Originally Posted by kpaddle
Good work. Keep the information coming.
Investigate complaints from Alaska residents regarding the offer and sale of unregistered securities, including fraud, as well as allegations of unethical or fraudulent sales practices by broker dealers and agents or by investment advisers and their representatives.
The division receives numerous inquiries and complaints about investment securities offered and/or sold to Alaskans. Solicitations for investments come from both within and outside the state and the division receives these inquiries at various stages of the investment process. For example, we may be contacted at the point when a high pressure, "boiler room" call is first made by a salesman from outside the state or we may be called at the point a stock becomes worthless or the underlying business goes defunct or bankrupt. Early notification allows the division to provide the most useful information to potential investors and take any appropriate action on a timely basis. However, the division does not have the statutory power to demand an individual investor’s monies be returned.
Individual investors may have certain civil rights, including AS 45.55.930 (see Alaska Securities Act
), which is each person’s private responsibility to pursue, or enlist the help of an attorney to pursue, and request, demand, arbitrate or litigate for the return of their funds. See Investor Complaints
for more explanation on the securities complaint process and the use of the Investment Complaint Form.
Definition of a Security
Before discussing the laws governing the offer and sale of securities in Alaska, it is appropriate to devote some space to the question of what things fall within the definition of a security. The term security is very broadly defined under state and federal law. There are, however, some differences among the various definitions contained in state and federal statutes. Alaska’s definition of security, found at AS 45.55.990(12), includes any
. . .note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; a limited liability company interest under AS 10.50, notwithstanding the limitations of AS 45.08.103(c); collateral-trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting-trust certificate; certificate of deposit for a security; a certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under the title or lease or in any sale of or indenture or bond or contract for the conveyance of land or any interest in land; an option on a contract for the future delivery of agricultural or mineral commodities or any other commodity offered or sold to the public and not regulated by the Commodity Futures Trading Commission; however, the contract or option is not subject to the provisions of AS 45.55.070 if it is sold or purchased on the floor of a bona fide exchange or board of trade and offered or sold to the public by a broker-dealer or agent registered under this chapter; investment of money or moneys worth including goods furnished or services performed in the risk capital of a venture with the expectation of some benefit to the investor where the investor has no direct control over the investment or policy decision of the venture; or, in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing; security does not include an insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed or variable sum of money either in a lump sum or periodically for life or for some other specified period; . . .
Many of these terms, particularly investment contract, have been expanded by judicial decision to encompass a variety of money raising ventures. When applying the definition of a security to a particular transaction, courts routinely ignore the labels applied to the form of the transaction and, instead, focus on the economic realities of the relationship between the parties. Thus, if you create a general partnership (general partnership interests are usually not considered to be securities), but structure the transaction so that all other general partners, apart from yourself, will play a passive role in the operation of the partnership, the general partnership interests may be treated as securities. That is one reason why legal counsel is a good idea.
Capitalizing a new or existing business almost invariably involves the offer and sale of securities. The next section presents an overview of the legal and regulatory framework governing the sale of securities in Alaska