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A BILL TO BE ENTITLED
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AN ACT
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relating to financial advisors and investment advisors retained by |
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bond issuers for the issuance of bonds. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 1371, Government Code, is amended by |
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adding Subchapter D to read as follows: |
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SUBCHAPTER D. ADVISORS RETAINED FOR THE ISSUANCE OF PUBLIC |
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SECURITIES AND RELATED MATTERS |
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Sec. 1371.151. DEFINITIONS. In this subchapter: |
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(1) "Interest rate management agreement" means an |
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agreement that provides for an interest rate transaction, |
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including: |
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(A) a swap, basis, forward, option, cap, collar, |
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floor, lock, or hedge; or |
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(B) any combination of these types of agreements |
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or transactions. |
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(2) "Public security" has the meaning assigned by |
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Section 1202.001. |
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Sec. 1371.152. EXEMPTION FOR CERTAIN ISSUERS AND NONPROFIT |
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CORPORATIONS. This subchapter does not apply to an issuer who has |
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more than $3 billion in outstanding obligations or to a nonprofit |
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corporation investing funds on behalf of such an issuer. |
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Sec. 1371.153. FINANCIAL ADVISOR OR INVESTMENT ADVISOR |
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QUALIFICATIONS AND REQUIREMENTS FOR CERTAIN AGREEMENTS AND |
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TRANSACTIONS. (a) This section applies to a financial advisor or |
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an investment advisor, other than a person employed by the issuer or |
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another issuer, who advises the issuer in connection with: |
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(1) an interest rate management agreement; |
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(2) the execution or delivery of a public security; or |
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(3) the investment of the public security proceeds. |
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(b) To be eligible to be a financial advisor or an |
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investment advisor under this section, the advisor must: |
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(1) be a dealer or investment advisor registered in |
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accordance with Section 12 or 12-1, The Securities Act (Article |
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581-12 or 581-12-1, Vernon's Texas Civil Statutes); |
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(2) have relevant experience in providing advice to |
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issuers in connection with: |
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(A) the issuance of public securities; |
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(B) the valuation of interest rate management |
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agreements; or |
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(C) the investment of public security proceeds; |
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and |
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(3) acknowledge in writing to the issuer that in |
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connection with the transaction for which the advisor is providing |
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advice the advisor: |
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(A) is acting as the issuer's agent; and |
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(B) has complied with rules adopted under this |
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subchapter. |
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Sec. 1371.154. RULES. The State Securities Board shall |
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adopt rules relating to public securities, interest rate management |
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agreements, and investment of bond proceeds applicable to financial |
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advisors and investment advisors under this subchapter. The board |
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shall base the rules on principles stated, as of May 1, 2007, in the |
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Municipal Securities Rulemaking Board's rules G-17, G-19(c), G-20, |
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G-37, and G-38, as those rules may apply to financial advisors and |
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investment advisors. |
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SECTION 2. Not later than January 1, 2008, the State |
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Securities Board shall adopt the rules required by Section |
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1371.154, Government Code, as added by this Act. |
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SECTION 3. (a) Except as provided by Subsection (b) of this |
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section: |
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(1) this Act takes effect immediately if it receives a |
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vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution; and |
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(2) if this Act does not receive the vote necessary for |
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immediate effect, this Act takes effect September 1, 2007. |
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(b) Section 1371.153, Government Code, as added by this Act, |
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takes effect January 1, 2008. |