S.C.R. NO.














requesting the CONVENING OF a working group to investigate the creation of a locally-focused, hawaii-based stock exchange.



     WHEREAS, sustainable economic diversification is essential to Hawaii's continued fiscal growth and development; and


     WHEREAS, currently, neither local lenders nor governmental entities are equipped to make significant equity investments in local enterprises; and


     WHEREAS, individual Hawaii residents, resident economic entities, and institutional investors do frequently engage in risk-oriented investments, but do so primarily through out of state investment entities and national or international exchanges; and


     WHEREAS, the requirements, including cost, for listing on national and international exchanges are generally prohibitive for small-to-medium sized businesses; and


     WHEREAS, Hawaii companies seeking local investment capital under current state and federal securities laws are generally limited to working privately with a small number of individual investors with significant personal assets in closed transactions subject to financial privacy protection; and


     WHEREAS, state and federal securities laws allow for a more publicly transparent equity investment process to be conducted between a private enterprise and investors, where all parties are located within the same state; and


     WHEREAS, local investment in local companies is an effective means of driving economic growth and job creation through development of diversified industries within the State; and


     WHEREAS, a local investment exchange is an effective and efficient method of connecting potential investors, including small investors, with local enterprises seeking equity capital; and


     WHEREAS, a local investment exchange provides protection for investors and listed enterprises through the enforcement of clear standards and mandatory disclosures for listed enterprises and clear criteria for qualified investments; and


     WHEREAS, a local investment exchange will generate awareness of and interest in locally-based opportunities for equity investment; and


     WHEREAS, several other jurisdictions have created or are investigating the possibility of creating local investment exchanges to promote locally-based investment with a high multiplier effect; now, therefore,


     BE IT RESOLVED by the Senate of the Twenty-sixth Legislature of the State of Hawaii, Regular Session of 2011, the House of Representatives concurring, that the Department of Commerce and Consumer Affairs is requested to convene a working group, chaired by the Commissioner of Financial Institutions and including the Securities Commissioner, a representative of the Director of Commerce and Consumer Affairs, representatives from the investor community, and other participants identified by the Commissioner of Financial Institutions to investigate the creation of a Hawaii investment exchange to be administered by a nonprofit corporation and to be known as the Hawaii Exchange for Local Investment; and


     BE IT FURTHER RESOLVED that the working group created by this measure is requested to investigate the relevant state and federal laws and regulations relating to the formation of a local investment exchange and to develop recommendations for legislation to create the necessary regulatory framework for a local investment exchange including recommendations for the appropriate agency to exercise regulatory authority, adequate staffing levels within the identified regulatory agency, criteria for appointment of the officers or directors of the local investment exchange, criteria for listing enterprises on the local investment exchange, indemnification of the investment exchange from civil and criminal liability, and policies and procedures for collaboration with the federal Securities and Exchange Commission in the creation and administration of a local investment exchange; and


     BE IT FURTHER RESOLVED that the working group created by this measure is requested to submit a report of its findings and recommendations to the Legislature no later than twenty days before prior to the convening of the Regular Session of 2012; and


     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Commissioner of Financial Institutions, Director of Commerce and Consumer Affairs, and Securities Commissioner.









Report Title: 

Local Investment Exchange; Economic Development