Bill Text: TX HB4171 | 2019-2020 | 86th Legislature | Enrolled
Bill Title: Relating to the nonsubstantive revision of The Securities Act, including conforming amendments.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2019-06-07 - Effective on . . . . . . . . . . . . . . . January 1, 2022 [HB4171 Detail]
Download: Texas-2019-HB4171-Enrolled.html
H.B. No. 4171 |
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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 | ||
4003.304, or a requirement of the commissioner under Subchapter G, | ||
Chapter 4003, other than Section 4003.304; or | ||
(3) an order under Section 4007.101 or 4007.104. | ||
(b) The buyer of the security may sue for: | ||
(1) rescission; or | ||
(2) damages if the buyer no longer owns the security. | ||
(V.A.C.S. Art. 581-33, Subsec. A, Subdiv. (1).) | ||
Sec. 4008.052. OFFEROR OR SELLER LIABILITY: UNTRUTH OR | ||
OMISSION. (a) Except as provided by Subsection (c), a person who | ||
offers or sells a security and from whom another person buys the | ||
security is liable to the buyer of the security, regardless of | ||
whether the security or transaction is exempt under Chapter 4005, | ||
if the person offers or sells the security by means of an untrue | ||
statement of a material fact or an omission 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. | ||
(b) The buyer may sue for: | ||
(1) rescission; or | ||
(2) damages if the buyer no longer owns the security. | ||
(c) Except as provided by Subsection (d), a person offering | ||
or selling a security is not liable under Subsection (a) if the | ||
person sustains the burden of proof that either: | ||
(1) the buyer knew of the untruth or omission; or | ||
(2) the offeror or seller did not know, and in the | ||
exercise of reasonable care could not have known, of the untruth or | ||
omission. | ||
(d) The issuer of the security, other than a government | ||
issuer identified in Section 4005.017, is not entitled to the | ||
defense in Subsection (c)(2) regarding an untruth or omission: | ||
(1) in a prospectus required in connection with an | ||
application or registration statement under Subchapter A, B, or C, | ||
Chapter 4003; or | ||
(2) in a writing prepared and delivered by the issuer | ||
in the sale of the security. (V.A.C.S. Art. 581-33, Subsec. A, | ||
Subdiv. (2).) | ||
Sec. 4008.053. BUYER LIABILITY. (a) Except as provided by | ||
Subsection (c), a person who offers to buy or buys a security and to | ||
whom another person sells the security is liable to the seller, | ||
regardless of whether the security or transaction is exempt under | ||
Chapter 4005, if the person offers to buy or buys the security by | ||
means of an untrue statement of a material fact or an omission 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. | ||
(b) The seller may sue for: | ||
(1) rescission; or | ||
(2) damages if the buyer no longer owns the security. | ||
(c) A person who offers to buy or buys a security is not | ||
liable under Subsection (a) if the offeror or buyer sustains the | ||
burden of proof that either: | ||
(1) the seller knew of the untruth or omission; or | ||
(2) the offeror or buyer did not know, and in the | ||
exercise of reasonable care could not have known, of the untruth or | ||
omission. (V.A.C.S. Art. 581-33, Subsec. B.) | ||
Sec. 4008.054. NONSELLING ISSUER LIABILITY. (a) This | ||
section applies only to an issuer that registers under Subchapter | ||
A, B, or C, Chapter 4003, or under Section 6, Securities Act of 1933 | ||
(15 U.S.C. Section 77f), the issuer's outstanding securities for | ||
offer and sale by or for the owner of the securities. | ||
(b) Except as provided by Subsection (d), the issuer is | ||
liable to a person buying the registered security if the prospectus | ||
required in connection with the registration contains, as of its | ||
effective date, an untrue statement of a material fact or an | ||
omission 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. | ||
(c) The buyer of the registered security may sue for: | ||
(1) rescission; or | ||
(2) damages if the buyer no longer owns the security. | ||
(d) The issuer is not liable under Subsection (b) if the | ||
issuer sustains the burden of proof that the buyer knew of the | ||
untruth or omission. (V.A.C.S. Art. 581-33, Subsec. C.) | ||
Sec. 4008.055. CONTROLLING PERSON OR AIDER LIABILITY. (a) | ||
Except as provided by Subsection (b), a person who directly or | ||
indirectly controls a seller, buyer, or issuer of a security is | ||
liable under Section 4008.051, 4008.052, 4008.053, or 4008.054 | ||
jointly and severally with the seller, buyer, or issuer and to the | ||
same extent as the seller, buyer, or issuer. | ||
(b) The controlling person is not liable under Subsection | ||
(a) if the controlling person sustains the burden of proof that the | ||
controlling person did not know, and in the exercise of reasonable | ||
care could not have known, of the existence of the facts by reason | ||
of which the liability is alleged to exist. | ||
(c) A person who directly or indirectly with intent to | ||
deceive or defraud or with reckless disregard for the truth or the | ||
law materially aids a seller, buyer, or issuer of a security is | ||
liable under Section 4008.051, 4008.052, 4008.053, or 4008.054 | ||
jointly and severally with the seller, buyer, or issuer and to the | ||
same extent as the seller, buyer, or issuer. | ||
(d) There is contribution under this section as in cases of | ||
contract among the several persons who are liable. (V.A.C.S. Art. | ||
581-33, Subsec. F.) | ||
Sec. 4008.056. RESCISSION. (a) On rescission under this | ||
subchapter, a buyer of a security shall, on tender of the security | ||
or a security of the same class and series, recover the | ||
consideration the buyer paid for the security plus interest on the | ||
consideration at the legal rate from the date the buyer made the | ||
payment, less the amount of any income the buyer received on the | ||
security. | ||
(b) On rescission under this subchapter, a seller of a | ||
security shall recover the security or a security of the same class | ||
and series, on tender of the consideration the seller received for | ||
the security plus interest on the consideration at the legal rate | ||
from the date the seller received the payment, less the amount of | ||
any income the buyer received on the security. | ||
(c) For a buyer suing under Section 4008.054, the | ||
consideration the buyer paid for the security is deemed to be the | ||
lesser of: | ||
(1) the price the buyer paid; or | ||
(2) the price at which the security was offered to the | ||
public. | ||
(d) A tender specified in this section may be made at any | ||
time before a judgment is entered. (V.A.C.S. Art. 581-33, Subsec. | ||
D, Subdivs. (1), (2), (5), Subsec. E.) | ||
Sec. 4008.057. DAMAGES. (a) In damages under this | ||
subchapter, a buyer of a security shall recover the consideration | ||
the buyer paid for the security plus interest on the consideration | ||
at the legal rate from the date the buyer made the payment, less the | ||
greater of: | ||
(1) the value of the security at the time the buyer | ||
disposed of the security plus the amount of any income the buyer | ||
received on the security; or | ||
(2) the actual consideration received for the security | ||
at the time the buyer disposed of the security plus the amount of | ||
any income the buyer received on the security. | ||
(b) In damages under this subchapter, a seller of a security | ||
shall recover the value of the security at the time of sale plus the | ||
amount of any income the buyer received on the security, less the | ||
consideration paid to the seller for the security plus interest on | ||
the consideration at the legal rate from the date of payment to the | ||
seller. | ||
(c) For a buyer suing under Section 4008.054, the | ||
consideration the buyer paid for the security is deemed to be the | ||
lesser of: | ||
(1) the price the buyer paid; or | ||
(2) the price at which the security was offered to the | ||
public. (V.A.C.S. Art. 581-33, Subsec. D, Subdivs. (3), (4), (5).) | ||
Sec. 4008.058. REQUIREMENTS OF RESCISSION OFFER TO BUYERS. | ||
(a) A rescission offer is sufficient for purposes of Section | ||
4008.062(a) or (b) only if the offer meets the requirements of this | ||
section. | ||
(b) The offer must include financial and other information | ||
material to the offeree's decision whether to accept the offer. The | ||
offer may not contain an untrue statement of a material fact or an | ||
omission 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. | ||
(c) The offeror shall: | ||
(1) deposit funds in escrow in a state or national bank | ||
doing business in this state, or in another bank approved by the | ||
commissioner; or | ||
(2) receive an unqualified commitment from a bank | ||
described by Subdivision (1) to provide funds sufficient to pay the | ||
amount offered. | ||
(d) The amount of the offer to a buyer who still owns the | ||
security must be the amount, excluding costs and attorney's fees, | ||
the buyer would recover on rescission under Section 4008.056(a). | ||
(e) The amount of the offer to a buyer who no longer owns the | ||
security must be the amount, excluding costs and attorney's fees, | ||
the buyer would recover in damages under Section 4008.057(a). | ||
(f) The offer must state: | ||
(1) the amount of the offer, as determined under | ||
Subsection (d) or (e), which must be given: | ||
(A) to the extent practicable, in terms of a | ||
specified number of dollars and a specified rate of interest for a | ||
period starting at a specified date; and | ||
(B) to the extent necessary, in terms of | ||
specified elements, such as the value of the security when the | ||
offeree disposed of the security, that are known to the offeree but | ||
not to the offeror, subject to the provision of reasonable evidence | ||
by the offeree; | ||
(2) the name and address of the bank at which the | ||
amount of the offer will be paid; | ||
(3) that the offeree will receive the amount of the | ||
offer within a specified number of days that is not more than 30 | ||
days after the date the bank receives, in form reasonably | ||
acceptable to the offeror and in compliance with the instructions | ||
in the offer: | ||
(A) the security, if the offeree still owns the | ||
security, or evidence of the fact and date of disposition if the | ||
offeree no longer owns the security; and | ||
(B) evidence, if necessary, of elements | ||
described by Subdivision (1)(B); | ||
(4) in a conspicuous manner that the offeree may not | ||
sue on the offeree's purchase under this subchapter unless: | ||
(A) the offeree accepts the offer but does not | ||
receive the amount of the offer, in which case the offeree may sue | ||
within the time allowed by Section 4008.062(a)(1), (b)(1), or | ||
(b)(2), as applicable; or | ||
(B) the offeree rejects the offer in writing | ||
within 30 days of the date the offeree receives the offer and | ||
expressly reserves in the rejection the right to sue, in which case | ||
the offeree may sue not later than one year after the date of the | ||
rejection; | ||
(5) in reasonable detail, the nature of the violation | ||
of this title that occurred or may have occurred; and | ||
(6) any other information the offeror wants to | ||
include. (V.A.C.S. Art. 581-33, Subsec. I.) | ||
Sec. 4008.059. REQUIREMENTS OF RESCISSION OFFER TO SELLERS. | ||
(a) A rescission offer is sufficient for purposes of Section | ||
4008.062(c) only if the offer meets the requirements of this | ||
section. | ||
(b) The offer must include financial and other information | ||
material to the offeree's decision whether to accept the offer. The | ||
offer may not contain an untrue statement of a material fact or an | ||
omission 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. | ||
(c) The offeror shall deposit the securities in escrow in a | ||
state or national bank doing business in this state, or in another | ||
bank approved by the commissioner. | ||
(d) The terms of the offer must be the same, excluding costs | ||
and attorney's fees, as the seller would recover on rescission | ||
under Section 4008.056(b). | ||
(e) The offer must state: | ||
(1) the terms of the offer, as determined under | ||
Subsection (d), which must be given: | ||
(A) to the extent practicable, in terms of a | ||
specified number and kind of securities and a specified rate of | ||
interest for a period starting at a specified date; and | ||
(B) to the extent necessary, in terms of | ||
specified elements that are known to the offeree but not to the | ||
offeror, subject to the provision of reasonable evidence by the | ||
offeree; | ||
(2) the name and address of the bank at which the terms | ||
of the offer will be carried out; | ||
(3) that the offeree will receive the securities | ||
within a specified number of days that is not more than 30 days | ||
after the date the bank receives, in form reasonably acceptable to | ||
the offeror and in compliance with the instructions in the offer: | ||
(A) the amount required by the terms of the | ||
offer; and | ||
(B) evidence, if necessary, of elements | ||
described by Subdivision (1)(B); | ||
(4) in a conspicuous manner that the offeree may not | ||
sue on the offeree's sale under this subchapter unless: | ||
(A) the offeree accepts the offer but does not | ||
receive the securities, in which case the offeree may sue within the | ||
time allowed by Section 4008.062(c)(1) or (2), as applicable; or | ||
(B) the offeree rejects the offer in writing | ||
within 30 days of the date the offeree receives the offer and | ||
expressly reserves in the rejection the right to sue, in which case | ||
the offeree may sue not later than one year after the date of the | ||
rejection; | ||
(5) in reasonable detail, the nature of the violation | ||
of this title that occurred or may have occurred; and | ||
(6) any other information the offeror wants to | ||
include. (V.A.C.S. Art. 581-33, Subsec. J.) | ||
Sec. 4008.060. COSTS; ATTORNEY'S FEES. (a) On rescission | ||
or as a part of damages under this subchapter, a buyer or a seller of | ||
a security shall also recover costs. | ||
(b) On rescission or as a part of damages under this | ||
subchapter, a buyer or a seller of a security may also recover | ||
reasonable attorney's fees if the court finds that the recovery is | ||
equitable under the circumstances. (V.A.C.S. Art. 581-33, Subsec. | ||
D, Subdivs. (6), (7).) | ||
Sec. 4008.061. LIMITATION OF LIABILITY IN SMALL BUSINESS | ||
ISSUANCES. (a) In this section, "small business issuer" means an | ||
issuer that, at the time of an offer to which this section applies: | ||
(1) has annual gross revenues in an amount that does | ||
not exceed $25 million; and | ||
(2) does not have a class of equity securities | ||
registered, or required to be registered, with the Securities and | ||
Exchange Commission under Section 12, Securities Exchange Act of | ||
1934 (15 U.S.C. Section 78l). | ||
(b) This section applies only to: | ||
(1) an offer of securities in an aggregate amount that | ||
does not exceed $5 million made by a small business issuer or by the | ||
seller of securities of a small business issuer; and | ||
(2) a person who has been engaged to provide services | ||
relating to an offer of securities described by Subdivision (1), | ||
including an attorney, an accountant, a consultant, or the firm of | ||
the attorney, accountant, or consultant. | ||
(c) In an action or series of actions under this subchapter | ||
relating to an offer of securities to which this section applies, | ||
the maximum amount that may be recovered against a person to whom | ||
this section applies is three times the fee paid by the small | ||
business issuer or other seller to the person for the services | ||
related to the offer of securities, unless the trier of fact finds | ||
the person engaged in intentional wrongdoing in providing the | ||
services. | ||
(d) A small business issuer making an offer of securities | ||
shall: | ||
(1) provide to the prospective buyer a written | ||
disclosure of the limitation of liability created by this section; | ||
and | ||
(2) receive a signed acknowledgment that the | ||
disclosure was provided. (V.A.C.S. Art. 581-33, Subsec. N.) | ||
Sec. 4008.062. STATUTE OF LIMITATIONS. (a) A person may | ||
not sue under Section 4008.051 or 4008.055 to the extent that | ||
section relates to Section 4008.051: | ||
(1) more than three years after the date of the sale; | ||
(2) if the person received a rescission offer meeting | ||
the requirements of Section 4008.058 before suit, unless the | ||
person: | ||
(A) rejected the offer in writing within 30 days | ||
of the date the person received the offer; and | ||
(B) expressly reserved in the rejection the right | ||
to sue; or | ||
(3) more than one year after the date the person so | ||
rejected a rescission offer meeting the requirements of Section | ||
4008.058. | ||
(b) A person may not sue under Section 4008.052, 4008.054, | ||
or 4008.055 to the extent that section relates to Section 4008.052 | ||
or 4008.054: | ||
(1) more than three years after the date of discovery | ||
of the untruth or omission, or after the date discovery should have | ||
been made by the exercise of reasonable diligence; | ||
(2) more than five years after the date of the sale; | ||
(3) if the person received a rescission offer meeting | ||
the requirements of Section 4008.058 before suit, unless the | ||
person: | ||
(A) rejected the offer in writing within 30 days | ||
of the date the person received the offer; and | ||
(B) expressly reserved in the rejection the right | ||
to sue; or | ||
(4) more than one year after the date the person so | ||
rejected a rescission offer meeting the requirements of Section | ||
4008.058. | ||
(c) A person may not sue under Section 4008.053 or 4008.055 | ||
to the extent that section relates to Section 4008.053: | ||
(1) more than three years after the date of discovery | ||
of the untruth or omission, or after the date discovery should have | ||
been made by the exercise of reasonable diligence; | ||
(2) more than five years after the date of the | ||
purchase; | ||
(3) if the person received a rescission offer meeting | ||
the requirements of Section 4008.059 before suit, unless the | ||
person: | ||
(A) rejected the offer in writing within 30 days | ||
of the date the person received the offer; and | ||
(B) expressly reserved in the rejection the right | ||
to sue; or | ||
(4) more than one year after the date the person so | ||
rejected a rescission offer meeting the requirements of Section | ||
4008.059. (V.A.C.S. Art. 581-33, Subsec. H.) | ||
SUBCHAPTER C. CIVIL LIABILITY OF INVESTMENT ADVISERS AND | ||
INVESTMENT ADVISER REPRESENTATIVES | ||
Sec. 4008.101. INVESTMENT ADVISER OR INVESTMENT ADVISER | ||
REPRESENTATIVE LIABILITY. (a) An investment adviser or investment | ||
adviser representative who renders services as an investment | ||
adviser in violation of Section 4004.052 or 4004.102(a) or an order | ||
under Section 4007.102 or 4007.104 is liable to the purchaser, who | ||
may sue for damages in the amount of any consideration paid for the | ||
services. | ||
(b) Except as provided by Subsection (c), an investment | ||
adviser or investment adviser representative who commits fraud or | ||
engages in a fraudulent practice in rendering services as an | ||
investment adviser is liable to the purchaser, who may sue for | ||
damages. | ||
(c) An investment adviser or investment adviser | ||
representative who in rendering services as an investment adviser | ||
makes an untrue statement of a material fact or omits to state a | ||
material fact necessary in order to make the statement made, in | ||
light of the circumstances under which the statement is made, not | ||
misleading is not liable under Subsection (b) if the adviser or | ||
representative proves: | ||
(1) the purchaser knew of the truth or omission; or | ||
(2) the adviser or representative did not know, and in | ||
the exercise of reasonable care could not have known, of the untruth | ||
or omission. (V.A.C.S. Art. 581-33-1, Subsecs. A, C.) | ||
Sec. 4008.102. CONTROLLING PERSON OR AIDER LIABILITY. (a) | ||
Except as provided by Subsection (b), a person who directly or | ||
indirectly controls an investment adviser is jointly and severally | ||
liable with the investment adviser under this subchapter and to the | ||
same extent as the investment adviser. | ||
(b) The controlling person is not liable under Subsection | ||
(a) if the controlling person sustains the burden of proof that the | ||
controlling person did not know, and in the exercise of reasonable | ||
care could not have known, of the existence of the facts by reason | ||
of which liability is alleged to exist. | ||
(c) A person who directly or indirectly with intent to | ||
deceive or defraud or with reckless disregard for the truth or the | ||
law materially aids an investment adviser in conduct for which a | ||
cause of action is authorized by this subchapter is jointly and | ||
severally liable with the investment adviser in an action to | ||
recover damages under this subchapter. (V.A.C.S. Art. 581-33-1, | ||
Subsec. E.) | ||
Sec. 4008.103. DAMAGES. In damages under Section | ||
4008.101(b), the purchaser is entitled to recover: | ||
(1) the amount of any consideration paid for the | ||
services, less the amount of any income the purchaser received from | ||
acting on the services; | ||
(2) any loss incurred by the purchaser in acting on the | ||
services provided by the investment adviser or investment adviser | ||
representative; | ||
(3) interest at the legal rate for judgments accruing | ||
from the date the purchaser paid the consideration; and | ||
(4) to the extent the court considers equitable, court | ||
costs and reasonable attorney's fees. (V.A.C.S. Art. 581-33-1, | ||
Subsec. B.) | ||
Sec. 4008.104. STATUTE OF LIMITATIONS. (a) A person may | ||
not sue under Section 4008.101(a) more than three years after the | ||
date the violation occurs. | ||
(b) A person may not sue under Section 4008.101(b) more | ||
than: | ||
(1) five years after the date the violation occurs; or | ||
(2) three years after the date the person knew or | ||
should have known, by the exercise of reasonable diligence, of the | ||
occurrence of the violation. (V.A.C.S. Art. 581-33-1, Subsec. D.) | ||
Sec. 4008.105. REMEDY NOT EXCLUSIVE. A remedy provided by | ||
this subchapter is not exclusive of any other applicable remedy | ||
provided by law. (V.A.C.S. Art. 581-33-1, Subsec. F.) | ||
ARTICLE 2. CONFORMING AMENDMENTS | ||
SECTION 2.01. Section 52.063(c), Agriculture Code, is | ||
amended to read as follows: | ||
(c) A marketing association may not sell and issue shares of | ||
preferred stock to a person who is not a member of the association | ||
unless the association first complies with The Securities Act | ||
(Title 12, Government Code) [ |
||
|
||
SECTION 2.02. Section 58.034(b), Agriculture Code, is | ||
amended to read as follows: | ||
(b) The bonds issued under this chapter and interest | ||
coupons, if any, are investment securities under the terms of | ||
Chapter 8, Business & Commerce Code. The bonds are exempt | ||
securities under The Securities Act (Title 12, Government Code) | ||
[ |
||
unless specifically provided otherwise, under any subsequently | ||
enacted securities act. Any contract, guaranty, or any other | ||
document executed in connection with the issuance of bonds pursuant | ||
to this chapter is not a security under The Securities Act (Title | ||
12, Government Code) [ |
||
|
||
subsequently enacted securities act. The board is authorized to do | ||
all things necessary to qualify the bonds for offer and sale under | ||
the securities laws and regulations of the United States and of the | ||
states and other jurisdictions in the United States as the board | ||
shall determine. | ||
SECTION 2.03. Section 302.053, Business & Commerce Code, is | ||
amended to read as follows: | ||
Sec. 302.053. EXEMPTION: PERSONS REGULATED BY OTHER LAW. | ||
This chapter does not apply to: | ||
(1) a person offering or selling a security that has | ||
been qualified for sale under Chapter 4003, Government Code | ||
[ |
||
|
||
Government Code [ |
||
(2) a publicly traded corporation registered with the | ||
Securities and Exchange Commission or the State Securities Board, | ||
or a subsidiary or agent of the corporation; | ||
(3) a person who holds a license issued under the | ||
Insurance Code if the solicited transaction is governed by that | ||
code; | ||
(4) a supervised financial institution or a parent, a | ||
subsidiary, or an affiliate of a supervised financial institution; | ||
(5) a person whose business is regulated by the Public | ||
Utility Commission of Texas or an affiliate of that person, except | ||
that this chapter applies to such a person or affiliate only with | ||
respect to one or more automated dial announcing devices; | ||
(6) a person subject to the control or licensing | ||
regulations of the Federal Communications Commission; | ||
(7) a person selling a contractual plan regulated by | ||
the Federal Trade Commission trade regulation on use of negative | ||
option plans by sellers in commerce under 16 C.F.R. Part 425; | ||
(8) a person subject to filing requirements under | ||
Chapter 1803, Occupations Code; or | ||
(9) a person who: | ||
(A) is soliciting a transaction regulated by the | ||
Commodity Futures Trading Commission; and | ||
(B) is registered or holds a temporary license | ||
for the activity described by Paragraph (A) with the Commodity | ||
Futures Trading Commission under the Commodity Exchange Act (7 | ||
U.S.C. Section 1 et seq.), if the registration or license has not | ||
expired or been suspended or revoked. | ||
SECTION 2.04. Section 304.002(3), Business & Commerce Code, | ||
is amended to read as follows: | ||
(3) "Consumer good or service" means property of any | ||
kind that is normally used for personal, family, or household | ||
purposes. The term does not include a security, as defined by | ||
Section 4001.068, Government Code [ |
||
|
||
SECTION 2.05. Section 23.052, Business Organizations Code, | ||
is amended to read as follows: | ||
Sec. 23.052. ORGANIZERS. Subject to The Securities Act | ||
(Title 12, Government Code) [ |
||
|
||
residents of this state, may form a business development | ||
corporation to promote, develop, and advance the prosperity and | ||
economic welfare of this state. | ||
SECTION 2.06. Article 59.01(2), Code of Criminal Procedure, | ||
is amended to read as follows: | ||
(2) "Contraband" means property of any nature, | ||
including real, personal, tangible, or intangible, that is: | ||
(A) used in the commission of: | ||
(i) any first or second degree felony under | ||
the Penal Code; | ||
(ii) any felony under Section 15.031(b), | ||
20.05, 20.06, 21.11, 38.04, or Chapter 43, 20A, 29, 30, 31, 32, 33, | ||
33A, or 35, Penal Code; | ||
(iii) any felony under The Securities Act | ||
(Title 12, Government Code) [ |
||
|
||
(iv) any offense under Chapter 49, Penal | ||
Code, that is punishable as a felony of the third degree or state | ||
jail felony, if the defendant has been previously convicted three | ||
times of an offense under that chapter; | ||
(B) used or intended to be used in the commission | ||
of: | ||
(i) any felony under Chapter 481, Health | ||
and Safety Code (Texas Controlled Substances Act); | ||
(ii) any felony under Chapter 483, Health | ||
and Safety Code; | ||
(iii) a felony under Chapter 151, Finance | ||
Code; | ||
(iv) any felony under Chapter 34, Penal | ||
Code; | ||
(v) a Class A misdemeanor under Subchapter | ||
B, Chapter 365, Health and Safety Code, if the defendant has been | ||
previously convicted twice of an offense under that subchapter; | ||
(vi) any felony under Chapter 32, Human | ||
Resources Code, or Chapter 31, 32, 35A, or 37, Penal Code, that | ||
involves the state Medicaid program; | ||
(vii) a Class B misdemeanor under Chapter | ||
522, Business & Commerce Code; | ||
(viii) a Class A misdemeanor under Section | ||
306.051, Business & Commerce Code; | ||
(ix) any offense under Section 42.10, Penal | ||
Code; | ||
(x) any offense under Section 46.06(a)(1) | ||
or 46.14, Penal Code; | ||
(xi) any offense under Chapter 71, Penal | ||
Code; | ||
(xii) any offense under Section 20.05 or | ||
20.06, Penal Code; or | ||
(xiii) an offense under Section 326.002, | ||
Business & Commerce Code; | ||
(C) the proceeds gained from the commission of a | ||
felony listed in Paragraph (A) or (B) of this subdivision, a | ||
misdemeanor listed in Paragraph (B)(vii), (ix), (x), or (xi) of | ||
this subdivision, or a crime of violence; | ||
(D) acquired with proceeds gained from the | ||
commission of a felony listed in Paragraph (A) or (B) of this | ||
subdivision, a misdemeanor listed in Paragraph (B)(vii), (ix), (x), | ||
or (xi) of this subdivision, or a crime of violence; | ||
(E) used to facilitate or intended to be used to | ||
facilitate the commission of a felony under Section 15.031 or | ||
43.25, Penal Code; or | ||
(F) used to facilitate or intended to be used to | ||
facilitate the commission of a felony under Section 20A.02 or | ||
Chapter 43, Penal Code. | ||
SECTION 2.07. Section 54.6385, Education Code, is amended | ||
to read as follows: | ||
Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The | ||
registration requirements of The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
the board or by a registered securities dealer or registered | ||
investment adviser. | ||
SECTION 2.08. Section 54.768, Education Code, is amended to | ||
read as follows: | ||
Sec. 54.768. EXEMPTION FROM SECURITIES LAWS. The | ||
registration requirements of The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
the board or by a registered securities dealer or registered | ||
investment adviser. | ||
SECTION 2.09. Section 54.907, Education Code, is amended to | ||
read as follows: | ||
Sec. 54.907. EXEMPTION FROM SECURITIES LAWS. An ABLE | ||
account is not a security within the meaning of the term as defined | ||
by Section 4001.068, Government Code [ |
||
|
||
the provisions of The Securities Act (Title 12, Government Code) | ||
[ |
||
SECTION 2.10. Section 255.251(1), Estates Code, is amended | ||
to read as follows: | ||
(1) "Securities" has the meaning assigned by Section | ||
4001.068, Government Code [ |
||
|
||
SECTION 2.11. Section 31.007(a), Finance Code, is amended | ||
to read as follows: | ||
(a) An officer, director, or employee of a bank that has its | ||
main office or a branch located in this state with fewer than 500 | ||
shareholders or of a bank holding company with fewer than 500 | ||
shareholders that controls a bank that has its main office or a | ||
branch located in this state is exempt from the registration and | ||
licensing provisions of The Securities Act (Title 12, Government | ||
Code) [ |
||
respect to that person's participation in a transaction, including | ||
a sale, involving securities issued by: | ||
(1) the bank or bank holding company of which that | ||
person is an officer, director, or employee; | ||
(2) a bank holding company that controls the bank of | ||
which that person is an officer, director, or employee; or | ||
(3) a bank controlled by the bank holding company of | ||
which that person is an officer, director, or employee. | ||
SECTION 2.12. Section 89.005, Finance Code, is amended to | ||
read as follows: | ||
Sec. 89.005. EXEMPTION FROM SECURITIES LAWS. A savings | ||
account, certificate, or other evidence of an interest in the | ||
savings liability of an association or federal association is not | ||
considered a security under The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
interest in the savings liability of an association, is not subject | ||
to the registration requirements of that act. A person whose | ||
principal occupation is being an officer of an association is | ||
exempt from the registration and licensing provisions of that act | ||
with respect to that person's participation in a sale or other | ||
transaction involving securities of the association of which the | ||
person is an officer. | ||
SECTION 2.13. Section 119.007, Finance Code, is amended to | ||
read as follows: | ||
Sec. 119.007. EXEMPTION FROM SECURITIES LAWS. A deposit | ||
account, certificate, or other evidence of an interest in the | ||
deposit liability of a savings bank or federal savings bank is not | ||
considered a security under The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
interest in the deposit liability of a savings bank, is not subject | ||
to the registration requirements of that Act. A person whose | ||
principal occupation is being an officer of a savings bank is exempt | ||
from the registration and licensing provisions of that Act with | ||
respect to that person's participation in a sale or other | ||
transaction involving securities of the savings bank of which the | ||
person is an officer. | ||
SECTION 2.14. Section 149.002(c), Finance Code, is amended | ||
to read as follows: | ||
(c) In this section, "security" has the meaning assigned by | ||
Section 4001.068, Government Code [ |
||
|
||
SECTION 2.15. Section 181.006, Finance Code, is amended to | ||
read as follows: | ||
Sec. 181.006. EXEMPTION OF TRUST INSTITUTION DIRECTORS AND | ||
PERSONNEL FROM SECURITIES LAW. An officer, director, manager, | ||
managing participant, or employee of a trust institution with fewer | ||
than 500 shareholders or participants, including a state trust | ||
company or a trust institution organized under the laws of another | ||
state that lawfully maintains an office in this state, or a holding | ||
company with fewer than 500 shareholders or participants that | ||
controls a trust institution is exempt from the registration and | ||
licensing provisions of The Securities Act (Title 12, Government | ||
Code) [ |
||
respect to that person's participation in a transaction, including | ||
a sale, involving securities issued by the trust institution or the | ||
holding company of which that person is an officer, director, | ||
manager, managing participant, or employee if the person is not | ||
compensated for the person's participation in the transaction. | ||
SECTION 2.16. Section 273.004, Finance Code, is amended to | ||
read as follows: | ||
Sec. 273.004. EXEMPTION FROM SECURITIES ACT. (a) A | ||
security issued by the corporation under this chapter is not | ||
considered a "security" under The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
(b) A person authorized by and acting on behalf of the | ||
corporation is exempt from the registration and licensing | ||
provisions of The Securities Act (Title 12, Government Code) | ||
[ |
||
respect to that person's participation in a sale or other | ||
transaction involving a security of the corporation. | ||
SECTION 2.17. Section 103.033, Government Code, is amended | ||
to read as follows: | ||
Sec. 103.033. MISCELLANEOUS FEES AND COSTS: THE | ||
SECURITIES ACT. A fee shall be collected for the sale of | ||
securities under an offering that has not been registered, if the | ||
transaction or securities are not exempt under Section 4006.153 | ||
[ |
||
|
||
court, but not to exceed six times the amount that would have been | ||
paid if the issuer had filed an application to register the | ||
securities and paid the fee prescribed based on the amount of sales | ||
made in this state within the prior three years, plus interest on | ||
that amount from the date of the first sale made in this state until | ||
the date the fee is paid. | ||
SECTION 2.18. Section 411.139, Government Code, is amended | ||
to read as follows: | ||
Sec. 411.139. ACCESS TO CRIMINAL HISTORY RECORD | ||
INFORMATION: STATE SECURITIES BOARD. (a) The securities | ||
commissioner is entitled to obtain from the department criminal | ||
history record information maintained by the department that | ||
relates to a person who is: | ||
(1) an applicant for a certificate of registration | ||
under The Securities Act (Title 12, Government Code) [ |
||
|
||
(2) a holder of a certificate of registration under | ||
The Securities Act (Title 12, Government Code) [ |
||
|
||
(3) an applicant for employment by the State | ||
Securities Board; or | ||
(4) an employee of the State Securities Board. | ||
(b) Criminal history record information obtained by the | ||
securities commissioner under this section may not be released by | ||
any person or agency except on court order or with the consent of | ||
the person who is the subject of the criminal history record | ||
information, unless the information is entered into evidence by the | ||
State Securities Board or a court at an administrative proceeding | ||
or a civil or criminal action under The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
SECTION 2.19. Section 552.112(b), Government Code, is | ||
amended to read as follows: | ||
(b) In this section, "securities" has the meaning assigned | ||
by The Securities Act (Title 12, Government Code) [ |
||
|
||
SECTION 2.20. Section 815.301(f), Government Code, is | ||
amended to read as follows: | ||
(f) For purposes of the investment authority of the board of | ||
trustees under Section 67, Article XVI, Texas Constitution, | ||
"securities" means any investment instrument within the meaning of | ||
the term as defined by Section 4001.068 [ |
||
|
||
77b(a)(1), or 15 U.S.C. Section 78c(a)(10). | ||
SECTION 2.21. Section 825.301(a), Government Code, is | ||
amended to read as follows: | ||
(a) The board of trustees shall invest and reinvest assets | ||
of the retirement system without distinction as to their source in | ||
accordance with Section 67, Article XVI, Texas Constitution. For | ||
purposes of the investment authority of the board of trustees under | ||
Section 67, Article XVI, Texas Constitution, "securities" includes | ||
any investment instrument within the meaning of the term as defined | ||
by Section 4001.068 [ |
||
|
||
Section 78c(a)(10), any derivative instrument, and any other | ||
instrument commonly used by institutional investors to manage | ||
institutional investment portfolios. An interest in a limited | ||
partnership or investment contract is considered a security without | ||
regard to the number of investors or the control, access to | ||
information, or rights granted to or retained by the retirement | ||
system. Any instrument or contract intended to manage transaction | ||
or currency exchange risk in purchasing, selling, or holding | ||
securities is considered to be a security. Investment decisions | ||
are subject to the standard provided in the Texas Trust Code by | ||
Section 117.004(b), Property Code. | ||
SECTION 2.22. Section 840.301(c), Government Code, is | ||
amended to read as follows: | ||
(c) For purposes of the investment authority of the board of | ||
trustees under Section 67, Article XVI, Texas Constitution, | ||
"securities" means any investment instrument within the meaning of | ||
the term as defined by Section 4001.068 [ |
||
|
||
77b(a)(1), or 15 U.S.C. Section 78c(a)(10). | ||
SECTION 2.23. Section 845.301(a), Government Code, is | ||
amended to read as follows: | ||
(a) The assets of the retirement system shall be invested | ||
and reinvested without distinction as to their source in accordance | ||
with Section 67, Article XVI, Texas Constitution. For purposes of | ||
the investment authority of the board of trustees under Section 67, | ||
Article XVI, Texas Constitution, "securities" means any investment | ||
instrument within the meaning of the term as defined by Section | ||
4001.068 [ |
||
|
||
78c(a)(10). An interest in a limited partnership or investment | ||
contract is considered a security without regard to the number of | ||
investors or the control, access to information, or rights granted | ||
to or retained by the retirement system. Any instrument or | ||
contract intended to manage transaction, currency exchange, or | ||
interest rate risk in purchasing, selling, or holding securities, | ||
or that derives all or substantially all of its value from the value | ||
or performance of one or more securities, including an index or | ||
group of securities, is considered to be a security. Investment | ||
decisions are subject to the standard provided in the Texas Trust | ||
Code by Section 117.004(b), Property Code. | ||
SECTION 2.24. Section 855.301(a), Government Code, is | ||
amended to read as follows: | ||
(a) The board of trustees shall invest and reinvest the | ||
assets of the retirement system without distinction as to their | ||
source in accordance with Section 67, Article XVI, Texas | ||
Constitution. For purposes of the investment authority of the | ||
board of trustees under Section 67, Article XVI, Texas | ||
Constitution, "security" means any investment instrument within | ||
the meaning of the term as defined by Section 4001.068 [ |
||
|
||
U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10). | ||
SECTION 2.25. Section 1371.154(b), Government Code, is | ||
amended to read as follows: | ||
(b) To be eligible to be a financial adviser or an | ||
investment adviser under this subchapter, the adviser must: | ||
(1) be registered: | ||
(A) as a dealer or investment adviser in | ||
accordance with Section 4004.051, 4004.052, or 4004.302 [ |
||
|
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|
||
(B) with the United States Securities and | ||
Exchange Commission under the Investment Advisers Act of 1940 (15 | ||
U.S.C. Section 80b-1 et seq.), if the adviser is providing advice on | ||
the investment of bond proceeds and not on the issuance of a public | ||
security or an interest rate management agreement; or | ||
(C) with the United States Securities and | ||
Exchange Commission as a municipal advisor under Section 15B, | ||
Securities Exchange Act of 1934 (15 U.S.C. Section 78o-4); | ||
(2) have relevant experience in providing advice to | ||
issuers in connection with: | ||
(A) the issuance of public securities; | ||
(B) the valuation of interest rate management | ||
agreements; or | ||
(C) the investment of public security proceeds; | ||
and | ||
(3) acknowledge in writing to the issuer that in | ||
connection with the transaction for which the adviser is providing | ||
advice the adviser: | ||
(A) is acting as the issuer's agent; and | ||
(B) has complied with the requirements of this | ||
subchapter. | ||
SECTION 2.26. Sections 1433.069(b) and (c), Government | ||
Code, are amended to read as follows: | ||
(b) A bond issued under this chapter and any coupon | ||
representing interest on the bond are exempt securities under The | ||
Securities Act (Title 12, Government Code) [ |
||
|
||
(c) A lease agreement under this chapter is not a security | ||
under The Securities Act (Title 12, Government Code) [ |
||
|
||
SECTION 2.27. Section 2306.556(b), Government Code, is | ||
amended to read as follows: | ||
(b) A bond or other obligation issued by the corporation is | ||
an exempt security under The Securities Act (Title 12, Government | ||
Code) [ |
||
unless specifically provided otherwise, under any subsequently | ||
enacted securities act. Any contract, guaranty, or other document | ||
executed in connection with the issuance of the bond or other | ||
obligation is not an exempt security under that Act, and unless | ||
specifically provided otherwise, under any subsequently enacted | ||
securities act. | ||
SECTION 2.28. Section 221.067, Health and Safety Code, is | ||
amended to read as follows: | ||
Sec. 221.067. EXEMPT SECURITIES. (a) Bonds issued under | ||
this chapter and any interest coupons are exempt securities under | ||
The Securities Act (Title 12, Government Code) [ |
||
|
||
(b) If the bonds are secured by an agreement by a user to pay | ||
to the development corporation amounts sufficient to pay the | ||
principal of and interest and any redemption premium on the bonds, | ||
the agreement, for the purposes of The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
bonds by the user, and not by the corporation. The agreement is | ||
exempt from that Act only if: | ||
(1) that Act exempts the agreement; or | ||
(2) the bonds or the payments to be made under the | ||
agreement are guaranteed by any person and the guarantee is an | ||
exempt security under that Act. | ||
SECTION 2.29. Section 223.036(a), Health and Safety Code, | ||
is amended to read as follows: | ||
(a) Bonds issued under this chapter and any interest coupons | ||
are investment securities under Chapter 8, Business & Commerce | ||
Code, and are exempt securities under The Securities Act (Title 12, | ||
Government Code) [ |
||
|
||
SECTION 2.30. Section 826.204(b), Insurance Code, is | ||
amended to read as follows: | ||
(b) A membership interest in a mutual holding company does | ||
not constitute a security as defined by Section 4001.068, | ||
Government Code [ |
||
|
||
SECTION 2.31. Section 829.007, Insurance Code, is amended | ||
to read as follows: | ||
Sec. 829.007. SALE OF SECURITIES. (a) A sale, issuance, or | ||
offering of securities under this chapter is exempt from the | ||
registration and licensing provisions of The Securities Act (Title | ||
12, Government Code) [ |
||
|
||
(b) An officer, director, or employee of an exchange, an | ||
intermediate holding company, a mutual holding company, or a | ||
resulting company who participates in a conversion under this | ||
chapter is exempt from the registration and licensing provisions of | ||
The Securities Act (Title 12, Government Code) [ |
||
|
||
compensation, other than that person's usual salary or | ||
compensation, for services performed under the exemption provided | ||
by this subsection. | ||
SECTION 2.32. Section 829.152(b), Insurance Code, is | ||
amended to read as follows: | ||
(b) A membership interest in a mutual holding company does | ||
not constitute a security as defined by Section 4001.068, | ||
Government Code [ |
||
|
||
SECTION 2.33. Section 882.756, Insurance Code, is amended | ||
to read as follows: | ||
Sec. 882.756. SALE OF SECURITIES. (a) A sale, issuance, or | ||
offering of securities under this subchapter is exempt from the | ||
registration and licensing provisions of The Securities Act (Title | ||
12, Government Code) [ |
||
|
||
(b) An officer, director, or employee of a mutual life | ||
insurance company or a mutual insurance holding company or stock | ||
life insurance company resulting from a conversion under this | ||
subchapter who participates in the conversion is exempt from the | ||
registration and licensing provisions of The Securities Act (Title | ||
12, Government Code) [ |
||
|
||
person's usual salary or compensation, for services performed under | ||
the exemption provided by this subsection. | ||
SECTION 2.34. Section 884.002(d), Insurance Code, is | ||
amended to read as follows: | ||
(d) The Securities Act (Title 12, Government Code) | ||
[ |
||
a stipulated premium company. | ||
SECTION 2.35. Section 884.203, Insurance Code, is amended | ||
to read as follows: | ||
Sec. 884.203. PUBLIC OFFERING OF CAPITAL STOCK. A | ||
stipulated premium company may not make to the public an offering | ||
that is subject to The Securities Act (Title 12, Government Code) | ||
[ |
||
its capital stock before the company possesses: | ||
(1) capital in an amount of at least $100,000; and | ||
(2) unencumbered surplus in an amount of at least | ||
$100,000. | ||
SECTION 2.36. Section 394.056(a), Local Government Code, is | ||
amended to read as follows: | ||
(a) A bond issued under this chapter or a coupon | ||
representing interest on the bond is, when delivered, a security as | ||
that term is defined under Chapter 8 of the Uniform Commercial Code | ||
(Chapter 8, Title 1, Business & Commerce Code) and is an exempt | ||
security under The Securities Act (Title 12, Government Code) | ||
[ |
||
SECTION 2.37. Section 501.203, Local Government Code, is | ||
amended to read as follows: | ||
Sec. 501.203. SECURITIES COMMISSIONER PERMIT TO SELL | ||
SECURITIES REQUIRED. A corporation may not sell or offer for sale | ||
bonds or other securities until the securities commissioner grants | ||
a permit authorizing the corporation to offer and sell the bonds or | ||
other securities under the registration provisions of The | ||
Securities Act (Title 12, Government Code) [ |
||
|
||
registration by rule or order of the State Securities | ||
Board. Appeal from an adverse decision of the securities | ||
commissioner or the State Securities Board is under the | ||
administrative procedure law, Chapter 2001, Government Code. The | ||
substantial evidence rule applies in an appeal under this | ||
subsection. | ||
SECTION 2.38. Section 901.457(b), Occupations Code, is | ||
amended to read as follows: | ||
(b) This section does not prohibit a license holder from | ||
disclosing information that is required to be disclosed: | ||
(1) by the professional standards for reporting on the | ||
examination of a financial statement; | ||
(2) under a summons or subpoena under the provisions | ||
of the Internal Revenue Code of 1986 and its subsequent amendments, | ||
the Securities Act of 1933 (15 U.S.C. Section 77a et seq.) and its | ||
subsequent amendments, the Securities Exchange Act of 1934 (15 | ||
U.S.C. Section 78a et seq.) and its subsequent amendments, or The | ||
Securities Act (Title 12, Government Code) [ |
||
|
||
(3) under a court order signed by a judge if the order: | ||
(A) is addressed to the license holder; | ||
(B) mentions the client by name; and | ||
(C) requests specific information concerning the | ||
client; | ||
(4) in an investigation or proceeding conducted by the | ||
board; | ||
(5) in an ethical investigation conducted by a | ||
professional organization of certified public accountants; | ||
(6) in the course of a peer review under Section | ||
901.159 or in accordance with the requirements of the Public | ||
Company Accounting Oversight Board or its successor; or | ||
(7) in the course of a practice review by another | ||
certified public accountant or certified public accountancy firm | ||
for a potential acquisition or merger of one firm with another, if | ||
both firms enter into a nondisclosure agreement with regard to all | ||
client information shared between the firms. | ||
SECTION 2.39. Section 221.025(a), Property Code, is amended | ||
to read as follows: | ||
(a) A developer's compliance with this chapter exempts the | ||
developer's offer and disposition of timeshare interests subject to | ||
this chapter from securities and dealer registration under The | ||
Securities Act (Title 12, Government Code) [ |
||
|
||
SECTION 2.40. Section 222.013, Property Code, is amended to | ||
read as follows: | ||
Sec. 222.013. EXEMPT FROM SECURITIES ACT. The filing of a | ||
registration under this chapter exempts the sale of a membership | ||
interest or membership right in a membership camping resort subject | ||
to this chapter from registration under The Securities Act (Title | ||
12, Government Code) [ |
||
|
||
SECTION 2.41. Section 171.055, Tax Code, is amended to read | ||
as follows: | ||
Sec. 171.055. EXEMPTION--OPEN-END INVESTMENT COMPANY. An | ||
open-end investment company, as defined by the Investment Company | ||
Act of 1940 (15 U.S.C. Section 80a-1 et seq.[ |
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subject to that Act and that is registered under The Securities Act | ||
(Title 12, Government Code) [ |
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SECTION 2.42. Section 161.063, Utilities Code, is amended | ||
to read as follows: | ||
Sec. 161.063. EXEMPTION FROM APPLICATION OF SECURITIES ACT. | ||
The Securities Act (Title 12, Government Code) [ |
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(1) an obligation issued to secure a debt of an | ||
electric cooperative to the United States; or | ||
(2) the issuance of a membership certificate by an | ||
electric cooperative. | ||
SECTION 2.43. Section 162.063, Utilities Code, is amended | ||
to read as follows: | ||
Sec. 162.063. EXEMPTION FROM APPLICATION OF SECURITIES ACT. | ||
The Securities Act (Title 12, Government Code) [ |
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(1) a note, bond, or other evidence of indebtedness | ||
issued by a telephone cooperative doing business in this state to | ||
the United States; | ||
(2) an instrument executed to secure a debt of a | ||
telephone cooperative to the United States; or | ||
(3) the issuance of a membership certificate by a | ||
telephone cooperative or a foreign corporation doing business in | ||
this state under this chapter. | ||
SECTION 2.44. Section 67.015, Water Code, is amended to | ||
read as follows: | ||
Sec. 67.015. EXEMPTION FROM SECURITIES ACT. The Securities | ||
Act (Title 12, Government Code) [ |
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(1) a note, bond, or other evidence of indebtedness | ||
issued by a corporation doing business in this state to the United | ||
States; | ||
(2) an instrument executed to secure a debt of a | ||
corporation to the United States; or | ||
(3) the issuance of a membership certificate or stock | ||
certificate of a corporation. | ||
ARTICLE 3. REPEALER | ||
SECTION 3.01. The Securities Act (Article 581-1 et seq., | ||
Vernon's Texas Civil Statutes) is repealed. | ||
ARTICLE 4. GENERAL MATTERS | ||
SECTION 4.01. This Act is enacted under Section 43, Article | ||
III, Texas Constitution. This Act is intended as a recodification | ||
only, and no substantive change in law is intended by this Act. | ||
SECTION 4.02. This Act takes effect January 1, 2022. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 4171 was passed by the House on May 3, | ||
2019, by the following vote: Yeas 140, Nays 0, 2 present, not | ||
voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 4171 was passed by the Senate on May | ||
21, 2019, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: _____________________ | ||
Date | ||
_____________________ | ||
Governor |