1-1 By: McCall, et al. (Senate Sponsor - Harris) H.B. No. 2255
1-2 (In the Senate - Received from the House April 9, 2001;
1-3 April 9, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 4, 2001, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 6, Nays
1-6 0; May 4, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2255 By: Jackson
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the continuation and functions of the State Securities
1-11 Board; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 ARTICLE 1. GENERAL OPERATIONS AND ADMINISTRATION OF THE STATE
1-14 SECURITIES BOARD
1-15 SECTION 1.01. Section 2, The Securities Act (Article 581-2,
1-16 Vernon's Texas Civil Statutes), is amended to read as follows:
1-17 Sec. 2. CREATING THE STATE SECURITIES BOARD AND PROVIDING
1-18 FOR APPOINTMENT OF SECURITIES COMMISSIONER. A. The State
1-19 Securities Board is hereby created. The Board shall consist of
1-20 five [three] citizens of the state appointed by the governor with[.
1-21 With] the advice and consent of the Senate[, the Governor shall
1-22 biennially appoint one member]. Members of the Board serve for
1-23 staggered terms of six years, with as near as possible to one-third
1-24 of the members' terms expiring January 20 of each odd-numbered year
1-25 [The term of each member shall be six (6) years from the time of
1-26 his appointment and qualification, and until his successor shall
1-27 qualify]. Vacancies shall be filled by the Governor for the
1-28 unexpired term. Members shall be eligible for reappointment.
1-29 Appointments to the Board shall be made without regard to the race,
1-30 color, disability [creed], sex, religion, age, or national origin
1-31 of the appointees.
1-32 B. Board members must be members of the general public. A
1-33 person is not eligible for appointment as a member if the person or
1-34 the person's spouse:
1-35 (1) is registered as a dealer, [salesman,] agent, [or]
1-36 investment adviser, or investment adviser representative;
1-37 (2) has an active notice filing under this Act to
1-38 engage in business in this state as an investment adviser or
1-39 investment adviser representative;
1-40 (3) is employed by or participates in the management
1-41 of a business entity engaged in business as a securities dealer or
1-42 investment adviser; or
1-43 (4) [(3)] has, other than as a consumer, a financial
1-44 interest in a business entity engaged in business as a securities
1-45 dealer or investment adviser.
1-46 [C. A person who is required to register as a lobbyist under
1-47 Chapter 305, Government Code, because of the person's activities
1-48 for compensation in or for a profession related to the operation of
1-49 the Board, may not serve as a member of the Board or act as the
1-50 general counsel to the Board.]
1-51 D. Each member of the Board is entitled to per diem as set
1-52 by legislative appropriation for each day that the member engages
1-53 in the business of the Board.
1-54 The Governor shall designate a member of the Board as the
1-55 presiding officer of the Board to serve in that capacity at the
1-56 will of the Governor [They shall select their own chairman]. A
1-57 majority of the members shall constitute a quorum for the
1-58 transaction of any business.
1-59 E. It is a ground for removal from the Board that [if] a
1-60 member:
1-61 (1) does not have at the time of taking office
1-62 [appointment] the qualifications required by Subsection A or B of
1-63 this section for appointment to the Board;
1-64 (2) does not maintain during [the] service on the
2-1 Board the qualifications required by Subsection A or B of this
2-2 section for appointment to the Board; [or]
2-3 (3) is ineligible for membership under Subsection B or
2-4 C of this section or Section 2-1 of this Act;
2-5 (4) cannot, because of illness or disability,
2-6 discharge the member's duties for a substantial part of the
2-7 member's term; or
2-8 (5) is absent from more than half of the regularly
2-9 scheduled Board meetings that the member is eligible to attend
2-10 during a calendar year without an excuse approved by a majority
2-11 vote of the Board [violates a prohibition established by
2-12 Subsection C of this section].
2-13 F. The validity of an action of the Board is not affected by
2-14 the fact that it is [was] taken when a ground for removal of a
2-15 Board member exists [of the Board existed]. If the Commissioner
2-16 has knowledge that a potential ground for removal exists, the
2-17 Commissioner shall notify the presiding officer of the Board of the
2-18 potential ground. The presiding officer shall then notify the
2-19 Governor and the attorney general that a potential ground for
2-20 removal exists. If the potential ground for removal involves the
2-21 presiding officer, the Commissioner shall notify the next highest
2-22 ranking officer of the Board, who shall then notify the Governor
2-23 and the attorney general that a potential ground for removal
2-24 exists.
2-25 G. The Board shall appoint a Securities Commissioner who
2-26 serves at the pleasure of the Board and who shall, under the
2-27 supervision of the Board, administer the provisions of this Act.
2-28 Each member of the Board shall have access to all offices and
2-29 records under his supervision, and the Board, or a majority
2-30 thereof, may exercise any power or perform any act authorized to
2-31 the Securities Commissioner by the provisions of this Act.
2-32 H. The Commissioner, with the consent of the Board, may
2-33 designate a Deputy Securities Commissioner who shall perform all
2-34 the duties required by law to be performed by the Securities
2-35 Commissioner when the said Commissioner is absent or unable to act
2-36 for any reason. The Commissioner shall appoint other persons as
2-37 necessary to carry out the powers and duties of the Commissioner
2-38 under this Act and other laws granting jurisdiction or applicable
2-39 to the Board or the Commissioner. The Commissioner may delegate to
2-40 the other persons appointed under this subsection powers and duties
2-41 of the Commissioner as the Commissioner considers necessary.
2-42 I. Before assuming office, the Securities Commissioner shall
2-43 first give a bond in the sum of Twenty-five Thousand Dollars
2-44 ($25,000.00) payable to and to be approved by the Governor,
2-45 conditioned that he will faithfully execute the duties of his
2-46 office. The same requirement is made of the Deputy Securities
2-47 Commissioner, and the Securities Commissioner may require any or
2-48 all of his staff and employees to be likewise bonded. The expense
2-49 of all such bonds may be paid by the state.
2-50 J. On or before January 1 of each year, the Board, with the
2-51 advice of the Commissioner, shall report to the Governor and the
2-52 presiding officer of each house of the Legislature as to its
2-53 administration of this Act, as well as plans and needs for future
2-54 securities regulation. The report must include a detailed
2-55 accounting of all funds received and disbursed by the Board during
2-56 the preceding year.
2-57 K. The Commissioner or his designee shall develop an
2-58 intraagency career ladder program, one part of which shall be the
2-59 intraagency posting of all nonentry level positions for at least
2-60 ten (10) days before any public posting. The Commissioner or his
2-61 designee shall develop a system of annual performance evaluations
2-62 based on measurable job tasks. All merit pay for Board employees
2-63 must be based on the system established under this section.
2-64 L. The Board shall prepare information of consumer interest
2-65 describing the regulatory functions of the Board and Commissioner
2-66 and describing the Board's and Commissioner's procedures by which
2-67 consumer complaints are filed with and resolved by the Board or
2-68 Commissioner. The Board shall make the information available to
2-69 the general public and appropriate state agencies. There shall be
3-1 prominently displayed at all times in the place of business of each
3-2 dealer, [salesman, or] agent, investment adviser, or investment
3-3 adviser representative regulated under this Act, a sign containing
3-4 the name, mailing address, and telephone number of the Board and a
3-5 statement informing consumers that complaints against a dealer,
3-6 [salesman, or] agent, investment adviser, or investment adviser
3-7 representative may be directed to the Board.
3-8 M. The financial transactions of the Board are subject to
3-9 audit by the state auditor in accordance with Chapter 321,
3-10 Government Code.
3-11 N. The Board and Commissioner are subject to Chapters 551,
3-12 2001, and 2002, Government Code.
3-13 O. The State Securities Board is subject to Chapter 325,
3-14 Government Code (Texas Sunset Act). Unless continued in existence
3-15 as provided by that chapter, the board is abolished and this Act
3-16 expires September 1, 2013 [2001].
3-17 SECTION 1.02. The Securities Act (Article 581-1 et seq.,
3-18 Vernon's Texas Civil Statutes) is amended by adding Sections 2-1,
3-19 2-2, 2-3, 2-4, 2-5, 2-6, 2-7, and 2-8 to read as follows:
3-20 Sec. 2-1. CONFLICT OF INTEREST. A. In this section, "Texas
3-21 trade association" means a cooperative and voluntarily joined
3-22 association of business or professional competitors in this state
3-23 designed to assist its members and its industry or profession in
3-24 dealing with mutual business or professional problems and in
3-25 promoting their common interest.
3-26 B. A person may not be a member of the Board and may not be
3-27 a Board employee employed in a "bona fide executive,
3-28 administrative, or professional capacity," as that phrase is used
3-29 for purposes of establishing an exemption to the overtime
3-30 provisions of the federal Fair Labor Standards Act of 1938 (29
3-31 U.S.C. Section 201 et seq.) and its subsequent amendments, if:
3-32 (1) the person is an officer, employee, or paid
3-33 consultant of a Texas trade association in a field regulated by the
3-34 Board; or
3-35 (2) the person's spouse is an officer, manager, or
3-36 paid consultant of a Texas trade association in a field regulated
3-37 by the Board.
3-38 C. A person may not be a member of the Board or act as the
3-39 general counsel to the Board if the person is required to register
3-40 as a lobbyist under Chapter 305, Government Code, because of the
3-41 person's activities for compensation on behalf of a profession
3-42 related to the operation of the Board.
3-43 Sec. 2-2. INFORMATION ABOUT STANDARDS OF CONDUCT. The
3-44 Commissioner or the Commissioner's designee shall provide to
3-45 members of the Board and to Board employees, as often as necessary,
3-46 information regarding the requirements for office or employment
3-47 under this Act, including information regarding a person's
3-48 responsibilities under applicable laws relating to standards of
3-49 conduct for state officers or employees.
3-50 Sec. 2-3. TRAINING. A. A person who is appointed to and
3-51 qualifies for office as a member of the Board may not vote,
3-52 deliberate, or be counted as a member in attendance at a meeting of
3-53 the Board until the person completes a training program that
3-54 complies with this section.
3-55 B. The training program must provide the person with
3-56 information regarding:
3-57 (1) the legislation that created the Board;
3-58 (2) the programs operated by the Board;
3-59 (3) the role and functions of the Board;
3-60 (4) the rules of the Board with an emphasis on the
3-61 rules that relate to disciplinary and investigatory authority;
3-62 (5) the current budget for the Board;
3-63 (6) the results of the most recent formal audit of the
3-64 Board;
3-65 (7) the requirements of:
3-66 (A) the open meetings law, Chapter 551,
3-67 Government Code;
3-68 (B) the public information law, Chapter 552,
3-69 Government Code;
4-1 (C) the administrative procedure law, Chapter
4-2 2001, Government Code; and
4-3 (D) other laws relating to public officials,
4-4 including conflict-of-interest laws; and
4-5 (8) any applicable ethics policies adopted by the
4-6 Board or the Texas Ethics Commission.
4-7 C. A person appointed to the Board is entitled to
4-8 reimbursement, as provided by the General Appropriations Act, for
4-9 the travel expenses incurred in attending the training program
4-10 regardless of whether the attendance at the program occurs before
4-11 or after the person qualifies for office.
4-12 Sec. 2-4. DIVISION OF POLICY AND MANAGEMENT
4-13 RESPONSIBILITIES. The Board shall develop and implement policies
4-14 that clearly separate the policymaking responsibilities of the
4-15 Board and the management responsibilities of the Commissioner and
4-16 employees of the Board.
4-17 Sec. 2-5. PUBLIC TESTIMONY. The Board by rule shall develop
4-18 and implement policies that provide the public with a reasonable
4-19 opportunity to appear before the Board and to speak on any issue
4-20 under the jurisdiction of the Board.
4-21 Sec. 2-6. COMPLAINTS INFORMATION. A. The Commissioner or
4-22 the Commissioner's designee shall maintain a file on each written
4-23 complaint filed with the Commissioner or Board concerning an
4-24 employee, former employee, or person registered under this Act.
4-25 The file must include:
4-26 (1) the name of the person who filed the complaint;
4-27 (2) the date the complaint is received by the
4-28 Commissioner or Board;
4-29 (3) the subject matter of the complaint;
4-30 (4) the name of each person contacted in relation to
4-31 the complaint;
4-32 (5) a summary of the results of the review or
4-33 investigation of the complaint; and
4-34 (6) an explanation of the reason the file was closed,
4-35 if the Commissioner closed the file without taking action other
4-36 than to investigate the complaint.
4-37 B. The Commissioner or the Commissioner's designee shall
4-38 provide to the person filing the complaint and to each person who
4-39 is a subject of the complaint a copy of the Board's policies and
4-40 procedures relating to complaint investigation and resolution.
4-41 C. The Commissioner or the Commissioner's designee, at least
4-42 quarterly until final disposition of the complaint, shall notify
4-43 the person filing the complaint and each person who is a subject of
4-44 the complaint of the status of the investigation unless the notice
4-45 would jeopardize an undercover investigation.
4-46 Sec. 2-7. EQUAL EMPLOYMENT OPPORTUNITY POLICY STATEMENT. A.
4-47 The Commissioner or the Commissioner's designee shall prepare and
4-48 maintain a written policy statement that implements a program of
4-49 equal employment opportunity to ensure that all personnel decisions
4-50 are made without regard to race, color, disability, sex, religion,
4-51 age, or national origin.
4-52 B. The policy statement must include:
4-53 (1) personnel policies, including policies relating to
4-54 recruitment, evaluation, selection, training, and promotion of
4-55 personnel, that show the intent of the Board to avoid the unlawful
4-56 employment practices described by Chapter 21, Labor Code; and
4-57 (2) an analysis of the extent to which the composition
4-58 of the Board's personnel is in accordance with state and federal
4-59 law and a description of reasonable methods to achieve compliance
4-60 with state and federal law.
4-61 C. The policy statement must:
4-62 (1) be updated annually;
4-63 (2) be reviewed by the state Commission on Human
4-64 Rights for compliance with Subsection B(1) of this section; and
4-65 (3) be filed with the governor's office.
4-66 Sec. 2-8. INFORMATION ABOUT STATE EMPLOYEE INCENTIVE
4-67 PROGRAM. The Commissioner or the Commissioner's designee shall
4-68 provide to Board employees information and training on the benefits
4-69 and methods of participation in the state employee incentive
5-1 program.
5-2 SECTION 1.03. The Securities Act (Article 581-1 et seq.,
5-3 Vernon's Texas Civil Statutes) is amended by adding Section 43 to
5-4 read as follows:
5-5 Sec. 43. INVESTOR EDUCATION. A. The Commissioner, with
5-6 Board approval, shall develop and implement investor education
5-7 initiatives to inform the public about the basics of investing in
5-8 securities, with a special emphasis placed on the prevention and
5-9 detection of securities fraud. Materials developed for and
5-10 distributed as part of the initiatives must be published in both
5-11 Spanish and English.
5-12 B. In developing and implementing the initiatives, the
5-13 Commissioner shall use the Commissioner's best efforts to
5-14 collaborate with public or nonprofit entities with an interest in
5-15 investor education.
5-16 C. Subject to Chapter 575, Government Code, the Commissioner
5-17 may accept grants and donations from a person who is not affiliated
5-18 with the securities industry or from a nonprofit association,
5-19 regardless of whether the entity is affiliated with the securities
5-20 industry, for use in providing investor education initiatives.
5-21 SECTION 1.04. As soon as possible after the effective date of
5-22 this Act, the governor shall appoint one member to the State
5-23 Securities Board for a term expiring January 20, 2005, and another
5-24 member to the State Securities Board for a term expiring January
5-25 20, 2007. As those terms expire, the governor shall appoint
5-26 members to full six-year terms.
5-27 SECTION 1.05. Not later than September 1, 2002, the
5-28 Securities Commissioner shall implement the investor education
5-29 initiatives as required by Section 43, The Securities Act (Article
5-30 581-43, Vernon's Texas Civil Statutes), as added by this Act.
5-31 SECTION 1.06. The changes in law made by this Act in the
5-32 prohibitions and qualifications applying to members of the State
5-33 Securities Board do not affect the entitlement of a member serving
5-34 on the board immediately before September 1, 2001, to continue to
5-35 serve and function as a member of the board for the remainder of
5-36 the member's term. The changes in law apply only to a member
5-37 appointed on or after September 1, 2001.
5-38 ARTICLE 2. REGULATORY PROVISIONS
5-39 SECTION 2.01. Section 4, The Securities Act (Article 581-4,
5-40 Vernon's Texas Civil Statutes), is amended by amending Subsections
5-41 B, C, D, and E and adding Subsections N, O, P, and Q to read as
5-42 follows:
5-43 B. The terms "person" and "company" shall include a
5-44 corporation, person, joint stock company, partnership, limited
5-45 partnership, association, company, firm, syndicate, trust,
5-46 incorporated or unincorporated, heretofore or hereafter formed
5-47 under the laws of this or any other state, country, sovereignty or
5-48 political subdivision thereof, and shall include a government, or a
5-49 political subdivision or agency thereof. As used herein, the term
5-50 "trust" shall be deemed to include a common law trust, but shall
5-51 not include a trust created or appointed under or by virtue of a
5-52 last will and testament or by a court of law or equity. [Under the
5-53 criminal penal provisions of Section 29 of this Act, the word
5-54 "person" shall mean a natural person.]
5-55 C. The term "dealer" shall include every person or company
5-56 other than an agent [a salesman], who engages in this state, either
5-57 for all or part of his or its time, directly or through an agent,
5-58 in selling, offering for sale or delivery or soliciting
5-59 subscriptions to or orders for, or undertaking to dispose of, or to
5-60 invite offers for any security or securities [and every person or
5-61 company who engages in rendering services as an investment
5-62 adviser,] and every person or company who deals in any other manner
5-63 in any security or securities within this state. Any issuer other
5-64 than a registered dealer of a security or securities, who, directly
5-65 or through any person or company, other than a registered dealer,
5-66 offers for sale, sells or makes sales of its own security or
5-67 securities shall be deemed a dealer and shall be required to comply
5-68 with the provisions hereof; provided, however, this section or
5-69 provision shall not apply to such issuer when such security or
6-1 securities are offered for sale or sold either to a registered
6-2 dealer or only by or through a registered dealer acting as fiscal
6-3 agent for the issuer; and provided further, this section or
6-4 provision shall not apply to such issuer if the transaction is
6-5 within the exemptions contained in the provisions of Section 5 of
6-6 this Act.
6-7 D. The term ["salesman" or] "agent" shall include every
6-8 person or company employed or appointed or authorized by a dealer
6-9 to sell, offer for sale or delivery, or solicit subscriptions to or
6-10 orders for, or deal in any other manner, in securities within this
6-11 state, whether by direct act or through subagents; provided, that
6-12 the officers of a corporation or partners of a partnership shall
6-13 not be deemed [salesmen or] agents solely because of their status
6-14 as officers or partners, where such corporation or partnership is
6-15 registered as a dealer hereunder.
6-16 E. The terms "sale" or "offer for sale" or "sell" shall
6-17 include every disposition, or attempt to dispose of a security for
6-18 value. The term "sale" means and includes contracts and agreements
6-19 whereby securities are sold, traded or exchanged for money,
6-20 property or other things of value, or any transfer or agreement to
6-21 transfer, in trust or otherwise. Any security given or delivered
6-22 with or as a bonus on account of any purchase of securities or
6-23 other thing of value, shall be conclusively presumed to constitute
6-24 a part of the subject of such purchase and to have been sold for
6-25 value. The term "sell" means any act by which a sale is made, and
6-26 the term "sale" or "offer for sale" shall include a subscription,
6-27 an option for sale, a solicitation of sale, a solicitation of an
6-28 offer to buy, an attempt to sell, or an offer to sell, directly or
6-29 by an agent [or salesman], by a circular, letter, or advertisement
6-30 or otherwise, including the deposit in a United States Post Office
6-31 or mail box or in any manner in the United States mails within this
6-32 State of a letter, circular or other advertising matter. Nothing
6-33 herein shall limit or diminish the full meaning of the terms
6-34 "sale," "sell" or "offer for sale" as used by or accepted in courts
6-35 of law or equity. The sale of a security under conditions which
6-36 entitle the purchaser or subsequent holder to exchange the same
6-37 for, or to purchase some other security, shall not be deemed a sale
6-38 or offer for sale of such other security; but no exchange for or
6-39 sale of such other security shall ever be made unless and until the
6-40 sale thereof shall have been first authorized in Texas under this
6-41 Act, if not exempt hereunder, or by other provisions of law.
6-42 N. "Investment adviser" includes a person who, for
6-43 compensation, engages in the business of advising another, either
6-44 directly or through publications or writings, with respect to the
6-45 value of securities or to the advisability of investing in,
6-46 purchasing, or selling securities or a person who, for compensation
6-47 and as part of a regular business, issues or adopts analyses or a
6-48 report concerning securities, as may be further defined by Board
6-49 rule. The term does not include:
6-50 (1) a bank or a bank holding company, as defined by
6-51 the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et
6-52 seq.), as amended, that is not an investment company;
6-53 (2) a lawyer, accountant, engineer, teacher, or
6-54 geologist whose performance of the services is solely incidental to
6-55 the practice of the person's profession;
6-56 (3) a dealer or agent who receives no special
6-57 compensation for those services and whose performance of those
6-58 services is solely incidental to transacting business as a dealer
6-59 or agent;
6-60 (4) the publisher of a bona fide newspaper, news
6-61 magazine, or business or financial publication of general and
6-62 regular circulation; or
6-63 (5) a person whose advice, analyses, or report does
6-64 not concern a security other than a security that is:
6-65 (A) a direct obligation of or an obligation the
6-66 principal or interest of which is guaranteed by the United States
6-67 government; or
6-68 (B) issued or guaranteed by a corporation in
6-69 which the United States has a direct or indirect interest and
7-1 designated by the United States Secretary of the Treasury under
7-2 Section 3(a)(12), Securities Exchange Act of 1934 (15 U.S.C.
7-3 Section 78c(a)(12)), as amended, as an exempt security for purposes
7-4 of that Act.
7-5 O. "Federal covered investment adviser" means an investment
7-6 adviser who is registered under the Investment Advisers Act of 1940
7-7 (15 U.S.C. Section 80b-1 et seq.), as amended.
7-8 P. "Investment adviser representative" or "representative of
7-9 an investment adviser" includes each person or company who, for
7-10 compensation, is employed, appointed, or authorized by an
7-11 investment adviser to solicit clients for the investment adviser or
7-12 who, on behalf of an investment adviser, provides investment
7-13 advice, directly or through subagents, as defined by Board rule, to
7-14 the investment adviser's clients. The term does not include a
7-15 partner of a partnership or an officer of a corporation or other
7-16 entity that is registered as an investment adviser under this Act
7-17 solely because of the person's status as an officer or partner of
7-18 that entity.
7-19 Q. "Registered investment adviser" means an investment
7-20 adviser who has been issued a registration certificate by the
7-21 Commissioner under Section 15 of this Act.
7-22 SECTION 2.02. Section 5, The Securities Act (Article 581-5,
7-23 Vernon's Texas Civil Statutes), is amended to read as follows:
7-24 Sec. 5. EXEMPT TRANSACTIONS. Except as hereinafter in this
7-25 Act specifically provided, the provisions of this Act shall not
7-26 apply to the sale of any security when made in any of the following
7-27 transactions and under any of the following conditions, and the
7-28 company or person engaged therein shall not be deemed a dealer
7-29 within the meaning of this Act; that is to say, the provisions of
7-30 this Act shall not apply to any sale, offer for sale, solicitation,
7-31 subscription, dealing in or delivery of any security under any of
7-32 the following transactions or conditions:
7-33 A. At any judicial, executor's, administrator's,
7-34 guardian's or conservator's sale, or any sale by a receiver or
7-35 trustee in insolvency or bankruptcy.
7-36 B. The sale by or for the account of a pledge holder
7-37 or mortgagee, selling or offering for sale or delivery in the
7-38 ordinary course of business to liquidate a bona fide debt, of a
7-39 security pledged in good faith as security for such debt.
7-40 C. (1) Sales of securities made by or in behalf of a
7-41 vendor, whether by dealer or other agent, in the ordinary course of
7-42 bona fide personal investment of the personal holdings of such
7-43 vendor, or change in such investment, if such vendor is not engaged
7-44 in the business of selling securities and the sale or sales are
7-45 isolated transactions not made in the course of repeated and
7-46 successive transactions of a like character; provided, that in no
7-47 event shall such sales or offerings be exempt from the provisions
7-48 of this Act when made or intended by the vendor or his agent, for
7-49 the benefit, either directly or indirectly, of any company or
7-50 corporation except the individual vendor (other than a usual
7-51 commission to said agent), and provided further, that any person
7-52 acting as agent for said vendor shall be registered pursuant to
7-53 this Act;
7-54 (2) Sales by or on behalf of any insurance
7-55 company subject to the supervision or control of the Texas
7-56 Department of Insurance of any security owned by such company as a
7-57 legal and bona fide investment, provided that in no event shall any
7-58 such sale or offering be exempt from the provisions of this Act
7-59 when made or intended, either directly or indirectly, for the
7-60 benefit of any other company as that term is defined in this Act.
7-61 D. The distribution by a corporation of securities
7-62 direct to its stockholders as a stock dividend or other
7-63 distribution paid out of earnings or surplus.
7-64 E. Any offer and any transaction pursuant to any offer
7-65 by the issuer of its securities to its existing security holders
7-66 (including persons who at the time of the transaction are holders
7-67 of convertible securities or nontransferable warrants) if no
7-68 commission or other remuneration (other than a stand-by commission)
7-69 is paid or given directly or indirectly for soliciting any security
8-1 holder in this State.
8-2 F. The issue in good faith of securities by a company
8-3 to its security holders, or creditors, in the process of a bona
8-4 fide reorganization of the company made in good faith, or the issue
8-5 in good faith of securities by a company, organized solely for the
8-6 purpose of taking over the assets and continuing the business of a
8-7 predecessor company, to the security holders or creditors of such
8-8 predecessor company, provided that in either such case such
8-9 securities are issued in exchange for the securities of such
8-10 holders or claims of such creditors, or both, and in either such
8-11 case security holders or creditors do not pay or give or promise
8-12 and are not obligated to pay or give any consideration for the
8-13 securities so issued other than the securities of or claims against
8-14 said company or its predecessor then held or owned by them.
8-15 G. The issue or sale of securities (a) by one
8-16 corporation to another corporation or the security holders thereof
8-17 pursuant to a vote by one or more classes of such security holders,
8-18 as required by the certificate of incorporation or the applicable
8-19 corporation statute, in connection with a merger, consolidation or
8-20 sale of corporate assets, or (b) by one corporation to its own
8-21 stockholders in connection with the change of par value stock to no
8-22 par value stock or vice versa, or the exchange of outstanding
8-23 shares for the same or a greater or smaller number of shares;
8-24 provided that in any such case such security holders do not pay or
8-25 give or promise and are not obligated to pay or give any
8-26 consideration for the securities so issued or sold other than the
8-27 securities of the corporation then held by them.
8-28 H. The sale of any security to any bank, trust
8-29 company, building and loan association, insurance company, surety
8-30 or guaranty company, savings institution, investment company as
8-31 defined in the Investment Company Act of 1940, small business
8-32 investment company as defined in the Small Business Investment Act
8-33 of 1958, as amended, or to any registered dealer actually engaged
8-34 in buying and selling securities.
8-35 I. Provided such sale is made without any public
8-36 solicitation or advertisements:
8-37 (a) the sale of any security by the issuer
8-38 thereof so long as the total number of security holders of the
8-39 issuer thereof does not exceed thirty-five (35) persons after
8-40 taking such sale into account;
8-41 (b) the sale or distribution by an employer or
8-42 its participating subsidiary, if any, of a security under a thrift,
8-43 savings, stock purchase, retirement, pension, profit-sharing,
8-44 option, bonus, appreciation right, incentive, or similar employee
8-45 benefit plan for employees or directors of the employer or its
8-46 subsidiary; or
8-47 (c) the sale by an issuer of its securities
8-48 during the period of twelve (12) months ending with the date of the
8-49 sale in question to not more than fifteen (15) persons (excluding,
8-50 in determining such fifteen (15) persons, purchasers of securities
8-51 in transactions exempt under other provisions of this Section 5,
8-52 purchasers of securities exempt under Section 6 hereof and
8-53 purchasers of securities which are part of an offering registered
8-54 under Section 7 hereof), provided such persons purchased such
8-55 securities for their own account and not for distribution.
8-56 J. Wherein the securities disposed of consist
8-57 exclusively of notes or bonds secured by mortgage or vendor's lien
8-58 upon real estate or tangible personal property, and the entire
8-59 mortgage is sold or transferred with all of the notes or bonds
8-60 secured thereby in a single transaction.
8-61 K. Any security or membership issued by a corporation
8-62 or association, organized exclusively for religious, educational,
8-63 benevolent, fraternal, charitable, or reformatory purposes and not
8-64 for pecuniary profit, and no part of the net earnings of which
8-65 inures to the benefit of any stockholder, shareholder, or
8-66 individual members, and where no commission or remuneration is paid
8-67 or given or is to be paid or given in connection with the
8-68 disposition thereof.
8-69 L. The sale by the issuer itself, or by a registered
9-1 dealer, of any security issued or guaranteed by any bank organized
9-2 and subject to regulation under the laws of the United States or
9-3 under the laws of any State or territory of the United States, or
9-4 any insular possession thereof, or by any savings and loan
9-5 association organized and subject to regulation under the laws of
9-6 this State, or the sale by the issuer itself of any security issued
9-7 by any federal savings and loan association.
9-8 M. The sale by the issuer itself, or by a registered
9-9 dealer, of any security either issued or guaranteed by the United
9-10 States or by any territory or insular possession thereof, or by the
9-11 District of Columbia, or by any state of the United States, or
9-12 political subdivision thereof (including but not limited to any
9-13 county, city, municipal corporation, district, or authority), or by
9-14 any public or governmental agency or instrumentality of any of the
9-15 foregoing.
9-16 N. The sale and issuance of any securities issued by
9-17 any farmers' cooperative marketing association organized under
9-18 Chapter 52, Agriculture Code, or the predecessor of that law
9-19 (Article 5737 et seq., Revised Statutes); the sale and issuance of
9-20 any securities issued by any mutual loan corporation organized
9-21 under Chapter 54, Agriculture Code, or the predecessor of that law
9-22 (Article 2500 et seq., Revised Statutes); the sale and issuance of
9-23 any equity securities issued by any cooperative association
9-24 organized under the Cooperative Association Act, as amended
9-25 (Article 1396-50.01, Vernon's Texas Civil Statutes); and the sale
9-26 of any securities issued by any farmers' cooperative society
9-27 organized under Chapter 51, Agriculture Code, or the predecessor of
9-28 that law (Article 2514 et seq., Revised Statutes). Provided,
9-29 however, this exemption shall not be applicable to agents [and
9-30 salesmen] of any farmers' cooperative marketing association, mutual
9-31 loan corporation, cooperative association, or farmers' cooperative
9-32 society when the sale of such securities is made to non-members, or
9-33 when the sale of such securities is made to members or non-members
9-34 and a commission is paid or contracted to be paid to the said
9-35 agents [or salesmen].
9-36 O. The sale by a registered dealer of outstanding
9-37 securities provided that:
9-38 (1) Such securities form no part of an unsold
9-39 allotment to or subscription by such dealer as a participant in the
9-40 distribution of such securities by the issuer thereof; and
9-41 (2) Securities of the same class, of the same
9-42 issuer, are outstanding in the hands of the public; and
9-43 (3) Such securities are offered for sale, in
9-44 good faith, at prices reasonably related to the current market
9-45 price of such securities at the time of such sale; and
9-46 (4) No part of the proceeds of such sale are
9-47 paid directly or indirectly to the issuer of such securities; and
9-48 (5) Such sale is not directly or indirectly for
9-49 the purposes of providing or furthering any scheme to violate or
9-50 evade any provision of this Act; and
9-51 (6) The right to sell or resell such securities
9-52 has not been enjoined by any court of competent jurisdiction in
9-53 this State by proceedings instituted by an officer or agency of
9-54 this State charged with enforcement of this Act; and
9-55 (7) The right to sell such securities has not
9-56 been revoked or suspended by the commissioner under any of the
9-57 provisions of this Act, or, if so, revocation or suspension is not
9-58 in force and effect; and
9-59 (8) At the time of such sale, the issuer of such
9-60 securities shall be a going concern actually engaged in business
9-61 and shall then be neither in an organization stage nor in
9-62 receivership or bankruptcy; and
9-63 (9) Such securities or other securities of the
9-64 issuer of the same class have been registered by qualification,
9-65 notification or coordination under Section 7 of this Act; or at the
9-66 time of such sale at least the following information about the
9-67 issuer shall appear in a recognized securities manual or in a
9-68 statement, in form and extent acceptable to the commissioner, filed
9-69 with the commissioner by the issuer or by a registered dealer:
10-1 (a) A statement of the issuer's principal
10-2 business;
10-3 (b) A balance sheet as of a date within
10-4 eighteen (18) months of the date of such sale; and
10-5 (c) Profit and loss statements and a
10-6 record of the dividends paid, if any, for a period of not less than
10-7 three (3) years prior to the date of such balance sheet or for the
10-8 period of existence of the issuer, if such period of existence is
10-9 less than three (3) years.
10-10 The term "recognized securities manual" means a
10-11 nationally distributed manual of securities that is approved for
10-12 use hereunder by the Board.
10-13 The Commissioner may issue a stop order or by order
10-14 prohibit, revoke or suspend the exemption under this Subsection O
10-15 with respect to any security if the Commissioner has reasonable
10-16 cause to believe that the plan of business of the issuer of such
10-17 security, the security, or the sale thereof would tend to work a
10-18 fraud or deceit upon any purchaser or purchasers thereof, such
10-19 order to be subject to review in the manner provided by Section 24
10-20 of this Act. Notice of any court injunction enjoining the sale, or
10-21 resale, of any such security, or of an order revoking or suspending
10-22 the exemption under this subdivision with respect to any security,
10-23 shall be delivered or shall be mailed by certified or registered
10-24 mail with return receipt requested, to any dealers believed to be
10-25 selling, or offering for sale, securities of the type referred to
10-26 in the notice; and the prohibitions of (6) and (7) above of this
10-27 Subsection O shall be inapplicable to any dealer until the dealer
10-28 has received actual notice from the commissioner of such revocation
10-29 or suspension.
10-30 The Board may for cause shown revoke or suspend the
10-31 recognition hereunder of any manuals previously approved under this
10-32 Subsection but no such action may be taken unless upon notice and
10-33 opportunity for hearing before the Board or a hearings officer as
10-34 now or hereafter required by law. A judgment sustaining the Board
10-35 in the action complained of shall not bar after one year an
10-36 application by the plaintiff for approval of its manual or manuals
10-37 hereunder, nor shall a judgment in favor of the plaintiff prevent
10-38 the Board from thereafter revoking such recognition for any proper
10-39 cause which may thereafter accrue or be discovered.
10-40 P. The execution by a dealer of an unsolicited order
10-41 for the purchase of securities, where the initial offering of such
10-42 securities has been completed and provided that the dealer acts
10-43 solely as an agent for the purchaser, has no direct or indirect
10-44 interest in the sale or distribution of the security ordered, and
10-45 receives no commission, profit, or other compensation from any
10-46 source other than the purchaser.
10-47 Q. The sales of interests in and under oil, gas or
10-48 mining leases, fees or titles, or contracts relating thereto, where
10-49 (1) the total number of sales by any one owner of interests,
10-50 whether whole, fractional, segregated or undivided in any single
10-51 oil, gas or mineral lease, fee or title, or contract relating
10-52 thereto, shall not exceed thirty-five (35) within a period of
10-53 twelve (12) consecutive months and (2) no use is made of
10-54 advertisement or public solicitation; provided, however, if such
10-55 sale or sales are made by an agent for such owner or owners, such
10-56 agent shall be licensed pursuant to this Act. No oil, gas or
10-57 mineral unitization or pooling agreement shall be deemed a sale
10-58 under this Act.
10-59 R. The sale by the issuer itself, or by a subsidiary
10-60 of such issuer, of any securities which would be exempt if sold by
10-61 a registered dealer under Section 6 (other than Section 6E) of this
10-62 Act.
10-63 S. The sale by or through a registered dealer of any
10-64 option if at the time of the sale of the option:
10-65 (1) the performance of the terms of the option
10-66 is guaranteed by any broker-dealer registered under the federal
10-67 Securities Exchange Act of 1934, as amended, which guaranty and
10-68 broker-dealer are in compliance with such requirements or
10-69 regulations as may be approved or adopted by the board;
11-1 (2) the option is not sold by or for the benefit
11-2 of the issuer of the security which may be purchased or sold upon
11-3 exercise of the option;
11-4 (3) the security which may be purchased or sold
11-5 upon exercise of the option is either (a) exempted under
11-6 Subsection F of Section 6 of this Act or (b) quoted on the NASDAQ
11-7 stock market [National Association of Securities Dealers Automated
11-8 Quotation system] and meets the requirements of Paragraphs (1),
11-9 (6), (7), and (8) of Subsection O of Section 5 of this Act; and
11-10 (4) such sale is not directly or indirectly for
11-11 the purposes of providing or furthering any scheme to violate or
11-12 evade any provisions of this Act.
11-13 For purposes of this subsection the term "option" shall
11-14 mean and include any put, call, straddle, or other option or
11-15 privilege of buying or selling a specified number of securities at
11-16 a specified price from or to another person, without being bound to
11-17 do so, on or prior to a specified date, but such term shall not
11-18 include any option or privilege which by its terms may terminate
11-19 prior to such specified date upon the occurrence of a specified
11-20 event.
11-21 T. Such other transactions or conditions as the board
11-22 by rule, regulation, or order may define or prescribe,
11-23 conditionally or unconditionally.
11-24 SECTION 2.03. Section 6, The Securities Act (Article 581-6,
11-25 Vernon's Texas Civil Statutes), is amended to read as follows:
11-26 Sec. 6. EXEMPT SECURITIES. Except as hereinafter in this Act
11-27 expressly provided, the provisions of this Act shall not apply to
11-28 any of the following securities when offered for sale, or sold, or
11-29 dealt in by a registered dealer or agent [salesman] of a registered
11-30 dealer:
11-31 D. Any security issued or guaranteed either as to
11-32 principal, interest, or dividend, by a corporation owning or
11-33 operating a railroad or any other public service utility;
11-34 provided, that such corporation is subject to regulation or
11-35 supervision either as to its rates and charges or as to the issue
11-36 of its own securities by the Railroad Commission of Texas, or by a
11-37 public commission, agency, board or officers of the Government of
11-38 the United States, or of any territory or insular possession
11-39 thereof, or of any state or municipal corporation, or of the
11-40 District of Columbia, or of the Dominion of Canada, or any province
11-41 thereof; also equipment trust certificates or equipment notes or
11-42 bonds based on chattel mortgages, leases or agreements for
11-43 conditional sale of cars, motive power or other rolling stock
11-44 mortgages, leased or sold to or furnished for the use of or upon a
11-45 railroad or other public service utility corporation, provided that
11-46 such corporation is subject to regulation or supervision as above;
11-47 or equipment trust certificates, or equipment notes or bonds where
11-48 the ownership or title of such equipment is pledged or retained in
11-49 accordance with the provisions of the laws of the United States, or
11-50 of any state, territory or insular possession thereof, or of the
11-51 District of Columbia, or the Dominion of Canada, or any province
11-52 thereof, to secure the payment of such equipment trust
11-53 certificates, bonds or notes.
11-54 E. Any security issued and sold by a domestic
11-55 corporation without capital stock and not organized and not engaged
11-56 in business for profit.
11-57 F. Securities which at the time of sale have been
11-58 fully listed upon the American Stock Exchange, the Boston Stock
11-59 Exchange, the Chicago [Midwest] Stock Exchange or the New York
11-60 Stock Exchange, have been designated or approved for designation on
11-61 notice of issuance on the national market system of the NASDAQ
11-62 stock market [National Association of Securities Dealers Automated
11-63 Quotation National Market System], or have been fully listed upon
11-64 any recognized and responsible stock exchange approved by the
11-65 Commissioner as hereinafter in this section provided, and also all
11-66 securities senior to, or if of the same issues, upon a parity with,
11-67 any securities so listed or designated or represented by
11-68 subscription rights which have been so listed or designated, or
11-69 evidence of indebtedness guaranteed by any company, any stock of
12-1 which is so listed or designated, such securities to be exempt only
12-2 so long as the exchange upon which such securities are so listed
12-3 remains approved under the provisions of this Section. Application
12-4 for approval by the Commissioner may be made by any organized stock
12-5 exchange in such manner and upon such forms as may be prescribed by
12-6 the Commissioner, but no approval of any exchange shall be given
12-7 unless the facts and data supplied with the application shall be
12-8 found to establish:
12-9 (1) That the requirements for the listing of
12-10 securities upon the exchange so seeking approval are such as to
12-11 effect reasonable protection to the public;
12-12 (2) That the governing constitution, by-laws or
12-13 regulations of such exchange shall require:
12-14 1st: An adequate examination into the
12-15 affairs of the issuer of the securities which are to be listed
12-16 before permitting trading therein;
12-17 2nd: That the issuer of such securities,
12-18 so long as they be listed, shall periodically prepare, make public
12-19 and furnish promptly to the exchange, appropriate financial,
12-20 income, and profit and loss statements;
12-21 3rd: Securities listed and traded in on
12-22 such exchange to be restricted to those of ascertained, sound asset
12-23 or income value;
12-24 4th: A reasonable surveillance of its
12-25 members, including a requirement for periodical financial
12-26 statements and a determination of the financial responsibility of
12-27 its members and the right and obligation in the governing body of
12-28 such exchange to suspend or expel any member found to be
12-29 financially embarrassed or irresponsible or found to have been
12-30 guilty of misconduct in his business dealings, or conduct
12-31 prejudicial of the rights and interests of his customers;
12-32 The approval of any such exchange by the Commissioner
12-33 shall be made only after a reasonable investigation and hearing,
12-34 and shall be by a written order of approval upon a finding of fact
12-35 substantially in accordance with the requirements hereinabove
12-36 provided. The Commissioner, upon ten (10) days notice and hearing,
12-37 shall have power at any time to withdraw approval theretofore
12-38 granted by him to any such stock exchange which does not at the
12-39 time of hearing meet the standards of approval under this Act, and
12-40 thereupon securities so listed upon such exchange shall be no
12-41 longer entitled to the benefit of such exemption except upon the
12-42 further order of said Commissioner approving such exchange.
12-43 By the same procedure set out in the preceding
12-44 paragraph with respect to exchanges approved by the Commissioner,
12-45 the Commissioner may suspend the exempt status of any trading
12-46 system exempted by the Legislature on or after January 1, 1989, if
12-47 that system does not at the time of hearing meet the applicable
12-48 standards for approval of exchanges prescribed by this Act. The
12-49 suspension has the same effect as the removal of approval of an
12-50 exchange. The suspension remains in effect until the Commissioner
12-51 by order determines that the trading system has corrected the
12-52 deficiency or deficiencies on which the suspension was based and
12-53 maintains standards and procedures that provide reasonable
12-54 protection to the public.
12-55 H. Any commercial paper that arises out of a current
12-56 transaction or the proceeds of which have been or are to be used
12-57 for current transactions, and that evidences an obligation to pay
12-58 cash within nine months of the date of issuance, exclusive of days
12-59 of grace, or any renewal of such paper that is likewise limited, or
12-60 any guarantee of such paper or of any such renewal.
12-61 I. Notes, bonds, or other evidence of indebtedness or
12-62 certificates of ownership which are equally and proportionately
12-63 secured without reference of priority of one over another, and
12-64 which, by the terms of the instrument creating the lien, shall
12-65 continue to be so secured by the deposit with a trustee of
12-66 recognized responsibility approved by the Commissioner of any of
12-67 the securities specified in Subsection M of Section 5 or Subsection
12-68 D of Section 6; such deposited securities, if of the classes
12-69 described in Subsection M of Section 5, having an aggregate par
13-1 value of not less than one hundred and ten per cent (110%) of the
13-2 par value of the securities thereby secured, and if of class
13-3 specified in Subsection D of Section 6, having an aggregate par
13-4 value of not less than one hundred and twenty five per cent (125%)
13-5 of the par value of the securities thereby secured.
13-6 J. Notes, bonds or other evidence of indebtedness of
13-7 religious, charitable or benevolent corporations.
13-8 SECTION 2.04. Subsection A, Section 7, The Securities Act
13-9 (Article 581-7, Vernon's Texas Civil Statutes), is amended to read
13-10 as follows:
13-11 A. Qualification of Securities. (1) No dealer or [,] agent
13-12 [or salesman] shall sell or offer for sale any securities issued
13-13 after September 6, 1955, except those which shall have been
13-14 registered by Notification under subsection B or by Coordination
13-15 under subsection C of this Section 7 and except those which come
13-16 within the classes enumerated in Section 5 or Section 6 of this
13-17 Act, until the issuer of such securities or a dealer registered
13-18 under the provisions of this Act shall have been granted a permit
13-19 by the Commissioner; and no such permit shall be granted by the
13-20 Commissioner until the issuer of such securities or a dealer
13-21 registered under the provisions of this Act shall have filed with
13-22 the Commissioner a sworn statement verified under the oath of an
13-23 executive officer or partner of the issuer, or of such registered
13-24 dealer, and attested by the secretary or partner thereof, setting
13-25 forth the following information:
13-26 a. The names, residences and post office
13-27 addresses of the officers and directors of the company;
13-28 b. The location of its principal office and of
13-29 all branch offices in this State, if any;
13-30 c. A copy of its articles of incorporation or
13-31 partnership or association, as the case may be, and of any
13-32 amendments thereto, if any; if a corporation, a copy of all minutes
13-33 of any proceedings of its directors, stockholders or members
13-34 relating to or affecting the issue of said security; if a
13-35 corporation, a copy of its bylaws and of any amendments thereto;
13-36 if a trustee, a copy of all instruments by which the trust is
13-37 created and in which it is accepted, acknowledged or declared;
13-38 d. A statement showing the amount of capital
13-39 stock, if any, and if no capital stock, the amount of capital of
13-40 the issuer that is contemplated to be employed; the number of
13-41 shares into which such stock is divided, or if not divided into
13-42 shares of stock, what division is to be made or is contemplated;
13-43 the par value of each share, or if no par stock, the price at which
13-44 such security is proposed to be sold; the promotional fees or
13-45 commissions to be paid for the sale of same, including any and all
13-46 compensations of every nature that are in any way to be allowed the
13-47 promoters or allowed for the sale of same; and how such
13-48 compensation is to be paid, whether in cash, securities, service or
13-49 otherwise, or partly of either or both; also, the amount of cash
13-50 to be paid, or securities to be issued, given, transferred or sold
13-51 to promoters for promotion or organization services and expenses,
13-52 and the amount of promotion or organization services and expenses
13-53 which will be assumed or in any way paid by the issuer;
13-54 e. Copies of certificates of the stock and all
13-55 other securities to be sold, or offered for sale, together with
13-56 application blanks therefor; a copy of any contract it proposes to
13-57 make concerning such security; a copy of any prospectus or
13-58 advertisement or other description of security prepared by or for
13-59 it for distribution or publication;
13-60 f. 1. A detailed statement prepared in
13-61 accordance with generally accepted auditing standards and
13-62 procedures and generally accepted accounting principles, showing
13-63 all the assets and all the liabilities of the issuer, said
13-64 statement to reflect the financial condition of the issuer on a day
13-65 not more than ninety (90) days prior to the date such statement is
13-66 filed. Such statement shall list all assets in detail and shall
13-67 show how the value of such assets was determined, that is, whether
13-68 the value set forth in said statement represents the actual cost in
13-69 money of such assets, or whether such value represents their
14-1 present market value, or some other value than the actual cost in
14-2 money, and shall show the present actual value of said assets;
14-3 also, whether the value set forth in the statement is greater or
14-4 less than the actual cost value in money and greater or less than
14-5 the present market value of such assets. If any of the assets
14-6 consist of real estate, then said statement shall show the amount
14-7 for which said real estate is rendered for State and county taxes,
14-8 or assessed for taxes. If any such assets listed shall consist of
14-9 anything other than cash and real estate, same shall be set out in
14-10 detail so as to give the Commissioner the fullest possible
14-11 information concerning same, and the Commissioner shall have the
14-12 power to require the filing of such additional information as the
14-13 Commissioner may deem necessary to determine whether or not the
14-14 true value of said assets are reflected in the statement filed.
14-15 Should any of the assets listed in said statement be subject to any
14-16 repurchase agreement, or any other agreement of like character, by
14-17 the terms of which the absolute ownership of, or title to said
14-18 assets is qualified or limited in any way, then the terms and
14-19 conditions of said agreement by which the absolute ownership of, or
14-20 title to said assets is qualified or limited, as well as the amount
14-21 and character of the assets subject thereto shall be fully stated.
14-22 Said statement shall list all current liabilities, that is, all
14-23 liabilities which will mature and become due within one year from
14-24 the date of such application, and shall list separately from such
14-25 current liabilities, all other liabilities, contingent or
14-26 otherwise, showing the amount of those which are secured by
14-27 mortgage or otherwise, the assets of the issuer which are subject
14-28 to such mortgage, and the dates of maturity of any such mortgage
14-29 indebtedness. Such application shall also include a detailed
14-30 income statement, prepared in accordance with generally accepted
14-31 auditing standards and procedures and generally accepted accounting
14-32 principles, which shall cover the last three (3) years' operations
14-33 of the issuer, if such issuer has been in operation for three (3)
14-34 years, but if not, said income statement shall cover the time that
14-35 said issuer has been operating. If said issuer has not been
14-36 operating, but is taking over a concern of any kind which has been
14-37 previously operating, an income statement showing the operations of
14-38 the concern thus taken over for a period of the last three (3)
14-39 years next preceding the taking over of said concern shall be
14-40 included in said statement; said income statement shall clearly
14-41 reflect the amount of net income or net loss incurred during each
14-42 of the years shown.
14-43 2. The financial statements required in
14-44 subparagraph (1) of this paragraph for a small business issuer, as
14-45 defined by Board rule, may be reviewed by an independent certified
14-46 public accountant in accordance with the Statements on Standards
14-47 for Accounting and Review Services promulgated by the American
14-48 Institute of Certified Public Accountants in lieu of being audited
14-49 and certified, provided that the small business issuer otherwise
14-50 meets all of the requirements that the Board by rule, regulation,
14-51 or order may prescribe, conditionally or unconditionally.
14-52 SECTION 2.05. Section 8, The Securities Act (Article 581-8,
14-53 Vernon's Texas Civil Statutes), is amended to read as follows:
14-54 Sec. 8. CONSENT TO SERVICE. Unless the Board by rule
14-55 otherwise specifies, any application filed or notice filing
14-56 submitted by an issuer, or by a dealer or investment adviser who
14-57 [will offer such securities for sale as the agent of the issuer,
14-58 and the issuer] is organized under the laws of any other state,
14-59 territory, or government, or domiciled in any other state than
14-60 Texas, shall contain a provision that appoints [written instrument
14-61 appointing] the Commissioner the issuer's, dealer's, or investment
14-62 adviser's true and lawful attorney upon whom all process may be
14-63 served in any action or proceedings against such issuer, dealer, or
14-64 investment adviser arising out of any transaction subject to this
14-65 Act with the same effect as if such issuer, dealer, or investment
14-66 adviser were organized or created under the laws of this state and
14-67 had been lawfully served with process therein. The provision [Such
14-68 instrument] shall be duly executed by an authorized agent of the
14-69 issuer, dealer, or investment adviser [under proper resolution or
15-1 authority]. Whenever the Commissioner shall have been served with
15-2 any process as is herein provided, it shall be the duty of the
15-3 Commissioner to forward same by United States mail to the last
15-4 known address of such issuer, dealer, or investment adviser.
15-5 SECTION 2.06. Subsection C, Section 10, The Securities Act
15-6 (Article 581-10, Vernon's Texas Civil Statutes), is amended to read
15-7 as follows:
15-8 C. Use of Permit to Aid Sale of Securities Prohibited. It
15-9 shall be unlawful for any dealer, [or] issuer, or agent [or
15-10 salesman,] to use a permit authorizing the issuance of securities
15-11 in connection with any sale or effort to sell any security.
15-12 SECTION 2.07. Section 11, The Securities Act (Article 581-11,
15-13 Vernon's Texas Civil Statutes), is amended to read as follows:
15-14 Sec. 11. PAPERS FILED WITH COMMISSIONER; RECORDS OPEN TO
15-15 INSPECTION. All information, papers, documents, instruments and
15-16 affidavits required by this Act to be filed with the Commissioner
15-17 shall be deemed public records of this state, and shall be open to
15-18 the inspection and examination of any purchaser or prospective
15-19 purchaser of said securities or the agent or representative of such
15-20 purchaser or prospective purchaser; and the Commissioner shall give
15-21 out to any such purchaser or prospective purchaser or his agent or
15-22 representative any information required to be filed with him under
15-23 the provisions of this section, or any other part of this Act, and
15-24 shall furnish any such purchaser, prospective purchaser, or his
15-25 agent or representative requesting it, certified copies of any and
15-26 all papers, documents, instruments and affidavits filed with him
15-27 under the provisions of this section or of any part of this Act.
15-28 The Commissioner shall maintain a record, which shall be open for
15-29 public inspection, upon which shall be entered the names and
15-30 addresses of all registered dealers, registered agents, registered
15-31 investment advisers, registered investment adviser representatives,
15-32 and persons who have submitted a notice filing under this Act, [and
15-33 salesmen] and all orders of the Commissioner denying, suspending or
15-34 revoking registration. This section does not affect information
15-35 considered confidential by Section 13-1 or 28 of this Act or other
15-36 law.
15-37 SECTION 2.08. Section 12, The Securities Act (Article 581-12,
15-38 Vernon's Texas Civil Statutes), is amended to read as follows:
15-39 Sec. 12. REGISTRATION OF PERSONS SELLING SECURITIES OR
15-40 RENDERING INVESTMENT ADVICE. A. Except as provided in Section 5 of
15-41 this Act, no person, firm, corporation or dealer shall, directly or
15-42 through agents [or salesmen], offer for sale, sell or make a sale
15-43 of any securities in this state without first being registered as
15-44 in this Act provided. No [salesman or] agent shall, in behalf of
15-45 any dealer, sell, offer for sale, or make sale of any securities
15-46 within the state unless registered as an [a salesman or] agent for
15-47 that particular [of a] registered dealer under the provisions of
15-48 this Act.
15-49 B. Except as provided by Section 5 of this Act, a person may
15-50 not, directly or through an investment adviser representative,
15-51 render services as an investment adviser in this state unless the
15-52 person is registered under this Act, submits a notice filing as
15-53 provided by Section 12-1 of this Act, or is otherwise exempt under
15-54 this Act. A person may not act or render services as an investment
15-55 adviser representative for a certain investment adviser in this
15-56 state unless the person is registered or submits a notice filing as
15-57 an investment adviser representative for that particular investment
15-58 adviser as provided in Section 18 or 12-1 of this Act.
15-59 C. The Board may adopt rules and regulations exempting
15-60 certain classes of persons from the dealer, [and] agent, investment
15-61 adviser, and investment adviser representative registration
15-62 requirements, or providing conditional exemptions from
15-63 registration, if the Board determines that such rules and
15-64 regulations are consistent with the purposes of this Act.
15-65 SECTION 2.09. The Securities Act (Article 581-1 et seq.,
15-66 Vernon's Texas Civil Statutes) is amended by adding Section 12-1 to
15-67 read as follows:
15-68 Sec. 12-1. NOTICE FILING FOR FEDERAL COVERED INVESTMENT
15-69 ADVISERS AND REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
16-1 ADVISERS. A. This section does not apply to an investment adviser
16-2 or investment adviser representative that is exempt from
16-3 registration under this Act or Board rule.
16-4 B. The Board by rule shall authorize a federal covered
16-5 investment adviser or a representative of a federal covered
16-6 investment adviser to engage in rendering services as an investment
16-7 adviser in this state on submission to and receipt by the
16-8 Commissioner of:
16-9 (1) a notice filing on the form and containing the
16-10 information prescribed by the Commissioner and, if applicable, a
16-11 consent to service appointing the Commissioner as the adviser's
16-12 agent for service of process as required by Section 8 of this Act;
16-13 and
16-14 (2) a fee in the amount determined under Sections 35
16-15 and 41 of this Act.
16-16 C. After the notice filing fee is paid and all the
16-17 requirements for a notice filing under Subsection B of this section
16-18 are met, a notice filing submitted under this section takes effect
16-19 and is valid for the remainder of the calendar year. A federal
16-20 covered investment adviser or federal covered investment adviser
16-21 representative may renew a notice filing on or before its
16-22 expiration date on submission to and receipt by the Commissioner
16-23 of:
16-24 (1) a renewal notice filing; and
16-25 (2) a renewal fee in the amount determined under
16-26 Sections 35 and 41 of this Act.
16-27 SECTION 2.10. Section 13, The Securities Act (Article 581-13,
16-28 Vernon's Texas Civil Statutes), is amended to read as follows:
16-29 Sec. 13. METHOD AND CONDITION OF REGISTRATION REQUIRED FOR
16-30 DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER
16-31 REPRESENTATIVE [OF EACH DEALER AND EACH AGENT OR SALESMAN OF EACH
16-32 DEALER]. A. A dealer or investment adviser to be registered must
16-33 submit a sworn application therefor to the Commissioner, which
16-34 shall be in such form as the Commissioner may determine and which
16-35 shall state:
16-36 (1) The principal place of business of the applicant
16-37 wherever situated;
16-38 (2) The location of the principal place of business
16-39 and all branch offices in this state, if any;
16-40 (3) The name or style of doing business and the
16-41 address of the applicant [dealer];
16-42 (4) The names, residences and the business addresses
16-43 of all persons interested in the business as principal, officer,
16-44 director or managing agent, specified as to each his capacity and
16-45 title; and
16-46 (5) The general plan and character of business of such
16-47 applicant and the length of time during and the places at which the
16-48 applicant [dealer] has been engaged in the business.
16-49 B. An [Such] application filed by a dealer or investment
16-50 adviser shall also contain such additional information as to the
16-51 applicant's previous history, record, associations and present
16-52 financial condition as may be required by the Commissioner, or as
16-53 is necessary to enable the Commissioner to determine whether the
16-54 sale of any securities proposed to be issued or dealt in by such
16-55 applicant would result in fraud.
16-56 C. Each application shall be accompanied by certificates or
16-57 other evidences satisfactory to the Commissioner establishing the
16-58 good reputation of the applicant, his directors, officers,
16-59 copartners or principals.
16-60 D. The Commissioner shall require as a condition of
16-61 registration for all registrations granted after the effective date
16-62 of this Subsection D that the applicant (and, in the case of a
16-63 corporation or partnership, the officers, directors or partners to
16-64 be licensed by the applicant) pass successfully a written
16-65 examination to determine the applicant's qualifications and
16-66 competency to engage in the business of dealing in and selling
16-67 securities as a dealer or agent [as a salesman], or rendering
16-68 services as an investment adviser or investment adviser
16-69 representative. This condition may be waived as to any applicant
17-1 or class of applicants by action of the State Securities Board.
17-2 E. Not later than the 30th day after the date a person takes
17-3 a registration [day on which an] examination [is administered]
17-4 under this Act, the Board shall notify the person [each examinee]
17-5 of the results of the examination. If the [However, if an]
17-6 examination is graded or reviewed by a [national] testing service:
17-7 (1) [,] the Board shall notify the person [examinees]
17-8 of the results of the examination not later than the 14th day after
17-9 the date [day on which] the Board receives the results from the
17-10 testing service; and
17-11 (2) if [. If the] notice of the examination results
17-12 will be delayed for longer than 90 [ninety (90)] days after the
17-13 examination date, the Board shall notify the person [examinee] of
17-14 the reason for the delay before the 90th day.
17-15 F. The Board may require a testing service to notify a
17-16 person of the results of the person's examination. If requested in
17-17 writing by a person who fails a registration [an] examination
17-18 administered under this Act, the Board shall furnish the person
17-19 with an analysis of the person's performance on the examination.
17-20 G. If the applicant is a corporation organized under the
17-21 laws of any other state or territory or government or shall have
17-22 its principal place of business therein, it shall accompany the
17-23 application with a copy of its Articles of Incorporation and all
17-24 amendments thereto, certified by the proper officer of such state
17-25 or government or of the corporation, and its regulations and by
17-26 laws.
17-27 H. If a limited partnership, either a copy of its Articles
17-28 of Copartnership or a verified statement of the plan of doing
17-29 business.
17-30 I. If an unincorporated association or organization under
17-31 the laws of any other state, territory or government, or having its
17-32 principal place of business therein, a copy of its Articles of
17-33 Association, Trust Agreement or other form of organization.
17-34 J. It shall be the duty of the Commissioner to prepare a
17-35 proper form to be used by the applicant under the terms of this
17-36 Section, and the Commissioner shall furnish copies thereof to all
17-37 persons desiring to make application to be registered as a dealer
17-38 or investment adviser.
17-39 K. The Commissioner may accept some or all of the
17-40 examinations administered by securities self-regulatory
17-41 organizations [the National Association of Securities Dealers] to
17-42 fulfill the examination requirements of Subsection D.
17-43 SECTION 2.11. Section 15, The Securities Act (Article 581-15,
17-44 Vernon's Texas Civil Statutes), is amended to read as follows:
17-45 Sec. 15. ISSUANCE OF REGISTRATION CERTIFICATES TO DEALERS
17-46 AND INVESTMENT ADVISERS. If the Commissioner is satisfied that the
17-47 applicant for a dealer's or investment adviser's certificate of
17-48 registration has complied with the requirements of the Act above,
17-49 that the applicant has filed a written consent to service as and
17-50 when required by Section 8 [16] of this Act, and upon the payment
17-51 of the fees required by Section 35 of this Act, the Commissioner
17-52 shall register the applicant and issue to it or him a registration
17-53 certificate, stating the principal place of business and address of
17-54 the dealer or investment adviser, the names and business addresses
17-55 of all persons interested in the business as principals, officers,
17-56 directors or managing agents, and the fact that the dealer or
17-57 investment adviser has been registered for a current calendar year
17-58 as a dealer in securities or as an investment adviser. Pending
17-59 final disposition of an application, the Commissioner may, for
17-60 special cause shown, grant temporary permission, revocable at any
17-61 time and subject to such terms and conditions as the Commissioner
17-62 may prescribe, to transact business as a dealer or investment
17-63 adviser under this Act. Any dealer or investment adviser acting
17-64 under such a temporary permission, shall be considered a registered
17-65 dealer or investment adviser for all purposes of this Act.
17-66 SECTION 2.12. Section 17, The Securities Act (Article 581-17,
17-67 Vernon's Texas Civil Statutes), is amended to read as follows:
17-68 Sec. 17. FORM OF CERTIFICATES TO DEALERS AND INVESTMENT
17-69 ADVISERS. The certificate shall be in such form as the Commissioner
18-1 may determine. Any changes in the personnel of a partnership or in
18-2 the principals, officers, directors or managing agents of any
18-3 dealer or investment adviser shall be immediately certified under
18-4 oath to the Commissioner and any change in the certificate
18-5 necessitated thereby may be made at any time, upon written
18-6 application setting forth the fact necessitating the change. Upon
18-7 the issue of the amended certificates, the original certificate and
18-8 the certified copies thereof outstanding shall be promptly
18-9 surrendered to the Commissioner.
18-10 SECTION 2.13. Section 18, The Securities Act (Article 581-18,
18-11 Vernon's Texas Civil Statutes), is amended to read as follows:
18-12 Sec. 18. REGISTRATION OF AGENTS [OR SALESMEN] OF DEALERS OR
18-13 OF REPRESENTATIVES OF INVESTMENT ADVISERS. Upon written application
18-14 by a registered dealer or investment adviser, and upon satisfactory
18-15 compliance with the requirements of the Act above, the Commissioner
18-16 shall register as an agent [agents or salesmen] of such dealer or
18-17 as a representative of the investment adviser such persons as the
18-18 dealer or investment adviser may request. The application shall be
18-19 in such form as the Commissioner may prescribe and shall state the
18-20 residences and addresses of the persons whose registration is
18-21 requested, together with such information as to such agent's or
18-22 investment adviser representative's [salesman's] previous history,
18-23 record and association as may be required by the Commissioner.
18-24 Such application shall also be signed and sworn to by the agent or
18-25 investment adviser representative [salesman] for whom registration
18-26 is requested. The Commissioner shall issue to such dealer or
18-27 investment adviser, to be retained by such dealer or investment
18-28 adviser for each person so registered, evidence of registration
18-29 stating the person's name, the address of the dealer or investment
18-30 adviser, and the fact that the person is registered for the current
18-31 calendar year as an agent or investment adviser representative
18-32 [salesman] of the dealer or investment adviser, as appropriate.
18-33 The evidence of registration shall be in such form as the
18-34 Commissioner shall determine. Upon application by the dealer or
18-35 the investment adviser, the registration of any agent or investment
18-36 adviser representative [salesman] shall be cancelled.
18-37 SECTION 2.14. Subsection D, Section 19, The Securities Act
18-38 (Article 581-19, Vernon's Texas Civil Statutes), is amended to
18-39 read as follows:
18-40 D. The Board may recognize, prepare, or administer
18-41 continuing education programs for a person who is registered under
18-42 this Act [dealers, salesmen, or agents]. If participation is
18-43 required by the Board as a condition of maintaining the certificate
18-44 or evidence of registration, a person who is registered under this
18-45 Act must participate in the continuing education programs
18-46 [Participation in the programs is voluntary].
18-47 SECTION 2.15. Section 20, The Securities Act (Article 581-20,
18-48 Vernon's Texas Civil Statutes), is amended to read as follows:
18-49 Sec. 20. DISPLAY OR ADVERTISEMENT OF FACT OF REGISTRATION
18-50 UNLAWFUL. It shall be unlawful for any dealer, agent, investment
18-51 adviser, or investment adviser representative [salesman] to use the
18-52 fact of his registry, by public display or advertisement, except as
18-53 hereinafter expressly provided, for the registration certificate or
18-54 evidence of registration or any certified copy thereof, in
18-55 connection with any sale or effort to sell any security or any
18-56 rendering of services as an investment adviser.
18-57 SECTION 2.16. Section 21, The Securities Act (Article 581-21,
18-58 Vernon's Texas Civil Statutes), is amended to read as follows:
18-59 Sec. 21. POSTING REGISTRATION CERTIFICATES [OF AUTHORITY].
18-60 Immediately upon receipt of the dealer's or investment adviser's
18-61 registration certificate issued pursuant to the authority of this
18-62 Act, the dealer or investment adviser named therein shall cause
18-63 such certificate to be posted and at all times conspicuously
18-64 displayed in such dealer's or investment adviser's principal place
18-65 of business, if one is maintained in this state, and shall likewise
18-66 forthwith cause a duplicate of such certificate to be posted and at
18-67 all times conspicuously displayed in each branch office located
18-68 within this state.
18-69 SECTION 2.17. Subsections A and B, Section 22, The Securities
19-1 Act (Article 581-22, Vernon's Texas Civil Statutes), are amended to
19-2 read as follows:
19-3 A. Permitted Written, Pictorial, or Broadcast Offers. A
19-4 written or printed offer (including a pictorial demonstration with
19-5 any accompanying script) or a broadcast offer (i.e., an offer
19-6 disseminated by radio, television, recorded telephone presentation,
19-7 or other mass media) to sell a security may be made in this State
19-8 if:
19-9 (1) a copy of the offer is filed with the Commissioner
19-10 within 10 days after the date of its first use in this State; and
19-11 (2) the person making or distributing the offer in
19-12 this State is a registered dealer or a registered agent [salesman]
19-13 of a registered dealer, as required by this Act; and
19-14 (3) either:
19-15 (a) the security is registered under Subsection
19-16 B or C of Section 7 or a permit has been granted for the security
19-17 under Section 10, or
19-18 (b) an application for registration under
19-19 Subsection B or C of Section 7 or for a permit under Section 10 has
19-20 been filed with the Commissioner; and
19-21 (4) if registration has not become effective under
19-22 Subsection B or C of Section 7 or a permit has not been granted
19-23 under Section 10, the offer prominently states on the first page of
19-24 a written or printed offer or as a preface to any pictorial or
19-25 broadcast offer either:
19-26 (a)
19-27 INFORMATIONAL ADVERTISING ONLY.
19-28 THE SECURITIES HEREIN DESCRIBED HAVE NOT BEEN QUALIFIED OR
19-29 REGISTERED FOR SALE IN TEXAS. ANY REPRESENTATION TO THE CONTRARY
19-30 OR CONSUMMATION OF SALE OF THESE SECURITIES IN TEXAS PRIOR TO
19-31 QUALIFICATION OR REGISTRATION THEREOF IS A CRIMINAL OFFENSE.
19-32 or
19-33 (b) other language required by the United States
19-34 Securities and Exchange Commission that in the Commissioner's
19-35 opinion will inform investors that the securities may not yet be
19-36 sold; and
19-37 (5) the person making or distributing the offer in
19-38 this State;
19-39 (a) has not received notice in writing of an
19-40 order prohibiting the offer under Subsection A or B of Section 23,
19-41 or
19-42 (b) has received such notice but the order is no
19-43 longer in effect; and
19-44 (6) payment is not accepted from the offeree and no
19-45 contract of sale is made before registration is effective under
19-46 Subsection B or C of Section 7 or a permit is granted under Section
19-47 10.
19-48 B. Permitted Oral Offers. An oral offer (not broadcast,
19-49 i.e., not disseminated by radio, television, recorded telephone
19-50 presentation, or other mass media) to sell a security may be made
19-51 in this State in person, by telephone, or by other direct
19-52 individual communication if:
19-53 (1) the person making the offer in this State is a
19-54 registered dealer or a registered agent [salesman] of a registered
19-55 dealer, as required by this Act; and
19-56 (2) either:
19-57 (a) the security is registered under Subsection
19-58 B or C of Section 7 or a permit has been granted for the security
19-59 under Section 10, or
19-60 (b) an application for registration under
19-61 Subsection B or C of Section 7 or for a permit under Section 10 has
19-62 been filed with the Commissioner; and
19-63 (3) the person making or distributing the offer in
19-64 this State:
19-65 (a) has not received notice in writing of an
19-66 order prohibiting the offer under Subsection A or B of Section 23,
19-67 or
19-68 (b) has received such notice but the order is no
19-69 longer in effect; and
20-1 (4) payment is not accepted from the offeree and no
20-2 contract of sale is made before registration is effective under
20-3 Subsection B or C of Section 7 or before a permit is granted under
20-4 Section 10.
20-5 SECTION 2.18. Section 26, The Securities Act (Article 581-26,
20-6 Vernon's Texas Civil Statutes), is amended to read as follows:
20-7 Sec. 26. NOTICES BY REGISTERED MAIL. Any notice required by
20-8 this Act shall be sufficient if sent by registered or certified
20-9 mail unless otherwise specified in this Act, addressed to a person
20-10 [the dealer, agent or salesman, as the case may be,] at the address
20-11 designated in any filings submitted by the person to the
20-12 Commissioner or the person's last known address [the application
20-13 for registration]. A [All testimony taken at any hearing before
20-14 the Commissioner shall be reported stenographically and a] full and
20-15 complete record shall be kept of all proceedings had before the
20-16 Commissioner on any hearing or investigation.
20-17 SECTION 2.19. Section 34, The Securities Act (Article 581-34,
20-18 Vernon's Texas Civil Statutes), is amended to read as follows:
20-19 Sec. 34. ACTIONS FOR COMMISSION; ALLEGATIONS AND PROOF OF
20-20 COMPLIANCE. No person or company shall bring or maintain any action
20-21 in the courts of this state for collection of a commission or
20-22 compensation for services rendered in the sale or purchase of
20-23 securities, as that term is defined in this Act, without alleging
20-24 and proving that such person or company was duly registered under
20-25 the provisions of this Act (or duly exempt from such registration
20-26 pursuant to rules adopted under Section 12C [12B] of this Act) and
20-27 the securities so sold were duly registered under the provisions of
20-28 this Act at the time the alleged cause of action arose; provided,
20-29 however, that this section shall not apply to any company or person
20-30 that rendered services in connection with any transaction exempted
20-31 by Section 5 of this Act or by any rule promulgated by the Board
20-32 pursuant to Subsection T of Section 5 of this Act if the company or
20-33 person was not required to be registered by the terms of the
20-34 exemption.
20-35 SECTION 2.20. Section 35, The Securities Act (Article 581-35,
20-36 Vernon's Texas Civil Statutes), is amended to read as follows:
20-37 Sec. 35. FEES. The Commissioner or Board shall charge and
20-38 collect the following fees and shall daily pay all fees received
20-39 into the State Treasury:
20-40 A. For the filing of any original application of a
20-41 dealer or investment adviser or for the submission of a notice
20-42 filing for a federal covered investment adviser, Seventy-five
20-43 Dollars ($75.00), and for the filing of any renewal application of
20-44 a dealer or investment adviser or for the submission of a renewal
20-45 notice filing for a federal covered investment adviser, Forty
20-46 Dollars ($40.00);
20-47 B. For the filing of any original application for each
20-48 agent, officer, or investment adviser representative or for the
20-49 submission of a notice filing for each representative of a federal
20-50 covered investment adviser [salesman], Thirty-five Dollars
20-51 ($35.00), and for the filing of any renewal application for each
20-52 agent, officer, or investment adviser representative or for the
20-53 submission of a renewal notice filing for each representative of a
20-54 federal covered investment adviser [salesman], Twenty Dollars
20-55 ($20.00);
20-56 C. For any filing to amend the registration
20-57 certificate of a dealer or investment adviser or evidence of
20-58 registration of an agent or investment adviser representative [a
20-59 salesman], issue a duplicate certificate or evidence of
20-60 registration, or register a branch office, Twenty-five Dollars
20-61 ($25.00);
20-62 D. For the filing of any original, amended or renewal
20-63 application to sell or dispose of securities, Ten Dollars ($10.00);
20-64 E. For the examination of any original or amended
20-65 application filed under Subsection A, B, or C of Section 7 of this
20-66 Act, regardless of whether the application is denied, abandoned,
20-67 withdrawn, or approved, a fee of one-tenth (1/10) of one percent
20-68 (1%) of the aggregate amount of securities described and proposed
20-69 to be sold to persons located within this state based upon the
21-1 price at which such securities are to be offered to the public;
21-2 F. For certified copies of any papers filed in the
21-3 office of the Commissioner, the Commissioner shall charge such fees
21-4 as are reasonably related to costs; however, in no event shall
21-5 such fees be more than those which the Secretary of State is
21-6 authorized to charge in similar cases;
21-7 G. For the filing of any application for approval of a
21-8 stock exchange so that securities fully listed thereon will be
21-9 exempt, a fee of Ten Thousand Dollars ($10,000.00);
21-10 H. For the filing of a request to take the Texas
21-11 Securities Law Examination, Thirty-five Dollars ($35.00);
21-12 I. For the filing of an initial notice required by the
21-13 Commissioner to claim a secondary trading exemption, a fee of Five
21-14 Hundred Dollars ($500.00), and for the filing of a secondary
21-15 trading exemption renewal notice, a fee of Five Hundred Dollars
21-16 ($500.00);
21-17 J. For the filing of an initial notice required by the
21-18 Commissioner to claim a limited offering exemption, a fee of
21-19 one-tenth (1/10) of one percent (1%) of the aggregate amount of
21-20 securities described as being offered for sale, but in no case more
21-21 than Five Hundred Dollars ($500.00); and
21-22 K. For an interpretation by the Board's general
21-23 counsel of this Act or a rule adopted under this Act, a fee of One
21-24 Hundred Dollars ($100.00), except that an officer or employee of a
21-25 governmental entity and the entity that the officer or employee
21-26 represents are exempt from the fee under this subsection when the
21-27 officer or employee is conducting official business of the entity.
21-28 SECTION 2.21. Section 41(a), The Securities Act (Article
21-29 581-41, Vernon's Texas Civil Statutes), is amended to read as
21-30 follows:
21-31 (a) Each of the following fees imposed by or under another
21-32 section of this Act is increased by $200:
21-33 (1) fee for filing any original application of a
21-34 dealer or investment adviser or for submitting a notice filing for
21-35 a federal covered investment adviser;
21-36 (2) fee for filing any renewal application of a dealer
21-37 or investment adviser or for submitting a renewal notice filing for
21-38 a federal covered investment adviser;
21-39 (3) fee for filing any original application for agent,
21-40 officer, or investment adviser representative or for submitting a
21-41 notice filing for an investment adviser representative of a federal
21-42 covered investment adviser [or salesman]; and
21-43 (4) fee for filing any renewal application for agent,
21-44 officer, or investment adviser representative or for submitting a
21-45 renewal notice filing for an investment adviser representative of a
21-46 federal covered investment adviser [salesman].
21-47 SECTION 2.22. Section 42, The Securities Act (Article 581-42,
21-48 Vernon's Texas Civil Statutes), is amended to read as follows:
21-49 Sec. 42. REDUCED FEES. A. The Board by rule may adopt
21-50 reduced fees, under Sections 35 and 41 of this Act, for original
21-51 and renewal applications of dealers, agents, officers, investment
21-52 advisers, or investment adviser representatives [salesmen] who have
21-53 assumed inactive status as defined by the Board.
21-54 B. The Board by rule may adopt reduced fees, under Sections
21-55 35 and 41 of this Act, as appropriate to accomodate a small
21-56 business [for persons] required by this Act to register in two or
21-57 more of the following capacities:
21-58 (1) dealer;
21-59 (2) agent [or salesman]; [or]
21-60 (3) investment adviser;
21-61 (4) investment adviser representative; or
21-62 (5) officer.
21-63 C. Notwithstanding Sections 35 and 41 of this Act, a person
21-64 shall pay only one fee required under those sections to engage in
21-65 business in this state concurrently for the same person or company
21-66 as:
21-67 (1) a dealer and an investment adviser; or
21-68 (2) an agent and investment adviser representative.
21-69 SECTION 2.23. Subchapter F, Chapter 411, Government Code, is
22-1 amended by adding Section 411.137 to read as follows:
22-2 Sec. 411.137. ACCESS TO CRIMINAL HISTORY RECORD INFORMATION:
22-3 STATE SECURITIES BOARD. (a) The securities commissioner is
22-4 entitled to obtain from the department criminal history record
22-5 information maintained by the department that relates to a person
22-6 who is:
22-7 (1) an applicant for a certificate of registration
22-8 under The Securities Act (Article 581-1 et seq., Vernon's Texas
22-9 Civil Statutes);
22-10 (2) a holder of a certificate of registration under
22-11 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
22-12 Statutes);
22-13 (3) an applicant for employment by the State
22-14 Securities Board; or
22-15 (4) an employee of the State Securities Board.
22-16 (b) Criminal history record information obtained by the
22-17 securities commissioner under this section may not be released by
22-18 any person or agency except on court order, unless the information
22-19 is entered into evidence by the State Securities Board or a court
22-20 at an administrative proceeding or a civil or criminal action under
22-21 The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
22-22 Statutes).
22-23 SECTION 2.24. Section 16, The Securities Act (Article 581-16,
22-24 Vernon's Texas Civil Statutes), is repealed.
22-25 SECTION 2.25. The changes in law made by this Act apply only
22-26 to a fee that becomes due on or after the effective date of this
22-27 Act. A fee that becomes due before the effective date of this Act
22-28 is governed by the law in effect on the date the fee is due, and
22-29 the former law is continued in effect for that purpose.
22-30 ARTICLE 3. ENFORCEMENT PROVISIONS
22-31 SECTION 3.01. The Securities Act (Article 581-1 et seq.,
22-32 Vernon's Texas Civil Statutes) is amended by adding Section 13-1 to
22-33 read as follows:
22-34 Sec. 13-1. INSPECTION. A. The Commissioner, without notice,
22-35 may inspect a registered dealer or registered investment adviser as
22-36 necessary to ensure compliance with this Act and Board rules.
22-37 B. The Commissioner, during regular business hours, may:
22-38 (1) enter the business premises of a registered dealer
22-39 or registered investment adviser; and
22-40 (2) examine and copy books and records pertinent to
22-41 the inspection.
22-42 C. During the inspection, the dealer or investment adviser
22-43 shall:
22-44 (1) provide to the Commissioner or the Commissioner's
22-45 authorized representative immediate and complete access to the
22-46 person's office, place of business, files, safe, and any other
22-47 location in which books and records pertinent to the inspection are
22-48 located; and
22-49 (2) allow the Commissioner or the Commissioner's
22-50 authorized representative to make photostatic or electronic copies
22-51 of books or records subject to inspection.
22-52 D. A dealer or investment adviser may not charge a fee for
22-53 copying information under this section.
22-54 E. Information obtained under this section and any
22-55 intra-agency or interagency notes, memoranda, reports, or other
22-56 communications consisting of advice, analyses, opinions, or
22-57 recommendations that are made in connection with the inspection are
22-58 confidential and may not be disclosed to the public or released by
22-59 the Commissioner except to the same extent provided for the release
22-60 or disclosure of confidential documents or other information made
22-61 or obtained in connection with an investigation under Section 28 of
22-62 this Act.
22-63 SECTION 3.02. Section 14, The Securities Act (Article 581-14,
22-64 Vernon's Texas Civil Statutes), is amended to read as follows:
22-65 Sec. 14. DENIAL, SUSPENSION OR REVOCATION OF REGISTRATION AS
22-66 DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER
22-67 REPRESENTATIVE [SALESMAN]. A. The Commissioner may deny, revoke,
22-68 or suspend a registration issued under this Act, place on probation
22-69 a dealer, agent, investment adviser, or investment adviser
23-1 representative [salesman] whose registration has been suspended
23-2 under this Act, or reprimand a person registered under this Act if
23-3 the person:
23-4 (1) has been convicted of any felony;
23-5 (2) has been convicted of any misdemeanor which
23-6 directly relates to the person's securities-related duties and
23-7 responsibilities;
23-8 (3) has engaged in any inequitable practice in the
23-9 sale of securities or in rendering services as an investment
23-10 adviser, or in any fraudulent business practice;
23-11 (4) is a dealer or investment adviser who is
23-12 insolvent;
23-13 (5) meets one of the following criteria:
23-14 (a) is a dealer who is selling or has sold
23-15 securities in this state through an agent [a salesman] other than a
23-16 registered agent;
23-17 (b) is an investment adviser who is engaging or
23-18 has engaged in rendering services as an investment adviser in this
23-19 state through a representative who is not registered to perform
23-20 services for that investment adviser as required by this Act;
23-21 (c) [salesman, or,] is an agent [a salesman] who
23-22 is selling or has sold securities in this state for a dealer,
23-23 issuer or controlling person with knowledge that such dealer,
23-24 issuer or controlling person has not complied with the provisions
23-25 of this Act; or
23-26 (d) is an investment adviser representative who
23-27 is rendering or has rendered services as an investment adviser for
23-28 an investment adviser in this state whom the representative is not
23-29 or was not registered to represent as required by this Act;
23-30 (6) has violated any of the provisions of this Act or
23-31 a rule of the Board;
23-32 (7) has made any material misrepresentation to the
23-33 Commissioner or Board in connection with any information deemed
23-34 necessary by the Commissioner or Board to determine a dealer's or
23-35 investment adviser's financial responsibility or a dealer's,
23-36 agent's, investment adviser's or investment adviser
23-37 representative's [or salesman's] business repute or qualifications,
23-38 or has refused to furnish any such information requested by the
23-39 Commissioner or Board;
23-40 (8) became registered as a dealer, agent, investment
23-41 adviser, or investment adviser representative [or salesman] after
23-42 August 23, 1963, and has not complied with a condition imposed by
23-43 the Commissioner under Section 13-D;
23-44 (9) is the subject of any of the following orders that
23-45 are currently effective and were issued within the last five years:
23-46 (a) an order by the securities agency or
23-47 administrator of any [another] state, by the financial regulatory
23-48 authority of a foreign country, or by the Securities and Exchange
23-49 Commission, entered after notice and opportunity for hearing,
23-50 denying, suspending, or revoking the person's license as a dealer,
23-51 agent, [salesman, or] investment adviser, or investment adviser
23-52 representative or the substantial equivalent of those terms;
23-53 (b) a suspension or expulsion from membership in
23-54 or association with a member of a self-regulatory organization;
23-55 (c) a United States Postal Service fraud order;
23-56 (d) an order by the securities agency or
23-57 administrator of any [another] state, the financial regulatory
23-58 authority of a foreign country, the Securities and Exchange
23-59 Commission, or by the Commodity Futures Trading Commission,
23-60 finding, after notice and opportunity for hearing, that the person
23-61 engaged in acts involving fraud, deceit, false statements or
23-62 omissions, or wrongful taking of property;
23-63 (e) an order by the Commodity Futures Trading
23-64 Commission denying, suspending, or revoking registration under the
23-65 Commodity Exchange Act;
23-66 (10) is subject to any order, judgment, or decree
23-67 entered by any court of competent jurisdiction which permanently
23-68 restrains or enjoins such person from engaging in or continuing any
23-69 conduct, action, or practice in connection with any aspect of the
24-1 purchase or sale of securities or the rendering of security
24-2 investment advice; or
24-3 (11) has violated any provision of any order issued by
24-4 the Commissioner or has violated any provision of any undertaking
24-5 or agreement with the Commissioner.
24-6 B. [The Commissioner shall keep an information file about
24-7 each complaint filed with the Commissioner or Board relating to a
24-8 person registered under this Act.]
24-9 [C. If a written complaint is filed with the Commissioner or
24-10 Board relating to a person registered under this Act, the
24-11 Commissioner, at least as frequently as quarterly and until final
24-12 disposition of the complaint, shall notify the parties to the
24-13 complaint of the status of the complaint unless the notice would
24-14 jeopardize an undercover investigation.]
24-15 [D.] If the Commissioner proposes to suspend or revoke a
24-16 person's registration, the person is entitled to a hearing before
24-17 the Commissioner or a hearings officer as now or hereafter required
24-18 by law. Proceedings for the suspension or revocation of a
24-19 registration are governed by Chapter 2001, Government Code.
24-20 C. [E.] This section does not affect the confidentiality of
24-21 investigative records maintained by the Commissioner or Board.
24-22 SECTION 3.03. Section 23, The Securities Act (Article
24-23 581-23, Vernon's Texas Civil Statutes), is amended to read as
24-24 follows:
24-25 Sec. 23. CEASE AND DESIST ORDERS; CEASE PUBLICATION ORDERS;
24-26 LIST OF SECURITIES OFFERED.
24-27 Anything in this Act to the contrary notwithstanding,
24-28 A. If it appears to the commissioner at any time that the
24-29 sale or proposed sale or method of sale of any securities, whether
24-30 exempt or not, is a fraudulent practice or would not be in
24-31 compliance with this Act or would tend to work a fraud on any
24-32 purchaser thereof or would not be fair, just or equitable to any
24-33 purchaser thereof, the commissioner may hold a hearing on a date
24-34 determined by the commissioner within 30 days after the date of
24-35 receipt of actual notice by, or notice by registered or certified
24-36 mail to the person's last known address is given to, the issuer,
24-37 the registrant, the person on whose behalf such securities are
24-38 being or are to be offered, or any person acting as a dealer or
24-39 agent in violation of this Act. If the commissioner shall
24-40 determine at such hearing that such sale would not be in compliance
24-41 with the Act, is a fraudulent practice, or would tend to work a
24-42 fraud on any purchaser thereof or would not be fair, just or
24-43 equitable to any purchaser thereof, the commissioner may issue a
24-44 written cease and desist order, prohibiting or suspending the sale
24-45 of such securities or denying or revoking the registration of such
24-46 securities, [or] prohibiting an unregistered person from acting as
24-47 a dealer or an agent, or prohibiting the fraudulent conduct. No
24-48 dealer or[,] agent [or salesman] shall thereafter knowingly sell or
24-49 offer for sale any security named in such cease and desist order.
24-50 B. If it appears to the Commissioner at any time that an
24-51 investment adviser or investment adviser representative is engaging
24-52 or is likely to engage in fraud or a fraudulent practice with
24-53 respect to rendering services as an investment adviser or
24-54 investment adviser representative or that a person is acting as an
24-55 investment adviser or investment adviser representative in
24-56 violation of this Act, the Commissioner may hold a hearing not
24-57 later than the 30th day after the date on which the person receives
24-58 actual notice or is provided notice by registered or certified
24-59 mail, return receipt requested, to the person's last known address.
24-60 After the hearing, the Commissioner shall issue or decline to issue
24-61 a cease and desist order. An order issued under this subsection
24-62 must:
24-63 (1) require the investment adviser or investment
24-64 adviser representative to immediately cease and desist from the
24-65 fraudulent conduct; or
24-66 (2) prohibit an unregistered or other unauthorized
24-67 person who is not exempt from the registration or notice filing
24-68 requirements of this Act from acting as an investment adviser or
24-69 investment adviser representative in violation of this Act.
25-1 C. If it appears to the Commissioner at any time that an
25-2 offer contains any statement that is materially false or misleading
25-3 or is otherwise likely to deceive the public, the Commissioner may
25-4 issue a cease publication order. No person shall make an offer
25-5 prohibited by such cease publication order.
25-6 D. [C.] The commissioner may, in the exercise of reasonable
25-7 discretion hereunder, at any time, require a dealer to file with
25-8 the commissioner a list of securities which he has offered for sale
25-9 or has advertised for sale within this State during the preceding
25-10 six months, or which he is at the time offering for sale or
25-11 advertising, or any portion thereof.
25-12 SECTION 3.04. Subsection A, Section 23-1, The Securities Act
25-13 (Article 581-23-1 et seq., Vernon's Texas Civil Statutes), is
25-14 amended to read as follows:
25-15 A. After giving notice and opportunity for a hearing, the
25-16 Commissioner may issue an order which assesses an administrative
25-17 fine against any person or company found to have:
25-18 (1) engaged in fraud or a fraudulent practice in
25-19 connection with:
25-20 (A) the offer for sale or sale of a security; or
25-21 (B) the rendering of services as an investment
25-22 adviser or investment adviser representative;
25-23 (2) made an offer containing a statement that is
25-24 materially misleading or is otherwise likely to deceive the public;
25-25 or
25-26 (3) engaged in an act or practice that violates
25-27 [violated any provision of] this Act or a[,] Board rule[,] or
25-28 [Board] order.
25-29 SECTION 3.05. The Securities Act (Article 581-1 et seq.,
25-30 Vernon's Texas Civil Statutes) is amended by adding Section 23-2 to
25-31 read as follows:
25-32 Sec. 23-2. EMERGENCY CEASE AND DESIST ORDER. A. On the
25-33 Commissioner's determination that the conduct, act, or practice
25-34 threatens immediate and irreparable public harm, the Commissioner
25-35 may issue an emergency cease and desist order to a person whom the
25-36 Commissioner reasonably believes:
25-37 (1) is engaging in or is about to engage in fraud or a
25-38 fraudulent practice in connection with:
25-39 (A) the offer for sale or sale of a security; or
25-40 (B) the rendering of services as an investment
25-41 adviser or investment adviser representative;
25-42 (2) has made an offer containing a statement that is
25-43 materially misleading or is otherwise likely to deceive the public;
25-44 or
25-45 (3) is engaging or is about to engage in an act or
25-46 practice that violates this Act or a Board rule.
25-47 B. The order must:
25-48 (1) be sent on issuance to each person affected by the
25-49 order by personal delivery or registered or certified mail, return
25-50 receipt requested, to the person's last known address;
25-51 (2) state the specific charges and require the person
25-52 to immediately cease and desist from the unauthorized activity; and
25-53 (3) contain a notice that a request for hearing may be
25-54 filed under this section.
25-55 C. Unless a person against whom the emergency order is
25-56 directed requests a hearing in writing before the 31st day after
25-57 the date it is served on the person, the emergency order is final
25-58 and nonappealable as to that person. A request for a hearing must:
25-59 (1) be in writing and directed to the Commissioner;
25-60 and
25-61 (2) state the grounds for the request to set aside or
25-62 modify the order.
25-63 D. On receiving a request for a hearing, the Commissioner
25-64 shall serve notice of the time and place of the hearing by personal
25-65 delivery or registered or certified mail, return receipt requested.
25-66 The hearing must be held not later than the 10th day after the date
25-67 the Commissioner receives the request for a hearing unless the
25-68 parties agree to a later hearing date. At the hearing, the
25-69 Commissioner has the burden of proof and must present evidence in
26-1 support of the order.
26-2 E. After the hearing, the Commissioner shall affirm, modify,
26-3 or set aside in whole or part the emergency order. An order
26-4 affirming or modifying the emergency order is immediately final for
26-5 purposes of enforcement and appeal.
26-6 F. An emergency order continues in effect unless the order
26-7 is stayed by the Commissioner. The Commissioner may impose any
26-8 condition before granting a stay of the order.
26-9 SECTION 3.06. Subsection A, Section 24, The Securities Act
26-10 (Article 581-24, Vernon's Texas Civil Statutes), is amended to read
26-11 as follows:
26-12 A. If any person or company should take exception to the
26-13 action of the Commissioner [under Sections 15 or 18,] in failing or
26-14 refusing to register and issue certificate for a dealer or
26-15 investment adviser or evidence of registration for an investment
26-16 adviser representative or agent under Section 15 or 18 of this Act,
26-17 in issuing an order [salesman,] under Section 23 or 23-2 of this
26-18 Act [in issuing an order against the sale of securities or the use
26-19 of materials therein], or in any other particular where this Act
26-20 specifies no other procedure, the complaining party may request a
26-21 hearing before the Commissioner or before a hearings officer as now
26-22 or hereafter required by law.
26-23 SECTION 3.07. Section 25, The Securities Act (Article 581-25,
26-24 Vernon's Texas Civil Statutes), is amended to read as follows:
26-25 Sec. 25. REVOCATION OF REGISTRATION OF ANY DEALER, AGENT,
26-26 INVESTMENT ADVISER, OR INVESTMENT ADVISER REPRESENTATIVE
26-27 [SALESMAN]. The revocation of a dealer's or investment adviser's
26-28 registration shall constitute a revocation of the registration of
26-29 any agent [or salesman] of the dealer or any investment adviser
26-30 representative of the investment adviser and notice of its
26-31 operation on such agent or investment adviser representative
26-32 [salesman] shall be forthwith sent by the Commissioner to each of
26-33 such agents or investment adviser representatives [salesmen]. All
26-34 registrations and evidences of registration revoked shall at once
26-35 be surrendered to the Commissioner upon request.
26-36 SECTION 3.08. Subsections A and B, Section 25-1, The
26-37 Securities Act (Article 581-25-1, Vernon's Texas Civil Statutes),
26-38 are amended to read as follows:
26-39 A. Whenever it shall appear to the commissioner, either upon
26-40 complaint or otherwise, that:
26-41 (1) any person or company acting as a dealer, agent,
26-42 investment adviser, investment adviser representative [salesman],
26-43 or issuer (as defined in Section 4 of this Act), or an affiliate of
26-44 a dealer, agent, investment adviser, investment adviser
26-45 representative [salesman], or issuer, whether or not required to be
26-46 registered by the commissioner as in this Act provided, shall have
26-47 engaged in any act, transaction, practice, or course of business
26-48 declared by Section 32 of this Act to be a fraudulent practice;
26-49 (2) such person or company shall have acted as a
26-50 dealer, agent, investment adviser, investment adviser
26-51 representative [salesman], or issuer or an affiliate of a dealer,
26-52 agent, investment adviser, investment adviser representative
26-53 [salesman], or issuer in connection with such fraudulent practice;
26-54 and
26-55 (3) the appointment of a receiver for such person or
26-56 company, or the assets of such a person or company is necessary in
26-57 order to conserve and protect the assets of such person or company
26-58 for the benefit of customers, security holders, and other actual
26-59 and potential claimants of such person or company the commissioner
26-60 may request the attorney general to bring an action for the
26-61 appointment of a receiver for such person or company or the assets
26-62 of such person or company.
26-63 B. Upon request by the commissioner pursuant to Subsection A
26-64 of this Section 25-1, and if it appears to the attorney general
26-65 that the facts enumerated in Paragraphs (1) through (3) of
26-66 Subsection A of this Section 25-1 exist with respect to any person
26-67 or company, the attorney general may bring an action in the name
26-68 and on behalf of the State of Texas for the appointment of a
26-69 receiver for such person or company. The facts set forth in the
27-1 petition for such relief shall be verified by the commissioner upon
27-2 information and belief. Such action may be brought in a district
27-3 court of any county wherein the fraudulent practice complained of
27-4 has been committed in whole or part, or of any county wherein any
27-5 defendant with respect to whom appointment of a receiver is sought
27-6 has its principal place of business, and such district court shall
27-7 have jurisdiction and venue of such action; this provision shall
27-8 be superior to any other provision of law fixing jurisdiction or
27-9 venue with regard to suits for receivership. In any such action
27-10 the attorney general may apply for and on due showing be entitled
27-11 to have issued the court's subpoena requiring the forthwith
27-12 appearance of any defendant and his employees, investment adviser
27-13 representatives [salesmen], or agents and the production of
27-14 documents, books, and records as may appear necessary for any
27-15 hearing, to testify and give evidence concerning matters relevant
27-16 to the appointment of a receiver.
27-17 SECTION 3.09. Section 28, The Securities Act (Article 581-28,
27-18 Vernon's Texas Civil Statutes), is amended to read as follows:
27-19 Sec. 28. INVESTIGATIONS, INVESTIGATORY MATERIALS, AND
27-20 REGISTRATION RELATED MATERIALS. A. [Subpoenas or Other Process in]
27-21 Investigations by Commissioner. The Commissioner shall conduct
27-22 investigations as the Commissioner considers necessary to prevent
27-23 or detect the violation of this Act or a Board rule or order. For
27-24 this purpose, the Commissioner may require, by subpoena or summons
27-25 issued by the Commissioner, the attendance and testimony of
27-26 witnesses and the production of all [any books, accounts, records,
27-27 papers and correspondence or other] records, whether maintained by
27-28 electronic or other means, relating to any matter which the
27-29 Commissioner has authority by this Act to consider or investigate,
27-30 and[. For this purpose the Commissioner] may sign subpoenas,
27-31 administer oaths and affirmations, examine witnesses and receive
27-32 evidence; provided, however, that all information of every kind
27-33 and nature received in connection with an investigation and all
27-34 internal notes, memoranda, reports, or communications made in
27-35 connection with an investigation [contained therein] shall be
27-36 treated as confidential by the Commissioner and shall not be
27-37 disclosed to the public except under order of court for good cause
27-38 shown. [However, except for good cause the order may not extend to
27-39 a record or communication received from other law enforcement or
27-40 regulatory agencies or to the internal notes, memoranda, reports,
27-41 or communications made in connection with a matter that the
27-42 Commissioner has the authority by this Act to consider or
27-43 investigate.] Nothing in this section shall be interpreted to
27-44 prohibit or limit the publication of rulings or decisions of the
27-45 Commissioner nor shall this limitation apply if disclosure is made,
27-46 in the discretion of the Commissioner, as part of an administrative
27-47 proceeding or a civil or criminal action to enforce this Act [to
27-48 hearings provided for in Sections 24 and 25 of this Act]. In case
27-49 of disobedience of any subpoena, or of the contumacy of any witness
27-50 appearing before the Commissioner, the Commissioner may invoke the
27-51 aid of the District Court within whose jurisdiction any witness may
27-52 be found, and such court may thereupon issue an order requiring the
27-53 person subpoenaed to obey the subpoena or give evidence, or produce
27-54 books, accounts, records, papers, and correspondence touching the
27-55 matter in question. Any failure to obey such order of the court
27-56 may be punished by such court as contempt thereof.
27-57 In the course of an investigation looking to the enforcement
27-58 of this Act, or in connection with the application of a person or
27-59 company for registration or to qualify securities, the Commissioner
27-60 or Deputy Commissioner shall have free access to all records and
27-61 reports of and to any department or agency of the state government.
27-62 In the event, however, that the Commissioner or Deputy Commissioner
27-63 should give out any information which the law makes confidential,
27-64 the affected corporation, firm or person shall have a right of
27-65 action on the official bond of the Commissioner or Deputy for the
27-66 corporation's, firm's, or person's injuries, in a suit brought in
27-67 the name of the state at the relation of the injured party.
27-68 The Commissioner may in any investigation cause the
27-69 deposition of witnesses residing within or without the state to be
28-1 taken in the manner prescribed for depositions in civil actions
28-2 under the laws of Texas.
28-3 Each witness required to attend before the Commissioner shall
28-4 receive a fee, for each day's attendance, in an amount set by Board
28-5 rule. All disbursements made in the payment of such fees shall be
28-6 made in accordance with Board rule and shall be included in, and
28-7 paid in the same manner as is provided for, the payment of other
28-8 expenses incident to the administration and enforcement of this
28-9 Act.
28-10 The sheriff's or constable's fee for serving the subpoena
28-11 shall be the same as those paid the sheriff or constable for
28-12 similar services. The fees, expenses and costs incurred at or in
28-13 connection with any hearing may be imposed by the Commissioner upon
28-14 any party to the record, or may be divided between any and all
28-15 parties to the record in such proportions as the Commissioner may
28-16 determine.
28-17 Any subpoena, summons, or other process issued by the
28-18 Commissioner may be served, at the Commissioner's discretion, by
28-19 the Commissioner, the Commissioner's authorized agent, a sheriff,
28-20 or a constable.
28-21 The Commissioner may, at the Commissioner's discretion,
28-22 disclose any confidential information in the Commissioner's
28-23 possession to any governmental or regulatory authority or
28-24 association of governmental or regulatory authorities approved by
28-25 Board rule[; to any quasi-governmental authority charged with
28-26 overseeing securities activities which is approved by Board rule;]
28-27 or to any receiver appointed under Section 25-1 of this Act. The
28-28 disclosure does not violate any other provision of this Act or
28-29 Chapter 552, Government Code.
28-30 B. Confidentiality of Certain Registration-Related and Other
28-31 Materials. To the extent not already provided for by this Act, any
28-32 intraagency or interagency notes, memoranda, reports, or other
28-33 communications consisting of advice, analyses, opinions, or
28-34 recommendations shall be treated as confidential by the
28-35 Commissioner and shall not be disclosed to the public, except under
28-36 order of court, for good cause shown. The Commissioner may, at
28-37 the Commissioner's discretion, disclose any confidential
28-38 information in the Commissioner's possession to any governmental or
28-39 regulatory authority or association of governmental or regulatory
28-40 authorities approved by Board rule[; to any quasi-governmental
28-41 authority charged with overseeing securities activities which is
28-42 approved by Board rule;] or to any receiver appointed under
28-43 Section 25-1 of this Act. The disclosure does not violate any
28-44 other provision of this Act or Chapter 552, Government Code.
28-45 SECTION 3.10. Section 29, The Securities Act (Article 581-29,
28-46 Vernon's Texas Civil Statutes), is amended to read as follows:
28-47 Sec. 29. PENAL PROVISIONS. Any person who shall:
28-48 A. Sell, offer for sale or delivery, solicit
28-49 subscriptions or orders for, dispose of, invite offers for, or who
28-50 shall deal in any other manner in any security or securities
28-51 without being a registered dealer [or salesman] or agent as in this
28-52 Act provided shall be deemed guilty of a felony, and upon
28-53 conviction thereof shall be sentenced to pay a fine of not more
28-54 than $5,000 or imprisonment in the penitentiary for not less than
28-55 two or more than 10 years, or by both such fine and imprisonment.
28-56 B. Sell, offer for sale or delivery, solicit
28-57 subscriptions to and orders for, dispose of, invite orders for, or
28-58 who shall deal in any other manner in any security or securities
28-59 issued after September 6, 1955, unless said security or securities
28-60 have been registered or granted a permit as provided in Section 7
28-61 of this Act, shall be deemed guilty of a felony, and upon
28-62 conviction thereof shall be sentenced to pay a fine of not more
28-63 than $5,000 or imprisonment in the penitentiary for not less than
28-64 two or more than 10 years, or by both such fine and imprisonment.
28-65 C. In connection with the sale, offering for sale or
28-66 delivery of, the purchase, offer to purchase, invitation of offers
28-67 to purchase, invitations of offers to sell, or dealing in any other
28-68 manner in any security or securities, whether or not the
28-69 transaction or security is exempt under Section 5 or 6 of this Act,
29-1 directly or indirectly:
29-2 (1) engage in any fraud or fraudulent practice;
29-3 (2) employ any device, scheme, or artifice to
29-4 defraud;
29-5 (3) knowingly make any untrue statement of a
29-6 material fact or omit to state a material fact necessary in order
29-7 to make the statements made, in the light of the circumstances
29-8 under which they are made, not misleading; or
29-9 (4) engage in any act, practice or course of
29-10 business which operates or will operate as a fraud or deceit upon
29-11 any person, is guilty of a felony and upon conviction shall be:
29-12 (a) imprisoned for not less than 2 or more
29-13 than 10 years and fined not more than $10,000, if the amount
29-14 involved in the offense is less than $10,000;
29-15 (b) imprisoned for not less than 2 or more
29-16 than 20 years and fined not more than $10,000, if the amount
29-17 involved in the offense is $10,000 or more but less than $100,000;
29-18 or
29-19 (c) imprisoned for life or for not less
29-20 than 5 or more than 99 years and fined not more than $10,000, if
29-21 the amount involved is $100,000 or more.
29-22 D. Knowingly violate a cease and desist order issued
29-23 [Sell or offer for sale any security or securities named or listed
29-24 in a notice in writing given him] by the commissioner under the
29-25 authority of Section 23A, 23B, or 23-2 of this Act shall be deemed
29-26 guilty of a felony, and upon conviction thereof shall be sentenced
29-27 to pay a fine of not more than $5,000 or imprisonment in the
29-28 penitentiary for not more than two years, or by both such fine and
29-29 imprisonment.
29-30 E. Knowingly make or cause to be made, in any document
29-31 filed with the commissioner or in any proceeding under this Act,
29-32 whether or not such document or proceeding relates to a transaction
29-33 or security exempt under the provisions of Sections 5 or 6 of this
29-34 Act, any statement which is, at the time and in the light of the
29-35 circumstances under which it is made, false or misleading in any
29-36 material respect shall be deemed guilty of a felony, and upon
29-37 conviction thereof shall be sentenced to pay a fine of not more
29-38 than $5,000 or imprisonment in the penitentiary for not less than
29-39 two or more than 10 years, or by both such fine and imprisonment.
29-40 F. Knowingly make any false statement or
29-41 representation concerning any registration made under the
29-42 provisions of this Act shall be deemed guilty of a felony, and upon
29-43 conviction thereof shall be sentenced to pay a fine of not more
29-44 than $5,000 or imprisonment in the penitentiary for not more than
29-45 two years, or by both such fine and imprisonment.
29-46 G. Make an offer of any security within this State
29-47 that is not in compliance with the requirements governing offers
29-48 set forth in Section 22 of this Act shall be deemed guilty of a
29-49 felony, and upon conviction thereof, shall be sentenced to pay a
29-50 fine of not more than $5,000 or imprisonment in the penitentiary
29-51 for not more than two years, or by both such fine and imprisonment.
29-52 H. Knowingly make an offer of any security within this
29-53 State prohibited by a cease publication order issued by the
29-54 Commissioner under Section 23C [23B] of this Act shall be deemed
29-55 guilty of a felony, and upon conviction thereof, shall be sentenced
29-56 to pay a fine of not more than $5,000 or imprisonment in the
29-57 penitentiary for not more than two years, or by both such fine and
29-58 imprisonment.
29-59 SECTION 3.11. The Securities Act (Article 581-1 et seq.,
29-60 Vernon's Texas Civil Statutes) is amended by adding Section 29-3 to
29-61 read as follows:
29-62 Sec. 29-3. CRIMINAL RESPONSIBILITY OF CORPORATION OR
29-63 ASSOCIATION. A. In this section:
29-64 (1) "Association" and "corporation" have the meanings
29-65 assigned by Section 1.07, Penal Code.
29-66 (2) "High managerial agent" has the meaning assigned
29-67 by Section 7.21, Penal Code.
29-68 B. If conduct constituting an offense under Section 29 of
29-69 this Act is performed by an agent acting in behalf of a corporation
30-1 or association and within the scope of the person's office or
30-2 employment, the corporation or association is criminally
30-3 responsible for the offense only if its commission was authorized,
30-4 requested, commanded, performed, or recklessly tolerated by:
30-5 (1) a majority of the governing board acting in behalf
30-6 of the corporation or association; or
30-7 (2) a high managerial agent acting in behalf of the
30-8 corporation or association and within the scope of the high
30-9 managerial agent's office or employment.
30-10 C. It is an affirmative defense to prosecution of a
30-11 corporation or association under Subsection B of this section that
30-12 the high managerial agent having supervisory responsibility over
30-13 the subject matter of the offense employed due diligence to prevent
30-14 its commission.
30-15 SECTION 3.12. Section 30, The Securities Act (Article 581-30,
30-16 Vernon's Texas Civil Statutes), is amended to read as follows:
30-17 Sec. 30. CERTIFIED COPIES OF PAPERS FILED WITH COMMISSIONER
30-18 AS EVIDENCE. Copies of all papers, instruments, or documents filed
30-19 in the office of the Commissioner, certified by the Commissioner,
30-20 shall be admitted to be read in evidence in all courts of law and
30-21 elsewhere in this state in all cases where the original would be
30-22 admitted in evidence; provided, that in any proceeding in the court
30-23 having jurisdiction, the court may, on cause shown, require the
30-24 production of the originals.
30-25 The Commissioner shall assume custody of all records of the
30-26 Securities Divisions within the offices of the Secretary of State
30-27 and of the Board of Insurance Commissioners, and henceforth these
30-28 prior records shall be proven under certificate of the
30-29 Commissioner.
30-30 In any prosecution, action, suit or proceeding before any of
30-31 the several courts of this state based upon or arising out of or
30-32 under the provisions of this Act, a certificate under the state
30-33 seal, duly signed by the Commissioner, showing compliance or
30-34 non-compliance with the provisions of this Act respecting
30-35 compliance or non-compliance with the provisions of this Act by any
30-36 dealer, agent, investment adviser, or investment adviser
30-37 representative [salesman], shall constitute prima facie evidence of
30-38 such compliance or of such non-compliance with the provisions of
30-39 this Act, as the case may be, and shall be admissible in evidence
30-40 in any action at law or in equity to enforce the provisions of this
30-41 Act.
30-42 SECTION 3.13. Subsection A, Section 32, The Securities Act
30-43 (Article 581-32, Vernon's Texas Civil Statutes), is amended to read
30-44 as follows:
30-45 A. Whenever it shall appear to the Commissioner either upon
30-46 complaint or otherwise, that any person has engaged or is about to
30-47 engage in fraud or a fraudulent practice in connection with the
30-48 sale of a security, has engaged or is about to engage in fraud or a
30-49 fraudulent practice in the rendering of services as an investment
30-50 adviser or investment adviser representative, has made an offer
30-51 containing a statement that is materially misleading or is
30-52 otherwise likely to deceive the public, or is engaging or is about
30-53 to engage in an act or practice that violates this Act or a Board
30-54 rule or order [in the issuance, sale, promotion, negotiations,
30-55 advertisement or distribution of any securities within this state,
30-56 including any security embraced in the subsections of Section 6,
30-57 and including any transaction exempted under the provisions of
30-58 Section 5, any person or company who shall have employed or is
30-59 about to employ any device, scheme or artifice to defraud or to
30-60 obtain money or property by means of any false pretense,
30-61 representation or promise, or that any such person or company shall
30-62 have made, makes or attempts to make in this state fictitious or
30-63 pretended purchases or sales of securities or shall have engaged in
30-64 or is about to engage in any practice or transaction or course of
30-65 business relating to the purchase or sale of securities which is in
30-66 violation of law or which is fraudulent or which has operated or
30-67 which would operate as a fraud upon the purchaser, any one or all
30-68 of which devices, schemes, artifices, fictitious or pretended
30-69 purchases, or sales of securities, practices, transactions and
31-1 courses of business are hereby declared to be and are hereafter
31-2 referred to as fraudulent practices; or that any person or company
31-3 is acting as dealer or salesman within this state without being
31-4 duly registered as such dealer or salesman as provided in this Act,
31-5 the Commissioner and Attorney General may investigate, and whenever
31-6 he shall believe from evidence satisfactory to him that any such
31-7 person or company has engaged in, is engaged in, or is about to be
31-8 engaged in any of the practices or transactions heretofore referred
31-9 to as and declared to be fraudulent practices, or is selling or
31-10 offering for sale any securities in violation of this Act or is
31-11 acting as a dealer or salesman without being duly registered as
31-12 provided in this Act], the Attorney General may, on request by the
31-13 Commissioner, and in addition to any other remedies, bring action
31-14 in the name and on behalf of the State of Texas against such person
31-15 or company and any person who, with intent to deceive or defraud or
31-16 with reckless disregard for the truth or the law, has materially
31-17 aided, is materially aiding, or is about to materially aid such
31-18 person and any other person or persons heretofore concerned in or
31-19 in any way participating in or about to participate in such acts or
31-20 [fraudulent] practices [or acting in such violation of this Act],
31-21 to enjoin such person or company and such other person or persons
31-22 from continuing such acts or [fraudulent] practices [or engaging
31-23 therein] or doing any act or acts in furtherance thereof. The
31-24 Commissioner shall verify, on information and belief, the facts
31-25 contained in an application for injunction under this section [or
31-26 in violation of this Act]. In any such court proceedings, the
31-27 Attorney General may apply for and on due showing be entitled to
31-28 have issued the court's subpoena requiring the forthwith appearance
31-29 of any defendant and the defendant's [his] employees[, salesmen] or
31-30 agents and the production of documents, books and records as may
31-31 appear necessary for the hearing of such petition, to testify and
31-32 give evidence concerning the acts or conduct or things complained
31-33 of in such application for injunction. The District Court of any
31-34 county, wherein it is shown that the acts complained of have been
31-35 or are about to be committed, or a district court in Travis County
31-36 shall have jurisdiction of any action brought under this section,
31-37 and this provision shall be superior to any provision fixing the
31-38 jurisdiction or venue with regard to suits for injunction. No bond
31-39 for injunction shall be required of the Commissioner or Attorney
31-40 General in any such proceeding.
31-41 SECTION 3.14. The heading of Section 33, The Securities Act
31-42 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
31-43 as follows:
31-44 Sec. 33. CIVIL LIABILITY WITH RESPECT TO ISSUANCE OR SALE OF
31-45 A SECURITY [LIABILITIES].
31-46 SECTION 3.15. Subsection L, Section 33, The Securities Act
31-47 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
31-48 as follows:
31-49 L. Waivers Void. A condition, stipulation, or provision
31-50 binding a buyer or seller of a security or a purchaser of services
31-51 rendered by an investment adviser or investment adviser
31-52 representative to waive compliance with a provision of this Act or
31-53 a rule or order or requirement hereunder is void.
31-54 SECTION 3.16. Subsection A, Section 33, The Securities Act
31-55 (Article 581-33, Vernon's Texas Civil Statutes), is amended to read
31-56 as follows:
31-57 A. Liability of Sellers. (1) Registration and Related
31-58 Violations. A person who offers or sells a security in violation
31-59 of Section 7, 9 (or a requirement of the Commissioner thereunder),
31-60 12, 23C [23B], or an order under 23A or 23-2 of this Act is liable
31-61 to the person buying the security from him, who may sue either at
31-62 law or in equity for rescission or for damages if the buyer no
31-63 longer owns the security.
31-64 (2) Untruth or Omission. A person who offers or sells
31-65 a security (whether or not the security or transaction is exempt
31-66 under Section 5 or 6 of this Act) by means of an untrue statement
31-67 of a material fact or an omission to state a material fact
31-68 necessary in order to make the statements made, in the light of the
31-69 circumstances under which they are made, not misleading, is liable
32-1 to the person buying the security from him, who may sue either at
32-2 law or in equity for rescission, or for damages if the buyer no
32-3 longer owns the security. However, a person is not liable if he
32-4 sustains the burden of proof that either (a) the buyer knew of the
32-5 untruth or omission or (b) he (the offeror or seller) did not know,
32-6 and in the exercise of reasonable care could not have known, of the
32-7 untruth or omission. The issuer of the security (other than a
32-8 government issuer identified in Section 5M) is not entitled to the
32-9 defense in clause (b) with respect to an untruth or omission (i) in
32-10 a prospectus required in connection with a registration statement
32-11 under Section 7A, 7B, or 7C, or (ii) in a writing prepared and
32-12 delivered by the issuer in the sale of a security.
32-13 SECTION 3.17. The Securities Act (Article 581-1 et seq.,
32-14 Vernon's Texas Civil Statutes) is amended by adding Section 33-1 to
32-15 read as follows:
32-16 Sec. 33-1. CIVIL LIABILITY OF INVESTMENT ADVISERS AND
32-17 INVESTMENT ADVISER REPRESENTATIVES. A. Liability of Investment
32-18 Advisers and Investment Adviser Representatives. (1) An
32-19 investment adviser or investment adviser representative who renders
32-20 services as an investment adviser in violation of Section 12 or an
32-21 order under Section 23B or 23-2 of this Act is liable to the
32-22 purchaser, who may sue at law or in equity, for damages in the
32-23 amount of any consideration paid for the services.
32-24 (2) Except as provided by Subsection C of this
32-25 section, an investment adviser or investment adviser representative
32-26 who commits fraud or engages in a fraudulent practice in rendering
32-27 services as an investment adviser is liable to the purchaser, who
32-28 may sue at law or in equity, for damages.
32-29 B. Damages. In damages under Subsection A(2) of this
32-30 section, the purchaser is entitled to recover:
32-31 (1) the amount of any consideration paid for the
32-32 services, less the amount of any income the purchaser received from
32-33 acting on the services;
32-34 (2) any loss incurred by the person in acting on the
32-35 services provided by the adviser or representative;
32-36 (3) interest at the legal rate for judgments accruing
32-37 from the date of the payment of consideration; and
32-38 (4) to the extent the court considers equitable, court
32-39 costs and reasonable attorney's fees.
32-40 C. Untruth or Omission. An investment adviser or investment
32-41 adviser representative who in rendering services as an investment
32-42 adviser makes a false statement of a material fact or omits to
32-43 state a material fact necessary in order to make the statement
32-44 made, in light of the circumstances under which the statement is
32-45 made, not misleading, may not be found liable under Subsection A(2)
32-46 of this section if the adviser or representative proves:
32-47 (1) the purchaser knew of the truth or omission; or
32-48 (2) the adviser or representative did not know, and in
32-49 the exercise of reasonable care could not have known, of the
32-50 untruth or omission.
32-51 D. Statute of Limitations. (1) A person may not sue under
32-52 Subsection A(1) of this section more than three years after the
32-53 violation occurred.
32-54 (2) A person may not sue under Subsection A(2) of this
32-55 section more than five years after the violation occurs or more
32-56 than three years after the person knew or should have known, by the
32-57 exercise of reasonable diligence, of the occurrence of the
32-58 violation.
32-59 E. Liability of Control Persons and Assistants. (1) A
32-60 person who directly or indirectly controls an investment adviser is
32-61 jointly and severally liable with the investment adviser under this
32-62 section, and to the same extent as the investment adviser, unless
32-63 the controlling person sustains the burden of proof that the person
32-64 did not know, and in the exercise of reasonable care could not have
32-65 known, of the existence of the facts by reason of which liability
32-66 is alleged to exist.
32-67 (2) A person who directly or indirectly with intent to
32-68 deceive or defraud or with reckless disregard for the truth or the
32-69 law materially aids an investment adviser in conduct for which a
33-1 cause of action is authorized by this section is jointly and
33-2 severally liable with the investment adviser in an action to
33-3 recover damages under this section.
33-4 SECTION 3.18. (a) A change in law made by this Act that
33-5 applies to a criminal or civil penalty applies only to an offense
33-6 committed or a violation that occurs on or after the effective date
33-7 of this Act. For the purposes of this Act, an offense is committed
33-8 or a violation occurs before the effective date of this Act if any
33-9 element of the offense or violation occurs before that date.
33-10 (b) An offense committed or violation that occurs before the
33-11 effective date of this Act is covered by the law in effect when the
33-12 offense was committed or the violation occurred, and the former law
33-13 is continued in effect for that purpose.
33-14 ARTICLE 4. CONFORMING AMENDMENTS
33-15 SECTION 4.01. Section 54.6385, Education Code, is amended to
33-16 read as follows:
33-17 Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The
33-18 registration requirements of The Securities Act (Article 581-1 et
33-19 seq., Vernon's Texas Civil Statutes) do not apply to the sale of a
33-20 prepaid tuition contract by the board or by a registered securities
33-21 dealer or registered investment adviser.
33-22 SECTION 4.02. Section 153.117(a), Finance Code, as amended by
33-23 Chapters 62, 344, and 356, Acts of the 76th Legislature, Regular
33-24 Session, 1999, is reenacted and amended to read as follows:
33-25 (a) The following persons are not required to be licensed
33-26 under this chapter:
33-27 (1) a federally insured financial institution, as that
33-28 term is defined by Section 201.101 [as that term is defined by
33-29 state law governing bank holding companies and interstate bank
33-30 operations], that is organized under the laws of this state,
33-31 another state, or the United States;
33-32 (2) a foreign bank branch or agency in the United
33-33 States established under the federal International Banking Act of
33-34 1978 (12 U.S.C. Section 3101 et seq.), as amended;
33-35 (3) [(2)] a license holder under Chapter 152, except
33-36 that the license holder is required to comply with the other
33-37 provisions of this chapter to the extent the license holder engages
33-38 in currency exchange, transportation, or transmission transactions;
33-39 (4) a person registered as a securities dealer or
33-40 investment adviser under The Securities Act (Article 581-1 et seq.,
33-41 Vernon's Texas Civil Statutes);
33-42 (5) an attorney or title company that in connection
33-43 with a real property transaction receives and disburses only
33-44 domestic currency on behalf of a party to the transaction;
33-45 (6) a Federal Reserve bank;
33-46 (7) a clearinghouse exercising bank payment,
33-47 collection, and clearing functions; or
33-48 (8) another person that the commissioner may exempt by
33-49 rule if the commissioner finds that the licensing of the person is
33-50 not necessary or appropriate to achieve the objectives of this
33-51 chapter.
33-52 SECTION 4.03. Subchapter A, Chapter 182, Finance Code, is
33-53 amended by adding Section 182.0211 to read as follows:
33-54 Sec. 182.0211. CONFORMANCE WITH SECURITIES ACT. For the
33-55 purposes of Section 182.021(7), "salesman" includes "agent" and
33-56 "advisor" includes "investment adviser" or "investment adviser
33-57 representative."
33-58 SECTION 4.04. Section 2051.005, Occupations Code, is amended
33-59 to read as follows:
33-60 Sec. 2051.005. CERTAIN PROFESSIONAL SERVICES EXEMPT. This
33-61 chapter does not apply to a person who directly or indirectly
33-62 recruits or solicits an athlete to enter into a contract with the
33-63 person in which, for compensation, the person performs financial
33-64 services for the athlete if:
33-65 (1) the person is licensed or registered by the state
33-66 as:
33-67 (A) a dealer, agent, investment adviser, or
33-68 investment adviser representative [agent, or securities
33-69 salesperson];
34-1 (B) a real estate broker or salesperson;
34-2 (C) an insurance agent; or
34-3 (D) another professional;
34-4 (2) the financial services performed by the person are
34-5 of a type that are customarily performed by a person licensed in
34-6 that profession; and
34-7 (3) the person does not:
34-8 (A) recruit or solicit the athlete to enter into
34-9 an agent contract or a professional services contract on behalf of
34-10 the person, an affiliate, a related entity, or a third party; or
34-11 (B) procure, offer, promise, or attempt to
34-12 obtain for the athlete employment with a professional sports team.
34-13 SECTION 4.05. Section 452.107(c), Transportation Code, is
34-14 amended to read as follows:
34-15 (c) The executive committee may authorize the negotiation of
34-16 a contract without competitive sealed bids or proposals if:
34-17 (1) the aggregate amount involved in the contract is
34-18 $25,000 or less;
34-19 (2) the contract is for construction for which not
34-20 more than one bid or proposal is received;
34-21 (3) the contract is for services or property for which
34-22 there is only one source or for which it is otherwise impracticable
34-23 to obtain competition;
34-24 (4) the contract is to respond to an emergency for
34-25 which the public exigency does not permit the delay incident to the
34-26 competitive process;
34-27 (5) the contract is for personal or professional
34-28 services or services for which competitive bidding is precluded by
34-29 law; or
34-30 (6) the contract, without regard to form and which may
34-31 include bonds, notes, loan agreements, or other obligations, is for
34-32 the purpose of borrowing money or is a part of a transaction
34-33 relating to the borrowing of money, including:
34-34 (A) a credit support agreement, such as a line
34-35 or letter of credit or other debt guaranty;
34-36 (B) a bond, note, debt sale or purchase,
34-37 trustee, paying agent, remarketing agent, indexing agent, or
34-38 similar agreement;
34-39 (C) an agreement with a securities dealer or
34-40 investment adviser, broker, or underwriter; and
34-41 (D) any other contract or agreement considered
34-42 by the executive committee to be appropriate or necessary in
34-43 support of the authority's financing activities.
34-44 ARTICLE 5. EFFECTIVE DATE
34-45 SECTION 5.01. This Act takes effect September 1, 2001.
34-46 * * * * *