SRC-SLL S.B. 808 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 808
By: Ratliff
Jurisprudence
4-14-97
As Filed


DIGEST 

Due to the increased risk of jury findings of liability and the potential
for enormous damages, a growing number of attorneys, accountants, and
other professionals are declining to provide services in connection with
the issuance of small securities in offerings for which the professional
can earn only a small amount of fees for services performed in connection
with the offering.  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.  This bill will limit the liability of certain persons involved
in the issuance of securities by a small business. 

PURPOSE

As proposed, S.B. 808 limits the liability of certain persons involved in
the issuance of securities by a small business. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

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

N.  Limitation of Liability in Small Business Issuances.  Defines "small
business issuer." Provides that this subsection applies only to an offer
of securities made by a small business issuer or by the seller of
securities of a small business issuer that is in an aggregate amount that
does not exceed $5 million and a person who has been engaged to provide
services relating to an offer of securities described by Paragraph (a) of
this subdivision, including an attorney, an accountant, a consultant, or
the firm of the attorney, accountant, or consultant. Authorizes the
maximum amount to be recovered against a  person to which this subsection
applies in all actions relating to an offer of securities to which this
subsection applies is an amount equal to three times the fee paid by the
issuer or other seller to the person for the services related to the offer
of securities, unless the trier of fact in an action described by this
subdivision finds the person engaged in intentional wrongdoing in
providing the service. 

SECTION 2. Makes application of this Act prospective.

SECTION 3. Emergency clause.
  Effective date: upon passage.