By: Harris of Dallas S.B. No. 77
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the authority of certain state financial regulatory
1-2 agencies to enforce laws pertaining to certain institutions and
1-3 loan and securities transactions that they regulate; providing
1-4 administrative penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 8, Texas Savings and Loan Act (Article
1-7 852a, Vernon's Texas Civil Statutes), is amended by adding Section
1-8 8.14 to read as follows:
1-9 Sec. 8.14. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
1-10 (a) The commissioner may assess an administrative penalty against
1-11 a person who knowingly and wilfully violates or causes a violation
1-12 of this Act or a rule adopted under this Act. The commissioner may
1-13 order a person who knowingly and wilfully violates or causes a
1-14 violation of this Act or a rule adopted under this Act to make
1-15 restitution to an identifiable person injured by the violation.
1-16 (b) The amount of the penalty may not exceed $25,000 for
1-17 each day of violation and for each act of violation.
1-18 (c) In determining the amount of a penalty, the commissioner
1-19 shall consider:
1-20 (1) the extent of actual or potential harm to a third
1-21 party;
1-22 (2) the history of previous violations;
1-23 (3) the amount necessary to deter future violations;
1-24 (4) efforts to correct the violation;
2-1 (5) enforcement costs relating to the violation,
2-2 including investigation costs, witness fees, and deposition
2-3 expenses; and
2-4 (6) any other matters that justice may require.
2-5 (d) In determining the amount of restitution, the
2-6 commissioner shall consider:
2-7 (1) the extent of actual harm to the third party in
2-8 whose favor restitution is ordered; and
2-9 (2) any other matters that justice may require.
2-10 (e) If after an examination of the facts the commissioner
2-11 concludes that the person did commit a violation, the commissioner
2-12 may issue a preliminary report stating the facts on which the
2-13 commissioner based that conclusion, recommending that an
2-14 administrative penalty be imposed or a restitution order entered,
2-15 or both, under this section, and recommending the amount of the
2-16 proposed penalty or restitution.
2-17 (f) The commissioner shall give written notice of the report
2-18 to the person charged with committing the violation. The notice
2-19 must include a brief summary of the facts, a statement of the
2-20 amount of the recommended penalty or restitution, or both, and a
2-21 statement of the person's right to an informal review of the
2-22 occurrence of the violation, the amount of the penalty or
2-23 restitution, or both the occurrence and the amount.
2-24 (g) Not later than the 10th day after the date on which the
2-25 person charged with committing the violation receives the notice,
2-26 the person may either give the commissioner written consent to the
2-27 report, including the recommended amounts, or make a written
3-1 request for an informal review by the commissioner.
3-2 (h) If the person charged with committing the violation
3-3 consents to the amounts recommended by the commissioner or fails to
3-4 timely request an informal review, the commissioner shall assess
3-5 the penalty or enter the restitution order, or both. The
3-6 commissioner shall give the person written notice of the
3-7 commissioner's action. The person shall pay the required amounts
3-8 not later than the 30th day after the date on which the person
3-9 receives the notice.
3-10 (i) If the person charged with committing a violation
3-11 requests an informal review as provided by Subsection (g) of this
3-12 section, the commissioner shall conduct the review. The
3-13 commissioner shall give the person written notice of the results of
3-14 the review.
3-15 (j) Not later than the 10th day after the date on which the
3-16 person charged with committing the violation receives the notice
3-17 prescribed by Subsection (i) of this section, the person may make
3-18 to the commissioner a written request for a hearing. The hearing
3-19 must be conducted in accordance with the Administrative Procedure
3-20 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
3-21 Statutes) and its subsequent amendments.
3-22 (k) If after informal review a person who has been ordered
3-23 to pay a penalty or make restitution, or both, fails to request a
3-24 formal hearing in a timely manner, the commissioner shall assess
3-25 the penalty or enter a restitution order, or both. The
3-26 commissioner shall give the person written notice of the
3-27 commissioner's action. The person shall pay the required amounts
4-1 not later than the 30th day after the date on which the person
4-2 receives the notice.
4-3 (l) Except as provided by Subsection (m) of this section,
4-4 not later than the 30th day after the date on which the
4-5 commissioner issues a final decision after a hearing under
4-6 Subsection (j) of this section, a person who has been ordered to
4-7 pay a penalty or make restitution, or both, under this section
4-8 shall pay the required amount in full.
4-9 (m) If the person seeks judicial review of either the fact
4-10 of the occurrence of a violation or the amount ordered or of both
4-11 the occurrence and the amount, the person shall send the required
4-12 amount to the commissioner for placement in an escrow account or
4-13 post with the commissioner a supersedeas bond in a form approved by
4-14 the commissioner for the required amount. The bond must be
4-15 effective until all judicial review of the order or decision is
4-16 final.
4-17 (n) Failure to forward the money to or to post the bond with
4-18 the commissioner within the period provided by Subsection (l) or
4-19 (m) of this section results in a waiver of all legal rights to
4-20 judicial review. If the person charged fails to forward the money
4-21 or post the bond within the period provided by Subsection (h), (k),
4-22 (l), or (m) of this section, the commissioner may forward the
4-23 matter to the attorney general for enforcement of the penalty or
4-24 restitution, or both, and interest as provided by law for legal
4-25 judgments. An action to enforce an order under this section must
4-26 be initiated in a court of competent jurisdiction in Travis County
4-27 or in the county in which the violation occurred.
5-1 (o) Judicial review of an order of the commissioner or
5-2 review under this section assessing a penalty or ordering
5-3 restitution, or both, is under the substantial evidence rule. A
5-4 suit may be initiated by filing a petition with a district court in
5-5 Travis County, as provided by Section 19, Administrative Procedure
5-6 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
5-7 Statutes), and its subsequent amendments.
5-8 (p) If a penalty or restitution amount is reduced or not
5-9 assessed, the commissioner shall remit to the person the
5-10 appropriate amount plus accrued interest if the penalty or
5-11 restitution amount has been paid or shall execute a release of the
5-12 bond if a supersedeas bond has been posted. The accrued interest
5-13 on amounts remitted by the commissioner under this subsection shall
5-14 be paid at a rate equal to the rate provided by law for legal
5-15 judgments and shall be paid for the period beginning on the date
5-16 the amount is paid to the commissioner under this section and
5-17 ending on the date the amount is remitted.
5-18 (q) In addition to the administrative penalty or restitution
5-19 amount, the court may authorize the commissioner to recover from a
5-20 person who pays an administrative penalty or restitution amount, or
5-21 both, under this section reasonable expenses incurred in obtaining
5-22 the ordered amount, including investigation costs, witness fees,
5-23 and deposition expenses.
5-24 (r) A penalty collected under this section shall be
5-25 deposited to the credit of the general revenue fund. After an
5-26 order of restitution becomes final and the restitution amount is
5-27 paid to the commissioner, the commissioner shall transmit the
6-1 amount to the party entitled to it.
6-2 SECTION 2. Chapter IV, The Texas Banking Code (Article
6-3 342-401 et seq., Vernon's Texas Civil Statutes), is amended by
6-4 adding Article 12a to read as follows:
6-5 Art. 12a. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
6-6 (a) The Banking Commissioner may assess an administrative penalty
6-7 against a person who knowingly and wilfully violates or causes a
6-8 violation of a provision of this Code or a rule adopted under this
6-9 Code that relates to a state bank, private bank, or trust company.
6-10 The Banking Commissioner may order a person who knowingly and
6-11 wilfully violates or causes a violation of this Code or a rule
6-12 adopted under this Code that relates to a state bank, private bank,
6-13 or trust company to make restitution to an identifiable person
6-14 injured by the violation.
6-15 (b) The amount of the penalty may not exceed $25,000 for
6-16 each day of violation and for each act of violation.
6-17 (c) In determining the amount of a penalty, the Banking
6-18 Commissioner shall consider:
6-19 (1) the extent of actual or potential harm to a third
6-20 party;
6-21 (2) the history of previous violations;
6-22 (3) the amount necessary to deter future violations;
6-23 (4) efforts to correct the violation;
6-24 (5) enforcement costs relating to the violation,
6-25 including investigation costs, witness fees, and deposition
6-26 expenses; and
6-27 (6) any other matters that justice may require.
7-1 (d) In determining the amount of restitution, the Banking
7-2 Commissioner shall consider:
7-3 (1) the extent of actual harm to the third party in
7-4 whose favor restitution is ordered; and
7-5 (2) any other matters that justice may require.
7-6 (e) If after an examination of the facts the Banking
7-7 Commissioner concludes that the person did commit or cause a
7-8 violation, the Banking Commissioner may issue a preliminary report
7-9 stating the facts on which the Banking Commissioner based that
7-10 conclusion, recommending that an administrative penalty be imposed
7-11 or a restitution order entered, or both, under this article, and
7-12 recommending the amount of the proposed penalty or restitution.
7-13 (f) The Banking Commissioner shall give written notice of
7-14 the report to the person charged with committing or causing the
7-15 violation. The notice must include a brief summary of the facts, a
7-16 statement of the amount of the recommended penalty or restitution,
7-17 or both, and a statement of the person's right to an informal
7-18 review of the occurrence of the violation, the amount of the
7-19 penalty or restitution, or both the occurrence and the amount.
7-20 (g) Not later than the 10th day after the date on which the
7-21 person charged with committing or causing the violation receives
7-22 the notice, the person may either give the Banking Commissioner
7-23 written consent to the report, including the recommended amounts,
7-24 or make a written request for an informal review by the Banking
7-25 Commissioner.
7-26 (h) If the person charged with committing or causing the
7-27 violation consents to the amounts recommended by the Banking
8-1 Commissioner or fails to timely request an informal review, the
8-2 Banking Commissioner shall assess the penalty or enter the
8-3 restitution order, or both. The Banking Commissioner shall give
8-4 the person written notice of the Banking Commissioner's action.
8-5 The person shall pay the required amounts not later than the 30th
8-6 day after the date on which the person receives the notice.
8-7 (i) If the person charged with committing or causing a
8-8 violation requests an informal review as provided by Subsection (g)
8-9 of this article, the Banking Commissioner shall conduct the review.
8-10 The Banking Commissioner shall give the person written notice of
8-11 the results of the review.
8-12 (j) Not later than the 10th day after the date on which the
8-13 person charged with committing or causing the violation receives
8-14 the notice prescribed by Subsection (i) of this article, the person
8-15 may make to the Banking Commissioner a written request for a
8-16 hearing. The hearing must be conducted in accordance with the
8-17 Administrative Procedure and Texas Register Act (Article 6252-13a,
8-18 Vernon's Texas Civil Statutes) and its subsequent amendments.
8-19 (k) If after informal review a person who has been ordered
8-20 to pay a penalty or make restitution, or both, fails to request a
8-21 formal hearing in a timely manner, the Banking Commissioner shall
8-22 assess the penalty or enter a restitution order, or both. The
8-23 Banking Commissioner shall give the person written notice of the
8-24 Banking Commissioner's action. The person shall pay the required
8-25 amounts not later than the 30th day after the date on which the
8-26 person receives the notice.
8-27 (l) Except as provided by Subsection (m) of this article,
9-1 not later than the 30th day after the date on which the Banking
9-2 Commissioner issues a final decision after a hearing under
9-3 Subsection (j) of this article, a person who has been ordered to
9-4 pay a penalty or make restitution, or both, under this article
9-5 shall pay the required amount in full.
9-6 (m) If the person seeks judicial review of either the fact
9-7 of the occurrence of a violation or the amount ordered or of both
9-8 the occurrence and the amount, the person shall send the required
9-9 amount to the Banking Commissioner for placement in an escrow
9-10 account or post with the Banking Commissioner a supersedeas bond in
9-11 a form approved by the Banking Commissioner for the required
9-12 amount. The bond must be effective until all judicial review of
9-13 the order or decision is final.
9-14 (n) Failure to forward the money to or to post the bond with
9-15 the Banking Commissioner within the period provided by Subsection
9-16 (l) or (m) of this article results in a waiver of all legal rights
9-17 to judicial review. If the person charged fails to forward the
9-18 money or post the bond within the period provided by Subsection
9-19 (h), (k), (l), or (m) of this article, the Banking Commissioner may
9-20 forward the matter to the attorney general for enforcement of the
9-21 penalty or restitution, or both, and interest as provided by law
9-22 for legal judgments. An action to enforce an order under this
9-23 article must be initiated in a court of competent jurisdiction in
9-24 Travis County or in the county in which the violation occurred.
9-25 (o) Judicial review of an order of the Banking Commissioner
9-26 or review under this article assessing a penalty or ordering
9-27 restitution, or both, is under the substantial evidence rule. A
10-1 suit may be initiated by filing a petition with a district court in
10-2 Travis County, as provided by Section 19, Administrative Procedure
10-3 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
10-4 Statutes).
10-5 (p) If a penalty or restitution amount is reduced or not
10-6 assessed, the Banking Commissioner shall remit to the person the
10-7 appropriate amount plus accrued interest if the penalty or
10-8 restitution amount has been paid or shall execute a release of the
10-9 bond if a supersedeas bond has been posted. The accrued interest
10-10 on amounts remitted by the Banking Commissioner under this
10-11 subsection shall be paid at a rate equal to the rate provided by
10-12 law for legal judgments and shall be paid for the period beginning
10-13 on the date the amount is paid to the Banking Commissioner under
10-14 this article and ending on the date the amount is remitted.
10-15 (q) In addition to the administrative penalty or restitution
10-16 amount, the court may authorize the Banking Commissioner to recover
10-17 from a person who pays an administrative penalty or restitution
10-18 amount, or both, under this article reasonable expenses incurred in
10-19 obtaining the ordered amount, including investigation costs,
10-20 witness fees, and deposition expenses.
10-21 (r) A penalty collected under this article shall be
10-22 deposited to the credit of the general revenue fund. After an
10-23 order of restitution becomes final and the restitution amount is
10-24 paid to the Banking Commissioner, the Banking Commissioner shall
10-25 transmit the amount to the party entitled to it.
10-26 SECTION 3. Subchapter C, Chapter 712, Health and Safety
10-27 Code, is amended by adding Sections 712.049 and 712.050 to read as
11-1 follows:
11-2 Sec. 712.049. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
11-3 (a) The commissioner may assess an administrative penalty against
11-4 a person who knowingly and wilfully violates or causes a violation
11-5 of this chapter or a rule adopted under this chapter. The
11-6 commissioner may order a person who knowingly and wilfully violates
11-7 or causes a violation of this chapter or a rule adopted under this
11-8 chapter to make restitution to an identifiable person injured by
11-9 the violation.
11-10 (b) The amount of the penalty may not exceed $25,000 for
11-11 each day of violation and for each act of violation.
11-12 (c) In determining the amount of a penalty, the commissioner
11-13 shall consider:
11-14 (1) the extent of actual or potential harm to a third
11-15 party;
11-16 (2) the history of previous violations;
11-17 (3) the amount necessary to deter future violations;
11-18 (4) efforts to correct the violation;
11-19 (5) enforcement costs relating to the violation,
11-20 including investigation costs, witness fees, and deposition
11-21 expenses; and
11-22 (6) any other matters that justice may require.
11-23 (d) In determining the amount of restitution, the
11-24 commissioner shall consider:
11-25 (1) the extent of actual harm to the third party in
11-26 whose favor restitution is ordered; and
11-27 (2) any other matters that justice may require.
12-1 (e) If after an examination of the facts the commissioner
12-2 concludes that the person did commit or cause a violation, the
12-3 commissioner may issue a preliminary report stating the facts on
12-4 which the commissioner based that conclusion, recommending that an
12-5 administrative penalty be imposed or a restitution order entered,
12-6 or both, under this section, and recommending the amount of the
12-7 proposed penalty or restitution.
12-8 (f) The commissioner shall give written notice of the report
12-9 to the person charged with committing or causing the violation.
12-10 The notice must include a brief summary of the facts, a statement
12-11 of the amount of the recommended penalty or restitution, or both,
12-12 and a statement of the person's right to an informal review of the
12-13 occurrence of the violation, the amount of the penalty or
12-14 restitution, or both the occurrence and the amount.
12-15 (g) Not later than the 10th day after the date on which the
12-16 person charged with committing or causing the violation receives
12-17 the notice, the person may either give the commissioner written
12-18 consent to the report, including the recommended amounts, or make a
12-19 written request for an informal review by the commissioner.
12-20 (h) If the person charged with committing or causing the
12-21 violation consents to the amounts recommended by the commissioner
12-22 or fails to timely request an informal review, the commissioner
12-23 shall assess the penalty or enter a restitution order, or both.
12-24 The commissioner shall give the person written notice of the
12-25 commissioner's action. The person shall pay the required amounts
12-26 not later than the 30th day after the date on which the person
12-27 receives the notice.
13-1 (i) If the person charged with committing or causing a
13-2 violation requests an informal review as provided by Subsection
13-3 (g), the commissioner shall conduct the review. The commissioner
13-4 shall give the person written notice of the results of the review.
13-5 (j) Not later than the 10th day after the date on which the
13-6 person charged with committing or causing the violation receives
13-7 the notice prescribed by Subsection (i), the person may make to the
13-8 commissioner a written request for a hearing. The hearing must be
13-9 conducted in accordance with the Administrative Procedure and Texas
13-10 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).
13-11 (k) If after informal review a person who has been ordered
13-12 to pay a penalty or make restitution, or both, fails to request a
13-13 formal hearing in a timely manner, the commissioner shall assess
13-14 the penalty or enter a restitution order, or both. The
13-15 commissioner shall give the person written notice of the
13-16 commissioner's action. The person shall pay the required amounts
13-17 not later than the 30th day after the date on which the person
13-18 receives the notice.
13-19 (l) Except as provided by Subsection (m), not later than the
13-20 30th day after the date on which the commissioner issues a final
13-21 decision after a hearing under Subsection (j), a person who has
13-22 been ordered to pay a penalty or make restitution, or both, under
13-23 this section shall pay the required amounts in full.
13-24 (m) If the person seeks judicial review of either the fact
13-25 of the occurrence of a violation or the amount ordered or of both
13-26 the occurrence and the amount, the person shall send the required
13-27 amount to the commissioner for placement in an escrow account or
14-1 post with the commissioner a supersedeas bond in a form approved by
14-2 the commissioner for the required amount. The bond must be
14-3 effective until all judicial review of the order or decision is
14-4 final.
14-5 (n) Failure to forward the money to or to post the bond with
14-6 the commissioner within the period provided by Subsection (l) or
14-7 (m) results in a waiver of all legal rights to judicial review. If
14-8 the person charged fails to forward the money or post the bond
14-9 within the period provided by Subsection (h), (k), (l), or (m), the
14-10 commissioner may forward the matter to the attorney general for
14-11 enforcement of the penalty or restitution, or both, and interest as
14-12 provided by law for legal judgments. An action to enforce an order
14-13 under this section must be initiated in a court of competent
14-14 jurisdiction in Travis County or in the county in which the
14-15 violation occurred.
14-16 (o) Judicial review of an order of the commissioner or
14-17 review under this section assessing a penalty or ordering
14-18 restitution, or both, is under the substantial evidence rule. A
14-19 suit may be initiated by filing a petition with a district court in
14-20 Travis County, as provided by Section 19, Administrative Procedure
14-21 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
14-22 Statutes).
14-23 (p) If a penalty or restitution amount is reduced or not
14-24 assessed, the commissioner shall remit to the person the
14-25 appropriate amount plus accrued interest if the penalty or
14-26 restitution amount has been paid or shall execute a release of the
14-27 bond if a supersedeas bond has been posted. The accrued interest
15-1 on amounts remitted by the commissioner under this subsection shall
15-2 be paid at a rate equal to the rate provided by law for legal
15-3 judgments and shall be paid for the period beginning on the date
15-4 the amount is paid to the commissioner under this section and
15-5 ending on the date the amount is remitted.
15-6 (q) In addition to the administrative penalty or restitution
15-7 amount, the court may authorize the commissioner to recover from a
15-8 person who pays an administrative penalty or restitution amount, or
15-9 both, under this section reasonable expenses incurred in obtaining
15-10 the ordered amount, including investigation costs, witness fees,
15-11 and deposition expenses.
15-12 (r) A penalty collected under this section shall be
15-13 deposited to the credit of the general revenue fund. After an
15-14 order of restitution becomes final and the restitution amount is
15-15 paid to the commissioner, the commissioner shall transmit the
15-16 amount to the party entitled to it.
15-17 Sec. 712.050. CEASE AND DESIST ORDERS. (a) The
15-18 commissioner may send written notice of the commissioner's findings
15-19 and meet with the directors of a cemetery corporation or its
15-20 trustee to discuss the findings and demand a discontinuance of
15-21 certain violations and practices if the commissioner determines
15-22 that the cemetery corporation or trustee or a person acting on
15-23 behalf of the cemetery corporation or trustee has:
15-24 (1) violated this chapter or a rule adopted under this
15-25 chapter;
15-26 (2) committed a breach of trust or of a fiduciary
15-27 duty;
16-1 (3) committed a fraudulent act or other practice in
16-2 the conduct of the cemetery corporation's business that threatens
16-3 the solvency of the cemetery corporation;
16-4 (4) refused to submit to an examination by the
16-5 commissioner;
16-6 (5) conducted the cemetery corporation's business in
16-7 an unsafe or unauthorized manner; or
16-8 (6) violated a condition of an agreement between the
16-9 cemetery corporation or trustee and the commissioner.
16-10 (b) The notice required by Subsection (a) must be sent to
16-11 the cemetery corporation or trustee and to the person acting on
16-12 behalf of the cemetery corporation or trustee whose conduct
16-13 constitutes the violation or practice. The notice must contain a
16-14 time for the meeting at the office of the commissioner concerning
16-15 the findings.
16-16 (c) Not later than the 30th day after the date of the
16-17 meeting, the commissioner may enter a cease and desist order or may
16-18 order affirmative action to correct the violation or practice if
16-19 the commissioner determines the order is necessary. A copy of the
16-20 order must be served on the cemetery corporation or trustee and on
16-21 any other person named in the order. An order takes effect on the
16-22 date specified in the order, except that an order may not take
16-23 effect before the 10th day after the date of its receipt by the
16-24 cemetery corporation or trustee or other person named in the order
16-25 unless the commissioner finds that immediate and irreparable harm
16-26 is threatened to the purchasers or potential purchasers of plots in
16-27 the cemetery or the general public. The cemetery corporation or
17-1 trustee shall certify to the commissioner in writing that each
17-2 person named in the order and each member of the cemetery
17-3 corporation's board of directors has read and understood the order.
17-4 (d) A cemetery corporation or trustee or other person named
17-5 in the order may appeal the commissioner's order to the commission
17-6 by filing a notice of appeal with the commission not later than the
17-7 10th day after the date of receipt of notice of the order.
17-8 (e) On receipt of a timely notice of appeal, the commission
17-9 shall set a time and place for hearing the appeal of the order and
17-10 give reasonable notice of the hearing to the party filing the
17-11 appeal. Unless otherwise provided by this chapter, the hearing
17-12 before the commission shall be conducted in accordance with the
17-13 Administrative Procedure and Texas Register Act (Article 6252-13a,
17-14 Vernon's Texas Civil Statutes). If the commission finds that a
17-15 party filing an appeal has committed one or more of the violations
17-16 or practices charged by the commissioner and that the order is
17-17 necessary, the commission shall affirm the order. If the
17-18 commission finds otherwise, the commission shall set aside the
17-19 order.
17-20 (f) If a cemetery corporation or trustee or other person
17-21 named in an order does not comply with a final and effective order
17-22 entered under this section, the attorney general, if requested by
17-23 the commissioner, may bring suit in a district court in Travis
17-24 County against the cemetery corporation or trustee or other person
17-25 to enjoin violation of the order.
17-26 (g) Nothing in this section diminishes the regulatory or
17-27 enforcement powers of the commissioner or the commission under
18-1 other provisions of this chapter or other applicable law. The
18-2 commissioner is not required to proceed under this section before
18-3 taking regulatory action under any section of this subchapter or
18-4 under any other applicable law.
18-5 (h) In this section, "commission" means The Finance
18-6 Commission of Texas.
18-7 SECTION 4. Title 79, Revised Statutes (Article 5069-1.01 et
18-8 seq., Vernon's Texas Civil Statutes), is amended by adding Article
18-9 2.03A to read as follows:
18-10 Art. 2.03A. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
18-11 (a) The Consumer Credit Commissioner may assess an administrative
18-12 penalty against a person who knowingly and wilfully violates or
18-13 causes a violation of this subtitle, Chapter 9 or 15 of this title,
18-14 or a rule adopted under this subtitle or Chapter 9 or 15 of this
18-15 title. The commissioner may order a person who knowingly and
18-16 wilfully violates or causes a violation of this subtitle, Chapter 9
18-17 or 15 of this title, or a rule adopted under this subtitle or
18-18 Chapter 9 or 15 of this title to make restitution to an
18-19 identifiable person injured by the violation.
18-20 (b) The amount of the penalty may not exceed $1,000 for each
18-21 day of violation and for each act of violation. The aggregate
18-22 amount of penalties that may be assessed against a person during
18-23 one calendar year under this Article may not exceed $5,000 for each
18-24 business location at which an element of a violation occurred and
18-25 may not exceed $50,000 if the person committed violations at 11 or
18-26 more business locations.
18-27 (c) In determining the amount of a penalty, the commissioner
19-1 shall consider:
19-2 (1) the seriousness of the violation, including the
19-3 nature, circumstances, extent, and gravity of the prohibited act;
19-4 (2) the extent of actual or potential harm to a third
19-5 party;
19-6 (3) the history of violations during the preceding
19-7 four years;
19-8 (4) the amount necessary to deter future violations;
19-9 (5) efforts to correct the violation; and
19-10 (6) any other matter that justice may require.
19-11 (d) If after an examination of the facts the commissioner
19-12 concludes that the person did commit a violation, the commissioner
19-13 may issue a preliminary report stating the facts on which the
19-14 commissioner based that conclusion, recommending that an
19-15 administrative penalty be imposed or a restitution order entered,
19-16 or both, under this Article, and recommending the amount of the
19-17 proposed penalty or restitution.
19-18 (e) The commissioner shall give written notice of the report
19-19 to the person charged with committing the violation. The notice
19-20 must include a brief summary of the facts, a statement of the
19-21 amount of the recommended penalty or restitution, or both, and a
19-22 statement of the person's right to an informal review of the
19-23 occurrence of the violation, the amount of the penalty or
19-24 restitution, or both the occurrence and the amount.
19-25 (f) Not later than the 10th day after the date on which the
19-26 person charged with committing the violation receives the notice,
19-27 the person may either give the commissioner written consent to the
20-1 report, including the recommended amounts, or make a written
20-2 request for an informal review by the commissioner.
20-3 (g) If the person charged with committing the violation
20-4 consents to the amounts recommended by the commissioner or fails to
20-5 timely request an informal review, the commissioner shall assess
20-6 the penalty or enter the restitution order, or both. The
20-7 commissioner shall give the person written notice of the
20-8 commissioner's action. The person shall pay the required amounts
20-9 not later than the 30th day after the date on which the person
20-10 receives the notice.
20-11 (h) If the person charged with committing a violation
20-12 requests an informal review as provided by Subsection (f) of this
20-13 Article, the commissioner shall conduct the review. The
20-14 commissioner shall give the person written notice of the results of
20-15 the review.
20-16 (i) Not later than the 10th day after the date on which the
20-17 person charged with committing the violation receives the notice
20-18 prescribed by Subsection (h) of this Article, the person may make
20-19 to the commissioner a written request for a hearing. The hearing
20-20 must be conducted in accordance with the Administrative Procedure
20-21 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
20-22 Statutes).
20-23 (j) If after informal review a person who has been ordered
20-24 to pay a penalty or make restitution, or both, fails to request a
20-25 formal hearing in a timely manner, the commissioner shall assess
20-26 the penalty or enter a restitution order, or both. The
20-27 commissioner shall give the person written notice of the
21-1 commissioner's action. The person shall pay the required amounts
21-2 not later than the 30th day after the date on which the person
21-3 receives the notice.
21-4 (k) Except as provided by Subsection (l) of this Article,
21-5 not later than the 30th day after the date on which the
21-6 commissioner issues a final decision after a hearing under
21-7 Subsection (i) of this Article, a person who has been ordered to
21-8 pay a penalty or make restitution, or both, under this Article
21-9 shall pay the required amount in full.
21-10 (l) If the person seeks judicial review of either the fact
21-11 of the occurrence of a violation or the amount ordered or of both
21-12 the occurrence and the amount, the person shall send the required
21-13 amount to the commissioner for placement in an escrow account or
21-14 post with the commissioner a supersedeas bond in a form approved by
21-15 the commissioner for the required amount. The bond must be
21-16 effective until all judicial review of the order or decision is
21-17 final.
21-18 (m) Failure to forward the money to or to post the bond with
21-19 the commissioner within the period provided by Subsection (k) or
21-20 (l) of this Article results in a waiver of all legal rights to
21-21 judicial review. If the person charged fails to forward the money
21-22 or post the bond within the period provided by Subsection (g), (j),
21-23 (k), or (l) of this Article, the commissioner may forward the
21-24 matter to the attorney general for enforcement of the penalty or
21-25 restitution, or both, and interest as provided by law for legal
21-26 judgments. An action to enforce an order under this Article must
21-27 be initiated in a court of competent jurisdiction in Travis County
22-1 or in the county in which the violation occurred.
22-2 (n) Judicial review of an order of the commissioner or
22-3 review under this Article assessing a penalty or ordering
22-4 restitution, or both, is under the substantial evidence rule. Suit
22-5 may be initiated by filing a petition with a district court in
22-6 Travis County, as provided by Section 19, Administrative Procedure
22-7 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
22-8 Statutes).
22-9 (o) If a penalty amount is reduced or not assessed, the
22-10 commissioner shall remit to the person the appropriate amount plus
22-11 accrued interest if the penalty or restitution amount has been paid
22-12 or shall execute a release of the bond if a supersedeas bond has
22-13 been posted. The accrued interest on amounts remitted by the
22-14 commissioner under this subsection shall be paid at a rate equal to
22-15 the rate provided by law for legal judgments and shall be paid for
22-16 the period beginning on the date the amount is paid to the
22-17 commissioner under this Article and ending on the date the amount
22-18 is remitted.
22-19 (p) In addition to the administrative penalty or restitution
22-20 amount, the court may authorize the commissioner to recover from a
22-21 person who pays an administrative penalty or restitution amount, or
22-22 both, under this Article reasonable expenses incurred in obtaining
22-23 the ordered amount, including investigation costs, witness fees,
22-24 and deposition expenses.
22-25 (q) A penalty collected under this Article shall be
22-26 deposited to the credit of the general revenue fund.
22-27 (r) An administrative penalty or restitution order
23-1 authorized by this Article is in addition to any other enforcement
23-2 authority provided by law.
23-3 SECTION 5. Section 3, The Securities Act (Article 581-3,
23-4 Vernon's Texas Civil Statutes), is amended to read as follows:
23-5 Sec. 3. ADMINISTRATION AND ENFORCEMENT BY THE SECURITIES
23-6 COMMISSIONER AND THE ATTORNEY GENERAL AND LOCAL LAW ENFORCEMENT
23-7 OFFICIALS. A. The administration of the provisions of this Act
23-8 shall be vested in the Securities Commissioner. It shall be the
23-9 duty of the Securities Commissioner and the Attorney General to see
23-10 that its provisions are at all times obeyed and to take such
23-11 measures and to make such investigations as will prevent or detect
23-12 the violation of any provision thereof. The Commissioner shall at
23-13 once lay before the District or County Attorney of the proper
23-14 county any evidence which shall come to his knowledge of
23-15 criminality under this Act. In the event of the neglect or refusal
23-16 of such attorney to institute and prosecute such violation, the
23-17 Commissioner shall submit such evidence to the Attorney General,
23-18 who is hereby authorized to proceed therein with all the rights,
23-19 privileges and powers conferred by law upon district or county
23-20 attorneys, including the power to appear before grand juries and to
23-21 interrogate witnesses before such grand juries.
23-22 B. The remedies provided by this Act are not exclusive, and
23-23 the Securities Commissioner may seek and enforce as many of the
23-24 remedies as the Commissioner considers necessary.
23-25 SECTION 6. Subsection A, Section 14, The Securities Act
23-26 (Article 581-14, Vernon's Texas Civil Statutes), is amended to read
23-27 as follows:
24-1 A. The Commissioner may deny, revoke, or suspend a
24-2 registration, place on probation a dealer, agent, or salesman whose
24-3 registration has been suspended, or reprimand a person registered
24-4 under this Act if the person:
24-5 (1) has been convicted of a felony, or of any
24-6 misdemeanor of which fraud is an essential element;
24-7 (2) has engaged in any inequitable practice in the
24-8 sale of securities or in any fraudulent business practice;
24-9 (3) in the case of a dealer, is insolvent;
24-10 (4) in the case of a dealer, is selling or has sold
24-11 securities in this state through a salesman other than a registered
24-12 salesman, or, in the case of a salesman, is selling or has sold
24-13 securities in this state for a dealer, issuer or controlling person
24-14 with knowledge that such dealer, issuer or controlling person has
24-15 not complied with the provisions of this Act;
24-16 (5) has violated any of the provisions of this Act or
24-17 a rule of the Board;
24-18 (6) has made any material misrepresentation to the
24-19 Commissioner or Board in connection with any information deemed
24-20 necessary by the Commissioner or Board to determine a dealer's
24-21 financial responsibility or a dealer's or salesman's business
24-22 repute or qualifications, or has refused to furnish any such
24-23 information requested by the Commissioner or Board; <or>
24-24 (7) has not complied with a condition imposed by the
24-25 Commissioner under Section 13-D. Provided, however, that this
24-26 subdivision shall not apply to any person or company registered as
24-27 a dealer or salesman on August 23, 1963; or
25-1 (8) has failed to pay an administrative penalty
25-2 assessed under Section 35-3 of this Act.
25-3 SECTION 7. The Securities Act (Article 581-1 et seq.,
25-4 Vernon's Texas Civil Statutes) is amended by adding Section 35-3 to
25-5 read as follows:
25-6 Sec. 35-3. ADMINISTRATIVE PENALTIES. A. The commissioner
25-7 may assess an administrative penalty against a person who violates
25-8 or causes a violation of this Act or a rule adopted under this Act.
25-9 B. The amount of the penalty may not exceed $10,000 for each
25-10 day of violation and for each act of violation.
25-11 C. In determining the amount of a penalty, the commissioner
25-12 shall consider:
25-13 (1) the extent of actual or potential harm to a third
25-14 party;
25-15 (2) the history of previous violations;
25-16 (3) the amount necessary to deter future violations;
25-17 (4) efforts to correct the violation;
25-18 (5) enforcement costs relating to the violation,
25-19 including investigation costs, witness fees, and deposition
25-20 expenses; and
25-21 (6) any other matters that justice may require.
25-22 D. If after an examination of the facts the commissioner
25-23 concludes that the person did commit a violation, the commissioner
25-24 may issue a preliminary report stating the facts on which the
25-25 commissioner based that conclusion, recommending that an
25-26 administrative penalty be imposed under this section, and
25-27 recommending the amount of the proposed penalty.
26-1 E. The commissioner shall give written notice of the report
26-2 to the person charged with committing the violation. The notice
26-3 must include a brief summary of the facts, a statement of the
26-4 amount of the recommended penalty, a statement of the person's
26-5 right to an informal review of the occurrence of the violation, the
26-6 amount of the penalty, or both the occurrence and the amount.
26-7 F. Not later than the 10th day after the date on which the
26-8 person charged with committing the violation receives the notice,
26-9 the person may either give the commissioner written consent to the
26-10 report, including the recommended amounts, or make a written
26-11 request for an informal review by the commissioner.
26-12 G. If the person charged with committing the violation
26-13 consents to the amounts recommended by the commissioner or fails to
26-14 timely request an informal review, the commissioner shall assess
26-15 the penalty. The commissioner shall give the person written notice
26-16 of the commissioner's action. The person shall pay the required
26-17 amounts not later than the 30th day after the date on which the
26-18 person receives the notice.
26-19 H. If the person charged with committing a violation
26-20 requests an informal review as provided by Subsection F of this
26-21 section, the commissioner shall conduct the review. The
26-22 commissioner shall give the person written notice of the results of
26-23 the review.
26-24 I. Not later than the 10th day after the date on which the
26-25 person charged with committing the violation receives the notice
26-26 prescribed by Subsection H of this section, the person may make to
26-27 the commissioner a written request for a hearing. The hearing must
27-1 be conducted in accordance with the Administrative Procedure and
27-2 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
27-3 Statutes).
27-4 J. If after informal review a person who has been ordered to
27-5 pay a penalty fails to request a formal hearing in a timely manner,
27-6 the commissioner shall assess the penalty. The commissioner shall
27-7 give the person written notice of the commissioner's action. The
27-8 person shall pay the required amounts not later than the 30th day
27-9 after the date on which the person receives the notice.
27-10 K. Except as provided by Subsection L of this section, not
27-11 later than the 30th day after the date on which the commissioner
27-12 issues a final decision after a hearing under Subsection I of this
27-13 section, a person who has been ordered to pay a penalty under this
27-14 section shall pay the required amount in full.
27-15 L. If the person seeks judicial review of either the fact of
27-16 the occurrence of a violation or the amount ordered or of both the
27-17 occurrence and the amount, the person shall send the required
27-18 amount of the penalty to the commissioner for placement in an
27-19 escrow account or post with the commissioner a supersedeas bond in
27-20 a form approved by the commissioner for the required amount. The
27-21 bond must be effective until all judicial review of the order or
27-22 decision is final.
27-23 M. Failure to forward the money to or to post the bond with
27-24 the commissioner within the period provided by Subsection K or L of
27-25 this section results in a waiver of all legal rights to judicial
27-26 review. If the person charged fails to forward the money or post
27-27 the bond within the period provided by Subsection G, J, K, or L of
28-1 this section, the commissioner may forward the matter to the
28-2 attorney general for enforcement of the penalty and interest as
28-3 provided by law for legal judgments. An action to enforce an order
28-4 under this section must be initiated in a court of competent
28-5 jurisdiction in Travis County or in the county in which the
28-6 violation occurred.
28-7 N. Judicial review of an order of the commissioner or review
28-8 under this section assessing a penalty is under the substantial
28-9 evidence rule. A suit may be initiated by filing a petition with a
28-10 district court in Travis County, as provided by Section 19,
28-11 Administrative Procedure and Texas Register Act (Article 6252-13a,
28-12 Vernon's Texas Civil Statutes).
28-13 O. If a penalty amount is reduced or not assessed, the
28-14 commissioner shall remit to the person the appropriate amount plus
28-15 accrued interest if the penalty amount has been paid or shall
28-16 execute a release of the bond if a supersedeas bond has been
28-17 posted. The accrued interest on amounts remitted by the
28-18 commissioner under this subsection shall be paid at a rate equal to
28-19 the rate provided by law for legal judgments and shall be paid for
28-20 the period beginning on the date the amount is paid to the
28-21 commissioner under this section and ending on the date the amount
28-22 is remitted.
28-23 P. In addition to the administrative penalty, the court may
28-24 authorize the commissioner to recover from a person who pays an
28-25 administrative penalty under this section reasonable expenses
28-26 incurred in obtaining the ordered amount, including investigation
28-27 costs, witness fees, and deposition expenses.
29-1 Q. A penalty collected under this section shall be deposited
29-2 to the credit of the general revenue fund.
29-3 SECTION 8. This Act takes effect September 1, 1993.
29-4 SECTION 9. The administrative penalties, restitution orders,
29-5 and cease and desist orders provided by this Act apply only to
29-6 violations committed on or after the effective date of this Act.
29-7 For purposes of this section, a violation is committed on or after
29-8 the effective date of this Act if each element of the violation
29-9 occurs on or after that date.
29-10 SECTION 10. The importance of this legislation and the
29-11 crowded condition of the calendars in both houses create an
29-12 emergency and an imperative public necessity that the
29-13 constitutional rule requiring bills to be read on three several
29-14 days in each house be suspended, and this rule is hereby suspended.