ARTICLE 2 – EXEMPTIONS FROM REGISTRATION OF SECURITIES

§201.  EXEMPT SECURITIES.   SEQ CHAPTER \h \r 1The following securities are exempt from the requirements of Sections 301 through 306 and 504:

RCW 21.20.310.  Securities exempt from registration.  RCW 21.20.140 through 21.20.300, inclusive, and 21.20.327 do not apply to any of the following securities:

§ 8.  EXEMPT SECURITIES.  The following securities are exempt from the requirements of sections 13 through 18 and 37 of this act:

USA

 SEQ CHAPTER \h \r 1(1) a security, including a revenue obligation or a separate security as defined in Rule 131 (17 C.F.R. 230.131) adopted under the Securities Act of 1933, issued, insured, or guaranteed by the United States; by a State; by a political subdivision of a State; by a public authority, agency, or instrumentality of one or more States; by a political subdivision of one or more States; or by a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by the Congress; or a certificate of deposit for any of the foregoing;

(1) Any security (including a revenue obligation) issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency or corporate or other instrumentality of one or more of the foregoing; or any certificate of deposit for any of the foregoing; but this exemption does not include any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise unless such payments are made or unconditionally guaranteed by a person whose securities are exempt from registration by subsection (7) or (8) of this section: PROVIDED, That the director, by rule or order, may exempt any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise if the director finds that registration with respect to such securities is not necessary in the public interest and for the protection of investors.

§ 8(1).  A security, including a revenue obligation or a separate security as defined in Rule 131 (17 C.F.R. 230.131) adopted under the Securities Act of 1933, issued, insured, or guaranteed by the United States; by a state; by a political subdivision of a state; by a public authority, agency, or instrumentality of one or more states; by a political subdivision of one or more states; or by a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by the Congress; or a certificate of deposit for any of the securities listed in this subsection, but this exemption does not include any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise unless such payments are made or unconditionally guaranteed by a person whose securities are exempt from registration by subsection (5) or (6) of this section.  However, the director, by rule or order, may exempt any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise if the director finds that registration with respect to such securities is not necessary in the public interest and for the protection of investors;

USA with the addition of the current exclusion for certain non-guaranteed industrial development bonds.  Retaining the current filing structure also keeps the statute revenue neutral. 

 SEQ CHAPTER \h \r 1(2) a security issued, insured, or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor;

(2) Any security issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor; but this exemption does not include any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise unless such payments shall be made or unconditionally guaranteed by a person whose securities are exempt from registration by subsection (7) or (8) of this section.

§ 8(2).  A security issued, insured, or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor, but this exemption does not include any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise unless such payments are made or unconditionally guaranteed by a person whose securities are exempt from registration by subsection (5) or (6) of this section.  However, the director, by rule or order, may exempt any security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise if the director finds that registration with respect to such securities is not necessary in the public interest and for the protection of investors;

USA with addition of current exclusion for certain non-guaranteed industrial development bonds, current filing structure.

( SEQ CHAPTER \h \r 13) a security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by:

(A) an international banking institution;

(B) a banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the Comptroller of Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a); or

(C) any other depository institution, unless by rule or order the administrator proceeds under Section 204;

(3) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank or trust company organized or supervised under the laws of any state.

(4) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings and loan association, or any building and loan or similar association organized under the laws of any state and authorized to do business in this state.

(6) Any security issued or guaranteed by any federal credit union or any credit union, industrial loan association, or similar association organized and supervised under the laws of this state.

§ 8(3).  A security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by:

    (a) An international banking institution;

    (b) A banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the Comptroller of Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Sec. 92a); or

    (c) Any other depository institution, unless by rule or order the director proceeds under section 11 of this act;

USA

 SEQ CHAPTER \h \r 1(4) a security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to do business in this State;

(5) Any security issued by and representing an interest in or a debt of, or insured or guaranteed by, any insurance company authorized to do business in this state.

§ 8(4).  A security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to do business in this state;

USA

 SEQ CHAPTER \h \r 1(5) a security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is:

(A) regulated in respect to its rates and charges by the United States or a State;

(B) regulated in respect to the issuance or guarantee of the security by the United States, a State, Canada, or a Canadian province or territory; or

(C) a public utility holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act;

(7) Any security issued or guaranteed by any railroad, other common carrier, public utility, or holding company which is

(a)   a registered holding company under the public utility holding company act of 1935 or a subsidiary of such a company within the meaning of that act;

(b)  regulated in respect of its rates and charges by a governmental authority of the United States or any state or municipality; or

(c)  regulated in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada, or any Canadian province; and equipment trust certificates in respect of equipment conditionally sold or leased to a railroad or public utility, if other securities issued by such railroad or public utility would be exempt under this subsection.

§ 8(5).  A security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is:

     (a) Regulated in respect to its rates and charges by the United States or a state;

     (b) Regulated in respect to the issuance or guarantee of the security by the United States, a state, Canada, or a Canadian province or territory; or

(c) A public utility holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act;

USA

 SEQ CHAPTER \h \r 1(6) a federal covered security specified in Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)) or by rule adopted under that provision or a security listed or approved for listing on another securities market specified by rule under this [Act]; a put or a call option contract; a warrant; a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78i(b));

§ 8(6).  A federal covered security specified in Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Sec. 77r(b)(1)) or by rule adopted under that section or a security listed or approved for listing on another securities market specified by rule under this chapter; a put or a call option contract, a warrant, or a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78i(b));

USA. 

 SEQ CHAPTER \h \r 1(7) a security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under Section 3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(10)(B)); except that with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by such a person, a rule may be adopted under this [Act] limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying with respect to paragraph (B) the scope of the exemption and the grounds for denial or suspension, and requiring an issuer:

(A) to file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the administrator does not disallow the exemption within the period established by the rule;

(B) to file a request for exemption authorization for which a rule under this [Act] may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with Section 611, and grounds for denial or suspension of the exemption; or

(C) to register under Section 304;

(11) Any security issued by any person organized and operated as a nonprofit organization as defined in RCW 84.36.800(4) exclusively for religious, educational, fraternal, or charitable purposes and which nonprofit organization also possesses a current tax exempt status under the laws of the United States, which security is offered or sold only to persons who, prior to their solicitation for the purchase of said securities, were members of, contributors to, or listed as participants in, the organization, or their relatives, if such nonprofit organization first files a notice specifying the terms of the offering and the director does not by order disallow the exemption within the next ten full business days: PROVIDED, That no offerings may be made until expiration of the ten full business days. Every such nonprofit organization which files a notice of exemption of such securities shall pay a filing fee as set forth in RCW 21.20.340(11) as now or hereafter amended.

§ 8(7).  A security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under Section 3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-3(c)(10)(B)); except that with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by such a person, a rule may be adopted under this chapter limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying with respect to (b) of this subsection the scope of the exemption and the grounds for denial or suspension, and requiring an issuer:

     (a) To file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the director does not disallow the exemption within the period established by the rule;

     (b) To file a request for exemption authorization for which a rule under this chapter may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with section 54 of this act, and grounds for denial or suspension of the exemption; or

(c) To register under section 16 of this act;

USA.  In providing three methods for regulating debt securities, rulemaking may limit the exemption to securities sold to members of the nonprofit organization.

( SEQ CHAPTER \h \r 18) a member’s or owner’s interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of a State, but not a member’s or owner’s interest, retention certificate, or like security sold to persons other than bona fide members of the cooperative; and

RCW 21.20.320(16). Any transaction by a mutual or cooperative association meeting the requirements of (a) and (b) of this subsection:
(a) The transaction:
     (i) Does not involve advertising or public solicitation; or
     (ii) Involves advertising or public solicitation, and:
     (A) The association first files a notice of claim of exemption on a form prescribed by the director specifying the terms of the offer and the director does not by order deny the exemption within the next ten full business days; or
     (B) The association is an employee cooperative and identifies itself as an employee cooperative in advertising or public solicitation.
(b) The transaction involves an instrument or interest, that:
     (i)(A) Qualifies its holder to be a member or patron of the association;
     (B) Represents a contribution of capital to the association by a person who is or intends to become a member or patron of the association;
     (C) Represents a patronage dividend or other patronage allocation; or
     (D) Represents the terms or conditions by which a member or patron purchases, sells, or markets products, commodities, or services from, to, or through the association; and
     (ii) Is nontransferable except in the case of death, operation of law, bona fide transfer for security purposes only to the association, a bank, or other financial institution, intrafamily transfer, or transfer to an existing member or person who will become a member and, in the case of an instrument, so states conspicuously on its face.

§ 9(24).  A transaction by a mutual or cooperative association which meets the requirements of (a) and (b) of this subsection:

    (a) The transaction:

        (i) Does not involve advertising or public solicitation; or

        (ii) Involves advertising or public solicitation, and:

            (A) The association first files a notice of claim of exemption on a form prescribed by the director specifying the terms of the offer and the director does not by order deny the exemption within the next ten business days; or

            (B) The association is an employee cooperative and identifies itself as an employee cooperative in advertising or public solicitation.

     (b) The transaction involves an instrument or interest that:

        (i)(A) Qualifies its holder to be a member or patron of the association;

         (B) Represents a contribution of capital to the association by a person who is or intends to become a member or patron of the association;

         (C) Represents a patronage dividend or other patronage allocation; or

         (D) Represents the terms or conditions by which a member or patron purchases, sells, or markets products, commodities, or services from, to, or through the association; and

        (ii) Is nontransferable except in the case of death; operation of law; bona fide transfer for security purposes only to the association, a bank, or other financial institution; intrafamily transfer; or transfer to an existing member or person who will become a member, and in the case of an instrument so states conspicuously on its face; or

RCW 21.20.320(16) retained.  The Division draft moves the cooperative exemption to § 9 (Exempt Transactions).  The USA exemption is limited to nonprofits, which would prevent for-profit cooperatives from relying on the exemption. 

In the Division draft, the statutory place held by USA 201(8) will hold the charitable gift annuity exemption (not in USA).  See § 8(8), below.

(8) Any security which meets the criteria for investment grade securities that the director may adopt by rule.

USA (RCW eliminated).  Rules adopted under current RCW are generally addressed by other USA exemptions and federal law.

 SEQ CHAPTER \h \r 1(9) an equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt under this section or would be a federal covered security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)).

§ 8(9).  An equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt under this section or would be a federal covered security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Sec. 77r(b)(1)).

USA

(9) Any prime quality negotiable commercial paper not intended to be marketed to the general public and not advertised for sale to the general public that is of a type eligible for discounting by federal reserve banks, that arises out of a current transaction or the proceeds of which have been or are to be used for a current transaction, and that evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal.

USA (RCW eliminated).

(12) Any charitable gift annuities issued by a board of a state university, regional university, or of the state college.

(13) Any charitable gift annuity issued by an insurer or institution holding a certificate of exemption under RCW 48.38.010.

§ 8(8).  Any charitable gift annuity issued:

            (a) Pursuant to the authority granted by RCW 28B.10.485 or similar authority granted to colleges or universities by any state; or

            (b) By an insurer or institution holding a certificate of exemption under RCW 48.38.010; and

RCW – Division Draft maintains exemptions for certain charitable gift annuities.  

§202.  EXEMPT TRANSACTIONS.   SEQ CHAPTER \h \r 1The following transactions are exempt from the requirements of Sections 301 through 306 and 504:

RCW 21.20.320  Exempt transactions.

The following transactions are exempt from RCW 21.20.040 through 21.20.300 and 21.20.327 except as expressly provided:

§ 9.  EXEMPT TRANSACTIONS.  The following transactions are exempt from the requirements of sections 13 through 18 and 37 of this act:

USA.

( SEQ CHAPTER \h \r 11) an isolated nonissuer transaction, whether effected by or through a broker-dealer or not;

(1) Any isolated transaction, or sales not involving a public offering, whether effected through a broker-dealer or not; or any transaction effected in accordance with any rule by the director establishing a nonpublic offering exemption pursuant to this subsection where registration is not necessary or appropriate in the public interest or for the protection of investors.

§ 9(1).  An isolated nonissuer transaction, whether effected by or through a broker-dealer or not;

USA.  Also note that the Division draft includes a nonpublic offering exemption at § 9(25).

 SEQ CHAPTER \h \r 1(2) a nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this [Act], and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least 90 days, if, at the date of the transaction:

(A) the issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

(B) the security is sold at a price reasonably related to its current market price;

(C) the security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution;

(D) a nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued under this [Act] or a record filed with the Securities and Exchange Commission that is publicly available contains:

i) a description of the business and operations of the issuer;

(ii) the names of the issuer’s executive officers and the names of the issuer’s directors, if any;

(iii) an audited balance sheet of the issuer as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and

(iv) an audited income statement for each of the issuer’s two immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; and

(E) any one of the following requirements is met:

(i) the issuer of the security has a class of equity securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System;

(ii) the issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;

(iii) the issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or

(iv) the issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had such an audited balance sheet, a pro forma balance sheet for the combined organization;

(2) Any nonissuer transaction by a registered salesperson of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940 pursuant to any rule adopted by the director.

§ 9(2).  A nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940 in a security of a class that has been outstanding in the hands of the public for at least ninety days, if, at the date of the transaction:

     (a) The issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

(b) The security is sold at a price reasonably related to its current market price;

(c) The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution;

(d) A nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued under this chapter or a record filed with the Securities and Exchange Commission that is publicly available contains:

            (i) A description of the business and operations of the issuer;

            (ii) The names of the issuer's executive officers and the names of the issuer's directors, if any;

            (iii) An audited balance sheet of the issuer as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and

            (iv) An audited income statement for each of the issuer's two immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; and

      (e) Any one of the following requirements is met:

            (i) The issuer of the security has a class of equity securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System;

            (ii) The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;

            (iii) The issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or

            (iv) The issuer of the security has total assets of at least two million dollars based on an audited balance sheet as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had such an audited balance sheet, a pro forma balance sheet for the combined organization;

USA.  Consistent with current rules.

 SEQ CHAPTER \h \r 1(3) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this [Act] in a security of a foreign issuer that is a margin security defined in regulations or rules adopted by the Board of Governors of the Federal Reserve System;

§ 9(3).  A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security of a foreign issuer that is a margin security defined in regulations or rules adopted by the Board of Governors of the Federal Reserve System;

USA

 SEQ CHAPTER \h \r 1(4) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this [Act] in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));

§ 9(4).  A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78m or 78o(d));

USA

 SEQ CHAPTER \h \r 1(5) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this [Act] in a security that:

(A) is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its four highest rating categories; or

(B) has a fixed maturity or a fixed interest or dividend, if:

     (i) a default has not occurred during the current fiscal year or within the three previous fiscal years or during the existence of the issuer and any predecessor if less than three fiscal years, in the payment of principal, interest, or dividends on the security; and

     (ii) the issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous 12 months a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

§ 9(5).  A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security that:

   (a) Is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its four highest rating categories; or

   (b) Has a fixed maturity or a fixed interest or dividend, if:

        (i) A default has not occurred during the current fiscal year or within the three previous fiscal years or during the existence of the issuer and any predecessor if less than three fiscal years, in the payment of principal, interest, or dividends on the security; and

        (ii) The issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous twelve months a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

USA

 SEQ CHAPTER \h \r 1(6) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this [Act] effecting an unsolicited order or offer to purchase;

(3) Any nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to buy; but the director may by rule require that the customer acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each such form be preserved by the broker-dealer for a specified period.

§ 9(6).  A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter effecting an unsolicited order or offer to purchase;

USA

 SEQ CHAPTER \h \r 1(7) a nonissuer transaction executed by a bona fide pledgee without the purpose of evading this [Act];

(7) Any transaction executed by a bona fide pledgee without any purpose of evading this chapter.

§ 9(7).  A nonissuer transaction executed by a bona fide pledgee without the purpose of evading this chapter;

USA

 SEQ CHAPTER \h \r 1(8) a nonissuer transaction by a federal covered investment adviser with investments under management in excess of $100,000,000 acting in the exercise of discretionary authority in a signed record for the account of others;

§ 9(8).  A nonissuer transaction by a federal covered investment adviser with investments under management in excess of one hundred million dollars acting in the exercise of discretionary authority in a signed record for the account of others;

USA

 SEQ CHAPTER \h \r 1(9) a transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims, or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the administrator after a hearing;

§ 9(9).  A transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims, or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved after a hearing by a court; an official or agency of the United States; a state securities, banking, or insurance agency; or other government authority, if expressly authorized by law to grant such approvals;

USA with addition to clarify that the exemption is available for transactions that have been approved pursuant to fairness hearings in other jurisdictions, including agencies allowed to conduct such hearing under § 3(a)(10) of the Securities Act of 1933.

 SEQ CHAPTER \h \r 1(10) a transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;

(4) Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters.

§ 9(10).  A transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;

USA

 SEQ CHAPTER \h \r 1(11) a transaction in a note, bond, debenture, or other evidence of indebtedness secured by a mortgage or other security agreement if:

(A) the note, bond, debenture, or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit;

(B) a general solicitation or general advertisement of the transaction is not made; and

(C) a commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this [Act] as a broker-dealer or as an agent;

(5) Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit. A bond or other evidence of indebtedness is not offered and sold as a unit if the transaction involves:

(a) A partial interest in one or more bonds or other evidences of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels; or

(b) One of multiple bonds or other evidences of indebtedness secured by one or more real or chattel mortgages or deeds of trust, or agreements for the sale of real estate or chattels, sold to more than one purchaser as part of a single plan of financing; or

(c) A security including an investment contract other than the bond or other evidence of indebtedness.

§ 9(11).  (a) A transaction in a note, bond, debenture, or other evidence of indebtedness secured by a mortgage or other security agreement if:

       (i) The note, bond, debenture, or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit;

       (ii) A general solicitation or general advertisement of the transaction is not made; and

       (iii) A commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this chapter as a broker-dealer or as a sales agent.

   (b) A transaction does not qualify for the exemption if it involves:

       (i) A fractional or partial interest in one or more notes, bonds, debentures, or other evidence of indebtedness, secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels;

       (ii) One of multiple notes, bonds, debentures, or other evidence of indebtedness, all secured by the same real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, and sold to more than one purchaser; or

       (iii) Services by a person other than the primary obligor on a note, bond, debenture, or other evidence of indebtedness, that would render the investor dependent upon such person for a return upon the note, bond, debenture, or other evidence of indebtedness, as specified by rule adopted or order issued under this chapter;

USA with additional language generally following RCW 21.20.320(5)(a)-(c), which, as Official Comment 11 to USA § 202(11) notes, has been an area “of concern to state securities administrators.”

 SEQ CHAPTER \h \r 1(12) a transaction by an executor, administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;

(6) Any transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator.

§ 9(12).  A transaction by an executor, director of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;

USA

 SEQ CHAPTER \h \r 1(13) a sale or offer to sell to:

(A) an institutional investor;      

(B) a federal covered investment adviser; or

(C) any other person exempted by rule adopted or order issued under this [Act];

(8) Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit-sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity.

§ 9(13).  A sale or offer to sell to:

     (a) An institutional investor;

     (b) A federal covered investment adviser for its own account and not for the account of others; or

(c) Any other person exempted by rule adopted or order issued under this chapter;

USA with additional language based on current WA practice and Official Comment 14 to USA § 202(13).

 SEQ CHAPTER \h \r 1(14) a sale or an offer to sell securities by or on behalf of an issuer, if the transaction is part of a single issue in which:

(A) not more than 25 purchasers are present in this State during any 12 consecutive months, other than those designated in paragraph (13);

(B) a general solicitation or general advertising is not made in connection with the offer to sell or sale of the securities;

(C) a commission or other remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this [Act] or an agent registered under this [Act] for soliciting a prospective purchaser in this State; and

(D) the issuer reasonably believes that all the purchasers in this State, other than those designated in paragraph (13), are purchasing for investment;

(17) Any transaction effected in accordance with any rule adopted by the director establishing a limited offering exemption which furthers objectives of compatibility with federal exemptions and uniformity among the states, provided that in adopting any such rule the director may require that no commission or other remuneration be paid or given to any person, directly or indirectly, for effecting sales unless the person is registered under this chapter as a broker-dealer or salesperson.

§ 9(14).  A sale or an offer to sell securities by or on behalf of an issuer, if the transaction is part of a single issue in which:

    (a) Not more than twenty-five purchasers are present in this state during any twelve consecutive months, other than those designated in subsection (13) of this section;

    (b) A general solicitation or general advertising is not made in connection with the offer to sell or sale of the securities;

    (c) A commission or other remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this chapter or a sales agent registered under this chapter for soliciting a prospective purchaser in this state;

    (d) The issuer reasonably believes that all the purchasers in this state, other than those designated in subsection (13) of this section, are purchasing for investment and not with a view to distribution;

    (e) A filing is made and a fee, not to exceed three hundred dollars, is paid in accordance with a rule adopted by the director.  A rule adopted under this subsection may authorize late filings and require the payment of an additional fee not to exceed three hundred dollars for any late filing;

USA with additional language requiring a filing and fee, consistent with current law.  Retaining this filing/fee structure is needed to avoid a revenue impact.

 SEQ CHAPTER \h \r 1(15) a transaction under an offer to existing security holders of the issuer, including persons that at the date of the transaction are holders of convertible securities, options, or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in this State;

(11) Any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than ninety days of their issuance, if (a) no commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in this state, or (b) the issuer first files a notice specifying the terms of the offer and the director does not by order disallow the exemption within the next five full business days.

§ 9(15).  A transaction under an offer to existing security holders of the issuer, including persons that at the date of the transaction are holders of convertible securities, options, or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in this state.  For purposes of this section, "standby commission" means the commission payable to a broker-dealer registered or exempt from registration under this chapter for its firm commitment to purchase securities offered to existing security holders which are not purchased by the security holders;

USA with additional language to define “standby commission.”

 SEQ CHAPTER \h \r 1(16) an offer to sell, but not a sale, of a security not exempt from registration under the Securities Act of 1933 if:

(A) a registration or offering statement or similar record as required under the Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 adopted under the Securities Act of 1933 (17 C.F.R. 230.165); and

(B) a stop order of which the offeror is aware has not been issued against the offeror by the administrator or the Securities and Exchange Commission, and an audit, inspection, or proceeding that is public and that may culminate in a stop order is not known by the offeror to be pending;

(12) Any offer (but not a sale) of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no stop order or refusal order is in effect and no public proceeding or examination looking toward such an order is pending under either act

§ 9(16).  An offer to sell, but not a sale of, a security not exempt from registration under the Securities Act of 1933 if:

    (a) A registration or offering statement or similar record as required under the Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 adopted under the Securities Act of 1933 (17 C.F.R. 230.165); and

    (b) A stop order of which the offeror is aware has not been issued against the offeror by the director or the Securities and Exchange Commission, and an audit, inspection, or proceeding that is public and that may culminate in a stop order is not known by the offeror to be pending;

USA (with minor technical change)

 SEQ CHAPTER \h \r 1(17) an offer to sell, but not a sale, of a security exempt from registration under the Securities Act of 1933 if:

(A) a registration statement has been filed under this [Act], but is not effective;

(B) a solicitation of interest is provided in a record to offerees in compliance with a rule adopted by the administrator under this [Act]; and

(C) a stop order of which the offeror is aware has not been issued by the administrator under this [Act] and an audit, inspection, or proceeding that may culminate in a stop order is not known by the offeror to be pending;

§ 9(17).  An offer to sell, but not a sale of, a security exempt from registration under the Securities Act of 1933 if:

     (a) A registration statement has been filed under this chapter but is not effective;

     (b) A solicitation of interest is provided in a record to offerees in compliance with a rule adopted by the director under this chapter; and

(c) A stop order of which the offeror is aware has not been issued by the director under this chapter and an audit, inspection, or proceeding that may culminate in a stop order is not known by the offeror to be pending;

USA

 SEQ CHAPTER \h \r 1(18) a transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets, or other reorganization to which the issuer, or its parent or subsidiary and the other person, or its parent or subsidiary, are parties;

See (14), below.

§ 9(18). A transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets, or other reorganization to which the issuer, or its parent or subsidiary, and the other person, or its parent or subsidiary, are parties;

USA

 SEQ CHAPTER \h \r 1(19) a rescission offer, sale, or purchase under Section 510;

§ 9(19).  A rescission offer, sale, or purchase under section 43 of this act;

USA

 SEQ CHAPTER \h \r 1(20) an offer or sale of a security to a person not a resident of this State and not present in this State if the offer or sale does not constitute a violation of the laws of the State or foreign jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or scheme to evade this [Act];

§ 9(20).  An offer or sale of a security to a person not a resident of this state and not present in this state if the offer or sale does not constitute a violation of the laws of the state or foreign jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or scheme to evade this chapter;

USA

 SEQ CHAPTER \h \r 1(21) employees’ stock purchase, savings, option, profit-sharing, pension, or similar employees’ benefit plan, including any securities, plan interests, and guarantees issued under a compensatory benefit plan or compensation contract, contained in a record, established by the issuer, its parents, its majority-owned subsidiaries, or the majority-owned subsidiaries of the issuer’s parent for the participation of their employees including offers or sales of such securities to:

(A) directors; general partners; trustees, if the issuer is a business trust; officers; consultants; and advisors;

(B) family members who acquire such securities from those persons through gifts or domestic relations orders;

(C) former employees, directors, general partners, trustees, officers, consultants, and advisors if those individuals were employed by or providing services to the issuer when the securities were offered; and

(D) insurance agents who are exclusive insurance agents of the issuer, or the issuer’s subsidiaries or parents, or who derive more than 50 percent of their annual income from those organizations;

RCW 21.20.310(10) Any security issued in connection with an employee's stock purchase, savings, pension, profit-sharing, or similar benefit plan if: (a) The plan meets the requirements for qualification as a pension, profit sharing, or stock bonus plan under section 401 of the internal revenue code, as an incentive stock option plan under section 422 of the internal revenue code, as a nonqualified incentive stock option plan adopted with or as a supplement to an incentive stock option plan under section 422 of the internal revenue code, or as an employee stock purchase plan under section 423 of the internal revenue code; or (b) the director is notified in writing with a copy of the plan thirty days before offering the plan to employees in this state. In the event of late filing of notification the director may upon application, for good cause excuse such late filing if he or she finds it in the public interest to grant such relief.

§ 9(21).  A transaction pursuant to an employees' stock purchase, savings, option, profit-sharing, pension, or similar employees' benefit plan, including any securities, plan interests, and guarantees issued under a compensatory benefit plan or compensation contract, contained in a record, established by the issuer, its parents, its majority-owned subsidiaries, or the majority-owned subsidiaries of the issuer's parent for the participation of their employees including offers or sales of such securities to:

     (a) Directors; general partners; trustees, if the issuer is a business trust; officers; consultants; and advisors;

     (b) Family members who acquire such securities from those persons through gifts or domestic relations orders;

     (c) Former employees, directors, general partners, trustees, officers, consultants, and advisors if those individuals were employed by or providing services to the issuer when the securities were offered; and

(d) Insurance agents who are exclusive insurance agents of the issuer, or the issuer's subsidiaries or parents, or who derive more than fifty percent of their annual income from those organizations;

USA with addition of “transaction pursuant to” intro clause to make the exemption consistent with other provisions in § 9.

 SEQ CHAPTER \h \r 1(22) a transaction involving:

(A) a stock dividend or equivalent equity distribution, whether the corporation or other business organization distributing the dividend or equivalent equity distribution is the issuer or not, if nothing of value is given by stockholders or other equity holders for the dividend or equivalent equity distribution other than the surrender of a right to a cash or property dividend if each stockholder or other equity holder may elect to take the dividend or equivalent equity distribution in cash, property, or stock; 

(B) an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such exchange and partly for cash; or

(C) the solicitation of tenders of securities by an offeror in a tender offer in compliance with Rule 162 adopted under the Securities Act of 1933  (17 C.F.R. 230.162); or

(13) The issuance of any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the distribution other than the surrender of a right to a cash dividend where the stockholder can elect to take a dividend in cash or stock.

(14) Any transaction incident to a right of conversion or a statutory or judicially approved reclassification, recapitalization, reorganization, quasi reorganization, stock split, reverse stock split, merger, consolidation, or sale of assets

§ 9(22).  A transaction involving:

   (a) A stock dividend or equivalent equity distribution, whether the corporation or other business organization distributing the dividend or equivalent equity distribution is the issuer or not, if nothing of value is given by stockholders or other equity holders for the dividend or equivalent equity distribution other than the surrender of a right to a cash or property dividend if each stockholder or other equity holder may elect to take the dividend or equivalent equity distribution in cash, property, or stock;

   (b) An act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such exchange and partly for cash; or

   (c) The solicitation of tenders of securities by an offeror in a tender offer in compliance with Rule 162 adopted under the Securities Act of 1933 (17 C.F.R. 230.162);

USA

 SEQ CHAPTER \h \r 1(23) a nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration under this [Act], if the issuer is a reporting issuer in a foreign jurisdiction designated by this paragraph or by rule adopted or order issued under this [Act]; has been subject to continuous reporting requirements in the foreign jurisdiction for not less than 180 days before the transaction; and the security is listed on the foreign jurisdiction’s securities exchange that has been designated by this paragraph or by rule adopted or order issued under this [Act], or is a security of the same issuer that is of senior or substantially equal rank to the listed security or is a warrant or right to purchase or subscribe to any of the foregoing.  For purposes of this paragraph, Canada, together with its provinces and territories, is a designated foreign jurisdiction and The Toronto Stock Exchange, Inc., is a designated securities exchange.  After an administrative hearing in compliance with [the state administrative procedure act], the administrator, by rule adopted or order issued under this [Act], may revoke the designation of a securities exchange under this paragraph, if the administrator finds that revocation is necessary or appropriate in the public interest and for the protection of investors.

§ 9(23).  A nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration under this chapter, if the issuer is a reporting issuer in a foreign jurisdiction designated by this subsection or by rule adopted or order issued under this chapter; has been subject to continuous reporting requirements in the foreign jurisdiction for not less than one hundred eighty days before the transaction; and the security is listed on the foreign jurisdiction's securities exchange that has been designated by this subsection or by rule adopted or order issued under this chapter, or is a security of the same issuer that is of senior or substantially equal rank to the listed security or is a warrant or right to purchase or subscribe to any of the foregoing under this subsection.  For purposes of this subsection, Canada, together with its provinces and territories, is a designated foreign jurisdiction and The Toronto Stock Exchange, Inc., is a designated securities exchange.  The director, by rule adopted or order issued under this chapter, may revoke the designation of a securities exchange under this subsection, if the director finds that revocation is necessary or appropriate in the public interest and for the protection of investors;

USA.  The Division deleted certain references to procedural matters provided for by the Washington APA.

§ 9(24).  See row for USA § 201(8), above.

RCW – cooperative exemption substantially similar to RCW 21.20.320(16).  See comments to USA § 201(8), above.

RCW 21.20.320(1) Any isolated transaction, or sales not involving a public offering, whether effected through a broker-dealer or not; or any transaction effected in accordance with any rule by the director establishing a nonpublic offering exemption pursuant to this subsection where registration is not necessary or appropriate in the public interest or for the protection of investors.

§ 9(25).  A transaction not involving a public offering, whether effected through a broker-dealer or not, consistent with section 4(2) of the Securities Act of 1933.

RCW approach retained to establish a non-public offering exemption consistent with § 4(2) of the Securities Act of 1933 and current RCW 21.20.320(1).

(9) Any transaction effected in accordance with the terms and conditions of any rule adopted by the director if:
(a) The aggregate offering amount does not exceed five million dollars; and
(b) The director finds that registration is not necessary in the public interest and for the protection of investors.

USA (RCW eliminated – USA § 203, below, provides sufficient rulemaking authority).

(10) Any offer or sale of a preorganization certificate or subscription if (a) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective subscriber, (b) the number of subscribers does not exceed ten, and (c) no payment is made by any subscriber.

USA (RCW eliminated as obsolete).

(15) The offer or sale by a registered broker-dealer, or a person exempted from the registration requirements pursuant to RCW 21.20.040, acting either as principal or agent, of securities previously sold and distributed to the public: PROVIDED, That:
(a) Such securities are sold at prices reasonably related to the current market price thereof at the time of sale, and, if such broker-dealer is acting as agent, the commission collected by such broker-dealer on account of the sale thereof is not in excess of usual and customary commissions collected with respect to securities and transactions having comparable characteristics;
(b) Such securities do not constitute the whole or a part of an unsold allotment to or subscription or participation by such broker-dealer as an underwriter of such securities or as a participant in the distribution of such securities by the issuer, by an underwriter or by a person or group of persons in substantial control of the issuer or of the outstanding securities of the class being distributed; and
(c) The security has been lawfully sold and distributed in this state or any other state of the United States under this or any act regulating the sale of such securities.

USA (RCW eliminated).

RCW 21.20.340  Fees

(10)(a) The director may provide by rule for the filing of notice of claim of exemption under RCW 21.20.320 (1), (9), and (17) and set fees accordingly not to exceed three hundred dollars.

(11) For filing of notification of claim of exemption from registration pursuant to RCW 21.20.310(11), as now or hereafter amended, the fee shall be fifty dollars for each filing.

USA approach followed, which includes the appropriate fee in the substantive section relating to applicable filings.

§203.  ADDITIONAL EXEMPTIONS AND WAIVERS.   SEQ CHAPTER \h \r 1A rule adopted or order issued under this [Act] may exempt a security, transaction, or offer; a rule under this [Act] may exempt a class of securities, transactions, or offers from any or all of the requirements of Sections 301 through 306 and 504; and an order under this [Act] may waive, in whole or in part, any or all of the conditions for an exemption or offer under Sections 201 and 202.

§ 10.  ADDITIONAL EXEMPTIONS AND WAIVERS.  A rule adopted or order issued under this chapter may exempt a security, transaction, or offer; a rule under this chapter may exempt a class of securities, transactions, or offers from any or all of the requirements of sections 13 through 18 and 37 of this act; and an order under this chapter may waive, in whole or in part, any or all of the conditions for an exemption or offer under sections 8 and 9 of this act.

USA

§204.  DENIAL, SUSPENSION, REVOCATION, CONDITIONS, OR LIMITATION OF EXEMPTIONS.   SEQ CHAPTER \h \r 1(a) [Enforcement related powers.]  Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this [Act] may deny, suspend application of, condition, limit, or revoke an exemption created under Section 201(3)(C), (7) or (8) or 202 or an exemption or waiver created under Section 203 with respect to a specific security, transaction, or offer.  An order under this section may be issued only pursuant to the procedures in Section 306(d) or 604 and only prospectively.

(b) [Knowledge of order required.]  A person does not violate Section 301, 303 through 306, 504, or 510 by an offer to sell, offer to purchase, sale, or purchase effected after the entry of an order issued under this section if the person did not know, and in the exercise of reasonable care could not have known, of the order.

RCW 21.20.325  Denial, revocation, condition, of exemptions -- Authority -- Procedure.

The director or administrator may by order deny, revoke, or condition any exemption specified in subsections (10), (11), (12) or (13) of RCW 21.20.310 or in RCW 21.20.320, as now or hereafter amended, with respect to a specific security or transaction. No such order may be entered without appropriate prior notice to all interested parties, opportunity for hearing, and written findings of fact and conclusions of law, except that the director or administrator may by order summarily deny, revoke, or condition any of the specified exemptions pending final determination of any proceeding under this section. Upon the entry of a summary order, the director or administrator shall promptly notify all interested parties that it has been entered and of the reasons therefor and that within fifteen days of the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the director or administrator, the order will remain in effect until it is modified or vacated by the director or administrator. If a hearing is requested or ordered, the director or administrator, after notice of and opportunity for hearing to all interested persons, may modify or vacate the order or extend it until final determination. No order under this section may operate retroactively. No person may be considered to have violated RCW 21.20.140 as now or hereafter amended by reason of any offer or sale effected after the entry of an order under this section if he or she sustains the burden of proof that he or she did not know, and in the exercise of reasonable care could not have known, of the order.

§ 11.  DENIAL, SUSPENSION, REVOCATION, CONDITION, OR LIMITATION OF EXEMPTIONS. 

    (1) Enforcement related powers.  Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this chapter may deny, suspend application of, condition, limit, or revoke an exemption created under section 8 (3)(c), (7), or (8) or 9 of this act or an exemption or waiver created under section 10 of this act with respect to a specific security, transaction, or offer.  An order under this section may be issued only pursuant to the procedures in section 18(4) or 48 of this act and only prospectively.

    (2) Knowledge of order required.  A person does not violate section 13, 15 through 18, 37, or 43 of this act by an offer to sell, offer to purchase, sale, or purchase effected after the entry of an order issued under this section if the person did not know, and in the exercise of reasonable care could not have known, of the order.

USA

§ 12.  Sections 8 through 11 of this act are each added to chapter 21.20A RCW (created in section 115 of this act) and codified with the subchapter heading of "Exemption from Registration of Securities."

Code Reviser Instructions