STAND. COM. REP. NO. 524-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2481
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 2481 entitled: 

     "A BILL FOR AN ACT RELATING TO THE UNIFORM SECURITIES ACT,"

begs leave to report as follows:

     The purpose of this bill is to improve the State's
securities law by:

     (1)  Clearly providing that the Commissioner of Securities
          (Commissioner) has the authority to issue interpretive
          orders and forms as necessary to implement Chapter 485,
          Hawaii Revised Statutes;

     (2)  Specifying that the Commissioner may revoke or suspend
          a registration, or require conditional registration
          that places limits or conditions on securities
          activities;

     (3)  Authorizing the Commissioner to impose sanctions
          against those agents of dealers, and employees of
          investment advisors who have supervisory
          responsibilities and have failed to reasonably
          supervise agents;

     (4)  Allowing the Commissioner to better enforce the law and
          continue to pursue potential, pending, or incomplete
          regulatory proceedings against registrants by
          authorizing the Commissioner to:

 
 
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          (A)  Deny requests to withdraw registration in cases
               where regulatory proceedings concerning the
               requester are pending or incomplete;

          (B)  Deny requests to withdraw registration in cases
               where additional information regarding an
               application to withdraw is requested by the
               Commissioner; and

          (C)  Pursue proceedings against a former registrant
               within two years after withdrawal from
               registration becomes effective, in cases where no
               proceeding was pending or additional information
               was requested at the time of withdrawal;

     (5)  Giving broker-dealers or investment advisors the
          ability to avoid interruptions in business by
          authorizing them to file applications for registration
          on behalf of a successor entity; and

     (6)  Providing an exclusion from regulation as a dealer,
          that is reciprocal to one provided by Canada, for
          Canadian securities dealers servicing Canadian citizens
          who are temporarily on vacation in Hawaii.

     Your Committee received testimony in support of this measure
from the Department of Commerce and Consumer Affairs (DCCA) and
four attorneys.

     Your Committee heard testimony that this bill is one of a
number of bills produced by a working group formed by DCCA and
the Business Law Section of the Hawaii State Bar Association.
This group identified areas of the law that could be improved
from a legal standpoint or that were unnecessarily restrictive,
and developed legislation to address the problems identified.
Your Committee finds that this bill will enhance the
Commissioner's ability to implement the securities law and
protect consumers, and will also reduce unnecessary regulatory
burdens on business.

     In response to testimony that state broker-dealer
applications for registration are currently available in
electronic form, and that the United States Securities and
Exchange Commission is developing a nationwide electronic
registration filing system, your Committee has amended this bill
to:

     (1)  Remove language requiring written applications for
          registration and withdrawal of registration; and

 
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     (2)  Give the Commissioner the option of determining whether
          to accept electronically filed applications.

     Technical, nonsubstantive amendments were also made for
purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 2481, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
2481, H.D. 1, and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair