By: Harris, Ike S.B. No. 77
73R3700 LJD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the authority of certain state financial regulatory
1-3 agencies to enforce laws pertaining to certain institutions and
1-4 loan and securities transactions that they regulate; providing
1-5 administrative penalties.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Chapter 8, Texas Savings and Loan Act (Article
1-8 852a, Vernon's Texas Civil Statutes), is amended by adding Section
1-9 8.14 to read as follows:
1-10 Sec. 8.14. ADMINISTRATIVE PENALTY; RESTITUTION ORDER. (a)
1-11 The commissioner may assess an administrative penalty against a
1-12 person who violates this Act or a rule adopted under this Act. The
1-13 commissioner may order a person who violates this Act or a rule
1-14 adopted under this Act to make restitution to an identifiable
1-15 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. The amount of
1-18 restitution ordered against a person may not exceed $25,000 for
1-19 each calendar year.
1-20 (c) In determining the amount of a penalty, the commissioner
1-21 shall consider:
1-22 (1) the extent of actual or potential harm to a third
1-23 party;
1-24 (2) the history of previous violations;
2-1 (3) the amount necessary to deter future violations;
2-2 (4) efforts to correct the violation;
2-3 (5) enforcement costs relating to the violation,
2-4 including investigation costs, witness fees, and deposition
2-5 expenses; and
2-6 (6) any other matters that justice may require.
2-7 (d) In determining the amount of restitution, the
2-8 commissioner shall consider:
2-9 (1) the extent of actual harm to the third party in
2-10 whose favor restitution is ordered; and
2-11 (2) any other matters that justice may require.
2-12 (e) If after an examination of the facts the commissioner
2-13 concludes that the person did commit a violation, the commissioner
2-14 may issue a preliminary report stating the facts on which the
2-15 commissioner based that conclusion, recommending that an
2-16 administrative penalty be imposed or a restitution order entered,
2-17 or both, under this section, and recommending the amount of the
2-18 proposed penalty or restitution.
2-19 (f) The commissioner shall give written notice of the report
2-20 to the person charged with committing the violation. The notice
2-21 must include a brief summary of the facts, a statement of the
2-22 amount of the recommended penalty or restitution, or both, and a
2-23 statement of the person's right to an informal review of the
2-24 occurrence of the violation, the amount of the penalty or
2-25 restitution, or both the occurrence and the amount.
2-26 (g) Not later than the 10th day after the date on which the
2-27 person charged with committing the violation receives the notice,
3-1 the person may either give the commissioner written consent to the
3-2 report, including the recommended amounts, or make a written
3-3 request for an informal review by the commissioner.
3-4 (h) If the person charged with committing the violation
3-5 consents to the amounts recommended by the commissioner or fails to
3-6 timely request an informal review, the commissioner shall assess
3-7 the penalty or enter the restitution order, or both. The
3-8 commissioner shall give the person written notice of the
3-9 commissioner's action. The person shall pay the required amounts
3-10 not later than the 30th day after the date on which the person
3-11 receives the notice.
3-12 (i) If the person charged with committing a violation
3-13 requests an informal review as provided by Subsection (g) of this
3-14 section, the commissioner shall conduct the review. The
3-15 commissioner shall give the person written notice of the results of
3-16 the review.
3-17 (j) Not later than the 10th day after the date on which the
3-18 person charged with committing the violation receives the notice
3-19 prescribed by Subsection (i) of this section, the person may make
3-20 to the commissioner a written request for a hearing. The hearing
3-21 must be conducted in accordance with the Administrative Procedure
3-22 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
3-23 Statutes) and its subsequent amendments.
3-24 (k) If, after informal review, a person who has been ordered
3-25 to pay a penalty or make restitution, or both, fails to request a
3-26 formal hearing in a timely manner, the commissioner shall assess
3-27 the penalty or enter a restitution order, or both. The
4-1 commissioner shall give the person written notice of the
4-2 commissioner's action. The person shall pay the required amounts
4-3 not later than the 30th day after the date on which the person
4-4 receives the notice.
4-5 (l) Except as provided by Subsection (m) of this section,
4-6 not later than the 30th day after the date on which the
4-7 commissioner issues a final decision after a hearing under
4-8 Subsection (j) of this section, a person who has been ordered to
4-9 pay a penalty or make restitution, or both, under this section
4-10 shall pay the required amount in full.
4-11 (m) If the person seeks judicial review of either the fact
4-12 of the occurrence of a violation or the amount ordered, or of both
4-13 the occurrence and the amount, the person shall send the required
4-14 amount to the commissioner for placement in an escrow account or
4-15 post with the commissioner a supersedeas bond in a form approved by
4-16 the commissioner for the required amount. The bond must be
4-17 effective until all judicial review of the order or decision is
4-18 final.
4-19 (n) Failure to forward the money to or to post the bond with
4-20 the commissioner within the period provided by Subsection (l) or
4-21 (m) of this section results in a waiver of all legal rights to
4-22 judicial review. If the person charged fails to forward the money
4-23 or post the bond within the period provided by Subsection (h), (k),
4-24 (l), or (m) of this section, the commissioner may forward the
4-25 matter to the attorney general for enforcement of the penalty or
4-26 restitution, or both, and interest as provided by law for legal
4-27 judgments. An action to enforce an order under this section must
5-1 be initiated in a court of competent jurisdiction in Travis County
5-2 or in the county in which the violation occurred.
5-3 (o) Judicial review of an order of the commissioner or
5-4 review under this section assessing a penalty or ordering
5-5 restitution, or both, is under the substantial evidence rule. A
5-6 suit may be initiated by filing a petition with a district court in
5-7 Travis County, as provided by Section 19, Administrative Procedure
5-8 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
5-9 Statutes), and its subsequent amendments.
5-10 (p) If a penalty or restitution amount is reduced or not
5-11 assessed, the commissioner shall remit to the person the
5-12 appropriate amount plus accrued interest if the penalty or
5-13 restitution amount has been paid or shall execute a release of the
5-14 bond if a supersedeas bond has been posted. The accrued interest
5-15 on amounts remitted by the commissioner under this subsection shall
5-16 be paid at a rate equal to the rate provided by law for legal
5-17 judgments and shall be paid for the period beginning on the date
5-18 the amount is paid to the commissioner under this section and
5-19 ending on the date the amount is remitted.
5-20 (q) In addition to the administrative penalty or restitution
5-21 amount, the court may authorize the commissioner to recover from a
5-22 person who pays an administrative penalty or restitution amount, or
5-23 both, under this section reasonable expenses incurred in obtaining
5-24 the ordered amount, including investigation costs, witness fees,
5-25 and deposition expenses.
5-26 (r) A penalty collected under this section shall be
5-27 deposited to the credit of the general revenue fund. After an
6-1 order of restitution becomes final and the restitution amount is
6-2 paid to the commissioner, the commissioner shall transmit the
6-3 amount to the party entitled to it.
6-4 SECTION 2. Chapter IV, The Texas Banking Code (Article
6-5 342-401 et seq., Vernon's Texas Civil Statutes), is amended by
6-6 adding Article 12a to read as follows:
6-7 Art. 12a. ADMINISTRATIVE PENALTY; RESTITUTION ORDER. (a)
6-8 The Banking Commissioner may assess an administrative penalty
6-9 against a person who violates a provision of this Code or a rule
6-10 adopted under this Code that relates to a state bank or private
6-11 bank. The Banking Commissioner may order a person who violates
6-12 this Code or a rule adopted under this Code that relates to a state
6-13 bank or private bank 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. The amount of
6-17 restitution ordered against a person may not exceed $25,000 for
6-18 each calendar year.
6-19 (c) In determining the amount of a penalty, the Banking
6-20 Commissioner shall consider:
6-21 (1) the extent of actual or potential harm to a third
6-22 party;
6-23 (2) the history of previous violations;
6-24 (3) the amount necessary to deter future violations;
6-25 (4) efforts to correct the violation;
6-26 (5) enforcement costs relating to the violation,
6-27 including investigation costs, witness fees, and deposition
7-1 expenses; and
7-2 (6) any other matters that justice may require.
7-3 (d) In determining the amount of restitution, the Banking
7-4 Commissioner shall consider:
7-5 (1) the extent of actual harm to the third party in
7-6 whose favor restitution is ordered; and
7-7 (2) any other matters that justice may require.
7-8 (e) If after an examination of the facts the Banking
7-9 Commissioner concludes that the person did commit a violation, the
7-10 Banking Commissioner may issue a preliminary report stating the
7-11 facts on which the Banking Commissioner based that conclusion,
7-12 recommending that an administrative penalty be imposed or a
7-13 restitution order entered, or both, under this article, and
7-14 recommending the amount of the proposed penalty or restitution.
7-15 (f) The Banking Commissioner shall give written notice of
7-16 the report to the person charged with committing the violation.
7-17 The notice must include a brief summary of the facts, a statement
7-18 of the amount of the recommended penalty or restitution, or both,
7-19 and a statement of the person's right to an informal review of the
7-20 occurrence of the violation, the amount of the penalty or
7-21 restitution, or both the occurrence and the amount.
7-22 (g) Not later than the 10th day after the date on which the
7-23 person charged with committing the violation receives the notice,
7-24 the person may either give the Banking Commissioner written consent
7-25 to the report, including the recommended amounts, or make a written
7-26 request for an informal review by the Banking Commissioner.
7-27 (h) If the person charged with committing the violation
8-1 consents to the amounts recommended by the Banking Commissioner or
8-2 fails to timely request an informal review, the Banking
8-3 Commissioner shall assess the penalty or enter the restitution
8-4 order, or both. The Banking Commissioner shall give the person
8-5 written notice of the Banking Commissioner's action. The person
8-6 shall pay the required amounts not later than the 30th day after
8-7 the date on which the person receives the notice.
8-8 (i) If the person charged with committing a violation
8-9 requests an informal review as provided by Subsection (g) of this
8-10 article, the Banking Commissioner shall conduct the review. The
8-11 Banking Commissioner shall give the person written notice of the
8-12 results of the review.
8-13 (j) Not later than the 10th day after the date on which the
8-14 person charged with committing the violation receives the notice
8-15 prescribed by Subsection (i) of this article, the person may make
8-16 to the Banking Commissioner a written request for a hearing. The
8-17 hearing must be conducted in accordance with the Administrative
8-18 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
8-19 Civil Statutes) and its subsequent amendments.
8-20 (k) If, after informal review, a person who has been ordered
8-21 to pay a penalty or make restitution, or both, fails to request a
8-22 formal hearing in a timely manner, the Banking Commissioner shall
8-23 assess the penalty or enter a restitution order, or both. The
8-24 Banking Commissioner shall give the person written notice of the
8-25 Banking Commissioner's action. The person shall pay the required
8-26 amounts not later than the 30th day after the date on which the
8-27 person receives the notice.
9-1 (l) Except as provided by Subsection (m) of this article,
9-2 not later than the 30th day after the date on which the Banking
9-3 Commissioner issues a final decision after a hearing under
9-4 Subsection (j) of this article, a person who has been ordered to
9-5 pay a penalty or make restitution, or both, under this article
9-6 shall pay the required amount in full.
9-7 (m) If the person seeks judicial review of either the fact
9-8 of the occurrence of a violation or the amount ordered, or of both
9-9 the occurrence and the amount, the person shall send the required
9-10 amount to the Banking Commissioner for placement in an escrow
9-11 account or post with the Banking Commissioner a supersedeas bond in
9-12 a form approved by the Banking Commissioner for the required
9-13 amount. The bond must be effective until all judicial review of
9-14 the order or decision is final.
9-15 (n) Failure to forward the money to or to post the bond with
9-16 the Banking Commissioner within the period provided by Subsection
9-17 (l) or (m) of this article results in a waiver of all legal rights
9-18 to judicial review. If the person charged fails to forward the
9-19 money or post the bond within the period provided by Subsection
9-20 (h), (k), (l), or (m) of this article, the Banking Commissioner may
9-21 forward the matter to the attorney general for enforcement of the
9-22 penalty or restitution, or both, and interest as provided by law
9-23 for legal judgments. An action to enforce an order under this
9-24 article must be initiated in a court of competent jurisdiction in
9-25 Travis County or in the county in which the violation occurred.
9-26 (o) Judicial review of an order of the Banking Commissioner
9-27 or review under this article assessing a penalty or ordering
10-1 restitution, or both, is under the substantial evidence rule. A
10-2 suit may be initiated by filing a petition with a district court in
10-3 Travis County, as provided by Section 19, Administrative Procedure
10-4 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
10-5 Statutes), and its subsequent amendments.
10-6 (p) If a penalty or restitution amount is reduced or not
10-7 assessed, the Banking Commissioner shall remit to the person the
10-8 appropriate amount plus accrued interest if the penalty or
10-9 restitution amount has been paid or shall execute a release of the
10-10 bond if a supersedeas bond has been posted. The accrued interest
10-11 on amounts remitted by the Banking Commissioner under this
10-12 subsection shall be paid at a rate equal to the rate provided by
10-13 law for legal judgments and shall be paid for the period beginning
10-14 on the date the amount is paid to the Banking Commissioner under
10-15 this article and ending on the date the amount is remitted.
10-16 (q) In addition to the administrative penalty or restitution
10-17 amount, the court may authorize the Banking Commissioner to recover
10-18 from a person who pays an administrative penalty or restitution
10-19 amount, or both, under this article reasonable expenses incurred in
10-20 obtaining the ordered amount, including investigation costs,
10-21 witness fees, and deposition expenses.
10-22 (r) A penalty collected under this article shall be
10-23 deposited to the credit of the general revenue fund. After an
10-24 order of restitution becomes final and the restitution amount is
10-25 paid to the Banking Commissioner, the Banking Commissioner shall
10-26 transmit the amount to the party entitled to it.
10-27 SECTION 3. Subchapter C, Chapter 712, Health and Safety
11-1 Code, is amended by adding Sections 712.049 and 712.050 to read as
11-2 follows:
11-3 Sec. 712.049. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
11-4 (a) The commissioner may assess an administrative penalty against
11-5 a person who violates this chapter or a rule adopted under this
11-6 chapter. The commissioner may order a person who violates this
11-7 chapter or a rule adopted under this chapter to make restitution to
11-8 an identifiable person injured by the violation.
11-9 (b) The amount of the penalty may not exceed $25,000 for
11-10 each day of violation and for each act of violation. The amount of
11-11 restitution ordered against a person may not exceed $25,000 for
11-12 each calendar year.
11-13 (c) In determining the amount of a penalty, the commissioner
11-14 shall consider:
11-15 (1) the extent of actual or potential harm to a third
11-16 party;
11-17 (2) the history of previous violations;
11-18 (3) the amount necessary to deter future violations;
11-19 (4) efforts to correct the violation;
11-20 (5) enforcement costs relating to the violation,
11-21 including investigation costs, witness fees, and deposition
11-22 expenses; and
11-23 (6) any other matters that justice may require.
11-24 (d) In determining the amount of restitution, the
11-25 commissioner shall consider:
11-26 (1) the extent of actual harm to the third party in
11-27 whose favor restitution is ordered; and
12-1 (2) any other matters that justice may require.
12-2 (e) If after an examination of the facts the commissioner
12-3 concludes that the person did commit a violation, the commissioner
12-4 may issue a preliminary report stating the facts on which the
12-5 commissioner based that conclusion, recommending that an
12-6 administrative penalty be imposed or a restitution order entered,
12-7 or both, under this section, and recommending the amount of the
12-8 proposed penalty or restitution.
12-9 (f) The commissioner shall give written notice of the report
12-10 to the person charged with committing the violation. The notice
12-11 must include a brief summary of the facts, a statement of the
12-12 amount of the recommended penalty or restitution, or both, and a
12-13 statement of the person's right to an informal review of the
12-14 occurrence of the violation, the amount of the penalty or
12-15 restitution, or both the occurrence and the amount.
12-16 (g) Not later than the 10th day after the date on which the
12-17 person charged with committing the violation receives the notice,
12-18 the person may either give the commissioner written consent to the
12-19 report, including the recommended amounts, or make a written
12-20 request for an informal review by the commissioner.
12-21 (h) If the person charged with committing the violation
12-22 consents to the amounts recommended by the commissioner or fails to
12-23 timely request an informal review, the commissioner shall assess
12-24 the penalty or enter a restitution order, or both. The
12-25 commissioner shall give the person written notice of the
12-26 commissioner's action. The person shall pay the required amounts
12-27 not later than the 30th day after the date on which the person
13-1 receives the notice.
13-2 (i) If the person charged with committing a violation
13-3 requests an informal review as provided by Subsection (g), the
13-4 commissioner shall conduct the review. The commissioner shall give
13-5 the person written notice of the results of the review.
13-6 (j) Not later than the 10th day after the date on which the
13-7 person charged with committing the violation receives the notice
13-8 prescribed by Subsection (i), the person may make to the
13-9 commissioner a written request for a hearing. The hearing must be
13-10 conducted in accordance with the Administrative Procedure and Texas
13-11 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).
13-12 (k) If, after informal review, a person who has been ordered
13-13 to pay a penalty or make restitution, or both, fails to request a
13-14 formal hearing in a timely manner, the commissioner shall assess
13-15 the penalty or enter a restitution order, or both. The
13-16 commissioner shall give the person written notice of the
13-17 commissioner's action. The person shall pay the required amounts
13-18 not later than the 30th day after the date on which the person
13-19 receives the notice.
13-20 (l) Except as provided by Subsection (m), not later than the
13-21 30th day after the date on which the commissioner issues a final
13-22 decision after a hearing under Subsection (j), a person who has
13-23 been ordered to pay a penalty or make restitution, or both, under
13-24 this section shall pay the required amounts in full.
13-25 (m) If the person seeks judicial review of either the fact
13-26 of the occurrence of a violation or the amount ordered, or of both
13-27 the occurrence and the amount, the person shall send the required
14-1 amount to the commissioner for placement in an escrow account or
14-2 post with the commissioner a supersedeas bond in a form approved by
14-3 the commissioner for the required amount. The bond must be
14-4 effective until all judicial review of the order or decision is
14-5 final.
14-6 (n) Failure to forward the money to or to post the bond with
14-7 the commissioner within the period provided by Subsection (l) or
14-8 (m) results in a waiver of all legal rights to judicial review. If
14-9 the person charged fails to forward the money or post the bond
14-10 within the period provided by Subsection (h), (k), (l), or (m), the
14-11 commissioner may forward the matter to the attorney general for
14-12 enforcement of the penalty or restitution, or both, and interest as
14-13 provided by law for legal judgments. An action to enforce an order
14-14 under this section must be initiated in a court of competent
14-15 jurisdiction in Travis County or in the county in which the
14-16 violation occurred.
14-17 (o) Judicial review of an order of the commissioner or
14-18 review under this section assessing a penalty or ordering
14-19 restitution, or both, is under the substantial evidence rule. A
14-20 suit may be initiated by filing a petition with a district court in
14-21 Travis County, as provided by Section 19, Administrative Procedure
14-22 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
14-23 Statutes).
14-24 (p) If a penalty or restitution amount is reduced or not
14-25 assessed, the commissioner shall remit to the person the
14-26 appropriate amount plus accrued interest if the penalty or
14-27 restitution amount has been paid or shall execute a release of the
15-1 bond if a supersedeas bond has been posted. The accrued interest
15-2 on amounts remitted by the commissioner under this subsection shall
15-3 be paid at a rate equal to the rate provided by law for legal
15-4 judgments and shall be paid for the period beginning on the date
15-5 the amount is paid to the commissioner under this section and
15-6 ending on the date the amount is remitted.
15-7 (q) In addition to the administrative penalty or restitution
15-8 amount, the court may authorize the commissioner to recover from a
15-9 person who pays an administrative penalty or restitution amount, or
15-10 both, under this section reasonable expenses incurred in obtaining
15-11 the ordered amount, including investigation costs, witness fees,
15-12 and deposition expenses.
15-13 (r) A penalty collected under this section shall be
15-14 deposited to the credit of the general revenue fund. After an
15-15 order of restitution becomes final and the restitution amount is
15-16 paid to the commissioner, the commissioner shall transmit the
15-17 amount to the party entitled to it.
15-18 Sec. 712.050. CEASE AND DESIST ORDERS. (a) The
15-19 commissioner may send written notice of the commissioner's findings
15-20 and meet with the directors of a cemetery corporation or its
15-21 trustee to discuss the findings and demand a discontinuance of
15-22 certain violations and practices if the commissioner determines
15-23 that the cemetery corporation or trustee or a person acting on
15-24 behalf of the cemetery corporation or trustee has:
15-25 (1) violated this chapter or a rule adopted under this
15-26 chapter;
15-27 (2) committed a breach of trust or of a fiduciary
16-1 duty;
16-2 (3) committed a fraudulent act or other practice in
16-3 the conduct of the cemetery corporation's business that threatens
16-4 the solvency of the cemetery corporation;
16-5 (4) refused to submit to an examination by the
16-6 commissioner;
16-7 (5) conducted the cemetery corporation's business in
16-8 an unsafe or unauthorized manner; or
16-9 (6) violated a condition of an agreement between the
16-10 cemetery corporation or trustee and the commissioner.
16-11 (b) The notice required by Subsection (a) must be sent to
16-12 the cemetery corporation or trustee and to the person acting on
16-13 behalf of the cemetery corporation or trustee whose conduct
16-14 constitutes the violation or practice. The notice must contain a
16-15 time for the meeting at the office of the commissioner concerning
16-16 the findings.
16-17 (c) Not later than the 30th day after the date of the
16-18 meeting, the commissioner may enter a cease and desist order or may
16-19 order affirmative action to correct the violation or practice if
16-20 the commissioner determines the order is necessary. A copy of the
16-21 order must be served on the cemetery corporation or trustee and on
16-22 any other person named in the order. An order takes effect on the
16-23 date specified in the order, except that an order may not take
16-24 effect before the 10th day after the date of its receipt by the
16-25 cemetery corporation or trustee or other person named in the order
16-26 unless the commissioner finds that immediate and irreparable harm
16-27 is threatened to the purchasers or potential purchasers of plots in
17-1 the cemetery or the general public. The cemetery corporation or
17-2 trustee shall certify to the commissioner in writing that each
17-3 person named in the order and each member of the cemetery
17-4 corporation's board of directors has read and understood the order.
17-5 (d) A cemetery corporation or trustee or other person named
17-6 in the order may appeal the commissioner's order to the commission
17-7 by filing a notice of appeal with the commission not later than the
17-8 10th day after the date of receipt of notice of the order.
17-9 (e) On receipt of a timely notice of appeal, the commission
17-10 shall set a time and place for hearing the appeal of the order and
17-11 give reasonable notice of the hearing to the party filing the
17-12 appeal. Unless otherwise provided by this chapter, the hearing
17-13 before the commission shall be conducted in accordance with the
17-14 Administrative Procedure and Texas Register Act (Article 6252-13a,
17-15 Vernon's Texas Civil Statutes). If the commission finds that a
17-16 party filing an appeal has committed one or more of the violations
17-17 or practices charged by the commissioner and that the order is
17-18 necessary, the commission shall affirm the order. If the
17-19 commission finds otherwise, the commission shall set aside the
17-20 order.
17-21 (f) If a cemetery corporation or trustee or other person
17-22 named in an order does not comply with a final and effective order
17-23 entered under this section, the attorney general, if requested by
17-24 the commissioner, may bring suit in a district court in Travis
17-25 County against the cemetery corporation or trustee or other person
17-26 to enjoin violation of the order.
17-27 (g) Nothing in this section diminishes the regulatory or
18-1 enforcement powers of the commissioner or the commission under
18-2 other provisions of this chapter or other applicable law. The
18-3 commissioner is not required to proceed under this section before
18-4 taking regulatory action under any section of this subchapter or
18-5 under any other applicable law.
18-6 (h) In this section, "commission" means The Finance
18-7 Commission of Texas.
18-8 SECTION 4. Title 79, Revised Statutes (Article 5069-1.01 et
18-9 seq., Vernon's Texas Civil Statutes), is amended by adding Article
18-10 2.03A to read as follows:
18-11 Art. 2.03A. ADMINISTRATIVE PENALTY; RESTITUTION ORDER. (a)
18-12 The Consumer Credit Commissioner may assess an administrative
18-13 penalty against a person who violates this subtitle, Chapter 9 or
18-14 15 of this title, or a rule adopted under this subtitle or Chapter
18-15 9 or 15 of this title. The commissioner may order a person who
18-16 violates this subtitle, Chapter 9 or 15 of this title, or a rule
18-17 adopted under this subtitle or Chapter 9 or 15 of this title to
18-18 make restitution to an identifiable person injured by the
18-19 violation.
18-20 (b) The amount of the penalty or restitution may not exceed
18-21 $1,000 for each day of violation and for each act of violation.
18-22 The aggregate amount of penalties that may be assessed against a
18-23 person during one calendar year under this Article may not exceed
18-24 $5,000 for each business location at which an element of a
18-25 violation occurred and may not exceed $50,000 if the person
18-26 committed violations at 11 or more business locations. The amount
18-27 of restitution ordered against a person may not exceed $5,000 for
19-1 each calendar year.
19-2 (c) In determining the amount of a penalty, the commissioner
19-3 shall consider:
19-4 (1) the seriousness of the violation, including the
19-5 nature, circumstances, extent, and gravity of the prohibited act;
19-6 (2) the extent of actual or potential harm to a third
19-7 party;
19-8 (3) the history of violations during the preceding
19-9 four years;
19-10 (4) the amount necessary to deter future violations;
19-11 (5) efforts to correct the violation; and
19-12 (6) any other matter that justice may require.
19-13 (d) In determining the amount of restitution, the
19-14 commissioner shall consider:
19-15 (1) the extent of actual harm to the third party in
19-16 whose favor restitution is ordered; and
19-17 (2) any other matters that justice may require.
19-18 (e) If after an examination of the facts the commissioner
19-19 concludes that the person did commit a violation, the commissioner
19-20 may issue a preliminary report stating the facts on which the
19-21 commissioner based that conclusion, recommending that an
19-22 administrative penalty be imposed or a restitution order entered,
19-23 or both, under this Article, and recommending the amount of the
19-24 proposed penalty or restitution.
19-25 (f) The commissioner shall give written notice of the report
19-26 to the person charged with committing the violation. The notice
19-27 must include a brief summary of the facts, a statement of the
20-1 amount of the recommended penalty or restitution, or both, and a
20-2 statement of the person's right to an informal review of the
20-3 occurrence of the violation, the amount of the penalty or
20-4 restitution, or both the occurrence and the amount.
20-5 (g) Not later than the 10th day after the date on which the
20-6 person charged with committing the violation receives the notice,
20-7 the person may either give the commissioner written consent to the
20-8 report, including the recommended amounts, or make a written
20-9 request for an informal review by the commissioner.
20-10 (h) If the person charged with committing the violation
20-11 consents to the amounts recommended by the commissioner or fails to
20-12 timely request an informal review, the commissioner shall assess
20-13 the penalty or enter the restitution order, or both. The
20-14 commissioner shall give the person written notice of the
20-15 commissioner's action. The person shall pay the required amounts
20-16 not later than the 30th day after the date on which the person
20-17 receives the notice.
20-18 (i) If the person charged with committing a violation
20-19 requests an informal review as provided by Subsection (g) of this
20-20 Article, the commissioner shall conduct the review. The
20-21 commissioner shall give the person written notice of the results of
20-22 the review.
20-23 (j) Not later than the 10th day after the date on which the
20-24 person charged with committing the violation receives the notice
20-25 prescribed by Subsection (i) of this Article, the person may make
20-26 to the commissioner a written request for a hearing. The hearing
20-27 must be conducted in accordance with the Administrative Procedure
21-1 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
21-2 Statutes) and its subsequent amendments.
21-3 (k) If, after informal review, a person who has been ordered
21-4 to pay a penalty or make restitution, or both, fails to request a
21-5 formal hearing in a timely manner, the commissioner shall assess
21-6 the penalty or enter a restitution order, or both. The
21-7 commissioner shall give the person written notice of the
21-8 commissioner's action. The person shall pay the required amounts
21-9 not later than the 30th day after the date on which the person
21-10 receives the notice.
21-11 (l) Except as provided by Subsection (m) of this Article,
21-12 not later than the 30th day after the date on which the
21-13 commissioner issues a final decision after a hearing under
21-14 Subsection (j) of this Article, a person who has been ordered to
21-15 pay a penalty or make restitution, or both, under this Article
21-16 shall pay the required amount in full.
21-17 (m) If the person seeks judicial review of either the fact
21-18 of the occurrence of a violation or the amount ordered, or of both
21-19 the occurrence and the amount, the person shall send the required
21-20 amount to the commissioner for placement in an escrow account or
21-21 post with the commissioner a supersedeas bond in a form approved by
21-22 the commissioner for the required amount. The bond must be
21-23 effective until all judicial review of the order or decision is
21-24 final.
21-25 (n) Failure to forward the money to or to post the bond with
21-26 the commissioner within the period provided by Subsection (l) or
21-27 (m) of this Article results in a waiver of all legal rights to
22-1 judicial review. If the person charged fails to forward the money
22-2 or post the bond within the period provided by Subsection (h), (k),
22-3 (l), or (m) of this Article, the commissioner may forward the
22-4 matter to the attorney general for enforcement of the penalty or
22-5 restitution, or both, and interest as provided by law for legal
22-6 judgments. An action to enforce an order under this Article must
22-7 be initiated in a court of competent jurisdiction in Travis County
22-8 or in the county in which the violation occurred.
22-9 (o) Judicial review of an order of the commissioner or
22-10 review under this Article assessing a penalty or ordering
22-11 restitution, or both, is under the substantial evidence rule. A
22-12 suit may be initiated by filing a petition with a district court in
22-13 Travis County, as provided by Section 19, Administrative Procedure
22-14 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
22-15 Statutes), and its subsequent amendments.
22-16 (p) If a penalty or restitution amount is reduced or not
22-17 assessed, the commissioner shall remit to the person the
22-18 appropriate amount plus accrued interest if the penalty or
22-19 restitution amount has been paid or shall execute a release of the
22-20 bond if a supersedeas bond has been posted. The accrued interest
22-21 on amounts remitted by the commissioner under this subsection shall
22-22 be paid at a rate equal to the rate provided by law for legal
22-23 judgments and shall be paid for the period beginning on the date
22-24 the amount is paid to the commissioner under this Article and
22-25 ending on the date the amount is remitted.
22-26 (q) In addition to the administrative penalty or restitution
22-27 amount, the court may authorize the commissioner to recover from a
23-1 person who pays an administrative penalty or restitution amount, or
23-2 both, under this Article reasonable expenses incurred in obtaining
23-3 the ordered amount, including investigation costs, witness fees,
23-4 and deposition expenses.
23-5 (r) A penalty collected under this Article shall be
23-6 deposited to the credit of the general revenue fund. After an
23-7 order of restitution becomes final and the restitution amount is
23-8 paid to the commissioner, the commissioner shall transmit the
23-9 amount to the party entitled to it.
23-10 (s) An administrative penalty or restitution order
23-11 authorized by this Article is in addition to any other enforcement
23-12 authority provided by law.
23-13 SECTION 5. Section 3, The Securities Act (Article 581-3,
23-14 Vernon's Texas Civil Statutes), is amended to read as follows:
23-15 Sec. 3. ADMINISTRATION AND ENFORCEMENT BY THE SECURITIES
23-16 COMMISSIONER AND THE ATTORNEY GENERAL AND LOCAL LAW ENFORCEMENT
23-17 OFFICIALS. A. The administration of the provisions of this Act
23-18 shall be vested in the Securities Commissioner. It shall be the
23-19 duty of the Securities Commissioner and the Attorney General to see
23-20 that its provisions are at all times obeyed and to take such
23-21 measures and to make such investigations as will prevent or detect
23-22 the violation of any provision thereof. The Commissioner shall at
23-23 once lay before the District or County Attorney of the proper
23-24 county any evidence which shall come to his knowledge of
23-25 criminality under this Act. In the event of the neglect or refusal
23-26 of such attorney to institute and prosecute such violation, the
23-27 Commissioner shall submit such evidence to the Attorney General,
24-1 who is hereby authorized to proceed therein with all the rights,
24-2 privileges and powers conferred by law upon district or county
24-3 attorneys, including the power to appear before grand juries and to
24-4 interrogate witnesses before such grand juries.
24-5 B. The remedies provided by this Act are not exclusive, and
24-6 the Securities Commissioner may seek and enforce as many of the
24-7 remedies as the Commissioner considers necessary.
24-8 SECTION 6. Subsection A, Section 14, The Securities Act
24-9 (Article 581-14, Vernon's Texas Civil Statutes), is amended to read
24-10 as follows:
24-11 A. The Commissioner may deny, revoke, or suspend a
24-12 registration, place on probation a dealer, agent, or salesman whose
24-13 registration has been suspended, or reprimand a person registered
24-14 under this Act if the person:
24-15 (1) has been convicted of a felony, or of any
24-16 misdemeanor of which fraud is an essential element;
24-17 (2) has engaged in any inequitable practice in the
24-18 sale of securities or in any fraudulent business practice;
24-19 (3) in the case of a dealer, is insolvent;
24-20 (4) in the case of a dealer, is selling or has sold
24-21 securities in this state through a salesman other than a registered
24-22 salesman, or, in the case of a salesman, is selling or has sold
24-23 securities in this state for a dealer, issuer or controlling person
24-24 with knowledge that such dealer, issuer or controlling person has
24-25 not complied with the provisions of this Act;
24-26 (5) has violated any of the provisions of this Act or
24-27 a rule of the Board;
25-1 (6) has made any material misrepresentation to the
25-2 Commissioner or Board in connection with any information deemed
25-3 necessary by the Commissioner or Board to determine a dealer's
25-4 financial responsibility or a dealer's or salesman's business
25-5 repute or qualifications, or has refused to furnish any such
25-6 information requested by the Commissioner or Board; <or>
25-7 (7) has not complied with a condition imposed by the
25-8 Commissioner under Section 13-D. Provided, however, that this
25-9 subdivision shall not apply to any person or company registered as
25-10 a dealer or salesman on August 23, 1963; or
25-11 (8) has failed to pay an administrative penalty
25-12 assessed or restitution amount ordered under Section 35-3 of this
25-13 Act.
25-14 SECTION 7. The Securities Act (Article 581-1 et seq.,
25-15 Vernon's Texas Civil Statutes) is amended by adding Section 35-3 to
25-16 read as follows:
25-17 Sec. 35-3. ADMINISTRATIVE PENALTIES; RESTITUTION ORDER.
25-18 A. The commissioner may assess an administrative penalty against a
25-19 person who violates this Act or a rule adopted under this Act. The
25-20 commissioner may order a person who violates this Act or a rule
25-21 adopted under this Act to make restitution to an identifiable
25-22 person injured by the violation.
25-23 B. The amount of the penalty or restitution may not exceed
25-24 $10,000 for each day of violation and for each act of violation.
25-25 The amount of restitution ordered against a person may not exceed
25-26 $10,000 for each calendar year.
25-27 C. In determining the amount of a penalty, the commissioner
26-1 shall consider:
26-2 (1) the extent of actual or potential harm to a third
26-3 party;
26-4 (2) the history of previous violations;
26-5 (3) the amount necessary to deter future violations;
26-6 (4) efforts to correct the violation;
26-7 (5) enforcement costs relating to the violation,
26-8 including investigation costs, witness fees, and deposition
26-9 expenses; and
26-10 (6) any other matters that justice may require.
26-11 D. In determining the amount of restitution, the
26-12 commissioner shall consider:
26-13 (1) the extent of actual harm to the third party in
26-14 whose favor restitution is ordered; and
26-15 (2) any other matters that justice may require.
26-16 E. If after an examination of the facts the commissioner
26-17 concludes that the person did commit a violation, the commissioner
26-18 may issue a preliminary report stating the facts on which the
26-19 commissioner based that conclusion, recommending that an
26-20 administrative penalty be imposed or a restitution order entered,
26-21 or both, under this section, and recommending the amount of the
26-22 proposed penalty or restitution.
26-23 F. The commissioner shall give written notice of the report
26-24 to the person charged with committing the violation. The notice
26-25 must include a brief summary of the facts, a statement of the
26-26 amount of the recommended penalty or restitution, or both, and a
26-27 statement of the person's right to an informal review of the
27-1 occurrence of the violation, the amount of the penalty or
27-2 restitution, or both the occurrence and the amount.
27-3 G. Not later than the 10th day after the date on which the
27-4 person charged with committing the violation receives the notice,
27-5 the person may either give the commissioner written consent to the
27-6 report, including the recommended amounts, or make a written
27-7 request for an informal review by the commissioner.
27-8 H. If the person charged with committing the violation
27-9 consents to the amounts recommended by the commissioner or fails to
27-10 timely request an informal review, the commissioner shall assess
27-11 the penalty or enter a restitution order, or both. The
27-12 commissioner shall give the person written notice of the
27-13 commissioner's action. The person shall pay the required amounts
27-14 not later than the 30th day after the date on which the person
27-15 receives the notice.
27-16 I. If the person charged with committing a violation
27-17 requests an informal review as provided by Subsection G of this
27-18 section, the commissioner shall conduct the review. The
27-19 commissioner shall give the person written notice of the results of
27-20 the review.
27-21 J. Not later than the 10th day after the date on which the
27-22 person charged with committing the violation receives the notice
27-23 prescribed by Subsection I of this section, the person may make to
27-24 the commissioner a written request for a hearing. The hearing must
27-25 be conducted in accordance with the Administrative Procedure and
27-26 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
27-27 Statutes) and its subsequent amendments.
28-1 K. If, after informal review, a person who has been ordered
28-2 to pay a penalty or make restitution, or both, fails to request a
28-3 formal hearing in a timely manner, the commissioner shall assess
28-4 the penalty or enter a restitution order, or both. The
28-5 commissioner shall give the person written notice of the
28-6 commissioner's action. The person shall pay the required amounts
28-7 not later than the 30th day after the date on which the person
28-8 receives the notice.
28-9 L. Except as provided by Subsection M of this section, not
28-10 later than the 30th day after the date on which the commissioner
28-11 issues a final decision after a hearing under Subsection J of this
28-12 section, a person who has been ordered to pay a penalty or make
28-13 restitution, or both, under this section shall pay the required
28-14 amount in full.
28-15 M. If the person seeks judicial review of either the fact of
28-16 the occurrence of a violation or the amount ordered, or of both the
28-17 occurrence and the amount, the person shall send the required
28-18 amount of the penalty to the commissioner for placement in an
28-19 escrow account or post with the commissioner a supersedeas bond in
28-20 a form approved by the commissioner for the required amount. The
28-21 bond must be effective until all judicial review of the order or
28-22 decision is final.
28-23 N. Failure to forward the money to or to post the bond with
28-24 the commissioner within the period provided by Subsection L or M of
28-25 this section results in a waiver of all legal rights to judicial
28-26 review. If the person charged fails to forward the money or post
28-27 the bond within the period provided by Subsection H, K, L, or M of
29-1 this section, the commissioner may forward the matter to the
29-2 attorney general for enforcement of the penalty or restitution, or
29-3 both, and interest as provided by law for legal judgments. An
29-4 action to enforce an order under this section must be initiated in
29-5 a court of competent jurisdiction in Travis County or in the county
29-6 in which the violation occurred.
29-7 O. Judicial review of an order of the commissioner or review
29-8 under this section assessing a penalty or ordering restitution, or
29-9 both, is under the substantial evidence rule. A suit may be
29-10 initiated by filing a petition with a district court in Travis
29-11 County, as provided by Section 19, Administrative Procedure and
29-12 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
29-13 Statutes), and its subsequent amendments.
29-14 P. If a penalty or restitution amount is reduced or not
29-15 assessed, the commissioner shall remit to the person the
29-16 appropriate amount plus accrued interest if the penalty or
29-17 restitution amount has been paid or shall execute a release of the
29-18 bond if a supersedeas bond has been posted. The accrued interest
29-19 on amounts remitted by the commissioner under this subsection shall
29-20 be paid at a rate equal to the rate provided by law for legal
29-21 judgments and shall be paid for the period beginning on the date
29-22 the amount is paid to the commissioner under this section and
29-23 ending on the date the amount is remitted.
29-24 Q. In addition to the administrative penalty or restitution
29-25 amount, the court may authorize the commissioner to recover from a
29-26 person who pays an administrative penalty or restitution amount, or
29-27 both, under this section reasonable expenses incurred in obtaining
30-1 the ordered amount, including investigation costs, witness fees,
30-2 and deposition expenses.
30-3 R. A penalty collected under this section shall be deposited
30-4 to the credit of the general revenue fund. After an order of
30-5 restitution becomes final and the restitution amount is paid to the
30-6 commissioner, the commissioner shall transmit the amount to the
30-7 party entitled to it.
30-8 SECTION 8. This Act takes effect September 1, 1993.
30-9 SECTION 9. The administrative penalties, restitution orders,
30-10 and cease and desist orders provided by this Act apply only to
30-11 violations committed on or after the effective date of this Act.
30-12 For purposes of this section, a violation is committed on or after
30-13 the effective date of this Act if each element of the violation
30-14 occurs on or after that date.
30-15 SECTION 10. The importance of this legislation and the
30-16 crowded condition of the calendars in both houses create an
30-17 emergency and an imperative public necessity that the
30-18 constitutional rule requiring bills to be read on three several
30-19 days in each house be suspended, and this rule is hereby suspended.