H.B. No. 4171
 
 
 
 
AN ACT
  relating to the nonsubstantive revision of The Securities Act,
  including conforming amendments.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. NONSUBSTANTIVE REVISION OF THE SECURITIES ACT
         SECTION 1.01.  The Government Code is amended by adding Title 12 to read as follows:
 
  TITLE 12. SECURITIES ACT
  CHAPTER 4001. GENERAL PROVISIONS
  SUBCHAPTER A. SHORT TITLE; PURPOSES; CONSTRUCTION
  Sec. 4001.001.  SHORT TITLE 
  Sec. 4001.002.  PURPOSES; CONSTRUCTION 
  Sec. 4001.003.  SEVERABILITY 
  SUBCHAPTER B. DEFINITIONS
  Sec. 4001.051.  APPLICABILITY OF DEFINITIONS;
                   CONSTRUCTION OF CERTAIN CONJUNCTIONS 
  Sec. 4001.052.  AGENT 
  Sec. 4001.053.  BOARD 
  Sec. 4001.054.  BROKER 
  Sec. 4001.055.  COMMISSIONER 
  Sec. 4001.056.  DEALER 
  Sec. 4001.057.  FEDERAL COVERED INVESTMENT ADVISER 
  Sec. 4001.058.  FRAUD; FRAUDULENT PRACTICE 
  Sec. 4001.059.  INVESTMENT ADVISER 
  Sec. 4001.060.  INVESTMENT ADVISER REPRESENTATIVE 
  Sec. 4001.061.  ISSUER 
  Sec. 4001.062.  MORTGAGE 
  Sec. 4001.063.  NO PAR VALUE; PAR VALUE 
  Sec. 4001.064.  PERSON; COMPANY 
  Sec. 4001.065.  REGISTERED DEALER 
  Sec. 4001.066.  REGISTERED INVESTMENT ADVISER 
  Sec. 4001.067.  SALE; OFFER FOR SALE; SELL 
  Sec. 4001.068.  SECURITY 
  SUBCHAPTER C. GENERAL ADMINISTRATIVE PROVISIONS
  Sec. 4001.101.  SUFFICIENCY OF NOTICE 
  Sec. 4001.102.  CONSENT FOR SERVICE OF PROCESS 
  SUBCHAPTER D. OTHER GENERAL PROVISIONS
  Sec. 4001.151.  PROSECUTION UNDER CERTAIN OTHER LAW 
  Sec. 4001.152.  GOOD FAITH 
  Sec. 4001.153.  BURDEN OF PROOF ON EXEMPTION 
  Sec. 4001.154.  CERTIFIED COPIES OF CERTAIN DOCUMENTS
                   OR INSTRUMENTS AS EVIDENCE 
  Sec. 4001.155.  PROOF OF CERTAIN RECORDS 
  TITLE 12. SECURITIES ACT
  CHAPTER 4001. GENERAL PROVISIONS
  SUBCHAPTER A. SHORT TITLE; PURPOSES; CONSTRUCTION
         Sec. 4001.001.  SHORT TITLE. This title may be cited as The
  Securities Act. (V.A.C.S. Art. 581-1.)
         Sec. 4001.002.  PURPOSES; CONSTRUCTION. (a) The general
  purposes of this title are to:
               (1)  protect investors and, consistent with that
  purpose, encourage capital formation, job formation, and free and
  competitive securities markets;
               (2)  maximize coordination with federal and other
  states' laws and administration, particularly with respect to
  procedure, reports, forms, and exemptions; and
               (3)  minimize regulatory burdens on issuers and other
  persons subject to this title, especially small businesses.
         (b)  This title may be construed and implemented to
  effectuate the title's general purposes. (V.A.C.S. Art. 581-10-1.)
         Sec. 4001.003.  SEVERABILITY. The provisions of this title
  are severable. If any provision of this title is declared void or
  unconstitutional, the remaining provisions of this title would have
  been enacted notwithstanding such judicial determination of the
  invalidity of the provision, and the remaining provisions shall
  remain in effect. (V.A.C.S. Art. 581-38.)
  SUBCHAPTER B. DEFINITIONS
         Sec. 4001.051.  APPLICABILITY OF DEFINITIONS; CONSTRUCTION
  OF CERTAIN CONJUNCTIONS. (a) The definition for a term provided by
  this chapter applies in this title unless the context in which the
  term is used indicates a different meaning.
         (b)  The term "and" may be construed to mean "or," and the
  term "or" may be construed to mean "and." (V.A.C.S. Art. 581-4
  (part); Art. 581-4, Subsec. J (part).)
         Sec. 4001.052.  AGENT. (a) Except as provided by Subsection
  (b), "agent" includes a person or company employed, appointed, or
  authorized by a dealer to sell, offer for sale or delivery, solicit
  subscriptions to or orders for, or deal in any other manner in,
  securities in this state directly or through a subagent.
         (b)  If a corporation or partnership is registered as a
  dealer under this title, an officer of the corporation or partner of
  the partnership is not deemed an agent solely because of the
  officer's or partner's status as an officer or partner of that
  entity. (V.A.C.S. Art. 581-4, Subsec. D.)
         Sec. 4001.053.  BOARD. "Board" means the State Securities
  Board. (New.)
         Sec. 4001.054.  BROKER. "Broker" means "dealer" as defined
  in this title. (V.A.C.S. Art. 581-4, Subsec. H.)
         Sec. 4001.055.  COMMISSIONER. "Commissioner" means the
  securities commissioner. (New.)
         Sec. 4001.056.  DEALER. (a) "Dealer" includes:
               (1)  a person or company, other than an agent, who for
  all or part of the person's or company's time engages in this state,
  directly or through an agent, in selling, offering for sale or
  delivery, soliciting subscriptions to or orders for, undertaking to
  dispose of, or inviting offers for any security; and
               (2)  a person or company who deals in any other manner
  in any security in this state.
         (b)  Except as provided by Subsection (c), an issuer, other
  than a registered dealer, who directly or through any person or
  company, other than a registered dealer, offers for sale, sells, or
  makes sales of the issuer's own securities is deemed a dealer and
  shall comply with this title.
         (c)  An issuer is not deemed a dealer under Subsection (b)
  if:
               (1)  the issuer sells or offers for sale securities to a
  registered dealer or only by or through a registered dealer acting
  as fiscal agent for the issuer; or
               (2)  the transaction is exempt as provided by
  Subchapter A, Chapter 4005.
         (d)  Except as expressly provided otherwise in this title, a
  person or company engaged in the sale of, offer for sale of,
  solicitation of, subscription to, dealing in, or delivery of a
  security made in a transaction or under a condition specified in
  Subchapter A, Chapter 4005, is not deemed a dealer within the
  meaning of this title. (V.A.C.S. Art. 581-4, Subsec. C; Art. 581-5
  (part).)
         Sec. 4001.057.  FEDERAL COVERED INVESTMENT ADVISER.  
  "Federal covered investment adviser" means an investment adviser
  who is registered under the Investment Advisers Act of 1940 (15
  U.S.C. Section 80b-1 et seq.).  (V.A.C.S. Art. 581-4, Subsec. O.)
         Sec. 4001.058.  FRAUD; FRAUDULENT PRACTICE.  (a)  "Fraud"
  and "fraudulent practice" include:
               (1)  a misrepresentation of a relevant fact made in any
  manner;
               (2)  a promise, representation, or predication as to
  the future not made honestly and in good faith;
               (3)  an intentional failure to disclose a material
  fact;
               (4)  a direct or indirect gain, through the sale of a
  security, of an underwriting or promotion fee or profit, or of a
  selling or managing commission or profit, that is so gross or
  exorbitant as to be unconscionable; and
               (5)  a scheme, device, or other artifice to obtain a
  profit, fee, or commission described by Subdivision (4).
         (b)  Nothing in this section limits the full meaning of
  "fraud," "fraudulent," or "fraudulent practice" as applied or
  accepted in courts.  (V.A.C.S. Art. 581-4, Subsec. F.)
         Sec. 4001.059.  INVESTMENT ADVISER. "Investment adviser"
  includes a person who, for compensation, engages in the business of
  advising another, either directly or through publications or
  writings, with respect to the value of securities or to the
  advisability of investing in, purchasing, or selling securities or
  a person who, for compensation and as part of a regular business,
  issues or adopts analyses or a report concerning securities, as may
  be further defined by board rule. The term does not include:
               (1)  a bank or a bank holding company, as defined by the
  Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.),
  that is not an investment company;
               (2)  a lawyer, accountant, engineer, teacher, or
  geologist whose performance of the services is solely incidental to
  the practice of the person's profession;
               (3)  a dealer or agent who receives no special
  compensation for those services and whose performance of those
  services is solely incidental to transacting business as a dealer
  or agent;
               (4)  the publisher of a bona fide newspaper, news
  magazine, or business or financial publication of general and
  regular circulation; or
               (5)  a person whose advice, analyses, or report does
  not concern a security other than a security that is:
                     (A)  a direct obligation of or an obligation the
  principal or interest of which is guaranteed by the United States
  government; or
                     (B)  issued or guaranteed by a corporation in
  which the United States has a direct or indirect interest and
  designated by the United States Secretary of the Treasury under
  Section 3(a)(12), Securities Exchange Act of 1934 (15 U.S.C.
  Section 78c(a)(12)), as an exempt security for purposes of that
  Act. (V.A.C.S. Art. 581-4, Subsec. N.)
         Sec. 4001.060.  INVESTMENT ADVISER REPRESENTATIVE. (a)
  Except as provided by Subsection (b), "investment adviser
  representative" includes a person or company who, for compensation,
  is employed, appointed, or authorized by an investment adviser to
  solicit clients for the investment adviser or who provides
  investment advice, directly or through subagents, as defined by
  board rule, to an investment adviser's clients on behalf of the
  investment adviser.
         (b)  "Investment adviser representative" does not include a
  partner of a partnership or officer of a corporation or other entity
  that is registered as an investment adviser under this title solely
  because of the person's status as a partner or officer of that
  entity. (V.A.C.S. Art. 581-4, Subsec. P.)
         Sec. 4001.061.  ISSUER.  "Issuer" means and includes a
  person or company who has issued, proposes to issue, or issues any
  security.  (V.A.C.S. Art. 581-4, Subsec. G.)
         Sec. 4001.062.  MORTGAGE. "Mortgage" includes a deed of
  trust to secure a debt. (V.A.C.S. Art. 581-4, Subsec. I.)
         Sec. 4001.063.  NO PAR VALUE; PAR VALUE. (a) "No par value"
  as applied to shares of stock or other securities means the
  securities are without a given or specified par value.
         (b)  For purposes of classifying or computing the par value
  of shares of stock or other securities of no par value, the amount
  for which the securities are sold or offered for sale to the public
  is used as a basis. (V.A.C.S. Art. 581-4, Subsec. K.)
         Sec. 4001.064.  PERSON; COMPANY. (a) The terms "person" and
  "company" include:
               (1)  any of the following formed under the laws of this
  or another state, country, sovereignty, or political subdivision of
  a state, country, or sovereignty, and regardless of whether
  incorporated or unincorporated:
                     (A)  a corporation;
                     (B)  a person;
                     (C)  a company, including a joint stock company;
                     (D)  a partnership, including a limited
  partnership;
                     (E)  an association;
                     (F)  a firm;
                     (G)  a syndicate; or
                     (H)  a trust; and
               (2)  a government or a political subdivision or agency
  of a government.
         (b)  As used in Subsection (a), "trust":
               (1)  is deemed to include a common law trust; and
               (2)  does not include a trust created or appointed
  under or by virtue of a last will and testament or by a court.
         (c)  The definition of "person" assigned by Section 311.005
  does not apply to any provision in this title. (V.A.C.S. Art.
  581-4, Subsec. B; New.)
         Sec. 4001.065.  REGISTERED DEALER. "Registered dealer"
  means a dealer the commissioner has registered under Sections
  4004.054 and 4004.055, or Section 4004.056. (V.A.C.S. Art. 581-4,
  Subsec. M.)
         Sec. 4001.066.  REGISTERED INVESTMENT ADVISER. "Registered
  investment adviser" means an investment adviser to whom the
  commissioner has issued a registration certificate under Sections
  4004.054 and 4004.055, or Section 4004.056. (V.A.C.S. Art. 581-4,
  Subsec. Q.)
         Sec. 4001.067.  SALE; OFFER FOR SALE; SELL. (a) "Sale,"
  "offer for sale," and "sell" include every disposition or attempted
  disposition of a security for value.
         (b)  "Sale" means and includes:
               (1)  a contract or agreement in which a security is
  sold, traded, or exchanged for money, property, or another thing of
  value; or
               (2)  a transfer of or agreement to transfer a security,
  in trust or otherwise.
         (c)  "Sale" or "offer for sale" includes a subscription, an
  option for sale, a solicitation of sale, a solicitation of an offer
  to buy, an attempt to sell, or an offer to sell, directly or by an
  agent, by a circular, letter, or advertisement or otherwise,
  including the deposit in any manner in the United States mail within
  this state of a circular, letter, or other advertising matter.
         (d)  "Sell" means any act by which a sale is made.
         (e)  A security given or delivered with or as a bonus on
  account of a purchase of securities or other thing of value is
  conclusively presumed to:
               (1)  constitute a part of the subject of the purchase;
  and
               (2)  have been sold for value.
         (f)  The sale of a security under conditions that entitle the
  purchaser or subsequent holder to exchange the security for another
  security or to purchase another security is not deemed a sale or
  offer for sale of the other security.
         (g)  This section does not limit the meaning of the terms
  "sale," "offer for sale," or "sell" as used by or accepted in
  courts. (V.A.C.S. Art. 581-4, Subsec. E (part).)
         Sec. 4001.068.  SECURITY. (a) The term "security":
               (1)  includes:
                     (A)  a limited partner interest in a limited
  partnership;
                     (B)  a share;
                     (C)  a stock;
                     (D)  a treasury stock;
                     (E)  a stock certificate under a voting trust
  agreement;
                     (F)  a collateral trust certificate;
                     (G)  an equipment trust certificate;
                     (H)  a preorganization certificate or receipt;
                     (I)  a subscription or reorganization
  certificate;
                     (J)  a note, bond, debenture, mortgage
  certificate, or other evidence of indebtedness;
                     (K)  any form of commercial paper;
                     (L)  a certificate in or under a profit sharing or
  participation agreement;
                     (M)  a certificate or instrument representing an
  interest in or under an oil, gas, or mining lease, fee, or title;
                     (N)  a certificate or instrument representing or
  secured by an interest in any of the capital, property, assets,
  profits, or earnings of a company;
                     (O)  an investment contract; and
                     (P)  any other instrument commonly known as a
  security, regardless of whether the instrument is similar to
  another instrument listed in this subsection; and
               (2)  applies regardless of whether the security is
  evidenced by a written instrument.
         (b)  "Security" does not include an insurance policy,
  endowment policy, annuity contract, or optional annuity contract,
  or any contract or agreement in relation to and in consequence of
  any such policy or contract, issued by an insurance company subject
  to the supervision or control of the Texas Department of Insurance
  when the form of such policy or contract has been filed with the
  department as required by law. (V.A.C.S. Art. 581-4, Subsec. A.)
  SUBCHAPTER C. GENERAL ADMINISTRATIVE PROVISIONS
         Sec. 4001.101.  SUFFICIENCY OF NOTICE. In this title unless
  otherwise specified, a notice required by this title is sufficient
  if sent by registered or certified mail addressed to a person at:
               (1)  the address designated in any filing the person
  submitted to the commissioner; or
               (2)  the person's last known address. (V.A.C.S. Art.
  581-26 (part).)
         Sec. 4001.102.  CONSENT FOR SERVICE OF PROCESS. (a)  This
  section applies only to an issuer, dealer, or investment adviser
  that is:
               (1)  organized under the laws of any other state,
  territory, or government; or
               (2)  domiciled in any other state.
         (b)  Unless a board rule specifies otherwise, an issuer,
  dealer, or investment adviser subject to this section must include
  in an application filed with or notice filing submitted to the
  commissioner a provision that appoints the commissioner as the
  attorney of the issuer, dealer, or investment adviser who may be
  served with process in any action or proceeding against the issuer,
  dealer, or investment adviser that arises out of any transaction
  subject to this title.
         (c)  The provision required by Subsection (b) must be
  executed by an authorized agent of the issuer, dealer, or
  investment adviser filing the application or submitting the notice
  filing.
         (d)  Service of process on the commissioner in accordance
  with a provision executed under this section has the same effect as
  if the issuer, dealer, or investment adviser was created or formed
  under the laws of this state and served with process in this state.
         (e)  If the commissioner is served with process in accordance
  with a provision executed under this section, the commissioner
  shall forward the process by United States mail to the last known
  address of the issuer, dealer, or investment adviser. (V.A.C.S.
  Art. 581-8.)
  SUBCHAPTER D. OTHER GENERAL PROVISIONS
         Sec. 4001.151.  PROSECUTION UNDER CERTAIN OTHER LAW.
  Nothing in Chapter 269 (S.B. 294), Acts of the 55th Legislature,
  Regular Session, 1957 (Article 581-1 et seq., Vernon's Texas Civil
  Statutes), limits the liability of a person or company, or of its
  officers or agents, imposed by law as of August 22, 1957, so as to
  prevent the prosecution of the person or company, or of its officers
  or agents, for violating another statute. (V.A.C.S. Art. 581-31.)
         Sec. 4001.152.  GOOD FAITH. (a)  A provision of this title
  that imposes liability or a penalty does not apply to an act or
  omission made in good faith in conformity with a board rule.
         (b)  This section applies regardless of whether the rule is
  subsequently amended, rescinded, or determined by judicial or other
  authority to be invalid for any reason. (V.A.C.S. Art. 581-28-1,
  Subsec. E.)
         Sec. 4001.153.  BURDEN OF PROOF ON EXEMPTION. (a) A
  complaint, information or indictment, or a writ or proceeding
  brought under this title is not required to negate an exemption
  under this title.
         (b)  A party claiming an exemption under this title has the
  burden of proof on the exemption. (V.A.C.S. Art. 581-37.)
         Sec. 4001.154.  CERTIFIED COPIES OF CERTAIN DOCUMENTS OR
  INSTRUMENTS AS EVIDENCE. (a) Except as provided by Subsection (b),
  a copy of a paper, document, or instrument filed in the office of
  the commissioner and certified by the commissioner must be admitted
  in evidence in a court and elsewhere in this state in any case in
  which the original would be admitted in evidence.
         (b)  In any proceeding in a court, the court may, on cause
  shown, require the production of the original paper, document, or
  instrument.
         (c)  In a prosecution, suit, or other action or proceeding in
  a court of this state that arises under this title, a certificate
  showing compliance or noncompliance with a provision of this title
  by a dealer, agent, investment adviser, or investment adviser
  representative constitutes prima facie evidence of the person's
  compliance or noncompliance with that provision if the certificate:
               (1)  is under the state seal; and
               (2)  is signed by the commissioner.
         (d)  A certificate described by Subsection (c) is admissible
  in evidence in an action to enforce this title. (V.A.C.S. Art.
  581-30 (part).)
         Sec. 4001.155.  PROOF OF CERTAIN RECORDS. All records of the
  former securities divisions of the offices of the secretary of
  state and the former Board of Insurance Commissioners for which
  custody was assumed by the commissioner under Chapter 269, Acts of
  the 55th Legislature, Regular Session, 1957, shall be proven under
  the commissioner's certificate. (V.A.C.S. Art. 581-30 (part).)
  CHAPTER 4002. STATE SECURITIES BOARD AND SECURITIES COMMISSIONER
  SUBCHAPTER A. GENERAL PROVISIONS
  Sec. 4002.001.  APPLICABILITY OF OTHER LAW 
  Sec. 4002.002.  SUNSET PROVISION 
  SUBCHAPTER B. STATE SECURITIES BOARD
  Sec. 4002.051.  APPOINTMENT OF BOARD 
  Sec. 4002.052.  MEMBERSHIP ELIGIBILITY 
  Sec. 4002.053.  MEMBERSHIP AND EMPLOYEE RESTRICTIONS 
  Sec. 4002.054.  TERMS; VACANCY 
  Sec. 4002.055.  PRESIDING OFFICER 
  Sec. 4002.056.  GROUNDS FOR REMOVAL 
  Sec. 4002.057.  PER DIEM 
  Sec. 4002.058.  BOARD MEMBER TRAINING 
  SUBCHAPTER C. SECURITIES COMMISSIONER AND EMPLOYEES OF BOARD
  Sec. 4002.101.  SECURITIES COMMISSIONER 
  Sec. 4002.102.  DEPUTY SECURITIES COMMISSIONER;
                   SECURITIES COMMISSIONER APPOINTEES 
  Sec. 4002.103.  DIVISION OF RESPONSIBILITIES 
  Sec. 4002.104.  STANDARDS OF CONDUCT INFORMATION 
  Sec. 4002.105.  CAREER LADDER PROGRAM; PERFORMANCE
                   EVALUATIONS 
  Sec. 4002.106.  EQUAL EMPLOYMENT OPPORTUNITY POLICY 
  Sec. 4002.107.  WRITTEN EMPLOYEE COMPLAINT PROCEDURE 
  SUBCHAPTER D. POWERS AND DUTIES OF BOARD AND COMMISSIONER
  Sec. 4002.151.  RULES 
  Sec. 4002.152.  RULES REGARDING COMPETITIVE BIDDING OR
                   ADVERTISING 
  Sec. 4002.153.  BOARD DELEGATION OF RULEMAKING
                   AUTHORITY 
  Sec. 4002.154.  COMMISSIONER DISCRETION REGARDING RULES 
  Sec. 4002.155.  DEPOSIT OF RECEIPTS TO GENERAL REVENUE
                   FUND 
  Sec. 4002.156.  BOARD AUTHORITY TO EXERCISE
                   COMMISSIONER'S POWERS 
  Sec. 4002.157.  LIST OF SECURITIES OFFERED 
  Sec. 4002.158.  RECORD OF PROCEEDINGS 
  Sec. 4002.159.  RECORD OF CERTAIN FILINGS AND ORDERS 
  Sec. 4002.160.  COMMISSIONER'S ACCESS TO RECORDS AND
                   REPORTS OF OTHER STATE AGENCIES 
  Sec. 4002.161.  CONFIDENTIALITY OF CERTAIN INFORMATION 
  Sec. 4002.162.  BOARD ACCESS TO OFFICES AND RECORDS 
  Sec. 4002.163.  ANNUAL REPORT 
  SUBCHAPTER E. CONSUMER INTEREST AND OTHER PUBLIC INTEREST
  INFORMATION
  Sec. 4002.201.  CONSUMER INTEREST INFORMATION 
  Sec. 4002.202.  PUBLIC PARTICIPATION 
  Sec. 4002.203.  DOCUMENTS AND OTHER INFORMATION FILED
                   WITH COMMISSIONER; PUBLIC RECORDS 
  CHAPTER 4002. STATE SECURITIES BOARD AND SECURITIES COMMISSIONER
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 4002.001.  APPLICABILITY OF OTHER LAW. The board and
  commissioner are subject to Chapters 551, 2001, and 2002.
  (V.A.C.S. Art. 581-2, Subsec. N.)
         Sec. 4002.002.  SUNSET PROVISION. The State Securities
  Board is subject to Chapter 325 (Texas Sunset Act). Unless
  continued in existence as provided by that chapter, the board is
  abolished and this title expires September 1, 2019. (V.A.C.S. Art.
  581-2, Subsec. O.)
  SUBCHAPTER B. STATE SECURITIES BOARD
         Sec. 4002.051.  APPOINTMENT OF BOARD. (a) The State
  Securities Board consists of five citizens of this state appointed
  by the governor with the advice and consent of the senate.
         (b)  Members of the board must be members of the general
  public.
         (c)  Appointments to the board shall be made without regard
  to the race, color, disability, sex, religion, age, or national
  origin of the appointee.
         (d)  A member of the board is eligible for reappointment.
  (V.A.C.S. Art. 581-2, Subsecs. A (part), B (part).)
         Sec. 4002.052.  MEMBERSHIP ELIGIBILITY. A person is not
  eligible for appointment to the board if the person or the person's
  spouse:
               (1)  is registered as a dealer, agent, investment
  adviser, or investment adviser representative;
               (2)  has an active notice filing under this title to
  engage in business in this state as an investment adviser or
  investment adviser representative;
               (3)  is employed by or participates in the management
  of a business entity engaged in business as a securities dealer or
  investment adviser; or
               (4)  has, other than as a consumer, a financial
  interest in a business entity engaged in business as a securities
  dealer or investment adviser. (V.A.C.S. Art. 581-2, Subsec. B
  (part).)
         Sec. 4002.053.  MEMBERSHIP AND EMPLOYEE RESTRICTIONS. (a)
  In this section, "Texas trade association" means a cooperative and
  voluntarily joined association of business or professional
  competitors in this state designed to assist its members and its
  industry or profession in dealing with mutual business or
  professional problems and in promoting their common interest.
         (b)  A person may not be a member of the board or an employee
  of the board employed in a "bona fide executive, administrative, or
  professional capacity," as that phrase is used for purposes of
  establishing an exemption to the overtime provisions of the federal
  Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.),
  if:
               (1)  the person is an officer, employee, or paid
  consultant of a Texas trade association in a field regulated by the
  board; or
               (2)  the person's spouse is an officer, manager, or paid
  consultant of a Texas trade association in a field regulated by the
  board.
         (c)  A person may not be a member of the board or act as the
  general counsel to the board if the person is required to register
  as a lobbyist under Chapter 305 because of the person's activities
  for compensation on behalf of a profession related to the operation
  of the board. (V.A.C.S. Art. 581-2-1.)
         Sec. 4002.054.  TERMS; VACANCY. (a) Members of the board
  serve staggered six-year terms, with as near as possible to
  one-third of the members' terms expiring January 20 of each
  odd-numbered year.
         (b)  The governor shall fill a vacancy on the board for the
  unexpired term. (V.A.C.S. Art. 581-2, Subsec. A (part).)
         Sec. 4002.055.  PRESIDING OFFICER. The governor shall
  designate a member of the board as the board's presiding officer to
  serve in that capacity at the will of the governor. (V.A.C.S. Art.
  581-2, Subsec. D (part).)
         Sec. 4002.056.  GROUNDS FOR REMOVAL. (a) It is a ground for
  removal from the board that a member:
               (1)  does not have at the time of taking office the
  qualifications required by Section 4002.051;
               (2)  does not maintain during service on the board the
  qualifications required by Section 4002.051;
               (3)  is ineligible for membership under Section
  4002.052 or 4002.053;
               (4)  cannot, because of illness or disability,
  discharge the member's duties for a substantial part of the member's
  term; or
               (5)  is absent from more than half of the regularly
  scheduled board meetings that the member is eligible to attend
  during a calendar year without an excuse approved by a majority vote
  of the board.
         (b)  The validity of an action of the board is not affected by
  the fact that it is taken when a ground for removal of a board member
  exists.
         (c)  If the commissioner has knowledge that a potential
  ground for removal exists, the commissioner shall notify the
  board's presiding officer of the potential ground. The presiding
  officer shall then notify the governor and the attorney general
  that a potential ground for removal exists. If the potential ground
  for removal involves the presiding officer, the commissioner shall
  notify the board's next highest ranking officer, who shall then
  notify the governor and the attorney general that a potential
  ground for removal exists. (V.A.C.S. Art. 581-2, Subsecs. E, F.)
         Sec. 4002.057.  PER DIEM. A member of the board is entitled
  to a per diem as set by legislative appropriation for each day the
  member engages in the business of the board. (V.A.C.S. Art. 581-2,
  Subsec. D (part).)
         Sec. 4002.058.  BOARD MEMBER TRAINING. (a) A person who is
  appointed to and qualifies for office as a member of the board may
  not vote, deliberate, or be counted as a member in attendance at a
  meeting of the board until the person completes a training program
  that complies with this section.
         (b)  The training program must provide the person with
  information regarding:
               (1)  the legislation that created the board;
               (2)  the programs operated by the board;
               (3)  the role and functions of the board;
               (4)  the rules of the board, with an emphasis on the
  rules that relate to disciplinary and investigatory authority;
               (5)  the current budget for the board;
               (6)  the results of the most recent formal audit of the
  board;
               (7)  the requirements of:
                     (A)  the open meetings law, Chapter 551;
                     (B)  the public information law, Chapter 552;
                     (C)  the administrative procedure law, Chapter
  2001; and
                     (D)  other laws relating to public officials,
  including conflict-of-interest laws; and
               (8)  any applicable ethics policies adopted by the
  board or the Texas Ethics Commission.
         (c)  A person appointed to the board is entitled to
  reimbursement, as provided by the General Appropriations Act, for
  travel expenses incurred in attending the training program
  regardless of whether the attendance at the program occurs before
  or after the person qualifies for office. (V.A.C.S. Art. 581-2-3.)
  SUBCHAPTER C. SECURITIES COMMISSIONER AND EMPLOYEES OF BOARD
         Sec. 4002.101.  SECURITIES COMMISSIONER. The board shall
  appoint a securities commissioner who serves at the pleasure of the
  board and who, under the board's supervision, shall administer this
  title. (V.A.C.S. Art. 581-2, Subsec. G (part).)
         Sec. 4002.102.  DEPUTY SECURITIES COMMISSIONER; SECURITIES
  COMMISSIONER APPOINTEES. (a) The commissioner, with the consent
  of the board, may designate a deputy securities commissioner who
  shall perform all of the duties of the commissioner required by law
  to be performed by the commissioner when the commissioner is absent
  or unable to act for any reason.
         (b)  The commissioner shall appoint other persons as
  necessary to carry out the powers and duties of the commissioner
  under this title and under other laws granting jurisdiction to or
  applicable to the board or the commissioner.
         (c)  The commissioner may delegate to a person appointed
  under Subsection (b) powers and duties of the commissioner as the
  commissioner considers necessary. (V.A.C.S. Art. 581-2, Subsec.
  H.)
         Sec. 4002.103.  DIVISION OF RESPONSIBILITIES. The board
  shall develop and implement policies that clearly separate the
  policy-making responsibilities of the board and the management
  responsibilities of the commissioner and board employees.
  (V.A.C.S. Art. 581-2-4.)
         Sec. 4002.104.  STANDARDS OF CONDUCT INFORMATION. The
  commissioner or the commissioner's designee shall provide to
  members of the board and to board employees, as often as necessary,
  information regarding the requirements for office or employment
  under this title, including information regarding a person's
  responsibilities under applicable laws relating to standards of
  conduct for state officers or employees. (V.A.C.S. Art. 581-2-2.)
         Sec. 4002.105.  CAREER LADDER PROGRAM; PERFORMANCE
  EVALUATIONS. (a) The commissioner or the commissioner's designee
  shall develop an intra-agency career ladder program. The program
  must require intra-agency posting of each nonentry level position
  at least 10 days before the date of any public posting.
         (b)  The commissioner or the commissioner's designee shall
  develop a system of annual performance evaluations based on
  measurable job tasks. All merit pay for board employees must be
  based on the system established under this subsection. (V.A.C.S.
  Art. 581-2, Subsec. K.)
         Sec. 4002.106.  EQUAL EMPLOYMENT OPPORTUNITY POLICY. (a)
  The commissioner or the commissioner's designee shall prepare and
  maintain a written policy statement that implements a program of
  equal employment opportunity to ensure that all personnel decisions
  are made without regard to race, color, disability, sex, religion,
  age, or national origin.
         (b)  The policy statement must include:
               (1)  personnel policies, including policies relating
  to recruitment, evaluation, selection, training, and promotion of
  personnel, that show the intent of the board to avoid the unlawful
  employment practices described by Chapter 21, Labor Code; and
               (2)  an analysis of the extent to which the composition
  of the board's personnel is in accordance with state and federal law
  and a description of reasonable methods to achieve compliance with
  state and federal law.
         (c)  The policy statement must be:
               (1)  updated annually;
               (2)  reviewed by the Texas Workforce Commission civil
  rights division for compliance with Subsection (b)(1); and
               (3)  filed with the governor's office. (V.A.C.S. Art.
  581-2-7.)
         Sec. 4002.107.  WRITTEN EMPLOYEE COMPLAINT PROCEDURE. (a)
  The commissioner or the commissioner's designee shall maintain a
  file on each written complaint filed with the commissioner or board
  concerning an employee or former employee. The file must include
  the information listed in Section 4007.051 for files maintained
  under that section for complaints against persons registered under
  this title.
         (b)  The commissioner or the commissioner's designee shall
  provide to the person filing the complaint and to each person who is
  a subject of the complaint a copy of the board's policies and
  procedures relating to complaint investigation and resolution.
         (c)  The commissioner or the commissioner's designee, at
  least quarterly until final disposition of the complaint, shall
  notify the person filing the complaint and each person who is a
  subject of the complaint of the status of the investigation unless
  the notice would jeopardize an undercover investigation. (V.A.C.S.
  Art. 581-2-6, Subsecs. A (part), B, C; New.)
  SUBCHAPTER D. POWERS AND DUTIES OF BOARD AND COMMISSIONER
         Sec. 4002.151.  RULES. (a) Subject to Subsection (b), the
  board may adopt rules as necessary to implement this title,
  including rules:
               (1)  governing registration statements, applications,
  notices, and reports; and 
               (2)  defining terms, regardless of whether used in this
  title, provided that the definitions are not inconsistent with the
  purposes fairly intended by the policy and provisions of this
  title.
         (b)  The board may not adopt a rule unless, after notice and
  opportunity for comment, the board finds that the action is:
               (1)  necessary or appropriate in the public interest or
  for the protection of investors; and
               (2)  consistent with the purposes fairly intended by
  the policy and provisions of this title. 
         (c)  For the purpose of adopting rules, the board may
  classify securities, persons, and matters within the board's
  jurisdiction and prescribe different requirements for different
  classes.
         (d)  The board, in the board's discretion, may waive a
  requirement of a rule in a situation in which, in the board's
  opinion, the requirement is not necessary in the public interest or
  for the protection of investors. (V.A.C.S. Art. 581-28-1, Subsecs.
  B, C.)
         Sec. 4002.152.  RULES REGARDING COMPETITIVE BIDDING OR
  ADVERTISING. (a) The board may not adopt rules restricting
  competitive bidding or advertising by a person registered under
  this title except to prohibit false, misleading, or deceptive
  practices by the person. 
         (b)  The board may not include in the board's rules to
  prohibit false, misleading, or deceptive practices by a person
  regulated by the board a rule that:
               (1)  restricts the person's use of any advertising
  medium;
               (2)  restricts the person's personal appearance or use
  of the person's voice in an advertisement;
               (3)  relates to the size or duration of an
  advertisement by the person; or
               (4)  restricts the person's advertisement under a trade
  name.
         (c)  This section does not affect limitations on advertising
  in Section 4005.012, 4005.013, or 4005.021 or in rules adopted by
  the board under Section 4005.024. (V.A.C.S. Art. 581-28-1, Subsec.
  F.)
         Sec. 4002.153.  BOARD DELEGATION OF RULEMAKING AUTHORITY.
  (a) The board by rule may delegate to the commissioner or the
  deputy securities commissioner the authority granted to the board
  under Section 4002.151 or 4002.152 to adopt rules or to waive the
  requirements of rules as the board considers appropriate.
         (b)  Any rule adopted by the commissioner or the deputy
  securities commissioner based on the authority delegated under this
  section must be adopted in accordance with Sections 4002.151 and
  4002.152. (V.A.C.S. Art. 581-28-1, Subsec. D.)
         Sec. 4002.154.  COMMISSIONER DISCRETION REGARDING RULES. In
  applying the standards of this title, the commissioner may waive or
  relax any restriction or requirement in a board rule that, in the
  commissioner's opinion, is unnecessary for the protection of
  investors in a particular case. (V.A.C.S. Art. 581-10, Subsec. D.)
         Sec. 4002.155.  DEPOSIT OF RECEIPTS TO GENERAL REVENUE FUND.
  The commissioner or board shall deposit money received from
  assessments or charges under this title to the credit of the general
  revenue fund. (V.A.C.S. Art. 581-36 (part).)
         Sec. 4002.156.  BOARD AUTHORITY TO EXERCISE COMMISSIONER'S
  POWERS. The board may exercise any power or perform any act the
  commissioner is authorized to exercise or perform under this title.
  (V.A.C.S. Art. 581-2, Subsec. G (part).)
         Sec. 4002.157.  LIST OF SECURITIES OFFERED. At any time, the
  commissioner may, in the exercise of reasonable discretion under
  this title, require a dealer to file with the commissioner a partial
  or complete list of securities that the dealer:
               (1)  is offering or advertising for sale in this state
  at the time of the request; or
               (2)  has offered or advertised for sale in this state
  during the six-month period preceding the date of the request.
  (V.A.C.S. Art. 581-23, Subsec. D.)
         Sec. 4002.158.  RECORD OF PROCEEDINGS. A complete record
  shall be kept of all proceedings held before the commissioner on any
  hearing or investigation. (V.A.C.S. Art. 581-26 (part).)
         Sec. 4002.159.  RECORD OF CERTAIN FILINGS AND ORDERS. (a)
  The commissioner shall maintain a record of:
               (1)  the names and addresses of all registered dealers,
  registered agents, registered investment advisers, registered
  investment adviser representatives, and persons who have submitted
  a notice filing under this title; and
               (2)  all orders of the commissioner denying,
  suspending, or revoking a registration.
         (b)  A record maintained under Subsection (a) must be open
  for public inspection.
         (c)  This section does not apply to information made
  confidential by Section 4002.161, 4007.052, or 4007.056 or other
  law. (V.A.C.S. Art. 581-11 (part).)
         Sec. 4002.160.  COMMISSIONER'S ACCESS TO RECORDS AND REPORTS
  OF OTHER STATE AGENCIES. (a) During an investigation for the
  purpose of enforcing this title or in connection with the
  application of a person or company for registration or for a permit
  qualifying securities for sale, the commissioner or deputy
  securities commissioner shall have free access to all records of,
  all reports of, and all reports made to an agency or department of
  this state.
         (b)  If the commissioner or deputy securities commissioner
  discloses any information made confidential by law, the affected
  person or company has a right of action on the official bond of the
  commissioner or deputy securities commissioner for the person's or
  company's injuries in a suit brought in the name of the state at the
  relation of the person or company.
         (c)  This section may not be interpreted to prohibit or limit
  the publication of rulings or decisions of the commissioner.
  (V.A.C.S. Art. 581-28, Subsec. A (part).)
         Sec. 4002.161.  CONFIDENTIALITY OF CERTAIN INFORMATION. (a)
  To the extent not otherwise provided by this title, any
  intra-agency or interagency notes, memoranda, reports, or other
  communications consisting of advice, analyses, opinions, or
  recommendations are confidential.
         (b)  Except as provided by Subsection (c) or Section
  4007.056(b) or (c), the commissioner may not disclose a document or
  other information made confidential by Subsection (a) unless the
  disclosure is made to the public under court order for good cause
  shown.
         (c)  The commissioner, at the commissioner's discretion, may
  disclose confidential information in the commissioner's possession
  to:
               (1)  a governmental or regulatory authority or any
  association of governmental or regulatory authorities approved by
  board rule; or
               (2)  any receiver appointed under Section 4007.151.
         (d)  Disclosure of information under Subsection (c) does not
  violate any other provision of this title or Chapter 552.
         (e)  This section may not be interpreted to prohibit or limit
  the publication of rulings or decisions of the commissioner.
  (V.A.C.S. Art. 581-28, Subsecs. A (part), B; New.)
         Sec. 4002.162.  BOARD ACCESS TO OFFICES AND RECORDS. Each
  member of the board shall have access to all of the offices and
  records under the commissioner's supervision. (V.A.C.S. Art.
  581-2, Subsec. G (part).)
         Sec. 4002.163.  ANNUAL REPORT. On or before January 1 of
  each year, the board, with the advice of the commissioner, shall
  report to the governor and the presiding officer of each house of
  the legislature about the administration of this title and plans
  and needs for future securities regulation. The report must
  include a detailed accounting of all funds received and disbursed
  by the board during the preceding year. (V.A.C.S. Art. 581-2,
  Subsec. J.)
  SUBCHAPTER E. CONSUMER INTEREST AND OTHER PUBLIC INTEREST
  INFORMATION
         Sec. 4002.201.  CONSUMER INTEREST INFORMATION. (a) The
  board shall prepare information of consumer interest describing:
               (1)  the regulatory functions of the board and
  commissioner; and
               (2)  the procedures by which consumer complaints are
  filed with and resolved by the board or commissioner.
         (b)  The board shall make the information available to the
  public and appropriate state agencies. (V.A.C.S. Art. 581-2,
  Subsec. L (part).)
         Sec. 4002.202.  PUBLIC PARTICIPATION. The board by rule
  shall develop and implement policies that provide the public with a
  reasonable opportunity to appear before the board and to speak on
  any issue under the board's jurisdiction. (V.A.C.S. Art. 581-2-5.)
         Sec. 4002.203.  DOCUMENTS AND OTHER INFORMATION FILED WITH
  COMMISSIONER; PUBLIC RECORDS. (a) All information, papers,
  documents, instruments, and affidavits required by this title to be
  filed with the commissioner are public records.
         (b)  All information, papers, documents, instruments, and
  affidavits required by this title to be filed with the commissioner
  must be open to inspection and examination by a purchaser or
  prospective purchaser of securities, or by the agent or
  representative of a purchaser or prospective purchaser of
  securities. The commissioner shall:
               (1)  provide to a purchaser or prospective purchaser of
  securities, or an agent or representative of those persons, any
  information required to be filed with the commissioner under this
  title; and
               (2)  on request by a person described by Subdivision
  (1), provide a certified copy of any paper, document, instrument,
  or affidavit filed with the commissioner under this title.
         (c)  This section does not apply to information made
  confidential by Section 4002.161, 4007.052, or 4007.056 or other
  law. (V.A.C.S. Art. 581-11 (part).)
  CHAPTER 4003. SECURITIES
  SUBCHAPTER A. PERMIT QUALIFYING SECURITIES FOR SALE
  Sec. 4003.001.  PERMIT REQUIRED; EXCEPTIONS 
  Sec. 4003.002.  PERMIT APPLICATION TO QUALIFY
                   SECURITIES FOR SALE 
  Sec. 4003.003.  STATEMENT OF FINANCIAL CONDITION AND
                   INCOME STATEMENT 
  Sec. 4003.004.  EXCEPTIONS TO CERTIFICATION REQUIREMENT
                   FOR FINANCIAL STATEMENTS 
  Sec. 4003.005.  PERMIT FEE 
  Sec. 4003.006.  EXAMINATION OF AND DETERMINATION ON
                   PERMIT APPLICATION 
  Sec. 4003.007.  FORM AND CONTENTS OF PERMIT 
  Sec. 4003.008.  TERM OF PERMIT 
  Sec. 4003.009.  RENEWAL OF PERMIT 
  Sec. 4003.010.  USE OF PERMIT FOR CERTAIN PURPOSES
                   PROHIBITED 
  SUBCHAPTER B. REGISTRATION BY NOTIFICATION
  Sec. 4003.051.  ELIGIBILITY FOR REGISTRATION BY
                   NOTIFICATION 
  Sec. 4003.052.  REGISTRATION STATEMENT REQUIRED 
  Sec. 4003.053.  EXCEPTION TO CERTIFICATION REQUIREMENT
                   FOR FINANCIAL STATEMENTS 
  Sec. 4003.054.  REGISTRATION PROCEDURES 
  Sec. 4003.055.  EFFECTIVE DATE OF REGISTRATION BY
                   NOTIFICATION 
  Sec. 4003.056.  EFFECT OF REGISTRATION BY NOTIFICATION 
  Sec. 4003.057.  TERM OF REGISTRATION 
  Sec. 4003.058.  RENEWAL OF REGISTRATION 
  Sec. 4003.059.  INSUFFICIENT OR FRAUDULENT REGISTRATION
                   STATEMENT 
  SUBCHAPTER C. REGISTRATION BY COORDINATION
  Sec. 4003.101.  ELIGIBILITY FOR REGISTRATION BY
                   COORDINATION 
  Sec. 4003.102.  REGISTRATION STATEMENT REQUIRED 
  Sec. 4003.103.  EXAMINATION OF AND DETERMINATION ON
                   REGISTRATION STATEMENT 
  Sec. 4003.104.  TERM OF REGISTRATION 
  Sec. 4003.105.  RENEWAL OF REGISTRATION 
  SUBCHAPTER D. PROHIBITED SALES
  Sec. 4003.151.  CERTAIN SALES PROHIBITED 
  SUBCHAPTER E. REGULATION OF OFFERS
  Sec. 4003.201.  DEFINITION 
  Sec. 4003.202.  APPLICABILITY 
  Sec. 4003.203.  AUTHORIZED WRITTEN, PRINTED, OR
                   BROADCAST OFFERS 
  Sec. 4003.204.  AUTHORIZED ORAL OFFERS 
  Sec. 4003.205.  DEALER NAMED IN OFFER 
  Sec. 4003.206.  EFFECT OF COMPLIANCE OR NONCOMPLIANCE 
  SUBCHAPTER F. CROWDFUNDING
  Sec. 4003.251.  DEFINITION 
  Sec. 4003.252.  CROWDFUNDING 
  SUBCHAPTER G. PROTECTION FOR PURCHASERS OF SECURITIES
  Sec. 4003.301.  DEPOSIT IN TRUST ACCOUNT 
  Sec. 4003.302.  MARKETING EXPENSES 
  Sec. 4003.303.  PROSPECTUS REQUIRED FOR CERTAIN OFFERS 
  Sec. 4003.304.  INVESTOR EDUCATION 
  CHAPTER 4003. SECURITIES
  SUBCHAPTER A. PERMIT QUALIFYING SECURITIES FOR SALE
         Sec. 4003.001.  PERMIT REQUIRED; EXCEPTIONS. (a) A dealer
  or agent may not sell or offer for sale any securities issued after
  September 6, 1955, unless the commissioner has issued a permit
  qualifying securities for sale for those securities to the issuer
  of the securities or a registered dealer.
         (b)  This section does not apply to:
               (1)  securities that have been registered by
  notification under Subchapter B or by coordination under Subchapter
  C; or
               (2)  transactions or securities that are exempt under
  Chapter 4005. (V.A.C.S. Art. 581-7, Subsec. A, Subdiv. (1) (part);
  Art. 581-10, Subsec. B (part).)
         Sec. 4003.002.  PERMIT APPLICATION TO QUALIFY SECURITIES FOR
  SALE. (a) The commissioner may not issue a permit qualifying
  securities for sale required by Section 4003.001 until the issuer
  of the securities or a registered dealer files with the
  commissioner an application for the permit in the form of a
  statement containing the following information:
               (1)  the name, residence, and post office address of
  each of the company's officers and directors;
               (2)  the location of the company's principal office and
  each branch office in this state;
               (3)  a copy of the company's certificate of formation or
  articles of incorporation or partnership or association and any
  amendments to those documents;
               (4)  if the company is a corporation, a copy of:
                     (A)  all minutes of any proceedings of the
  company's directors, stockholders, or members relating to or
  affecting the issuance of the securities; and
                     (B)  the company's bylaws and any amendments to
  the bylaws;
               (5)  if the company is a trustee, a copy of all
  instruments by which the trust is created and in which the trust is
  accepted, acknowledged, or declared;
               (6)  a statement showing:
                     (A)  the amount of capital stock and, if there is
  no capital stock, the amount of capital of the issuer that is
  contemplated to be employed;
                     (B)  the number of shares into which the stock is
  divided or, if not divided into shares, what division is to be made
  or is contemplated;
                     (C)  the par value of each share or, if there are
  shares with no par value, the price at which the security is
  proposed to be sold; and
                     (D)  the promotional fees or commissions to be
  paid for the sale of the securities, including:
                           (i)  all compensation of every nature
  allowed to be paid to the promoters or allowed for the sale of the
  securities;
                           (ii)  how the compensation is to be paid,
  whether in cash, securities, service or otherwise, or partly of
  either or both;
                           (iii)  the amount of cash to be paid or
  securities to be issued, given, transferred, or sold to promoters
  for promotion or organization services and expenses; and
                           (iv)  the amount of promotion or
  organization services and expenses that the issuer will assume or
  pay in any way;
               (7)  a copy of:
                     (A)  certificates of the stock and all other
  securities to be sold or offered for sale, together with
  application blanks for the stock and securities;
                     (B)  any contract the company proposes to make
  concerning the securities; and
                     (C)  any prospectus or advertisement or other
  description of security prepared by or for the company for
  distribution or publication; and
               (8)  the statement of financial condition and income
  statement described by Section 4003.003.
         (b)  The statement in an application under this section must
  be:
               (1)  verified under oath by an executive officer or
  partner of the issuer or registered dealer filing the application;
  and
               (2)  attested by the secretary or partner of the issuer
  or registered dealer filing the application. (V.A.C.S. Art. 581-7,
  Subsec. A, Subdiv. (1) (part).)
         Sec. 4003.003.  STATEMENT OF FINANCIAL CONDITION AND INCOME
  STATEMENT. (a)  In this section, "current liabilities" means all
  liabilities that will mature and become due not later than the first
  anniversary of the date the application listing the liabilities is
  filed under this subchapter.
         (b)  A statement of financial condition required in the
  application under this subchapter must:
               (1)  be detailed;
               (2)  be prepared in accordance with generally accepted
  auditing standards and procedures and generally accepted
  accounting principles;
               (3)  reflect the financial condition of the issuer of
  the securities to be qualified for sale on a date not earlier than
  the 90th day before the date the issuer or registered dealer files
  the application;
               (4)  show all of the issuer's liabilities by listing all
  current liabilities and, separately from current liabilities, all
  other liabilities, including contingent liabilities, showing the
  amount of those liabilities that are secured by mortgage or
  otherwise, the issuer's assets that are subject to the mortgage,
  and the dates of maturity of the mortgage indebtedness;
               (5)  list all of the issuer's assets in detail and show
  how the value of the assets was determined;
               (6)  show whether the value of the assets represents:
                     (A)  the assets' actual cost in money;
                     (B)  the assets' present market value; or
                     (C)  some other value of the assets;
               (7)  show the present actual value of the assets; and
               (8)  state whether the value listed in the statement is
  greater or less than the assets':
                     (A)  actual cost value in money; and
                     (B)  present market value.
         (c)  The statement under Subsection (b) must show the amount
  for which any real property listed as an asset is rendered for state
  and county taxation or assessed for taxation.
         (d)  The statement under Subsection (b) must describe any
  assets consisting of anything other than cash or real property in
  detail to give the commissioner the fullest possible information.
  The commissioner may require the filing of additional information
  as the commissioner considers necessary to determine whether the
  true value of those assets is reflected in the statement.
         (e)  A statement under Subsection (b) that lists assets
  subject to a repurchase agreement or similar agreement under the
  terms of which the absolute ownership of or title to the assets is
  qualified or limited must fully state:
               (1)  the terms of the agreement; and
               (2)  the amount and character of the assets subject to
  the agreement.
         (f)  Subject to Subsection (g), the income statement
  required in an application under this subchapter must:
               (1)  be detailed;
               (2)  be prepared in accordance with generally accepted
  auditing standards and procedures and generally accepted
  accounting principles; and
               (3)  cover the lesser of:
                     (A)  the preceding three years of the issuer's
  operations; or
                     (B)  the period the issuer has been operating.
         (g)  If the issuer has not been operating but is taking over a
  concern of any kind that was previously operating, the income
  statement required in an application under this subchapter must:
               (1)  show the operations of the concern taken over for
  the three years preceding the taking over of the concern; and
               (2)  clearly reflect the amount of net income or net
  loss incurred during each year shown. (V.A.C.S. Art. 581-7,
  Subsec. A, Subdiv. (1) (part), Subsec. D (part).)
         Sec. 4003.004.  EXCEPTIONS TO CERTIFICATION REQUIREMENT FOR
  FINANCIAL STATEMENTS. (a) Financial statements filed as required
  by this subchapter are not required to be certified by an
  independent certified public accountant or independent public
  accountant if:
               (1)  the fiscal year of the issuer of the securities to
  be qualified for sale ended on a date earlier than the 90th day
  before the date of the filing; and
               (2)  financial statements in addition to those required
  by this subchapter are filed that:
                     (A)  contain the information required by Section
  4003.003; and
                     (B)  are certified by an independent certified
  public accountant or independent public accountant as of the end of
  the issuer's preceding fiscal year.
         (b)  Instead of being audited and certified, the financial
  statements described by Section 4003.003 of a small business
  issuer, as defined by board rule, that meets all other requirements
  the board by rule or order prescribes, conditionally or
  unconditionally, may be reviewed by an independent certified public
  accountant in accordance with the Statements on Standards for
  Accounting and Review Services promulgated by the American
  Institute of Certified Public Accountants. (V.A.C.S. Art. 581-7,
  Subsec. A, Subdiv. (1) (part), Subsec. D (part).)
         Sec. 4003.005.  PERMIT FEE. The commissioner shall charge
  the fees provided by Chapter 4006 for the issuance of a permit
  qualifying securities for sale. (V.A.C.S. Art. 581-10, Subsec. B
  (part).)
         Sec. 4003.006.  EXAMINATION OF AND DETERMINATION ON PERMIT
  APPLICATION. (a) On the filing of an application for a permit
  qualifying securities for sale under this subchapter, the
  commissioner shall examine the application and the papers and
  documents filed with the application.
         (b)  After the examination, the commissioner shall:
               (1)  issue a permit to the applicant authorizing the
  applicant to issue and dispose of the securities if the
  commissioner determines that:
                     (A)  the applicant's proposed plan of business
  appears to be fair, just, and equitable;
                     (B)  any consideration paid or to be paid by
  promoters for the securities is fair, just, and equitable if that
  consideration is less than the proposed offering price to the
  public; and
                     (C)  the securities the applicant proposes to
  issue and the methods to be used by the applicant in issuing and
  disposing of the securities will not work a fraud upon the purchaser
  of the securities; or
               (2)  deny the application for a permit and notify the
  applicant in writing of the commissioner's decision if the
  commissioner determines that the applicant's proposed plan of
  business appears to be unfair, unjust, or inequitable. (V.A.C.S.
  Art. 581-10, Subsec. A.)
         Sec. 4003.007.  FORM AND CONTENTS OF PERMIT. A permit
  qualifying securities for sale must:
               (1)  be in the form the commissioner prescribes; and
               (2)  state in bold type that the issuance of the permit
  is permissive only and does not constitute a recommendation or
  endorsement of the securities permitted to be issued. (V.A.C.S.
  Art. 581-10, Subsec. B (part).)
         Sec. 4003.008.  TERM OF PERMIT. A permit qualifying
  securities for sale that is issued under this subchapter is valid
  for one year. (V.A.C.S. Art. 581-10, Subsec. B (part).)
         Sec. 4003.009.  RENEWAL OF PERMIT. (a) An issuer or
  registered dealer may file a renewal application with the
  commissioner if the securities authorized to be sold under a permit
  qualifying securities for sale that is issued under this subchapter
  are not sold before the permit expires.
         (b)  The renewal application must:
               (1)  state:
                     (A)  the total number of shares sold in this
  state;
                     (B)  the total number of shares sold outside this
  state; and
                     (C)  the total number of shares outstanding;
               (2)  contain a detailed balance sheet;
               (3)  contain an operating statement; and
               (4)  provide any other information the commissioner may
  require.
         (c)  The commissioner shall examine a renewal application
  and issue a renewal permit or deny the application using the
  standards stated in Section 4003.006 applicable to an original
  application.
         (d)  If issued, a renewal permit:
               (1)  is valid for one year; and
               (2)  must be in the form the commissioner prescribes.
  (V.A.C.S. Art. 581-10, Subsec. B (part).)
         Sec. 4003.010.  USE OF PERMIT FOR CERTAIN PURPOSES
  PROHIBITED. A dealer, issuer, or agent may not use a permit
  qualifying securities for sale in connection with a sale or effort
  to sell a security. (V.A.C.S. Art. 581-10, Subsec. C.)
  SUBCHAPTER B. REGISTRATION BY NOTIFICATION
         Sec. 4003.051.  ELIGIBILITY FOR REGISTRATION BY
  NOTIFICATION. (a) Securities may be registered by notification
  under this subchapter if the securities are issued by an issuer
  that:
               (1)  has been in continuous operation for at least
  three years; and
               (2)  has shown, during at least the three years
  preceding the date of registration under this subchapter, average
  annual net earnings after deducting all prior charges, including
  income taxes but not including charges on securities to be retired
  out of the proceeds of sale, as follows:
                     (A)  for interest-bearing securities, not less
  than one and one-half times the annual interest charges on those
  securities and on all other outstanding interest-bearing
  securities of equal rank;
                     (B)  for securities with a specified dividend
  rate, not less than one and one-half times the annual dividend
  requirements on those securities and on all other outstanding
  securities of equal rank; and
                     (C)  for securities with no specified dividend
  rate, not less than five percent on all outstanding securities of
  equal rank, together with the amount of those securities then
  offered for sale, based on the maximum price at which the securities
  are to be offered for sale.
         (b)  For purposes of calculating average annual net earnings
  under Subsection (a)(2)(C), an issuer's ownership of more than 50
  percent of the outstanding voting stock of a corporation:
               (1)  is construed as the issuer's proportionate
  ownership of that corporation; and
               (2)  permits the inclusion of that corporation's
  earnings applicable to the payment of dividends on the stock owned
  in the earnings of the issuer of the securities being registered by
  notification.  (V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (1).)
         Sec. 4003.052.  REGISTRATION STATEMENT REQUIRED. (a) To
  register securities by notification that are entitled to that
  registration, an issuer of the securities or a registered dealer
  must file with the commissioner a registration statement that
  complies with this section.
         (b)  A registration statement filed under this section must:
               (1)  be in the form the commissioner prescribes;
               (2)  be signed by the applicant filing the statement;
  and
               (3)  contain the following information:
                     (A)  the name and business address of the main
  office of the issuer of the securities to be registered and the
  address of the issuer's principal office, if any, in this state;
                     (B)  the title of the securities to be registered
  and the total amount of securities to be offered;
                     (C)  the price at which the securities are to be
  offered for sale to the public, the amount of securities to be
  offered in this state, and the amount of the registration fee,
  computed as provided by Chapter 4006;
                     (D)  a brief statement of the facts showing that
  the securities are entitled to be registered by notification;
                     (E)  the name and business address of the
  applicant filing the statement;
                     (F)  subject to Subsection (c) and except as
  provided by Section 4003.053, financial statements that include,
  for at least the three years preceding the date of registration:
                           (i)  a certified income statement;
                           (ii)  a certified balance sheet; and
                           (iii)  a certified statement of
  stockholders' equity;
                     (G)  a copy of any prospectus describing the
  securities; and
                     (H)  a filing of a consent to service of process
  conforming to the requirements of Section 4001.102, if the issuer:
                           (i)  is registering the securities; and
                           (ii)  is not a resident of this state or
  incorporated or formed under the laws of this state.
         (c)  The financial statements described by Subsection
  (b)(3)(F) must reflect the financial condition of the issuer of the
  securities to be registered on a date not earlier than the 90th day
  before the date the issuer or registered dealer files the
  registration statement.
         (d)  Filing a registration statement that complies with this
  section constitutes the registration of the securities by
  notification, subject to Section 4003.055.  (V.A.C.S. Art. 581-7,
  Subsec. B, Subdiv. (2) (part), Subsec. D (part).)
         Sec. 4003.053.  EXCEPTION TO CERTIFICATION REQUIREMENT FOR
  FINANCIAL STATEMENTS. Financial statements filed as required by
  this subchapter are not required to be certified by an independent
  certified public accountant or independent public accountant if:
               (1)  the fiscal year of the issuer of the securities to
  be registered ended on a date earlier than the 90th day before the
  date of the filing; and
               (2)  financial statements in addition to those required
  by this subchapter are filed that:
                     (A)  contain the information required by Section
  4003.052; and
                     (B)  are certified by an independent certified
  public accountant or independent public accountant as of the end of
  the issuer's preceding fiscal year. (V.A.C.S. Art. 581-7, Subsec.
  D (part).)
         Sec. 4003.054.  REGISTRATION PROCEDURES. (a) The
  commissioner shall complete the procedures specified by this
  section to register securities entitled to registration by
  notification.
         (b)  The commissioner shall:
               (1)  examine the registration statement filed under
  Section 4003.052 and the accompanying papers to determine their
  sufficiency under the requirements of this subchapter; and
               (2)  record the registration by notification of the
  securities described on receipt of:
                     (A)  the registration statement;
                     (B)  any prospectus;
                     (C)  payment of the filing fee and registration
  fee; and
                     (D)  a consent to service of process, if required.  
  (V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part); Art. 581-10,
  Subsec. B (part).)
         Sec. 4003.055.  EFFECTIVE DATE OF REGISTRATION BY
  NOTIFICATION. (a)  Except as provided by Subsection (b), the
  registration of securities by notification takes effect five days
  after the date the commissioner receives the registration statement
  filed under Section 4003.052 and all accompanying papers.
         (b)  The commissioner may waive or reduce the five-day
  waiting period if the commissioner determines that the public will
  not be injured by the waiver or reduction of the waiting period.
  (V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part).)
         Sec. 4003.056.  EFFECT OF REGISTRATION BY NOTIFICATION. On
  registration of securities by notification, the securities may be
  sold in this state by a registered dealer or a registered agent.
  (V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part).)
         Sec. 4003.057.  TERM OF REGISTRATION. A registration of
  securities by notification is effective for one year. (V.A.C.S.
  Art. 581-7, Subsec. B, Subdiv. (2) (part).)
         Sec. 4003.058.  RENEWAL OF REGISTRATION. A registration of
  securities by notification may be renewed for additional periods of
  one year if:
               (1)  the securities are entitled to registration under
  this subchapter at the time of renewal; and
               (2)  a new filing is made under this subchapter
  together with the payment of the renewal fee of $10.  (V.A.C.S. Art.
  581-7, Subsec. B, Subdiv. (2) (part).)
         Sec. 4003.059.  INSUFFICIENT OR FRAUDULENT REGISTRATION
  STATEMENT. (a) If at any time, in the commissioner's opinion, the
  information in a registration statement filed under this subchapter
  is insufficient to establish that the securities described in the
  statement are or were entitled to registration by notification
  under this subchapter, or that the registration information
  contains or contained false, misleading, or fraudulent facts, the
  commissioner may order the applicant who filed the statement to
  cease and desist from selling or offering for sale the securities
  registered or proposed to be registered by notification under this
  subchapter until additional information is filed with the
  commissioner that in the commissioner's judgment is necessary to
  establish that those securities are or were entitled to
  registration by notification under this subchapter.
         (b)  The provisions of Section 4007.107 relating to hearings
  apply to an order entered under this section.  (V.A.C.S. Art. 581-7,
  Subsec. B, Subdiv. (2) (part).)
  SUBCHAPTER C. REGISTRATION BY COORDINATION
         Sec. 4003.101.  ELIGIBILITY FOR REGISTRATION BY
  COORDINATION. A security may be registered by coordination if a
  registration statement has been filed under the Securities Act of
  1933 (15 U.S.C. Section 77a et seq.) in connection with the same
  offering. (V.A.C.S. Art. 581-7, Subsec. C, Subdiv. (1) (part).)
         Sec. 4003.102.  REGISTRATION STATEMENT REQUIRED. To
  register securities by coordination, an issuer of the securities or
  a registered dealer must file with the commissioner a registration
  statement that contains:
               (1)  the following information:
                     (A)  the amount of securities to be offered in
  this state;
                     (B)  the states in which a registration statement
  or similar document in connection with the offering has been or is
  expected to be filed; and
                     (C)  any adverse order, judgment, or decree
  previously entered in connection with the offering by a court or the
  Securities and Exchange Commission;
               (2)  one copy of the prospectus filed under the
  Securities Act of 1933 (15 U.S.C. Section 77a et seq.) together with
  all amendments to the prospectus;
               (3)  a copy of:
                     (A)  the articles of incorporation and bylaws, or
  their substantial equivalents, currently in effect;
                     (B)  any agreements with or among underwriters;
  and
                     (C)  any indenture or other instrument governing
  the issuance of the securities to be registered;
               (4)  a specimen or copy of the security;
               (5)  any other information or copies of any other
  documents filed under the Securities Act of 1933 (15 U.S.C. Section
  77a et seq.) the commissioner requests;
               (6)  an undertaking to promptly forward all amendments
  to the federal registration statement other than an amendment that
  delays the effective date only; and
               (7)  a consent to service of process conforming to the
  requirements of Section 4001.102 if:
                     (A)  the registration statement is filed by the
  issuer or by a dealer that will offer the securities for sale as the
  issuer's agent; and
                     (B)  the issuer is not a resident of this state or
  incorporated or formed under the laws of this state.  (V.A.C.S. Art.
  581-7, Subsec. C, Subdiv. (1) (part).)
         Sec. 4003.103.  EXAMINATION OF AND DETERMINATION ON
  REGISTRATION STATEMENT. (a) In this section, "price amendment"
  means the final federal amendment that includes a statement of the
  offering price, underwriting and selling discounts or commissions,
  amount of proceeds, conversion rates, call prices, and other
  matters dependent on the offering price.
         (b)  The commissioner shall examine a registration statement
  filed under Section 4003.102 and the accompanying documents on
  receipt.
         (c)  The commissioner may enter an order denying
  registration of the securities to be registered under the
  registration statement if after the examination the commissioner
  determines that the registrant has not proven that:
               (1)  the proposed plan of business of the issuer of the
  securities is fair, just, and equitable;
               (2)  any consideration paid or to be paid by promoters
  for the securities is fair, just, and equitable if that
  consideration is less than the proposed offering price to the
  public; and
               (3)  the securities the registrant proposes to issue
  and the methods to be used by the registrant in issuing and
  disposing of the securities will not work a fraud upon the purchaser
  of the securities.
         (d)  If the commissioner enters an order denying the
  registration of securities under this subchapter, the commissioner
  shall notify the registrant immediately.
         (e)  A registration statement under this subchapter becomes
  effective automatically at the moment the federal registration
  statement becomes effective if all of the following conditions are
  satisfied:
               (1)  the commissioner has not entered an order denying
  registration of the securities;
               (2)  the registration statement has been on file with
  the commissioner for at least 10 days; and
               (3)  a statement of the maximum and minimum proposed
  offering prices and the maximum underwriting discounts and
  commissions has been on file for two full business days or a shorter
  period as the commissioner expressly permits and the offering is
  made within those limitations.
         (f)  The commissioner may waive either or both of the
  conditions specified in Subsections (e)(2) and (3).
         (g)  The registrant shall promptly:
               (1)  notify the commissioner by telephone or telegram
  of the date and time when the federal registration statement became
  effective and the content of any price amendment; and
               (2)  file a post-effective amendment containing the
  information and documents in the price amendment.
         (h)  The commissioner may enter a stop order, without notice
  or hearing, retroactively denying effectiveness to or suspending
  effectiveness of the registration statement until the registrant
  complies with this subchapter if the commissioner:
               (1)  does not receive the notification and
  post-effective amendment required under Subsection (g); and
               (2)  promptly notifies the registrant by telephone or
  telegram of the issuance of the stop order, and promptly confirms by
  letter or telegram if the commissioner notifies by telephone.
         (i)  A stop order entered under Subsection (h) is void from
  the time of the order's entry if the registrant proves compliance
  with the notice and post-effective amendment requirements of this
  section.
         (j)  If the federal registration statement becomes effective
  before all conditions under this section are satisfied and the
  conditions are not waived, the registration statement becomes
  effective automatically when all the conditions are satisfied.
         (k)  If the registrant advises the commissioner of the date
  the federal registration statement is expected to become effective,
  the commissioner shall promptly advise the registrant by telephone
  or telegram, at the registrant's expense, whether all the
  conditions are satisfied and whether the commissioner then
  contemplates the issuance of an order denying registration.  This
  advice by the commissioner does not preclude the issuance of the
  order at any time.  (V.A.C.S. Art. 581-7, Subsec. C, Subdiv. (2)
  (part); Art. 581-10, Subsec. B (part).)
         Sec. 4003.104.  TERM OF REGISTRATION. (a) Except as
  provided by this section, a registration by coordination of
  securities under this subchapter is effective until the first
  anniversary of the date the commissioner declares the registration
  to be effective.
         (b)  The initial registration by coordination of securities
  of an open-end investment company, as defined by the Investment
  Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), is effective
  until two months after the end of the issuer's fiscal year.
         (c)  The registration by coordination of securities of a unit
  investment trust, as defined by the Investment Company Act of 1940
  (15 U.S.C. Section 80a-1 et seq.), is effective until the first
  anniversary of the date of effectiveness granted by the Securities
  and Exchange Commission. (V.A.C.S. Art. 581-7, Subsec. C, Subdiv.
  (3) (part).)
         Sec. 4003.105.  RENEWAL OF REGISTRATION. (a)  Except as
  provided by Subsection (b) and subject to Subsection (c), a
  registration of securities under Section 4003.104 may be renewed
  for additional periods of one year if the appropriate registration
  forms and renewal fees are received before the expiration date of
  the registration to be renewed.
         (b)  Subject to Subsection (c), for renewal of the initial
  registration of securities described by Section 4003.104(b), the
  issuer or the issuer's agent may renew the registration by
  submitting the appropriate registration forms and renewal fees not
  later than two months after the end of the issuer's fiscal year.
         (c)  The same standards of fairness, justice, and equity
  prescribed by this subchapter for original approval of a
  registration apply to the renewal of the registration. (V.A.C.S.
  Art. 581-7, Subsec. C, Subdivs. (3) (part), (4).)
  SUBCHAPTER D. PROHIBITED SALES
         Sec. 4003.151.  CERTAIN SALES PROHIBITED. If the sale of a
  security entitles the purchaser or subsequent holder to exchange
  that security for another, or to purchase another security, the
  sale of, including an exchange for, the other security may not be
  made unless the sale is authorized under this title, if not exempt
  under this title, or by another provision of law. (V.A.C.S. Art.
  581-4, Subsec. E (part).)
  SUBCHAPTER E. REGULATION OF OFFERS
         Sec. 4003.201.  DEFINITION.  In this subchapter, "broadcast
  offer" means an offer disseminated by radio, television, recorded
  telephone presentation, or other mass media. (V.A.C.S. Art. 581-22,
  Subsecs. A (part), B (part).)
         Sec. 4003.202.  APPLICABILITY. This subchapter does not
  apply to transactions or securities exempt under Chapter 4005.
  (V.A.C.S. Art. 581-22, Subsec. E.)
         Sec. 4003.203.  AUTHORIZED WRITTEN, PRINTED, OR BROADCAST
  OFFERS. A person may make in this state a written or printed offer,
  including a pictorial demonstration with any accompanying script,
  or broadcast offer to sell a security if:
               (1)  a copy of the offer is filed with the commissioner
  not later than the 10th day after the date of the offer's first use
  in this state;
               (2)  the person making or distributing the offer is a
  registered dealer or registered agent of a registered dealer;
               (3)  either:
                     (A)  the security is registered under Subchapter B
  or C or the commissioner has issued a permit qualifying securities
  for sale for the security under Subchapter A; or
                     (B)  an application for registration under
  Subchapter B or C or for a permit under Subchapter A has been filed
  with the commissioner;
               (4)  for a registration for the security that has not
  become effective under Subchapter B or C or for a permit that has
  not been issued under Subchapter A, the offer prominently states on
  the first page of a written or printed offer or as a preface to any
  pictorial or broadcast offer either:
                     (A)  "INFORMATIONAL ADVERTISING ONLY.
  THE SECURITIES HEREIN DESCRIBED HAVE NOT BEEN QUALIFIED OR
  REGISTERED FOR SALE IN TEXAS. ANY REPRESENTATION TO THE CONTRARY OR
  CONSUMMATION OF SALE OF THESE SECURITIES IN TEXAS PRIOR TO
  QUALIFICATION OR REGISTRATION THEREOF IS A CRIMINAL OFFENSE."; or
                     (B)  other language required by the Securities and
  Exchange Commission that in the commissioner's opinion will inform
  investors that the securities may not yet be sold;
               (5)  the person making or distributing the offer in
  this state:
                     (A)  has not received written notice of an order
  prohibiting the offer under Section 4007.101 or 4007.102; or
                     (B)  has received notice of an order described by
  Paragraph (A) but the order is no longer in effect; and
               (6)  payment is not accepted from the offeree and no
  contract of sale is made before registration of the security is
  effective under Subchapter B or C or a permit is issued under
  Subchapter A. (V.A.C.S. Art. 581-22, Subsec. A (part).)
         Sec. 4003.204.  AUTHORIZED ORAL OFFERS. (a) In this
  section, "oral offer" means an offer that is not a broadcast offer.
         (b)  A person may make in this state an oral offer to sell a
  security in person, by telephone, or by other direct individual
  communication if:
               (1)  the person making the offer is a registered dealer
  or registered agent of a registered dealer;
               (2)  either:
                     (A)  the security is registered under Subchapter B
  or C or the commissioner has issued a permit qualifying securities
  for sale for the security under Subchapter A; or
                     (B)  an application for registration under
  Subchapter B or C or for a permit under Subchapter A has been filed
  with the commissioner;
               (3)  the person making or distributing the offer:
                     (A)  has not received written notice of an order
  prohibiting the offer under Section 4007.101 or 4007.102; or
                     (B)  has received notice of an order described by
  Paragraph (A) but the order is no longer in effect; and
               (4)  payment is not accepted from the offeree and no
  contract of sale is made before registration of the security is
  effective under Subchapter B or C or a permit is issued under
  Subchapter A. (V.A.C.S. Art. 581-22, Subsec. B (part).)
         Sec. 4003.205.  DEALER NAMED IN OFFER. A dealer whose name
  is included in a written, printed, or broadcast offer along with the
  name of a registered dealer is not deemed, on that fact alone, to
  have made an offer in this state to sell a security. (V.A.C.S. Art.
  581-22, Subsec. F.)
         Sec. 4003.206.  EFFECT OF COMPLIANCE OR NONCOMPLIANCE. (a)
  An offer to sell a security that complies with Section 4003.203 or
  4003.204 does not violate Subchapter A, B, or C.
         (b)  An offer to sell a security that does not comply with
  Section 4003.203 or 4003.204 violates this title. (V.A.C.S. Art.
  581-22, Subsecs. C, D.)
  SUBCHAPTER F. CROWDFUNDING
         Sec. 4003.251.  DEFINITION. In this subchapter, "authorized
  small business development entity" means:
               (1)  a Type A corporation authorized under Chapter 504,
  Local Government Code;
               (2)  a Type B corporation authorized under Chapter 505,
  Local Government Code;
               (3)  a nonprofit organization authorized by an agency
  or authority of the federal government to distribute housing and
  community development block grants;
               (4)  a municipal corporation;
               (5)  the Texas Veterans Commission; or
               (6)  a nonprofit community development financial
  institution certified by the Community Development Financial
  Institutions Fund. (V.A.C.S. Art. 581-44, Subsec. (c).)
         Sec. 4003.252.  CROWDFUNDING. (a) The board shall adopt
  rules to regulate and facilitate online intrastate crowdfunding
  applicable to authorized small business development entities. The
  board may create other requirements necessary to carry out this
  subchapter.
         (b)  The rules must:
               (1)  allow an authorized small business development
  entity to list on the entity's web portal offerings of securities by
  issuers in which the entity is financially interested;
               (2)  allow an authorized small business development
  entity and the entity's web portal to list offerings of securities
  without offering investment advice;
               (3)  allow an authorized small business development
  entity to subcontract the operations of a crowdfunding web portal
  to a third party as permitted by board rule; and
               (4)  limit the offerings of securities on an authorized
  small business development entity's web portal to securities of
  issuers located within the service area of the entity. (V.A.C.S.
  Art. 581-44, Subsecs. (a), (b).)
  SUBCHAPTER G. PROTECTION FOR PURCHASERS OF SECURITIES
         Sec. 4003.301.  DEPOSIT IN TRUST ACCOUNT. (a) If the
  commissioner considers it necessary to protect the interests of
  prospective purchasers of securities a company sells or offers for
  sale, the commissioner may require the company to deposit in a trust
  account at a bank or trust company approved by the commissioner and
  doing business in this state:
               (1)  all or part of the proposed securities; or
               (2)  subject to Subsection (b), all or part of the money
  and other funds received from the sale of those securities.
         (b)  A company is not required to deposit funds received from
  the sale of securities in a trust account to the extent the
  commissioner considers the funds necessary to be used, provided
  that the amount of the funds the company is not required to deposit
  does not exceed the amount allowed as expenses and commissions for
  the sale of the securities.
         (c)  The funds must remain on deposit until the proposed or
  existing company sells a specified monetary amount or number of
  shares of the securities that in the commissioner's opinion will
  reasonably assure the public's protection.
         (d)  When the commissioner makes a written determination
  that the terms of the escrow agreement have been fully met, the bank
  or trust company in which the funds of a proposed or existing
  corporation are deposited in a trust account as provided by this
  section shall transfer to the corporation and the corporation's
  executive officers the funds to allow the corporation to use the
  securities or money in the corporation's business.
         (e)  If a proposed or existing company that deposits funds in
  a trust account as provided by this section does not sell the
  minimum amount of capital necessary under the escrow agreement
  within two years, the commissioner may authorize the bank or trust
  company at which the funds are deposited to return to the
  subscribers the portion of the funds that were deposited or
  escrowed under the escrow agreement.  The bank or trust company
  shall return the funds to the subscribers on receipt of
  authorization from the commissioner under this subsection. If the
  bank or trust company holds securities under the escrow agreement,
  the bank or trust company may return the securities to the
  corporation only after the bank or trust company receives from the
  issuer evidence of cancellation thereof.
         (f)  A dealer or issuer of securities shall provide to the
  commissioner and the bank or trust company at the time the dealer or
  issuer makes the deposit required by this section:
               (1)  the names of the purchasers of or subscribers for
  the securities; and
               (2)  the amount of money paid by each. (V.A.C.S. Art.
  581-9, Subsec. A.)
         Sec. 4003.302.  MARKETING EXPENSES. (a)  Total expenses for
  marketing securities, including all commissions for the sale of the
  securities, and all other incidental selling expenses, may not in
  the aggregate exceed 20 percent of the price at which the stock or
  other securities of a proposed or existing company are to be sold or
  offered for sale to the public of this state.
         (b)  The commissioner may reduce the percentage listed in
  Subsection (a) to a percentage that in the commissioner's opinion
  is fair, just, and equitable under the facts of the particular case.
  (V.A.C.S. Art. 581-9, Subsec. B.)
         Sec. 4003.303.  PROSPECTUS REQUIRED FOR CERTAIN OFFERS. (a)  
  Except as provided by Subsection (b), the commissioner shall
  require that, in connection with a permit qualifying securities for
  sale, all offers for the sale of the securities be made through a
  prospectus that:
               (1)  fairly discloses the material facts about the plan
  of finance and business; and
               (2)  must be filed with and approved by the
  commissioner.
         (b)  The prospectus requirements of this section are
  satisfied if the applicant files a prospectus or offering circular
  with the commissioner that is also filed with the Securities and
  Exchange Commission under the Securities Act of 1933 (15 U.S.C.
  Section 77a et seq.) or the regulations under that law.
         (c)  Failure to comply with the prospectus requirements of
  this section violates this title. (V.A.C.S. Art. 581-9, Subsec. C.)
         Sec. 4003.304.  INVESTOR EDUCATION.  (a)  The commissioner,
  with board approval, shall develop and implement investor education
  initiatives to inform the public about the basics of investing in
  securities. The initiatives must place a special emphasis on the
  prevention and detection of securities fraud. Materials developed
  for and distributed as part of the initiatives must be published in
  both English and Spanish.
         (b)  In developing and implementing the initiatives, the
  commissioner shall use the commissioner's best efforts to
  collaborate with public or nonprofit entities with an interest in
  investor education.
         (c)  For use in providing investor education initiatives and
  subject to Chapter 575, the commissioner may accept grants and
  donations from:
               (1)  a person who is not affiliated with the securities
  industry; or
               (2)  a nonprofit association, regardless of whether the
  entity is affiliated with the securities industry. (V.A.C.S. Art.
  581-43.)
  CHAPTER 4004. REGULATION OF DEALERS, INVESTMENT ADVISERS, DEALERS'
  AGENTS, AND INVESTMENT ADVISER REPRESENTATIVES
  SUBCHAPTER A. GENERAL PROVISIONS
  Sec. 4004.001.  RULES FOR EXEMPTION FROM REGISTRATION
                   REQUIREMENTS 
  Sec. 4004.002.  CERTAIN DISPLAYS OR ADVERTISEMENT OF
                   REGISTRATION PROHIBITED 
  Sec. 4004.003.  DISPLAY OF INFORMATION REGARDING
                   COMPLAINTS 
  SUBCHAPTER B. REGISTRATION OF DEALERS AND INVESTMENT ADVISERS
  Sec. 4004.051.  REGISTRATION OF DEALERS REQUIRED 
  Sec. 4004.052.  REGISTRATION OF INVESTMENT ADVISERS
                   REQUIRED 
  Sec. 4004.053.  APPLICATION FOR REGISTRATION 
  Sec. 4004.054.  ISSUANCE OF REGISTRATION CERTIFICATE 
  Sec. 4004.055.  FORM AND CONTENTS OF REGISTRATION
                   CERTIFICATE 
  Sec. 4004.056.  TEMPORARY PERMISSION TO ENGAGE IN
                   BUSINESS AS DEALER OR INVESTMENT
                   ADVISER 
  Sec. 4004.057.  AMENDMENT OF REGISTRATION CERTIFICATE 
  Sec. 4004.058.  POSTING REGISTRATION CERTIFICATES 
  SUBCHAPTER C. REGISTRATION OF AGENTS AND INVESTMENT ADVISER
  REPRESENTATIVES
  Sec. 4004.101.  REGISTRATION OF AGENTS 
  Sec. 4004.102.  REGISTRATION OF INVESTMENT ADVISER
                   REPRESENTATIVES 
  Sec. 4004.103.  APPLICATION FOR REGISTRATION 
  Sec. 4004.104.  ISSUANCE OF EVIDENCE OF REGISTRATION 
  Sec. 4004.105.  FORM AND CONTENTS OF EVIDENCE OF
                   REGISTRATION 
  Sec. 4004.106.  CANCELLATION OF REGISTRATION 
  SUBCHAPTER D. EXAMINATION REQUIREMENTS
  Sec. 4004.151.  EXAMINATION REQUIREMENTS 
  Sec. 4004.152.  EXAMINATION RESULTS 
  SUBCHAPTER E. DENIAL OR REVOCATION OF REGISTRATION
  Sec. 4004.201.  DENIAL OF REGISTRATION 
  Sec. 4004.202.  AUTOMATIC REVOCATION OF REGISTRATION OF
                   AGENTS AND INVESTMENT ADVISER
                   REPRESENTATIVES AFTER REVOCATION OF
                   REGISTRATION OF DEALER OR INVESTMENT
                   ADVISER 
  SUBCHAPTER F. EXPIRATION AND RENEWAL OF REGISTRATION
  Sec. 4004.251.  EXPIRATION OF REGISTRATION 
  Sec. 4004.252.  RENEWAL OF REGISTRATION 
  Sec. 4004.253.  STAGGERED RENEWAL; PRORATION OF
                   REGISTRATION RENEWAL FEE 
  Sec. 4004.254.  NOTICE OF EXPIRATION REQUIRED 
  Sec. 4004.255.  RENEWAL OF EXPIRED REGISTRATION 
  Sec. 4004.256.  EFFECT OF EXPIRED REGISTRATION 
  Sec. 4004.257.  CONTINUING EDUCATION 
  SUBCHAPTER G. NOTICE FILINGS OF FEDERAL COVERED INVESTMENT
  ADVISERS AND CERTAIN REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
  ADVISERS
  Sec. 4004.301.  APPLICABILITY 
  Sec. 4004.302.  NOTICE FILING 
  Sec. 4004.303.  EFFECTIVE DATE OF NOTICE FILING 
  Sec. 4004.304.  RENEWAL 
  SUBCHAPTER H. REQUIREMENTS FOR PROTECTION OF VULNERABLE ADULTS
  FROM FINANCIAL EXPLOITATION
  Sec. 4004.351.  DEFINITIONS 
  Sec. 4004.352.  REPORTING SUSPECTED FINANCIAL
                   EXPLOITATION OF VULNERABLE ADULTS 
  Sec. 4004.353.  FORM AND CONTENT OF REPORT 
  Sec. 4004.354.  NOTIFYING THIRD PARTIES OF SUSPECTED
                   FINANCIAL EXPLOITATION OF VULNERABLE
                   ADULTS 
  Sec. 4004.355.  TEMPORARY HOLD ON TRANSACTIONS IN
                   CERTAIN CASES OF SUSPECTED FINANCIAL
                   EXPLOITATION OF VULNERABLE ADULTS 
  Sec. 4004.356.  IMMUNITY 
  Sec. 4004.357.  RECORDS 
  CHAPTER 4004. REGULATION OF DEALERS, INVESTMENT ADVISERS, DEALERS'
  AGENTS, AND INVESTMENT ADVISER REPRESENTATIVES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 4004.001.  RULES FOR EXEMPTION FROM REGISTRATION
  REQUIREMENTS. The board may adopt rules that exempt certain
  classes of persons from the dealer, agent, investment adviser, and
  investment adviser representative registration requirements, or
  provide conditional exemptions from registration, if the board
  determines that the rules are consistent with the purposes of this
  title.  (V.A.C.S. Art. 581-12, Subsec. C.)
         Sec. 4004.002.  CERTAIN DISPLAYS OR ADVERTISEMENT OF
  REGISTRATION PROHIBITED. Except as expressly provided by this
  title, a dealer, agent, investment adviser, or investment adviser
  representative may not by public display or advertisement use the
  fact that the person is registered under this title, the person's
  registration certificate or evidence of registration, or a
  certified copy of the certificate or evidence of registration in
  connection with any sale or effort to sell any security or any
  rendering of services as an investment adviser. (V.A.C.S. Art.
  581-20.)
         Sec. 4004.003.  DISPLAY OF INFORMATION REGARDING
  COMPLAINTS. A dealer, agent, investment adviser, or investment
  adviser representative regulated under this title shall
  prominently display at all times in the person's place of business:
               (1)  a sign containing the name, mailing address, and
  telephone number of the board; and
               (2)  a statement informing consumers that complaints
  against a dealer, agent, investment adviser, or investment adviser
  representative may be directed to the board. (V.A.C.S. Art. 581-2,
  Subsec. L (part).)
  SUBCHAPTER B. REGISTRATION OF DEALERS AND INVESTMENT ADVISERS
         Sec. 4004.051.  REGISTRATION OF DEALERS REQUIRED. Except as
  provided by Section 4001.056(d) or Subchapter A, Chapter 4005, a
  dealer or other person or company, including a corporation or firm,
  may not, directly or through the dealer's or other person's or
  company's agents, offer for sale, sell, or make a sale of any
  securities in this state unless the dealer or other person or
  company is first registered as provided by this chapter.  (V.A.C.S.
  Art. 581-12, Subsec. A (part).)
         Sec. 4004.052.  REGISTRATION OF INVESTMENT ADVISERS
  REQUIRED. Except as provided by Subchapter A, Chapter 4005, a
  person may not, directly or through the person's investment adviser
  representative, render services as an investment adviser in this
  state unless the person:
               (1)  is registered under this chapter;
               (2)  submits a notice filing as provided by Subchapter
  G; or
               (3)  is otherwise exempt under this title.  (V.A.C.S.
  Art. 581-12, Subsec. B (part).)
         Sec. 4004.053.  APPLICATION FOR REGISTRATION. (a) To be
  registered, a dealer or investment adviser must submit to the
  commissioner a sworn application that must be in the form the
  commissioner prescribes and must state:
               (1)  the applicant's principal place of business;
               (2)  the location of the applicant's principal place of
  business and all branch offices of the applicant in this state;
               (3)  the name or style of doing business and the address
  of the applicant;
               (4)  the name, residence, and business address of each
  person interested in the business as a principal, officer,
  director, or managing agent of the applicant's business, specified
  by capacity and title;
               (5)  the general plan and character of the applicant's
  business;
               (6)  the period the applicant has been engaged in the
  business; and
               (7)  the places at which the applicant has engaged in
  the business.
         (b)  An application filed under this section must contain
  additional information relating to the previous history, record,
  associations, and present financial condition of the applicant as
  the commissioner may require or as necessary to enable the
  commissioner to determine whether the sale of any securities the
  applicant proposes to issue or deal in would result in fraud.
         (c)  An application must be accompanied by a certificate or
  other evidence satisfactory to the commissioner that establishes
  the good reputation of:
               (1)  the applicant; and
               (2)  the directors, officers, copartners, or
  principals of the applicant.
         (d)  For an applicant that is a corporation organized under
  the laws of another state, territory, or government or that will
  have the applicant's principal place of business therein, the
  application must be accompanied by a copy of the corporation's:
               (1)  articles of incorporation or similar
  organizational instrument, and all amendments to the document or
  instrument, as applicable, certified by the appropriate officer of
  the corporation or of the state or other jurisdiction in which the
  corporation is organized;
               (2)  regulations; and
               (3)  bylaws.
         (e)  For an applicant that is a limited partnership, the
  application must be accompanied by either:
               (1)  a copy of the articles of copartnership or similar
  organizational instrument of the partnership; or
               (2)  a verified statement of the partnership's plan of
  doing business.
         (f)  For an applicant that is an unincorporated association
  or organization under the laws of another state, territory, or
  government or is an unincorporated association or organization that
  has its principal place of business therein, the application must
  be accompanied by a copy of the association's or organization's
  articles of association, trust agreement, or other form of
  organization.
         (g)  The commissioner shall:
               (1)  prescribe the application form to be used by an
  applicant under this section; and
               (2)  provide copies of the application form for
  registration to all persons who seek to submit an application to
  register as a dealer or investment adviser.  (V.A.C.S. Art. 581-13,
  Subsecs. A, B, C, G, H, I, J.)
         Sec. 4004.054.  ISSUANCE OF REGISTRATION CERTIFICATE. The
  commissioner shall issue a certificate of registration to an
  applicant for registration as a dealer or investment adviser if:
               (1)  the commissioner is satisfied that the applicant
  has complied with the requirements of this chapter; and
               (2)  the applicant:
                     (A)  if applicable, has filed a written consent to
  service that complies with Section 4001.102; and
                     (B)  has paid the fees required by Chapter 4006.  
  (V.A.C.S. Art. 581-15 (part).)
         Sec. 4004.055.  FORM AND CONTENTS OF REGISTRATION
  CERTIFICATE.  The registration certificate must be in the form the
  commissioner prescribes and must state:
               (1)  the principal place of business and address of the
  dealer or investment adviser;
               (2)  the name and business address of each person
  interested in the business as a principal, officer, director, or
  managing agent of the dealer or investment adviser; and
               (3)  that the dealer or investment adviser has been
  registered for a current calendar year as a dealer in securities or
  as an investment adviser, as appropriate.  (V.A.C.S. Arts. 581-15
  (part), 581-17 (part).)
         Sec. 4004.056.  TEMPORARY PERMISSION TO ENGAGE IN BUSINESS
  AS DEALER OR INVESTMENT ADVISER. (a) Pending final disposition of
  an application under this subchapter, the commissioner may, for
  special cause shown, grant an applicant temporary permission to
  engage in business as a dealer or investment adviser under this
  title, subject to any terms and conditions that the commissioner
  prescribes.
         (b)  Temporary permission granted by the commissioner under
  this section may be revoked at any time.
         (c)  A dealer or investment adviser acting under temporary
  permission granted under this section is considered to be a
  registered dealer or registered investment adviser for any purpose
  of this title.  (V.A.C.S. Art. 581-15 (part).)
         Sec. 4004.057.  AMENDMENT OF REGISTRATION CERTIFICATE. (a)  
  A dealer or investment adviser shall immediately certify under oath
  to the commissioner any change in the personnel of a partnership or
  in the principals, officers, directors, or managing agents of the
  dealer or investment adviser.
         (b)  A change in the registration certificate required as the
  result of a change described by Subsection (a) may be made at any
  time by submitting to the commissioner a written application that
  specifies the reason for the change.
         (c)  On the issuance of an amended registration certificate,
  the dealer or investment adviser shall promptly surrender the
  original certificate and any outstanding certified copies of the
  original certificate to the commissioner.  (V.A.C.S. Art. 581-17
  (part).)
         Sec. 4004.058.  POSTING REGISTRATION CERTIFICATES. On
  receipt of a registration certificate issued under this chapter,
  the dealer or investment adviser named in the certificate shall
  immediately post and conspicuously display the certificate at all
  times in the dealer's or investment adviser's principal place of
  business, if the dealer's or investment adviser's principal place
  of business is maintained in this state. The dealer or investment
  adviser shall similarly post and conspicuously display a duplicate
  copy of the dealer's or investment adviser's certificate in each
  branch office located in this state. (V.A.C.S. Art. 581-21.)
  SUBCHAPTER C. REGISTRATION OF AGENTS AND INVESTMENT ADVISER
  REPRESENTATIVES
         Sec. 4004.101.  REGISTRATION OF AGENTS. (a) An agent may
  not, on behalf of a registered dealer, sell, offer for sale, or make
  a sale of any securities in this state unless the agent is
  registered as an agent for that particular registered dealer under
  this chapter.
         (b)  On written application by a registered dealer, and on
  satisfactory compliance with the requirements of this title, the
  commissioner shall register a person as an agent of the registered
  dealer. (V.A.C.S. Art. 581-12, Subsec. A (part); Art. 581-18
  (part).)
         Sec. 4004.102.  REGISTRATION OF INVESTMENT ADVISER
  REPRESENTATIVES. (a) A person may not act or render services as an
  investment adviser representative for an investment adviser in this
  state unless the person is registered or submits a notice filing as
  an investment adviser representative for that particular
  investment adviser as provided by this subchapter and Subchapter G.
         (b)  On written application by an investment adviser and on
  satisfactory compliance with the requirements of this title, the
  commissioner shall register a person as an investment adviser
  representative of that investment adviser. (V.A.C.S. Art. 581-12,
  Subsec. B (part); Art. 581-18 (part).)
         Sec. 4004.103.  APPLICATION FOR REGISTRATION. The
  application described by Sections 4004.101 and 4004.102 must:
               (1)  be in the form the commissioner prescribes;
               (2)  state:
                     (A)  the residence and address of the person whose
  registration as an agent or investment adviser representative is
  requested through the application; and
                     (B)  any other information relating to that
  person's previous history, record, and associations that the
  commissioner may require; and
               (3)  be signed and sworn to by the person whose
  registration as an agent or investment adviser representative is
  requested through the application. (V.A.C.S. Art. 581-18 (part).)
         Sec. 4004.104.  ISSUANCE OF EVIDENCE OF REGISTRATION. For
  each person registered under this subchapter, the commissioner
  shall issue evidence of registration of the agent or investment
  adviser representative to the registered dealer or investment
  adviser who requested the person's registration, as appropriate.
  The registered dealer or investment adviser who requested the
  person's registration shall retain the evidence of registration for
  the dealer's agents or investment adviser's representatives, as
  appropriate. (V.A.C.S. Art. 581-18 (part).)
         Sec. 4004.105.  FORM AND CONTENTS OF EVIDENCE OF
  REGISTRATION. The evidence of registration described by Section
  4004.104 must:
               (1)  be in the form the commissioner prescribes; and
               (2)  state:
                     (A)  the name of the agent or investment adviser
  representative;
                     (B)  the address of the registered dealer or
  investment adviser, as appropriate; and
                     (C)  that the person is registered for the current
  calendar year as an agent of the dealer or as an investment adviser
  representative of the investment adviser, as appropriate.
  (V.A.C.S. Art. 581-18 (part).)
         Sec. 4004.106.  CANCELLATION OF REGISTRATION. On
  application by a registered dealer or investment adviser, the
  commissioner shall cancel the registration of the registered
  dealer's agent or the investment adviser's representative.
  (V.A.C.S. Art. 581-18 (part).)
  SUBCHAPTER D. EXAMINATION REQUIREMENTS
         Sec. 4004.151.  EXAMINATION REQUIREMENTS. (a) Except as
  provided by Subsection (c), the commissioner shall require that, to
  be registered under this chapter, each applicant must pass a
  written examination to determine whether the applicant possesses
  the qualifications and competency to engage in the business of
  dealing in and selling securities as a dealer or agent, or rendering
  services as an investment adviser or investment adviser
  representative. If the applicant is a corporation or partnership,
  the officers, directors, or partners to be licensed by the
  corporation or partnership must pass the written examination
  described by this section.
         (b)  The commissioner may accept some or all of the
  examinations administered by securities self-regulatory
  organizations to fulfill the examination requirements of this
  section.
         (c)  The board may waive the examination requirement under
  Subsection (a) for any applicant or class of applicants. (V.A.C.S.
  Art. 581-13, Subsecs. D, K.)
         Sec. 4004.152.  EXAMINATION RESULTS. (a) Except as
  provided by Subsection (b), the board shall notify each examinee of
  the results of a registration examination required by this
  subchapter not later than the 30th day after the date the examinee
  takes the examination.
         (b)  If an examination is graded or reviewed by a testing
  service:
               (1)  the board shall notify each examinee of the
  results of the examination not later than the 14th day after the
  date the board receives the results from the testing service; and
               (2)  if notice of the examination results will be
  delayed for longer than 90 days after the examination date, the
  board shall notify each examinee of the reason for the delay before
  the 90th day.
         (c)  The board may require a testing service to notify an
  examinee of the results of the examination.
         (d)  If requested in writing by an examinee who fails an
  examination administered under this subchapter, the board shall
  provide the examinee with an analysis of the examinee's performance
  on the examination. (V.A.C.S. Art. 581-13, Subsecs. E, F.)
  SUBCHAPTER E. DENIAL OR REVOCATION OF REGISTRATION
         Sec. 4004.201.  DENIAL OF REGISTRATION. The commissioner
  may deny an application for registration under this chapter in
  accordance with Section 4007.105.  (New.)
         Sec. 4004.202.  AUTOMATIC REVOCATION OF REGISTRATION OF
  AGENTS AND INVESTMENT ADVISER REPRESENTATIVES AFTER REVOCATION OF
  REGISTRATION OF DEALER OR INVESTMENT ADVISER. (a) The revocation
  of the registration of a dealer or an investment adviser under
  Section 4007.105 constitutes a revocation of the registration of
  any agent of the dealer or of any investment adviser representative
  of the investment adviser, as appropriate.
         (b)  The commissioner shall promptly send notice of the
  revocation of the registration of a dealer or of an investment
  adviser to each applicable agent or investment adviser
  representative.
         (c)  All evidences of registration that have been revoked
  shall be immediately surrendered to the commissioner on request.
  (V.A.C.S. Art. 581-25 (part).)
  SUBCHAPTER F. EXPIRATION AND RENEWAL OF REGISTRATION
         Sec. 4004.251.  EXPIRATION OF REGISTRATION. Except as
  provided by Sections 4004.252(a) and 4004.253, all registrations
  expire at the end of the calendar year.  (V.A.C.S. Art. 581-19,
  Subsec. A (part).)
         Sec. 4004.252.  RENEWAL OF REGISTRATION. (a) A person may
  renew an unexpired registration by filing a renewal application in
  the form the commissioner prescribes and by paying the required
  renewal fee to the board before the registration's expiration date.
         (b)  New registrations for the year succeeding the
  expiration of registrations shall be issued on the filing of a
  written application and payment of the fee as provided by this
  subchapter. If an applicant registers after December 1 of any year,
  the applicant may immediately apply for a renewal of the
  applicant's registration for the ensuing year.
         (c)  The filing of additional statements or the provision of
  additional information is not required for renewal unless
  specifically requested by the commissioner.  (V.A.C.S. Art. 581-19,
  Subsecs. A (part), C, Subdiv. (1).)
         Sec. 4004.253.  STAGGERED RENEWAL; PRORATION OF
  REGISTRATION RENEWAL FEE. (a)  The board by rule may adopt a system
  under which registrations expire on various dates during the year.
         (b)  For the year in which the registration expiration date
  is changed, registration fees payable after the 60th day and before
  the 30th day before January 1 of the next year shall be prorated on a
  monthly basis so that each person pays only that portion of the
  registration fee that is allocable to the number of months during
  which the registration is valid.  On renewal of the registration on
  the new expiration date, the total registration renewal fee is
  payable. (V.A.C.S. Art. 581-19, Subsec. B.)
         Sec. 4004.254.  NOTICE OF EXPIRATION REQUIRED.  Not later
  than the 30th day before the date a person's registration is
  scheduled to expire, the commissioner shall send written notice of
  the impending expiration to the person at the person's last known
  address according to the board's records. (V.A.C.S. Art. 581-19,
  Subsec. C, Subdiv. (5).)
         Sec. 4004.255.  RENEWAL OF EXPIRED REGISTRATION. (a)  A
  person whose registration has been expired for 90 days or less may
  renew the registration by:
               (1)  filing a renewal application with the
  commissioner; and
               (2)  paying to the board:
                     (A)  the required renewal fee; and
                     (B)  a fee that is equal to one-half of the
  original registration application fee.
         (b)  A person whose registration has been expired for more
  than 90 days but less than two years may renew the registration by:
               (1)  filing a renewal application with the
  commissioner; and
               (2)  paying to the board:
                     (A)  all unpaid renewal fees; and
                     (B)  a fee that is equal to the original
  registration application fee.
         (c)  A person whose registration has been expired for two
  years or more may not renew the registration. The person may obtain
  a new registration by complying with the requirements and
  procedures, including the examination requirements, for obtaining
  an original registration. The person must pay to the board a fee
  that is equal to the original registration application fee.
  (V.A.C.S. Art. 581-19, Subsec. C, Subdivs. (2), (3), (4).)
         Sec. 4004.256.  EFFECT OF EXPIRED REGISTRATION.  A person
  who sells securities or who renders investment advising services
  after the person's registration has expired but before the
  registration is renewed is subject to the sanctions provided by
  this title for selling securities or rendering investment advice
  without being registered. (V.A.C.S. Art. 581-19, Subsec. C,
  Subdiv. (6).)
         Sec. 4004.257.  CONTINUING EDUCATION. (a)  The board may
  recognize, prepare, or administer continuing education programs
  for a person who is registered under this chapter.
         (b)  A person who is registered under this chapter must
  participate in continuing education programs if the board requires
  participation as a condition of maintaining the person's
  certificate or evidence of registration. (V.A.C.S. Art. 581-19,
  Subsec. D.)
  SUBCHAPTER G. NOTICE FILINGS OF FEDERAL COVERED INVESTMENT
  ADVISERS AND CERTAIN REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
  ADVISERS
         Sec. 4004.301.  APPLICABILITY. This subchapter does not
  apply to an investment adviser or investment adviser representative
  who is exempt from registration under this title or by board rule.
  (V.A.C.S. Art. 581-12-1, Subsec. A.)
         Sec. 4004.302.  NOTICE FILING. The board by rule shall
  authorize a federal covered investment adviser or a representative
  of a federal covered investment adviser to render services as an
  investment adviser in this state if the commissioner receives:
               (1)  a notice filing submitted by the adviser or
  representative that:
                     (A)  is on the form and contains the information
  the commissioner prescribes; and
                     (B)  if applicable, contains a consent to service
  appointing the commissioner as the adviser's attorney for service
  of process, as required by Section 4001.102; and
               (2)  a notice filing fee in the amount determined under
  Chapter 4006. (V.A.C.S. Art. 581-12-1, Subsec. B.)
         Sec. 4004.303.  EFFECTIVE DATE OF NOTICE FILING.  On the
  commissioner's receipt of a notice filing and fee payment that meet
  the requirements of Section 4004.302, the notice filing takes
  effect and is valid for the remainder of the calendar year.
  (V.A.C.S. Art. 581-12-1, Subsec. C (part).)
         Sec. 4004.304.  RENEWAL.  A federal covered investment
  adviser or a representative of a federal covered investment adviser
  may renew a notice filing on or before the filing's expiration date
  if the commissioner receives:
               (1)  a renewal notice filing submitted by the adviser
  or representative; and
               (2)  a renewal fee in the amount determined under
  Chapter 4006. (V.A.C.S. Art. 581-12-1, Subsec. C (part).)
  SUBCHAPTER H. REQUIREMENTS FOR PROTECTION OF VULNERABLE ADULTS
  FROM FINANCIAL EXPLOITATION
         Sec. 4004.351.  DEFINITIONS. In this subchapter:
               (1)  "Department" means the Department of Family and
  Protective Services.
               (2)  "Exploitation," "financial exploitation," and
  "vulnerable adult" have the meanings assigned by Section 280.001,
  Finance Code.
               (3)  "Securities professional" means an agent, an
  investment adviser representative, or a person who serves in a
  supervisory or compliance capacity for a dealer or investment
  adviser. (V.A.C.S. Art. 581-45, Subsec. A.)
         Sec. 4004.352.  REPORTING SUSPECTED FINANCIAL EXPLOITATION
  OF VULNERABLE ADULTS. (a) If a securities professional or a person
  serving in a legal capacity for a dealer or investment adviser has
  cause to believe that financial exploitation of a vulnerable adult
  who is an account holder with the dealer or investment adviser has
  occurred, is occurring, or has been attempted, the securities
  professional or person serving in a legal capacity for the dealer or
  investment adviser shall notify the dealer or investment adviser of
  the suspected financial exploitation.
         (b)  If a dealer or investment adviser is notified of
  suspected financial exploitation under Subsection (a) or otherwise
  has cause to believe that financial exploitation of a vulnerable
  adult who is an account holder with the dealer or investment adviser
  has occurred, is occurring, or has been attempted, the dealer or
  investment adviser shall assess the suspected financial
  exploitation and submit a report to the commissioner, in accordance
  with rules adopted under Section 4004.353, and the department in
  the same manner as and containing the same information required to
  be included in a report under Section 48.051, Human Resources Code.
  The dealer or investment adviser shall submit the reports required
  by this subsection not later than the earlier of:
               (1)  the date the dealer or investment adviser
  completes the dealer's or investment adviser's assessment of the
  suspected financial exploitation; or
               (2)  the fifth business day after the date the dealer or
  investment adviser is notified of the suspected financial
  exploitation under Subsection (a) or otherwise has cause to believe
  that the suspected financial exploitation has occurred, is
  occurring, or has been attempted.
         (c)  A dealer or investment adviser who submits a report to
  the department of suspected financial exploitation of a vulnerable
  adult under Subsection (b) is not required to make an additional
  report of suspected abuse, neglect, or exploitation under Section
  48.051, Human Resources Code, for the same conduct constituting the
  reported suspected financial exploitation.
         (d)  Each dealer and investment adviser shall adopt internal
  policies, programs, plans, or procedures for:
               (1)  the securities professionals or persons serving in
  a legal capacity for the dealer or investment adviser to make the
  notification required under Subsection (a); and
               (2)  the dealer or investment adviser to conduct the
  assessment and submit the reports required under Subsection (b).
         (e)  The policies, programs, plans, or procedures adopted
  under Subsection (d) may authorize the dealer or investment adviser
  to report the suspected financial exploitation to other appropriate
  agencies and entities in addition to the commissioner and the
  department, including the attorney general, the Federal Trade
  Commission, and the appropriate law enforcement agency. (V.A.C.S.
  Art. 581-45, Subsecs. B, C, D, E.)
         Sec. 4004.353.  FORM AND CONTENT OF REPORT. The board by
  rule shall prescribe the form and content of the report required to
  be submitted by a dealer or investment adviser to the commissioner
  under Section 4004.352(b). (V.A.C.S. Art. 581-45, Subsec. N.)
         Sec. 4004.354.  NOTIFYING THIRD PARTIES OF SUSPECTED
  FINANCIAL EXPLOITATION OF VULNERABLE ADULTS. If a dealer or
  investment adviser submits reports of suspected financial
  exploitation of a vulnerable adult to the commissioner and the
  department under Section 4004.352(b), the dealer or investment
  adviser may at the time the dealer or investment adviser submits the
  reports also notify a third party reasonably associated with the
  vulnerable adult of the suspected financial exploitation, unless
  the dealer or investment adviser suspects the third party of
  financial exploitation of the vulnerable adult. (V.A.C.S. Art.
  581-45, Subsec. F.)
         Sec. 4004.355.  TEMPORARY HOLD ON TRANSACTIONS IN CERTAIN
  CASES OF SUSPECTED FINANCIAL EXPLOITATION OF VULNERABLE ADULTS.
  (a) Notwithstanding any other law, if a dealer or investment
  adviser submits reports of suspected financial exploitation of a
  vulnerable adult to the commissioner and the department under
  Section 4004.352(b), the dealer or investment adviser:
               (1)  may place a hold on any transaction that:
                     (A)  involves an account of the vulnerable adult;
  and
                     (B)  the dealer or investment adviser has cause to
  believe is related to the suspected financial exploitation; and
               (2)  must place a hold on any transaction involving an
  account of the vulnerable adult if the hold is requested by the
  commissioner, the department, or a law enforcement agency.
         (b)  Subject to Subsection (c), a hold placed on any
  transaction under Subsection (a) expires on the 10th business day
  after the date the dealer or investment adviser submits the reports
  under Section 4004.352(b).
         (c)  A dealer or investment adviser may extend a hold placed
  on any transaction under Subsection (a) for a period not to exceed
  30 business days after the expiration of the period prescribed by
  Subsection (b) if requested by a state or federal agency or a law
  enforcement agency investigating the suspected financial
  exploitation. The dealer or investment adviser may also petition a
  court to extend a hold placed on any transaction under Subsection
  (a) beyond the period prescribed by Subsection (b). A court may
  enter an order extending or shortening a hold or providing other
  relief.
         (d)  Each dealer and investment adviser shall adopt internal
  policies, programs, plans, or procedures for placing a hold on a
  transaction involving an account of a vulnerable adult under
  Subsection (a). (V.A.C.S. Art. 581-45, Subsecs. G, H, I, J.)
         Sec. 4004.356.  IMMUNITY. (a) A securities professional or
  person serving in a legal capacity for a dealer or investment
  adviser who makes a notification under Section 4004.352(a), a
  dealer or investment adviser that submits a report under Section
  4004.352(b) or makes a notification to a third party under Section
  4004.354, or a securities professional or person serving in a legal
  capacity who or dealer or investment adviser that testifies or
  otherwise participates in a judicial proceeding arising from a
  notification or report is immune from any civil or criminal
  liability arising from the notification, report, testimony, or
  participation in the judicial proceeding, unless the securities
  professional, person serving in a legal capacity for the dealer or
  investment adviser, or dealer or investment adviser acted in bad
  faith or with a malicious purpose.
         (b)  A dealer or investment adviser that in good faith and
  with the exercise of reasonable care places or does not place a hold
  on any transaction under Section 4004.355(a)(1) is immune from
  civil or criminal liability or disciplinary action resulting from
  the action or failure to act. (V.A.C.S. Art. 581-45, Subsecs. K,
  L.)
         Sec. 4004.357.  RECORDS. To the extent permitted by state or
  federal law, a dealer or investment adviser, on request, shall
  provide access to or copies of records relevant to the suspected
  financial exploitation of a vulnerable adult to the commissioner,
  the department, a law enforcement agency, or a prosecuting
  attorney's office, either as part of a report to the commissioner,
  department, law enforcement agency, or prosecuting attorney's
  office or at the request of the commissioner, department, law
  enforcement agency, or prosecuting attorney's office in accordance
  with an investigation. (V.A.C.S. Art. 581-45, Subsec. M.)
  CHAPTER 4005. EXEMPTIONS
  SUBCHAPTER A. EXEMPT TRANSACTIONS
  Sec. 4005.001.  SCOPE OF EXEMPTION 
  Sec. 4005.002.  COURT SUPERVISED SALES 
  Sec. 4005.003.  PLEDGED SECURITIES 
  Sec. 4005.004.  ISOLATED TRANSACTIONS 
  Sec. 4005.005.  INSURANCE COMPANY SALES 
  Sec. 4005.006.  STOCK DIVIDENDS 
  Sec. 4005.007.  EXISTING SECURITY HOLDERS 
  Sec. 4005.008.  FINANCIAL DISTRESS 
  Sec. 4005.009.  MERGER, CONSOLIDATION, AND ASSET SALES 
  Sec. 4005.010.  EXCHANGE OF SHARES 
  Sec. 4005.011.  INSTITUTIONAL INVESTORS 
  Sec. 4005.012.  PRIVATE LIMITED OFFERINGS 
  Sec. 4005.013.  COMPENSATION PLANS AND CONTRACTS 
  Sec. 4005.014.  MORTGAGES AND LIENS 
  Sec. 4005.015.  NONPROFITS 
  Sec. 4005.016.  FINANCIAL INSTITUTIONS 
  Sec. 4005.017.  GOVERNMENT ISSUANCE OR GUARANTEE 
  Sec. 4005.018.  COOPERATIVES 
  Sec. 4005.019.  SECONDARY MARKET SALES 
  Sec. 4005.020.  UNSOLICITED ORDERS 
  Sec. 4005.021.  OIL, GAS, OR MINING INTERESTS 
  Sec. 4005.022.  ISSUER SALES OF EXEMPT SECURITIES 
  Sec. 4005.023.  OPTIONS 
  Sec. 4005.024.  EXEMPTIONS BY RULE OR ORDER 
  Sec. 4005.025.  ISSUANCE OR TRANSFER TO NONPROFITS 
  SUBCHAPTER B. EXEMPT SECURITIES
  Sec. 4005.051.  SCOPE OF EXEMPTION 
  Sec. 4005.052.  RAILROADS OR UTILITIES 
  Sec. 4005.053.  NONPROFIT CORPORATIONS 
  Sec. 4005.054.  LISTED SECURITIES 
  Sec. 4005.055.  COMMERCIAL PAPER 
  Sec. 4005.056.  SECURED DEBT 
  Sec. 4005.057.  NONPROFIT DEBT 
  Sec. 4005.058.  SUSPENSION OF EXEMPT STATUS OF TRADING
                   SYSTEM 
  SUBCHAPTER C. PROCEDURES FOR APPROVAL OF STOCK EXCHANGE
  Sec. 4005.101.  APPLICATION FOR APPROVAL 
  Sec. 4005.102.  APPROVAL OF STOCK EXCHANGE 
  Sec. 4005.103.  INVESTIGATION AND HEARING 
  Sec. 4005.104.  ORDER OF APPROVAL 
  Sec. 4005.105.  WITHDRAWAL OF APPROVAL 
  CHAPTER 4005. EXEMPTIONS
  SUBCHAPTER A. EXEMPT TRANSACTIONS
         Sec. 4005.001.  SCOPE OF EXEMPTION.  Except as expressly
  provided otherwise in this title, this title does not apply to any
  sale of, offer for sale of, solicitation of, subscription to,
  dealing in, or delivery of a security made in a transaction or under
  a condition specified in this subchapter.  (V.A.C.S. Art. 581-5
  (part).)
         Sec. 4005.002.  COURT SUPERVISED SALES. The exemption
  provided by Section 4005.001 applies to the sale of a security made:
               (1)  at a judicial, executor's, administrator's,
  guardian's, or conservator's sale; or
               (2)  by a receiver or trustee in insolvency or
  bankruptcy.  (V.A.C.S. Art. 581-5, Subsec. A.)
         Sec. 4005.003.  PLEDGED SECURITIES. The exemption provided
  by Section 4005.001 applies to the sale of a security pledged in
  good faith as security for a bona fide debt that is made by or for
  the account of a pledge holder or mortgagee that is selling the
  security or offering the security for sale or delivery in the
  ordinary course of business to liquidate the debt. (V.A.C.S. Art.
  581-5, Subsec. B.)
         Sec. 4005.004.  ISOLATED TRANSACTIONS. (a)  The exemption
  provided by Section 4005.001 applies to the sale of a security that
  is made by a vendor or on a vendor's behalf by a dealer or other
  agent and is made in the ordinary course of a bona fide personal
  investment of the vendor's personal holdings or a change in the
  investment if:
               (1)  the vendor is not engaged in the business of
  selling securities; and
               (2)  the sale is an isolated transaction not made in the
  course of repeated and consecutive transactions of a like
  character.
         (b)  A sale or offer for sale under Subsection (a) is not
  exempt from this title if the sale or offer is made or intended to be
  made by the vendor or the vendor's agent for the direct or indirect
  benefit of a company other than the individual vendor.  The usual
  commission of a vendor's agent is not a benefit for the purposes of
  this subsection.
         (c)  A person acting as an agent for a vendor in any sale or
  offer for sale under Subsection (a) must be registered under this
  title.  (V.A.C.S. Art. 581-5, Subsec. C (part).)
         Sec. 4005.005.  INSURANCE COMPANY SALES. (a)  The exemption
  provided by Section 4005.001 applies to the sale of a security made
  by or on behalf of an insurance company that:
               (1)  is subject to the supervision or control of the
  Texas Department of Insurance; and
               (2)  owns the security as a legal and bona fide
  investment.
         (b)  A sale or offer for sale under Subsection (a) is not
  exempt from this title if the sale or offer is made or intended to be
  made directly or indirectly for the benefit of another company.  
  (V.A.C.S. Art. 581-5, Subsec. C (part).)
         Sec. 4005.006.  STOCK DIVIDENDS. The exemption provided by
  Section 4005.001 applies to a distribution of securities by a
  corporation directly to the corporation's stockholders as a stock
  dividend or other distribution paid out of earnings or surplus.
  (V.A.C.S. Art. 581-5, Subsec. D.)
         Sec. 4005.007.  EXISTING SECURITY HOLDERS. (a) In this
  section, "existing security holder" includes a person who is a
  holder of a convertible security or nontransferable warrant at the
  time of the transaction.
         (b)  The exemption provided by Section 4005.001 applies to an
  offer by the issuer of its securities to the issuer's existing
  security holders and to any transaction pursuant to the offer if no
  commission or other remuneration, other than a stand-by commission,
  is paid or given directly or indirectly for soliciting any security
  holder in this state. (V.A.C.S. Art. 581-5, Subsec. E.)
         Sec. 4005.008.  FINANCIAL DISTRESS. (a) The exemption
  provided by Section 4005.001 applies to the issuance in good faith
  of securities by a company:
               (1)  to the company's security holders or creditors in
  the process of a bona fide reorganization of the company made in
  good faith; or
               (2)  to the security holders or creditors of a
  predecessor company if the issuing company is organized solely for
  the purpose of taking over the assets and continuing the business of
  the predecessor company.
         (b)  The exemption provided by Section 4005.001 applies to an
  issuance of securities described by Subsection (a) only if:
               (1)  the securities are issued in exchange for
  securities of the security holders, claims of the creditors, or
  both; and
               (2)  the security holders or creditors do not pay,
  give, or promise any consideration, and are not obligated to pay or
  give any consideration, for the securities issued other than the
  securities of or claims against the company or the company's
  predecessor held or owned by the security holders or creditors at
  the time of the issuance. (V.A.C.S. Art. 581-5, Subsec. F.)
         Sec. 4005.009.  MERGER, CONSOLIDATION, AND ASSET SALES.
  (a) The exemption provided by Section 4005.001 applies to the
  issuance or sale of securities by one corporation to another
  corporation or to the security holders of the corporation pursuant
  to a vote by one or more classes of those security holders, as
  required by the certificate of formation, certificate of
  incorporation, or applicable corporation statute, in connection
  with:
               (1)  a merger;
               (2)  a consolidation; or
               (3)  a sale of corporate assets.
         (b)  The exemption provided by Section 4005.001 applies to an
  issuance or sale described by Subsection (a) only if the security
  holders do not pay, give, or promise any consideration, and are not
  obligated to pay or give any consideration, for the securities
  issued or sold other than the corporation's securities held by the
  security holders at the time of the issuance or sale. (V.A.C.S.
  Art. 581-5, Subsec. G (part).)
         Sec. 4005.010.  EXCHANGE OF SHARES. (a) The exemption
  provided by Section 4005.001 applies to the issuance or sale of
  securities by one corporation to the corporation's stockholders in
  connection with:
               (1)  the change of par value stock to no par value stock
  or vice versa; or
               (2)  the exchange of outstanding shares for the same or
  a greater or smaller number of shares.
         (b)  The exemption provided by Section 4005.001 applies to an
  issuance or sale described by Subsection (a) only if the security
  holders do not pay, give, or promise any consideration, and are not
  obligated to pay or give any consideration, for the securities
  issued or sold other than the corporation's securities held by the
  security holders at the time of the issuance or sale. (V.A.C.S.
  Art. 581-5, Subsec. G (part).)
         Sec. 4005.011.  INSTITUTIONAL INVESTORS. The exemption
  provided by Section 4005.001 applies to the sale of a security to:
               (1)  a bank;
               (2)  a trust company;
               (3)  a building and loan association;
               (4)  a savings and loan association;
               (5)  an insurance company;
               (6)  a surety or guaranty company;
               (7)  a savings institution;
               (8)  an investment company as defined by the Investment
  Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.);
               (9)  a small business investment company as defined by
  the Small Business Investment Act of 1958 (15 U.S.C. Section 661 et
  seq.); or
               (10)  a registered dealer actually engaged in buying
  and selling securities.  (V.A.C.S. Art. 581-5, Subsec. H.)
         Sec. 4005.012.  PRIVATE LIMITED OFFERINGS. (a)  The
  exemption provided by Section 4005.001 applies to the following
  sales made without any public solicitation or advertisement:
               (1)  the sale of a security by the issuer of the
  security if the total number of security holders of the issuer does
  not exceed 35 persons after the sale; or
               (2)  the sale by an issuer of the issuer's securities to
  not more than 15 persons during the 12-month period ending with the
  date of the sale if the persons purchased the securities for their
  own account and not for distribution.
         (b)  For the purpose of determining the number of persons
  under Subsection (a)(2), the following persons are not included:
               (1)  a purchaser of a security in a transaction exempt
  under another provision of this subchapter;
               (2)  a purchaser of a security exempt under Subchapter
  B; and
               (3)  a purchaser of a security that is part of an
  offering registered under Subchapter A, B, or C, Chapter 4003.  
  (V.A.C.S. Art. 581-5, Subsec. I (part).)
         Sec. 4005.013.  COMPENSATION PLANS AND CONTRACTS. The
  exemption provided by Section 4005.001 applies to the sale or
  distribution of a security without any public solicitation or
  advertisement if the sale or distribution is made:
               (1)  by an issuer of the security or any participating
  subsidiary of the issuer; and
               (2)  under a bona fide thrift, savings, stock purchase,
  retirement, pension, profit-sharing, option, bonus, appreciation
  right, incentive, or similar written compensation plan or written
  compensation contract established by the issuer or the issuer's
  subsidiary for the benefit of:
                     (A)  employees, directors, general partners,
  managers, or officers of the issuer or subsidiary;
                     (B)  the issuer's or subsidiary's trustees, if the
  issuer or subsidiary is a business trust; or
                     (C)  consultants or advisers who provide to the
  issuer or subsidiary bona fide services unrelated to the offer or
  sale of securities in a capital-raising transaction. (V.A.C.S.
  Art. 581-5, Subsec. I (part).)
         Sec. 4005.014.  MORTGAGES AND LIENS. The exemption provided
  by Section 4005.001 applies to a single transaction in which:
               (1)  the securities disposed of consist exclusively of
  notes or bonds secured by a mortgage or vendor's lien on real
  property or tangible personal property; and
               (2)  the entire mortgage or lien is sold or transferred
  with all of the notes or bonds secured by the mortgage or lien.
  (V.A.C.S. Art. 581-5, Subsec. J.)
         Sec. 4005.015.  NONPROFITS. The exemption provided by
  Section 4005.001 applies to the disposition of a security or
  membership:
               (1)  issued by a corporation or association:
                     (A)  that is organized exclusively for a
  religious, educational, benevolent, fraternal, charitable, or
  reformatory purpose;
                     (B)  that is not organized for pecuniary profit;
  and
                     (C)  for which no part of the net earnings inures
  to the benefit of any stockholder, shareholder, or individual
  member of the corporation or association; and
               (2)  for which no commission or remuneration is paid or
  given or is to be paid or given. (V.A.C.S. Art. 581-5, Subsec. K.)
         Sec. 4005.016.  FINANCIAL INSTITUTIONS. The exemption
  provided by Section 4005.001 applies to:
               (1)  the sale, by the issuer itself or by a registered
  dealer, of any security issued or guaranteed by:
                     (A)  a bank organized and subject to regulation
  under the laws of:
                           (i)  the United States; or
                           (ii)  a state, territory, or insular
  possession of the United States; or
                     (B)  a savings and loan association organized and
  subject to regulation under the laws of this state; or
               (2)  the sale, by the issuer itself, of any security
  issued by a federal savings and loan association. (V.A.C.S. Art.
  581-5, Subsec. L.)
         Sec. 4005.017.  GOVERNMENT ISSUANCE OR GUARANTEE. The
  exemption provided by Section 4005.001 applies to the sale, by the
  issuer itself or by a registered dealer, of any security either
  issued or guaranteed by:
               (1)  the United States;
               (2)  the District of Columbia, a state, territory, or
  insular possession of the United States;
               (3)  a political subdivision of a state of the United
  States, including a county, city, municipal corporation, district,
  and authority; or
               (4)  a public or governmental agency or instrumentality
  of an entity described by Subdivisions (1)-(3). (V.A.C.S. Art.
  581-5, Subsec. M.)
         Sec. 4005.018.  COOPERATIVES. (a) The exemption provided
  by Section 4005.001 applies to:
               (1)  the sale and issuance of:
                     (A)  any securities issued by a farmers'
  cooperative marketing association organized under Chapter 52,
  Agriculture Code, or the predecessor of that law (Article 5737 et
  seq., Revised Statutes);
                     (B)  any securities issued by a mutual loan
  corporation organized under Chapter 54, Agriculture Code, or the
  predecessor of that law (Article 2500 et seq., Revised Statutes);
  or
                     (C)  any equity securities issued by a cooperative
  association organized under the Texas Cooperative Association Law
  as described by Section 1.008(i), Business Organizations Code, or
  the predecessor of that law (Article 1396-50.01, Vernon's Texas
  Civil Statutes); or
               (2)  the sale of any securities issued by a farmers'
  cooperative society organized under Chapter 51, Agriculture Code,
  or the predecessor of that law (Article 2514 et seq., Revised
  Statutes).
         (b)  The exemption provided by Section 4005.001 does not
  apply to an agent of a farmers' cooperative marketing association,
  mutual loan corporation, cooperative association, or farmers'
  cooperative society if the sale of the securities is made to:
               (1)  nonmembers; or
               (2)  members and a commission is paid or contracted to
  be paid to the agent. (V.A.C.S. Art. 581-5, Subsec. N.)
         Sec. 4005.019.  SECONDARY MARKET SALES. (a) In this
  section, "recognized securities manual" means a nationally
  distributed manual of securities that is approved by the board for
  use under this section.
         (b)  The exemption provided by Section 4005.001 applies to
  the sale of outstanding securities by a registered dealer if:
               (1)  the securities do not form part of an unsold
  allotment to or subscription by the dealer as a participant in the
  securities' distribution by the issuer of the securities;
               (2)  the securities are of the same class and the same
  issuer and are outstanding in the hands of the public;
               (3)  the securities are offered for sale, in good
  faith, at prices reasonably related to the current market price of
  the securities at the time of the sale;
               (4)  none of the sale proceeds are paid directly or
  indirectly to the issuer of the securities;
               (5)  the sale is not directly or indirectly for the
  purposes of providing or furthering a scheme to violate or evade
  this title;
               (6)  the right to sell or resell the securities has not
  been enjoined by a court in this state by a proceeding instituted by
  an officer or agency of this state charged with enforcement of this
  title;
               (7)  the commissioner has not revoked or suspended the
  right to sell the securities under this title or, if the
  commissioner has revoked or suspended the right to sell the
  securities, the revocation or suspension is not in effect;
               (8)  at the time of the sale, the issuer of the
  securities is:
                     (A)  a going concern actually engaged in business;
  and
                     (B)  not in an organization stage or in
  receivership or bankruptcy; and
               (9)  either:
                     (A)  the securities or other securities of the
  issuer of the same class have been:
                           (i)  qualified for sale by a permit issued
  under Subchapter A, Chapter 4003;
                           (ii)  registered by notification under
  Subchapter B, Chapter 4003; or
                           (iii)  registered by coordination under
  Subchapter C, Chapter 4003; or
                     (B)  a recognized securities manual or a
  statement, in form and extent acceptable to the commissioner and
  filed with the commissioner by the issuer or a registered dealer, is
  provided at the time of the sale containing at least the following
  information about the issuer:
                           (i)  a statement of the issuer's principal
  business;
                           (ii)  a balance sheet as of a date not
  earlier than 18 months before the date of the sale; and
                           (iii)  profit and loss statements and a
  record of any dividends paid for:
                                 (a)  a period of at least three years
  before the date of the balance sheet; or
                                 (b)  the period of the issuer's
  existence, if the issuer has been in existence less than three
  years.
         (c)  The commissioner may issue a stop order or by order may
  prohibit, revoke, or suspend the exemption under this section with
  respect to any security if the commissioner has reasonable cause to
  believe that the plan of business of the issuer of the security, the
  security, or the sale of the security would tend to work a fraud or
  deceit on any purchaser of the security. The order is subject to
  review in the manner provided by Section 4007.107.
         (d)  Notice of any court injunction enjoining the sale or
  resale of a security described by this section, or of an order
  revoking or suspending the exemption under Subsection (c) with
  respect to a security, shall be mailed by certified or registered
  mail with return receipt requested or otherwise delivered to any
  dealer believed to be selling or offering for sale the type of
  securities referred to in the notice. Subsections (b)(6) and (7) do
  not apply to a dealer until the dealer has received from the
  commissioner actual notice of the revocation or suspension.
         (e)  The board, for cause shown, may revoke or suspend the
  recognition under this section of any manual previously approved
  under this section only after notice and an opportunity for a
  hearing is provided as required by law.
         (f)  A judgment sustaining the board in the board action
  complained about does not bar an application by the plaintiff for
  approval of the manual as provided by this section after the first
  anniversary of the date of the action.
         (g)  A judgment in favor of the plaintiff does not prevent
  the board from revoking the recognition of a manual previously
  approved under this section for any proper cause that may accrue or
  be discovered. (V.A.C.S. Art. 581-5, Subsec. O.)
         Sec. 4005.020.  UNSOLICITED ORDERS. The exemption provided
  by Section 4005.001 applies to a dealer's execution of an
  unsolicited order for the purchase of securities for which the
  initial offering of the securities has been completed if the
  dealer:
               (1)  acts solely as an agent for the purchaser;
               (2)  does not have a direct or indirect interest in the
  sale or distribution of securities ordered; and
               (3)  does not receive a commission, profit, or other
  compensation from any source other than the purchaser. (V.A.C.S.
  Art. 581-5, Subsec. P.)
         Sec. 4005.021.  OIL, GAS, OR MINING INTERESTS. (a) Subject
  to Subsection (b), the exemption provided by Section 4005.001
  applies to the sales of interests in and under oil, gas, or mining
  leases, fees, or titles, or contracts relating to those interests
  in which:
               (1)  the total number of sales by any one owner of
  interests, whether whole, fractional, segregated, or undivided in
  any single oil, gas, or mineral lease, fee, or title, or contract
  relating to those interests, is not more than 35 during a 12
  consecutive month period; and
               (2)  no use is made of advertisement or public
  solicitation.
         (b)  If a sale of an interest described by Subsection (a) is
  made for an owner of the interest by an agent of the owner, the
  exemption under that subsection applies only if the agent is
  registered under this title.
         (c)  An oil, gas, or mineral unitization or pooling agreement
  may not be considered a sale under this title. (V.A.C.S. Art.
  581-5, Subsec. Q.)
         Sec. 4005.022.  ISSUER SALES OF EXEMPT SECURITIES. (a)  The
  exemption provided by Section 4005.001 applies to the sale by the
  issuer itself or by a subsidiary of the issuer of any securities
  that would be exempt under Subchapter B if sold by a registered
  dealer.
         (b)  This section does not apply to securities that would be
  exempt under Section 4005.053. (V.A.C.S. Art. 581-5, Subsec. R.)
         Sec. 4005.023.  OPTIONS. (a) In this section, "option"
  means and includes a put, call, straddle, or other option or
  privilege of buying from another person or selling to another
  person a specified number of securities at a specified price,
  without being obligated to do so, on or before a specified date. The
  term does not include an option or privilege that by its terms may
  terminate before the specified date on the occurrence of a
  specified event.
         (b)  The exemption provided by Section 4005.001 applies to a
  sale of an option by or through a registered dealer if, at the time
  of the sale:
               (1)  the performance of the terms of the option is
  guaranteed by a broker-dealer registered under the Securities
  Exchange Act of 1934 (15 U.S.C. Section 78a et seq.);
               (2)  the guaranty and broker-dealer described by
  Subdivision (1) are in compliance with any requirements or rules
  adopted or approved by the board;
               (3)  the option is not sold by or for the benefit of the
  issuer of the security that may be purchased or sold on exercise of
  the option;
               (4)  the security that may be purchased or sold on
  exercise of the option is either:
                     (A)  exempted under Section 4005.054; or
                     (B)  quoted on the NASDAQ stock market and meets
  the requirements of Sections 4005.019(b)(1), (6), (7), and (8); and
               (5)  the sale is not directly or indirectly for the
  purposes of providing or furthering a scheme to violate or evade
  this title. (V.A.C.S. Art. 581-5, Subsec. S.)
         Sec. 4005.024.  EXEMPTIONS BY RULE OR ORDER. The exemption
  provided by Section 4005.001 applies to the sale of a security made
  in other transactions or under other conditions not specified in
  this subchapter as the board by rule or order may define or
  prescribe, conditionally or unconditionally. (V.A.C.S. Art.
  581-5, Subsec. T.)
         Sec. 4005.025.  ISSUANCE OR TRANSFER TO NONPROFITS. The
  exemption provided by Section 4005.001 applies to the issuance or
  transfer of securities by the issuer of its securities to a
  corporation or association organized exclusively for a religious,
  educational, benevolent, fraternal, charitable, or reformatory
  purpose and not for pecuniary profit, only if:
               (1)  the corporation or association does not provide
  anything of value for the securities other than, for a security that
  is an option, payment of the exercise price of the option to acquire
  the securities at a price not to exceed the fair market value of the
  underlying securities on the date the option was granted;
               (2)  the issuance or transfer is not made for the
  purpose of raising capital for the issuer;
               (3)  a commission or other form of consideration is not
  paid or provided to a third party with respect to the issuance or
  transfer; and
               (4)  the issuance or transfer is not directly or
  indirectly for the purposes of providing or furthering a scheme to
  violate or evade this title. (V.A.C.S. Art. 581-5, Subsec. U.)
  SUBCHAPTER B. EXEMPT SECURITIES
         Sec. 4005.051.  SCOPE OF EXEMPTION. Except as expressly
  provided otherwise in this title, this title does not apply to a
  security described by this subchapter when offered for sale, sold,
  or dealt in by a registered dealer or a registered dealer's agent.
  (V.A.C.S. Art. 581-6 (part).)
         Sec. 4005.052.  RAILROADS OR UTILITIES. The exemption
  provided by Section 4005.051 applies to:
               (1)  a security issued or guaranteed either as to
  principal, interest, or dividend by a corporation that owns or
  operates a railroad or any other public service utility if the
  corporation is subject to regulation or supervision either as to
  the corporation's rates and charges or as to the issuance of the
  corporation's own securities by:
                     (A)  the Texas Department of Transportation; or
                     (B)  a public commission, an agency, a board, or
  officers of:
                           (i)  the government of the United States;
                           (ii)  the District of Columbia, a state,
  territory, or insular possession of the United States, or a
  municipal corporation; or
                           (iii)  Canada or a province of Canada; or
               (2)  equipment trust certificates or equipment notes or
  bonds:
                     (A)  that are based on chattel mortgages, leases
  or agreements for conditional sale of cars, motive power or other
  rolling stock mortgages, leased or sold to or provided for the use
  of or on a railroad or other public service utility corporation if
  the corporation is subject to regulation or supervision as
  described by Subdivision (1); or
                     (B)  for which the ownership or title of the
  equipment is pledged or retained to secure the payment of the
  equipment trust certificates, bonds, or notes, in accordance with
  the laws of:
                           (i)  the United States;
                           (ii)  the District of Columbia or a state,
  territory, or insular possession of the United States; or
                           (iii)  Canada or a province of Canada.  
  (V.A.C.S. Art. 581-6, Subsec. D.)
         Sec. 4005.053.  NONPROFIT CORPORATIONS. The exemption
  provided by Section 4005.051 applies to a security issued and sold
  by a domestic corporation that:
               (1)  is not organized and engaged in business for
  profit; and
               (2)  does not have capital stock. (V.A.C.S. Art. 581-6,
  Subsec. E.)
         Sec. 4005.054.  LISTED SECURITIES. (a) The exemption
  provided by Section 4005.051 applies to securities that at the time
  of sale:
               (1)  are fully listed on:
                     (A)  the American Stock Exchange;
                     (B)  the Boston Stock Exchange;
                     (C)  the Chicago Stock Exchange;
                     (D)  the New York Stock Exchange; or
                     (E)  a recognized and responsible stock exchange
  approved by the commissioner, as provided by Subchapter C;
               (2)  are designated or approved for designation on
  notice of issuance on the national market system of the NASDAQ stock
  market; or
               (3)  are senior to, or if of the same issue, on a parity
  with, any securities listed or designated as described by
  Subdivision (1) or (2) or represented by subscription rights that
  are listed or designated as described by Subdivision (1) or (2), or
  evidence of indebtedness guaranteed by a company, any stock of
  which is listed or designated as described by Subdivision (1) or
  (2).
         (b)  Securities described by Subsection (a) are exempt only
  so long as the exchange on which the securities are listed remains
  approved under this section or Subchapter C. (V.A.C.S. Art. 581-6,
  Subsec. F (part).)
         Sec. 4005.055.  COMMERCIAL PAPER. The exemption provided by
  Section 4005.051 applies to:
               (1)  commercial paper that:
                     (A)  arises out of a current transaction or the
  proceeds of which have been or are to be used for current
  transactions; and
                     (B)  evidences an obligation to pay cash not later
  than the ninth month after the issuance date of the commercial
  paper, not including days of grace;
               (2)  a renewal of commercial paper described by
  Subdivision (1) that is similarly limited; or
               (3)  a guarantee of commercial paper described by
  Subdivision (1) or of a renewal described by Subdivision (2).
  (V.A.C.S. Art. 581-6, Subsec. H.)
         Sec. 4005.056.  SECURED DEBT. The exemption provided by
  Section 4005.051 applies to notes, bonds, or other evidence of
  indebtedness or certificates of ownership that:
               (1)  are equally and proportionately secured without
  reference of priority of one over another; and
               (2)  by the terms of the instrument creating the lien,
  continue to be secured by the deposit with a trustee of recognized
  responsibility approved by the commissioner of any of the
  securities specified in:
                     (A)  Section 4005.017, if the deposited
  securities have an aggregate par value of not less than 110 percent
  of the par value of the securities being secured; or
                     (B)  Section 4005.052, if the deposited
  securities have an aggregate par value of not less than 125 percent
  of the par value of the securities being secured. (V.A.C.S. Art.
  581-6, Subsec. I.)
         Sec. 4005.057.  NONPROFIT DEBT. The exemption provided by
  Section 4005.051 applies to notes, bonds, or other evidence of
  indebtedness of a religious, charitable, or benevolent
  corporation. (V.A.C.S. Art. 581-6, Subsec. J.)
         Sec. 4005.058.  SUSPENSION OF EXEMPT STATUS OF TRADING
  SYSTEM. (a) The commissioner, by the same procedures described by
  Section 4005.105, may at any time suspend the exempt status of any
  trading system exempted by the legislature on or after January 1,
  1989, if at the time of the hearing the trading system does not meet
  the applicable standards for approval of exchanges provided by this
  title.
         (b)  The suspension of a trading system under Subsection (a)
  has the same effect as the withdrawal of approval of a stock
  exchange under Section 4005.105.
         (c)  The suspension under Subsection (a) remains in effect
  until the commissioner by order determines that the trading system:
               (1)  has corrected each deficiency on which the
  suspension was based; and
               (2)  maintains standards and procedures that provide
  reasonable protection to the public. (V.A.C.S. Art. 581-6, Subsec.
  F (part).)
  SUBCHAPTER C. PROCEDURES FOR APPROVAL OF STOCK EXCHANGE
         Sec. 4005.101.  APPLICATION FOR APPROVAL. An organized
  stock exchange may apply to the commissioner for approval in the
  manner and on the forms the commissioner prescribes. (V.A.C.S. Art.
  581-6, Subsec. F (part).)
         Sec. 4005.102.  APPROVAL OF STOCK EXCHANGE. The
  commissioner may approve a stock exchange only if the commissioner
  finds that the facts and data provided with the application
  establish that:
               (1)  the requirements for the listing of securities on
  the exchange seeking approval provide reasonable protection to the
  public; and
               (2)  the governing constitution, bylaws, or
  regulations of the exchange require:
                     (A)  an adequate examination into the affairs of
  the issuer of the securities to be listed on the exchange before
  permitting trading on the exchange;
                     (B)  that the issuer of the securities, while the
  securities are listed on the exchange, shall periodically prepare,
  make public, and provide promptly to the exchange appropriate
  income, profit and loss, and other financial statements;
                     (C)  that securities listed and traded on the
  exchange be restricted to securities of ascertained, sound asset or
  income value; and
                     (D)  a reasonable surveillance of the exchange's
  members, including a requirement for periodical financial
  statements, a determination of the members' financial
  responsibility, and the right and obligation of the exchange's
  governing body to suspend or expel any member found:
                           (i)  to be financially embarrassed or
  irresponsible; or
                           (ii)  guilty of misconduct in the member's
  business dealings or of conduct prejudicial to the rights and
  interests of the member's customers. (V.A.C.S. Art. 581-6, Subsec.
  F (part).)
         Sec. 4005.103.  INVESTIGATION AND HEARING. The commissioner
  may approve a stock exchange only after a reasonable investigation
  and hearing. (V.A.C.S. Art. 581-6, Subsec. F (part).)
         Sec. 4005.104.  ORDER OF APPROVAL.  The commissioner's
  approval of a stock exchange must be made by a written order based
  on a finding of fact substantially in accordance with the
  requirements of Sections 4005.101 and 4005.102.  (V.A.C.S. Art.
  581-6, Subsec. F (part).)
         Sec. 4005.105.  WITHDRAWAL OF APPROVAL. At any time, the
  commissioner, on 10 days' notice and hearing, may withdraw approval
  of a stock exchange that at the time of the hearing does not meet the
  standards for approval under this title. On the withdrawal of
  approval, securities listed on the exchange are not exempt from
  this title until the commissioner issues an order approving the
  exchange. (V.A.C.S. Art. 581-6, Subsec. F (part).)
  CHAPTER 4006. FEES
  SUBCHAPTER A. CERTAIN REGISTRATION AND NOTICE FILING FEES
  Sec. 4006.001.  CERTAIN REGISTRATION AND NOTICE FILING
                   FEES 
  SUBCHAPTER B. EXEMPTION FEES AND OTHER FEES
  Sec. 4006.051.  NOTICE FOR SECONDARY TRADING EXEMPTION 
  Sec. 4006.052.  NOTICE FOR LIMITED OFFERING EXEMPTION 
  Sec. 4006.053.  APPLICATION FOR APPROVAL OF STOCK
                   EXCHANGE 
  Sec. 4006.054.  AMENDMENT OR DUPLICATE OF REGISTRATION
                   CERTIFICATE OR EVIDENCE OF
                   REGISTRATION; REGISTRATION OF BRANCH
                   OFFICE 
  Sec. 4006.055.  EXAMINATION OF CERTAIN APPLICATIONS OR
                   REGISTRATION STATEMENTS 
  Sec. 4006.056.  CERTIFIED COPIES 
  Sec. 4006.057.  REQUEST TO TAKE EXAMINATION 
  Sec. 4006.058.  INTERPRETATION BY GENERAL COUNSEL 
  SUBCHAPTER C. PROVISIONS APPLICABLE TO CERTAIN FEES
  Sec. 4006.101.  REASONABLE AND NECESSARY REQUIREMENT 
  Sec. 4006.102.  REDUCED FEES 
  Sec. 4006.103.  PAYMENT OF CERTAIN COSTS 
  Sec. 4006.104.  REFUND OF REGISTRATION FEE 
  SUBCHAPTER D. FEES FOR CERTAIN SALES OR OFFERS OF SECURITIES
  Sec. 4006.151.  FEE FOR SALE OF EXCESS SECURITIES 
  Sec. 4006.152.  FEE FOR EXCEEDING LIMITED OFFERING
                   EXEMPTION 
  Sec. 4006.153.  FEE FOR SALES OF UNREGISTERED
                   SECURITIES 
  SUBCHAPTER E. MISCELLANEOUS FEES
  Sec. 4006.201.  RENEWAL OF REGISTRATION BY NOTIFICATION 
  SUBCHAPTER F. DEPOSIT OF FEES
  Sec. 4006.251.  DEPOSIT OF FEES TO GENERAL REVENUE FUND 
  Sec. 4006.252.  DAILY DEPOSIT OF CERTAIN FEES 
  CHAPTER 4006. FEES
  SUBCHAPTER A. CERTAIN REGISTRATION AND NOTICE FILING FEES
         Sec. 4006.001.  CERTAIN REGISTRATION AND NOTICE FILING FEES.
  The board shall establish the following fees in amounts so that the
  aggregate amount that exceeds the amount of the fees on September 1,
  2002, produces sufficient revenue to cover the costs of
  administering and enforcing this title:
               (1)  for filing an original, amended, or renewal
  application or registration statement to sell or dispose of
  securities, an amount not to exceed $100;
               (2)  for filing an original application of a dealer or
  investment adviser or submitting a notice filing for a federal
  covered investment adviser, an amount not to exceed $100;
               (3)  for filing a renewal application of a dealer or
  investment adviser or submitting a renewal notice filing for a
  federal covered investment adviser, an amount not to exceed $100;
               (4)  for filing an original application for each agent,
  officer, or investment adviser representative or submitting a
  notice filing for each representative of a federal covered
  investment adviser, an amount not to exceed $100; and
               (5)  for filing a renewal application for each agent,
  officer, or investment adviser representative or submitting a
  renewal notice filing for each representative of a federal covered
  investment adviser, an amount not to exceed $100.  (V.A.C.S. Art.
  581-35, Subsec. A.)
  SUBCHAPTER B. EXEMPTION FEES AND OTHER FEES
         Sec. 4006.051.  NOTICE FOR SECONDARY TRADING EXEMPTION. The
  commissioner or board shall charge and collect:
               (1)  a fee of $500 for filing an initial notice required
  by the commissioner to claim a secondary trading exemption; and
               (2)  a fee of $500 for filing a secondary trading
  exemption renewal notice.  (V.A.C.S. Art. 581-35, Subsec. B
  (part).)
         Sec. 4006.052.  NOTICE FOR LIMITED OFFERING EXEMPTION. (a)  
  Subject to Subsection (b), for filing an initial notice required by
  the commissioner to claim a limited offering exemption, the
  commissioner or board shall charge and collect a fee of one-tenth of
  one percent of the aggregate amount of securities described as
  being offered for sale.
         (b)  A fee charged under this section may not exceed $500.  
  (V.A.C.S. Art. 581-35, Subsec. B (part).)
         Sec. 4006.053.  APPLICATION FOR APPROVAL OF STOCK EXCHANGE.
  The commissioner or board shall charge and collect a fee of $10,000
  for filing an application for approval of a stock exchange.  
  (V.A.C.S. Art. 581-35, Subsec. B (part).)
         Sec. 4006.054.  AMENDMENT OR DUPLICATE OF REGISTRATION
  CERTIFICATE OR EVIDENCE OF REGISTRATION; REGISTRATION OF BRANCH
  OFFICE. The commissioner or board shall charge and collect a fee of
  $25 for a filing to:
               (1)  amend the registration certificate of a dealer or
  investment adviser or the evidence of registration of an agent or
  investment adviser representative;
               (2)  issue a duplicate certificate or evidence of
  registration; or
               (3)  register a branch office.  (V.A.C.S. Art. 581-35,
  Subsec. B (part).)
         Sec. 4006.055.  EXAMINATION OF CERTAIN APPLICATIONS OR
  REGISTRATION STATEMENTS. (a) For the examination of an original or
  amended application or registration statement filed under
  Subchapter A, B, or C, Chapter 4003, the commissioner or board shall
  charge and collect a fee of one-tenth of one percent of the
  aggregate amount of securities described and proposed to be sold to
  persons located in this state based on the price at which the
  securities will be offered to the public.
         (b)  A fee under this section applies regardless of whether
  the application or registration statement is denied, abandoned,
  withdrawn, or approved.  (V.A.C.S. Art. 581-35, Subsec. B (part).)
         Sec. 4006.056.  CERTIFIED COPIES. (a) For a certified copy
  of any papers filed in the office of the commissioner, the
  commissioner shall charge and collect a fee that is reasonably
  related to the costs of producing the certified copy.
         (b)  A fee charged under this section may not be more than a
  fee that the secretary of state is authorized to charge for a
  similar service.  (V.A.C.S. Art. 581-35, Subsec. B (part).)
         Sec. 4006.057.  REQUEST TO TAKE EXAMINATION. The
  commissioner or board shall charge and collect a fee of $35 for
  filing a request to take the Texas Securities Law Examination.  
  (V.A.C.S. Art. 581-35, Subsec. B (part).)
         Sec. 4006.058.  INTERPRETATION BY GENERAL COUNSEL. (a)  
  Except as provided by Subsection (b), the commissioner or board
  shall charge and collect a fee of $100 for an interpretation by the
  board's general counsel of this title or a rule adopted under this
  title.
         (b)  An officer or employee of a governmental entity and the
  entity that the officer or employee represents are exempt from the
  fee under this section if the officer or employee is conducting
  official business of the entity.  (V.A.C.S. Art. 581-35, Subsec. B
  (part).)
  SUBCHAPTER C. PROVISIONS APPLICABLE TO CERTAIN FEES
         Sec. 4006.101.  REASONABLE AND NECESSARY REQUIREMENT.
  Subject to Subchapter A, the board shall set a fee under Subchapters
  A and B in an amount that is reasonable and necessary to defray
  costs.  (V.A.C.S. Art. 581-35, Subsec. C.)
         Sec. 4006.102.  REDUCED FEES. (a)  The board by rule may
  adopt reduced fees under Section 4006.001 for original and renewal
  applications of dealers, agents, officers, investment advisers, or
  investment adviser representatives who have assumed inactive
  status as defined by the board.
         (b)  The board by rule may adopt reduced fees under Section
  4006.001 as appropriate to accommodate a small business required by
  this title to register in two or more of the following capacities:
               (1)  dealer;
               (2)  agent;
               (3)  investment adviser;
               (4)  investment adviser representative; or
               (5)  officer.
         (c)  A person is not required to pay more than one fee
  required under Section 4006.001 to engage in business in this state
  concurrently for the same person or company as:
               (1)  a dealer and an investment adviser; or
               (2)  an agent and investment adviser representative.
  (V.A.C.S. Art. 581-42.)
         Sec. 4006.103.  PAYMENT OF CERTAIN COSTS. A cost incurred by
  the board in administering this title may be paid only from a fee
  collected under Section 4006.001.  (V.A.C.S. Art. 581-35,
  Subsec. D.)
         Sec. 4006.104.  REFUND OF REGISTRATION FEE. If the
  commissioner or board determines that all or part of a registration
  fee should be refunded, the commissioner may make the refund by
  warrant on the state treasury from money appropriated from the
  general revenue fund for that purpose. (V.A.C.S. Art. 581-36
  (part).)
  SUBCHAPTER D. FEES FOR CERTAIN SALES OR OFFERS OF SECURITIES
         Sec. 4006.151.  FEE FOR SALE OF EXCESS SECURITIES. (a)  An
  offeror who sells securities in this state in excess of the
  aggregate amount of securities registered for the offering may
  apply to register the excess securities by paying:
               (1)  three times the difference between the initial fee
  paid and the fee required under Section 4006.055 for the securities
  sold to persons in this state;
               (2)  if the registration is no longer in effect,
  interest on that amount computed at the rate provided by Section
  302.002, Finance Code, from the date the registration was no longer
  in effect until the date the subsequent application is filed; and
               (3)  the amendment fee prescribed by Section
  4006.001(1).
         (b)  If an application to register excess securities is
  granted under Subsection (a), the registration of the excess
  securities is effective retroactively to the effective date of the
  initial registration for the offering.  (V.A.C.S. Art. 581-35-1,
  Subsec. A.)
         Sec. 4006.152.  FEE FOR EXCEEDING LIMITED OFFERING
  EXEMPTION. (a) This section applies only to an offeror who:
               (1)  has filed a notice to claim a limited offering
  exemption;
               (2)  paid less than the maximum fee prescribed by
  Section 4006.052; and
               (3)  offered a greater amount of securities in the
  offering than authorized pursuant to the formula prescribed by
  Section 4006.052.
         (b)  An offeror may:
               (1)  file an amended notice disclosing the amount of
  securities offered; and
               (2)  pay:
                     (A)  three times the difference between the fee
  initially paid and the fee that should have been paid; and
                     (B)  interest on that amount computed at the rate
  provided by Section 302.002, Finance Code, from the date the
  commissioner received the original notice until the date the
  commissioner received the amended notice.
         (c)  An amended notice filed under Subsection (b) is
  retroactive to the date of the initial filing of the notice to claim
  the exemption. (V.A.C.S. Art. 581-35-1, Subsec. B.)
         Sec. 4006.153.  FEE FOR SALES OF UNREGISTERED SECURITIES.
  (a) If, after notice and hearing, the commissioner or a court finds
  that an offeror has sold securities in this state pursuant to an
  offering no part of which has been registered under Chapter 4003 and
  for which the transactions or securities are not exempt under
  Chapter 4005, the commissioner or court may impose a fee equal to:
               (1)  six times the amount that would have been paid if
  the issuer had filed an application or registration statement to
  register the securities and paid the fee required under Section
  4006.055 based on the aggregate amount of sales made in this state
  in the preceding three years; and
               (2)  interest on that amount at the rate provided by
  Section 302.002, Finance Code, from the date of the first such sale
  made in this state until the date the fee is paid.
         (b)  Payment of the fee prescribed by this section does not
  effect registration of the securities or affect the application of
  any other provision of this title.
         (c)  Payment of the fee prescribed by this section is not an
  admission that the transactions or securities were not exempt and
  is not admissible as evidence in a suit or proceeding for failure to
  register the securities.  (V.A.C.S. Art. 581-35-2.)
  SUBCHAPTER E. MISCELLANEOUS FEES
         Sec. 4006.201.  RENEWAL OF REGISTRATION BY NOTIFICATION. A
  registration of securities by notification may be renewed as
  provided by Section 4003.058, which includes the payment of the
  renewal fee in the amount prescribed by that section. (New.)
  SUBCHAPTER F. DEPOSIT OF FEES
         Sec. 4006.251.  DEPOSIT OF FEES TO GENERAL REVENUE FUND. The
  commissioner or board shall deposit money received from fees under
  this title to the credit of the general revenue fund. (V.A.C.S.
  Art. 581-36 (part).)
         Sec. 4006.252.  DAILY DEPOSIT OF CERTAIN FEES. The
  commissioner or board shall deposit daily all fees received under
  Subchapter B to the credit of the general revenue fund. (V.A.C.S.
  Art. 581-35, Subsec. B (part).)
  CHAPTER 4007. ENFORCEMENT
  SUBCHAPTER A. AUTHORITY TO ENFORCE TITLE
  Sec. 4007.001.  ENFORCEMENT BY COMMISSIONER, ATTORNEY
                   GENERAL, AND DISTRICT OR COUNTY
                   ATTORNEY 
  Sec. 4007.002.  MEANS OF ENFORCEMENT NOT EXCLUSIVE 
  SUBCHAPTER B. INSPECTIONS AND INVESTIGATIONS
  Sec. 4007.051.  COMPLAINTS FILED WITH COMMISSIONER OR
                   BOARD 
  Sec. 4007.052.  INSPECTIONS 
  Sec. 4007.053.  INVESTIGATIVE AUTHORITY 
  Sec. 4007.054.  SERVICE OF SUBPOENA, SUMMONS, OR OTHER
                   PROCESS 
  Sec. 4007.055.  ENFORCEMENT OF SUBPOENA; CONTEMPT 
  Sec. 4007.056.  CONFIDENTIALITY OF INVESTIGATIVE
                   INFORMATION 
  Sec. 4007.057.  COMPENSATION OF WITNESSES 
  Sec. 4007.058.  IMPOSITION OF COSTS ON PARTIES 
  Sec. 4007.059.  ASSISTANCE TO SECURITIES REGULATORS IN
                   OTHER JURISDICTIONS 
  SUBCHAPTER C. ADMINISTRATIVE ACTIONS
  Sec. 4007.101.  CEASE AND DESIST ORDER: OFFER OR SALE
                   OF SECURITIES 
  Sec. 4007.102.  CEASE AND DESIST ORDER: INVESTMENT
                   ADVISER OR INVESTMENT ADVISER
                   REPRESENTATIVE 
  Sec. 4007.103.  CEASE PUBLICATION ORDER 
  Sec. 4007.104.  EMERGENCY CEASE AND DESIST ORDER 
  Sec. 4007.105.  DENIAL, SUSPENSION, OR REVOCATION OF
                   REGISTRATION 
  Sec. 4007.106.  ASSESSMENT OF ADMINISTRATIVE FINE 
  Sec. 4007.107.  HEARINGS ON CERTAIN MATTERS 
  SUBCHAPTER D. CIVIL PROCEEDINGS
  Sec. 4007.151.  RECEIVERSHIP 
  Sec. 4007.152.  INJUNCTIVE RELIEF 
  Sec. 4007.153.  EQUITABLE RELIEF AND RESTITUTION 
  Sec. 4007.154.  CIVIL PENALTY 
  Sec. 4007.155.  RECOVERY OF COSTS 
  SUBCHAPTER E. CRIMINAL PROVISIONS
  Sec. 4007.201.  UNAUTHORIZED SALE OF SECURITIES;
                   OFFENSE 
  Sec. 4007.202.  UNAUTHORIZED RENDERING OF SERVICES AS
                   INVESTMENT ADVISER OR INVESTMENT
                   ADVISER REPRESENTATIVE; OFFENSE 
  Sec. 4007.203.  FRAUDULENT CONDUCT; OFFENSE 
  Sec. 4007.204.  MATERIALLY FALSE STATEMENT IN DOCUMENT
                   OR PROCEEDING; OFFENSE 
  Sec. 4007.205.  FALSE STATEMENT OR REPRESENTATION
                   CONCERNING REGISTRATION; OFFENSE 
  Sec. 4007.206.  VIOLATION OF CEASE AND DESIST ORDER;
                   OFFENSE 
  Sec. 4007.207.  NONCOMPLIANT OFFER OR OFFER PROHIBITED
                   BY CEASE PUBLICATION ORDER; OFFENSE 
  Sec. 4007.208.  AGGREGATION OF AMOUNTS 
  Sec. 4007.209.  LIABILITY OF CORPORATION 
  CHAPTER 4007. ENFORCEMENT
  SUBCHAPTER A. AUTHORITY TO ENFORCE TITLE
         Sec. 4007.001.  ENFORCEMENT BY COMMISSIONER, ATTORNEY
  GENERAL, AND DISTRICT OR COUNTY ATTORNEY. (a) The administration
  of the provisions of this title is vested in the commissioner.
         (b)  The commissioner and the attorney general shall:
               (1)  ensure that the provisions of this title are
  obeyed; and
               (2)  conduct investigations and take measures to
  prevent or detect a violation of this title.
         (c)  The commissioner shall at once submit any evidence of a
  criminal violation of this title to the district or county attorney
  of the appropriate county after the evidence comes to the
  commissioner's knowledge.
         (d)  If the district or county attorney neglects or refuses
  to prosecute the alleged criminal violation, the commissioner shall
  submit the evidence of the alleged violation to the attorney
  general. The attorney general may proceed with the criminal
  prosecution of the alleged violation and has all the rights,
  privileges, and powers conferred by law on a district or county
  attorney, including the authority to appear before a grand jury and
  to interrogate witnesses before a grand jury. (V.A.C.S. Art.
  581-3.)
         Sec. 4007.002.  MEANS OF ENFORCEMENT NOT EXCLUSIVE. The
  commissioner may use any or all penalties, sanctions, remedies, or
  relief that the commissioner considers necessary. (V.A.C.S. Art.
  581-3-1.)
  SUBCHAPTER B. INSPECTIONS AND INVESTIGATIONS
         Sec. 4007.051.  COMPLAINTS FILED WITH COMMISSIONER OR BOARD.
  (a) The commissioner or the commissioner's designee shall maintain
  a file on each written complaint filed with the commissioner or
  board concerning a person registered under this title. The file
  must include:
               (1)  the name of the person who filed the complaint;
               (2)  the date the complaint was received by the
  commissioner or board;
               (3)  the subject matter of the complaint;
               (4)  the name of each person contacted in relation to
  the complaint;
               (5)  a summary of the results of the review or
  investigation of the complaint; and
               (6)  an explanation of the reason the file was closed,
  if the commissioner closed the file without taking action other
  than the investigation of the complaint.
         (b)  The commissioner or the commissioner's designee shall
  provide to the person filing the complaint and to each person who is
  a subject of the complaint a copy of the board's policies and
  procedures relating to complaint investigation and resolution.
         (c)  The commissioner or the commissioner's designee, at
  least quarterly until final disposition of the complaint, shall
  notify the person filing the complaint and each person who is a
  subject of the complaint of the status of the investigation, unless
  the notice would jeopardize an undercover investigation. (V.A.C.S.
  Art. 581-2-6, Subsecs. A (part), B, C.)
         Sec. 4007.052.  INSPECTIONS. (a) The commissioner without
  notice may inspect a registered dealer or registered investment
  adviser as necessary to ensure compliance with this title and board
  rules.
         (b)  The commissioner, during regular business hours, may
  enter the business premises of a registered dealer or registered
  investment adviser and examine and copy books and records pertinent
  to the inspection.
         (c)  During the inspection, the registered dealer or
  registered investment adviser shall:
               (1)  provide to the commissioner or the commissioner's
  authorized representative immediate and complete access to the
  registered dealer's or registered investment adviser's office,
  place of business, files, safe, and any other location at which
  books and records pertinent to the inspection are located; and
               (2)  allow the commissioner or the commissioner's
  authorized representative to make photostatic or electronic copies
  of books or records subject to inspection.
         (d)  A registered dealer or registered investment adviser
  may not charge a fee for copying information under this section.
         (e)  Information obtained under this section and any
  intra-agency or interagency notes, memoranda, reports, or other
  communications consisting of advice, analyses, opinions, or
  recommendations that are made in connection with the inspection are
  confidential. The commissioner may not disclose to the public or
  release documents or other information made confidential by this
  subsection except to the same extent provided for the release or
  disclosure of confidential documents or other information made or
  obtained in connection with an investigation under Section
  4007.053. (V.A.C.S. Art. 581-13-1.)
         Sec. 4007.053.  INVESTIGATIVE AUTHORITY. (a) The
  commissioner shall conduct investigations as the commissioner
  considers necessary to prevent or detect a violation of this title
  or a board rule or order.
         (b)  For the purpose of conducting an investigation under
  this section, the commissioner may:
               (1)  administer oaths;
               (2)  sign subpoenas;
               (3)  issue subpoenas or summons to compel the
  attendance and testimony of witnesses and the production of all
  records, electronic or otherwise, relating to any matter that the
  commissioner has the authority under this title to consider or
  investigate;
               (4)  examine witnesses; and
               (5)  receive evidence.
         (c)  During an investigation, the commissioner may cause the
  deposition of witnesses residing inside or outside this state to be
  taken in the manner prescribed by the laws of this state for taking
  a deposition in a civil action. (V.A.C.S. Art. 581-28, Subsec. A
  (part).)
         Sec. 4007.054.  SERVICE OF SUBPOENA, SUMMONS, OR OTHER
  PROCESS. (a) The commissioner may serve a subpoena, summons, or
  other process issued by the commissioner or have the subpoena,
  summons, or other process served by an authorized agent of the
  commissioner, a sheriff, or a constable.
         (b)  The sheriff's or constable's fee for serving the
  subpoena is the same as the fee paid the sheriff or constable for
  similar services. (V.A.C.S. Art. 581-28, Subsec. A (part).)
         Sec. 4007.055.  ENFORCEMENT OF SUBPOENA; CONTEMPT. (a) If a
  person disobeys a subpoena or if a witness appearing before the
  commissioner refuses to give evidence, the commissioner may
  petition the district court of a jurisdiction in which the person or
  witness may be found, and the court on this petition may issue an
  order requiring the person or witness to, as applicable, obey the
  subpoena, testify, or produce a book, an account, a record, a paper,
  and correspondence relating to the matter in question.
         (b)  The district court may punish as contempt the failure to
  obey an order under Subsection (a). (V.A.C.S. Art. 581-28, Subsec.
  A (part).)
         Sec. 4007.056.  CONFIDENTIALITY OF INVESTIGATIVE
  INFORMATION. (a) All information received in connection with an
  investigation under Section 4007.053 and all internal notes,
  memoranda, reports, or communications made in connection with an
  investigation under that section are confidential.
         (b)  The commissioner may not disclose a document or other
  information made confidential by Subsection (a) unless the
  disclosure is made:
               (1)  to the public under court order for good cause
  shown; or
               (2)  at the commissioner's discretion, as part of an
  administrative proceeding or a civil or criminal action to enforce
  this title.
         (c)  The commissioner, at the commissioner's discretion, may
  disclose confidential information in the commissioner's possession
  to:
               (1)  a governmental or regulatory authority or any
  association of governmental or regulatory authorities approved by
  board rule; or
               (2)  any receiver appointed under Section 4007.151.
         (d)  Disclosure of information under Subsection (c) does not
  violate any other provision of this title or Chapter 552.
         (e)  This section may not be interpreted to prohibit or limit
  the publication of rulings or decisions of the commissioner.
  (V.A.C.S. Art. 581-28, Subsec. A (part).)
         Sec. 4007.057.  COMPENSATION OF WITNESSES. (a) A witness
  required to attend a hearing before the commissioner shall receive
  for each day's attendance a fee in an amount set by board rule.
         (b)  A disbursement made in payment of a fee under this
  section shall be:
               (1)  made in accordance with board rule; and
               (2)  included in, and paid in the same manner that is
  provided for, the payment of other expenses incurred in the
  administration and enforcement of this title. (V.A.C.S. Art.
  581-28, Subsec. A (part).)
         Sec. 4007.058.  IMPOSITION OF COSTS ON PARTIES. The
  commissioner may impose on a party of record fees, expenses, or
  costs incurred in connection with a hearing or may divide the fee,
  expense, or cost among any or all parties of record as determined by
  the commissioner. (V.A.C.S. Art. 581-28, Subsec. A (part).)
         Sec. 4007.059.  ASSISTANCE TO SECURITIES REGULATORS IN OTHER
  JURISDICTIONS. (a) On request from a securities regulator of
  another state or of a foreign jurisdiction, the commissioner may
  provide assistance to the regulator in conducting an investigation
  to determine whether a person has violated, is violating, or is
  about to violate a law or rule of the other state or foreign
  jurisdiction relating to a securities matter that the regulator is
  authorized to administer or enforce.
         (b)  The commissioner may provide assistance under this
  section through the use of the authority to investigate and any
  other power conferred by this section or Section 4007.054,
  4007.055, 4007.056, or 4007.057, as the commissioner determines to
  be necessary and appropriate.
         (c)  In determining whether to provide assistance under this
  section, the commissioner may consider whether:
               (1)  the securities regulator is permitted and has
  agreed to provide assistance within the regulator's jurisdiction to
  the commissioner reciprocally and at the commissioner's request
  concerning securities matters;
               (2)  compliance with the request for assistance would
  violate or otherwise prejudice the public policy of this state;
               (3)  the conduct described in the request would also
  constitute a violation of this title or another law of this state
  had the conduct occurred in this state; and
               (4)  board employees and board or commissioner
  resources necessary to carry out the request for assistance are
  available. (V.A.C.S. Art. 581-28, Subsec. C.)
  SUBCHAPTER C. ADMINISTRATIVE ACTIONS
         Sec. 4007.101.  CEASE AND DESIST ORDER: OFFER OR SALE OF
  SECURITIES. (a) The commissioner may hold a hearing as provided by
  this section if at any time it appears to the commissioner that the
  sale, proposed sale, or method of sale of securities, regardless of
  whether exempt:
               (1)  is a fraudulent practice;
               (2)  does not comply with this title;
               (3)  would tend to work a fraud on any purchaser of the
  securities; or
               (4)  would not be fair, just, or equitable to any
  purchaser of the securities.
         (b)  The commissioner may hold a hearing under this section
  on a date set by the commissioner that is not later than the 30th day
  after the date the issuer or registrant of the securities, the
  person on whose behalf the securities are being or will be offered,
  or any person that is acting as a dealer or agent in violation of
  this title, as applicable:
               (1)  receives actual notice; or
               (2)  is provided notice by registered or certified mail
  to the person's last known address.
         (c)  If the commissioner determines at the hearing that the
  sale, proposed sale, or method of sale of the securities is a
  fraudulent practice, does not comply with this title, would tend to
  work a fraud on any purchaser of the securities, or would not be
  fair, just, or equitable to any purchaser of the securities, the
  commissioner may issue a written cease and desist order:
               (1)  prohibiting or suspending the sale of the
  securities;
               (2)  denying or revoking the registration of the
  securities;
               (3)  prohibiting an unregistered person from acting as
  a dealer or agent; or
               (4)  prohibiting the fraudulent conduct.
         (d)  After the issuance of a cease and desist order under
  Subsection (c), a dealer or agent may not knowingly sell or offer
  for sale any security named in the order. (V.A.C.S. Art. 581-23,
  Subsec. A.)
         Sec. 4007.102.  CEASE AND DESIST ORDER: INVESTMENT ADVISER
  OR INVESTMENT ADVISER REPRESENTATIVE. (a) Notwithstanding any
  provision of this title to the contrary, the commissioner may hold a
  hearing as provided by this section if at any time it appears to the
  commissioner that:
               (1)  an investment adviser or investment adviser
  representative is engaging or is likely to engage in fraud or a
  fraudulent practice with respect to rendering services as an
  investment adviser or investment adviser representative; or
               (2)  a person is acting as an investment adviser or
  investment adviser representative in violation of this title.
         (b)  A hearing under this section must be held not later than
  the 30th day after the date the person described by Subsection (a):
               (1)  receives actual notice; or
               (2)  is provided notice by registered or certified
  mail, return receipt requested, to the person's last known address.
         (c)  After the hearing, the commissioner shall issue or
  decline to issue a cease and desist order. An order issued under
  this subsection must:
               (1)  require the investment adviser or investment
  adviser representative to immediately cease and desist from the
  fraudulent conduct; or
               (2)  prohibit an unregistered or other unauthorized
  person who is not exempt from the registration or notice filing
  requirements of this title from acting as an investment adviser or
  investment adviser representative in violation of this title.
  (V.A.C.S. Art. 581-23, Subsec. B.)
         Sec. 4007.103.  CEASE PUBLICATION ORDER. (a)
  Notwithstanding any provision of this title to the contrary, the
  commissioner may issue a cease publication order if at any time it
  appears to the commissioner that an offer contains any statement
  that is materially false or misleading or is otherwise likely to
  deceive the public.
         (b)  A person may not make an offer that is prohibited by an
  order issued under Subsection (a). (V.A.C.S. Art. 581-23, Subsec.
  C.)
         Sec. 4007.104.  EMERGENCY CEASE AND DESIST ORDER. (a) On the
  commissioner's determination that the conduct, act, or practice
  threatens immediate and irreparable public harm, the commissioner
  may issue an emergency cease and desist order to a person who the
  commissioner reasonably believes:
               (1)  is engaging in or is about to engage in fraud or a
  fraudulent practice in connection with:
                     (A)  the offer for sale or sale of a security; or
                     (B)  the rendering of services as an investment
  adviser or investment adviser representative;
               (2)  has made an offer containing a statement that is
  materially misleading or is otherwise likely to deceive the public;
  or
               (3)  is engaging or is about to engage in an act or
  practice that violates this title or a board rule.
         (b)  The emergency order must:
               (1)  be sent on issuance to each person affected by the
  order by personal delivery or registered or certified mail, return
  receipt requested, to the person's last known address;
               (2)  state the specific charges and require the person
  to immediately cease and desist from the unauthorized activity; and
               (3)  contain a notice that a request for a hearing may
  be filed under this section.
         (c)  Unless a person against whom the emergency order is
  directed requests a hearing in writing before the 31st day after the
  date the order is served on the person, the emergency order is final
  and nonappealable as to that person. A request for a hearing must:
               (1)  be in writing and directed to the commissioner;
  and
               (2)  state the grounds for the request to set aside or
  modify the order.
         (d)  On receiving a request for a hearing, the commissioner
  shall serve notice of the time and place of the hearing by personal
  delivery or registered or certified mail, return receipt requested.
  The hearing must be held not later than the 10th day after the date
  the commissioner receives the request for a hearing unless the
  parties agree to a later hearing date. At the hearing, the
  commissioner has the burden of proof and must present evidence in
  support of the emergency order.
         (e)  After the hearing, the commissioner shall affirm,
  modify, or set aside, wholly or partly, the emergency order. An
  order affirming or modifying the emergency order is immediately
  final for purposes of enforcement and appeal.
         (f)  An emergency order continues in effect unless the order
  is stayed by the commissioner. The commissioner may impose any
  condition before granting a stay of the order. (V.A.C.S. Art.
  581-23-2.)
         Sec. 4007.105.  DENIAL, SUSPENSION, OR REVOCATION OF
  REGISTRATION. (a) The commissioner may deny an application for
  registration under this title, suspend or revoke a registration
  issued under this title, place on probation a dealer, agent,
  investment adviser, or investment adviser representative whose
  registration has been suspended under this title, or reprimand a
  person registered under this title if the person:
               (1)  has been convicted of a felony;
               (2)  has been convicted of a misdemeanor that directly
  relates to the person's securities-related duties and
  responsibilities;
               (3)  has engaged in:
                     (A)  an inequitable practice in the sale of
  securities or in rendering services as an investment adviser; or
                     (B)  a fraudulent business practice;
               (4)  is an insolvent dealer or investment adviser;
               (5)  is a dealer and is selling or sold securities in
  this state through an agent other than a registered agent;
               (6)  is an investment adviser and is engaging or
  engaged in rendering services as an investment adviser in this
  state through a representative who is not registered to perform
  services for that investment adviser;
               (7)  is an agent and is selling or sold securities in
  this state for a dealer, issuer, or controlling person with
  knowledge that the dealer, issuer, or controlling person has not
  complied with this title;
               (8)  is an investment adviser representative and is
  rendering or rendered services as an investment adviser for an
  investment adviser in this state whom the representative is not or
  was not registered to represent;
               (9)  has:
                     (A)  made a material misrepresentation to the
  commissioner or board in connection with information considered
  necessary by the commissioner or board to determine:
                           (i)  a dealer's or investment adviser's
  financial responsibility; or
                           (ii)  a dealer's, agent's, investment
  adviser's, or investment adviser representative's business repute
  or qualifications; or
                     (B)  refused to provide information described by
  Paragraph (A) that the commissioner or board has requested;
               (10)  is registered as a dealer, agent, investment
  adviser, or investment adviser representative and has not complied
  with an applicable requirement under Section 4004.151(a);
               (11)  is the subject of any of the following orders
  issued within the preceding five years that remain effective:
                     (A)  an order by the securities agency or
  administrator of any state, the financial regulatory authority of a
  foreign country, or the Securities and Exchange Commission, entered
  after notice and opportunity for hearing, denying, suspending, or
  revoking the person's license as a dealer, agent, investment
  adviser, or investment adviser representative or the substantial
  equivalent of those terms;
                     (B)  an order suspending or expelling from
  membership in or association with a member of a self-regulatory
  organization;
                     (C)  a United States Postal Service fraud order;
                     (D)  an order by the securities agency or
  administrator of any state, the financial regulatory authority of a
  foreign country, the Securities and Exchange Commission, or the
  Commodity Futures Trading Commission, finding, after notice and
  opportunity for hearing, that the person engaged in acts involving
  fraud, deceit, false statements or omissions, or wrongful taking of
  property; or
                     (E)  an order by the Commodity Futures Trading
  Commission denying, suspending, or revoking registration under the
  Commodity Exchange Act (7 U.S.C. Section 1 et seq.);
               (12)  is subject to any order, judgment, or decree
  entered by a court that permanently restrains or enjoins the person
  from engaging in or continuing any conduct, action, or practice in
  connection with any aspect of the purchase or sale of securities or
  the rendering of investment advice; or
               (13)  has violated:
                     (A)  any provision of this title;
                     (B)  a board rule;
                     (C)  any order issued by the commissioner; or
                     (D)  any undertaking or agreement with the
  commissioner.
         (b)  If the commissioner proposes the suspension or
  revocation of a person's registration, the person is entitled to a
  hearing before the commissioner or a hearings officer as required
  by law.
         (c)  All registration certificates that have been revoked
  shall be immediately surrendered to the commissioner on request.
         (d)  This section does not affect the confidentiality of
  investigative records maintained by the commissioner or board.
  (V.A.C.S. Arts. 581-14, 581-25 (part).)
         Sec. 4007.106.  ASSESSMENT OF ADMINISTRATIVE FINE. (a) In
  addition to any other remedies, the commissioner, after giving
  notice and opportunity for a hearing, may issue an order that
  assesses an administrative fine against a person or company found
  to have:
               (1)  engaged in fraud or a fraudulent practice in
  connection with:
                     (A)  the offer for sale or sale of a security; or
                     (B)  the rendering of services as an investment
  adviser or investment adviser representative;
               (2)  made an offer containing a statement that is
  materially misleading or is otherwise likely to deceive the public;
               (3)  engaged in an act or practice that violates this
  title or a board rule or order; or
               (4)  with intent to deceive or defraud or with reckless
  disregard for the truth or the law, materially aided any person in
  engaging in an act or practice described by Subdivision (1), (2), or
  (3).
         (b)  An administrative fine assessed under this section when
  added to the amount of any civil penalty previously awarded under
  Section 4007.154 must be in an amount that does not exceed:
               (1)  the greater of:
                     (A)  $20,000 per violation; or
                     (B)  the gross amount of any economic benefit
  gained by the person or company as a result of the act or practice
  for which the fine was assessed; and
               (2)  if the act or practice was committed against a
  person 65 years of age or older, an additional amount of not more
  than $250,000.
         (c)  For purposes of determining the amount of an
  administrative fine assessed under this section, the commissioner
  shall consider factors set out in guidelines established by the
  board.
         (d)  For purposes of private civil litigation, the payment of
  a fine assessed in an agreed order under this title does not
  constitute an admission of any misconduct described in the order.
         (e)  A proceeding for the assessment of an administrative
  fine must be commenced within five years after the violation
  occurs. (V.A.C.S. Art. 581-23-1.)
         Sec. 4007.107.  HEARINGS ON CERTAIN MATTERS. (a) A person
  or company may request a hearing to dispute the commissioner's:
               (1)  failure or refusal to:
                     (A)  register and issue a certificate of
  registration for a dealer or investment adviser under Section
  4004.054; or
                     (B)  register and issue evidence of registration
  for an agent or investment adviser representative under Section
  4004.104;
               (2)  issuance of an order under Section 4007.101,
  4007.102, 4007.103, or 4007.104; or
               (3)  taking of an action in any other particular matter
  for which no other procedure is specified by this title.
         (b)  A hearing under Subsection (a) must be held before the
  commissioner or a hearings officer as required by law.
         (c)  On complaint by a person aggrieved by the denial of a
  permit qualifying securities for sale under Subchapter A, Chapter
  4003, or by the failure or refusal to register securities under
  Subchapter B or C, Chapter 4003, the board or a hearings officer, as
  required by law, shall conduct a hearing.
         (d)  A hearing under this section is subject to Chapter 2001.
  (V.A.C.S. Art. 581-24.)
  SUBCHAPTER D. CIVIL PROCEEDINGS
         Sec. 4007.151.  RECEIVERSHIP. (a) This section applies
  only to a person or company acting as a dealer, agent, investment
  adviser, investment adviser representative, or issuer or as an
  affiliate of a dealer, agent, investment adviser, investment
  adviser representative, or issuer, regardless of whether the person
  or company is required to be registered as provided in this title.
         (b)  The commissioner may request the attorney general to
  bring an action as provided by this section for the appointment of a
  receiver for a person or company to which this section applies or
  the assets of the person or company if it appears to the
  commissioner, on complaint or otherwise, that:
               (1)  the person or company has:
                     (A)  engaged in an act, transaction, practice, or
  course of business declared as a fraudulent practice under Section
  4007.152 or 4007.153; and
                     (B)  acted as a dealer, agent, investment adviser,
  investment adviser representative, or issuer or as an affiliate of
  a dealer, agent, investment adviser, investment adviser
  representative, or issuer in connection with the fraudulent
  practice; and
               (2)  the appointment of a receiver for the person or
  company or the assets of the person or company is necessary to
  conserve and protect the assets for the benefit of customers,
  security holders, and other claimants and potential claimants of
  the person or company.
         (c)  On the commissioner's request under Subsection (b), the
  attorney general may bring an action against a person or company in
  the name and on behalf of the state if it appears to the attorney
  general that the facts described by that subsection exist with
  respect to the person or company. The facts contained in the
  petition for the appointment of a receiver must be verified by the
  commissioner on information and belief.
         (d)  An action under this section may be brought in a
  district court of any county in which the fraudulent practice that
  is the subject of the petition was wholly or partly committed or in
  a county in which any defendant for whom the appointment of a
  receiver is sought has the defendant's principal place of business.
  A district court described by this subsection has jurisdiction and
  venue of the action. This subsection is superior to any other
  provision of law establishing jurisdiction or venue with regard to
  an action for receivership.
         (e)  The attorney general may apply for and, on proper
  showing, is entitled to have a subpoena issued by the court that
  requires:
               (1)  the appearance, without delay, of a defendant or
  any employee, investment adviser representative, or agent of the
  defendant to testify and give evidence concerning a matter relevant
  to the appointment of a receiver; and
               (2)  the production of documents, books, and records
  that may be necessary for a hearing on the action.
         (f)  The court may appoint a receiver for the person or
  company or the person's or company's assets on the attorney
  general's proper showing of the existence of the facts described by
  Subsection (b) with respect to the person or company.
         (g)  If the court appoints a receiver without providing the
  person or company with notice and an opportunity for hearing, the
  person or company may file with the court a written application for
  an order dissolving the receivership. If the application is filed
  not later than the 30th day after the date the person or company is
  served with the order appointing the receiver, the person or
  company is entitled to a hearing on the application not later than
  the 10th day after the date written notice is provided to the
  attorney general.
         (h)  A person may not be appointed as a receiver under this
  section unless the court finds that the person is qualified to
  discharge the duties of receiver after:
               (1)  hearing the views of:
                     (A)  the attorney general;
                     (B)  the commissioner; and
                     (C)  the defendant against whom the appointment of
  a receiver is sought, if the court considers it practicable; and
               (2)  considering the probable nature and magnitude of
  the receiver's duties in the particular case.
         (i)  The commissioner or attorney general may not be required
  to give a bond for receivership in an action brought under this
  section. The court shall require a person appointed as a receiver
  to give a bond that is:
               (1)  in an amount found by the court to be sufficient
  after considering the probable nature and magnitude of the
  receiver's duties in the particular case; and
               (2)  conditioned on the faithful discharge of the
  receiver's duties.
         (j)  The remedy provided by this section is in addition to
  any other remedy made available to the commissioner or the attorney
  general by statutory laws or case law of this state, including any
  provision authorizing receiverships. (V.A.C.S. Art. 581-25-1.)
         Sec. 4007.152.  INJUNCTIVE RELIEF. (a) The commissioner
  may request the attorney general to bring an action as provided by
  this section against a person or company if it appears to the
  commissioner, on complaint or otherwise, that the person or
  company:
               (1)  has engaged, is engaging, or is about to engage in
  fraud or a fraudulent practice in connection with the sale of a
  security;
               (2)  has engaged, is engaging, or is about to engage in
  fraud or a fraudulent practice in rendering services as an
  investment adviser or investment adviser representative;
               (3)  has made an offer containing a statement that is
  materially misleading or is otherwise likely to deceive the public;
  or
               (4)  has engaged, is engaging, or is about to engage in
  an act or practice that violates this title or a board rule or
  order.
         (b)  On the commissioner's request under Subsection (a), the
  attorney general, in addition to other remedies, may bring an
  action in the name and on behalf of the state:
               (1)  against:
                     (A)  a person or company described by Subsection
  (a);
                     (B)  any person who, with intent to deceive or
  defraud or with reckless disregard for the truth or the law, has
  materially aided, is materially aiding, or is about to materially
  aid the person or company; and
                     (C)  any other person concerned with or in any
  manner participating in or about to participate in the acts or
  practices described by Subsection (a); and
               (2)  to enjoin the person or company and any other
  person described by Subdivision (1) from continuing the acts or
  practices that are the subject of the action for injunctive relief
  or from doing any act to further the acts or practices.
         (c)  The facts contained in an application for injunctive
  relief must be verified by the commissioner on information and
  belief.
         (d)  The attorney general may apply for and, on proper
  showing, is entitled to have a subpoena issued by the court that
  requires:
               (1)  the appearance, without delay, of a defendant and
  any employee or agent of the defendant to testify and give evidence
  concerning the acts, conduct, or other matters complained about in
  the application for injunctive relief; and
               (2)  the production of documents, books, and records
  that may be necessary for the hearing on the action.
         (e)  A district court in any county in which it is shown that
  the acts that are the subject of the application for injunctive
  relief have been or are about to be committed or a district court in
  Travis County has jurisdiction and venue of an action brought under
  this section. This subsection is superior to any provision
  establishing jurisdiction or venue with regard to an action for an
  injunction.
         (f)  The commissioner or attorney general shall not be
  required to give a bond for injunction in an action brought under
  this section. (V.A.C.S. Art. 581-32, Subsec. A.)
         Sec. 4007.153.  EQUITABLE RELIEF AND RESTITUTION. (a) On
  the commissioner's request, the attorney general may, in addition
  to other remedies, seek:
               (1)  equitable relief, including restitution, for a
  victim of a fraudulent practice; and
               (2)  the disgorgement of any economic benefit gained by
  a defendant through an act or practice that violates this title or
  for which this title provides the commissioner and attorney general
  with a remedy.
         (b)  The attorney general may seek the remedies described by
  Subsection (a) either in:
               (1)  an action under Section 4007.152; or
               (2)  a separate action brought in district court.
         (c)  The court may:
               (1)  grant any equitable relief the court considers
  appropriate; and
               (2)  order the defendant to deliver to each victim of an
  act or practice that violates this title, or for which this title
  provides the commissioner or the attorney general with a remedy,
  the amount of money or the property the defendant obtained from the
  victim, including any bonus, fee, commission, option, proceeds, or
  profit from or loss avoided through the sale of the security or
  through the rendering of services as an investment adviser or
  investment adviser representative, or any other tangible benefit.
  (V.A.C.S. Art. 581-32, Subsec. B.)
         Sec. 4007.154.  CIVIL PENALTY. (a) On the commissioner's
  request, the attorney general may, in addition to other remedies,
  seek a civil penalty to be paid to the state in an amount that, when
  added to the amount of any administrative fine previously assessed
  under Section 4007.106(b), does not exceed:
               (1)  the greater of:
                     (A)  $20,000 per violation; or
                     (B)  the gross amount of any economic benefit
  gained by the person or company as a result of the commission of the
  act or practice; and
               (2)  if the act or practice was committed against a
  person 65 years of age or older, an additional amount of not more
  than $250,000.
         (b)  The attorney general may seek a civil penalty under this
  section either in:
               (1)  an action under Section 4007.152; or
               (2)  a separate action in district court. (V.A.C.S.
  Art. 581-32, Subsec. C.)
         Sec. 4007.155.  RECOVERY OF COSTS. In an action brought
  under Section 4007.152, 4007.153, or 4007.154, the attorney general
  may recover reasonable costs and expenses incurred by the attorney
  general in bringing the action. (V.A.C.S. Art. 581-32, Subsec. D.)
  SUBCHAPTER E. CRIMINAL PROVISIONS
         Sec. 4007.201.  UNAUTHORIZED SALE OF SECURITIES; OFFENSE.
  (a) A person commits an offense if the person sells, offers for
  sale or delivery, solicits subscriptions to or orders for, disposes
  of, invites orders for, or deals in any other manner in a security
  issued after September 6, 1955, unless:
               (1)  the security has been registered under Subchapter
  B or C, Chapter 4003; or
               (2)  a permit qualifying securities for sale has been
  issued under Subchapter A, Chapter 4003, with respect to the
  security.
         (b)  A person commits an offense if the person sells, offers
  for sale or delivery, solicits subscriptions to or orders for,
  disposes of, invites offers for, or deals in any other manner in a
  security without being a registered dealer or registered agent as
  provided in this title.
         (c)  An offense under this section is a felony of the third
  degree. (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.202.  UNAUTHORIZED RENDERING OF SERVICES AS
  INVESTMENT ADVISER OR INVESTMENT ADVISER REPRESENTATIVE; OFFENSE.
  (a) A person commits an offense if the person:
               (1)  renders services as an investment adviser or
  investment adviser representative; and
               (2)  is not registered as an investment adviser or
  investment adviser representative as required by this title.
         (b)  An offense under this section is a felony of the third
  degree. (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.203.  FRAUDULENT CONDUCT; OFFENSE. (a) A person
  commits an offense if:
               (1)  the person directly or indirectly:
                     (A)  engages in any fraud or fraudulent practice;
                     (B)  employs any device, scheme, or artifice to
  defraud;
                     (C)  knowingly makes an untrue statement of a
  material fact or omits to state a material fact necessary in order
  to make the statements made, in light of the circumstances under
  which they are made, not misleading; or
                     (D)  engages in any act, practice, or course of
  business that operates or will operate as a fraud or deceit on any
  person; and
               (2)  the applicable conduct is committed in connection
  with:
                     (A)  the sale of, the offering for sale or
  delivery of, the purchase of, the offer to purchase, invitation of
  offers to purchase, invitations of offers to sell, or dealing in any
  other manner in any security, regardless of whether the transaction
  or security is exempt under Chapter 4005; or
                     (B)  the rendering of services as an investment
  adviser or an investment adviser representative.
         (b)  An offense under this section is:
               (1)  a felony of the third degree, if the amount
  involved in the offense is less than $10,000;
               (2)  a felony of the second degree, if the amount
  involved in the offense is $10,000 or more but less than $100,000;
  or
               (3)  a felony of the first degree, if the amount
  involved is $100,000 or more.
         (c)  An indictment for an offense under this section may be
  brought only before the fifth anniversary of the date the offense
  was committed. (V.A.C.S. Art. 581-29 (part); Art. 581-29-1.)
         Sec. 4007.204.  MATERIALLY FALSE STATEMENT IN DOCUMENT OR
  PROCEEDING; OFFENSE. (a) A person commits an offense if the person
  knowingly makes or causes to be made any statement in a document
  filed with the commissioner or in a proceeding under this title that
  is, at the time and in light of the circumstances under which the
  statement is made, false or misleading in any material respect.
         (b)  An offense is established under this section regardless
  of whether the document or proceeding relates to a transaction or
  security that is exempt under Chapter 4005.
         (c)  An offense under this section is a felony of the third
  degree. (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.205.  FALSE STATEMENT OR REPRESENTATION
  CONCERNING REGISTRATION; OFFENSE. (a) A person commits an offense
  if the person knowingly makes a false statement or representation
  concerning a registration made or an exemption claimed under this
  title.
         (b)  An offense under this section is a state jail felony.
  (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.206.  VIOLATION OF CEASE AND DESIST ORDER;
  OFFENSE. (a) A person commits an offense if the person knowingly
  violates a cease and desist order issued by the commissioner under
  Section 4007.101, 4007.102, or 4007.104.
         (b)  An offense under this section is a felony of the third
  degree. (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.207.  NONCOMPLIANT OFFER OR OFFER PROHIBITED BY
  CEASE PUBLICATION ORDER; OFFENSE. (a) A person commits an offense
  if the person:
               (1)  makes an offer of a security in this state that
  does not comply with the requirements governing offers specified in
  Subchapter E, Chapter 4003; or
               (2)  knowingly makes an offer of a security in this
  state that is prohibited by a cease publication order issued by the
  commissioner under Section 4007.103.
         (b)  An offense under this section is a state jail felony.
  (V.A.C.S. Art. 581-29 (part).)
         Sec. 4007.208.  AGGREGATION OF AMOUNTS. When amounts are
  obtained in violation of this title pursuant to one scheme or
  continuing course of conduct, whether from the same or several
  sources, the conduct may be considered as one offense and the
  amounts aggregated in determining the grade of the offense.
  (V.A.C.S. Art. 581-29-2.)
         Sec. 4007.209.  LIABILITY OF CORPORATION. (a) In this
  section:
               (1)  "Association" and "corporation" have the meanings
  assigned by Section 1.07, Penal Code.
               (2)  "High managerial agent" has the meaning assigned
  by Section 7.21, Penal Code.
         (b)  If conduct constituting an offense under this
  subchapter is performed by an agent acting on behalf of a
  corporation or association and within the scope of the agent's
  office or employment, the corporation or association is criminally
  responsible for the offense only if the commission of the offense
  was authorized, requested, commanded, performed, or recklessly
  tolerated by:
               (1)  a majority of the governing board acting on behalf
  of the corporation or association; or
               (2)  a high managerial agent acting on behalf of the
  corporation or association and within the scope of the high
  managerial agent's office or employment.
         (c)  It is an affirmative defense to prosecution of a
  corporation or association under Subsection (b) that the high
  managerial agent having supervisory responsibility over the
  subject matter of the offense employed due diligence to prevent the
  commission of the offense. (V.A.C.S. Art. 581-29-3.)
  CHAPTER 4008. PRIVATE RIGHTS OF ACTION
  SUBCHAPTER A. GENERAL PROVISIONS
  Sec. 4008.001.  UNENFORCEABILITY OF ILLEGAL CONTRACTS 
  Sec. 4008.002.  CERTAIN WAIVERS VOID 
  Sec. 4008.003.  ACTION FOR COLLECTION OF COMMISSION OR
                   COMPENSATION 
  Sec. 4008.004.  STAY OF RECOGNITION OR ENFORCEMENT OF
                   FOREIGN-COUNTRY JUDGMENT 
  Sec. 4008.005.  SURVIVABILITY OF ACTION 
  Sec. 4008.006.  SAVING OF EXISTING RIGHTS AND REMEDIES 
  SUBCHAPTER B. CIVIL LIABILITY FOR ISSUANCE, SALE, OR PURCHASE OF
  SECURITIES
  Sec. 4008.051.  OFFEROR OR SELLER LIABILITY: REGISTRATION AND
                   RELATED VIOLATIONS 
  Sec. 4008.052.  OFFEROR OR SELLER LIABILITY: UNTRUTH OR OMISSION 
  Sec. 4008.053.  BUYER LIABILITY 
  Sec. 4008.054.  NONSELLING ISSUER LIABILITY 
  Sec. 4008.055.  CONTROLLING PERSON OR AIDER LIABILITY 
  Sec. 4008.056.  RESCISSION 
  Sec. 4008.057.  DAMAGES 
  Sec. 4008.058.  REQUIREMENTS OF RESCISSION OFFER TO
                   BUYERS 
  Sec. 4008.059.  REQUIREMENTS OF RESCISSION OFFER TO
                   SELLERS 
  Sec. 4008.060.  COSTS; ATTORNEY'S FEES 
  Sec. 4008.061.  LIMITATION OF LIABILITY IN SMALL
                   BUSINESS ISSUANCES 
  Sec. 4008.062.  STATUTE OF LIMITATIONS 
  SUBCHAPTER C. CIVIL LIABILITY OF INVESTMENT ADVISERS AND
  INVESTMENT ADVISER REPRESENTATIVES
  Sec. 4008.101.  INVESTMENT ADVISER OR INVESTMENT
                   ADVISER REPRESENTATIVE LIABILITY 
  Sec. 4008.102.  CONTROLLING PERSON OR AIDER LIABILITY 
  Sec. 4008.103.  DAMAGES 
  Sec. 4008.104.  STATUTE OF LIMITATIONS 
  Sec. 4008.105.  REMEDY NOT EXCLUSIVE 
  CHAPTER 4008. PRIVATE RIGHTS OF ACTION
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 4008.001.  UNENFORCEABILITY OF ILLEGAL CONTRACTS. A
  person may not base a suit on a contract if the person:
               (1)  made or engaged in the performance of the contract
  in violation of this title or a rule, order, or requirement under
  this title; or
               (2)  acquired any purported right under the contract
  with knowledge of the facts by reason of which the contract's making
  or performance was in violation of this title or a rule, order, or
  requirement under this title.  (V.A.C.S. Art. 581-33, Subsec. K.)
         Sec. 4008.002.  CERTAIN WAIVERS VOID. A condition,
  stipulation, or provision is void if it binds a buyer or seller of a
  security or a purchaser of services rendered by an investment
  adviser or investment adviser representative to waive compliance
  with this title or a rule, order, or requirement under this title.
  (V.A.C.S. Art. 581-33, Subsec. L.)
         Sec. 4008.003.  ACTION FOR COLLECTION OF COMMISSION OR
  COMPENSATION. (a) This section does not apply to a person or
  company that rendered services in connection with a transaction
  that is exempt under Subchapter A, Chapter 4005, or under a rule
  adopted by the board under Section 4005.024 if the person or company
  was not required to be registered by the terms of the exemption.
         (b)  A person or company may not bring or maintain any action
  in a court of this state for collection of a commission or
  compensation for services rendered in the sale or purchase of
  securities unless the person or company alleges and proves that:
               (1)  the person or company was:
                     (A)  registered under this title; or
                     (B)  exempt from registration under rules adopted
  under Section 4004.001; and
               (2)  the securities sold were registered under this
  title at the time the alleged cause of action arose. (V.A.C.S. Art.
  581-34.)
         Sec. 4008.004.  STAY OF RECOGNITION OR ENFORCEMENT OF
  FOREIGN-COUNTRY JUDGMENT. (a) Before a court's recognition or
  enforcement of a foreign-country judgment under Chapter 36A, Civil
  Practice and Remedies Code, or otherwise, a party against whom
  recognition or enforcement of the foreign-country judgment is
  sought is entitled to de novo review by a court in this state to
  determine whether a party, or the party's successors, assigns,
  agents, or representatives seeking recognition or enforcement of
  the foreign-country judgment have violated this title or Chapter
  17, Business & Commerce Code.
         (b)  A party seeking de novo review under this section must
  file with the court a verified pleading asserting a violation of
  this title or Chapter 17, Business & Commerce Code, not later than
  the 30th day after the date of service of the notice of filing of the
  foreign-country judgment with the court for recognition or
  enforcement.
         (c)  A pleading filed in accordance with Subsection (b)
  operates as a stay of the commencement or continuation of a
  proceeding to recognize or enforce the foreign-country judgment
  until the court completes its de novo review under this section and
  renders a final judgment.
         (d)  A finding by a court of a violation of this title or
  Chapter 17, Business & Commerce Code, is a sufficient ground for
  nonrecognition of a foreign-country judgment.
         (e)  This section applies to a foreign-country judgment
  involving a contract or agreement for a sale, offer for sale, or
  sell as defined by this title, or investment, that imposes an
  obligation of indemnification or liquidated damages on a resident
  of this state. (V.A.C.S. Art. 581-33-2.)
         Sec. 4008.005.  SURVIVABILITY OF ACTION. A cause of action
  under this title survives the death of a person who might have been
  a plaintiff or defendant. (V.A.C.S. Art. 581-33, Subsec. G.)
         Sec. 4008.006.  SAVING OF EXISTING RIGHTS AND REMEDIES. The
  rights and remedies provided by this title are in addition to any
  other rights, including exemplary damages, or remedies that exist.
  (V.A.C.S. Art. 581-33, Subsec. M.)
  SUBCHAPTER B. CIVIL LIABILITY FOR ISSUANCE, SALE, OR PURCHASE OF
  SECURITIES
         Sec. 4008.051.  OFFEROR OR SELLER LIABILITY: REGISTRATION
  AND RELATED VIOLATIONS. (a) A person who offers or sells a
  security in violation of the following is liable to a person who
  buys the security from the offeror or seller:
               (1)  Section 4003.001(a), 4003.002, 4003.003, or
  4003.004; Subchapter B, Chapter 4003, other than Section
  4003.054(b)(1); Subchapter C, Chapter 4003, other than Section
  4003.103(b); Section 4004.001, 4004.051, 4004.052, 4004.101(a), or
  4004.102(a); or Section 4007.103;
               (2)  Subchapter G, Chapter 4003, other than Section
&