1-1 AN ACT
1-2 relating to the continuation and functions of the State Securities
1-3 Board; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. GENERAL OPERATIONS AND ADMINISTRATION OF THE STATE
1-6 SECURITIES BOARD
1-7 SECTION 1.01. Section 2, The Securities Act (Article 581-2,
1-8 Vernon's Texas Civil Statutes), is amended to read as follows:
1-9 Sec. 2. CREATING THE STATE SECURITIES BOARD AND PROVIDING
1-10 FOR APPOINTMENT OF SECURITIES COMMISSIONER. A. The State
1-11 Securities Board is hereby created. The Board shall consist of
1-12 five [three] citizens of the state appointed by the governor with[.
1-13 With] the advice and consent of the Senate[, the Governor shall
1-14 biennially appoint one member]. Members of the Board serve for
1-15 staggered terms of six years, with as near as possible to one-third
1-16 of the members' terms expiring January 20 of each odd-numbered year
1-17 [The term of each member shall be six (6) years from the time of
1-18 his appointment and qualification, and until his successor shall
1-19 qualify]. Vacancies shall be filled by the Governor for the
1-20 unexpired term. Members shall be eligible for reappointment.
1-21 Appointments to the Board shall be made without regard to the race,
1-22 color, disability [creed], sex, religion, age, or national origin
1-23 of the appointees.
1-24 B. Board members must be members of the general public. A
2-1 person is not eligible for appointment as a member if the person or
2-2 the person's spouse:
2-3 (1) is registered as a dealer, [salesman,] agent, [or]
2-4 investment adviser, or investment adviser representative;
2-5 (2) has an active notice filing under this Act to
2-6 engage in business in this state as an investment adviser or
2-7 investment adviser representative;
2-8 (3) is employed by or participates in the management
2-9 of a business entity engaged in business as a securities dealer or
2-10 investment adviser; or
2-11 (4) [(3)] has, other than as a consumer, a financial
2-12 interest in a business entity engaged in business as a securities
2-13 dealer or investment adviser.
2-14 [C. A person who is required to register as a lobbyist under
2-15 Chapter 305, Government Code, because of the person's activities
2-16 for compensation in or for a profession related to the operation of
2-17 the Board, may not serve as a member of the Board or act as the
2-18 general counsel to the Board.]
2-19 D. Each member of the Board is entitled to per diem as set
2-20 by legislative appropriation for each day that the member engages
2-21 in the business of the Board.
2-22 The Governor shall designate a member of the Board as the
2-23 presiding officer of the Board to serve in that capacity at the
2-24 will of the Governor [They shall select their own chairman]. A
2-25 majority of the members shall constitute a quorum for the
2-26 transaction of any business.
2-27 E. It is a ground for removal from the Board that [if] a
3-1 member:
3-2 (1) does not have at the time of taking office
3-3 [appointment] the qualifications required by Subsection A or B of
3-4 this section for appointment to the Board;
3-5 (2) does not maintain during [the] service on the
3-6 Board the qualifications required by Subsection A or B of this
3-7 section for appointment to the Board; [or]
3-8 (3) is ineligible for membership under Subsection B of
3-9 this section or Subsection B or C of Section 2-1 of this Act;
3-10 (4) cannot, because of illness or disability,
3-11 discharge the member's duties for a substantial part of the
3-12 member's term; or
3-13 (5) is absent from more than half of the regularly
3-14 scheduled Board meetings that the member is eligible to attend
3-15 during a calendar year without an excuse approved by a majority
3-16 vote of the Board [violates a prohibition established by
3-17 Subsection C of this section].
3-18 F. The validity of an action of the Board is not affected by
3-19 the fact that it is [was] taken when a ground for removal of a
3-20 Board member exists [of the Board existed]. If the Commissioner
3-21 has knowledge that a potential ground for removal exists, the
3-22 Commissioner shall notify the presiding officer of the Board of the
3-23 potential ground. The presiding officer shall then notify the
3-24 Governor and the attorney general that a potential ground for
3-25 removal exists. If the potential ground for removal involves the
3-26 presiding officer, the Commissioner shall notify the next highest
3-27 ranking officer of the Board, who shall then notify the Governor
4-1 and the attorney general that a potential ground for removal
4-2 exists.
4-3 G. The Board shall appoint a Securities Commissioner who
4-4 serves at the pleasure of the Board and who shall, under the
4-5 supervision of the Board, administer the provisions of this Act.
4-6 Each member of the Board shall have access to all offices and
4-7 records under his supervision, and the Board, or a majority
4-8 thereof, may exercise any power or perform any act authorized to
4-9 the Securities Commissioner by the provisions of this Act.
4-10 H. The Commissioner, with the consent of the Board, may
4-11 designate a Deputy Securities Commissioner who shall perform all
4-12 the duties required by law to be performed by the Securities
4-13 Commissioner when the said Commissioner is absent or unable to act
4-14 for any reason. The Commissioner shall appoint other persons as
4-15 necessary to carry out the powers and duties of the Commissioner
4-16 under this Act and other laws granting jurisdiction or applicable
4-17 to the Board or the Commissioner. The Commissioner may delegate to
4-18 the other persons appointed under this subsection powers and duties
4-19 of the Commissioner as the Commissioner considers necessary.
4-20 I. Before assuming office, the Securities Commissioner shall
4-21 first give a bond in the sum of Twenty-five Thousand Dollars
4-22 ($25,000.00) payable to and to be approved by the Governor,
4-23 conditioned that he will faithfully execute the duties of his
4-24 office. The same requirement is made of the Deputy Securities
4-25 Commissioner, and the Securities Commissioner may require any or
4-26 all of his staff and employees to be likewise bonded. The expense
4-27 of all such bonds may be paid by the state.
5-1 J. On or before January 1 of each year, the Board, with the
5-2 advice of the Commissioner, shall report to the Governor and the
5-3 presiding officer of each house of the Legislature as to its
5-4 administration of this Act, as well as plans and needs for future
5-5 securities regulation. The report must include a detailed
5-6 accounting of all funds received and disbursed by the Board during
5-7 the preceding year.
5-8 K. The Commissioner or his designee shall develop an
5-9 intraagency career ladder program, one part of which shall be the
5-10 intraagency posting of all nonentry level positions for at least
5-11 ten (10) days before any public posting. The Commissioner or his
5-12 designee shall develop a system of annual performance evaluations
5-13 based on measurable job tasks. All merit pay for Board employees
5-14 must be based on the system established under this section.
5-15 L. The Board shall prepare information of consumer interest
5-16 describing the regulatory functions of the Board and Commissioner
5-17 and describing the Board's and Commissioner's procedures by which
5-18 consumer complaints are filed with and resolved by the Board or
5-19 Commissioner. The Board shall make the information available to
5-20 the general public and appropriate state agencies. There shall be
5-21 prominently displayed at all times in the place of business of each
5-22 dealer, [salesman, or] agent, investment adviser, or investment
5-23 adviser representative regulated under this Act, a sign containing
5-24 the name, mailing address, and telephone number of the Board and a
5-25 statement informing consumers that complaints against a dealer,
5-26 [salesman, or] agent, investment adviser, or investment adviser
5-27 representative may be directed to the Board.
6-1 M. The financial transactions of the Board are subject to
6-2 audit by the state auditor in accordance with Chapter 321,
6-3 Government Code.
6-4 N. The Board and Commissioner are subject to Chapters 551,
6-5 2001, and 2002, Government Code.
6-6 O. The State Securities Board is subject to Chapter 325,
6-7 Government Code (Texas Sunset Act). Unless continued in existence
6-8 as provided by that chapter, the board is abolished and this Act
6-9 expires September 1, 2013 [2001].
6-10 SECTION 1.02. The Securities Act (Article 581-1 et seq.,
6-11 Vernon's Texas Civil Statutes) is amended by adding Sections 2-1,
6-12 2-2, 2-3, 2-4, 2-5, 2-6, 2-7, and 2-8 to read as follows:
6-13 Sec. 2-1. CONFLICT OF INTEREST. A. In this section, "Texas
6-14 trade association" means a cooperative and voluntarily joined
6-15 association of business or professional competitors in this state
6-16 designed to assist its members and its industry or profession in
6-17 dealing with mutual business or professional problems and in
6-18 promoting their common interest.
6-19 B. A person may not be a member of the Board and may not be
6-20 a Board employee employed in a "bona fide executive,
6-21 administrative, or professional capacity," as that phrase is used
6-22 for purposes of establishing an exemption to the overtime
6-23 provisions of the federal Fair Labor Standards Act of 1938 (29
6-24 U.S.C. Section 201 et seq.) and its subsequent amendments, if:
6-25 (1) the person is an officer, employee, or paid
6-26 consultant of a Texas trade association in a field regulated by the
6-27 Board; or
7-1 (2) the person's spouse is an officer, manager, or
7-2 paid consultant of a Texas trade association in a field regulated
7-3 by the Board.
7-4 C. A person may not be a member of the Board or act as the
7-5 general counsel to the Board if the person is required to register
7-6 as a lobbyist under Chapter 305, Government Code, because of the
7-7 person's activities for compensation on behalf of a profession
7-8 related to the operation of the Board.
7-9 Sec. 2-2. INFORMATION ABOUT STANDARDS OF CONDUCT. The
7-10 Commissioner or the Commissioner's designee shall provide to
7-11 members of the Board and to Board employees, as often as necessary,
7-12 information regarding the requirements for office or employment
7-13 under this Act, including information regarding a person's
7-14 responsibilities under applicable laws relating to standards of
7-15 conduct for state officers or employees.
7-16 Sec. 2-3. TRAINING. A. A person who is appointed to and
7-17 qualifies for office as a member of the Board may not vote,
7-18 deliberate, or be counted as a member in attendance at a meeting of
7-19 the Board until the person completes a training program that
7-20 complies with this section.
7-21 B. The training program must provide the person with
7-22 information regarding:
7-23 (1) the legislation that created the Board;
7-24 (2) the programs operated by the Board;
7-25 (3) the role and functions of the Board;
7-26 (4) the rules of the Board with an emphasis on the
7-27 rules that relate to disciplinary and investigatory authority;
8-1 (5) the current budget for the Board;
8-2 (6) the results of the most recent formal audit of the
8-3 Board;
8-4 (7) the requirements of:
8-5 (A) the open meetings law, Chapter 551,
8-6 Government Code;
8-7 (B) the public information law, Chapter 552,
8-8 Government Code;
8-9 (C) the administrative procedure law, Chapter
8-10 2001, Government Code; and
8-11 (D) other laws relating to public officials,
8-12 including conflict-of-interest laws; and
8-13 (8) any applicable ethics policies adopted by the
8-14 Board or the Texas Ethics Commission.
8-15 C. A person appointed to the Board is entitled to
8-16 reimbursement, as provided by the General Appropriations Act, for
8-17 the travel expenses incurred in attending the training program
8-18 regardless of whether the attendance at the program occurs before
8-19 or after the person qualifies for office.
8-20 Sec. 2-4. DIVISION OF POLICY AND MANAGEMENT
8-21 RESPONSIBILITIES. The Board shall develop and implement policies
8-22 that clearly separate the policymaking responsibilities of the
8-23 Board and the management responsibilities of the Commissioner and
8-24 employees of the Board.
8-25 Sec. 2-5. PUBLIC TESTIMONY. The Board by rule shall develop
8-26 and implement policies that provide the public with a reasonable
8-27 opportunity to appear before the Board and to speak on any issue
9-1 under the jurisdiction of the Board.
9-2 Sec. 2-6. COMPLAINTS INFORMATION. A. The Commissioner or
9-3 the Commissioner's designee shall maintain a file on each written
9-4 complaint filed with the Commissioner or Board concerning an
9-5 employee, former employee, or person registered under this Act.
9-6 The file must include:
9-7 (1) the name of the person who filed the complaint;
9-8 (2) the date the complaint is received by the
9-9 Commissioner or Board;
9-10 (3) the subject matter of the complaint;
9-11 (4) the name of each person contacted in relation to
9-12 the complaint;
9-13 (5) a summary of the results of the review or
9-14 investigation of the complaint; and
9-15 (6) an explanation of the reason the file was closed,
9-16 if the Commissioner closed the file without taking action other
9-17 than to investigate the complaint.
9-18 B. The Commissioner or the Commissioner's designee shall
9-19 provide to the person filing the complaint and to each person who
9-20 is a subject of the complaint a copy of the Board's policies and
9-21 procedures relating to complaint investigation and resolution.
9-22 C. The Commissioner or the Commissioner's designee, at least
9-23 quarterly until final disposition of the complaint, shall notify
9-24 the person filing the complaint and each person who is a subject of
9-25 the complaint of the status of the investigation unless the notice
9-26 would jeopardize an undercover investigation.
9-27 Sec. 2-7. EQUAL EMPLOYMENT OPPORTUNITY POLICY STATEMENT. A.
10-1 The Commissioner or the Commissioner's designee shall prepare and
10-2 maintain a written policy statement that implements a program of
10-3 equal employment opportunity to ensure that all personnel decisions
10-4 are made without regard to race, color, disability, sex, religion,
10-5 age, or national origin.
10-6 B. The policy statement must include:
10-7 (1) personnel policies, including policies relating to
10-8 recruitment, evaluation, selection, training, and promotion of
10-9 personnel, that show the intent of the Board to avoid the unlawful
10-10 employment practices described by Chapter 21, Labor Code; and
10-11 (2) an analysis of the extent to which the composition
10-12 of the Board's personnel is in accordance with state and federal
10-13 law and a description of reasonable methods to achieve compliance
10-14 with state and federal law.
10-15 C. The policy statement must:
10-16 (1) be updated annually;
10-17 (2) be reviewed by the state Commission on Human
10-18 Rights for compliance with Subsection B(1) of this section; and
10-19 (3) be filed with the governor's office.
10-20 Sec. 2-8. INFORMATION ABOUT STATE EMPLOYEE INCENTIVE
10-21 PROGRAM. The Commissioner or the Commissioner's designee shall
10-22 provide to Board employees information and training on the benefits
10-23 and methods of participation in the state employee incentive
10-24 program.
10-25 SECTION 1.03. The Securities Act (Article 581-1 et seq.,
10-26 Vernon's Texas Civil Statutes) is amended by adding Section 43 to
10-27 read as follows:
11-1 Sec. 43. INVESTOR EDUCATION. A. The Commissioner, with
11-2 Board approval, shall develop and implement investor education
11-3 initiatives to inform the public about the basics of investing in
11-4 securities, with a special emphasis placed on the prevention and
11-5 detection of securities fraud. Materials developed for and
11-6 distributed as part of the initiatives must be published in both
11-7 Spanish and English.
11-8 B. In developing and implementing the initiatives, the
11-9 Commissioner shall use the Commissioner's best efforts to
11-10 collaborate with public or nonprofit entities with an interest in
11-11 investor education.
11-12 C. Subject to Chapter 575, Government Code, the Commissioner
11-13 may accept grants and donations from a person who is not affiliated
11-14 with the securities industry or from a nonprofit association,
11-15 regardless of whether the entity is affiliated with the securities
11-16 industry, for use in providing investor education initiatives.
11-17 SECTION 1.04. As soon as possible after the effective date of
11-18 this Act, the governor shall appoint one member to the State
11-19 Securities Board for a term expiring January 20, 2005, and another
11-20 member to the State Securities Board for a term expiring January
11-21 20, 2007. As those terms expire, the governor shall appoint
11-22 members to full six-year terms.
11-23 SECTION 1.05. Not later than September 1, 2002, the
11-24 Securities Commissioner shall implement the investor education
11-25 initiatives as required by Section 43, The Securities Act (Article
11-26 581-43, Vernon's Texas Civil Statutes), as added by this Act.
11-27 SECTION 1.06. The changes in law made by this Act in the
12-1 prohibitions and qualifications applying to members of the State
12-2 Securities Board do not affect the entitlement of a member serving
12-3 on the board immediately before September 1, 2001, to continue to
12-4 serve and function as a member of the board for the remainder of
12-5 the member's term. The changes in law apply only to a member
12-6 appointed on or after September 1, 2001.
12-7 ARTICLE 2. REGULATORY PROVISIONS
12-8 SECTION 2.01. Section 4, The Securities Act (Article 581-4,
12-9 Vernon's Texas Civil Statutes), is amended by amending Subsections
12-10 B, C, D, and E and adding Subsections N, O, P, and Q to read as
12-11 follows:
12-12 B. The terms "person" and "company" shall include a
12-13 corporation, person, joint stock company, partnership, limited
12-14 partnership, association, company, firm, syndicate, trust,
12-15 incorporated or unincorporated, heretofore or hereafter formed
12-16 under the laws of this or any other state, country, sovereignty or
12-17 political subdivision thereof, and shall include a government, or a
12-18 political subdivision or agency thereof. As used herein, the term
12-19 "trust" shall be deemed to include a common law trust, but shall
12-20 not include a trust created or appointed under or by virtue of a
12-21 last will and testament or by a court of law or equity. [Under the
12-22 criminal penal provisions of Section 29 of this Act, the word
12-23 "person" shall mean a natural person.]
12-24 C. The term "dealer" shall include every person or company
12-25 other than an agent [a salesman], who engages in this state, either
12-26 for all or part of his or its time, directly or through an agent,
12-27 in selling, offering for sale or delivery or soliciting
13-1 subscriptions to or orders for, or undertaking to dispose of, or to
13-2 invite offers for any security or securities [and every person or
13-3 company who engages in rendering services as an investment
13-4 adviser,] and every person or company who deals in any other manner
13-5 in any security or securities within this state. Any issuer other
13-6 than a registered dealer of a security or securities, who, directly
13-7 or through any person or company, other than a registered dealer,
13-8 offers for sale, sells or makes sales of its own security or
13-9 securities shall be deemed a dealer and shall be required to comply
13-10 with the provisions hereof; provided, however, this section or
13-11 provision shall not apply to such issuer when such security or
13-12 securities are offered for sale or sold either to a registered
13-13 dealer or only by or through a registered dealer acting as fiscal
13-14 agent for the issuer; and provided further, this section or
13-15 provision shall not apply to such issuer if the transaction is
13-16 within the exemptions contained in the provisions of Section 5 of
13-17 this Act.
13-18 D. The term ["salesman" or] "agent" shall include every
13-19 person or company employed or appointed or authorized by a dealer
13-20 to sell, offer for sale or delivery, or solicit subscriptions to or
13-21 orders for, or deal in any other manner, in securities within this
13-22 state, whether by direct act or through subagents; provided, that
13-23 the officers of a corporation or partners of a partnership shall
13-24 not be deemed [salesmen or] agents solely because of their status
13-25 as officers or partners, where such corporation or partnership is
13-26 registered as a dealer hereunder.
13-27 E. The terms "sale" or "offer for sale" or "sell" shall
14-1 include every disposition, or attempt to dispose of a security for
14-2 value. The term "sale" means and includes contracts and agreements
14-3 whereby securities are sold, traded or exchanged for money,
14-4 property or other things of value, or any transfer or agreement to
14-5 transfer, in trust or otherwise. Any security given or delivered
14-6 with or as a bonus on account of any purchase of securities or
14-7 other thing of value, shall be conclusively presumed to constitute
14-8 a part of the subject of such purchase and to have been sold for
14-9 value. The term "sell" means any act by which a sale is made, and
14-10 the term "sale" or "offer for sale" shall include a subscription,
14-11 an option for sale, a solicitation of sale, a solicitation of an
14-12 offer to buy, an attempt to sell, or an offer to sell, directly or
14-13 by an agent [or salesman], by a circular, letter, or advertisement
14-14 or otherwise, including the deposit in a United States Post Office
14-15 or mail box or in any manner in the United States mails within this
14-16 State of a letter, circular or other advertising matter. Nothing
14-17 herein shall limit or diminish the full meaning of the terms
14-18 "sale," "sell" or "offer for sale" as used by or accepted in courts
14-19 of law or equity. The sale of a security under conditions which
14-20 entitle the purchaser or subsequent holder to exchange the same
14-21 for, or to purchase some other security, shall not be deemed a sale
14-22 or offer for sale of such other security; but no exchange for or
14-23 sale of such other security shall ever be made unless and until the
14-24 sale thereof shall have been first authorized in Texas under this
14-25 Act, if not exempt hereunder, or by other provisions of law.
14-26 N. "Investment adviser" includes a person who, for
14-27 compensation, engages in the business of advising another, either
15-1 directly or through publications or writings, with respect to the
15-2 value of securities or to the advisability of investing in,
15-3 purchasing, or selling securities or a person who, for compensation
15-4 and as part of a regular business, issues or adopts analyses or a
15-5 report concerning securities, as may be further defined by Board
15-6 rule. The term does not include:
15-7 (1) a bank or a bank holding company, as defined by
15-8 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
15-9 seq.), as amended, that is not an investment company;
15-10 (2) a lawyer, accountant, engineer, teacher, or
15-11 geologist whose performance of the services is solely incidental to
15-12 the practice of the person's profession;
15-13 (3) a dealer or agent who receives no special
15-14 compensation for those services and whose performance of those
15-15 services is solely incidental to transacting business as a dealer
15-16 or agent;
15-17 (4) the publisher of a bona fide newspaper, news
15-18 magazine, or business or financial publication of general and
15-19 regular circulation; or
15-20 (5) a person whose advice, analyses, or report does
15-21 not concern a security other than a security that is:
15-22 (A) a direct obligation of or an obligation the
15-23 principal or interest of which is guaranteed by the United States
15-24 government; or
15-25 (B) issued or guaranteed by a corporation in
15-26 which the United States has a direct or indirect interest and
15-27 designated by the United States Secretary of the Treasury under
16-1 Section 3(a)(12), Securities Exchange Act of 1934 (15 U.S.C.
16-2 Section 78c(a)(12)), as amended, as an exempt security for purposes
16-3 of that Act.
16-4 O. "Federal covered investment adviser" means an investment
16-5 adviser who is registered under the Investment Advisers Act of 1940
16-6 (15 U.S.C. Section 80b-1 et seq.), as amended.
16-7 P. "Investment adviser representative" or "representative of
16-8 an investment adviser" includes each person or company who, for
16-9 compensation, is employed, appointed, or authorized by an
16-10 investment adviser to solicit clients for the investment adviser or
16-11 who, on behalf of an investment adviser, provides investment
16-12 advice, directly or through subagents, as defined by Board rule, to
16-13 the investment adviser's clients. The term does not include a
16-14 partner of a partnership or an officer of a corporation or other
16-15 entity that is registered as an investment adviser under this Act
16-16 solely because of the person's status as an officer or partner of
16-17 that entity.
16-18 Q. "Registered investment adviser" means an investment
16-19 adviser who has been issued a registration certificate by the
16-20 Commissioner under Section 15 of this Act.
16-21 SECTION 2.02. Section 5, The Securities Act (Article 581-5,
16-22 Vernon's Texas Civil Statutes), is amended to read as follows:
16-23 Sec. 5. EXEMPT TRANSACTIONS. Except as hereinafter in this
16-24 Act specifically provided, the provisions of this Act shall not
16-25 apply to the sale of any security when made in any of the following
16-26 transactions and under any of the following conditions, and the
16-27 company or person engaged therein shall not be deemed a dealer
17-1 within the meaning of this Act; that is to say, the provisions of
17-2 this Act shall not apply to any sale, offer for sale, solicitation,
17-3 subscription, dealing in or delivery of any security under any of
17-4 the following transactions or conditions:
17-5 A. At any judicial, executor's, administrator's,
17-6 guardian's or conservator's sale, or any sale by a receiver or
17-7 trustee in insolvency or bankruptcy.
17-8 B. The sale by or for the account of a pledge holder
17-9 or mortgagee, selling or offering for sale or delivery in the
17-10 ordinary course of business to liquidate a bona fide debt, of a
17-11 security pledged in good faith as security for such debt.
17-12 C. (1) Sales of securities made by or in behalf of a
17-13 vendor, whether by dealer or other agent, in the ordinary course of
17-14 bona fide personal investment of the personal holdings of such
17-15 vendor, or change in such investment, if such vendor is not engaged
17-16 in the business of selling securities and the sale or sales are
17-17 isolated transactions not made in the course of repeated and
17-18 successive transactions of a like character; provided, that in no
17-19 event shall such sales or offerings be exempt from the provisions
17-20 of this Act when made or intended by the vendor or his agent, for
17-21 the benefit, either directly or indirectly, of any company or
17-22 corporation except the individual vendor (other than a usual
17-23 commission to said agent), and provided further, that any person
17-24 acting as agent for said vendor shall be registered pursuant to
17-25 this Act;
17-26 (2) Sales by or on behalf of any insurance
17-27 company subject to the supervision or control of the Texas
18-1 Department of Insurance of any security owned by such company as a
18-2 legal and bona fide investment, provided that in no event shall any
18-3 such sale or offering be exempt from the provisions of this Act
18-4 when made or intended, either directly or indirectly, for the
18-5 benefit of any other company as that term is defined in this Act.
18-6 D. The distribution by a corporation of securities
18-7 direct to its stockholders as a stock dividend or other
18-8 distribution paid out of earnings or surplus.
18-9 E. Any offer and any transaction pursuant to any offer
18-10 by the issuer of its securities to its existing security holders
18-11 (including persons who at the time of the transaction are holders
18-12 of convertible securities or nontransferable warrants) if no
18-13 commission or other remuneration (other than a stand-by commission)
18-14 is paid or given directly or indirectly for soliciting any security
18-15 holder in this State.
18-16 F. The issue in good faith of securities by a company
18-17 to its security holders, or creditors, in the process of a bona
18-18 fide reorganization of the company made in good faith, or the issue
18-19 in good faith of securities by a company, organized solely for the
18-20 purpose of taking over the assets and continuing the business of a
18-21 predecessor company, to the security holders or creditors of such
18-22 predecessor company, provided that in either such case such
18-23 securities are issued in exchange for the securities of such
18-24 holders or claims of such creditors, or both, and in either such
18-25 case security holders or creditors do not pay or give or promise
18-26 and are not obligated to pay or give any consideration for the
18-27 securities so issued other than the securities of or claims against
19-1 said company or its predecessor then held or owned by them.
19-2 G. The issue or sale of securities (a) by one
19-3 corporation to another corporation or the security holders thereof
19-4 pursuant to a vote by one or more classes of such security holders,
19-5 as required by the certificate of incorporation or the applicable
19-6 corporation statute, in connection with a merger, consolidation or
19-7 sale of corporate assets, or (b) by one corporation to its own
19-8 stockholders in connection with the change of par value stock to no
19-9 par value stock or vice versa, or the exchange of outstanding
19-10 shares for the same or a greater or smaller number of shares;
19-11 provided that in any such case such security holders do not pay or
19-12 give or promise and are not obligated to pay or give any
19-13 consideration for the securities so issued or sold other than the
19-14 securities of the corporation then held by them.
19-15 H. The sale of any security to any bank, trust
19-16 company, building and loan association, insurance company, surety
19-17 or guaranty company, savings institution, investment company as
19-18 defined in the Investment Company Act of 1940, small business
19-19 investment company as defined in the Small Business Investment Act
19-20 of 1958, as amended, or to any registered dealer actually engaged
19-21 in buying and selling securities.
19-22 I. Provided such sale is made without any public
19-23 solicitation or advertisements:
19-24 (a) the sale of any security by the issuer
19-25 thereof so long as the total number of security holders of the
19-26 issuer thereof does not exceed thirty-five (35) persons after
19-27 taking such sale into account;
20-1 (b) the sale or distribution by an employer or
20-2 its participating subsidiary, if any, of a security under a thrift,
20-3 savings, stock purchase, retirement, pension, profit-sharing,
20-4 option, bonus, appreciation right, incentive, or similar employee
20-5 benefit plan for employees or directors of the employer or its
20-6 subsidiary; or
20-7 (c) the sale by an issuer of its securities
20-8 during the period of twelve (12) months ending with the date of the
20-9 sale in question to not more than fifteen (15) persons (excluding,
20-10 in determining such fifteen (15) persons, purchasers of securities
20-11 in transactions exempt under other provisions of this Section 5,
20-12 purchasers of securities exempt under Section 6 hereof and
20-13 purchasers of securities which are part of an offering registered
20-14 under Section 7 hereof), provided such persons purchased such
20-15 securities for their own account and not for distribution.
20-16 J. Wherein the securities disposed of consist
20-17 exclusively of notes or bonds secured by mortgage or vendor's lien
20-18 upon real estate or tangible personal property, and the entire
20-19 mortgage is sold or transferred with all of the notes or bonds
20-20 secured thereby in a single transaction.
20-21 K. Any security or membership issued by a corporation
20-22 or association, organized exclusively for religious, educational,
20-23 benevolent, fraternal, charitable, or reformatory purposes and not
20-24 for pecuniary profit, and no part of the net earnings of which
20-25 inures to the benefit of any stockholder, shareholder, or
20-26 individual members, and where no commission or remuneration is paid
20-27 or given or is to be paid or given in connection with the
21-1 disposition thereof.
21-2 L. The sale by the issuer itself, or by a registered
21-3 dealer, of any security issued or guaranteed by any bank organized
21-4 and subject to regulation under the laws of the United States or
21-5 under the laws of any State or territory of the United States, or
21-6 any insular possession thereof, or by any savings and loan
21-7 association organized and subject to regulation under the laws of
21-8 this State, or the sale by the issuer itself of any security issued
21-9 by any federal savings and loan association.
21-10 M. The sale by the issuer itself, or by a registered
21-11 dealer, of any security either issued or guaranteed by the United
21-12 States or by any territory or insular possession thereof, or by the
21-13 District of Columbia, or by any state of the United States, or
21-14 political subdivision thereof (including but not limited to any
21-15 county, city, municipal corporation, district, or authority), or by
21-16 any public or governmental agency or instrumentality of any of the
21-17 foregoing.
21-18 N. The sale and issuance of any securities issued by
21-19 any farmers' cooperative marketing association organized under
21-20 Chapter 52, Agriculture Code, or the predecessor of that law
21-21 (Article 5737 et seq., Revised Statutes); the sale and issuance of
21-22 any securities issued by any mutual loan corporation organized
21-23 under Chapter 54, Agriculture Code, or the predecessor of that law
21-24 (Article 2500 et seq., Revised Statutes); the sale and issuance of
21-25 any equity securities issued by any cooperative association
21-26 organized under the Cooperative Association Act, as amended
21-27 (Article 1396-50.01, Vernon's Texas Civil Statutes); and the sale
22-1 of any securities issued by any farmers' cooperative society
22-2 organized under Chapter 51, Agriculture Code, or the predecessor of
22-3 that law (Article 2514 et seq., Revised Statutes). Provided,
22-4 however, this exemption shall not be applicable to agents [and
22-5 salesmen] of any farmers' cooperative marketing association, mutual
22-6 loan corporation, cooperative association, or farmers' cooperative
22-7 society when the sale of such securities is made to non-members, or
22-8 when the sale of such securities is made to members or non-members
22-9 and a commission is paid or contracted to be paid to the said
22-10 agents [or salesmen].
22-11 O. The sale by a registered dealer of outstanding
22-12 securities provided that:
22-13 (1) Such securities form no part of an unsold
22-14 allotment to or subscription by such dealer as a participant in the
22-15 distribution of such securities by the issuer thereof; and
22-16 (2) Securities of the same class, of the same
22-17 issuer, are outstanding in the hands of the public; and
22-18 (3) Such securities are offered for sale, in
22-19 good faith, at prices reasonably related to the current market
22-20 price of such securities at the time of such sale; and
22-21 (4) No part of the proceeds of such sale are
22-22 paid directly or indirectly to the issuer of such securities; and
22-23 (5) Such sale is not directly or indirectly for
22-24 the purposes of providing or furthering any scheme to violate or
22-25 evade any provision of this Act; and
22-26 (6) The right to sell or resell such securities
22-27 has not been enjoined by any court of competent jurisdiction in
23-1 this State by proceedings instituted by an officer or agency of
23-2 this State charged with enforcement of this Act; and
23-3 (7) The right to sell such securities has not
23-4 been revoked or suspended by the commissioner under any of the
23-5 provisions of this Act, or, if so, revocation or suspension is not
23-6 in force and effect; and
23-7 (8) At the time of such sale, the issuer of such
23-8 securities shall be a going concern actually engaged in business
23-9 and shall then be neither in an organization stage nor in
23-10 receivership or bankruptcy; and
23-11 (9) Such securities or other securities of the
23-12 issuer of the same class have been registered by qualification,
23-13 notification or coordination under Section 7 of this Act; or at the
23-14 time of such sale at least the following information about the
23-15 issuer shall appear in a recognized securities manual or in a
23-16 statement, in form and extent acceptable to the commissioner, filed
23-17 with the commissioner by the issuer or by a registered dealer:
23-18 (a) A statement of the issuer's principal
23-19 business;
23-20 (b) A balance sheet as of a date within
23-21 eighteen (18) months of the date of such sale; and
23-22 (c) Profit and loss statements and a
23-23 record of the dividends paid, if any, for a period of not less than
23-24 three (3) years prior to the date of such balance sheet or for the
23-25 period of existence of the issuer, if such period of existence is
23-26 less than three (3) years.
23-27 The term "recognized securities manual" means a
24-1 nationally distributed manual of securities that is approved for
24-2 use hereunder by the Board.
24-3 The Commissioner may issue a stop order or by order
24-4 prohibit, revoke or suspend the exemption under this Subsection O
24-5 with respect to any security if the Commissioner has reasonable
24-6 cause to believe that the plan of business of the issuer of such
24-7 security, the security, or the sale thereof would tend to work a
24-8 fraud or deceit upon any purchaser or purchasers thereof, such
24-9 order to be subject to review in the manner provided by Section 24
24-10 of this Act. Notice of any court injunction enjoining the sale, or
24-11 resale, of any such security, or of an order revoking or suspending
24-12 the exemption under this subdivision with respect to any security,
24-13 shall be delivered or shall be mailed by certified or registered
24-14 mail with return receipt requested, to any dealers believed to be
24-15 selling, or offering for sale, securities of the type referred to
24-16 in the notice; and the prohibitions of (6) and (7) above of this
24-17 Subsection O shall be inapplicable to any dealer until the dealer
24-18 has received actual notice from the commissioner of such revocation
24-19 or suspension.
24-20 The Board may for cause shown revoke or suspend the
24-21 recognition hereunder of any manuals previously approved under this
24-22 Subsection but no such action may be taken unless upon notice and
24-23 opportunity for hearing before the Board or a hearings officer as
24-24 now or hereafter required by law. A judgment sustaining the Board
24-25 in the action complained of shall not bar after one year an
24-26 application by the plaintiff for approval of its manual or manuals
24-27 hereunder, nor shall a judgment in favor of the plaintiff prevent
25-1 the Board from thereafter revoking such recognition for any proper
25-2 cause which may thereafter accrue or be discovered.
25-3 P. The execution by a dealer of an unsolicited order
25-4 for the purchase of securities, where the initial offering of such
25-5 securities has been completed and provided that the dealer acts
25-6 solely as an agent for the purchaser, has no direct or indirect
25-7 interest in the sale or distribution of the security ordered, and
25-8 receives no commission, profit, or other compensation from any
25-9 source other than the purchaser.
25-10 Q. The sales of interests in and under oil, gas or
25-11 mining leases, fees or titles, or contracts relating thereto, where
25-12 (1) the total number of sales by any one owner of interests,
25-13 whether whole, fractional, segregated or undivided in any single
25-14 oil, gas or mineral lease, fee or title, or contract relating
25-15 thereto, shall not exceed thirty-five (35) within a period of
25-16 twelve (12) consecutive months and (2) no use is made of
25-17 advertisement or public solicitation; provided, however, if such
25-18 sale or sales are made by an agent for such owner or owners, such
25-19 agent shall be licensed pursuant to this Act. No oil, gas or
25-20 mineral unitization or pooling agreement shall be deemed a sale
25-21 under this Act.
25-22 R. The sale by the issuer itself, or by a subsidiary
25-23 of such issuer, of any securities which would be exempt if sold by
25-24 a registered dealer under Section 6 (other than Section 6E) of this
25-25 Act.
25-26 S. The sale by or through a registered dealer of any
25-27 option if at the time of the sale of the option:
26-1 (1) the performance of the terms of the option
26-2 is guaranteed by any broker-dealer registered under the federal
26-3 Securities Exchange Act of 1934, as amended, which guaranty and
26-4 broker-dealer are in compliance with such requirements or
26-5 regulations as may be approved or adopted by the board;
26-6 (2) the option is not sold by or for the benefit
26-7 of the issuer of the security which may be purchased or sold upon
26-8 exercise of the option;
26-9 (3) the security which may be purchased or sold
26-10 upon exercise of the option is either (a) exempted under
26-11 Subsection F of Section 6 of this Act or (b) quoted on the NASDAQ
26-12 stock market [National Association of Securities Dealers Automated
26-13 Quotation system] and meets the requirements of Paragraphs (1),
26-14 (6), (7), and (8) of Subsection O of Section 5 of this Act; and
26-15 (4) such sale is not directly or indirectly for
26-16 the purposes of providing or furthering any scheme to violate or
26-17 evade any provisions of this Act.
26-18 For purposes of this subsection the term "option" shall
26-19 mean and include any put, call, straddle, or other option or
26-20 privilege of buying or selling a specified number of securities at
26-21 a specified price from or to another person, without being bound to
26-22 do so, on or prior to a specified date, but such term shall not
26-23 include any option or privilege which by its terms may terminate
26-24 prior to such specified date upon the occurrence of a specified
26-25 event.
26-26 T. Such other transactions or conditions as the board
26-27 by rule, regulation, or order may define or prescribe,
27-1 conditionally or unconditionally.
27-2 SECTION 2.03. Section 6, The Securities Act (Article 581-6,
27-3 Vernon's Texas Civil Statutes), is amended to read as follows:
27-4 Sec. 6. EXEMPT SECURITIES. Except as hereinafter in this Act
27-5 expressly provided, the provisions of this Act shall not apply to
27-6 any of the following securities when offered for sale, or sold, or
27-7 dealt in by a registered dealer or agent [salesman] of a registered
27-8 dealer:
27-9 D. Any security issued or guaranteed either as to
27-10 principal, interest, or dividend, by a corporation owning or
27-11 operating a railroad or any other public service utility;
27-12 provided, that such corporation is subject to regulation or
27-13 supervision either as to its rates and charges or as to the issue
27-14 of its own securities by the Railroad Commission of Texas, or by a
27-15 public commission, agency, board or officers of the Government of
27-16 the United States, or of any territory or insular possession
27-17 thereof, or of any state or municipal corporation, or of the
27-18 District of Columbia, or of the Dominion of Canada, or any province
27-19 thereof; also equipment trust certificates or equipment notes or
27-20 bonds based on chattel mortgages, leases or agreements for
27-21 conditional sale of cars, motive power or other rolling stock
27-22 mortgages, leased or sold to or furnished for the use of or upon a
27-23 railroad or other public service utility corporation, provided that
27-24 such corporation is subject to regulation or supervision as above;
27-25 or equipment trust certificates, or equipment notes or bonds where
27-26 the ownership or title of such equipment is pledged or retained in
27-27 accordance with the provisions of the laws of the United States, or
28-1 of any state, territory or insular possession thereof, or of the
28-2 District of Columbia, or the Dominion of Canada, or any province
28-3 thereof, to secure the payment of such equipment trust
28-4 certificates, bonds or notes.
28-5 E. Any security issued and sold by a domestic
28-6 corporation without capital stock and not organized and not engaged
28-7 in business for profit.
28-8 F. Securities which at the time of sale have been
28-9 fully listed upon the American Stock Exchange, the Boston Stock
28-10 Exchange, the Chicago [Midwest] Stock Exchange or the New York
28-11 Stock Exchange, have been designated or approved for designation on
28-12 notice of issuance on the national market system of the NASDAQ
28-13 stock market [National Association of Securities Dealers Automated
28-14 Quotation National Market System], or have been fully listed upon
28-15 any recognized and responsible stock exchange approved by the
28-16 Commissioner as hereinafter in this section provided, and also all
28-17 securities senior to, or if of the same issues, upon a parity with,
28-18 any securities so listed or designated or represented by
28-19 subscription rights which have been so listed or designated, or
28-20 evidence of indebtedness guaranteed by any company, any stock of
28-21 which is so listed or designated, such securities to be exempt only
28-22 so long as the exchange upon which such securities are so listed
28-23 remains approved under the provisions of this Section. Application
28-24 for approval by the Commissioner may be made by any organized stock
28-25 exchange in such manner and upon such forms as may be prescribed by
28-26 the Commissioner, but no approval of any exchange shall be given
28-27 unless the facts and data supplied with the application shall be
29-1 found to establish:
29-2 (1) That the requirements for the listing of
29-3 securities upon the exchange so seeking approval are such as to
29-4 effect reasonable protection to the public;
29-5 (2) That the governing constitution, by-laws or
29-6 regulations of such exchange shall require:
29-7 1st: An adequate examination into the
29-8 affairs of the issuer of the securities which are to be listed
29-9 before permitting trading therein;
29-10 2nd: That the issuer of such securities,
29-11 so long as they be listed, shall periodically prepare, make public
29-12 and furnish promptly to the exchange, appropriate financial,
29-13 income, and profit and loss statements;
29-14 3rd: Securities listed and traded in on
29-15 such exchange to be restricted to those of ascertained, sound asset
29-16 or income value;
29-17 4th: A reasonable surveillance of its
29-18 members, including a requirement for periodical financial
29-19 statements and a determination of the financial responsibility of
29-20 its members and the right and obligation in the governing body of
29-21 such exchange to suspend or expel any member found to be
29-22 financially embarrassed or irresponsible or found to have been
29-23 guilty of misconduct in his business dealings, or conduct
29-24 prejudicial of the rights and interests of his customers;
29-25 The approval of any such exchange by the Commissioner
29-26 shall be made only after a reasonable investigation and hearing,
29-27 and shall be by a written order of approval upon a finding of fact
30-1 substantially in accordance with the requirements hereinabove
30-2 provided. The Commissioner, upon ten (10) days notice and hearing,
30-3 shall have power at any time to withdraw approval theretofore
30-4 granted by him to any such stock exchange which does not at the
30-5 time of hearing meet the standards of approval under this Act, and
30-6 thereupon securities so listed upon such exchange shall be no
30-7 longer entitled to the benefit of such exemption except upon the
30-8 further order of said Commissioner approving such exchange.
30-9 By the same procedure set out in the preceding
30-10 paragraph with respect to exchanges approved by the Commissioner,
30-11 the Commissioner may suspend the exempt status of any trading
30-12 system exempted by the Legislature on or after January 1, 1989, if
30-13 that system does not at the time of hearing meet the applicable
30-14 standards for approval of exchanges prescribed by this Act. The
30-15 suspension has the same effect as the removal of approval of an
30-16 exchange. The suspension remains in effect until the Commissioner
30-17 by order determines that the trading system has corrected the
30-18 deficiency or deficiencies on which the suspension was based and
30-19 maintains standards and procedures that provide reasonable
30-20 protection to the public.
30-21 H. Any commercial paper that arises out of a current
30-22 transaction or the proceeds of which have been or are to be used
30-23 for current transactions, and that evidences an obligation to pay
30-24 cash within nine months of the date of issuance, exclusive of days
30-25 of grace, or any renewal of such paper that is likewise limited, or
30-26 any guarantee of such paper or of any such renewal.
30-27 I. Notes, bonds, or other evidence of indebtedness or
31-1 certificates of ownership which are equally and proportionately
31-2 secured without reference of priority of one over another, and
31-3 which, by the terms of the instrument creating the lien, shall
31-4 continue to be so secured by the deposit with a trustee of
31-5 recognized responsibility approved by the Commissioner of any of
31-6 the securities specified in Subsection M of Section 5 or Subsection
31-7 D of Section 6; such deposited securities, if of the classes
31-8 described in Subsection M of Section 5, having an aggregate par
31-9 value of not less than one hundred and ten per cent (110%) of the
31-10 par value of the securities thereby secured, and if of class
31-11 specified in Subsection D of Section 6, having an aggregate par
31-12 value of not less than one hundred and twenty five per cent (125%)
31-13 of the par value of the securities thereby secured.
31-14 J. Notes, bonds or other evidence of indebtedness of
31-15 religious, charitable or benevolent corporations.
31-16 SECTION 2.04. Subsection A, Section 7, The Securities Act
31-17 (Article 581-7, Vernon's Texas Civil Statutes), is amended to read
31-18 as follows:
31-19 A. Qualification of Securities. (1) No dealer or [,] agent
31-20 [or salesman] shall sell or offer for sale any securities issued
31-21 after September 6, 1955, except those which shall have been
31-22 registered by Notification under subsection B or by Coordination
31-23 under subsection C of this Section 7 and except those which come
31-24 within the classes enumerated in Section 5 or Section 6 of this
31-25 Act, until the issuer of such securities or a dealer registered
31-26 under the provisions of this Act shall have been granted a permit
31-27 by the Commissioner; and no such permit shall be granted by the
32-1 Commissioner until the issuer of such securities or a dealer
32-2 registered under the provisions of this Act shall have filed with
32-3 the Commissioner a sworn statement verified under the oath of an
32-4 executive officer or partner of the issuer, or of such registered
32-5 dealer, and attested by the secretary or partner thereof, setting
32-6 forth the following information:
32-7 a. The names, residences and post office
32-8 addresses of the officers and directors of the company;
32-9 b. The location of its principal office and of
32-10 all branch offices in this State, if any;
32-11 c. A copy of its articles of incorporation or
32-12 partnership or association, as the case may be, and of any
32-13 amendments thereto, if any; if a corporation, a copy of all minutes
32-14 of any proceedings of its directors, stockholders or members
32-15 relating to or affecting the issue of said security; if a
32-16 corporation, a copy of its bylaws and of any amendments thereto;
32-17 if a trustee, a copy of all instruments by which the trust is
32-18 created and in which it is accepted, acknowledged or declared;
32-19 d. A statement showing the amount of capital
32-20 stock, if any, and if no capital stock, the amount of capital of
32-21 the issuer that is contemplated to be employed; the number of
32-22 shares into which such stock is divided, or if not divided into
32-23 shares of stock, what division is to be made or is contemplated;
32-24 the par value of each share, or if no par stock, the price at which
32-25 such security is proposed to be sold; the promotional fees or
32-26 commissions to be paid for the sale of same, including any and all
32-27 compensations of every nature that are in any way to be allowed the
33-1 promoters or allowed for the sale of same; and how such
33-2 compensation is to be paid, whether in cash, securities, service or
33-3 otherwise, or partly of either or both; also, the amount of cash
33-4 to be paid, or securities to be issued, given, transferred or sold
33-5 to promoters for promotion or organization services and expenses,
33-6 and the amount of promotion or organization services and expenses
33-7 which will be assumed or in any way paid by the issuer;
33-8 e. Copies of certificates of the stock and all
33-9 other securities to be sold, or offered for sale, together with
33-10 application blanks therefor; a copy of any contract it proposes to
33-11 make concerning such security; a copy of any prospectus or
33-12 advertisement or other description of security prepared by or for
33-13 it for distribution or publication;
33-14 f. 1. A detailed statement prepared in
33-15 accordance with generally accepted auditing standards and
33-16 procedures and generally accepted accounting principles, showing
33-17 all the assets and all the liabilities of the issuer, said
33-18 statement to reflect the financial condition of the issuer on a day
33-19 not more than ninety (90) days prior to the date such statement is
33-20 filed. Such statement shall list all assets in detail and shall
33-21 show how the value of such assets was determined, that is, whether
33-22 the value set forth in said statement represents the actual cost in
33-23 money of such assets, or whether such value represents their
33-24 present market value, or some other value than the actual cost in
33-25 money, and shall show the present actual value of said assets;
33-26 also, whether the value set forth in the statement is greater or
33-27 less than the actual cost value in money and greater or less than
34-1 the present market value of such assets. If any of the assets
34-2 consist of real estate, then said statement shall show the amount
34-3 for which said real estate is rendered for State and county taxes,
34-4 or assessed for taxes. If any such assets listed shall consist of
34-5 anything other than cash and real estate, same shall be set out in
34-6 detail so as to give the Commissioner the fullest possible
34-7 information concerning same, and the Commissioner shall have the
34-8 power to require the filing of such additional information as the
34-9 Commissioner may deem necessary to determine whether or not the
34-10 true value of said assets are reflected in the statement filed.
34-11 Should any of the assets listed in said statement be subject to any
34-12 repurchase agreement, or any other agreement of like character, by
34-13 the terms of which the absolute ownership of, or title to said
34-14 assets is qualified or limited in any way, then the terms and
34-15 conditions of said agreement by which the absolute ownership of, or
34-16 title to said assets is qualified or limited, as well as the amount
34-17 and character of the assets subject thereto shall be fully stated.
34-18 Said statement shall list all current liabilities, that is, all
34-19 liabilities which will mature and become due within one year from
34-20 the date of such application, and shall list separately from such
34-21 current liabilities, all other liabilities, contingent or
34-22 otherwise, showing the amount of those which are secured by
34-23 mortgage or otherwise, the assets of the issuer which are subject
34-24 to such mortgage, and the dates of maturity of any such mortgage
34-25 indebtedness. Such application shall also include a detailed
34-26 income statement, prepared in accordance with generally accepted
34-27 auditing standards and procedures and generally accepted accounting
35-1 principles, which shall cover the last three (3) years' operations
35-2 of the issuer, if such issuer has been in operation for three (3)
35-3 years, but if not, said income statement shall cover the time that
35-4 said issuer has been operating. If said issuer has not been
35-5 operating, but is taking over a concern of any kind which has been
35-6 previously operating, an income statement showing the operations of
35-7 the concern thus taken over for a period of the last three (3)
35-8 years next preceding the taking over of said concern shall be
35-9 included in said statement; said income statement shall clearly
35-10 reflect the amount of net income or net loss incurred during each
35-11 of the years shown.
35-12 2. The financial statements required in
35-13 subparagraph (1) of this paragraph for a small business issuer, as
35-14 defined by Board rule, may be reviewed by an independent certified
35-15 public accountant in accordance with the Statements on Standards
35-16 for Accounting and Review Services promulgated by the American
35-17 Institute of Certified Public Accountants in lieu of being audited
35-18 and certified, provided that the small business issuer otherwise
35-19 meets all of the requirements that the Board by rule, regulation,
35-20 or order may prescribe, conditionally or unconditionally.
35-21 SECTION 2.05. Section 8, The Securities Act (Article 581-8,
35-22 Vernon's Texas Civil Statutes), is amended to read as follows:
35-23 Sec. 8. CONSENT TO SERVICE. Unless the Board by rule
35-24 otherwise specifies, any application filed or notice filing
35-25 submitted by an issuer, or by a dealer or investment adviser who
35-26 [will offer such securities for sale as the agent of the issuer,
35-27 and the issuer] is organized under the laws of any other state,
36-1 territory, or government, or domiciled in any other state than
36-2 Texas, shall contain a provision that appoints [written instrument
36-3 appointing] the Commissioner the issuer's, dealer's, or investment
36-4 adviser's true and lawful attorney upon whom all process may be
36-5 served in any action or proceedings against such issuer, dealer, or
36-6 investment adviser arising out of any transaction subject to this
36-7 Act with the same effect as if such issuer, dealer, or investment
36-8 adviser were organized or created under the laws of this state and
36-9 had been lawfully served with process therein. The provision [Such
36-10 instrument] shall be duly executed by an authorized agent of the
36-11 issuer, dealer, or investment adviser [under proper resolution or
36-12 authority]. Whenever the Commissioner shall have been served with
36-13 any process as is herein provided, it shall be the duty of the
36-14 Commissioner to forward same by United States mail to the last
36-15 known address of such issuer, dealer, or investment adviser.
36-16 SECTION 2.06. Subsection C, Section 10, The Securities Act
36-17 (Article 581-10, Vernon's Texas Civil Statutes), is amended to read
36-18 as follows:
36-19 C. Use of Permit to Aid Sale of Securities Prohibited. It
36-20 shall be unlawful for any dealer, [or] issuer, or agent [or
36-21 salesman,] to use a permit authorizing the issuance of securities
36-22 in connection with any sale or effort to sell any security.
36-23 SECTION 2.07. Section 11, The Securities Act (Article 581-11,
36-24 Vernon's Texas Civil Statutes), is amended to read as follows:
36-25 Sec. 11. PAPERS FILED WITH COMMISSIONER; RECORDS OPEN TO
36-26 INSPECTION. All information, papers, documents, instruments and
36-27 affidavits required by this Act to be filed with the Commissioner
37-1 shall be deemed public records of this state, and shall be open to
37-2 the inspection and examination of any purchaser or prospective
37-3 purchaser of said securities or the agent or representative of such
37-4 purchaser or prospective purchaser; and the Commissioner shall give
37-5 out to any such purchaser or prospective purchaser or his agent or
37-6 representative any information required to be filed with him under
37-7 the provisions of this section, or any other part of this Act, and
37-8 shall furnish any such purchaser, prospective purchaser, or his
37-9 agent or representative requesting it, certified copies of any and
37-10 all papers, documents, instruments and affidavits filed with him
37-11 under the provisions of this section or of any part of this Act.
37-12 The Commissioner shall maintain a record, which shall be open for
37-13 public inspection, upon which shall be entered the names and
37-14 addresses of all registered dealers, registered agents, registered
37-15 investment advisers, registered investment adviser representatives,
37-16 and persons who have submitted a notice filing under this Act, [and
37-17 salesmen] and all orders of the Commissioner denying, suspending or
37-18 revoking registration. This section does not affect information
37-19 considered confidential by Section 13-1 or 28 of this Act or other
37-20 law.
37-21 SECTION 2.08. Section 12, The Securities Act (Article 581-12,
37-22 Vernon's Texas Civil Statutes), is amended to read as follows:
37-23 Sec. 12. REGISTRATION OF PERSONS SELLING SECURITIES OR
37-24 RENDERING INVESTMENT ADVICE. A. Except as provided in Section 5 of
37-25 this Act, no person, firm, corporation or dealer shall, directly or
37-26 through agents [or salesmen], offer for sale, sell or make a sale
37-27 of any securities in this state without first being registered as
38-1 in this Act provided. No [salesman or] agent shall, in behalf of
38-2 any dealer, sell, offer for sale, or make sale of any securities
38-3 within the state unless registered as an [a salesman or] agent for
38-4 that particular [of a] registered dealer under the provisions of
38-5 this Act.
38-6 B. Except as provided by Section 5 of this Act, a person may
38-7 not, directly or through an investment adviser representative,
38-8 render services as an investment adviser in this state unless the
38-9 person is registered under this Act, submits a notice filing as
38-10 provided by Section 12-1 of this Act, or is otherwise exempt under
38-11 this Act. A person may not act or render services as an investment
38-12 adviser representative for a certain investment adviser in this
38-13 state unless the person is registered or submits a notice filing as
38-14 an investment adviser representative for that particular investment
38-15 adviser as provided in Section 18 or 12-1 of this Act.
38-16 C. The Board may adopt rules and regulations exempting
38-17 certain classes of persons from the dealer, [and] agent, investment
38-18 adviser, and investment adviser representative registration
38-19 requirements, or providing conditional exemptions from
38-20 registration, if the Board determines that such rules and
38-21 regulations are consistent with the purposes of this Act.
38-22 SECTION 2.09. The Securities Act (Article 581-1 et seq.,
38-23 Vernon's Texas Civil Statutes) is amended by adding Section 12-1 to
38-24 read as follows:
38-25 Sec. 12-1. NOTICE FILING FOR FEDERAL COVERED INVESTMENT
38-26 ADVISERS AND REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
38-27 ADVISERS. A. This section does not apply to an investment adviser
39-1 or investment adviser representative that is exempt from
39-2 registration under this Act or Board rule.
39-3 B. The Board by rule shall authorize a federal covered
39-4 investment adviser or a representative of a federal covered
39-5 investment adviser to engage in rendering services as an investment
39-6 adviser in this state on submission to and receipt by the
39-7 Commissioner of:
39-8 (1) a notice filing on the form and containing the
39-9 information prescribed by the Commissioner and, if applicable, a
39-10 consent to service appointing the Commissioner as the adviser's
39-11 agent for service of process as required by Section 8 of this Act;
39-12 and
39-13 (2) a fee in the amount determined under Sections 35
39-14 and 41 of this Act.
39-15 C. After the notice filing fee is paid and all the
39-16 requirements for a notice filing under Subsection B of this section
39-17 are met, a notice filing submitted under this section takes effect
39-18 and is valid for the remainder of the calendar year. A federal
39-19 covered investment adviser or federal covered investment adviser
39-20 representative may renew a notice filing on or before its
39-21 expiration date on submission to and receipt by the Commissioner
39-22 of:
39-23 (1) a renewal notice filing; and
39-24 (2) a renewal fee in the amount determined under
39-25 Sections 35 and 41 of this Act.
39-26 SECTION 2.10. Section 13, The Securities Act (Article 581-13,
39-27 Vernon's Texas Civil Statutes), is amended to read as follows:
40-1 Sec. 13. METHOD AND CONDITION OF REGISTRATION REQUIRED FOR
40-2 DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER
40-3 REPRESENTATIVE [OF EACH DEALER AND EACH AGENT OR SALESMAN OF EACH
40-4 DEALER]. A. A dealer or investment adviser to be registered must
40-5 submit a sworn application therefor to the Commissioner, which
40-6 shall be in such form as the Commissioner may determine and which
40-7 shall state:
40-8 (1) The principal place of business of the applicant
40-9 wherever situated;
40-10 (2) The location of the principal place of business
40-11 and all branch offices in this state, if any;
40-12 (3) The name or style of doing business and the
40-13 address of the applicant [dealer];
40-14 (4) The names, residences and the business addresses
40-15 of all persons interested in the business as principal, officer,
40-16 director or managing agent, specified as to each his capacity and
40-17 title; and
40-18 (5) The general plan and character of business of such
40-19 applicant and the length of time during and the places at which the
40-20 applicant [dealer] has been engaged in the business.
40-21 B. An [Such] application filed by a dealer or investment
40-22 adviser shall also contain such additional information as to the
40-23 applicant's previous history, record, associations and present
40-24 financial condition as may be required by the Commissioner, or as
40-25 is necessary to enable the Commissioner to determine whether the
40-26 sale of any securities proposed to be issued or dealt in by such
40-27 applicant would result in fraud.
41-1 C. Each application shall be accompanied by certificates or
41-2 other evidences satisfactory to the Commissioner establishing the
41-3 good reputation of the applicant, his directors, officers,
41-4 copartners or principals.
41-5 D. The Commissioner shall require as a condition of
41-6 registration for all registrations granted after the effective date
41-7 of this Subsection D that the applicant (and, in the case of a
41-8 corporation or partnership, the officers, directors or partners to
41-9 be licensed by the applicant) pass successfully a written
41-10 examination to determine the applicant's qualifications and
41-11 competency to engage in the business of dealing in and selling
41-12 securities as a dealer or agent [as a salesman], or rendering
41-13 services as an investment adviser or investment adviser
41-14 representative. This condition may be waived as to any applicant
41-15 or class of applicants by action of the State Securities Board.
41-16 E. Not later than the 30th day after the date a person takes
41-17 a registration [day on which an] examination [is administered]
41-18 under this Act, the Board shall notify the person [each examinee]
41-19 of the results of the examination. If the [However, if an]
41-20 examination is graded or reviewed by a [national] testing service:
41-21 (1) [,] the Board shall notify the person [examinees]
41-22 of the results of the examination not later than the 14th day after
41-23 the date [day on which] the Board receives the results from the
41-24 testing service; and
41-25 (2) if [. If the] notice of the examination results
41-26 will be delayed for longer than 90 [ninety (90)] days after the
41-27 examination date, the Board shall notify the person [examinee] of
42-1 the reason for the delay before the 90th day.
42-2 F. The Board may require a testing service to notify a
42-3 person of the results of the person's examination. If requested in
42-4 writing by a person who fails a registration [an] examination
42-5 administered under this Act, the Board shall furnish the person
42-6 with an analysis of the person's performance on the examination.
42-7 G. If the applicant is a corporation organized under the
42-8 laws of any other state or territory or government or shall have
42-9 its principal place of business therein, it shall accompany the
42-10 application with a copy of its Articles of Incorporation and all
42-11 amendments thereto, certified by the proper officer of such state
42-12 or government or of the corporation, and its regulations and by
42-13 laws.
42-14 H. If a limited partnership, either a copy of its Articles
42-15 of Copartnership or a verified statement of the plan of doing
42-16 business.
42-17 I. If an unincorporated association or organization under
42-18 the laws of any other state, territory or government, or having its
42-19 principal place of business therein, a copy of its Articles of
42-20 Association, Trust Agreement or other form of organization.
42-21 J. It shall be the duty of the Commissioner to prepare a
42-22 proper form to be used by the applicant under the terms of this
42-23 Section, and the Commissioner shall furnish copies thereof to all
42-24 persons desiring to make application to be registered as a dealer
42-25 or investment adviser.
42-26 K. The Commissioner may accept some or all of the
42-27 examinations administered by securities self-regulatory
43-1 organizations [the National Association of Securities Dealers] to
43-2 fulfill the examination requirements of Subsection D.
43-3 SECTION 2.11. Section 15, The Securities Act (Article 581-15,
43-4 Vernon's Texas Civil Statutes), is amended to read as follows:
43-5 Sec. 15. ISSUANCE OF REGISTRATION CERTIFICATES TO DEALERS
43-6 AND INVESTMENT ADVISERS. If the Commissioner is satisfied that the
43-7 applicant for a dealer's or investment adviser's certificate of
43-8 registration has complied with the requirements of the Act above,
43-9 that the applicant has filed a written consent to service as and
43-10 when required by Section 8 [16] of this Act, and upon the payment
43-11 of the fees required by Section 35 of this Act, the Commissioner
43-12 shall register the applicant and issue to it or him a registration
43-13 certificate, stating the principal place of business and address of
43-14 the dealer or investment adviser, the names and business addresses
43-15 of all persons interested in the business as principals, officers,
43-16 directors or managing agents, and the fact that the dealer or
43-17 investment adviser has been registered for a current calendar year
43-18 as a dealer in securities or as an investment adviser. Pending
43-19 final disposition of an application, the Commissioner may, for
43-20 special cause shown, grant temporary permission, revocable at any
43-21 time and subject to such terms and conditions as the Commissioner
43-22 may prescribe, to transact business as a dealer or investment
43-23 adviser under this Act. Any dealer or investment adviser acting
43-24 under such a temporary permission, shall be considered a registered
43-25 dealer or investment adviser for all purposes of this Act.
43-26 SECTION 2.12. Section 17, The Securities Act (Article 581-17,
43-27 Vernon's Texas Civil Statutes), is amended to read as follows:
44-1 Sec. 17. FORM OF CERTIFICATES TO DEALERS AND INVESTMENT
44-2 ADVISERS. The certificate shall be in such form as the Commissioner
44-3 may determine. Any changes in the personnel of a partnership or in
44-4 the principals, officers, directors or managing agents of any
44-5 dealer or investment adviser shall be immediately certified under
44-6 oath to the Commissioner and any change in the certificate
44-7 necessitated thereby may be made at any time, upon written
44-8 application setting forth the fact necessitating the change. Upon
44-9 the issue of the amended certificates, the original certificate and
44-10 the certified copies thereof outstanding shall be promptly
44-11 surrendered to the Commissioner.
44-12 SECTION 2.13. Section 18, The Securities Act (Article 581-18,
44-13 Vernon's Texas Civil Statutes), is amended to read as follows:
44-14 Sec. 18. REGISTRATION OF AGENTS [OR SALESMEN] OF DEALERS OR
44-15 OF REPRESENTATIVES OF INVESTMENT ADVISERS. Upon written application
44-16 by a registered dealer or investment adviser, and upon satisfactory
44-17 compliance with the requirements of the Act above, the Commissioner
44-18 shall register as an agent [agents or salesmen] of such dealer or
44-19 as a representative of the investment adviser such persons as the
44-20 dealer or investment adviser may request. The application shall be
44-21 in such form as the Commissioner may prescribe and shall state the
44-22 residences and addresses of the persons whose registration is
44-23 requested, together with such information as to such agent's or
44-24 investment adviser representative's [salesman's] previous history,
44-25 record and association as may be required by the Commissioner.
44-26 Such application shall also be signed and sworn to by the agent or
44-27 investment adviser representative [salesman] for whom registration
45-1 is requested. The Commissioner shall issue to such dealer or
45-2 investment adviser, to be retained by such dealer or investment
45-3 adviser for each person so registered, evidence of registration
45-4 stating the person's name, the address of the dealer or investment
45-5 adviser, and the fact that the person is registered for the current
45-6 calendar year as an agent or investment adviser representative
45-7 [salesman] of the dealer or investment adviser, as appropriate.
45-8 The evidence of registration shall be in such form as the
45-9 Commissioner shall determine. Upon application by the dealer or
45-10 the investment adviser, the registration of any agent or investment
45-11 adviser representative [salesman] shall be cancelled.
45-12 SECTION 2.14. Subsection D, Section 19, The Securities Act
45-13 (Article 581-19, Vernon's Texas Civil Statutes), is amended to
45-14 read as follows:
45-15 D. The Board may recognize, prepare, or administer
45-16 continuing education programs for a person who is registered under
45-17 this Act [dealers, salesmen, or agents]. If participation is
45-18 required by the Board as a condition of maintaining the certificate
45-19 or evidence of registration, a person who is registered under this
45-20 Act must participate in the continuing education programs
45-21 [Participation in the programs is voluntary].
45-22 SECTION 2.15. Section 20, The Securities Act (Article 581-20,
45-23 Vernon's Texas Civil Statutes), is amended to read as follows:
45-24 Sec. 20. DISPLAY OR ADVERTISEMENT OF FACT OF REGISTRATION
45-25 UNLAWFUL. It shall be unlawful for any dealer, agent, investment
45-26 adviser, or investment adviser representative [salesman] to use the
45-27 fact of his registry, by public display or advertisement, except as
46-1 hereinafter expressly provided, for the registration certificate or
46-2 evidence of registration or any certified copy thereof, in
46-3 connection with any sale or effort to sell any security or any
46-4 rendering of services as an investment adviser.
46-5 SECTION 2.16. Section 21, The Securities Act (Article 581-21,
46-6 Vernon's Texas Civil Statutes), is amended to read as follows:
46-7 Sec. 21. POSTING REGISTRATION CERTIFICATES [OF AUTHORITY].
46-8 Immediately upon receipt of the dealer's or investment adviser's
46-9 registration certificate issued pursuant to the authority of this
46-10 Act, the dealer or investment adviser named therein shall cause
46-11 such certificate to be posted and at all times conspicuously
46-12 displayed in such dealer's or investment adviser's principal place
46-13 of business, if one is maintained in this state, and shall likewise
46-14 forthwith cause a duplicate of such certificate to be posted and at
46-15 all times conspicuously displayed in each branch office located
46-16 within this state.
46-17 SECTION 2.17. Subsections A and B, Section 22, The Securities
46-18 Act (Article 581-22, Vernon's Texas Civil Statutes), are amended to
46-19 read as follows:
46-20 A. Permitted Written, Pictorial, or Broadcast Offers. A
46-21 written or printed offer (including a pictorial demonstration with
46-22 any accompanying script) or a broadcast offer (i.e., an offer
46-23 disseminated by radio, television, recorded telephone presentation,
46-24 or other mass media) to sell a security may be made in this State
46-25 if:
46-26 (1) a copy of the offer is filed with the Commissioner
46-27 within 10 days after the date of its first use in this State; and
47-1 (2) the person making or distributing the offer in
47-2 this State is a registered dealer or a registered agent [salesman]
47-3 of a registered dealer, as required by this Act; and
47-4 (3) either:
47-5 (a) the security is registered under Subsection
47-6 B or C of Section 7 or a permit has been granted for the security
47-7 under Section 10, or
47-8 (b) an application for registration under
47-9 Subsection B or C of Section 7 or for a permit under Section 10 has
47-10 been filed with the Commissioner; and
47-11 (4) if registration has not become effective under
47-12 Subsection B or C of Section 7 or a permit has not been granted
47-13 under Section 10, the offer prominently states on the first page of
47-14 a written or printed offer or as a preface to any pictorial or
47-15 broadcast offer either:
47-16 (a)
47-17 INFORMATIONAL ADVERTISING ONLY.
47-18 THE SECURITIES HEREIN DESCRIBED HAVE NOT BEEN QUALIFIED OR
47-19 REGISTERED FOR SALE IN TEXAS. ANY REPRESENTATION TO THE CONTRARY
47-20 OR CONSUMMATION OF SALE OF THESE SECURITIES IN TEXAS PRIOR TO
47-21 QUALIFICATION OR REGISTRATION THEREOF IS A CRIMINAL OFFENSE.
47-22 or
47-23 (b) other language required by the United States
47-24 Securities and Exchange Commission that in the Commissioner's
47-25 opinion will inform investors that the securities may not yet be
47-26 sold; and
47-27 (5) the person making or distributing the offer in
48-1 this State;
48-2 (a) has not received notice in writing of an
48-3 order prohibiting the offer under Subsection A or B of Section 23,
48-4 or
48-5 (b) has received such notice but the order is no
48-6 longer in effect; and
48-7 (6) payment is not accepted from the offeree and no
48-8 contract of sale is made before registration is effective under
48-9 Subsection B or C of Section 7 or a permit is granted under Section
48-10 10.
48-11 B. Permitted Oral Offers. An oral offer (not broadcast,
48-12 i.e., not disseminated by radio, television, recorded telephone
48-13 presentation, or other mass media) to sell a security may be made
48-14 in this State in person, by telephone, or by other direct
48-15 individual communication if:
48-16 (1) the person making the offer in this State is a
48-17 registered dealer or a registered agent [salesman] of a registered
48-18 dealer, as required by this Act; and
48-19 (2) either:
48-20 (a) the security is registered under Subsection
48-21 B or C of Section 7 or a permit has been granted for the security
48-22 under Section 10, or
48-23 (b) an application for registration under
48-24 Subsection B or C of Section 7 or for a permit under Section 10 has
48-25 been filed with the Commissioner; and
48-26 (3) the person making or distributing the offer in
48-27 this State:
49-1 (a) has not received notice in writing of an
49-2 order prohibiting the offer under Subsection A or B of Section 23,
49-3 or
49-4 (b) has received such notice but the order is no
49-5 longer in effect; and
49-6 (4) payment is not accepted from the offeree and no
49-7 contract of sale is made before registration is effective under
49-8 Subsection B or C of Section 7 or before a permit is granted under
49-9 Section 10.
49-10 SECTION 2.18. Section 26, The Securities Act (Article 581-26,
49-11 Vernon's Texas Civil Statutes), is amended to read as follows:
49-12 Sec. 26. NOTICES BY REGISTERED MAIL. Any notice required by
49-13 this Act shall be sufficient if sent by registered or certified
49-14 mail unless otherwise specified in this Act, addressed to a person
49-15 [the dealer, agent or salesman, as the case may be,] at the address
49-16 designated in any filings submitted by the person to the
49-17 Commissioner or the person's last known address [the application
49-18 for registration]. A [All testimony taken at any hearing before
49-19 the Commissioner shall be reported stenographically and a] full and
49-20 complete record shall be kept of all proceedings had before the
49-21 Commissioner on any hearing or investigation.
49-22 SECTION 2.19. Section 34, The Securities Act (Article 581-34,
49-23 Vernon's Texas Civil Statutes), is amended to read as follows:
49-24 Sec. 34. ACTIONS FOR COMMISSION; ALLEGATIONS AND PROOF OF
49-25 COMPLIANCE. No person or company shall bring or maintain any action
49-26 in the courts of this state for collection of a commission or
49-27 compensation for services rendered in the sale or purchase of
50-1 securities, as that term is defined in this Act, without alleging
50-2 and proving that such person or company was duly registered under
50-3 the provisions of this Act (or duly exempt from such registration
50-4 pursuant to rules adopted under Section 12C [12B] of this Act) and
50-5 the securities so sold were duly registered under the provisions of
50-6 this Act at the time the alleged cause of action arose; provided,
50-7 however, that this section shall not apply to any company or person
50-8 that rendered services in connection with any transaction exempted
50-9 by Section 5 of this Act or by any rule promulgated by the Board
50-10 pursuant to Subsection T of Section 5 of this Act if the company or
50-11 person was not required to be registered by the terms of the
50-12 exemption.
50-13 SECTION 2.20. Section 35, The Securities Act (Article 581-35,
50-14 Vernon's Texas Civil Statutes), is amended to read as follows:
50-15 Sec. 35. FEES. The Commissioner or Board shall charge and
50-16 collect the following fees and shall daily pay all fees received
50-17 into the State Treasury:
50-18 A. For the filing of any original application of a
50-19 dealer or investment adviser or for the submission of a notice
50-20 filing for a federal covered investment adviser, Seventy-five
50-21 Dollars ($75.00), and for the filing of any renewal application of
50-22 a dealer or investment adviser or for the submission of a renewal
50-23 notice filing for a federal covered investment adviser, Forty
50-24 Dollars ($40.00);
50-25 B. For the filing of any original application for each
50-26 agent, officer, or investment adviser representative or for the
50-27 submission of a notice filing for each representative of a federal
51-1 covered investment adviser [salesman], Thirty-five Dollars
51-2 ($35.00), and for the filing of any renewal application for each
51-3 agent, officer, or investment adviser representative or for the
51-4 submission of a renewal notice filing for each representative of a
51-5 federal covered investment adviser [salesman], Twenty Dollars
51-6 ($20.00);
51-7 C. For any filing to amend the registration
51-8 certificate of a dealer or investment adviser or evidence of
51-9 registration of an agent or investment adviser representative [a
51-10 salesman], issue a duplicate certificate or evidence of
51-11 registration, or register a branch office, Twenty-five Dollars
51-12 ($25.00);
51-13 D. For the filing of any original, amended or renewal
51-14 application to sell or dispose of securities, Ten Dollars ($10.00);
51-15 E. For the examination of any original or amended
51-16 application filed under Subsection A, B, or C of Section 7 of this
51-17 Act, regardless of whether the application is denied, abandoned,
51-18 withdrawn, or approved, a fee of one-tenth (1/10) of one percent
51-19 (1%) of the aggregate amount of securities described and proposed
51-20 to be sold to persons located within this state based upon the
51-21 price at which such securities are to be offered to the public;
51-22 F. For certified copies of any papers filed in the
51-23 office of the Commissioner, the Commissioner shall charge such fees
51-24 as are reasonably related to costs; however, in no event shall
51-25 such fees be more than those which the Secretary of State is
51-26 authorized to charge in similar cases;
51-27 G. For the filing of any application for approval of a
52-1 stock exchange so that securities fully listed thereon will be
52-2 exempt, a fee of Ten Thousand Dollars ($10,000.00);
52-3 H. For the filing of a request to take the Texas
52-4 Securities Law Examination, Thirty-five Dollars ($35.00);
52-5 I. For the filing of an initial notice required by the
52-6 Commissioner to claim a secondary trading exemption, a fee of Five
52-7 Hundred Dollars ($500.00), and for the filing of a secondary
52-8 trading exemption renewal notice, a fee of Five Hundred Dollars
52-9 ($500.00);
52-10 J. For the filing of an initial notice required by the
52-11 Commissioner to claim a limited offering exemption, a fee of
52-12 one-tenth (1/10) of one percent (1%) of the aggregate amount of
52-13 securities described as being offered for sale, but in no case more
52-14 than Five Hundred Dollars ($500.00); and
52-15 K. For an interpretation by the Board's general
52-16 counsel of this Act or a rule adopted under this Act, a fee of One
52-17 Hundred Dollars ($100.00), except that an officer or employee of a
52-18 governmental entity and the entity that the officer or employee
52-19 represents are exempt from the fee under this subsection when the
52-20 officer or employee is conducting official business of the entity.
52-21 SECTION 2.21. Section 41(a), The Securities Act (Article
52-22 581-41, Vernon's Texas Civil Statutes), is amended to read as
52-23 follows:
52-24 (a) Each of the following fees imposed by or under another
52-25 section of this Act is increased by $200:
52-26 (1) fee for filing any original application of a
52-27 dealer or investment adviser or for submitting a notice filing for
53-1 a federal covered investment adviser;
53-2 (2) fee for filing any renewal application of a dealer
53-3 or investment adviser or for submitting a renewal notice filing for
53-4 a federal covered investment adviser;
53-5 (3) fee for filing any original application for agent,
53-6 officer, or investment adviser representative or for submitting a
53-7 notice filing for an investment adviser representative of a federal
53-8 covered investment adviser [or salesman]; and
53-9 (4) fee for filing any renewal application for agent,
53-10 officer, or investment adviser representative or for submitting a
53-11 renewal notice filing for an investment adviser representative of a
53-12 federal covered investment adviser [salesman].
53-13 SECTION 2.22. Section 42, The Securities Act (Article 581-42,
53-14 Vernon's Texas Civil Statutes), is amended to read as follows:
53-15 Sec. 42. REDUCED FEES. A. The Board by rule may adopt
53-16 reduced fees, under Sections 35 and 41 of this Act, for original
53-17 and renewal applications of dealers, agents, officers, investment
53-18 advisers, or investment adviser representatives [salesmen] who have
53-19 assumed inactive status as defined by the Board.
53-20 B. The Board by rule may adopt reduced fees, under Sections
53-21 35 and 41 of this Act, as appropriate to accomodate a small
53-22 business [for persons] required by this Act to register in two or
53-23 more of the following capacities:
53-24 (1) dealer;
53-25 (2) agent [or salesman]; [or]
53-26 (3) investment adviser;
53-27 (4) investment adviser representative; or
54-1 (5) officer.
54-2 C. Notwithstanding Sections 35 and 41 of this Act, a person
54-3 shall pay only one fee required under those sections to engage in
54-4 business in this state concurrently for the same person or company
54-5 as:
54-6 (1) a dealer and an investment adviser; or
54-7 (2) an agent and investment adviser representative.
54-8 SECTION 2.23. Subchapter F, Chapter 411, Government Code, is
54-9 amended by adding Section 411.137 to read as follows:
54-10 Sec. 411.137. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION:
54-11 STATE SECURITIES BOARD. (a) The securities commissioner is
54-12 entitled to obtain from the department criminal history record
54-13 information maintained by the department that relates to a person
54-14 who is:
54-15 (1) an applicant for a certificate of registration
54-16 under The Securities Act (Article 581-1 et seq., Vernon's Texas
54-17 Civil Statutes);
54-18 (2) a holder of a certificate of registration under
54-19 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
54-20 Statutes);
54-21 (3) an applicant for employment by the State
54-22 Securities Board; or
54-23 (4) an employee of the State Securities Board.
54-24 (b) Criminal history record information obtained by the
54-25 securities commissioner under this section may not be released by
54-26 any person or agency except on court order, unless the information
54-27 is entered into evidence by the State Securities Board or a court
55-1 at an administrative proceeding or a civil or criminal action under
55-2 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
55-3 Statutes).
55-4 SECTION 2.24. Section 16, The Securities Act (Article 581-16,
55-5 Vernon's Texas Civil Statutes), is repealed.
55-6 SECTION 2.25. The changes in law made by this Act apply only
55-7 to a fee that becomes due on or after the effective date of this
55-8 Act. A fee that becomes due before the effective date of this Act
55-9 is governed by the law in effect on the date the fee is due, and
55-10 the former law is continued in effect for that purpose.
55-11 ARTICLE 3. ENFORCEMENT PROVISIONS
55-12 SECTION 3.01. The Securities Act (Article 581-1 et seq.,
55-13 Vernon's Texas Civil Statutes) is amended by adding Section 13-1 to
55-14 read as follows:
55-15 Sec. 13-1. INSPECTION. A. The Commissioner, without notice,
55-16 may inspect a registered dealer or registered investment adviser as
55-17 necessary to ensure compliance with this Act and Board rules.
55-18 B. The Commissioner, during regular business hours, may:
55-19 (1) enter the business premises of a registered dealer
55-20 or registered investment adviser; and
55-21 (2) examine and copy books and records pertinent to
55-22 the inspection.
55-23 C. During the inspection, the dealer or investment adviser
55-24 shall:
55-25 (1) provide to the Commissioner or the Commissioner's
55-26 authorized representative immediate and complete access to the
55-27 person's office, place of business, files, safe, and any other
56-1 location in which books and records pertinent to the inspection are
56-2 located; and
56-3 (2) allow the Commissioner or the Commissioner's
56-4 authorized representative to make photostatic or electronic copies
56-5 of books or records subject to inspection.
56-6 D. A dealer or investment adviser may not charge a fee for
56-7 copying information under this section.
56-8 E. Information obtained under this section and any
56-9 intra-agency or interagency notes, memoranda, reports, or other
56-10 communications consisting of advice, analyses, opinions, or
56-11 recommendations that are made in connection with the inspection are
56-12 confidential and may not be disclosed to the public or released by
56-13 the Commissioner except to the same extent provided for the release
56-14 or disclosure of confidential documents or other information made
56-15 or obtained in connection with an investigation under Section 28 of
56-16 this Act.
56-17 SECTION 3.02. Section 14, The Securities Act (Article 581-14,
56-18 Vernon's Texas Civil Statutes), is amended to read as follows:
56-19 Sec. 14. DENIAL, SUSPENSION OR REVOCATION OF REGISTRATION AS
56-20 DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER
56-21 REPRESENTATIVE [SALESMAN]. A. The Commissioner may deny, revoke,
56-22 or suspend a registration issued under this Act, place on probation
56-23 a dealer, agent, investment adviser, or investment adviser
56-24 representative [salesman] whose registration has been suspended
56-25 under this Act, or reprimand a person registered under this Act if
56-26 the person:
56-27 (1) has been convicted of any felony;
57-1 (2) has been convicted of any misdemeanor which
57-2 directly relates to the person's securities-related duties and
57-3 responsibilities;
57-4 (3) has engaged in any inequitable practice in the
57-5 sale of securities or in rendering services as an investment
57-6 adviser, or in any fraudulent business practice;
57-7 (4) is a dealer or investment adviser who is
57-8 insolvent;
57-9 (5) meets one of the following criteria:
57-10 (a) is a dealer who is selling or has sold
57-11 securities in this state through an agent [a salesman] other than a
57-12 registered agent;
57-13 (b) is an investment adviser who is engaging or
57-14 has engaged in rendering services as an investment adviser in this
57-15 state through a representative who is not registered to perform
57-16 services for that investment adviser as required by this Act;
57-17 (c) [salesman, or,] is an agent [a salesman] who
57-18 is selling or has sold securities in this state for a dealer,
57-19 issuer or controlling person with knowledge that such dealer,
57-20 issuer or controlling person has not complied with the provisions
57-21 of this Act; or
57-22 (d) is an investment adviser representative who
57-23 is rendering or has rendered services as an investment adviser for
57-24 an investment adviser in this state for whom the representative is
57-25 not or was not registered to represent as required by this Act;
57-26 (6) has violated any of the provisions of this Act or
57-27 a rule of the Board;
58-1 (7) has made any material misrepresentation to the
58-2 Commissioner or Board in connection with any information deemed
58-3 necessary by the Commissioner or Board to determine a dealer's or
58-4 investment adviser's financial responsibility or a dealer's,
58-5 agent's, investment adviser's or investment adviser
58-6 representative's [or salesman's] business repute or qualifications,
58-7 or has refused to furnish any such information requested by the
58-8 Commissioner or Board;
58-9 (8) became registered as a dealer, agent, investment
58-10 adviser, or investment adviser representative [or salesman] after
58-11 August 23, 1963, and has not complied with a condition imposed by
58-12 the Commissioner under Section 13-D;
58-13 (9) is the subject of any of the following orders that
58-14 are currently effective and were issued within the last five years:
58-15 (a) an order by the securities agency or
58-16 administrator of any [another] state, by the financial regulatory
58-17 authority of a foreign country, or by the Securities and Exchange
58-18 Commission, entered after notice and opportunity for hearing,
58-19 denying, suspending, or revoking the person's license as a dealer,
58-20 agent, [salesman, or] investment adviser, or investment adviser
58-21 representative or the substantial equivalent of those terms;
58-22 (b) a suspension or expulsion from membership in
58-23 or association with a member of a self-regulatory organization;
58-24 (c) a United States Postal Service fraud order;
58-25 (d) an order by the securities agency or
58-26 administrator of any [another] state, the financial regulatory
58-27 authority of a foreign country, the Securities and Exchange
59-1 Commission, or by the Commodity Futures Trading Commission,
59-2 finding, after notice and opportunity for hearing, that the person
59-3 engaged in acts involving fraud, deceit, false statements or
59-4 omissions, or wrongful taking of property;
59-5 (e) an order by the Commodity Futures Trading
59-6 Commission denying, suspending, or revoking registration under the
59-7 Commodity Exchange Act;
59-8 (10) is subject to any order, judgment, or decree
59-9 entered by any court of competent jurisdiction which permanently
59-10 restrains or enjoins such person from engaging in or continuing any
59-11 conduct, action, or practice in connection with any aspect of the
59-12 purchase or sale of securities or the rendering of security
59-13 investment advice; or
59-14 (11) has violated any provision of any order issued by
59-15 the Commissioner or has violated any provision of any undertaking
59-16 or agreement with the Commissioner.
59-17 B. [The Commissioner shall keep an information file about
59-18 each complaint filed with the Commissioner or Board relating to a
59-19 person registered under this Act.]
59-20 [C. If a written complaint is filed with the Commissioner or
59-21 Board relating to a person registered under this Act, the
59-22 Commissioner, at least as frequently as quarterly and until final
59-23 disposition of the complaint, shall notify the parties to the
59-24 complaint of the status of the complaint unless the notice would
59-25 jeopardize an undercover investigation.]
59-26 [D.] If the Commissioner proposes to suspend or revoke a
59-27 person's registration, the person is entitled to a hearing before
60-1 the Commissioner or a hearings officer as now or hereafter required
60-2 by law. Proceedings for the suspension or revocation of a
60-3 registration are governed by Chapter 2001, Government Code.
60-4 C. [E.] This section does not affect the confidentiality of
60-5 investigative records maintained by the Commissioner or Board.
60-6 SECTION 3.03. Section 23, The Securities Act (Article
60-7 581-23, Vernon's Texas Civil Statutes), is amended to read as
60-8 follows:
60-9 Sec. 23. CEASE AND DESIST ORDERS; CEASE PUBLICATION ORDERS;
60-10 LIST OF SECURITIES OFFERED.
60-11 Anything in this Act to the contrary notwithstanding,
60-12 A. If it appears to the commissioner at any time that the
60-13 sale or proposed sale or method of sale of any securities, whether
60-14 exempt or not, is a fraudulent practice or would not be in
60-15 compliance with this Act or would tend to work a fraud on any
60-16 purchaser thereof or would not be fair, just or equitable to any
60-17 purchaser thereof, the commissioner may hold a hearing on a date
60-18 determined by the commissioner within 30 days after the date of
60-19 receipt of actual notice by, or notice by registered or certified
60-20 mail to the person's last known address is given to, the issuer,
60-21 the registrant, the person on whose behalf such securities are
60-22 being or are to be offered, or any person acting as a dealer or
60-23 agent in violation of this Act. If the commissioner shall
60-24 determine at such hearing that such sale would not be in compliance
60-25 with the Act, is a fraudulent practice, or would tend to work a
60-26 fraud on any purchaser thereof or would not be fair, just or
60-27 equitable to any purchaser thereof, the commissioner may issue a
61-1 written cease and desist order, prohibiting or suspending the sale
61-2 of such securities or denying or revoking the registration of such
61-3 securities, [or] prohibiting an unregistered person from acting as
61-4 a dealer or an agent, or prohibiting the fraudulent conduct. No
61-5 dealer or[,] agent [or salesman] shall thereafter knowingly sell or
61-6 offer for sale any security named in such cease and desist order.
61-7 B. If it appears to the Commissioner at any time that an
61-8 investment adviser or investment adviser representative is engaging
61-9 or is likely to engage in fraud or a fraudulent practice with
61-10 respect to rendering services as an investment adviser or
61-11 investment adviser representative or that a person is acting as an
61-12 investment adviser or investment adviser representative in
61-13 violation of this Act, the Commissioner may hold a hearing not
61-14 later than the 30th day after the date on which the person receives
61-15 actual notice or is provided notice by registered or certified
61-16 mail, return receipt requested, to the person's last known address.
61-17 After the hearing, the Commissioner shall issue or decline to issue
61-18 a cease and desist order. An order issued under this subsection
61-19 must:
61-20 (1) require the investment adviser or investment
61-21 adviser representative to immediately cease and desist from the
61-22 fraudulent conduct; or
61-23 (2) prohibit an unregistered or other unauthorized
61-24 person who is not exempt from the registration or notice filing
61-25 requirements of this Act from acting as an investment adviser or
61-26 investment adviser representative in violation of this Act.
61-27 C. If it appears to the Commissioner at any time that an
62-1 offer contains any statement that is materially false or misleading
62-2 or is otherwise likely to deceive the public, the Commissioner may
62-3 issue a cease publication order. No person shall make an offer
62-4 prohibited by such cease publication order.
62-5 D. [C.] The commissioner may, in the exercise of reasonable
62-6 discretion hereunder, at any time, require a dealer to file with
62-7 the commissioner a list of securities which he has offered for sale
62-8 or has advertised for sale within this State during the preceding
62-9 six months, or which he is at the time offering for sale or
62-10 advertising, or any portion thereof.
62-11 SECTION 3.04. Subsection A, Section 23-1, The Securities Act
62-12 (Article 581-23-1 et seq., Vernon's Texas Civil Statutes), is
62-13 amended to read as follows:
62-14 A. After giving notice and opportunity for a hearing, the
62-15 Commissioner may issue an order which assesses an administrative
62-16 fine against any person or company found to have:
62-17 (1) engaged in fraud or a fraudulent practice in
62-18 connection with:
62-19 (A) the offer for sale or sale of a security; or
62-20 (B) the rendering of services as an investment
62-21 adviser or investment adviser representative;
62-22 (2) made an offer containing a statement that is
62-23 materially misleading or is otherwise likely to deceive the public;
62-24 or
62-25 (3) engaged in an act or practice that violates
62-26 [violated any provision of] this Act or a[,] Board rule[,] or
62-27 [Board] order.
63-1 SECTION 3.05. The Securities Act (Article 581-1 et seq.,
63-2 Vernon's Texas Civil Statutes) is amended by adding Section 23-2 to
63-3 read as follows:
63-4 Sec. 23-2. EMERGENCY CEASE AND DESIST ORDER. A. On the
63-5 Commissioner's determination that the conduct, act, or practice
63-6 threatens immediate and irreparable public harm, the Commissioner
63-7 may issue an emergency cease and desist order to a person whom the
63-8 Commissioner reasonably believes:
63-9 (1) is engaging in or is about to engage in fraud or a
63-10 fraudulent practice in connection with:
63-11 (A) the offer for sale or sale of a security; or
63-12 (B) the rendering of services as an investment
63-13 adviser or investment adviser representative;
63-14 (2) has made an offer containing a statement that is
63-15 materially misleading or is otherwise likely to deceive the public;
63-16 or
63-17 (3) is engaging or is about to engage in an act or
63-18 practice that violates this Act or a Board rule.
63-19 B. The order must:
63-20 (1) be sent on issuance to each person affected by the
63-21 order by personal delivery or registered or certified mail, return
63-22 receipt requested, to the person's last known address;
63-23 (2) state the specific charges and require the person
63-24 to immediately cease and desist from the unauthorized activity; and
63-25 (3) contain a notice that a request for hearing may be
63-26 filed under this section.
63-27 C. Unless a person against whom the emergency order is
64-1 directed requests a hearing in writing before the 31st day after
64-2 the date it is served on the person, the emergency order is final
64-3 and nonappealable as to that person. A request for a hearing must:
64-4 (1) be in writing and directed to the Commissioner;
64-5 and
64-6 (2) state the grounds for the request to set aside or
64-7 modify the order.
64-8 D. On receiving a request for a hearing, the Commissioner
64-9 shall serve notice of the time and place of the hearing by personal
64-10 delivery or registered or certified mail, return receipt requested.
64-11 The hearing must be held not later than the 10th day after the date
64-12 the Commissioner receives the request for a hearing unless the
64-13 parties agree to a later hearing date. At the hearing, the
64-14 Commissioner has the burden of proof and must present evidence in
64-15 support of the order.
64-16 E. After the hearing, the Commissioner shall affirm, modify,
64-17 or set aside in whole or part the emergency order. An order
64-18 affirming or modifying the emergency order is immediately final for
64-19 purposes of enforcement and appeal.
64-20 F. An emergency order continues in effect unless the order
64-21 is stayed by the Commissioner. The Commissioner may impose any
64-22 condition before granting a stay of the order.
64-23 SECTION 3.06. Subsection A, Section 24, The Securities Act
64-24 (Article 581-24, Vernon's Texas Civil Statutes), is amended to read
64-25 as follows:
64-26 A. If any person or company should take exception to the
64-27 action of the Commissioner [under Sections 15 or 18,] in failing or
65-1 refusing to register and issue certificate for a dealer or
65-2 investment adviser or evidence of registration for an investment
65-3 adviser representative or agent under Section 15 or 18 of this Act,
65-4 in issuing an order [salesman,] under Section 23 or 23-2 of this
65-5 Act [in issuing an order against the sale of securities or the use
65-6 of materials therein], or in any other particular where this Act
65-7 specifies no other procedure, the complaining party may request a
65-8 hearing before the Commissioner or before a hearings officer as now
65-9 or hereafter required by law.
65-10 SECTION 3.07. Section 25, The Securities Act (Article 581-25,
65-11 Vernon's Texas Civil Statutes), is amended to read as follows:
65-12 Sec. 25. REVOCATION OF REGISTRATION OF ANY DEALER, AGENT,
65-13 INVESTMENT ADVISER, OR INVESTMENT ADVISER REPRESENTATIVE
65-14 [SALESMAN]. The revocation of a dealer's or investment adviser's
65-15 registration shall constitute a revocation of the registration of
65-16 any agent [or salesman] of the dealer or any investment adviser
65-17 representative of the investment adviser and notice of its
65-18 operation on such agent or investment adviser representative
65-19 [salesman] shall be forthwith sent by the Commissioner to each of
65-20 such agents or investment adviser representatives [salesmen]. All
65-21 registrations and evidences of registration revoked shall at once
65-22 be surrendered to the Commissioner upon request.
65-23 SECTION 3.08. Subsections A and B, Section 25-1, The
65-24 Securities Act (Article 581-25-1, Vernon's Texas Civil Statutes),
65-25 are amended to read as follows:
65-26 A. Whenever it shall appear to the commissioner, either upon
65-27 complaint or otherwise, that:
66-1 (1) any person or company acting as a dealer, agent,
66-2 investment adviser, investment adviser representative [salesman],
66-3 or issuer (as defined in Section 4 of this Act), or an affiliate of
66-4 a dealer, agent, investment adviser, investment adviser
66-5 representative [salesman], or issuer, whether or not required to be
66-6 registered by the commissioner as in this Act provided, shall have
66-7 engaged in any act, transaction, practice, or course of business
66-8 declared by Section 32 of this Act to be a fraudulent practice;
66-9 (2) such person or company shall have acted as a
66-10 dealer, agent, investment adviser, investment adviser
66-11 representative [salesman], or issuer or an affiliate of a dealer,
66-12 agent, investment adviser, investment adviser representative
66-13 [salesman], or issuer in connection with such fraudulent practice;
66-14 and
66-15 (3) the appointment of a receiver for such person or
66-16 company, or the assets of such a person or company is necessary in
66-17 order to conserve and protect the assets of such person or company
66-18 for the benefit of customers, security holders, and other actual
66-19 and potential claimants of such person or company the commissioner
66-20 may request the attorney general to bring an action for the
66-21 appointment of a receiver for such person or company or the assets
66-22 of such person or company.
66-23 B. Upon request by the commissioner pursuant to Subsection A
66-24 of this Section 25-1, and if it appears to the attorney general
66-25 that the facts enumerated in Paragraphs (1) through (3) of
66-26 Subsection A of this Section 25-1 exist with respect to any person
66-27 or company, the attorney general may bring an action in the name
67-1 and on behalf of the State of Texas for the appointment of a
67-2 receiver for such person or company. The facts set forth in the
67-3 petition for such relief shall be verified by the commissioner upon
67-4 information and belief. Such action may be brought in a district
67-5 court of any county wherein the fraudulent practice complained of
67-6 has been committed in whole or part, or of any county wherein any
67-7 defendant with respect to whom appointment of a receiver is sought
67-8 has its principal place of business, and such district court shall
67-9 have jurisdiction and venue of such action; this provision shall
67-10 be superior to any other provision of law fixing jurisdiction or
67-11 venue with regard to suits for receivership. In any such action
67-12 the attorney general may apply for and on due showing be entitled
67-13 to have issued the court's subpoena requiring the forthwith
67-14 appearance of any defendant and his employees, investment adviser
67-15 representatives [salesmen], or agents and the production of
67-16 documents, books, and records as may appear necessary for any
67-17 hearing, to testify and give evidence concerning matters relevant
67-18 to the appointment of a receiver.
67-19 SECTION 3.09. Section 28, The Securities Act (Article 581-28,
67-20 Vernon's Texas Civil Statutes), is amended to read as follows:
67-21 Sec. 28. INVESTIGATIONS, INVESTIGATORY MATERIALS, AND
67-22 REGISTRATION RELATED MATERIALS. A. [Subpoenas or Other Process in]
67-23 Investigations by Commissioner. The Commissioner shall conduct
67-24 investigations as the Commissioner considers necessary to prevent
67-25 or detect the violation of this Act or a Board rule or order. For
67-26 this purpose, the Commissioner may require, by subpoena or summons
67-27 issued by the Commissioner, the attendance and testimony of
68-1 witnesses and the production of all [any books, accounts, records,
68-2 papers and correspondence or other] records, whether maintained by
68-3 electronic or other means, relating to any matter which the
68-4 Commissioner has authority by this Act to consider or investigate,
68-5 and[. For this purpose the Commissioner] may sign subpoenas,
68-6 administer oaths and affirmations, examine witnesses and receive
68-7 evidence; provided, however, that all information of every kind
68-8 and nature received in connection with an investigation and all
68-9 internal notes, memoranda, reports, or communications made in
68-10 connection with an investigation [contained therein] shall be
68-11 treated as confidential by the Commissioner and shall not be
68-12 disclosed to the public except under order of court for good cause
68-13 shown. [However, except for good cause the order may not extend to
68-14 a record or communication received from other law enforcement or
68-15 regulatory agencies or to the internal notes, memoranda, reports,
68-16 or communications made in connection with a matter that the
68-17 Commissioner has the authority by this Act to consider or
68-18 investigate.] Nothing in this section shall be interpreted to
68-19 prohibit or limit the publication of rulings or decisions of the
68-20 Commissioner nor shall this limitation apply if disclosure is made,
68-21 in the discretion of the Commissioner, as part of an administrative
68-22 proceeding or a civil or criminal action to enforce this Act [to
68-23 hearings provided for in Sections 24 and 25 of this Act]. In case
68-24 of disobedience of any subpoena, or of the contumacy of any witness
68-25 appearing before the Commissioner, the Commissioner may invoke the
68-26 aid of the District Court within whose jurisdiction any witness may
68-27 be found, and such court may thereupon issue an order requiring the
69-1 person subpoenaed to obey the subpoena or give evidence, or produce
69-2 books, accounts, records, papers, and correspondence touching the
69-3 matter in question. Any failure to obey such order of the court
69-4 may be punished by such court as contempt thereof.
69-5 In the course of an investigation looking to the enforcement
69-6 of this Act, or in connection with the application of a person or
69-7 company for registration or to qualify securities, the Commissioner
69-8 or Deputy Commissioner shall have free access to all records and
69-9 reports of and to any department or agency of the state government.
69-10 In the event, however, that the Commissioner or Deputy Commissioner
69-11 should give out any information which the law makes confidential,
69-12 the affected corporation, firm or person shall have a right of
69-13 action on the official bond of the Commissioner or Deputy for the
69-14 corporation's, firm's, or person's injuries, in a suit brought in
69-15 the name of the state at the relation of the injured party.
69-16 The Commissioner may in any investigation cause the
69-17 deposition of witnesses residing within or without the state to be
69-18 taken in the manner prescribed for depositions in civil actions
69-19 under the laws of Texas.
69-20 Each witness required to attend before the Commissioner shall
69-21 receive a fee, for each day's attendance, in an amount set by Board
69-22 rule. All disbursements made in the payment of such fees shall be
69-23 made in accordance with Board rule and shall be included in, and
69-24 paid in the same manner as is provided for, the payment of other
69-25 expenses incident to the administration and enforcement of this
69-26 Act.
69-27 The sheriff's or constable's fee for serving the subpoena
70-1 shall be the same as those paid the sheriff or constable for
70-2 similar services. The fees, expenses and costs incurred at or in
70-3 connection with any hearing may be imposed by the Commissioner upon
70-4 any party to the record, or may be divided between any and all
70-5 parties to the record in such proportions as the Commissioner may
70-6 determine.
70-7 Any subpoena, summons, or other process issued by the
70-8 Commissioner may be served, at the Commissioner's discretion, by
70-9 the Commissioner, the Commissioner's authorized agent, a sheriff,
70-10 or a constable.
70-11 The Commissioner may, at the Commissioner's discretion,
70-12 disclose any confidential information in the Commissioner's
70-13 possession to any governmental or regulatory authority or
70-14 association of governmental or regulatory authorities approved by
70-15 Board rule[; to any quasi-governmental authority charged with
70-16 overseeing securities activities which is approved by Board rule;]
70-17 or to any receiver appointed under Section 25-1 of this Act. The
70-18 disclosure does not violate any other provision of this Act or
70-19 Chapter 552, Government Code.
70-20 B. Confidentiality of Certain Registration-Related and Other
70-21 Materials. To the extent not already provided for by this Act, any
70-22 intraagency or interagency notes, memoranda, reports, or other
70-23 communications consisting of advice, analyses, opinions, or
70-24 recommendations shall be treated as confidential by the
70-25 Commissioner and shall not be disclosed to the public, except under
70-26 order of court, for good cause shown. The Commissioner may, at
70-27 the Commissioner's discretion, disclose any confidential
71-1 information in the Commissioner's possession to any governmental or
71-2 regulatory authority or association of governmental or regulatory
71-3 authorities approved by Board rule[; to any quasi-governmental
71-4 authority charged with overseeing securities activities which is
71-5 approved by Board rule;] or to any receiver appointed under
71-6 Section 25-1 of this Act. The disclosure does not violate any
71-7 other provision of this Act or Chapter 552, Government Code.
71-8 SECTION 3.10. Section 29, The Securities Act (Article 581-29,
71-9 Vernon's Texas Civil Statutes), is amended to read as follows:
71-10 Sec. 29. PENAL PROVISIONS. Any person who shall:
71-11 A. Sell, offer for sale or delivery, solicit
71-12 subscriptions or orders for, dispose of, invite offers for, or who
71-13 shall deal in any other manner in any security or securities
71-14 without being a registered dealer [or salesman] or agent as in this
71-15 Act provided shall be deemed guilty of a felony, and upon
71-16 conviction thereof shall be sentenced to pay a fine of not more
71-17 than $5,000 or imprisonment in the penitentiary for not less than
71-18 two or more than 10 years, or by both such fine and imprisonment.
71-19 B. Sell, offer for sale or delivery, solicit
71-20 subscriptions to and orders for, dispose of, invite orders for, or
71-21 who shall deal in any other manner in any security or securities
71-22 issued after September 6, 1955, unless said security or securities
71-23 have been registered or granted a permit as provided in Section 7
71-24 of this Act, shall be deemed guilty of a felony, and upon
71-25 conviction thereof shall be sentenced to pay a fine of not more
71-26 than $5,000 or imprisonment in the penitentiary for not less than
71-27 two or more than 10 years, or by both such fine and imprisonment.
72-1 C. In connection with the sale, offering for sale or
72-2 delivery of, the purchase, offer to purchase, invitation of offers
72-3 to purchase, invitations of offers to sell, or dealing in any other
72-4 manner in any security or securities, whether or not the
72-5 transaction or security is exempt under Section 5 or 6 of this Act,
72-6 directly or indirectly:
72-7 (1) engage in any fraud or fraudulent practice;
72-8 (2) employ any device, scheme, or artifice to
72-9 defraud;
72-10 (3) knowingly make any untrue statement of a
72-11 material fact or omit to state a material fact necessary in order
72-12 to make the statements made, in the light of the circumstances
72-13 under which they are made, not misleading; or
72-14 (4) engage in any act, practice or course of
72-15 business which operates or will operate as a fraud or deceit upon
72-16 any person, is guilty of a felony and upon conviction shall be:
72-17 (a) imprisoned for not less than 2 or more
72-18 than 10 years and fined not more than $10,000, if the amount
72-19 involved in the offense is less than $10,000;
72-20 (b) imprisoned for not less than 2 or more
72-21 than 20 years and fined not more than $10,000, if the amount
72-22 involved in the offense is $10,000 or more but less than $100,000;
72-23 or
72-24 (c) imprisoned for life or for not less
72-25 than 5 or more than 99 years and fined not more than $10,000, if
72-26 the amount involved is $100,000 or more.
72-27 D. Knowingly violate a cease and desist order issued
73-1 [Sell or offer for sale any security or securities named or listed
73-2 in a notice in writing given him] by the commissioner under the
73-3 authority of Section 23A, 23B, or 23-2 of this Act shall be deemed
73-4 guilty of a felony, and upon conviction thereof shall be sentenced
73-5 to pay a fine of not more than $5,000 or imprisonment in the
73-6 penitentiary for not more than two years, or by both such fine and
73-7 imprisonment.
73-8 E. Knowingly make or cause to be made, in any document
73-9 filed with the commissioner or in any proceeding under this Act,
73-10 whether or not such document or proceeding relates to a transaction
73-11 or security exempt under the provisions of Sections 5 or 6 of this
73-12 Act, any statement which is, at the time and in the light of the
73-13 circumstances under which it is made, false or misleading in any
73-14 material respect shall be deemed guilty of a felony, and upon
73-15 conviction thereof shall be sentenced to pay a fine of not more
73-16 than $5,000 or imprisonment in the penitentiary for not less than
73-17 two or more than 10 years, or by both such fine and imprisonment.
73-18 F. Knowingly make any false statement or
73-19 representation concerning any registration made under the
73-20 provisions of this Act shall be deemed guilty of a felony, and upon
73-21 conviction thereof shall be sentenced to pay a fine of not more
73-22 than $5,000 or imprisonment in the penitentiary for not more than
73-23 two years, or by both such fine and imprisonment.
73-24 G. Make an offer of any security within this State
73-25 that is not in compliance with the requirements governing offers
73-26 set forth in Section 22 of this Act shall be deemed guilty of a
73-27 felony, and upon conviction thereof, shall be sentenced to pay a
74-1 fine of not more than $5,000 or imprisonment in the penitentiary
74-2 for not more than two years, or by both such fine and imprisonment.
74-3 H. Knowingly make an offer of any security within this
74-4 State prohibited by a cease publication order issued by the
74-5 Commissioner under Section 23C [23B] of this Act shall be deemed
74-6 guilty of a felony, and upon conviction thereof, shall be sentenced
74-7 to pay a fine of not more than $5,000 or imprisonment in the
74-8 penitentiary for not more than two years, or by both such fine and
74-9 imprisonment.
74-10 SECTION 3.11. The Securities Act (Article 581-1 et seq.,
74-11 Vernon's Texas Civil Statutes) is amended by adding Section 29-3 to
74-12 read as follows:
74-13 Sec. 29-3. CRIMINAL RESPONSIBILITY OF CORPORATION OR
74-14 ASSOCIATION. A. In this section:
74-15 (1) "Association" and "corporation" have the meanings
74-16 assigned by Section 1.07, Penal Code.
74-17 (2) "High managerial agent" has the meaning assigned
74-18 by Section 7.21, Penal Code.
74-19 B. If conduct constituting an offense under Section 29 of
74-20 this Act is performed by an agent acting in behalf of a corporation
74-21 or association and within the scope of the person's office or
74-22 employment, the corporation or association is criminally
74-23 responsible for the offense only if its commission was authorized,
74-24 requested, commanded, performed, or recklessly tolerated by:
74-25 (1) a majority of the governing board acting in behalf
74-26 of the corporation or association; or
74-27 (2) a high managerial agent acting in behalf of the
75-1 corporation or association and within the scope of the high
75-2 managerial agent's office or employment.
75-3 C. It is an affirmative defense to prosecution of a
75-4 corporation or association under Subsection B of this section that
75-5 the high managerial agent having supervisory responsibility over
75-6 the subject matter of the offense employed due diligence to prevent
75-7 its commission.
75-8 SECTION 3.12. Section 30, The Securities Act (Article 581-30,
75-9 Vernon's Texas Civil Statutes), is amended to read as follows:
75-10 Sec. 30. CERTIFIED COPIES OF PAPERS FILED WITH COMMISSIONER
75-11 AS EVIDENCE. Copies of all papers, instruments, or documents filed
75-12 in the office of the Commissioner, certified by the Commissioner,
75-13 shall be admitted to be read in evidence in all courts of law and
75-14 elsewhere in this state in all cases where the original would be
75-15 admitted in evidence; provided, that in any proceeding in the court
75-16 having jurisdiction, the court may, on cause shown, require the
75-17 production of the originals.
75-18 The Commissioner shall assume custody of all records of the
75-19 Securities Divisions within the offices of the Secretary of State
75-20 and of the Board of Insurance Commissioners, and henceforth these
75-21 prior records shall be proven under certificate of the
75-22 Commissioner.
75-23 In any prosecution, action, suit or proceeding before any of
75-24 the several courts of this state based upon or arising out of or
75-25 under the provisions of this Act, a certificate under the state
75-26 seal, duly signed by the Commissioner, showing compliance or
75-27 non-compliance with the provisions of this Act respecting
76-1 compliance or non-compliance with the provisions of this Act by any
76-2 dealer, agent, investment adviser, or investment adviser
76-3 representative [salesman], shall constitute prima facie evidence of
76-4 such compliance or of such non-compliance with the provisions of
76-5 this Act, as the case may be, and shall be admissible in evidence
76-6 in any action at law or in equity to enforce the provisions of this
76-7 Act.
76-8 SECTION 3.13. Subsection A, Section 32, The Securities Act
76-9 (Article 581-32, Vernon's Texas Civil Statutes), is amended to read
76-10 as follows:
76-11 A. Whenever it shall appear to the Commissioner either upon
76-12 complaint or otherwise, that any person has engaged or is about to
76-13 engage in fraud or a fraudulent practice in connection with the
76-14 sale of a security, has engaged or is about to engage in fraud or a
76-15 fraudulent practice in the rendering of services as an investment
76-16 adviser or investment adviser representative, has made an offer
76-17 containing a statement that is materially misleading or is
76-18 otherwise likely to deceive the public, or is engaging or is about
76-19 to engage in an act or practice that violates this Act or a Board
76-20 rule or order [in the issuance, sale, promotion, negotiations,
76-21 advertisement or distribution of any securities within this state,
76-22 including any security embraced in the subsections of Section 6,
76-23 and including any transaction exempted under the provisions of
76-24 Section 5, any person or company who shall have employed or is
76-25 about to employ any device, scheme or artifice to defraud or to
76-26 obtain money or property by means of any false pretense,
76-27 representation or promise, or that any such person or company shall
77-1 have made, makes or attempts to make in this state fictitious or
77-2 pretended purchases or sales of securities or shall have engaged in
77-3 or is about to engage in any practice or transaction or course of
77-4 business relating to the purchase or sale of securities which is in
77-5 violation of law or which is fraudulent or which has operated or
77-6 which would operate as a fraud upon the purchaser, any one or all
77-7 of which devices, schemes, artifices, fictitious or pretended
77-8 purchases, or sales of securities, practices, transactions and
77-9 courses of business are hereby declared to be and are hereafter
77-10 referred to as fraudulent practices; or that any person or company
77-11 is acting as dealer or salesman within this state without being
77-12 duly registered as such dealer or salesman as provided in this Act,
77-13 the Commissioner and Attorney General may investigate, and whenever
77-14 he shall believe from evidence satisfactory to him that any such
77-15 person or company has engaged in, is engaged in, or is about to be
77-16 engaged in any of the practices or transactions heretofore referred
77-17 to as and declared to be fraudulent practices, or is selling or
77-18 offering for sale any securities in violation of this Act or is
77-19 acting as a dealer or salesman without being duly registered as
77-20 provided in this Act], the Attorney General may, on request by the
77-21 Commissioner, and in addition to any other remedies, bring action
77-22 in the name and on behalf of the State of Texas against such person
77-23 or company and any person who, with intent to deceive or defraud or
77-24 with reckless disregard for the truth or the law, has materially
77-25 aided, is materially aiding, or is about to materially aid such
77-26 person and any other person or persons heretofore concerned in or
77-27 in any way participating in or about to participate in such acts or
78-1 [fraudulent] practices [or acting in such violation of this Act],
78-2 to enjoin such person or company and such other person or persons
78-3 from continuing such acts or [fraudulent] practices [or engaging
78-4 therein] or doing any act or acts in furtherance thereof. The
78-5 Commissioner shall verify, on information and belief, the facts
78-6 contained in an application for injunction under this section [or
78-7 in violation of this Act]. In any such court proceedings, the
78-8 Attorney General may apply for and on due showing be entitled to
78-9 have issued the court's subpoena requiring the forthwith appearance
78-10 of any defendant and the defendant's [his] employees[, salesmen] or
78-11 agents and the production of documents, books and records as may
78-12 appear necessary for the hearing of such petition, to testify and
78-13 give evidence concerning the acts or conduct or things complained
78-14 of in such application for injunction. The District Court of any
78-15 county, wherein it is shown that the acts complained of have been
78-16 or are about to be committed, or a district court in Travis County
78-17 shall have jurisdiction of any action brought under this section,
78-18 and this provision shall be superior to any provision fixing the
78-19 jurisdiction or venue with regard to suits for injunction. No bond
78-20 for injunction shall be required of the Commissioner or Attorney
78-21 General in any such proceeding.
78-22 SECTION 3.14. The heading of Section 33, The Securities Act
78-23 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
78-24 as follows:
78-25 Sec. 33. CIVIL LIABILITY WITH RESPECT TO ISSUANCE OR SALE OF
78-26 A SECURITY [LIABILITIES].
78-27 SECTION 3.15. Subsection L, Section 33, The Securities Act
79-1 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
79-2 as follows:
79-3 L. Waivers Void. A condition, stipulation, or provision
79-4 binding a buyer or seller of a security or a purchaser of services
79-5 rendered by an investment adviser or investment adviser
79-6 representative to waive compliance with a provision of this Act or
79-7 a rule or order or requirement hereunder is void.
79-8 SECTION 3.16. Subsection A, Section 33, The Securities Act
79-9 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
79-10 as follows:
79-11 A. Liability of Sellers. (1) Registration and Related
79-12 Violations. A person who offers or sells a security in violation
79-13 of Section 7, 9 (or a requirement of the Commissioner thereunder),
79-14 12, 23C [23B], or an order under 23A or 23-2 of this Act is liable
79-15 to the person buying the security from him, who may sue either at
79-16 law or in equity for rescission or for damages if the buyer no
79-17 longer owns the security.
79-18 (2) Untruth or Omission. A person who offers or sells
79-19 a security (whether or not the security or transaction is exempt
79-20 under Section 5 or 6 of this Act) by means of an untrue statement
79-21 of a material fact or an omission to state a material fact
79-22 necessary in order to make the statements made, in the light of the
79-23 circumstances under which they are made, not misleading, is liable
79-24 to the person buying the security from him, who may sue either at
79-25 law or in equity for rescission, or for damages if the buyer no
79-26 longer owns the security. However, a person is not liable if he
79-27 sustains the burden of proof that either (a) the buyer knew of the
80-1 untruth or omission or (b) he (the offeror or seller) did not know,
80-2 and in the exercise of reasonable care could not have known, of the
80-3 untruth or omission. The issuer of the security (other than a
80-4 government issuer identified in Section 5M) is not entitled to the
80-5 defense in clause (b) with respect to an untruth or omission (i) in
80-6 a prospectus required in connection with a registration statement
80-7 under Section 7A, 7B, or 7C, or (ii) in a writing prepared and
80-8 delivered by the issuer in the sale of a security.
80-9 SECTION 3.17. Subsection D, Section 33, The Securities Act
80-10 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
80-11 as follows:
80-12 D. Rescission and Damages. For this Section 33:
80-13 (1) On rescission, a buyer shall recover (a) the
80-14 consideration he paid for the security plus interest thereon at the
80-15 legal rate from the date of payment by him, less (b) the amount of
80-16 any income he received on the security, upon tender of the security
80-17 (or a security of the same class and series).
80-18 (2) On rescission, a seller shall recover the security
80-19 (or a security of the same class and series) upon tender of (a) the
80-20 consideration he received for the security plus interest thereon at
80-21 the legal rate from the date of receipt by him, less (b) the amount
80-22 of any income the buyer received on the security.
80-23 (3) In damages, a buyer shall recover (a) the
80-24 consideration the buyer [he] paid for the security plus interest
80-25 thereon at the legal rate from the date of payment by the buyer
80-26 [him], less (b) the greater of:
80-27 (i) the value of the security at the time
81-1 the buyer [he] disposed of it plus the amount of any income the
81-2 buyer [he] received on the security; or
81-3 (ii) the actual consideration received for
81-4 the security at the time the buyer disposed of it plus the amount
81-5 of any income the buyer received on the security.
81-6 (4) In damages, a seller shall recover (a) the value
81-7 of the security at the time of sale plus the amount of any income
81-8 the buyer received on the security, less (b) the consideration paid
81-9 the seller for the security plus interest thereon at the legal rate
81-10 from the date of payment to the seller.
81-11 (5) For a buyer suing under Section 33C, the
81-12 consideration he paid shall be deemed the lesser of (a) the price
81-13 he paid and (b) the price at which the security was offered to the
81-14 public.
81-15 (6) On rescission or as a part of damages, a buyer or
81-16 a seller shall also recover costs.
81-17 (7) On rescission or as a part of damages, a buyer or
81-18 a seller may also recover reasonable attorney's fees if the court
81-19 finds that the recovery would be equitable in the circumstances.
81-20 SECTION 3.18. The Securities Act (Article 581-1 et seq.,
81-21 Vernon's Texas Civil Statutes) is amended by adding Section 33-1 to
81-22 read as follows:
81-23 Sec. 33-1. CIVIL LIABILITY OF INVESTMENT ADVISERS AND
81-24 INVESTMENT ADVISER REPRESENTATIVES. A. Liability of Investment
81-25 Advisers and Investment Adviser Representatives. (1) An
81-26 investment adviser or investment adviser representative who renders
81-27 services as an investment adviser in violation of Section 12 or an
82-1 order under Section 23B or 23-2 of this Act is liable to the
82-2 purchaser, who may sue at law or in equity, for damages in the
82-3 amount of any consideration paid for the services.
82-4 (2) Except as provided by Subsection C of this
82-5 section, an investment adviser or investment adviser representative
82-6 who commits fraud or engages in a fraudulent practice in rendering
82-7 services as an investment adviser is liable to the purchaser, who
82-8 may sue at law or in equity, for damages.
82-9 B. Damages. In damages under Subsection A(2) of this
82-10 section, the purchaser is entitled to recover:
82-11 (1) the amount of any consideration paid for the
82-12 services, less the amount of any income the purchaser received from
82-13 acting on the services;
82-14 (2) any loss incurred by the person in acting on the
82-15 services provided by the adviser or representative;
82-16 (3) interest at the legal rate for judgments accruing
82-17 from the date of the payment of consideration; and
82-18 (4) to the extent the court considers equitable, court
82-19 costs and reasonable attorney's fees.
82-20 C. Untruth or Omission. An investment adviser or investment
82-21 adviser representative who in rendering services as an investment
82-22 adviser makes a false statement of a material fact or omits to
82-23 state a material fact necessary in order to make the statement
82-24 made, in light of the circumstances under which the statement is
82-25 made, not misleading, may not be found liable under Subsection A(2)
82-26 of this section if the adviser or representative proves:
82-27 (1) the purchaser knew of the truth or omission; or
83-1 (2) the adviser or representative did not know, and in
83-2 the exercise of reasonable care could not have known, of the
83-3 untruth or omission.
83-4 D. Statute of Limitations. (1) A person may not sue under
83-5 Subsection A(1) of this section more than three years after the
83-6 violation occurred.
83-7 (2) A person may not sue under Subsection A(2) of this
83-8 section more than five years after the violation occurs or more
83-9 than three years after the person knew or should have known, by the
83-10 exercise of reasonable diligence, of the occurrence of the
83-11 violation.
83-12 E. Liability of Control Persons and Assistants. (1) A
83-13 person who directly or indirectly controls an investment adviser is
83-14 jointly and severally liable with the investment adviser under this
83-15 section, and to the same extent as the investment adviser, unless
83-16 the controlling person sustains the burden of proof that the person
83-17 did not know, and in the exercise of reasonable care could not have
83-18 known, of the existence of the facts by reason of which liability
83-19 is alleged to exist.
83-20 (2) A person who directly or indirectly with intent to
83-21 deceive or defraud or with reckless disregard for the truth or the
83-22 law materially aids an investment adviser in conduct for which a
83-23 cause of action is authorized by this section is jointly and
83-24 severally liable with the investment adviser in an action to
83-25 recover damages under this section.
83-26 F. A remedy provided by this section is not exclusive of any
83-27 other applicable remedy provided by law.
84-1 SECTION 3.19. (a) A change in law made by this Act that
84-2 applies to a criminal or civil penalty applies only to an offense
84-3 committed or a violation that occurs on or after the effective date
84-4 of this Act. For the purposes of this Act, an offense is committed
84-5 or a violation occurs before the effective date of this Act if any
84-6 element of the offense or violation occurs before that date.
84-7 (b) An offense committed or violation that occurs before the
84-8 effective date of this Act is covered by the law in effect when the
84-9 offense was committed or the violation occurred, and the former law
84-10 is continued in effect for that purpose.
84-11 ARTICLE 4. CONFORMING AMENDMENTS
84-12 SECTION 4.01. Section 54.6385, Education Code, is amended to
84-13 read as follows:
84-14 Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The
84-15 registration requirements of The Securities Act (Article 581-1 et
84-16 seq., Vernon's Texas Civil Statutes) do not apply to the sale of a
84-17 prepaid tuition contract by the board or by a registered securities
84-18 dealer or registered investment adviser.
84-19 SECTION 4.02. Section 153.117(a), Finance Code, as amended by
84-20 Chapters 62, 344, and 356, Acts of the 76th Legislature, Regular
84-21 Session, 1999, is reenacted and amended to read as follows:
84-22 (a) The following persons are not required to be licensed
84-23 under this chapter:
84-24 (1) a federally insured financial institution, as that
84-25 term is defined by Section 201.101 [as that term is defined by
84-26 state law governing bank holding companies and interstate bank
84-27 operations], that is organized under the laws of this state,
85-1 another state, or the United States;
85-2 (2) a foreign bank branch or agency in the United
85-3 States established under the federal International Banking Act of
85-4 1978 (12 U.S.C. Section 3101 et seq.), as amended;
85-5 (3) [(2)] a license holder under Chapter 152, except
85-6 that the license holder is required to comply with the other
85-7 provisions of this chapter to the extent the license holder engages
85-8 in currency exchange, transportation, or transmission transactions;
85-9 (4) a person registered as a securities dealer or
85-10 investment adviser under The Securities Act (Article 581-1 et seq.,
85-11 Vernon's Texas Civil Statutes);
85-12 (5) an attorney or title company that in connection
85-13 with a real property transaction receives and disburses only
85-14 domestic currency on behalf of a party to the transaction;
85-15 (6) a Federal Reserve bank;
85-16 (7) a clearinghouse exercising bank payment,
85-17 collection, and clearing functions; or
85-18 (8) another person that the commissioner may exempt by
85-19 rule if the commissioner finds that the licensing of the person is
85-20 not necessary or appropriate to achieve the objectives of this
85-21 chapter.
85-22 SECTION 4.03. Subchapter A, Chapter 182, Finance Code, is
85-23 amended by adding Section 182.0211 to read as follows:
85-24 Sec. 182.0211. CONFORMANCE WITH SECURITIES ACT. For the
85-25 purposes of Section 182.021(7), "salesman" includes "agent" and
85-26 "advisor" includes "investment adviser" or "investment adviser
85-27 representative."
86-1 SECTION 4.04. Section 2051.005, Occupations Code, is amended
86-2 to read as follows:
86-3 Sec. 2051.005. CERTAIN PROFESSIONAL SERVICES EXEMPT. This
86-4 chapter does not apply to a person who directly or indirectly
86-5 recruits or solicits an athlete to enter into a contract with the
86-6 person in which, for compensation, the person performs financial
86-7 services for the athlete if:
86-8 (1) the person is licensed or registered by the state
86-9 as:
86-10 (A) a dealer, agent, investment adviser, or
86-11 investment adviser representative [agent, or securities
86-12 salesperson];
86-13 (B) a real estate broker or salesperson;
86-14 (C) an insurance agent; or
86-15 (D) another professional;
86-16 (2) the financial services performed by the person are
86-17 of a type that are customarily performed by a person licensed in
86-18 that profession; and
86-19 (3) the person does not:
86-20 (A) recruit or solicit the athlete to enter into
86-21 an agent contract or a professional services contract on behalf of
86-22 the person, an affiliate, a related entity, or a third party; or
86-23 (B) procure, offer, promise, or attempt to
86-24 obtain for the athlete employment with a professional sports team.
86-25 SECTION 4.05. Section 452.107(c), Transportation Code, is
86-26 amended to read as follows:
86-27 (c) The executive committee may authorize the negotiation of
87-1 a contract without competitive sealed bids or proposals if:
87-2 (1) the aggregate amount involved in the contract is
87-3 $25,000 or less;
87-4 (2) the contract is for construction for which not
87-5 more than one bid or proposal is received;
87-6 (3) the contract is for services or property for which
87-7 there is only one source or for which it is otherwise impracticable
87-8 to obtain competition;
87-9 (4) the contract is to respond to an emergency for
87-10 which the public exigency does not permit the delay incident to the
87-11 competitive process;
87-12 (5) the contract is for personal or professional
87-13 services or services for which competitive bidding is precluded by
87-14 law; or
87-15 (6) the contract, without regard to form and which may
87-16 include bonds, notes, loan agreements, or other obligations, is for
87-17 the purpose of borrowing money or is a part of a transaction
87-18 relating to the borrowing of money, including:
87-19 (A) a credit support agreement, such as a line
87-20 or letter of credit or other debt guaranty;
87-21 (B) a bond, note, debt sale or purchase,
87-22 trustee, paying agent, remarketing agent, indexing agent, or
87-23 similar agreement;
87-24 (C) an agreement with a securities dealer or
87-25 investment adviser, broker, or underwriter; and
87-26 (D) any other contract or agreement considered
87-27 by the executive committee to be appropriate or necessary in
88-1 support of the authority's financing activities.
88-2 ARTICLE 5. EFFECTIVE DATE
88-3 SECTION 5.01. This Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2255 was passed by the House on April
5, 2001, by a non-record vote; that the House refused to concur in
Senate amendments to H.B. No. 2255 on May 22, 2001, and requested
the appointment of a conference committee to consider the
differences between the two houses; and that the House adopted the
conference committee report on H.B. No. 2255 on May 27, 2001, by a
non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2255 was passed by the Senate, with
amendments, on May 16, 2001, by a viva-voce vote; at the request of
the House, the Senate appointed a conference committee to consider
the differences between the two houses; and that the Senate adopted
the conference committee report on H.B. No. 2255 on May 27, 2001,
by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor