ARIZONA STATE SENATE
Phoenix, Arizona
Requires registration of those persons that sell viatical settlement investment contracts and increases the ability of the Arizona Corporation Commission (ACC) to punish dishonest conduct in business matters.
The Securities Division within the Arizona Corporation Commission is responsible for overseeing the securities industry and administering the Arizona Securities and Investment Management Acts. This oversight includes the registration of certain securities dealers and salesmen, the licensure of investment advisors and their representatives; review of their conduct; investigation of possible violations; and the initiation of administrative, civil, or criminal enforcement actions.
The ACC has identified common sales practices relating to the sales of variable contracts and viatical settlement investment contracts that require registration and reporting requirements. Variable contracts are insurance policies that have characteristics of both whole life insurance and term life insurance. Currently, the Department of Insurance refers many investigations relating to variable contracts to the ACC’s Securities Division.
Viatical settlement investment contracts are securities issued by companies who purchase the life insurance policies of terminally ill patients or the elderly and resell the death benefits to investors.
S.B. 1107 would clarify that persons who sell variable contracts are required to register with the ACC and would require those persons who sell viatical settlement contracts to register with the ACC.
There is no anticipated fiscal impact to the state general fund associated with this bill.
1. Requires dealers and salesmen to register with the ACC in order to sell viatical settlement investment contracts.
2. Clarifies that dealers and salesmen register requirements for the sale of variable contracts.
3. Authorizes the ACC to assess administrative penalties and restitution for unconscionable, unethical, or dishonest behavior or for failure to fulfill supervisory responsibilities.
4. Authorizes attorneys from Securities Division to represent the ACC in administrative or civil matters under the Securities Act or the Investment Management Act.
5. Authorizes the ACC to forward evidence of criminal conduct to county attorneys, the United States Attorney and to the Attorney General.
6. Authorizes the ACC to deny, revoke or suspend registration or licensure for dishonest conduct in business or financial matters.
7. Authorizes the ACC to establish alternative financial information requirements by order or rule.
8. Changes the balance sheet requirement for applications for securities registration from within 90 days to within 120 days.
9. Authorizes the ACC to establish alternative financial information requirements by order or rule.
10. Authorizes the ACC to include a spouse in an administrative action for purposes of determining the liability of the marital community.
11. Stipulates that dealers or salesmen engaged in business of providing investment advice are subject to the antifraud provisions of the Investment Management Act.
12. Precludes the viatical settlement investment contract exemption from securities registration.
13. Removes language stating the Director of the Securities Division of the Corporation Commission shall abstain from all votes of the Commerce and Economic Development Commission relating to loans for the purpose of establishing a securities exchange.
14. Clarifies that filing an application for a rehearing of a denied registration application does not stay the ACC’s decision or order and that an application is considered denied if the rehearing is not granted within twenty calendar days from the filing of the rehearing.
15. Updates accounting terminology to current terms used in practice.
16. Contains conforming and technical changes.
17. Contains a general effective date.
Amendments Adopted by Committee
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Conforms existing statute to this bill.
Senate Action
BI 1/31/02 DPA 5-0-0-1
Prepared by Senate Staff
February 1, 2002,