Securities Division

Statement of procedure regarding certain Securities Division’s time-frame rules

Introduction

The Securities Division (the “Division”) of the Arizona Corporation Commission (the “Commission”) proposes to adopt procedures concerning the processing of certain registration applications.

Findings

1. WHEREAS A.R.S. §41-1073 mandates that any state agency that issues licenses shall promulgate final rules establishing time-frames during which the agency shall either grant or deny each type of license that the agency issues.
2. WHEREAS, under A.R.S. §41-1073, the Division initiated rulemaking proceedings for three time-frame rules: A.A.C. R14-4-146, R14-4-147, and R14-6-105.
3. WHEREAS proposed A.A.C. R14-4-146 (Docket No. RS-00000A-97-0434) establishes time frames within which the Division shall process the initial and renewal applications for the registration or exemption of securities offerings.
4. WHEREAS proposed A.A.C. R14-4-147 (Docket No. RS-00000A-97-0435) establishes time-frames within which the Division shall process applications for dealer and salesman registration.
5. WHEREAS proposed A.A.C. R14-6-105 (Docket No. RS-00000A-97-0436) establishes time-frames within which the Division shall process applications for investment advisor and investment advisor representative licensure.
6. WHEREAS on March 27, 1998, the Division forwarded to the Commission a proposal recommending that the Commission adopt the proposed time-frame rules.
7. WHEREAS on April 6, 1998, the Commission issued Decision No. 60756 which directed that a hearing be scheduled regarding the proposed time-frame rules for the purpose of taking public comments.
8. WHEREAS by procedural order issued April 8, 1998, the public comment hearing was scheduled for June 2, 1998 in Phoenix, Arizona.
9. WHEREAS the Notices of the Proposed Rulemaking for the three time-frame rules were published in the Arizona Administrative Register on May 1, 1998.
10. WHEREAS the public comment hearing for the three proposed time-frame rules was held as scheduled on June 2, 1998.
11. WHEREAS the Division received comments, both written and oral, concerning R14-4-146 and R14-4-147. Generally, the comments supported the time-frame rules; however, the comments did request shorter “administrative completeness review” and     “substantive review” time-frames, as defined by A.R.S. §41-1072, for three scenarios: (i) securities offerings that are registered with the Securities and Exchange Commission (“SEC”); (ii) securities offering renewals; and (iii) applications for securities salesmen with “clean” disciplinary histories who are transferring firms.
12. WHEREAS the Division acknowledges that there are scenarios where applications can and will be processed in shorter periods of time than allowed for under the proposed time-frame rules. There also are scenarios where the processing of applications will require the full period of time allowed for under the proposed time-frame rules, if not longer.
13. WHEREAS the Division is not in favor of amending the proposed time-frame rules to address each such scenario, but the Division has expressed its commitment to processing all applications under the time-frame rules in a reasonably expeditious manner whenever possible.
14. WHEREAS A.R.S. § 41-1005 exempts from rulemaking an agency statement that concerns only the internal management of an agency which does not directly and substantively affect the procedural rights or duties of any segment of the public.
15. WHEREAS the Division has agreed to adopt an internal procedural statement that will direct staff of the Division to process the three applications identified above in an “expedited” manner. Specifically, the Division has agreed to the following:
    1. With respect to applications for securities offerings that are registered with the SEC, the administrative completeness review time-frame shall be 30 days, and the substantive review time-frame, when no hearing is requested, shall be 30 days.
    2. With respect to applications for the registration renewal of securities offerings, the administrative completeness review time-frame shall be 15 days, and the substantive review time-frame, when no hearing is requested, shall be 15 days.
    3. With respect to applications for securities salesmen with clean disciplinary histories who are transferring firms, the administrative completeness review time-frame shall be 15 days from the date that the Division receives the Form U-5 from the salesman’s former firm, and the substantive review time-frame, when no hearing is requested, shall be 15 days.
16. WHEREAS the parties who submitted comments concerning the proposed time-frame rules have expressed their approval of this statement of procedure in lieu of amendments to the proposed rules.
17. WHEREAS the hearing officer has recommended that the Commission adopt the time-frame rules, as proposed by the Division.
    

Order

THEREFORE IT IS ORDERED that the Division’s staff shall process the following applications within the prescribed time-frames whenever possible:

1. With respect to applications for securities offerings that are registered with the SEC, the administrative completeness review time-frame shall be 30 days, and the substantive review time-frame, when no hearing is requested, shall be 30 days.
2. With respect to applications for the registration renewal of securities offerings, the administrative completeness review time-frame shall be 15 days, and the substantive review timeframe, when no hearing is requested, shall be 15 days.
3. With respect to applications for securities salesmen with clean disciplinary histories who are transferring firms, the administrative completeness review time-frame shall be 15 days from the date that the Division receives the Form U-5 from the salesman’s former firm, and the substantive review time-frame, when no hearing is requested, shall be 15 days.

IT IS FURTHER ORDERED that this statement of procedure shall become effective immediately.

BY ORDER OF THE ARIZONA CORPORATION COMMISSION

[Administrative Order, Arizona Corporation Commission, 7-16-98.]

This substantive policy statement is advisory only.  A substantive policy statement does not include internal procedural documents that only affect the internal procedures of the agency and does not impose additional requirements or penalties on regulated parties or include confidential information or rules made in accordance with the Arizona administrative procedure act.  If you believe that this substantive policy statement does impose additional requirements or penalties on regulated parties you may petition the agency under section 41-1033, Arizona Revised Statutes, for a review of the statement.