BILL ANALYSIS



H.B. 2563
By: Dutton
May 2, 1995
Committee Report (Unamended)


BACKGROUND

Currently, many attorneys and accountants decline to become
involved with or to provide assistance in connection with small
issuer offerings due to the exposure to liabilty relative to the
small amount of fees that can be charged for services offered to
these offerings.  As a consequence, small business issuers often
find it difficult to obtain assistance from the experienced
professionals who are the most likely to be effective in helping
the issuer comply with the securities laws.  Many professionals
have indicated that it would increase attorney and accountant
interest in such offerings if the amount of their liability, where
already otherwise established by Texas Securities Act, could be
limited to some multiple of the fees earned in connection with the
transaction.

PURPOSE

To encourage the participation of assisting professionals in
offerings by small business issuers by limiting their liability in
offerings by small business issuers in cases where the assisting
professional has not been found to have engaged in intentional
wrongdoing.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 33, The Securities Act ( Art. 581-33,
V.T.C.S.) by adding Subsection N, as follows:

Sec. 33(N)(1)  Definitions for small business issuer, covered
person; covered transaction. 

Sec. 33(N)(2)(a)  Provides that when liability against a Covered
Person has been established in connection with the Covered
Transaction, the liability of the Covered Person in this case is
limited to an amount that is three times the fee paid by the issuer
to the Covered Person for the Covered Transaction.  
     (b)  Provides that the limitation of liability provided under
subsection (a) of this section will not apply if the Covered Person
is found to have engaged in intentional wrongdoing while providing
services in connection with the Covered Transaction.

SECTION 2.  Prospective applicability.

SECTION 3.  Emergency clause

SUMMARY OF COMMITTEE ACTION

HB 2563 was considered by the committee in a public hearing on
April 24, 1995.

Rep. Harold Dutton testified as the bill's author.

James R. Peacock, III representing himself and the Texas Business
Law Foundation testified for the bill.

The bill was left pending.

HB 2563 was again considered by the committee in a public hearing
on May 1, 1995.  

The bill was reported favorably without amendment with the
recommendation that it do pass and be printed, by a record vote of
7 ayes, 0 nay, 0 pnv & 2 absent.