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(a) Except as provided in (c) of this section, an advertisement to be used or circulated in connection with the sale and promotion of a public offering of securities is subject to the following requirements and restrictions:
(1) at least five days before the intended use or dissemination of the advertisement, the applicant shall file with the administrator one copy of the proposed material;
(2) the use of the material is permitted if not disallowed by the administrator by written notice or otherwise within five days from the date filed;
(3) the administrator will not issue formal approval of the literature, and the user is responsible for determining the accuracy and reliability of the statements and material to be used in conformity with this section.
(b) The use of any of the following devices or sales presentations constitutes a deceptive or misleading practice:
(1) comparison charts or graphs showing a distorted, unfair, or unrealistic relationship between the issuer's past performance, progress, or success and that of another company, business, industry, or investment medium;
(2) the use of the layout format, size, kind, and color of type to attract attention to favorable or incomplete portions of the advertising matter, or to minimize less favorable, modified, or modifying portions necessary to make the entire advertisement a fair and truthful representation;
(3) statements or representations that
(A) by themselves predict future profit, success, appreciation, or performance, or that otherwise relate to the merit or potential of the securities;
(B) are positive or imperative in form; and
(C) fail to clearly indicate that they represent solely the opinion of the publisher or author;
(4) generalized conclusions, opinions, representations, or statements based upon a particular set of facts and circumstances, unless those facts and circumstances are stated and modified or explained by those additional facts or circumstances as are necessary to make the entire advertisement a full, fair, and truthful representation;
(5) sales kits or film clips, displays, or exposures that, alone or by sequence and progressive compilation, tend to present to the prospective purchaser a cumulative or composite picture or impression of certain or exaggerated potential, profit, safety, or returns, or of an assured or extraordinary investment opportunity or similar benefit;
(6) distribution, by words, pictures, charts, graphs, or other means, of nonfactual or inaccurate data, or of material based upon conjectural, unfounded, extravagant, or flamboyant claims, assertions, or predictions, or upon excessive optimism;
(7) a package or bonus deal, prize, gift, gimmick, or similar inducement, combined with or dependent upon the sale of some other product, contract, or service, unless that unit or combination has been fully disclosed and specifically described and identified in the application as the security being offered.
(8) performance figures or charts used to market investment advisory services, unless the figures or charts comply with the Performance Presentation Standards (PPS) or Global Investment Performance Standards (GIPS) of the Association for Investment Management and Research; the Performance Presentation Standards as revised as of February 12, 1999 and the Global Investment Performance Standards as revised as of April 14, 1999 are adopted by reference; this paragraph does not apply to individual account performance reports intended for use only by an individual client in assessing the individual's account;
(9) performance figures or charts not verified by an independent member of the Association for Investment Management and Research (AIMR), if the performance figures or charts are advertising intended for an individual; this paragraph does not apply to individual account performance reports intended for use only by an individual client in assessing the individual's account.
(c) The following advertisements are not subject to (a) of this section, unless specifically prohibited:
(1) a "tombstone" advertisement that contains no more than the following information:
(A) the name and address of the issuer;
(B) the identity or title of the security;
(C) the per-unit offering price, number of shares, and amount of the offering;
(D) a brief, general description of the business;
(E) the name and address of the underwriter, or the address where an offering circular or prospectus can be obtained;
(F) the date of issuance;
(2) dividend notices, proxy statements, and reports to shareholders, including investment company quarterly and semiannual reports;
(3) sales literature, advertisements, or market letters prepared in conformity with the applicable regulations and in compliance with the filing requirements of the SEC, NASD, or a national securities exchange, and not found by that agency or organization to be out of compliance with those regulations and requirements;
(4) factual or information letters, bulletins or releases, similar to newsletters, relating to the issuer's progress or activities, the status of the offering, or the issuer's current financial condition;
(5) dissemination of data incorporated in the offering circular or prospectus, if the use of that material out of context does not tend to detract from, distort, supersede, or express a different meaning of the representations or disclosures contained in the offering circular or prospectus.
(d) A person who knowingly prepares, distributes, or causes to be issued or published sales literature that is inaccurate, false, misleading, or tending to mislead in a material respect, or that is otherwise in violation of this section is subject to an administrative or civil enforcement proceeding arising under AS 45.55.
(e) For purposes of this section, an advertisement includes a
(1) display, pamphlet, brochure, letter, article, or communication published in a newspaper, magazine, or other periodical;
(2) script or recording; and
(3) radio or television announcement, broadcast, or commercial.
History: Eff. 2/20/72, Register 41; am 4/19/2000, Register 154; am 6/8/2001, Register 158
Authority: AS 45.55.150
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Last modified 7/05/2006