PERMANENT RULES
FINANCIAL INSTITUTIONS
(Securities Division)
Date of Adoption: August 8, 2002.
Purpose: Adopt WAC 460-10A-215. Clarify that a viatical or life settlement agreement can be a security if it constitutes an investment contract, risk capital, or otherwise satisfies the definition of "security" in RCW 21.20.005(12).
Statutory Authority for Adoption: RCW 21.20.450.
Adopted under notice filed as WSR 02-13-050 on June 13, 2002.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: No rule may
be made unless the director of the Department of Financial
Institutions finds that the action is necessary or appropriate in
the public interest or for the protection of investors and
consistent with the purposes fairly intended by the policy and
provisions of chapter 21.20 RCW. The director hereby makes such
a finding with respect to this proposal.
Effective Date of Rule:
Thirty-one days after filing.
August 22, 2002
Mark Thomson
Acting Director
OTS-5719.1
NEW SECTION
WAC 460-10A-215
Security -- Viatical and life settlement
agreements.
(1) A viatical or life settlement agreement
constitutes a security if the agreement falls within the
definition of "security" under RCW 21.20.005(12) as an investment
contract; an investment of money or other consideration in the
risk capital of a venture with the expectation of some valuable
benefit to the investor where the investor does not receive the
right to exercise practical and actual control over the
managerial decisions of the venture; or otherwise.
(2) For purpose of this section, a "viatical or life settlement agreement" means an agreement for consideration for the purchase, assignment, transfer, sale, devise or bequest of any portion of the death benefit under, or ownership of, either an insurance policy or certificate of insurance. A viatical or life settlement agreement does not include:
(a) Any agreement for the original issuance of an insurance policy or certificate of insurance;
(b) An assignment, transfer, sale, devise or bequest of a death benefit under, or ownership of, either an insurance policy or certificate of insurance by the original owner, or a person who has an insurable interest in the insured, to any of the following:
(i) The insured;
(ii) A person who has an insurable interest in the insured;
(iii) A dealer; or
(iv) A person who is engaged in the business of purchasing the death benefit under, or ownership of, either insurance policies or certificates of insurance;
(c) An assignment of an insurance policy or certificate of insurance to any bank, savings bank, savings and loan association, credit union, or other licensed lending institution as collateral for a loan; or
(d) The exercise of accelerated benefits pursuant to the life insurance policy.
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