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Amend SB 1332 on third reading by adding the following
appropriately numbered SECTION and renumbering the existing
SECTIONS of the bill appropriately:
SECTION ____. (a) Chapter 1371, Government Code, is amended
by adding Subchapter D to read as follows:
SUBCHAPTER D. ADVISORS RETAINED FOR THE ISSUANCE OF PUBLIC
SECURITIES AND RELATED MATTERS
Sec. 1371.151. DEFINITIONS. In this subchapter:
(1) "Interest rate management agreement" means an
agreement that provides for an interest rate transaction,
including:
(A) a swap, basis, forward, option, cap, collar,
floor, lock, or hedge; or
(B) any combination of these types of agreements
or transactions.
(2) "Public security" has the meaning assigned by
Section 1202.001.
Sec. 1371.152. EXEMPTIONS. This subchapter does not apply to:
(1) an issuer who has more than $3 billion in
outstanding obligations as of September 1, 2007, or to a nonprofit
corporation investing funds on behalf of such an issuer;
(2) any person acting as a financial advisor with
respect to an issue of public securities by an issuer created under
Chapter 222, Water Code, delivered before January 1, 2010, under a
contract that was in effect on the date of enactment of this Act and
that has not been modified since such date; or
(3) an employee of an issuer providing advice to the
issuer, or to another issuer.
Sec. 1371.153 EXEMPTIONS FOR CERTAIN ADVICE. This subchapter
does not apply to advice to an issuer regarding:
(1) a loan or a line of credit by a depository
institution to an issuer in a transaction not involving the
issuance of a public security offered to a third party or parties;
or
(2) a deposit of funds with a depository institution in
compliance with other statutes of this state.
Sec. 1371.154. FINANCIAL ADVISOR OR INVESTMENT ADVISOR
QUALIFICATIONS AND REQUIREMENTS FOR CERTAIN AGREEMENTS AND
TRANSACTIONS. (a) This section applies to a financial advisor or an
investment advisor, who advises the issuer in connection with:
(1) an interest rate management agreement;
(2) the execution or delivery of a public security; or
(3) the investment of the public security proceeds.
(b) To be eligible to be a financial advisor or an investment
advisor under this section, the advisor must:
(1) be a dealer or investment advisor registered in
accordance with Section 12 or 12-1, The Securities Act (Article
581-12 or 581-12-1, Vernon's Texas Civil Statutes); provided that a
person acting as an investment advisor with respect to the
investment of bond proceeds, and not as a financial advisor with
respect to the issuance of public securities or interest rate
management agreements may be registered under the federal
Investment Advisors Act of 1940 in lieu of registration under The
Securities Act;
(2) have relevant experience in providing advice to
issuers in connection with:
(A) the issuance of public securities;
(B) the valuation of interest rate management
agreements; or
(C) the investment of public security proceeds;
and
(3) acknowledge in writing to the issuer that in
connection with the transaction for which the advisor is providing
advice the advisor:
(A) is acting as the issuer's agent; and
(B) has complied with rules adopted under this
subchapter.
Sec. 1371.155. RULES. The State Securities Board shall adopt
rules relating to public securities, interest rate management
agreements, and investment of bond proceeds applicable to financial
advisors and investment advisors under this subchapter. The board
shall base the rules on principles stated, as of May 1, 2007, in the
Municipal Securities Rulemaking Board's rules G-17, G-19(c), G-20,
G-37, and G-38 as those rules may apply to financial advisors and
investment advisors.
(b) Not later than January 1, 2008, the State Securities
Board shall adopt the rules required by Section 1371.155,
Government Code, as added by this Act.
(c) Section 1371.154, Government Code, as added by this
section, takes effect January 1, 2008.