LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 30, 2001
TO: Honorable Dale B. Tillery, Chair, House Committee on
Pensions & Investments
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2846 by Craddick (Relating to the application of state
securities law to certain investment advisers.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2846, As Introduced: negative impact of $(1,740,080) through *
* the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(870,040) *
* 2003 (870,040) *
* 2004 (870,040) *
* 2005 (870,040) *
* 2006 (870,040) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $(870,040) *
* 2003 (870,040) *
* 2004 (870,040) *
* 2005 (870,040) *
* 2006 (870,040) *
*****************************************************
Fiscal Analysis
The bill would amend Subsection A, Section 12, the Securities Act, to
exempt from the registration requirements, investment advisers and their
agents who have fewer than 15 clients during the preceding 12 month
period and who do not hold themselves out to the public as investment
advisers.
The bill would take effect September 1, 2001.
Methodology
The Securities Board (SB) estimates that for each investment adviser with
one agent to which this exemption would apply, the loss to General
Revenue would be at least $460 per year or $2,300 over the first five
years that the act would be in effect. Each additional agent would cause
an additional loss of $220 per year or $1,100 over the first five years.
The SB estimates the number of dealers and agents registered would be
reduced by 3,879 or 2 percent. The fee for each advisor is $240 and for
each agent is $220.
The SB estimates that the exemption could apply to as many as 1/3 of the
2,650 investment advisers and 9,137 agents registered at August 31,2000.
Based on this assumption, the fiscal impact would be $870,040 per year
or $4,350,200 over the first five years.
While there would be new investment advisers going into business during
the first five years after passage, the SB has confined its analysis to
include only the investment advisers and agents registered at August 31,
2000.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 312 State Securities Board
LBB Staff: JK, RB, RT, DE