Nebraska Department of Banking and Finance

NOTICE OF RULEMAKING HEARING

Thursday, July 11, 2019 - 12:00am

NEBRASKA DEPARTMENT OF BANKING AND FINANCE

Notice is hereby given that the Nebraska Department of Banking and Finance will hold a rulemaking hearing on August 19, 2019, commencing at 1:30 p.m., at the offices of the Department of Banking and Finance, 1526 K Street, Suite 300, Lincoln, Nebraska 68508.

The purpose of the hearing is to take testimony and evidence concerning the following changes to the Rules and Regulations of the Department:

1) The proposed revision of 48 NAC Chapters 2, 4, 5, 7, 10, 12, 18, 20, and 21.

2) The proposed outright repeal of 48 NAC Chapters 17, 22-34, and 36.

48 NAC 2—Definitions. The purpose of the proposed amendments is to repeal definitions that are no longer necessary due to the proposed amendments to 48 NAC 21, and the proposed outright repeal of 48 NAC 22-34, and 36. The proposal also clarifies existing definitions and adopts a definition of the term "Department."

48 NAC 4—Broker-Dealers. The purpose of the proposed amendments is to eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 5—Issuer-Dealers. The purpose of the proposed amendments is to eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 7—Investment Advisers. The purpose of the proposed amendments is to adopt cybersecurity requirements for investment advisers. In addition, the proposed amendments eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 10—Recordkeeping by Investment Advisers. The purpose of the proposed amendments is to amend recordkeeping requirements for investment advisers as related to cybersecurity.

48 NAC 12—Fraudulent, Dishonest and Unethical Business Practices. The purpose of the proposed amendments is to provide that an investment adviser’s use of a client’s password to access the client’s account is a dishonest and unethical business practice. The rule further provides that an investment adviser’s failure to establish, maintain and enforce a required policy is a dishonest and unethical business practice.

48 NAC 17—Uniform Limited Offering Exemption. This chapter is proposed for outright repeal as such rule is no longer necessary as a result of the United States Securities and Exchange Commission’s repeal of Regulation D, Rule 505, 17 CFR 230.505.

48 NAC 18—Information Requirements for the Section 8-1111(20) Nebraska Intrastate Issuer Exemption. The purpose of the proposed amendments is to eliminate

requirements for manual signatures and the payment of filing fees by physical checks or money order.

48 NAC 20—Federal Covered Securities. The purpose of the proposed amendments is to eliminate the requirement that issuers offering securities in Nebraska pursuant to the Securities & Exchange Commission ("SEC") Regulation A, Tier 2 use a broker-dealer, provided no commissions or other remuneration are paid as provided by LB 259 (2019). The proposal also eliminates requirements that filing fees be paid by physical check or money order.

48 NAC 21—Underwriting Expenses, Underwriter’s Warrants, Selling Expenses, and Selling Securities Holders. The purpose of the proposed amendment is to replace this rule with a rule captioned "North American Securities Administrator Association Statements of Policy." The rule incorporates by reference Statements of Policy adopted by the North American Securities Administrators Association ("NASAA") and requires issuers registering offerings to comply with the requirements of the Statements of Policy. The following NASAA Statements of Policy are proposed for adoption:

1) "Statement of Policy Regarding Corporate Securities Definitions" as amended on May 6, 2018.

2) "Statement of Policy Regarding Underwriting and Selling Expenses, Underwriter’s Warrants and Selling Expenses" as amended on May 6, 2018.

3) "Statement of Policy Regarding Promotional Shares" as amended on March 31, 2008.

4) "Statement of Policy Regarding Promoters’ Equity Investment" as amended on September 11, 2016.

5) "Statement of Policy Regarding Loans and Other Material Transactions" as amended on May 6, 2018.

6) "Statement of Policy Regarding the Impoundment of Proceeds" as amended on March 31, 2008.

7) "Statement of Policy Regarding Unequal Voting Rights" as amended on September 11, 2016.

8) "Statement of Policy Regarding Specificity in Use of Proceeds" as amended on September 11, 2016.

9) "Statement of Policy Regarding Unsound Financial Condition" as amended on May 6, 2018.

10) "Statement of Policy Regarding Debt Securities" as adopted on April 25, 1993.

11) "Statement of Policy Regarding Preferred Stock" as amended on September 11, 2016.

12) "Statement of Policy Regarding Options and Warrants" as amended on March 31, 2008.

13) "Statement of Policy Regarding Real Estate Investment Trusts" as amended on May 7, 2007.

14) "Statement of Policy Regarding Real Estate Programs" as amended on May 7, 2007.

15) "Registration of Oil and Gas Programs" as amended on May 6, 2012.

16) "Registration of Publicly-Offered Cattle Feeding Programs" as adopted on September 17, 1980.

17) "Registration of Commodity Pool Programs" as amended on May 6, 2012.

18) "Equipment Programs" as amended on May 6, 2012.

19) "Registration of Asset Backed Securities" as amended on May 6, 2012.

20) "Statement of Policy Regarding Church Extension Fund Securities" as amended on April 18, 2004.

21) "Mortgage Program Guidelines" as amended on May 7, 2007.

22) "Omnibus Guidelines" as amended on May 7, 2007.

23) "Statement of Policy Regarding Use of Electronic Offering Documents and Electronic Signatures" as adopted on May 7, 2017.

48 NAC 22—Promotional Shares. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 23—Promoter’s Equity Investment. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 24—Loans and Other Material Affiliated Transactions. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 25—Impoundment of Proceeds. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 26—Unequal Voting Rights. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 27—Specificity Regarding Use of Proceeds. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 28—Unsound Financial Condition. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 29—Debt Securities. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 30—Preferred Stock. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 31—Options and Warrants. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 32—Real Estate Investment Trusts. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 33—Limited Partnerships. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 34—Registration of Asset Backed Securities. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 36—General Obligation Financing by Religious Denominations. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

The rulemaking hearing is being conducted under and by virtue of the provisions of Section 84-907, R.R.S 1943, as amended, which provides that COPIES OF THE PROPOSED RULES ARE AVAILABLE FOR PUBLIC EXAMINATION at the Office of the Department of Banking and Finance, 1526 K Street, Suite 300, Lincoln, Nebraska 68508, and at the Office of the Secretary of State, 1201 N Street, Suite 120, Lincoln, Nebraska 68509. In addition, the proposed rules are available on the Department of Banking and Finance’s website at https://ndbf.nebraska.gov, and the Secretary of State’s website www.sos.ne.gov.

A copy of the Fiscal Impact Statement is available at the Office of the Department of Banking and Finance and on the Department’s website.

All interested persons are invited to attend and testify at the hearing. Interested persons may also submit written comments to the Department of Banking and Finance prior to the hearing, which comments will be made part of the hearing record at the time of the hearing.

If auxiliary aids or reasonable accommodations are needed for attendance at this hearing, please call the Nebraska Department of Banking and Finance at (402) 471-2171, or, for persons with hearing impairments, please call the Nebraska Relay System, (800) 833-7352 TDD. This contact should be made at least seven (7) days prior to the hearing.

Dated at Lincoln, Nebraska, this 11th day of July, 2019.

Claire McHenry, Deputy Director—Securities

Nebraska Department of Banking and Finance

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