1-1 By: Harris of Dallas S.B. No. 77
1-2 (In the Senate - Filed February 17, 1993; February 17, 1993,
1-3 read first time and referred to Committee on State Affairs;
1-4 February 24, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 8, Nays 0;
1-6 February 24, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Harris of Dallas x
1-10 Rosson x
1-11 Carriker x
1-12 Henderson x
1-13 Leedom x
1-14 Lucio x
1-15 Luna x
1-16 Nelson x
1-17 Patterson x
1-18 Shelley x
1-19 Sibley x
1-20 West x
1-21 Whitmire x
1-22 COMMITTEE SUBSTITUTE FOR S.B. No. 77 By: Harris of Dallas
1-23 A BILL TO BE ENTITLED
1-24 AN ACT
1-25 relating to the authority of certain state financial regulatory
1-26 agencies to enforce laws pertaining to certain institutions and
1-27 loan and securities transactions that they regulate; providing
1-28 administrative penalties.
1-29 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-30 SECTION 1. Chapter 8, Texas Savings and Loan Act (Article
1-31 852a, Vernon's Texas Civil Statutes), is amended by adding Section
1-32 8.14 to read as follows:
1-33 Sec. 8.14. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
1-34 (a) The commissioner may assess an administrative penalty against
1-35 a person who knowingly and wilfully violates or causes a violation
1-36 of this Act or a rule adopted under this Act. The commissioner may
1-37 order a person who knowingly and wilfully violates or causes a
1-38 violation of this Act or a rule adopted under this Act to make
1-39 restitution to an identifiable person injured by the violation.
1-40 (b) The amount of the penalty may not exceed $25,000 for
1-41 each day of violation and for each act of violation.
1-42 (c) In determining the amount of a penalty, the commissioner
1-43 shall consider:
1-44 (1) the extent of actual or potential harm to a third
1-45 party;
1-46 (2) the history of previous violations;
1-47 (3) the amount necessary to deter future violations;
1-48 (4) efforts to correct the violation;
1-49 (5) enforcement costs relating to the violation,
1-50 including investigation costs, witness fees, and deposition
1-51 expenses; and
1-52 (6) any other matters that justice may require.
1-53 (d) In determining the amount of restitution, the
1-54 commissioner shall consider:
1-55 (1) the extent of actual harm to the third party in
1-56 whose favor restitution is ordered; and
1-57 (2) any other matters that justice may require.
1-58 (e) If after an examination of the facts the commissioner
1-59 concludes that the person did commit a violation, the commissioner
1-60 may issue a preliminary report stating the facts on which the
1-61 commissioner based that conclusion, recommending that an
1-62 administrative penalty be imposed or a restitution order entered,
1-63 or both, under this section, and recommending the amount of the
1-64 proposed penalty or restitution.
1-65 (f) The commissioner shall give written notice of the report
1-66 to the person charged with committing the violation. The notice
1-67 must include a brief summary of the facts, a statement of the
1-68 amount of the recommended penalty or restitution, or both, and a
2-1 statement of the person's right to an informal review of the
2-2 occurrence of the violation, the amount of the penalty or
2-3 restitution, or both the occurrence and the amount.
2-4 (g) Not later than the 10th day after the date on which the
2-5 person charged with committing the violation receives the notice,
2-6 the person may either give the commissioner written consent to the
2-7 report, including the recommended amounts, or make a written
2-8 request for an informal review by the commissioner.
2-9 (h) If the person charged with committing the violation
2-10 consents to the amounts recommended by the commissioner or fails to
2-11 timely request an informal review, the commissioner shall assess
2-12 the penalty or enter the restitution order, or both. The
2-13 commissioner shall give the person written notice of the
2-14 commissioner's action. The person shall pay the required amounts
2-15 not later than the 30th day after the date on which the person
2-16 receives the notice.
2-17 (i) If the person charged with committing a violation
2-18 requests an informal review as provided by Subsection (g) of this
2-19 section, the commissioner shall conduct the review. The
2-20 commissioner shall give the person written notice of the results of
2-21 the review.
2-22 (j) Not later than the 10th day after the date on which the
2-23 person charged with committing the violation receives the notice
2-24 prescribed by Subsection (i) of this section, the person may make
2-25 to the commissioner a written request for a hearing. The hearing
2-26 must be conducted in accordance with the Administrative Procedure
2-27 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
2-28 Statutes) and its subsequent amendments.
2-29 (k) If after informal review a person who has been ordered
2-30 to pay a penalty or make restitution, or both, fails to request a
2-31 formal hearing in a timely manner, the commissioner shall assess
2-32 the penalty or enter a restitution order, or both. The
2-33 commissioner shall give the person written notice of the
2-34 commissioner's action. The person shall pay the required amounts
2-35 not later than the 30th day after the date on which the person
2-36 receives the notice.
2-37 (l) Except as provided by Subsection (m) of this section,
2-38 not later than the 30th day after the date on which the
2-39 commissioner issues a final decision after a hearing under
2-40 Subsection (j) of this section, a person who has been ordered to
2-41 pay a penalty or make restitution, or both, under this section
2-42 shall pay the required amount in full.
2-43 (m) If the person seeks judicial review of either the fact
2-44 of the occurrence of a violation or the amount ordered or of both
2-45 the occurrence and the amount, the person shall send the required
2-46 amount to the commissioner for placement in an escrow account or
2-47 post with the commissioner a supersedeas bond in a form approved by
2-48 the commissioner for the required amount. The bond must be
2-49 effective until all judicial review of the order or decision is
2-50 final.
2-51 (n) Failure to forward the money to or to post the bond with
2-52 the commissioner within the period provided by Subsection (l) or
2-53 (m) of this section results in a waiver of all legal rights to
2-54 judicial review. If the person charged fails to forward the money
2-55 or post the bond within the period provided by Subsection (h), (k),
2-56 (l), or (m) of this section, the commissioner may forward the
2-57 matter to the attorney general for enforcement of the penalty or
2-58 restitution, or both, and interest as provided by law for legal
2-59 judgments. An action to enforce an order under this section must
2-60 be initiated in a court of competent jurisdiction in Travis County
2-61 or in the county in which the violation occurred.
2-62 (o) Judicial review of an order of the commissioner or
2-63 review under this section assessing a penalty or ordering
2-64 restitution, or both, is under the substantial evidence rule. A
2-65 suit may be initiated by filing a petition with a district court in
2-66 Travis County, as provided by Section 19, Administrative Procedure
2-67 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
2-68 Statutes), and its subsequent amendments.
2-69 (p) If a penalty or restitution amount is reduced or not
2-70 assessed, the commissioner shall remit to the person the
3-1 appropriate amount plus accrued interest if the penalty or
3-2 restitution amount has been paid or shall execute a release of the
3-3 bond if a supersedeas bond has been posted. The accrued interest
3-4 on amounts remitted by the commissioner under this subsection shall
3-5 be paid at a rate equal to the rate provided by law for legal
3-6 judgments and shall be paid for the period beginning on the date
3-7 the amount is paid to the commissioner under this section and
3-8 ending on the date the amount is remitted.
3-9 (q) In addition to the administrative penalty or restitution
3-10 amount, the court may authorize the commissioner to recover from a
3-11 person who pays an administrative penalty or restitution amount, or
3-12 both, under this section reasonable expenses incurred in obtaining
3-13 the ordered amount, including investigation costs, witness fees,
3-14 and deposition expenses.
3-15 (r) A penalty collected under this section shall be
3-16 deposited to the credit of the general revenue fund. After an
3-17 order of restitution becomes final and the restitution amount is
3-18 paid to the commissioner, the commissioner shall transmit the
3-19 amount to the party entitled to it.
3-20 SECTION 2. Chapter IV, The Texas Banking Code (Article
3-21 342-401 et seq., Vernon's Texas Civil Statutes), is amended by
3-22 adding Article 12a to read as follows:
3-23 Art. 12a. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
3-24 (a) The Banking Commissioner may assess an administrative penalty
3-25 against a person who knowingly and wilfully violates or causes a
3-26 violation of a provision of this Code or a rule adopted under this
3-27 Code that relates to a state bank, private bank, or trust company.
3-28 The Banking Commissioner may order a person who knowingly and
3-29 wilfully violates or causes a violation of this Code or a rule
3-30 adopted under this Code that relates to a state bank, private bank,
3-31 or trust company to make restitution to an identifiable person
3-32 injured by the violation.
3-33 (b) The amount of the penalty may not exceed $25,000 for
3-34 each day of violation and for each act of violation.
3-35 (c) In determining the amount of a penalty, the Banking
3-36 Commissioner shall consider:
3-37 (1) the extent of actual or potential harm to a third
3-38 party;
3-39 (2) the history of previous violations;
3-40 (3) the amount necessary to deter future violations;
3-41 (4) efforts to correct the violation;
3-42 (5) enforcement costs relating to the violation,
3-43 including investigation costs, witness fees, and deposition
3-44 expenses; and
3-45 (6) any other matters that justice may require.
3-46 (d) In determining the amount of restitution, the Banking
3-47 Commissioner shall consider:
3-48 (1) the extent of actual harm to the third party in
3-49 whose favor restitution is ordered; and
3-50 (2) any other matters that justice may require.
3-51 (e) If after an examination of the facts the Banking
3-52 Commissioner concludes that the person did commit or cause a
3-53 violation, the Banking Commissioner may issue a preliminary report
3-54 stating the facts on which the Banking Commissioner based that
3-55 conclusion, recommending that an administrative penalty be imposed
3-56 or a restitution order entered, or both, under this article, and
3-57 recommending the amount of the proposed penalty or restitution.
3-58 (f) The Banking Commissioner shall give written notice of
3-59 the report to the person charged with committing or causing the
3-60 violation. The notice must include a brief summary of the facts, a
3-61 statement of the amount of the recommended penalty or restitution,
3-62 or both, and a statement of the person's right to an informal
3-63 review of the occurrence of the violation, the amount of the
3-64 penalty or restitution, or both the occurrence and the amount.
3-65 (g) Not later than the 10th day after the date on which the
3-66 person charged with committing or causing the violation receives
3-67 the notice, the person may either give the Banking Commissioner
3-68 written consent to the report, including the recommended amounts,
3-69 or make a written request for an informal review by the Banking
3-70 Commissioner.
4-1 (h) If the person charged with committing or causing the
4-2 violation consents to the amounts recommended by the Banking
4-3 Commissioner or fails to timely request an informal review, the
4-4 Banking Commissioner shall assess the penalty or enter the
4-5 restitution order, or both. The Banking Commissioner shall give
4-6 the person written notice of the Banking Commissioner's action.
4-7 The person shall pay the required amounts not later than the 30th
4-8 day after the date on which the person receives the notice.
4-9 (i) If the person charged with committing or causing a
4-10 violation requests an informal review as provided by Subsection (g)
4-11 of this article, the Banking Commissioner shall conduct the review.
4-12 The Banking Commissioner shall give the person written notice of
4-13 the results of the review.
4-14 (j) Not later than the 10th day after the date on which the
4-15 person charged with committing or causing the violation receives
4-16 the notice prescribed by Subsection (i) of this article, the person
4-17 may make to the Banking Commissioner a written request for a
4-18 hearing. The hearing must be conducted in accordance with the
4-19 Administrative Procedure and Texas Register Act (Article 6252-13a,
4-20 Vernon's Texas Civil Statutes) and its subsequent amendments.
4-21 (k) If after informal review a person who has been ordered
4-22 to pay a penalty or make restitution, or both, fails to request a
4-23 formal hearing in a timely manner, the Banking Commissioner shall
4-24 assess the penalty or enter a restitution order, or both. The
4-25 Banking Commissioner shall give the person written notice of the
4-26 Banking Commissioner's action. The person shall pay the required
4-27 amounts not later than the 30th day after the date on which the
4-28 person receives the notice.
4-29 (l) Except as provided by Subsection (m) of this article,
4-30 not later than the 30th day after the date on which the Banking
4-31 Commissioner issues a final decision after a hearing under
4-32 Subsection (j) of this article, a person who has been ordered to
4-33 pay a penalty or make restitution, or both, under this article
4-34 shall pay the required amount in full.
4-35 (m) If the person seeks judicial review of either the fact
4-36 of the occurrence of a violation or the amount ordered or of both
4-37 the occurrence and the amount, the person shall send the required
4-38 amount to the Banking Commissioner for placement in an escrow
4-39 account or post with the Banking Commissioner a supersedeas bond in
4-40 a form approved by the Banking Commissioner for the required
4-41 amount. The bond must be effective until all judicial review of
4-42 the order or decision is final.
4-43 (n) Failure to forward the money to or to post the bond with
4-44 the Banking Commissioner within the period provided by Subsection
4-45 (l) or (m) of this article results in a waiver of all legal rights
4-46 to judicial review. If the person charged fails to forward the
4-47 money or post the bond within the period provided by Subsection
4-48 (h), (k), (l), or (m) of this article, the Banking Commissioner may
4-49 forward the matter to the attorney general for enforcement of the
4-50 penalty or restitution, or both, and interest as provided by law
4-51 for legal judgments. An action to enforce an order under this
4-52 article must be initiated in a court of competent jurisdiction in
4-53 Travis County or in the county in which the violation occurred.
4-54 (o) Judicial review of an order of the Banking Commissioner
4-55 or review under this article assessing a penalty or ordering
4-56 restitution, or both, is under the substantial evidence rule. A
4-57 suit may be initiated by filing a petition with a district court in
4-58 Travis County, as provided by Section 19, Administrative Procedure
4-59 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
4-60 Statutes).
4-61 (p) If a penalty or restitution amount is reduced or not
4-62 assessed, the Banking Commissioner shall remit to the person the
4-63 appropriate amount plus accrued interest if the penalty or
4-64 restitution amount has been paid or shall execute a release of the
4-65 bond if a supersedeas bond has been posted. The accrued interest
4-66 on amounts remitted by the Banking Commissioner under this
4-67 subsection shall be paid at a rate equal to the rate provided by
4-68 law for legal judgments and shall be paid for the period beginning
4-69 on the date the amount is paid to the Banking Commissioner under
4-70 this article and ending on the date the amount is remitted.
5-1 (q) In addition to the administrative penalty or restitution
5-2 amount, the court may authorize the Banking Commissioner to recover
5-3 from a person who pays an administrative penalty or restitution
5-4 amount, or both, under this article reasonable expenses incurred in
5-5 obtaining the ordered amount, including investigation costs,
5-6 witness fees, and deposition expenses.
5-7 (r) A penalty collected under this article shall be
5-8 deposited to the credit of the general revenue fund. After an
5-9 order of restitution becomes final and the restitution amount is
5-10 paid to the Banking Commissioner, the Banking Commissioner shall
5-11 transmit the amount to the party entitled to it.
5-12 SECTION 3. Subchapter C, Chapter 712, Health and Safety
5-13 Code, is amended by adding Sections 712.049 and 712.050 to read as
5-14 follows:
5-15 Sec. 712.049. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
5-16 (a) The commissioner may assess an administrative penalty against
5-17 a person who knowingly and wilfully violates or causes a violation
5-18 of this chapter or a rule adopted under this chapter. The
5-19 commissioner may order a person who knowingly and wilfully violates
5-20 or causes a violation of this chapter or a rule adopted under this
5-21 chapter to make restitution to an identifiable person injured by
5-22 the violation.
5-23 (b) The amount of the penalty may not exceed $25,000 for
5-24 each day of violation and for each act of violation.
5-25 (c) In determining the amount of a penalty, the commissioner
5-26 shall consider:
5-27 (1) the extent of actual or potential harm to a third
5-28 party;
5-29 (2) the history of previous violations;
5-30 (3) the amount necessary to deter future violations;
5-31 (4) efforts to correct the violation;
5-32 (5) enforcement costs relating to the violation,
5-33 including investigation costs, witness fees, and deposition
5-34 expenses; and
5-35 (6) any other matters that justice may require.
5-36 (d) In determining the amount of restitution, the
5-37 commissioner shall consider:
5-38 (1) the extent of actual harm to the third party in
5-39 whose favor restitution is ordered; and
5-40 (2) any other matters that justice may require.
5-41 (e) If after an examination of the facts the commissioner
5-42 concludes that the person did commit or cause a violation, the
5-43 commissioner may issue a preliminary report stating the facts on
5-44 which the commissioner based that conclusion, recommending that an
5-45 administrative penalty be imposed or a restitution order entered,
5-46 or both, under this section, and recommending the amount of the
5-47 proposed penalty or restitution.
5-48 (f) The commissioner shall give written notice of the report
5-49 to the person charged with committing or causing the violation.
5-50 The notice must include a brief summary of the facts, a statement
5-51 of the amount of the recommended penalty or restitution, or both,
5-52 and a statement of the person's right to an informal review of the
5-53 occurrence of the violation, the amount of the penalty or
5-54 restitution, or both the occurrence and the amount.
5-55 (g) Not later than the 10th day after the date on which the
5-56 person charged with committing or causing the violation receives
5-57 the notice, the person may either give the commissioner written
5-58 consent to the report, including the recommended amounts, or make a
5-59 written request for an informal review by the commissioner.
5-60 (h) If the person charged with committing or causing the
5-61 violation consents to the amounts recommended by the commissioner
5-62 or fails to timely request an informal review, the commissioner
5-63 shall assess the penalty or enter a restitution order, or both.
5-64 The commissioner shall give the person written notice of the
5-65 commissioner's action. The person shall pay the required amounts
5-66 not later than the 30th day after the date on which the person
5-67 receives the notice.
5-68 (i) If the person charged with committing or causing a
5-69 violation requests an informal review as provided by Subsection
5-70 (g), the commissioner shall conduct the review. The commissioner
6-1 shall give the person written notice of the results of the review.
6-2 (j) Not later than the 10th day after the date on which the
6-3 person charged with committing or causing the violation receives
6-4 the notice prescribed by Subsection (i), the person may make to the
6-5 commissioner a written request for a hearing. The hearing must be
6-6 conducted in accordance with the Administrative Procedure and Texas
6-7 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).
6-8 (k) If after informal review a person who has been ordered
6-9 to pay a penalty or make restitution, or both, fails to request a
6-10 formal hearing in a timely manner, the commissioner shall assess
6-11 the penalty or enter a restitution order, or both. The
6-12 commissioner shall give the person written notice of the
6-13 commissioner's action. The person shall pay the required amounts
6-14 not later than the 30th day after the date on which the person
6-15 receives the notice.
6-16 (l) Except as provided by Subsection (m), not later than the
6-17 30th day after the date on which the commissioner issues a final
6-18 decision after a hearing under Subsection (j), a person who has
6-19 been ordered to pay a penalty or make restitution, or both, under
6-20 this section shall pay the required amounts in full.
6-21 (m) If the person seeks judicial review of either the fact
6-22 of the occurrence of a violation or the amount ordered or of both
6-23 the occurrence and the amount, the person shall send the required
6-24 amount to the commissioner for placement in an escrow account or
6-25 post with the commissioner a supersedeas bond in a form approved by
6-26 the commissioner for the required amount. The bond must be
6-27 effective until all judicial review of the order or decision is
6-28 final.
6-29 (n) Failure to forward the money to or to post the bond with
6-30 the commissioner within the period provided by Subsection (l) or
6-31 (m) results in a waiver of all legal rights to judicial review. If
6-32 the person charged fails to forward the money or post the bond
6-33 within the period provided by Subsection (h), (k), (l), or (m), the
6-34 commissioner may forward the matter to the attorney general for
6-35 enforcement of the penalty or restitution, or both, and interest as
6-36 provided by law for legal judgments. An action to enforce an order
6-37 under this section must be initiated in a court of competent
6-38 jurisdiction in Travis County or in the county in which the
6-39 violation occurred.
6-40 (o) Judicial review of an order of the commissioner or
6-41 review under this section assessing a penalty or ordering
6-42 restitution, or both, is under the substantial evidence rule. A
6-43 suit may be initiated by filing a petition with a district court in
6-44 Travis County, as provided by Section 19, Administrative Procedure
6-45 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
6-46 Statutes).
6-47 (p) If a penalty or restitution amount is reduced or not
6-48 assessed, the commissioner shall remit to the person the
6-49 appropriate amount plus accrued interest if the penalty or
6-50 restitution amount has been paid or shall execute a release of the
6-51 bond if a supersedeas bond has been posted. The accrued interest
6-52 on amounts remitted by the commissioner under this subsection shall
6-53 be paid at a rate equal to the rate provided by law for legal
6-54 judgments and shall be paid for the period beginning on the date
6-55 the amount is paid to the commissioner under this section and
6-56 ending on the date the amount is remitted.
6-57 (q) In addition to the administrative penalty or restitution
6-58 amount, the court may authorize the commissioner to recover from a
6-59 person who pays an administrative penalty or restitution amount, or
6-60 both, under this section reasonable expenses incurred in obtaining
6-61 the ordered amount, including investigation costs, witness fees,
6-62 and deposition expenses.
6-63 (r) A penalty collected under this section shall be
6-64 deposited to the credit of the general revenue fund. After an
6-65 order of restitution becomes final and the restitution amount is
6-66 paid to the commissioner, the commissioner shall transmit the
6-67 amount to the party entitled to it.
6-68 Sec. 712.050. CEASE AND DESIST ORDERS. (a) The
6-69 commissioner may send written notice of the commissioner's findings
6-70 and meet with the directors of a cemetery corporation or its
7-1 trustee to discuss the findings and demand a discontinuance of
7-2 certain violations and practices if the commissioner determines
7-3 that the cemetery corporation or trustee or a person acting on
7-4 behalf of the cemetery corporation or trustee has:
7-5 (1) violated this chapter or a rule adopted under this
7-6 chapter;
7-7 (2) committed a breach of trust or of a fiduciary
7-8 duty;
7-9 (3) committed a fraudulent act or other practice in
7-10 the conduct of the cemetery corporation's business that threatens
7-11 the solvency of the cemetery corporation;
7-12 (4) refused to submit to an examination by the
7-13 commissioner;
7-14 (5) conducted the cemetery corporation's business in
7-15 an unsafe or unauthorized manner; or
7-16 (6) violated a condition of an agreement between the
7-17 cemetery corporation or trustee and the commissioner.
7-18 (b) The notice required by Subsection (a) must be sent to
7-19 the cemetery corporation or trustee and to the person acting on
7-20 behalf of the cemetery corporation or trustee whose conduct
7-21 constitutes the violation or practice. The notice must contain a
7-22 time for the meeting at the office of the commissioner concerning
7-23 the findings.
7-24 (c) Not later than the 30th day after the date of the
7-25 meeting, the commissioner may enter a cease and desist order or may
7-26 order affirmative action to correct the violation or practice if
7-27 the commissioner determines the order is necessary. A copy of the
7-28 order must be served on the cemetery corporation or trustee and on
7-29 any other person named in the order. An order takes effect on the
7-30 date specified in the order, except that an order may not take
7-31 effect before the 10th day after the date of its receipt by the
7-32 cemetery corporation or trustee or other person named in the order
7-33 unless the commissioner finds that immediate and irreparable harm
7-34 is threatened to the purchasers or potential purchasers of plots in
7-35 the cemetery or the general public. The cemetery corporation or
7-36 trustee shall certify to the commissioner in writing that each
7-37 person named in the order and each member of the cemetery
7-38 corporation's board of directors has read and understood the order.
7-39 (d) A cemetery corporation or trustee or other person named
7-40 in the order may appeal the commissioner's order to the commission
7-41 by filing a notice of appeal with the commission not later than the
7-42 10th day after the date of receipt of notice of the order.
7-43 (e) On receipt of a timely notice of appeal, the commission
7-44 shall set a time and place for hearing the appeal of the order and
7-45 give reasonable notice of the hearing to the party filing the
7-46 appeal. Unless otherwise provided by this chapter, the hearing
7-47 before the commission shall be conducted in accordance with the
7-48 Administrative Procedure and Texas Register Act (Article 6252-13a,
7-49 Vernon's Texas Civil Statutes). If the commission finds that a
7-50 party filing an appeal has committed one or more of the violations
7-51 or practices charged by the commissioner and that the order is
7-52 necessary, the commission shall affirm the order. If the
7-53 commission finds otherwise, the commission shall set aside the
7-54 order.
7-55 (f) If a cemetery corporation or trustee or other person
7-56 named in an order does not comply with a final and effective order
7-57 entered under this section, the attorney general, if requested by
7-58 the commissioner, may bring suit in a district court in Travis
7-59 County against the cemetery corporation or trustee or other person
7-60 to enjoin violation of the order.
7-61 (g) Nothing in this section diminishes the regulatory or
7-62 enforcement powers of the commissioner or the commission under
7-63 other provisions of this chapter or other applicable law. The
7-64 commissioner is not required to proceed under this section before
7-65 taking regulatory action under any section of this subchapter or
7-66 under any other applicable law.
7-67 (h) In this section, "commission" means The Finance
7-68 Commission of Texas.
7-69 SECTION 4. Title 79, Revised Statutes (Article 5069-1.01 et
7-70 seq., Vernon's Texas Civil Statutes), is amended by adding Article
8-1 2.03A to read as follows:
8-2 Art. 2.03A. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
8-3 (a) The Consumer Credit Commissioner may assess an administrative
8-4 penalty against a person who knowingly and wilfully violates or
8-5 causes a violation of this subtitle, Chapter 9 or 15 of this title,
8-6 or a rule adopted under this subtitle or Chapter 9 or 15 of this
8-7 title. The commissioner may order a person who knowingly and
8-8 wilfully violates or causes a violation of this subtitle, Chapter 9
8-9 or 15 of this title, or a rule adopted under this subtitle or
8-10 Chapter 9 or 15 of this title to make restitution to an
8-11 identifiable person injured by the violation.
8-12 (b) The amount of the penalty may not exceed $1,000 for each
8-13 day of violation and for each act of violation. The aggregate
8-14 amount of penalties that may be assessed against a person during
8-15 one calendar year under this Article may not exceed $5,000 for each
8-16 business location at which an element of a violation occurred and
8-17 may not exceed $50,000 if the person committed violations at 11 or
8-18 more business locations.
8-19 (c) In determining the amount of a penalty, the commissioner
8-20 shall consider:
8-21 (1) the seriousness of the violation, including the
8-22 nature, circumstances, extent, and gravity of the prohibited act;
8-23 (2) the extent of actual or potential harm to a third
8-24 party;
8-25 (3) the history of violations during the preceding
8-26 four years;
8-27 (4) the amount necessary to deter future violations;
8-28 (5) efforts to correct the violation; and
8-29 (6) any other matter that justice may require.
8-30 (d) If after an examination of the facts the commissioner
8-31 concludes that the person did commit a violation, the commissioner
8-32 may issue a preliminary report stating the facts on which the
8-33 commissioner based that conclusion, recommending that an
8-34 administrative penalty be imposed or a restitution order entered,
8-35 or both, under this Article, and recommending the amount of the
8-36 proposed penalty or restitution.
8-37 (e) The commissioner shall give written notice of the report
8-38 to the person charged with committing the violation. The notice
8-39 must include a brief summary of the facts, a statement of the
8-40 amount of the recommended penalty or restitution, or both, and a
8-41 statement of the person's right to an informal review of the
8-42 occurrence of the violation, the amount of the penalty or
8-43 restitution, or both the occurrence and the amount.
8-44 (f) Not later than the 10th day after the date on which the
8-45 person charged with committing the violation receives the notice,
8-46 the person may either give the commissioner written consent to the
8-47 report, including the recommended amounts, or make a written
8-48 request for an informal review by the commissioner.
8-49 (g) If the person charged with committing the violation
8-50 consents to the amounts recommended by the commissioner or fails to
8-51 timely request an informal review, the commissioner shall assess
8-52 the penalty or enter the restitution order, or both. The
8-53 commissioner shall give the person written notice of the
8-54 commissioner's action. The person shall pay the required amounts
8-55 not later than the 30th day after the date on which the person
8-56 receives the notice.
8-57 (h) If the person charged with committing a violation
8-58 requests an informal review as provided by Subsection (f) of this
8-59 Article, the commissioner shall conduct the review. The
8-60 commissioner shall give the person written notice of the results of
8-61 the review.
8-62 (i) Not later than the 10th day after the date on which the
8-63 person charged with committing the violation receives the notice
8-64 prescribed by Subsection (h) of this Article, the person may make
8-65 to the commissioner a written request for a hearing. The hearing
8-66 must be conducted in accordance with the Administrative Procedure
8-67 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
8-68 Statutes).
8-69 (j) If after informal review a person who has been ordered
8-70 to pay a penalty or make restitution, or both, fails to request a
9-1 formal hearing in a timely manner, the commissioner shall assess
9-2 the penalty or enter a restitution order, or both. The
9-3 commissioner shall give the person written notice of the
9-4 commissioner's action. The person shall pay the required amounts
9-5 not later than the 30th day after the date on which the person
9-6 receives the notice.
9-7 (k) Except as provided by Subsection (l) of this Article,
9-8 not later than the 30th day after the date on which the
9-9 commissioner issues a final decision after a hearing under
9-10 Subsection (i) of this Article, a person who has been ordered to
9-11 pay a penalty or make restitution, or both, under this Article
9-12 shall pay the required amount in full.
9-13 (l) If the person seeks judicial review of either the fact
9-14 of the occurrence of a violation or the amount ordered or of both
9-15 the occurrence and the amount, the person shall send the required
9-16 amount to the commissioner for placement in an escrow account or
9-17 post with the commissioner a supersedeas bond in a form approved by
9-18 the commissioner for the required amount. The bond must be
9-19 effective until all judicial review of the order or decision is
9-20 final.
9-21 (m) Failure to forward the money to or to post the bond with
9-22 the commissioner within the period provided by Subsection (k) or
9-23 (l) of this Article results in a waiver of all legal rights to
9-24 judicial review. If the person charged fails to forward the money
9-25 or post the bond within the period provided by Subsection (g), (j),
9-26 (k), or (l) of this Article, the commissioner may forward the
9-27 matter to the attorney general for enforcement of the penalty or
9-28 restitution, or both, and interest as provided by law for legal
9-29 judgments. An action to enforce an order under this Article must
9-30 be initiated in a court of competent jurisdiction in Travis County
9-31 or in the county in which the violation occurred.
9-32 (n) Judicial review of an order of the commissioner or
9-33 review under this Article assessing a penalty or ordering
9-34 restitution, or both, is under the substantial evidence rule. Suit
9-35 may be initiated by filing a petition with a district court in
9-36 Travis County, as provided by Section 19, Administrative Procedure
9-37 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
9-38 Statutes).
9-39 (o) If a penalty amount is reduced or not assessed, the
9-40 commissioner shall remit to the person the appropriate amount plus
9-41 accrued interest if the penalty or restitution amount has been paid
9-42 or shall execute a release of the bond if a supersedeas bond has
9-43 been posted. The accrued interest on amounts remitted by the
9-44 commissioner under this subsection shall be paid at a rate equal to
9-45 the rate provided by law for legal judgments and shall be paid for
9-46 the period beginning on the date the amount is paid to the
9-47 commissioner under this Article and ending on the date the amount
9-48 is remitted.
9-49 (p) In addition to the administrative penalty or restitution
9-50 amount, the court may authorize the commissioner to recover from a
9-51 person who pays an administrative penalty or restitution amount, or
9-52 both, under this Article reasonable expenses incurred in obtaining
9-53 the ordered amount, including investigation costs, witness fees,
9-54 and deposition expenses.
9-55 (q) A penalty collected under this Article shall be
9-56 deposited to the credit of the general revenue fund.
9-57 (r) An administrative penalty or restitution order
9-58 authorized by this Article is in addition to any other enforcement
9-59 authority provided by law.
9-60 SECTION 5. Section 3, The Securities Act (Article 581-3,
9-61 Vernon's Texas Civil Statutes), is amended to read as follows:
9-62 Sec. 3. ADMINISTRATION AND ENFORCEMENT BY THE SECURITIES
9-63 COMMISSIONER AND THE ATTORNEY GENERAL AND LOCAL LAW ENFORCEMENT
9-64 OFFICIALS. A. The administration of the provisions of this Act
9-65 shall be vested in the Securities Commissioner. It shall be the
9-66 duty of the Securities Commissioner and the Attorney General to see
9-67 that its provisions are at all times obeyed and to take such
9-68 measures and to make such investigations as will prevent or detect
9-69 the violation of any provision thereof. The Commissioner shall at
9-70 once lay before the District or County Attorney of the proper
10-1 county any evidence which shall come to his knowledge of
10-2 criminality under this Act. In the event of the neglect or refusal
10-3 of such attorney to institute and prosecute such violation, the
10-4 Commissioner shall submit such evidence to the Attorney General,
10-5 who is hereby authorized to proceed therein with all the rights,
10-6 privileges and powers conferred by law upon district or county
10-7 attorneys, including the power to appear before grand juries and to
10-8 interrogate witnesses before such grand juries.
10-9 B. The remedies provided by this Act are not exclusive, and
10-10 the Securities Commissioner may seek and enforce as many of the
10-11 remedies as the Commissioner considers necessary.
10-12 SECTION 6. Subsection A, Section 14, The Securities Act
10-13 (Article 581-14, Vernon's Texas Civil Statutes), is amended to read
10-14 as follows:
10-15 A. The Commissioner may deny, revoke, or suspend a
10-16 registration, place on probation a dealer, agent, or salesman whose
10-17 registration has been suspended, or reprimand a person registered
10-18 under this Act if the person:
10-19 (1) has been convicted of a felony, or of any
10-20 misdemeanor of which fraud is an essential element;
10-21 (2) has engaged in any inequitable practice in the
10-22 sale of securities or in any fraudulent business practice;
10-23 (3) in the case of a dealer, is insolvent;
10-24 (4) in the case of a dealer, is selling or has sold
10-25 securities in this state through a salesman other than a registered
10-26 salesman, or, in the case of a salesman, is selling or has sold
10-27 securities in this state for a dealer, issuer or controlling person
10-28 with knowledge that such dealer, issuer or controlling person has
10-29 not complied with the provisions of this Act;
10-30 (5) has violated any of the provisions of this Act or
10-31 a rule of the Board;
10-32 (6) has made any material misrepresentation to the
10-33 Commissioner or Board in connection with any information deemed
10-34 necessary by the Commissioner or Board to determine a dealer's
10-35 financial responsibility or a dealer's or salesman's business
10-36 repute or qualifications, or has refused to furnish any such
10-37 information requested by the Commissioner or Board; <or>
10-38 (7) has not complied with a condition imposed by the
10-39 Commissioner under Section 13-D. Provided, however, that this
10-40 subdivision shall not apply to any person or company registered as
10-41 a dealer or salesman on August 23, 1963; or
10-42 (8) has failed to pay an administrative penalty
10-43 assessed under Section 35-3 of this Act.
10-44 SECTION 7. The Securities Act (Article 581-1 et seq.,
10-45 Vernon's Texas Civil Statutes) is amended by adding Section 35-3 to
10-46 read as follows:
10-47 Sec. 35-3. ADMINISTRATIVE PENALTIES. A. The commissioner
10-48 may assess an administrative penalty against a person who knowingly
10-49 and wilfully violates or causes a violation of this Act or a rule
10-50 adopted under this Act.
10-51 B. The amount of the penalty may not exceed $10,000 for each
10-52 day of violation and for each act of violation.
10-53 C. In determining the amount of a penalty, the commissioner
10-54 shall consider:
10-55 (1) the extent of actual or potential harm to a third
10-56 party;
10-57 (2) the history of previous violations;
10-58 (3) the amount necessary to deter future violations;
10-59 (4) efforts to correct the violation;
10-60 (5) enforcement costs relating to the violation,
10-61 including investigation costs, witness fees, and deposition
10-62 expenses; and
10-63 (6) any other matters that justice may require.
10-64 D. If after an examination of the facts the commissioner
10-65 concludes that the person did commit a violation, the commissioner
10-66 may issue a preliminary report stating the facts on which the
10-67 commissioner based that conclusion, recommending that an
10-68 administrative penalty be imposed under this section, and
10-69 recommending the amount of the proposed penalty.
10-70 E. The commissioner shall give written notice of the report
11-1 to the person charged with committing the violation. The notice
11-2 must include a brief summary of the facts, a statement of the
11-3 amount of the recommended penalty, a statement of the person's
11-4 right to an informal review of the occurrence of the violation, the
11-5 amount of the penalty, or both the occurrence and the amount.
11-6 F. Not later than the 10th day after the date on which the
11-7 person charged with committing the violation receives the notice,
11-8 the person may either give the commissioner written consent to the
11-9 report, including the recommended amounts, or make a written
11-10 request for an informal review by the commissioner.
11-11 G. If the person charged with committing the violation
11-12 consents to the amounts recommended by the commissioner or fails to
11-13 timely request an informal review, the commissioner shall assess
11-14 the penalty. The commissioner shall give the person written notice
11-15 of the commissioner's action. The person shall pay the required
11-16 amounts not later than the 30th day after the date on which the
11-17 person receives the notice.
11-18 H. If the person charged with committing a violation
11-19 requests an informal review as provided by Subsection F of this
11-20 section, the commissioner shall conduct the review. The
11-21 commissioner shall give the person written notice of the results of
11-22 the review.
11-23 I. Not later than the 10th day after the date on which the
11-24 person charged with committing the violation receives the notice
11-25 prescribed by Subsection H of this section, the person may make to
11-26 the commissioner a written request for a hearing. The hearing must
11-27 be conducted in accordance with the Administrative Procedure and
11-28 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
11-29 Statutes).
11-30 J. If after informal review a person who has been ordered to
11-31 pay a penalty fails to request a formal hearing in a timely manner,
11-32 the commissioner shall assess the penalty. The commissioner shall
11-33 give the person written notice of the commissioner's action. The
11-34 person shall pay the required amounts not later than the 30th day
11-35 after the date on which the person receives the notice.
11-36 K. Except as provided by Subsection L of this section, not
11-37 later than the 30th day after the date on which the commissioner
11-38 issues a final decision after a hearing under Subsection I of this
11-39 section, a person who has been ordered to pay a penalty under this
11-40 section shall pay the required amount in full.
11-41 L. If the person seeks judicial review of either the fact of
11-42 the occurrence of a violation or the amount ordered or of both the
11-43 occurrence and the amount, the person shall send the required
11-44 amount of the penalty to the commissioner for placement in an
11-45 escrow account or post with the commissioner a supersedeas bond in
11-46 a form approved by the commissioner for the required amount. The
11-47 bond must be effective until all judicial review of the order or
11-48 decision is final.
11-49 M. Failure to forward the money to or to post the bond with
11-50 the commissioner within the period provided by Subsection K or L of
11-51 this section results in a waiver of all legal rights to judicial
11-52 review. If the person charged fails to forward the money or post
11-53 the bond within the period provided by Subsection G, J, K, or L of
11-54 this section, the commissioner may forward the matter to the
11-55 attorney general for enforcement of the penalty and interest as
11-56 provided by law for legal judgments. An action to enforce an order
11-57 under this section must be initiated in a court of competent
11-58 jurisdiction in Travis County or in the county in which the
11-59 violation occurred.
11-60 N. Judicial review of an order of the commissioner or review
11-61 under this section assessing a penalty is under the substantial
11-62 evidence rule. A suit may be initiated by filing a petition with a
11-63 district court in Travis County, as provided by Section 19,
11-64 Administrative Procedure and Texas Register Act (Article 6252-13a,
11-65 Vernon's Texas Civil Statutes).
11-66 O. If a penalty amount is reduced or not assessed, the
11-67 commissioner shall remit to the person the appropriate amount plus
11-68 accrued interest if the penalty amount has been paid or shall
11-69 execute a release of the bond if a supersedeas bond has been
11-70 posted. The accrued interest on amounts remitted by the
12-1 commissioner under this subsection shall be paid at a rate equal to
12-2 the rate provided by law for legal judgments and shall be paid for
12-3 the period beginning on the date the amount is paid to the
12-4 commissioner under this section and ending on the date the amount
12-5 is remitted.
12-6 P. In addition to the administrative penalty, the court may
12-7 authorize the commissioner to recover from a person who pays an
12-8 administrative penalty under this section reasonable expenses
12-9 incurred in obtaining the ordered amount, including investigation
12-10 costs, witness fees, and deposition expenses.
12-11 Q. A penalty collected under this section shall be deposited
12-12 to the credit of the general revenue fund.
12-13 SECTION 8. This Act takes effect September 1, 1993.
12-14 SECTION 9. The administrative penalties, restitution orders,
12-15 and cease and desist orders provided by this Act apply only to
12-16 violations committed on or after the effective date of this Act.
12-17 For purposes of this section, a violation is committed on or after
12-18 the effective date of this Act if each element of the violation
12-19 occurs on or after that date.
12-20 SECTION 10. The importance of this legislation and the
12-21 crowded condition of the calendars in both houses create an
12-22 emergency and an imperative public necessity that the
12-23 constitutional rule requiring bills to be read on three several
12-24 days in each house be suspended, and this rule is hereby suspended.
12-25 * * * * *
12-26 Austin,
12-27 Texas
12-28 February 24,
12-29 1993
12-30 Hon. Bob Bullock
12-31 President of the Senate
12-32 Sir:
12-33 We, your Committee on State Affairs to which was referred S.B. No.
12-34 77, have had the same under consideration, and I am instructed to
12-35 report it back to the Senate with the recommendation that it do not
12-36 pass, but that the Committee Substitute adopted in lieu thereof do
12-37 pass and be printed.
12-38 Harris of
12-39 Dallas, Chairman
12-40 * * * * *
12-41 WITNESSES
12-42 FOR AGAINST ON
12-43 ___________________________________________________________________
12-44 Name: Betty Ressel x
12-45 Representing: Comptrollers Office
12-46 City: Austin
12-47 -------------------------------------------------------------------
12-48 Name: William Howard Kuntz x
12-49 Representing: State Securities Board
12-50 City: Austin
12-51 -------------------------------------------------------------------
12-52 Name: Ann Graham x
12-53 Representing: Texas Banking Dept.
12-54 City: Austin
12-55 -------------------------------------------------------------------
12-56 Name: Karen M. Neeley x
12-57 Representing: Independent Bankers Assn of T
12-58 City: Austin
12-59 -------------------------------------------------------------------