C.S.H.B. 1840 78(R)    BILL ANALYSIS


C.S.H.B. 1840
By: Solomons
Pensions & Investments
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The State Securities Board was created in 1957 pursuant the Securities Act
passed by the 55th Texas Legislature. The mission of the State Securities
Board is to protect Texas investors. Consistent with that purpose, the
Agency seeks to ensure a free and competitive securities market for Texas,
increase investor confidence, and thereby encourage the formation of
capital and the creation of new jobs in Texas. 

The Board is funded through a direct appropriation from the General
Revenue Fund, unlike similar state agencies which regulate financial
institutions and are funded via fees. The Board's current appropriation of
is not sufficient to provide adequate protection of Texans' investments.  

CSHB 1840 would change the Board's current funding mechanism. Instead of
being funded from General Revenue, the Board would be able to fund
themselves directly from the fees that they collect. The bill would
designate five of the Board's current fees to fund the agency. They would
only collect what fees are necessary for the administering and enforcement
of their statutory duties. 


RULEMAKING AUTHORITY

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

ANALYSIS

SECTION 1.  Amends Section 35, The Securities Act (Article 581-35, VTCS),
by changing the funding mechanism of the State Securities Board to allow
the Board to set an aggregate amount above the five fees as they existed
on September 1 2002,  to generate sufficient revenue to cover the costs of
administering and enforcing the Securities Act. The five fees would
include the filings for: 

 _an application, renewal or amendment to sell or dispose  of securities;
 _an application of a dealer or investment adviser;
 _a renewal application of a dealer or investment advisor;
 _an application for each agent, officer, or investment advisor
representative; and 
 _a renewal application for each agent, officer, or investment advisor
representative. 

While the Board would be required to set only reasonable and necessary
fees, each of the five fees would be capped at $100. 

SECTION 2.  Amends Section 35-1, The Securities Act (Article 581-35-1,
VTCS), by correcting references to certain Subsections changed in Section
1. 

SECTION 3.  Amends Section 35-2, The Securities Act (Article 581-35-2,
VTCS), by correcting references to certain Subsections changed in Section
1. 

SECTION 4.  States the fee becomes in effect on or after the effective
date as stipulated. 

SECTION 5.  Effective date.
 


EFFECTIVE DATE

This Act takes effect immediately if it receives a vote of two-thirds of
all members elected to each House.  If it does not receive the votes
necessary for immediate effect, it will take effect on September 1, 2003. 


COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute bill changes SECTION 1, Section 35 A, The Securities Act
(Article 581-35, VTCS) by stating that the board shall establish fees so
that the aggregate amount above the fees as they existed on September 1,
2002, be sufficient to ocver the costs of administering and enforcing this
Act.  Section C is changed to state that the fees set by the board must be
reasonable and necessary. The effective date is changed to provide for
immediate effect.