ZEM H.B. 1507 75(R)BILL ANALYSIS CIVIL PRACTICES H.B. 1507 By: Dutton 4-10-97 Committee Report (Amended) BACKGROUND Due to the risk of jury findings of liability and the potential for large damage awards, a growing number of attorneys, accountants and other professionals are declining to provide services in connection with the issuance of small securities offerings. Many professionals have indicated that it would substantially increase the likelihood of professional involvement in small securities offerings if the amount of potential liability could be limited to a multiple of the fees earned by the professional in connection with the transaction. PURPOSE The bill limits the liability of professionals under the Texas Securities Act assisting in the offerings of securities by small business issuers in order to encourage professional participation in such offerings. The bill does not grant or deny any causes of action or in any way impact upon claims for liability against a professional engaged in a small offering. 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 of the Texas Securities Act (Article 581-33, Vernon's Texas Civil Statutes) by adding subsection N as follows: (1) Defines "small business issuer." (2) Specifies the applicability of the subsection. (3) Provides the maximum amounts that may be recovered against a person under this subsection; provides that this maximum amount is not applicable if the trier of fact finds the person engaged in intentional wrongdoing in providing the services. SECTION 2 Applies prospectively. Savings clause. SECTION 3. Emergency Clause. Effective date: upon passage. EXPLANATION OF AMENDMENTS Committee amendment #1 makes technical changes by replacing all references to "this subsection" or "this subdivision" with the actual section and subsection citation (Section 33N) of the Securities Code.