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  86R8229 KFF-F
 
  By: Flynn H.B. No. 2820
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the registration and certification of certain
  investment products made available to public school employees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  ELIGIBLE QUALIFIED INVESTMENTS
         SECTION 1.01.  Section 4, Chapter 22 (S.B. 17), Acts of the
  57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         Sec. 4.  In this section and in Sections 5, 6, [7, 8, 8A,] 9,
  9A, 9B, 10, 11, and 12[, and 13] of this Act:
               (1)  ["Board of trustees" means the board of trustees
  of the Teacher Retirement System of Texas.
               [(2)]  "Educational institution" means a school
  district or an open-enrollment charter school.
               (2) [(3)]  "Eligible qualified investment" means a
  qualified investment product offered by a company that[:
                     [(A)]  is eligible to offer the product [certified
  to the board of trustees] under Section 6 [5] of this Act[; or
                     [(B)     is eligible to certify to the board of
  trustees under Section 8 of this Act].
               (3) [(4)]  "Employee" means an employee of an
  educational institution.
               (4) [(5)]  "Qualified investment product" means an
  annuity or investment that:
                     (A)  meets the requirements of Section 403(b),
  Internal Revenue Code of 1986, and its subsequent amendments;
                     (B)  complies with applicable federal insurance
  and securities laws and regulations; and
                     (C)  complies with applicable state insurance and
  securities laws and rules.
               (5)  [(6)     "Retirement system" means the Teacher
  Retirement System of Texas.
               [(7)]  "Salary reduction agreement" means an agreement
  between an educational institution and an employee to reduce the
  employee's salary for the purpose of making direct contributions to
  or purchases of a qualified investment product.
         SECTION 1.02.  Sections 5(a) and (f), Chapter 22 (S.B. 17),
  Acts of the 57th Legislature, 3rd Called Session, 1962 (Article
  6228a-5, Vernon's Texas Civil Statutes), are amended to read as
  follows:
         (a)  An educational institution may enter into a salary
  reduction agreement with an employee of the institution only if the
  qualified investment product [:
               [(1)]  is an eligible qualified investment[; and
               [(2)     is registered with the retirement system under
  Section 8A of this Act].
         (f)  To the greatest degree possible, educational
  institutions that enter into a salary reduction agreement with
  [employers of] employees [who participate in the program offered]
  under this section shall require that contributions to eligible
  qualified investments be made by automatic payroll deduction and
  deposited directly in the investment accounts.
         SECTION 1.03.  Sections 6(a) and (b), Chapter 22 (S.B. 17),
  Acts of the 57th Legislature, 3rd Called Session, 1962 (Article
  6228a-5, Vernon's Texas Civil Statutes), are amended to read as
  follows:
         (a)  An insurance [A] company is eligible to offer qualified
  investment products to the employees of educational institutions
  under [certify to the retirement system under Section 5 of] this Act
  if the company satisfies the following [financial strength]
  criteria:
               (1)  the company is licensed by the Texas Department of
  Insurance and is in compliance with minimum capital and surplus
  requirements, including applicable risk-based capital and surplus
  requirements prescribed by rules adopted by the department
  [company's actuarial opinions required under Articles 1.11 and
  3.28, Insurance Code, have not been adverse or qualified in the five
  years preceding the date the application is filed;
               [(2) the company is subject to the annual audit
  requirements of Article 1.15A, Insurance Code, and its most recent
  audit of financial strength conducted by an independent certified
  public accountant is timely filed and does not indicate the
  existence of any material adverse financial conditions in the
  company for the five years preceding the filing deadline for the
  audit;
               [(3) the company has not been the subject of an
  administrative or regulatory action by the Texas Department of
  Insurance under Article 1.32 or 21.28-A or Section 83.051,
  Insurance Code, in the five years preceding the date the
  application is filed;
               [(4) the company has maintained during the five years
  preceding the date the application is filed an average of at least
  400 percent of the authorized control level, as calculated in
  accordance with the risk-based capital and surplus requirements
  established in rules adopted by the Texas Department of Insurance;
               [(5) the company has not fallen below 300 percent of the
  authorized control level, as calculated in accordance with the
  risk-based capital and surplus established in rules adopted by the
  Texas Department of Insurance, at any time in the five years
  preceding the date the application is filed]; and
               (2) [(6)]  the company has [at least five years']
  experience in providing qualified investment products and has a
  specialized department dedicated to the service of qualified
  investment products, as determined by the educational institution.
         (b)  A company that offers qualified investment products
  other than annuity contracts, including a company that offers
  custodial accounts under Section 403(b)(7), Internal Revenue Code
  of 1986, is eligible to offer qualified investment products to
  employees of educational institutions under this Act [For purposes
  of Subsection (a)(4) of this section, the company must calculate
  the five-year average on the same date each year].
         SECTION 1.04.  Section 9(a), Chapter 22 (S.B. 17), Acts of
  the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         (a)  An educational institution may not:
               (1)  except as provided by Subdivision (8) of this
  subsection and Subsection (b) of this section, refuse to enter into
  a salary reduction agreement with an employee if the qualified
  investment product that is the subject of the salary reduction is an
  eligible qualified investment [and is registered with the system
  under Section 8A];
               (2)  require or coerce an employee's attendance at any
  meeting at which qualified investment products are marketed;
               (3)  limit the ability of an employee to initiate,
  change, or terminate a qualified investment product at any time the
  employee chooses;
               (4)  grant exclusive access to an employee by
  discriminating against or imposing barriers to any agent, broker,
  or company that provides qualified investment products under this
  Act;
               (5)  grant exclusive access to information about an
  employee's financial information, including information about an
  employee's qualified investment products, to a company or agent or
  affiliate of a company offering qualified investment products
  unless the employee consents in writing to the access;
               (6)  accept any benefit from a company or from an agent
  or affiliate of a company that offers qualified investment
  products;
               (7)  use public funds to recommend a qualified
  investment product offered by a company or an agent or affiliate of
  a company that offers a qualified investment product; or
               (8)  enter into or continue a salary reduction
  agreement with an employee if the qualified investment product that
  is the subject of the salary reduction agreement is not an eligible
  qualified investment[, including the investment product of a
  company whose certification has been denied, suspended, or revoked]
  without first providing the employee with notice in writing that:
                     (A)  indicates the reason the subject of the
  salary reduction agreement is no longer an eligible qualified
  investment [or why certification has been denied, suspended, or
  revoked]; and
                     (B)  clearly states that by signing the notice the
  employee is agreeing to enter into or continue the salary reduction
  agreement.
         SECTION 1.05.  Section 9A, Chapter 22 (S.B. 17), Acts of the
  57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         Sec. 9A.  A person, other than an employee of an educational
  institution, or an affiliate of the person may not enter into or
  renew a contract under which the person is to provide services for
  or administer a plan offered by the institution under Section
  403(b), Internal Revenue Code of 1986, unless the person:
               (1)  holds a license or certificate of authority issued
  by the Texas Department of Insurance;
               (2)  is registered as a securities dealer or agent or
  investment advisor with the State Securities Board; or
               (3)  is a financial institution that:
                     (A)  is authorized by state or federal law to
  exercise fiduciary powers; and
                     (B)  has sufficient presence [its main office, a
  branch office, or a trust office] in this state to serve the
  employees of educational institutions who participate in the plan.
         SECTION 1.06.  Section 9B(b), Chapter 22 (S.B. 17), Acts of
  the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         (b)  If a person described by Subsection (a) holds a meeting
  at which qualified investment products will be marketed to
  employees of the educational institution, the person must provide
  representatives of other companies eligible to sell qualified
  investment products under Section 6 [certified to the retirement
  system under Section 5 or 8] of this Act an opportunity to attend
  and market their qualified investment products at the meeting.
         SECTION 1.07.  Section 10(a), Chapter 22 (S.B. 17), Acts of
  the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         (a)  A person commits an offense if the person:
               (1)  sells or offers for sale an investment product
  that is not an eligible qualified investment [or that is not
  registered under Section 8A of this Act] and that the person knows
  will be the subject of a salary reduction agreement;
               (2)  violates the licensing requirements of Title 13,
  Insurance Code, with regard to a qualified investment product that
  the person knows will be the subject of a salary reduction
  agreement; or
               (3)  engages in activity described by Subchapter B,
  Chapter 541, Insurance Code, with regard to a qualified investment
  product that the person knows will be the subject of a salary
  reduction agreement.
         SECTION 1.08.  Section 11(c), Chapter 22 (S.B. 17), Acts of
  the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         (c)  The notice required under this section must be uniform
  and:
               (1)  be in at least 14-point type;
               (2)  contain spaces for:
                     (A)  the name, address, and telephone number of
  the agent and company offering the annuity contract for sale;
                     (B)  the name, address, and telephone number of
  the company underwriting the annuity;
                     (C)  the license number of the person offering to
  sell the product;
                     (D)  the name of the state agency that issued the
  person's license;
                     (E)  the name of the company account
  representative who has the authority to respond to inquiries or
  complaints; and
                     (F)  with respect to fixed annuity products:
                           (i)  the current interest rate or the
  formula used to calculate the current rate of interest;
                           (ii)  the guaranteed rate of interest and
  the percentage of the premium to which the interest rate applies;
                           (iii)  how interest is compounded;
                           (iv)  the amount of any up-front, surrender,
  withdrawal, deferred sales, and market value adjustment charges or
  any other contract restriction that exceeds 10 years;
                           (v)  the time, if any, the annuity is
  required to be in force before the purchaser is entitled to the full
  bonus accumulation value;
                           (vi)  the manner in which the amount of the
  guaranteed benefit under the annuity is computed;
                           (vii)  whether loans are guaranteed to be
  available under the annuity;
                           (viii)  what restrictions, if any, apply to
  the availability of money attributable to the value of the annuity
  once the purchaser is retired or separated from the employment of
  the employer;
                           (ix)  the amount of any other fees, costs, or
  penalties;
                           (x)  whether the annuity guarantees the
  participant the right to surrender a percentage of the surrender
  value each year, and the percentage, if any; and
                           (xi)  whether the annuity guarantees the
  interest rate associated with any settlement option; and
               (3)  state, in plain language:
                     (A)  that the company offering the annuity must
  comply with Section 6 [5] of this Act and that the annuity must be a
  qualified investment product [registered under Section 8A of this
  Act];
                     (B)  [that the potential purchaser may contact the
  retirement system or access its Internet website to determine which
  companies are in compliance with Section 5 of this Act and which
  qualified investment products are registered under Section 8A of
  this Act;
                     [(C)] the civil remedies available to the
  employee;
                     (C) [(D)]  that the employee may purchase any
  eligible qualified investment through a salary reduction
  agreement;
                     (D) [(E)]  the name and telephone number of the
  Texas Department of Insurance division that specializes in consumer
  protection; and
                     (E) [(F)]  the name and telephone number of the
  attorney general's division that specializes in consumer
  protection.
         SECTION 1.09.  Section 12, Chapter 22 (S.B. 17), Acts of the
  57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         Sec. 12.  A company that offers an eligible qualified
  investment that is subject to a salary reduction agreement shall
  require [demonstrate annually to the retirement system] that each
  of its representatives are properly licensed and qualified, by
  training and continuing education, to sell and service the
  company's eligible qualified investments.
         SECTION 1.10.  The following laws are repealed:
               (1)  Sections 5(b), (c), (d), and (e), Chapter 22 (S.B.
  17), Acts of the 57th Legislature, 3rd Called Session, 1962
  (Article 6228a-5, Vernon's Texas Civil Statutes);
               (2)  Sections 6(c), (d), (d-1), (d-2), (e), (f), (f-1),
  (g), (h), and (i), Chapter 22 (S.B. 17), Acts of the 57th
  Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
  Texas Civil Statutes);
               (3)  Section 7, Chapter 22 (S.B. 17), Acts of the 57th
  Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
  Texas Civil Statutes);
               (4)  Section 8, Chapter 22 (S.B. 17), Acts of the 57th
  Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
  Texas Civil Statutes);
               (5)  Section 8A, Chapter 22 (S.B. 17), Acts of the 57th
  Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
  Texas Civil Statutes);
               (6)  Section 11(b), Chapter 22 (S.B. 17), Acts of the
  57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
  Vernon's Texas Civil Statutes); and
               (7)  Section 13, Chapter 22 (S.B. 17), Acts of the 57th
  Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
  Texas Civil Statutes).
  ARTICLE 2. CONFORMING CHANGE
         SECTION 2.01.  Section 17.46(b), Business & Commerce Code,
  as amended by Chapters 324 (S.B. 1488), 858 (H.B. 2552), and 967
  (S.B. 2065), Acts of the 85th Legislature, Regular Session, 2017,
  is reenacted and amended to read as follows:
         (b)  Except as provided in Subsection (d) of this section,
  the term "false, misleading, or deceptive acts or practices"
  includes, but is not limited to, the following acts:
               (1)  passing off goods or services as those of another;
               (2)  causing confusion or misunderstanding as to the
  source, sponsorship, approval, or certification of goods or
  services;
               (3)  causing confusion or misunderstanding as to
  affiliation, connection, or association with, or certification by,
  another;
               (4)  using deceptive representations or designations
  of geographic origin in connection with goods or services;
               (5)  representing that goods or services have
  sponsorship, approval, characteristics, ingredients, uses,
  benefits, or quantities which they do not have or that a person has
  a sponsorship, approval, status, affiliation, or connection which
  the person does not;
               (6)  representing that goods are original or new if
  they are deteriorated, reconditioned, reclaimed, used, or
  secondhand;
               (7)  representing that goods or services are of a
  particular standard, quality, or grade, or that goods are of a
  particular style or model, if they are of another;
               (8)  disparaging the goods, services, or business of
  another by false or misleading representation of facts;
               (9)  advertising goods or services with intent not to
  sell them as advertised;
               (10)  advertising goods or services with intent not to
  supply a reasonable expectable public demand, unless the
  advertisements disclosed a limitation of quantity;
               (11)  making false or misleading statements of fact
  concerning the reasons for, existence of, or amount of price
  reductions;
               (12)  representing that an agreement confers or
  involves rights, remedies, or obligations which it does not have or
  involve, or which are prohibited by law;
               (13)  knowingly making false or misleading statements
  of fact concerning the need for parts, replacement, or repair
  service;
               (14)  misrepresenting the authority of a salesman,
  representative or agent to negotiate the final terms of a consumer
  transaction;
               (15)  basing a charge for the repair of any item in
  whole or in part on a guaranty or warranty instead of on the value of
  the actual repairs made or work to be performed on the item without
  stating separately the charges for the work and the charge for the
  warranty or guaranty, if any;
               (16)  disconnecting, turning back, or resetting the
  odometer of any motor vehicle so as to reduce the number of miles
  indicated on the odometer gauge;
               (17)  advertising of any sale by fraudulently
  representing that a person is going out of business;
               (18)  advertising, selling, or distributing a card
  which purports to be a prescription drug identification card issued
  under Section 4151.152, Insurance Code, in accordance with rules
  adopted by the commissioner of insurance, which offers a discount
  on the purchase of health care goods or services from a third party
  provider, and which is not evidence of insurance coverage, unless:
                     (A)  the discount is authorized under an agreement
  between the seller of the card and the provider of those goods and
  services or the discount or card is offered to members of the
  seller;
                     (B)  the seller does not represent that the card
  provides insurance coverage of any kind; and
                     (C)  the discount is not false, misleading, or
  deceptive;
               (19)  using or employing a chain referral sales plan in
  connection with the sale or offer to sell of goods, merchandise, or
  anything of value, which uses the sales technique, plan,
  arrangement, or agreement in which the buyer or prospective buyer
  is offered the opportunity to purchase merchandise or goods and in
  connection with the purchase receives the seller's promise or
  representation that the buyer shall have the right to receive
  compensation or consideration in any form for furnishing to the
  seller the names of other prospective buyers if receipt of the
  compensation or consideration is contingent upon the occurrence of
  an event subsequent to the time the buyer purchases the merchandise
  or goods;
               (20)  representing that a guaranty or warranty confers
  or involves rights or remedies which it does not have or involve,
  provided, however, that nothing in this subchapter shall be
  construed to expand the implied warranty of merchantability as
  defined in Sections 2.314 through 2.318 and Sections 2A.212 through
  2A.216 to involve obligations in excess of those which are
  appropriate to the goods;
               (21)  promoting a pyramid promotional scheme, as
  defined by Section 17.461;
               (22)  representing that work or services have been
  performed on, or parts replaced in, goods when the work or services
  were not performed or the parts replaced;
               (23)  filing suit founded upon a written contractual
  obligation of and signed by the defendant to pay money arising out
  of or based on a consumer transaction for goods, services, loans, or
  extensions of credit intended primarily for personal, family,
  household, or agricultural use in any county other than in the
  county in which the defendant resides at the time of the
  commencement of the action or in the county in which the defendant
  in fact signed the contract; provided, however, that a violation of
  this subsection shall not occur where it is shown by the person
  filing such suit that the person neither knew or had reason to know
  that the county in which such suit was filed was neither the county
  in which the defendant resides at the commencement of the suit nor
  the county in which the defendant in fact signed the contract;
               (24)  failing to disclose information concerning goods
  or services which was known at the time of the transaction if such
  failure to disclose such information was intended to induce the
  consumer into a transaction into which the consumer would not have
  entered had the information been disclosed;
               (25)  using the term "corporation," "incorporated," or
  an abbreviation of either of those terms in the name of a business
  entity that is not incorporated under the laws of this state or
  another jurisdiction;
               (26)  selling, offering to sell, or illegally promoting
  an annuity contract under Chapter 22, Acts of the 57th Legislature,
  3rd Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
  Statutes), with the intent that the annuity contract will be the
  subject of a salary reduction agreement, as defined by that Act, if
  the annuity contract is not an eligible qualified investment under
  that Act [or is not registered with the Teacher Retirement System of
  Texas as required by Section 8A of that Act];
               (27)  taking advantage of a disaster declared by the
  governor under Chapter 418, Government Code, by:
                     (A)  selling or leasing fuel, food, medicine, or
  another necessity at an exorbitant or excessive price; or
                     (B)  demanding an exorbitant or excessive price in
  connection with the sale or lease of fuel, food, medicine, or
  another necessity;
               (28)  using the translation into a foreign language of
  a title or other word, including "attorney," "immigration
  consultant," "immigration expert," "lawyer," "licensed," "notary,"
  and "notary public," in any written or electronic material,
  including an advertisement, a business card, a letterhead,
  stationery, a website, or an online video, in reference to a person
  who is not an attorney in order to imply that the person is
  authorized to practice law in the United States;
               (29)  delivering or distributing a solicitation in
  connection with a good or service that:
                     (A)  represents that the solicitation is sent on
  behalf of a governmental entity when it is not; or
                     (B)  resembles a governmental notice or form that
  represents or implies that a criminal penalty may be imposed if the
  recipient does not remit payment for the good or service;
               (30)  delivering or distributing a solicitation in
  connection with a good or service that resembles a check or other
  negotiable instrument or invoice, unless the portion of the
  solicitation that resembles a check or other negotiable instrument
  or invoice includes the following notice, clearly and conspicuously
  printed in at least 18-point type:
         "SPECIMEN-NON-NEGOTIABLE";
               (31)  in the production, sale, distribution, or
  promotion of a synthetic substance that produces and is intended to
  produce an effect when consumed or ingested similar to, or in excess
  of, the effect of a controlled substance or controlled substance
  analogue, as those terms are defined by Section 481.002, Health and
  Safety Code:
                     (A)  making a deceptive representation or
  designation about the synthetic substance; or
                     (B)  causing confusion or misunderstanding as to
  the effects the synthetic substance causes when consumed or
  ingested;
               (32)  a licensed public insurance adjuster directly or
  indirectly soliciting employment, as defined by Section 38.01,
  Penal Code, for an attorney, or a licensed public insurance
  adjuster entering into a contract with an insured for the primary
  purpose of referring the insured to an attorney without the intent
  to actually perform the services customarily provided by a licensed
  public insurance adjuster, provided that this subdivision may not
  be construed to prohibit a licensed public insurance adjuster from
  recommending a particular attorney to an insured; [or]
               (33)  owning, operating, maintaining, or advertising a
  massage establishment, as defined by Section 455.001, Occupations
  Code, that:
                     (A)  is not appropriately licensed under Chapter
  455, Occupations Code, or is not in compliance with the applicable
  licensing and other requirements of that chapter; or
                     (B)  is not in compliance with an applicable local
  ordinance relating to the licensing or regulation of massage
  establishments; or
               (34) [(33)]  a warrantor of a vehicle protection
  product warranty using, in connection with the product, a name that
  includes "casualty," "surety," "insurance," "mutual," or any other
  word descriptive of an insurance business, including property or
  casualty insurance, or a surety business.
  ARTICLE 3. TRANSITIONS; CONFLICT WITH OTHER LEGISLATION; EFFECTIVE
  DATE
         SECTION 3.01.  The changes in law made by this Act to Chapter
  22 (S.B. 17), Acts of the 57th Legislature, 3rd Called Session,
  1962 (Article 6228a-5, Vernon's Texas Civil Statutes), apply only
  to an offer of a qualified investment product under that Act that is
  made on or after the effective date of this Act. An offer of a
  qualified investment product that is made before the effective date
  of this Act is governed by the law as it existed immediately before
  the effective date of this Act, and that law is continued in effect
  for that purpose.
         SECTION 3.02.  The change in law made by this Act to Section
  10(a), Chapter 22 (S.B. 17), Acts of the 57th Legislature, 3rd
  Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
  Statutes), applies only to an offense committed on or after the
  effective date of this Act. For purposes of this section, an
  offense is committed before the effective date of this Act if any
  element of the offense occurs before that date. An offense
  committed before the effective date of this Act is governed by the
  law in effect when the offense was committed, and the former law is
  continued in effect for that purpose.
         SECTION 3.03.  Section 17.46(b), Business & Commerce Code,
  as amended by this Act, applies only to a cause of action that
  accrues on or after the effective date of this Act. A cause of
  action that accrues before the effective date of this Act is
  governed by the law as it existed immediately before the effective
  date of this Act, and that law is continued in effect for that
  purpose.
         SECTION 3.04.  To the extent of any conflict, this Act
  prevails over another Act of the 86th Legislature, Regular Session,
  2019, relating to nonsubstantive additions to and corrections in
  enacted codes.
         SECTION 3.05.  This Act takes effect September 1, 2019.