enacted by the State of Kansas in 1911. Within a few years, 23 other states had adopted similar acts. By 1929, almost every state had such an act.

The 1929 stock market crash caused public outcry and, in part, resulted in establishing several federal securities laws, including the Securities Act of 1933, as amended (Securities Act). The Securities Act, in part, specifically deals with offerings involving interstate commerce.

State securities regulation predated the Securities Act by 22 years. This timing helps to understand the scope of state and federal securities laws and how they interrelate.

When dealing with securities regulation, Congress or a state legislature must make three public policy decisions.

First, should the jurisdiction regulate the area at all? The alternative to government regulation is deference to a totally unfettered market.

In this country, the overwhelming decision has been for at least some government control. Presently, in addition to the Securities Act, each state and all American possessions have some form of securities regulation. In Alaska, the basis for that regulation is the Alaska Securities Act.

Second, what general areas are in need of securities regulation? These areas can include securities offerings, the professionals involved in such offerings, and fraud in offerings. The professionals include a broker-dealer, an agent for a broker-dealer, an agent for a securities issuer, an investment adviser and an agent for an investment adviser.

The other three areas of securities regulation are shared between the federal government and the states. That is, most states (including Alaska) also regulate in the areas of securities offerings and the professionals involved in them, and fraud in offerings.

Third, what approach is to be used in securities regulation? One approach requires the securities or their offer to be registered or exempt from registration. The other requires registration of the company selling the securities.

In the latter approach, once the company is registered, it may make multiple securities offerings, regardless of volume sold. With limited exception, the State of New York follows this approach. The rest of the states (including Alaska) require registration or registration exemption of securities or their offer.

Under the Alaska Securities Act, an offer and sale of securities must, with two limited exceptions, first be registered under the act before the offer is made. Under the first exception, the securities or their offer must meet one or more specific registration exemptions under the act. Under the second exception, the Securities Act preempts the registration provisions of the state act as applied to certain offerings.

Neither assertion of an exemption nor preemption of registration prevents access to the anti-fraud provisions of the Alaska Securities Act. That is, those provisions may nevertheless be exercised to protect the investing public.

Under the Securities Act, it is unlawful to offer and sell securities unless they are registered. The only exception to this requirement is that the securities or their offer meets one or more specific registration exemptions under the act.

A decided majority of states (including Alaska) have taken the approach of emphasizing public protection from schemes to defraud. From these state anti-fraud provisions, outlines of required offering disclosure have developed on which an offeror must prepare a disclosure statement in a given offering. The offering is made through that statement. A similar approach is taken under the Securities Act, including provision for numerous forms and specified disclosures in securities offerings.