Part VII.
State Securities Board
Chapter 105.
Rules of Practice in Contested Cases
7 TAC §§105.1-105.10
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the State Securities Board or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of
§§105.1-105.10, concerning rules of practice in contested cases.
Repeal of the existing Chapter 105 will allow for the simultaneous adoption
of a new Chapter 105, which is being concurrently proposed.
John R. Morgan, Deputy Securities Commissioner, David Grauer, Director,
Enforcement Division, and Michael S. Gunst, Director, Dealer Registration
Division have determined that for the first five-year period the repeals
are in effect there will be no fiscal implications for state or local government
as a result of enforcing or administering the repeals.
Messrs. Morgan, Grauer, and Gunst also have determined that for each year
of the first five years the repeals are in effect the public benefit anticipated
as a result of enforcing the repeals will be the elimination of outdated
procedures. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the repeals as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The repeals are proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The repeals affect Texas Civil Statutes, Articles 581-14, 581-23, and
581-24.
§105.1. Scope.
§105.2. Notice.
§105.3. Presiding Officer or Body.
§105.4. Appearance.
§105.5. Postponements.
§105.6. Written Answers, Briefs, and Stipulations.
§105.7. Presentation of Evidence.
§105.8. Subpoenas and Depositions.
§105.9. Disposition.
§105.10. Record.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700897
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §§105.1-105.19
The State Securities Board proposes new §§105.1-105.19,
concerning rules of practice in contested cases. The existing Chapter 105
is being concurrently proposed for repeal.
John R. Morgan, Deputy Securities Commissioner, David Grauer, Director,
Enforcement Division, and Michael S. Gunst, Director, Dealer Registration
Division, have determined that for the first five-year period the rules are
in effect there will be no fiscal implications for state or local government
as a result of enforcing or administering the rules.
Messrs. Morgan, Grauer, and Gunst also have determined that for each year
of the first five years the rules are in effect the public benefit anticipated
as a result of enforcing the rules will be that the rules will reflect the
provisions of the Administrative Procedure Act and other requirements regarding
hearings in contested cases conducted by the State Office of Administrative
Hearings. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the rules as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The new rules are proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The new rules affect Texas Civil Statutes, Articles 581-14, 581-23, and
581-24.
§105.1. Scope.
These rules of practice are applicable to contested cases under the
Texas Securities Act (the "Act"). A "contested case" means a proceeding in
which the legal rights, duties, or privileges of a party are to be determined
after an opportunity for adjudicative hearing. A "party" means an applicant
for registration as a dealer or salesman under the Act, §§15 or
18, applicant for registration of securities under the Act, §7, or a
person named in an administrative action taken, or proposed to be taken by
the Securities Commissioner. In a contested case, each party is entitled
to an opportunity for hearing after reasonable notice of not less than 10
days and to respond and present evidence and argument on each issue involved
in the case. Such hearings shall be open to the public in accordance with
the Public Information Act, Texas Government Code, Chapter 551, and conducted
in accordance with the Administrative Procedure Act, Texas Government Code,
Chapter 2001.
§105.2. Service of Notice.
Unless otherwise specified in this chapter, notice to a party in a
contested case shall be by personal service or by registered or certified
mail to the party's last known address. Service by mail shall be complete
upon deposit of the document, enclosed in a postpaid, properly addressed
wrapper, in a post office or official depository under the care and custody
of the United States Postal Service.
§105.3. Computation of Time.
Unless otherwise required by law, in computing any period of time set
forth in this chapter, the date of the act, event, or default after which
the designated period of time begins to run is not to be included. The last
day of the period so computed is to be included, unless it is a Saturday,
Sunday, or a legal holiday, in which event the period runs until the end
of the next day which is not a Saturday, Sunday nor a legal holiday.
§105.4. Request for Hearing.
An applicant taking exception to the failure or refusal of the Securities
Commissioner to register the applicant as a dealer or salesman under the
Act, §§15 or 18, or failure to register securities of the applicant
under the Act, §7, may request a hearing pursuant to the Act, §24,
by filing a written request with the Securities Commissioner. A party named
in an ex parte order issued, or proposed to be issued by the Securities Commissioner
may request a hearing pursuant to the Act, §24, by filing a written
request with the Securities Commissioner no later than the 30th day after
the date on which the party is notified of such action or proposed action.
§105.5. Presiding Officer or Body.
All hearings in contested cases will be conducted by the State Office
of Administrative Hearings pursuant to the Administrative Procedure Act.
An informal disposition of a contested case may be made by the Securities
Commissioner without a hearing by stipulation of the parties, agreed settlement,
consent order, or default.
§105.6. Notice of Hearing.
(a)
A notice of hearing shall include:
(1)
a statement of the time, place and nature of the hearing;
(2)
a statement of the legal authority and jurisdiction
under which the hearing is to be held;
(3)
a short, plain statement of the matters asserted;
(4)
a description of the relief requested; and
(5)
if applicable, the disclosure language set forth in
§105.7 of this title (relating to Written Response to Notice of Hearing).
(b)
The Director or an Assistant Director of the Enforcement
Division may sign notices of hearings.
§105.7. Written Response to Notice of Hearing.
(a)
If the notice of hearing provides for at least 30 days
notice to a party prior to the hearing in a contested case, the respondent
shall file with both the staff of the State Securities Board and the State
Office of Administrative Hearings a written answer or other responsive pleading
to the matters asserted in the notice of hearing no later than the 20th day
after the date of service of notice to the respondent of the hearing.
(1)
Such a notice of hearing shall include the following disclosure
language set forth in capital letters and 12-point boldface type: IF YOU
DO NOT FILE A WRITTEN ANSWER OR OTHER WRITTEN RESPONSIVE PLEADING TO THIS
NOTICE OF HEARING NO LATER THAN THE 20TH DAY AFTER THE DATE ON WHICH THIS
NOTICE WAS MAILED TO YOU, OR IF YOU FAIL TO ATTEND THE HEARING, THE SECURITIES
COMMISSIONER MAY DISPOSE OF THIS CASE WITHOUT A HEARING AND GRANT THE RELIEF
SET FORTH IN THIS NOTICE. THE RESPONSE MUST BE FILED IN AUSTIN, TEXAS, WITH
THE STAFF OF THE STATE SECURITIES BOARD AND THE STATE OFFICE OF ADMINISTRATIVE
HEARINGS.
(2)
Such a notice of hearing shall include the mailing
addresses where the response may be filed with the staff of the State Securities
Board and the State Office of Administrative Hearings.
(b)
The failure of a respondent to timely file a written response
as provided in this section shall entitle the agency to the remedies relating
to default set forth in §105.8 of this title (relating to Default).
(c)
If the notice of hearing provides for less than 30 days
notice to a party prior to the hearing in a contested case, then no answer
need be filed and all allegations will be deemed to be denied by the party.
§105.8. Default.
(a)
The Securities Commissioner may make an informal disposition
of the contested case by default by issuing an order in which the relief
requested in the notice of hearing is granted and the matters set forth in
the notice are deemed admitted as true upon proof to the Securities Commissioner
of proper notice to a respondent in a contested case and that the respondent
has failed to:
(1)
file a written response as provided in §105.7 of this
title (relating to Written Response to Notice of Hearing); or
(2)
appear in person or through a legal representative
on the day and at the time set for the hearing of the case, whether or not
a written response has been filed.
(b)
The administrative law judge assigned to a contested case
shall promptly grant a motion by the staff of the State Securities Board
to seek informal disposition of the case by default.
(c)
Upon the motion of a respondent, the Securities Commissioner
may, for good cause shown, set aside a default order and reschedule a hearing
with the State Office of Administrative Hearings.
(1)
A motion by a respondent to set aside a default order shall
be filed with the Securities Commissioner not later than the 20th day after
the date of service of notice to the respondent of the default order.
(2)
A reply by the staff of the State Securities Board
to the motion by a respondent to set aside a default order must be filed
with the Securities Commissioner not later than the 30th day after the date
of service of notice to the respondent of the default order.
(3)
If the Securities Commissioner does not formally grant
or deny the motion filed by a respondent to set aside a default order not
later than the 45th day after the date of service of notice to the respondent
of the default order, the motion shall be considered denied.
§105.9. Appearance.
In order to promote speedy and orderly hearings, parties and their
attorneys, if any, should arrive at the place designated for the hearing
at least one hour prior to the time set for such hearing in order to provide
the parties an opportunity to resolve procedural matters.
(1)
An individual may appear in his or her own behalf; a member
of a partnership may represent the partnership; a bona fide officer of a
corporation, trust, association, or other form of organization may represent
that entity; and a duly authorized officer or employee of a state commission
or of a department or political subdivision of the state may represent the
state commission or the department or political subdivision of the state,
in any proceeding.
(2)
A person may be represented in a contested case by
an attorney-at-law duly admitted to practice in Texas under the rules of
the Texas Supreme Court. Attorneys who are admitted to practice law in states
other than Texas must comply with the Texas Supreme Court rules governing
admission to the Bar of Texas.
(3)
When a respondent appears in his or her own behalf
the respondent shall file with the staff of the State Securities Board or
otherwise state on the record an address at which any notice or other written
communication required to be served upon or furnished to the respondent may
be sent. When an attorney appears in a representative capacity, the attorney
shall file with the staff of the State Securities Board or otherwise state
on the record a notice of such appearance, which shall state the attorney's
name, address, and telephone number and the name and address of the person
or persons on whose behalf the attorney appears. Any additional notice or
other written communication required to be served or furnished to the client
may be sent to the attorney at the attorney's stated address.
(4)
Disruptive conduct at any hearing may be ground for
exclusion of the person responsible therefor from said hearing for the duration
of the hearing.
§105.10. Continuance.
(a)
Motions for continuance shall:
(1)
be in writing, and shall set forth the specific grounds
upon which the party seeks the continuance;
(2)
be filed no later than five days before the date of
the hearing, except, for good cause demonstrated in the motion, the administrative
law judge may consider a motion filed subsequent to that time or presented
orally at the hearing;
(3)
indicate that the movant has contacted the other party
or parties and whether there is opposition to the motion, or describe in
detail the movant's attempts to contact the other party or parties;
(4)
if seeking a continuance to a date certain, include
a proposed date or dates (preferably a range of dates) and indicate whether
the party or parties contacted agree on the proposed new date or dates; and
(5)
be served on the other party or parties according
to applicable filing and service requirements, except that a motion for continuance
filed five days or less before the date of the hearing shall be served by
hand or facsimile on the same date it is filed with the office, or by overnight
delivery on the next day, unless the motion demonstrates such service is
impracticable.
(b)
Responses to written motions for continuance shall be in
writing, except responses to written motions for continuance filed on the
date of the hearing may be presented orally at the hearing. Written responses
to motions for continuance shall be filed on the earlier of:
(1)
three days after receipt of the motion; or
(2)
the date and time of the hearing.
§105.11. Stipulations, Agreed Settlements and Consent Orders.
(a)
The parties to a hearing may, by stipulation in writing
filed with the administrative law judge or by the making of a statement into
the record, agree upon the facts or any portion of the facts involved in
the pending controversy, which stipulation may be considered and used as
evidence in the hearing.
(b)
At any time, the parties to a contested case may agree
to a settlement of all matters in controversy in connection with the case
and the Securities Commissioner may make an informal disposition of the case
by agreed settlement or consent order without further proceedings by the
State Office of Administrative Hearings.
§105.12. Presentation of Evidence.
(a)
Hearings are conducted in a trial format, and unless otherwise
agreed among the parties, the staff of the Securities Board will present
its opening statement first, will present its evidence first, and will have
the right to open and close arguments. The administrative law judge may reasonably
limit the time allotted for arguments by the parties.
(b)
The staff will present evidence to prove the facts alleged
in the notice of hearing. The staff will assume the burden of proving a prima
facie case by a preponderance of the evidence based upon reasonable inferences
drawn from the evidence presented, except that the burden of proof of an
exemption shall be upon the party claiming the same.
(c)
The rules of evidence as applied in nonjury civil cases
in the district courts of this state shall be followed to the extent required
by the Administrative Procedure Act. Irrelevant, immaterial, or unduly repetitious
evidence shall be excluded.
(d)
Witnesses may be sworn by the administrative law judge
and the testimony taken under oath.
§105.13. Subpoenas and Discovery.
(a)
On a showing of good cause, and on deposit of sums that
will reasonably ensure payment of witness fees and mileage, the Securities
Commissioner shall issue a subpoena addressed to the sheriff or any constable
to require the attendance of witnesses and the production of books, accounts,
records, papers, correspondence, or other objects as may be necessary and
proper for the purposes of the proceedings.
(b)
On a showing of good cause, and on deposit of sums that
will reasonably ensure payment of witness fees and mileage, the Securities
Commissioner shall issue a commission, addressed to the several officers
authorized by statute to take depositions, to require that the deposition
of a witness be taken, which commission shall authorize the issuance of any
subpoenas necessary.
(c)
Any party desiring to take a deposition shall make written
application therefor, setting forth the reasons why such deposition should
be taken, the name and residence of the witness, the matters concerning which
it is expected to question the witness, and the time and place proposed for
the taking of the deposition.
(d)
Depositions will be taken in the manner prescribed for
depositions in the Administrative Procedure Act.
(e)
A witness or deponent who is not a party and who is subpoenaed
or otherwise compelled to attend any hearing or proceeding to give a deposition
or to produce books, accounts, records, papers, correspondence, or other
objects that may be necessary and proper for the purposes of the proceeding
is entitled to receive:
(1)
mileage allowance as required by law, for going to and
returning from the place of the hearing or the place where the deposition
is taken, if the place is more than 25 miles from the person's place of residence;
and
(2)
a fee as required by law, for each day or part of
a day the person is necessarily present as a witness or deponent.
(f)
Mileage and fees to which a witness is entitled shall be
paid by the party at whose request the witness appears or the deposition
is taken, on presentation of proper vouchers sworn by the witness and approved
by the Securities Commissioner.
(g)
Reimbursement of travel expenses for witnesses whose presence
is required by the Securities Commissioner at hearings and investigative
proceedings shall be at the same rate as is paid to state employees traveling
on state business.
(h)
When the staff of the State Securities Board anticipates
the commencement of a contested case and determines that it is necessary
to perpetuate testimony to prevent a failure or delay of justice due to the
risk of unavailability of the testimony after the action is commenced, such
as with the acute illness of a potential witness or receipt of information
that the potential witness intends to leave the subpoena jurisdiction of
the Securities Commissioner, the staff may file a request with the Securities
Commissioner for a commission to take a deposition as set forth in subsection
(b) of this section.
(1)
The request shall show:
(A)
the staff anticipates the commencement of a contested
case;
(B)
the subject matter of the anticipated action and the jurisdiction
therein;
(C)
the names and addresses, if known, of the persons expected
to be interested adversely to the staff; and
(D)
the names and addresses of the persons to be examined,
the substance of the testimony which the staff expects to elicit from each,
and the reasons why the testimony is necessary to prevent a failure or delay
of justice.
(2)
Upon filing a request with the Securities Commissioner,
a notice and copy of the request shall be served upon the witness, or witnesses,
and upon each person named in the request as an expected adverse party. Each
person served with a copy of the request shall have the right to respond
to the request within 10 days of service of notice by filing a response with
the staff and the Securities Commissioner.
(3)
In any case where justice or necessity so requires,
the Securities Commissioner may permit the taking of such depositions upon
shorter notice than required by paragraph (2) of this subsection, or may
extend such time in order to permit service on any adverse party.
(4)
If satisfied that the perpetuation of testimony may
prevent a failure or delay of justice, the Securities Commissioner may issue
a commission authorizing the taking of such deposition.
§105.14. Assessment of Hearing Costs.
The costs charged by the court reporting service and the State Office
of Administrative Hearings for proceedings in a contested case may be assessed
against a party or parties in such proportions as the administrative law
judge may determine.
§105.15. Proposal for Decision.
(a)
At the conclusion of a hearing in a contested case, the
administrative law judge assigned to hear the case at the State Office of
Administrative Hearings will issue orders:
(1)
setting appropriate deadlines for the filing of the parties'
Proposed Findings of Fact and Conclusions of Law in the case, if any, and
the responses thereto, if any; and
(2)
setting appropriate deadlines for the filing of exceptions,
if any, to the administrative law judges's Proposal for Decision, and replies
thereto, if any.
(b)
In the event exceptions to the administrative law judge's
Proposal for Decision are not filed, the State Office of Administrative Hearings
loses jurisdiction over the case upon the expiration of the deadline for
the filing of such exceptions.
(c)
In the event exceptions to the administrative law judge's
Proposal for Decision are filed, the State Office of Administrative Hearings
loses jurisdiction over the case upon the issuance of the administrative
law judges's ruling on the said exceptions.
§105.16. Order Issued by Securities Commissioner.
(a)
Upon issuance of the proposal for decision, if any, by
the administrative law judge assigned to the case at the State Office of
Administrative Hearings, the complete transcript and record in the case shall
be sent directly to the Securities Commissioner.
(b)
The Securities Commissioner may change a finding of fact
or conclusion of law made by the administrative law judge, or may vacate
or modify an order issued by the administrative law judge only on grounds
set forth in the Administrative Procedure Act. The Securities Commissioner
shall state in writing the reason or basis for such a change.
§105.17. Motion for Rehearing.
A motion for rehearing must be filed with the Securities Commissioner
not later than the 20th day after the date on which the respondent or the
party's attorney of record is notified of a decision. A reply to a motion
for rehearing must be filed not later than the 30th day after the date on
which the party or the party's attorney of record is notified of the decision.
The Securities Commissioner shall act on a motion for rehearing not later
than the 45th day after the date on which the party or the party's attorney
of record is notified of the decision or the motion for rehearing is overruled
by operation of law.
§105.18. Final Decisions and Appeals.
(a)
A decision is final and appealable:
(1)
if a motion for rehearing is not filed on time, on the
expiration of the period for filing a motion for rehearing; or
(2)
if a motion for rehearing is filed on time, on the
date:
(A)
the order overruling the motion for rehearing is rendered;
or
(B)
the motion is overruled by operation of law.
(b)
A person who is aggrieved by a final decision of the Securities
Commissioner in a contested case may seek judicial review of the decision.
Judicial review of such a decision is under the substantial evidence rule.
§105.19. Record.
(a)
Testimony taken at any hearing will be recorded stenographically
and transcribed.
(b)
The record in a contested case includes the following:
(1)
all pleadings, motions, and intermediate rulings;
(2)
evidence received or considered;
(3)
a statement of matters officially noticed;
(4)
questions and offers of proof, objections, and rulings
on them;
(5)
proposed findings and exceptions;
(6)
any decision, opinion, or report by the administrative
law judge; and
(7)
all briefs, memoranda, or data submitted to or considered
by the administrative law judge.
(c)
In the event a final decision or order of the Securities
Commissioner is appealed and the agency is required to transmit to the reviewing
court a copy of the record of the agency proceeding, or any part thereof,
the appealing party shall pay all of the costs of the preparation of any
original or certified copy of the record of the agency proceeding that is
required to be transmitted to the reviewing court. The charges imposed by
this subsection will be the same as those charged by the agency for requests
for photographic reproductions and certified copies of public records made
pursuant to the provisions of the Public Information Act, Texas Government
Code, Chapter 552. These charges are considered to be a court cost and may
be assessed, all or in part, by the reviewing court in accordance with the
Texas Rules of Civil Procedure.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700898
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §107.2
The State Securities Board proposes an amendment to §107.2,
concerning definitions. The proposal would add a definition of federal covered
securities and provide references to various federal statutes that are cited
throughout the Board's rules. It would also update various other definitions
and make assorted other clarifications and corrections.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rule is in effect there will be no
fiscal implications for state or local government as a result of enforcing
or administering the rule.
Mr. Northcutt also has determined that for each year of the first five
years the rule is in effect the public benefit anticipated as a result of
enforcing the rule will be the inclusion of new and updated definitions of
terms that are used in the Texas Securities Act and elsewhere in the Board's
rules. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the rule as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendment is proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The proposed amendment affects Texas Civil Statutes, Articles 581-1, et
seq.
§107.2. Definitions.
The following words and terms, when used in
Part VII of
this
Title (relating to the
State Securities Board)
[chapter], shall have the following meanings,
unless the context clearly indicates otherwise.
Act or Securities Act or Texas Securities Act
- The
Affiliate
- An
"
affiliate
Applicant
- A person who submits an application for registration
of securities,
documents in connection with an authorization
to offer and sell federal covered securities,
or for registration
as a dealer, investment adviser, or salesman, or who files an application
for an order of the
Securities
Commissioner.
Business days
- For the purpose of filing Form 133.29 pursuant
to the requirements of
§109.13(l)
[§109.13(1)]
of this title (relating to Limited Offering Exemptions), means ordinary business
days and does not include Saturdays, Sundays, or state holidays.
Certified
- In conjunction with the term "financial statement(s),"
means financial statement(s) prepared in accordance with generally accepted
accounting principles and examined in accordance with generally accepted
auditing standards by independent certified public accountants or independent
public accountants for the purposes of expressing an opinion thereon. Such
opinion shall be one acceptable to the
Securities
Commissioner.
Detailed balance sheet
- A balance sheet
prepared in accordance with either generally accepted accounting principles
or generally accepted auditing standards
.
Employer
- For purposes of the
Texas
Securities Act, §5.I(b), includes a general partner of a limited
partnership with respect to a security sold or distributed by such limited
partnership in a transaction otherwise meeting the requirements of §5.I(b).
Federal covered securities
-
Any security or securities described as a "covered
security" or as "covered securities" in the Securities Act of 1933, §18(b).
However, until October 11, 1999, federal covered securities for which a fee
has not been paid or promptly remedied following written notification from
the Securities Commissioner to the applicant of the nonpayment or underpayment
of such fees required by the Texas Securities Act, shall be excluded from
the definition of federal covered securities.
Financial statement(s)
- Balance sheet and related statements
of income, changes in stockholders' equity, and cash flows, all (consolidated,
if applicable) prepared in accordance with generally accepted accounting
principles. The information contained in the
previously
described
[above] statements may vary according to presentation and
titles as they relate to specific entities, such as individuals, partnerships,
and nonprofit organizations.
Investment adviser
- Every person or company who for compensation
engages in this state in the business of providing personalized analyses,
advice, and/or recommendations to others, either directly or through publications
or
writings
[writing], as to the advisability
of investing in, purchasing, or selling securities. However, this interpretation
is deemed not to apply to:
(A)
(No change.)
(B)
any lawyer, accountant, engineer, or geologist, whose
performance of such
services
[practices]
is solely incidental to the practice of his
or her
profession; or
(C)
(No change.)
Investment Advisers Act of 1940
-
The federal statute of that name, as amended,
15 United States Code §80b-1, et seq.
Investment Company Act of 1940
-
The federal statute of that name, as amended,
15 United States Code §80a-1, et seq.
NASD
-
The
National Association
of Securities Dealers, Inc.
Profit and loss statement
- An income statement
prepared in accordance with either generally accepted accounting principles
or generally accepted auditing standards
.
Proposed plan of business
- As used in the
Texas
Securities Act, those aspects and only those aspects of the
business set-up (other than that done or proposed in respect to the pricing
and selling of its securities) which would materially affect the business
relationship between the prospective investor and those in control of the
business as such relationship would exist after the sale to the public of
the securities sought to be registered.
Rule
- Any statement by the Board or the
Securities
Commissioner of general applicability that implements,
interprets, or prescribes law or policy, or describes the procedure or practice
requirements of the Board or
Securities
Commissioner.
Savings and loan association
- For definition see the Texas
Savings and Loan Act (Texas Civil Statutes, Article 852a, as amended)
Securities Act of 1933
-
Securities Exchange Act of 1934
-
The federal statute of that name, as amended,
15 United States Code §78a, et seq.
Security holders or purchasers of securities
- As such terms
are used in the
Texas
Securities Act, §5.I,
do not include holders of any options granted pursuant to a plan which falls
within the exemption for employee plans provided by the
Texas
Securities Act, §5.I(b).
Staff
- Personnel of the Securities Board, excluding the
members of the Board, the
Securities
Commissioner
State, territory, or insular possession of the United States
- As used in the
Texas
Securities Act
Statement of surplus
- A statement of stockholders' equity
Telephone or telegram
- For purposes of the
Texas
Securities Act, §7.C(2)(c), includes any means of electronic
transmission such as, but not limited to, telephone, telegraph, graphic scanning,
modem, or facsimile; provided
,
however, that
the office of the State Securities Board has the necessary equipment to accept
such a transmission.
Within this state
-
(A)
A person is a "dealer" who engages "within this
state" in one or more of the activities set out in [§4.C of] the
(B)
Likewise, a person is a "salesman" who engages "within
this state" in one or more of the activities set out in [§4.D of] the
(C)
Offers and sales can be made by personal contact,
mail, telegram, telephone,
electronic communication,
or any other form of oral or written communication.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700899
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §109.13
The State Securities Board proposes an amendment to §109.13(k),
concerning the uniform limited offering exemption. The amendment would clarify
the availability of the exemption in Texas for offers and sales of federal
covered securities offered pursuant to Securities and Exchange Commission
("SEC") Regulation D, Rule 506. The clarification is necessitated by the
passage of the National Securities Markets Improvement Act of 1996, Public
Law No. 104-290. It also adds a cross-reference to new Chapter 114, relating
to federal covered securities (which is being concurrently proposed), for
fee and filing requirements in connection with Rule 506 offerings in Texas.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rule is in effect there will be no
fiscal implications for state or local government as a result of enforcing
or administering the rule.
Mr. Northcutt also has determined that for each year of the first five
years the rule is in effect the public benefit anticipated as a result of
enforcing the rule will be the elimination of confusion over the requirements
in Texas in relation to offerings of federal covered securities under SEC
Rule 506. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the rule as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendment is proposed under Texas Civil Statutes, Articles
581-28-1 and 581-5.T. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Section 5.T provides that the Board may prescribe
new exemptions by rule.
The proposed amendment affects Texas Civil Statutes, Article 581-7.
§109.13. Limited Offering Exemptions.
(a)-(j)
(No change.)
(k)
Uniform limited offering exemption. In addition to sales
made under the Texas Securities Act, §5.I, the State Securities Board,
pursuant to the Act, §5.T, exempts from the registration requirements
of the Act, §7, any offer or sale of securities offered or sold in compliance
with the Securities Act of 1933, Regulation D, Rules 230.505 and/or 230.506,
including any offer or sale made exempt by application of Rule 508(a), as
made effective in United States Securities and Exchange Commission Release
Number 33-6389 and as amended in Release Numbers 33-6437, 33-6663, 33-6758,
and 33-6825, and which satisfies the following further conditions and limitations.
(1)-(15)
(No change.)
(16)
If the securities comply with this subsection (except for paragraphs (2)-(5)
of this subsection) and are federal covered securities, as that term is defined
in §107.2 of this title (relating to Definitions), the issuer should
refer to Chapter 114 of this title (relating to Federal Covered Securities)
for the applicable filing and fee requirements.
(l)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700901
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §113.2, §113.12
The State Securities Board proposes amendments to §113.2,
concerning registration by coordination, and §113.12, concerning applicability
of guidelines. Both sections are amended to reflect changes in the law necessitated
by the passage of the National Securities Markets Improvement Act of 1996,
Public Law No. 104-290. Section 113.2 is amended to clarify that federal
covered securities are not required to be registered by coordination in Texas
and to provide a cross-reference to new Chapter 114, concerning federal covered
securities which is being concurrently proposed, for determining the fee
and filing requirements for offerings of federal covered securities. Section
113.12 is amended to clarify that the guidelines do not apply to offerings
of federal covered securities; remove a reference to Chapter 123, parts of
which are being concurrently proposed for repeal; and to add Chapter 129,
administrative guidelines for registration of asset-backed securities, which
was recently adopted by the Board.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rules are in effect there will be
no fiscal implications for state or local government as a result of enforcing
or administering the rules.
Mr. Northcutt also has determined that for each year of the first five
years the rules are in effect the public benefit anticipated as a result
of enforcing the rules will be clarification of their applicability to federal
covered securities offered in Texas. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the rules as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendments are proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The proposed amendments affect Texas Civil Statutes, Article 581-7.
§113.2. Registration by Coordination.
(a)
Time to file. Applications for registration under the
(b)
Who should file. Applications to register securities of
open-end investment companies and unit investment trusts subject to the provisions
of the Investment Company Act of 1940, the Securities Act of 1933, and the
Securities Exchange Act of 1934, will be considered and treated as applications
to register securities by coordination
, if the securities
are not federal covered securities as that term is defined in §107.2
of this title (relating to Definitions). Filings and fees relating to federal
covered securities are addressed in Chapter 114 of this title (relating to
Federal Covered Securities)
.
§113.12. Applicability of Guidelines.
The guidelines listed in this section do not apply to offerings made
pursuant to an exemption under either the
Texas
Securities Act [(Act)], §5 or §6
, or to an offering of federal covered securities, as that term is defined
in §107.2 of this title (relating to Definitions)
. In other words,
the requirements contained in one of the following guidelines would apply
only to an offering for which an application for registration is filed with
the Securities Commissioner:
(1)-(3)
(No change.)
[(4)
Chapter 123 of this title (relating to Administrative
Guidelines for Registration of Open-End Investment Companies);]
(4)
[(5)]
Chapter 124 of
this title (relating to Administrative Guidelines for Registration of Periodic
Payment Plans);
(5)
Chapter 129 of this title (relating to Administrative Guidelines for Registration
of Asset-Backed Securities);
(6)-(8)
(No change.)
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700902
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §§114.1-114.4
The State Securities Board proposes new Chapter 114, §§114.1-114.4,
concerning federal covered securities. A definition of "federal covered securities"
is being concurrently proposed in an amendment to §107.2 of this title,
relating to definitions. The new Chapter 114 is necessitated by the passage
of the National Securities Markets Improvement Act of 1996 ("NSMIA"), Public
Law No. 104-290. There is some uncertainty as to the effect of certain provisions
of NSMIA; the proposals, if adopted, will likely be adopted with changes,
which take into account the resolution of some of the ambiguities and provide
greater uniformity with responses and interpretations adopted by other securities
regulators.
Micheal Northcutt, Director, Securities Registration Division has determined
that for the first five-year period the rules are in effect there will be
no fiscal implications for state or local government as a result of enforcing
or administering the rules.
Mr. Northcutt also has determined that for each year of the first five
years the rules are in effect the public benefit anticipated as a result
of enforcing the rules will be to apprise issuers of federal covered securities
of the filing requirements associated with the offer and sale of such securities
in Texas. Although, as a result of NSMIA, certain aspects of the state requirements
imposed on federal covered securities are currently in flux, the proposal
seeks to obtain a greater degree of uniformity with other securities regulators,
than presently exists. There will be no effect on small businesses. There
is no anticipated economic cost to persons who are required to comply with
the rules as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The new rules are proposed under Texas Civil Statutes, Articles
581-28-1 and 581-5.T. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Section 5.T provides that the Board may prescribe
new exemptions by rule.
The new rules affect Texas Civil Statutes, Articles 581-5, 581-6, 581-7,
581-8, 581-35, 581-35-1, and 581-35-2.
§114.1. Introduction.
(a)
Scope. This chapter covers filings and fees required to
be paid in connection with the issuance of an authorization to offer and
sell federal covered securities.
(b)
Availability of a corresponding state exemption. Except
as otherwise provided herein, the filing and fee requirements detailed in
this chapter do not apply to federal covered securities that are exempt from
registration pursuant to the Texas Securities Act, §5 or §6.
§114.2. Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
Act or Securities Act or Texas Securities Act
- The Texas
Securities Act, Texas Civil Statutes, Article 581-1, et seq., as amended.
Federal covered securities
- Shall have the same meaning
as provided in §107.2 of this title (relating to Definitions).
Listed securities
- The category of nationally traded federal
covered securities defined in the Securities Act of 1933, §18(b)(1).
SEC
- The United States Securities and Exchange Commission.
§114.3. Consents to Service of Process.
(a)
Unless otherwise provided in subsection (b) of this section,
a consent to service of process is required from an issuer of federal covered
securities that is organized under the laws of any other state, territory,
or government, or domiciled in any state other than Texas. The written consent
to service of process must be duly executed by an authorized agent of the
issuer, under proper resolution or authority of the appropriate governing
body, and irrevocably appoint the Securities Commissioner as the issuer's
true and lawful attorney upon whom all process may be served in any action
or proceeding against such issuer arising out of any transaction subject
to the Texas Securities Act with the same effect as if such issuer were organized
or created under the laws of Texas and had been lawfully served with process
therein.
(b)
The consent to service of process filed through the Securities
Registration Depository System will satisfy, in all respects, the requirements
governing consents to service of process set out in this subsection and in
the Texas Securities Act, §8.
§114.4. Filings and Fees.
(a)
Generally. Unless otherwise provided in subsection (b)
of this section, prior to the initial offer of the federal covered securities
in this state, the issuer shall provide to the Securities Commissioner:
(1)
a notice filing, consisting of page 1 of a Form U-1, Uniform
Application to Register Securities, with items 1-6 completed, or a document
providing substantially the same information;
(2)
a consent to service of process signed by the issuer,
if required by §114.3 of this title (relating to Consents to Service
of Process); and
(3)
a fee of $10, plus one-tenth of 1.0% of the aggregate
amount of federal covered securities proposed to be sold to persons located
within this state based on the price at which such securities are to be offered
to the public, as provided in the Texas Securities Act, §§35.D
and 35.E.
(b)
Special circumstances.
(1)
SEC Regulation D, Rule 506 offerings. In connection with
an offering described in both §109.13(k)(16) of this title (relating
to Limited Offering Exemptions) and SEC Regulation D, Rule 506, at the time
the Form D is filed with the SEC, but no later than 15 days after the first
sale of the federal covered securities in this state, the issuer shall provide
to the Securities Commissioner:
(A)
a notice on Form D;
(B)
a consent to service of process signed by the issuer,
if required by §114.3 of this title (relating to Consents to Service
of Process); and
(C)
a fee of one-tenth of 1.0% of the aggregate amount of
federal covered securities described as being offered for sale, but in no
case more than $500, as provided in the Texas Securities Act, §35.J.
(2)
Listed securities. No filing or fee shall be
required of an issuer offering federal covered securities that are also "listed
securities" as defined in §114.2 of this title (relating to Definitions).
(3)
Money market status approved. In connection with an
offering of securities of an issuer which has applied for and been granted
money market status as provided in §123.3 of this title (relating to
Conditional Exemption for Money Market Funds), the issuer shall provide to
the Securities Commissioner:
(A)
a consent to service of process signed by the issuer,
if required by §114.3 of this title (relating to Consents to Service
of Process), if such a consent to service has not previously been filed with
the Securities Commissioner; and
(B)
the fee provided for in §123.3 of this title (relating
to Conditional Exemption for Money Market Funds).
(c)
Supplemental reports. Each applicant required to pay a
fee in connection with federal covered securities offered in this state,
shall submit to the Securities Commissioner annual reports showing the amount
of federal covered securities authorized to be sold in Texas, the actual
amount sold in Texas, the consideration received therefor, and the amount
of unsold securities authorized to be sold in Texas. Upon completion of all
offerings of federal covered securities authorized for sale in Texas, a final
sales report must be filed with the Securities Commissioner showing the total
aggregate amount of federal covered securities authorized and sold in Texas
and the total consideration received therefor.
(d)
Excess sales.
(1)
Except as provided in paragraph (2) of this subsection,
an offeror who sells securities in this state in excess of the amount of
federal covered securities authorized may do the following.
(A)
If the authorization is still in effect an offeror may:
(i)
request authorization for the excess securities by paying
three times the difference between the initial fee paid and one-tenth of
1.0% of the aggregate amount of the securities sold to persons in this state,
as provided in the Texas Securities Act, §35-1.A; and
(ii)
pay an amendment fee of $10, as provided in the Texas
Securities Act, §35.D.
(B)
If the authorization is no longer in effect an offeror
may:
(i)
request authorization of the excess securities in accordance
with subparagraph (A)(i) of this paragraph, plus interest on the amount of
fees owed computed at the rate of 6.0% from the date the authorization was
no longer in effect until the date the subsequent request is made; and
(ii)
pay an amendment fee of $10, as provided in the Texas
Securities Act, §35.D.
(C)
The authorization for the excess securities shall be effective
retroactively to the effective date of the initial authorization for the
offering.
(2)
An offeror in an SEC Regulation D, Rule 506 offering,
who paid less than the maximum fee prescribed in subsection (b)(1) of this
section and sells securities in excess of the amount of federal covered securities
authorized may do the following:
(A)
file an amended Form D disclosing the amount of federal
covered securities offered; and
(B)
pay three times the difference between the initial fee
paid and the fee which should have been paid, plus interest on the fee owed
computed at the rate of 6.0% from the date the original Form D was received
by the Securities Commissioner until the date the amended notice is received
by the Securities Commissioner, as provided in the Texas Securities Act,
§35-1.B.
(3)
After compliance with paragraph (2) of this subsection,
the amended Form D shall be effective retroactively to the date of the initial
filing.
(e)
Requests for additional documents. The Securities Commissioner
may, upon written request, require a copy of any document required to be
filed with the SEC in connection with the offering or sale of the federal
covered securities.
(f)
Period of effectiveness.
(1)
The initial authorization for federal covered securities
of an open-end investment company, as defined in the Investment Company Act
of 1940, shall be effective until two months after the end of the issuer's
fiscal year. After the initial authorization, the issuer or its agent may
renew the authorization by submitting, within two months after the end of
the issuer's fiscal year:
(A)
a notice filing, consisting of page 1 of a Form U-1, Uniform
Application to Register Securities, with items 1-6 completed, or a document
providing substantially the same information;
(B)
payment of the appropriate fees.
(2)
The authorization for federal covered securities
of a unit investment trust, as defined in the Investment Company Act of 1940,
shall be effective until one year from the date of effectiveness granted
by the SEC.
(3)
Any other authorization of federal covered securities
shall be effective for one year from the date the authorization is accepted
by the Securities Commissioner.
(4)
The renewal of an authorization for federal covered
securities under this chapter may be renewed for additional periods of one
year if the notice filing and renewal fees are received prior to the expiration
date of the existing authorization. Failure to tender the renewal fee prior
to the expiration date may subject the issuer to higher fees, pursuant to
the Texas Securities Act, §§35-1 or 35-2.
(g)
Money market fund determinations pursuant to §123.3.
A fund, offering federal covered securities, that is determined to be a money
market fund pursuant to §123.3 of this title (relating to Conditional
Exemption for Money Market Funds) shall pay the fees provided for in that
section.
(h)
Preservation of fees. The fees provided in this section
correspond to the filing or registration fees that would be collected pursuant
to the Texas Securities Act in effect on the day before the effectiveness
of the National Securities Markets Improvement Act of 1996, Public Law 104-290.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700903
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §§115.1-115.7
The State Securities Board proposes amendments to §§115.1-115.7,
concerning dealers, investment advisers, agents, and salesmen. Throughout
§§115.1-115.7, amendments are proposed to reflect changes necessitated
by the passage of the National Securities Markets Improvement Act of 1996
("NSMIA"), Public Law No. 104-290. There is some uncertainty as to the effect
of certain provisions of NSMIA; the proposals, if adopted, will likely be
adopted with changes, which take into account the resolution of some of the
ambiguities and provide greater uniformity with responses and interpretations
adopted by other securities regulators. The amendments also make a variety
of changes to clarify existing provisions and achieve greater consistency
of language throughout the chapter.
A description of additional proposed amendments, unique to specific sections,
follows. Section 115.1, concerning registration of dealers and salesmen,
would be amended to create a new category of restricted registration, recognize
a new examination, and change reporting requirements. The proposed amendments
to §115.2, concerning applications, would change the disclosures that
investment advisers must deliver to clients, require specific disclosures
in advisory contracts, and address contract terminations. In addition, §115.3,
concerning examinations, would be amended to recognize the Series 62 examination
and clarify the requirements for persons registering to act as agents for
investment advisers. Section 115.4, concerning evidences of registration,
would be amended to clarify requirements on successor entities and authorize
the issuance of temporary registrations. The proposed amendments to §115.5,
concerning minimum records, would clarify standards applicable to investment
advisers and allow investment advisers to maintain records in electronic
format. Readers should be aware that the Securities and Exchange Commission
("SEC") has a proposal outstanding which, if adopted, would also impact the
record keeping requirements contained in §115.5. The SEC proposal (Release
No. 34-37850) appears in the October 28, 1996, issue of the
Federal Register
(61 Fed. Reg. 55593). Section 115.6, concerning registration
of persons with criminal backgrounds, would be amended to change the crimes
considered as directly relating to the duties and responsibilities of dealers
and their agents. Finally, amendments proposed to §115.7, concerning
maintenance and inspection of records, would provide more flexibility in
records inspection requests.
Michael S. Gunst, Director, Dealer Registration Division has determined
that for the first five-year period the rules are in effect there will be
no fiscal implications for state or local government as a result of enforcing
or administering the rules.
Mr. Gunst also has determined that for each year of the first five years
the rules are in effect the public benefit anticipated as a result of enforcing
the rules will be to avoid confusion by having the rules reflect the parameters
set by NSMIA and clarify requirements imposed on dealers and investment advisers,
and their salesmen and agents. Although, as a result of NSMIA, this area
of regulation is currently in flux, the proposal seeks a greater degree of
uniformity with other securities regulators than presently exists. There
will be no effect on small businesses. There is no anticipated economic cost
to persons who are required to comply with the rules as proposed.
Comments are sought regarding proposed §115.2(c)(2) and how best
to make clear that investment advisers remain subject to current federal
and state case law, rules and regulations, interpretative opinions, and administrative
actions which impose disclosure requirements on them that are not otherwise
spelled out in this subsection.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendments are proposed under Texas Civil Statutes, Articles
581-28-1 and 581-12.B. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Section 12.B provides the Board with the authority
to prescribe new dealer/agent registration exemptions by rule.
The proposed amendments affects Texas Civil Statutes, Articles 581-13,
581-16, 581-18, 581-23, 581-23-1, 581-25-1, 581-29, 581-32, 581-33, 581-35,
and 581-41.
§115.1. General
(a)
Registration.
(1)-(2)
(No change.)
(3)
Except as provided in subsection
(i) of this section,
[The Securities Act requires the registration
of] investment advisers and their agents
who solicit
clients or who are
[actually] involved in the rendering of investment
advice
must be registered with the Securities Commissioner.
Officers of a corporation or partners of a partnership shall not be deemed
salesmen or agents solely because of their status as officers or partners
.
(4)-(5)
(No change.)
(b)
Restricted registration.
(1)
Any person or company may apply for, and the
Securities
Commissioner may grant, restricted registration for the
purpose of
rendering advice regarding or
effecting transactions in a particular type or category of securities, or
securities representing interests in one or more types or categories of businesses.
The restricted registrations are as follows:
(A)-(F)
(No change.)
(G)
registration with other restrictions which the
Securities
Commissioner may impose based upon the facts;
(H)-(J)
(No change.)
(K)
registration to accept orders unsolicited by such person
from existing customers of the dealer
; and
[.]
(L)
registration
to deal exclusively in corporate securities.
(2)
(No change.)
(c)
Availability of records. All applicants for dealer and/or
investment adviser registration must execute a Form 133.16 agreement that
records will be made available in
accordance with
the provisions of §115.7 of this title (relating to Maintenance and
Inspection of Records)
[the registrant's office for immediate inspection
or, if required, will be made available in the office of the State Securities
Board within 48 hours of request by the Commissioner or his representative].
(d)
Officer or partner registration. Dealer or investment adviser
applicants other than individuals must make an application to register an
officer or partner in connection with the registration, and any such officer
or partner must complete the necessary registration requirements. An applicant
may designate as its officer or partner a
control
person
[principal] registered
in Texas via
[on] the Central Registration Depository System maintained by the
National Association of Securities Dealers. If the officer or partner resigns
or is otherwise removed from his or her position, the firm shall make an
application to register another officer or partner within 30 days.
(e)
Multiple registration.
(1)
Any individual, partnership, corporation, or more than
one business entity substantially controlled by the same persons seeking
multiple registration shall:
(A)
undertake to the
Securities
Commissioner to disclose to each client or prospective client the applicant's
affiliation(s) with other securities dealers or investment advisers, the
nature of such affiliation(s), and the potential conflicts of interest arising
out of such affiliation(s);
(B)
(No change.)
(2)
(No change.)
(f)
(No change.)
(g)
Reporting requirements.
(1)
Each person registered as a dealer
or
[All registered dealers and] investment advisers
or as an agent thereof
shall report to the
Securities Commissioner
[commission] within 30 days after its entry
any action by a self-regulatory organization, any state or federal administrative
order, criminal conviction, or court judgment, order, or decree described
in paragraph (2) of this subsection which is entered against
that person or an employee, officer, or agent thereof
[the dealer
or any salesmen or officer of the dealer]. Upon request by the
Securities
Commissioner,
that person
[the dealer] may be required to furnish to the
Securities
Commissioner copies of the order, conviction, or decree, or other
documents, as applicable.
(2)
The following matters must be reported:
(A)
any administrative order issued by state or federal authorities,
which order:
(i)
(No change.)
(ii)
was entered after notice and opportunity
for a hearing, denying, suspending, or revoking the person's license as a
dealer, agent, salesman, or investment adviser, or the substantial equivalent
of those terms
[has the effect of enjoining such person from activities
subject to federal or state statutes designed to protect investors or consumers
against unlawful or deceptive practices involving securities, insurance,
commodities or commodity futures, real estate, franchises, business opportunities,
consumer goods, or other goods and services];
(B)
any felony criminal action or
conviction, or any misdemeanor action or conviction based on fraud, deceit,
or wrongful taking of property
[any conviction of any felony or misdemeanor
of which fraud is an essential element, or which is a violation of the securities
laws or regulations of this state, or of any other state of the United States,
or of the United States, or any foreign jurisdiction; or which is a crime
involving moral turpitude; or which is a criminal violation of statutes designed
to protect consumers against unlawful practices involving insurance, securities,
commodities or commodity futures, real estate, franchises, business opportunities,
consumer goods, or other goods and services];
(C)-(D)
(No change.)
(E)
any
change in any other information previously disclosed to the Securities Commissioner
on any application form or filing.
(3)
[(E)]
For
[for] purposes of this subsection,
"
dealer
"
shall include any partners,
directors, executive officers, or beneficial owner of 10% or more of any
class of the equity securities of the registered dealer or investment adviser
(beneficial ownership meaning the power to vote or direct the vote and/or
the power to dispose or direct the disposition of such securities).
(h)
(No change.)
(i)
Persons
not required to register as an investment adviser or an agent of an investment
adviser on or after April 9, 1997.
(1)
Registration
as an investment adviser is not required for the following:
(A)
an
investment adviser subject to registration under the Investment Advisers
Act of 1940, §203, and properly registered thereunder;
(B)
a
person not registered under the Investment Advisers Act of 1940, §203,
because such person is excepted from the definition of an investment adviser
under the Investment Advisers Act of 1940, §202(a)(11); or
(C)
an
investment adviser who does not have a place of business located within this
state and, during the preceding 12-month period, has had fewer than six clients
who are Texas residents.
(2)
Registration as an agent of an investment adviser is not required for an
investment adviser agent who does not have a place of business located in
Texas but who otherwise engages in the rendering of investment advice in
this state.
(3)
Preservation of filing requirements and fees for investment advisers and
agents exempted from registration pursuant to this subsection only.
(A)
Initially,
the provisions of paragraphs (1) and (2) of this subsection are available
provided that the investment adviser or agent files:
(i)
a
copy of its current Form ADV as filed with the Securities and Exchange Commission,
if a Form ADV is required to be filed by the investment adviser or agent
with the Securities and Exchange Commission;
(ii)
a consent to service of process; and
(iii)
an initial fee equal to the amount that would have been paid had the investment
adviser or agent filed for registration in Texas.
(B)
Upon
amendment to its Form ADV, the investment adviser or agent files:
(i)
a
copy of its amended Form ADV as filed with the Securities and Exchange Commission,
if a Form ADV is required to be filed by the investment adviser or agent
with the Securities and Exchange Commission; and
(ii)
an amendment fee of $25, as provided in the Texas Securities Act, §35.C.
(C)
Annually,
the investment adviser or agent files:
(i)
a
copy of its Form ADV as filed with the Securities and Exchange Commission,
if a Form ADV is required to be filed by the investment adviser or agent
with the Securities and Exchange Commission; and
(ii)
renewal fees which would have been paid had the investment adviser or agent
been registered in Texas.
(j)
Persons
not required to register as an agent or salesman. Registration as an agent
or salesman is not required for a person, associated with a dealer registered
in Texas, who effects a transaction pursuant to the Securities Exchange Act
of 1934, §15(h)(3), provided such person is:
(1)
not
ineligible to register with this state for any reason other than such a transaction;
and
(2)
registered with a registered securities association and at least one other
state.
(k)
Applicability
of antifraud provisions. With regard to subsections (i) and (j) of this section,
the Texas Securities Act (§§29, 32, and 33) prohibits the use of
false or misleading statements in dealing in any manner in any securities
whether or not the person making the false or misleading statements is required
to be registered. The Agency has jurisdiction to investigate and bring enforcement
actions to the full extent authorized in the Texas Securities Act with respect
to fraud or deceit, or unlawful conduct by a dealer, investment adviser,
or agent in connection with transactions involving securities in Texas. Additionally,
the Act, §23, authorizes the Securities Commissioner to issue a cease
and desist order prohibiting an unregistered person from acting as a dealer
in connection with a particular offering of securities. The Act, §23-1,
authorizes the Securities Commissioner to issue an order which assesses an
administrative fine against any person or company found to have violated
any provision of the Texas Securities Act, Board rule, or Board order. The
Act, §25-1, authorizes the Securities Commissioner, under certain circumstances,
to appoint a receiver for any person or company acting as a dealer.
§115.2. Application.
(a)-(b)
(No change.)
(c)
Investment
advisers
[advisors]--additional
requirements.
(1)
In addition to the information required to be submitted
by subsection (b) of this section, each applicant for registration as an
investment adviser must furnish to the
Securities
Commissioner a copy of its standard advisory contract.
(2)
All registered investment
advisers must deliver to all clients or prospective clients a written disclosure
statement which may be
[The applicant must also undertake to the
Commissioner to disclose to each client or prospective client the following]:
(A)
either Part II of Form ADV (Uniform
Application for Investment Adviser Registration) or another disclosure statement
which contains at least the information disclosed on Part II of Form ADV
or to amend such an application under the Investment Advisers Act of 1940
(17 C.F.R. §279.1)) as made effective in Release Number IA-991 and corrected
in Release Number IA-991A; or
[the applicant's affiliation(s), if
any, with other securities dealers or investment advisers, and the nature
of such affiliation(s);]
(B)
a disclosure statement containing
at least the information required by Schedule H of Form ADV, Uniform Application
for Investment Adviser Registration, if the investment adviser is the sponsor,
or the sponsor and the portfolio manager, of a wrap fee program which the
client will enter into.
[the applicant's fee schedule and whether
fees are negotiable; and]
[(C)
whether the applicant will also act as a principal or
as an agent to execute recommended transactions.]
[(3)
The applicant may satisfy the requirements of
paragraph (2)(A)-(C) of this subsection by furnishing to the Commissioner
a completed copy, as filed with the Securities and Exchange Commission, of
Part II of Form ADV (Uniform Application for Investment Adviser or to amend
such an application under the Investment Advisers Act of 1940 (17 Code of
Federal Regulations §279.1)) as made effective in Release Number IA-991
and corrected in Release Number IA-991A.]
(3)
[(4)]
The disclosure
(A)
not less than 48 hours prior to entering into any written
or oral investment advisory contract with such client or prospective client;
or
(B)
at the time of entering into any such contract, if the
advisory client has the right to terminate the contract without penalty within
five business days after entering into the contract.
(4)
Each advisory contract entered into within the State of Texas must contain
the following provision: "Client acknowledges receipt of Part II of Form
ADV, other disclosure statement containing the equivalent information, or
a disclosure statement containing at least the information required by Schedule
H of Form ADV if the client is entering into a wrap fee program sponsored
by the investment adviser. If the appropriate disclosure statement was not
delivered to the client at least 48 hours prior to the client entering into
any written or oral advisory contract with this investment adviser, then
the client has the right to terminate the contract without penalty within
five business days after entering into the contract. For the purposes of
this provision, a contract is considered entered into when all parties to
the contract have signed the contract, or in the case of an oral contract
otherwise signified their acceptance, any other provisions of this contract
notwithstanding."
(5)
Investment advisers are free
to provide a time period longer than five business days for penalty free
termination by their clients. If the client chooses to terminate the contract
within the five business day period, the adviser can only charge for fees
incurred prior to the termination excluding administrative fees, account
set-up fees, and minimum quarterly fees
[The required disclosure
to a client or prospective client may take the form of a brochure incorporating
the information required by paragraph (2)(A)-(C) of this subsection].
(6)
Nothing in this section shall relieve an investment
adviser from any obligation pursuant to any provision of the Investment Advisors
Act of 1940 or the rules and regulations thereunder or other federal
(d)
(No change.)
§115.3. Examination.
(a)
(No change.)
(b)
Content. Each applicant must satisfy two examination requirements.
(1)
Each applicant must pass an examination on general securities
principles. This requirement may be satisfied by passing an examination on
general securities principles administered by the NASD. As set out in subparagraph
(B) of this paragraph, applicants for restricted registrations may substitute
an examination dealing with a particular type of security for an examination
on general securities principles.
(A)
(No change.)
(B)
In lieu of an examination on general securities principles,
the Securities Commissioner recognizes the following limited examinations,
administered by the NASD, for the corresponding restricted registrations:
(i)-(ii)
(No change.)
(iii)
for persons seeking the type of restricted registration
specified in §115.1(b)(1)(I) of this title (relating to General Provisions),
the Series 22 -- Direct Participation Programs Representative Examination;
[and]
(iv)
for persons seeking the type of restricted registration
specified in §115.1(b)(1)(B) of this title (relating to General Provisions),
the Series 52 -- Municipal Securities Representative Examination
; and
[.]
(v)
for
persons seeking the type of restricted registration specified in §115.1(b)(1)(L)
of this title (relating to General Provisions), the Series 62 -- Corporate
Securities Representative Examination.
(2)
(No change.)
(c)
Exemptions from examination requirements.
(1)-(2)
(No change.)
(3)
A partial waiver of the examination requirements of
the
Texas
Securities Act, §13.D, is
granted by the Board to the following classes of persons:
(A)-(G)
(No change.)
(H)
applicants who are certified by the Certified Financial
Planner Board of Standards, Inc. to be certified financial planners and who
are seeking registration as investment advisers. These applicants are not
required to take the general securities examination, but must pass the examination
on state securities law as required by subsection (b)(2) of this section;
[and]
(I)
applicants who are designated by the American Institute
of Certified Public Accountants as accredited personal financial specialists
and who are seeking registration as investment advisers. Such persons are
not required to take the general securities examination, but are required
to pass an examination on state securities law as required by subsection
(b)(2) of this section
; and
[.]
(J)
applicants
seeking registration for the purpose of acting exclusively as an agent for
an investment adviser(s) and who limit their activities to disclosure of
the information contained in Part II of Form ADV. Such persons are not required
to take the general securities examination, but are required to pass an examination
on state securities law as required by subsection (b)(2) of this section.
(4)-(5)
(No change.)
(d)-(f)
(No change.)
§115.4. Evidences of Registration.
(a)
(No change.)
(b)
Amendments and successor entities.
(1)-(2)
(No change.)
(3)
The application for the successor entity should be filed far enough in advance
that the application can be reviewed and approved prior to the successor
entity taking over the business of the registered dealer. If a successor
entity has taken over the business of a registered dealer before the application
of the successor entity has been reviewed and approved, then the successor
entity and its agents are subject to the sanctions provided by the Texas
Securities Act for selling securities or rendering investment advice while
unregistered. If specifically requested in writing with a completed application
submission, a temporary registration for a term of 60 days may be granted
by the Securities Commissioner at his or her discretion to allow the successor
entity to carry on the business of the registered or extinct entity until
the application can be reviewed and approved. An additional fee of $25, as
required in paragraph (1) of this subsection, must be submitted with this
request since it will involve an amendment to the evidence of registration
when the application is approved.
(c)-(g)
(No change.)
§115.5. Minimum Records.
(a)
Dealer records. (Compliance with the
record-keeping
[recordkeeping] requirements of the United States
Securities and Exchange Commission (17 Code of Federal Regulations §240.17a-3
and §240.17a-4) will satisfy the following requirements
.
)[.]
(1)
(No change.)
(2)
Exemptions from the requirements of paragraph (1)
of this subsection:
(A)
Paragraph (1) of this subsection shall not be deemed to
require a dealer to make or keep such records of transactions cleared for
such dealer by a member of the National Association of Securities Dealers,
Inc., the American Stock Exchange, the Boston Stock Exchange, the Midwest
Stock Exchange, the New York Stock Exchange, the Pacific Stock Exchange,
the Chicago Board Option Exchange, or any other recognized and responsible
stock exchange approved by the
Securities
Commissioner pursuant to [§6.F of] the
Texas
Securities Act
, §6.F,
where such
records are customarily made and kept by the clearing member.
(B)-(D)
(No change.)
(3)
(No change.)
(4)
Records to be preserved by dealers.
(A)-(E)
(No change.)
(F)
The records required to be maintained and preserved pursuant
to this section may be immediately produced or reproduced on microfilm or
other photograph and may be maintained and preserved for the required time
in that form provided that such microfilms or other photographs are arranged
and indexed in such a manner as to permit the immediate location of any particular
document, and that such microfilms or other photographs are at all times
available for examination by representatives of the
Securities
Commissioner together with facilities for immediate,
easily readable projection of the microfilm or other photograph and for the
production of easily readable facsimile enlargements.
(G)-(H)
(No change.)
(b)
Investment
adviser
[advisor]
records. [Investment adviser records (compliance]
(Compliance
with the record-keeping requirements of the United States
Securities and Exchange Commission
(17 Code of Federal
Regulations §275.204-2
[(CFR §275-204-2]) will satisfy
the following requirements
.
) [shall satisfy
the following requirements:]
(1)
Records to be made by investment advisers. Persons registered
as investment advisers
whose principal place of business
is located in another state shall maintain records at least in accordance
with the minimum record keeping requirements of that state. Persons registered
as investment advisers whose principal place of business is located
in Texas shall make and keep current the following minimum records or the
equivalent thereof:
(A)-(H)
(No change.)
(2)
Records to be preserved by investment advisers.
(A)-(D)
(No change.)
(E)
The records required to be maintained and preserved pursuant
to this section may be immediately produced or reproduced on microfilm or
other photograph and may be maintained and preserved for the required time
in that form, provided that such microfilms or other photographs are arranged
and indexed in such a manner as to permit the immediate location of any particular
document, and that such microfilms or other photographs are at all times
available for examination by representatives of the
Securities
Commissioner together with facilities for immediate,
easily readable projection of the microfilm or other photograph and for the
production of easily readable facsimile enlargements.
The records required to be maintained pursuant to this section may be maintained
by any electronic medium available so long as such records are available
for immediate free access by representatives of the Securities Commissioner.
In the event that a records retention system commingles records required
to be kept under this section with records not required to be kept, representatives
of the Securities Commissioner may review all commingled records.
§115.6. Registration of Persons with Criminal Backgrounds.
(a)
The application for registration may be denied, suspended,
or revoked if the
Securities
Commissioner
finds that the person has been convicted of a felony or misdemeanor offense
which directly relates to its duties and responsibilities. In determining
whether a prior criminal conviction directly relates to such duties and responsibilities,
the
Securities
Commissioner shall consider:
(1)-(2)
(No change.)
(3)
the extent to which the
registration
[license] applied for might offer an opportunity to engage in further
criminal activity of the same type as that in which the applicant previously
had been involved; and
(4)
(No change.)
(b)
In addition to the factors stated in subsection (a) of
this section, the
Securities
Commissioner
shall consider the following evidence in determining the present fitness
of an applicant who has been convicted of a crime:
(1)-(6)
(No change.)
(7)
It shall be the responsibility of the applicant to
the extent possible to secure and provide to the
Securities
Commissioner the recommendation of the prosecution, law
enforcement, and correctional authorities as required under this section
(c)
The State Securities Board considers that the following
crimes directly relate to the duties and responsibilities of securities dealers,
agents, and salesmen:
(1)
any felony or misdemeanor of which fraud is an essential
element
or which involves wrongful taking of property
;
(2)
any criminal violation of the securities
laws
[law] or regulations of this state, or of any other state in
the United States, or of the United States, or any foreign jurisdiction;
[(3)
any crime involving moral turpitude; and]
(3)
[(4)]
any criminal violation
of statutes designed to protect consumers against unlawful practices involving
insurance, securities, commodities or commodity futures, real estate, franchises,
business opportunities, consumer goods, or other goods and services.
(d)
(No change.)
(e)
The following procedures shall apply in the event of a
denial, suspension, or revocation of license under this section.
(1)
Upon the
Securities
Commissioner's
denial of registration to an applicant, the applicant may exercise his or
her right to a hearing in accordance with [§24 of] the
Texas
Securities Act
, §24
(Texas
Civil Statutes, Article 581-24).
(2)
Upon the
Securities
Commissioner's suspension or revocation of a
registration
[license] on the grounds specified in subsection (d) of this section,
the person whose license has been suspended or revoked may exercise his or
her right to a hearing in accordance with [§24 of] the
Texas
Securities Act
, §24
(Texas
Civil Statutes, Article 581-24).
(3)
Nothing in this section shall be construed as affecting
the statutory bases or procedures for denial, suspension, or revocation of
(4)
If the
Securities
Commissioner denies, suspends, or revokes a
registration
[license] under this section, the
Securities
Commissioner shall notify the person affected in writing:
(A)
(No change.)
(B)
that a person whose
registration
[license] has been denied, suspended, or revoked, after exhausting
administrative appeals, may file an action in Travis County, Texas, for review
of the evidence presented to the
Securities
Commissioner and his
or her
decision, in
accordance with [§27 of] the
Texas
Securities
Act
, §27
(Texas Civil Statutes, Article
581-27); and
(C)
that the person seeking judicial review must file a petition
with the court within 30 days after the
Securities
Commissioner's decision is final and appealable.
§115.7. Maintenance and Inspection of Records.
(a)
(No change.)
(b)
The Securities Commissioner or his
or her
authorized representative may conduct on-site examinations
of registered dealers and investment advisers without notice and shall be
entitled to immediate and free access to all records required to be maintained
pursuant to Board rules and to all locations where such records are kept.
The Securities Commissioner or his
or her
authorized representative shall be permitted to make photostatic
or computer
copies of such records.
(c)
In the alternative, the
[The] Securities Commissioner or his
or her
authorized representative may require that records maintained pursuant to
Board rules be made available in
any
[the]
office of the Texas State Securities Board
designated
by the Securities Commissioner or his or her representative
within
48 hours of a request
or within a greater time period
as the Securities Commissioner or the Securities Commissioner's authorized
representative deems reasonable
.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700904
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §123.1, §123.2
(Editor's Note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the State Securities Board or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of
§§123.1 and 123.2, concerning guidelines for registration of open-end
investment companies. The repeals are necessitated by the passage of the
National Securities Markets Improvement Act of 1996 ("NSMIA"), Public Law
No. 104-290, which removed most securities issued by open-end investment
companies from the registration requirements of state law. After NSMIA, most
investment companies will no longer be subject to the provisions of §§123.1
or 123.2, so those provisions are no longer needed. Investment company securities
that do not come within the parameters of the exemption created by NSMIA
will proceed under the auspices of Chapter 113, registration of securities,
and be subject to general fairness standards.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the repeals are in effect there will
be no fiscal implications for state or local government as a result of enforcing
or administering the repeals.
Mr. Northcutt also has determined that for each year of the first five
years the repeals are in effect the public benefit anticipated as a result
of enforcing the repeals will be the elimination of unnecessary rules. There
will be no effect on small businesses. There is no anticipated economic cost
to persons who are required to comply with the repeals as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The repeals are proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The repeal affects Texas Civil Statutes, Article 581-7.
§123.1. Generally.
§123.2. Registration Requirements.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700905
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §123.3
The State Securities Board proposes an amendment to §123.3,
concerning a conditional exemption for money market funds. The amendments
reflect changes necessitated by the passage of the National Securities Markets
Improvement Act of 1996 ("NSMIA"), Public Law No. 104-290, and add a reference
to an additional Securities and Exchange Commission ("SEC") release in subsection
(b)(2). The SEC has a proposal outstanding which, if adopted, may also be
added to the release list in subsection (b)(2). The SEC proposal (Release
No. 33-7371) appears in the December 18, 1996, issue of the
Federal Register
(61 Fed. Reg. 66621). Related changes are being
concurrently proposed to Form 133.26, concerning request for determination
of money market fund, and Form 133.27, year-end report of sales, to reflect
the proposed amendments to §123.3.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rule is in effect there will be no
fiscal implications for state or local government as a result of enforcing
or administering the rule.
Mr. Northcutt also has determined that for each year of the first five
years the rule is in effect the public benefit anticipated as a result of
enforcing the rule will be to eliminate confusion and uncertainty over the
treatment of federal covered securities determined to be money market funds
for purposes of §123.3, by explaining that issuers of federal covered
securities meeting the requirements in the section for money market fund
status will be able to qualify for the exemption even through registration
is no longer required after NSMIA. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the rule as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendment is proposed under Texas Civil Statutes, Articles
581-28-1 and 581-5.T. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Section 5.T provides that the Board may prescribe
new exemptions by rule.
The proposed amendment affects Texas Civil Statutes, Articles 581-7 and
581-35.
§123.3. Conditional Exemption for Money Market Funds.
(a)
Introduction.
(1)
Certain open-end investment companies commonly known as
money market funds have investment characteristics and sales patterns materially
different from other types of mutual funds and other securities. These funds,
defined in subsection (b) of this section, are designed to attract a large
volume of comparatively short-term investments by purchasers. As early redemptions
are contemplated by both purchaser and seller
,
and because these funds continuously offer to repurchase their own securities
and issue new securities to new and repeat investors, an excessive amount
of fees may be paid under the
Texas
Securities
Act, §35.E, for the securities issued. Therefore, pursuant to the Act,
§5.T, the State Securities Board conditionally exempts from the [registration]
fee provisions of the
Texas
Securities Act
certain investment company securities defined herein provided all the requirements
of this
section
[rule] are satisfied.
(2)
Nothing in this section shall be construed to relieve
any open-end investment company from any condition or requirement of registration
under the Texas Securities Act except as specifically stated herein
(b)
Definition. In this section, a "money market fund" or "fund"
is an open-end investment company which must meet all of the following conditions.
(1)
(No change.)
(2)
The fund must hold itself out to be a money market
fund or an equivalent to a money market fund and must be in compliance with
the Investment Company Act of 1940, Rule 2a-7, as made effective in Securities
and Exchange Commission Release Number IC-13380 and as amended in Release
Numbers IC-14606, IC-14983, IC-18005, [and] IC-18177
, and IC-21837
.
(3)-(6)
(No change.)
(7)
A currently
authorized
[registered] fund which has been granted money market status is not required
to comply with this subsection until the fund files its Year End Report of
Sales
of Federal Covered Securities
by a
Money Market Fund on Form 133.27, but it is required to comply with the subsection
as it was in effect at the time that the fund was designated a money market
fund for purposes of this section.
(c)
Request for determination.
(1)
At the time an applicant
submits
documents or fees in connection with an authorization to sell federal covered
[applies for registration of] securities [issued by an open-end investment
company under the Act, §7], or at any time thereafter, the applicant
may request the
Securities
Commissioner [to]
determine that the issuer is a money market fund as defined in this
(2)
If the request is made after the issuance of the
fund's original
authorization
[permit], an
amendment fee of $10 will be required. Additional sales information [also]
will be required since only the
federal covered
securities
authorized
[registered]
and sold after the date the
Securities
Commissioner
determines that the issuer is a money market fund will be subject to the
reduced [registration] fees under subsection (d) of this section.
(d)
Conditional exemption. Subject to the other provisions
of this section,
federal covered
securities
issued by money market funds are exempt from the [registration] fee [requirement]
imposed by the
Texas
Securities Act, §35.E,
provided all of the following requirements are satisfied at the time of sale
of the
federal covered
securities.
(1)
An applicant has requested that the
Securities
Commissioner determine that the issuer is a money market
fund as defined in this section.
(2)
The
Securities
Commissioner
has determined that the issuer is a money market fund as defined in this
section.
(3)
For each filing of an original, renewal, or amended
(4)
During the current calendar year, the fund has [registered]
an aggregate
authorized
amount of $10 million
of
federal covered
securities for sale in
Texas.
(5)
The fund has paid the reduced
authorization
[registration] fee imposed by this paragraph for the
aggregate amount of
federal covered
securities
proposed to be sold during the current calendar year under this conditional
exemption. The reduced
authorization
[registration]
fee imposed by this paragraph for
authorization
[registration] of
federal covered
securities in excess of the first $10 million aggregate amount of securities
sold is:
(A)
for the next $10 million of
federal
covered
securities
authorized
[registered],
1/20 of 1.0% of the aggregate amount to be sold;
(B)
for the next $30 million of
federal
covered
securities
authorized
[registered],
1/50 of 1.0% of the aggregate amount to be sold;
(C)
for the next $50 million of
federal
covered
securities to be
authorized
[registered], 1/100 of 1.0% of the aggregate amount to be sold; and
(D)
1/200 of 1.0% of the aggregate amount on the remainder
of the
federal covered
securities
authorized
[registered] to be sold.
(e)
Oversales. The reduced
authorization
[registration] fee schedule imposed by subsection (d)(5) of this
section shall not apply to [the registration of] any
federal covered
securities
authorized
[registered] under the Act, §35-1. All fees paid for
authorization
[registration] of
federal
covered
securities of money market funds pursuant to §35-1 shall
be computed as set forth in the Act, §35.D
,
§35.E,
and [E and] §35-1.
(f)
Unsold balance at end of calendar year. In any calendar
year, the fees required to be paid by a fund for sales that year will be
calculated under subsection (d)(4) and (5) of this section without regard
to the amount of fees paid or
federal covered
securities sold in any other year. If, at the end of any calendar year a
money market fund has a remaining unsold balance of
federal covered
securities authorized to be sold, the dollar amount
of fees paid under subsection (d) of this section for
authorization
[registration] of the unsold balance may be reapplied
to fees required in the next calendar year, but no unsold balance of
(g)
Year end reports.
To qualify for
the reduced fees accorded to a fund granted money market fund status pursuant
to this section, the fund
[All funds] must file a year end report
of sales on Form 133.27 of this title (relating to Year End Report of Sales
(h)
Effect of noncompliance. If at any time the business or
plan of business of any fund has been altered so that it is no longer a money
market fund within subsection (b) of this section, such an issuer shall not
be entitled to any reduction of fees as provided in subsection (d)(5) of
this section. Such fund shall not be entitled to any reduction in fees as
provided in subsection (d)(5) of this section for any sales of its securities
from the time at which it ceases to comply with
subsection
(b) of this section
[§(6)] until the
Securities
Commissioner redetermines in a subsequent calendar year
that the issuer is again a money market fund as defined in subsection (b)
of this section, and instead fees shall be calculated for such issuer as
provided in the Act, §35 and §35-1.
(i)
Appeals. If any person should take exception to an action
of the
Securities
Commissioner in making,
failing to make, or revoking a determination whether that person is a money
market fund, the aggrieved person may appeal the decision of the
Securities
Commissioner as provided in the Act, §24.
(j)
Effect
of a prior determination. A fund offering federal covered securities, that
was determined to be a money market fund prior to October 11, 1996, will
continue to be considered a money market fund for purposes of this section
without the necessity of submitting a new request for determination, so long
as the fund continues to meet the definition of a "money market fund" in
subsection (b) of this section.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700906
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §133.2
(Editor's Note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices
of the State Securities Board or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of
§133.2, concerning public records charges - billing detail. Repeal of
the existing form will allow for the simultaneous adoption a new form which
is being concurrently proposed.
Tom Spradlin, Director of Information Resources, and Planning, and Don
Raschke, Director of Staff Services, have determined that for the first five-year
period the repeal is in effect there will be no fiscal implications for state
or local government as a result of enforcing or administering the repeal.
Messrs. Spradlin and Raschke also have determined that for each year of
the first five years the repeal is in effect the public benefit anticipated
as a result of enforcing the repeal will be the elimination of an outdated
form. There will be no effect on small businesses. There is no anticipated
economic cost to persons who are required to comply with the repeal as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The repeal is proposed under Texas Civil Statutes, Articles
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
Statutes and codes affected: none applicable.
§133.2. Public Records Charges - Billing Detail.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700907
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
The State Securities Board proposes
new §133.2, concerning public information charges -- billing detail.
The new section adopts by reference a form which reflects changes in the
fees for pubic information established by the General Services Commission
in accordance with the Public Information Act. The existing Form 133.2 is
being concurrently proposed for repeal.
Tom Spradlin, Director of Information Resources, and Planning, and Don
Raschke, Director of Staff Services, have determined that for the first five-year
period the rule is in effect there will be no fiscal implications for state
or local government as a result of enforcing or administering the rule.
Messrs. Spradlin and Raschke also have determined that for each year of
the first five years the rule is in effect the public benefit anticipated
as a result of enforcing the rule will be that the rule accurately apprises
persons requesting public information of the associated charges. There will
be no effect on small businesses. There is no anticipated economic cost to
persons who are required to comply with the rule as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The new rule is proposed under Texas Civil Statutes, Articles
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
Statutes and codes affected: none applicable.
§133.2. Public Information Charges -- Billing Detail.
The State Securities Board proposes to adopt by reference the public
information charges -- billing detail form. This form is available from the
State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700918
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §133.26, §133.27
(Editor's Note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the State Securities Board or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of
§133.26, concerning request for determination of money market fund status,
and §133.27, concerning year end report of sales, both concerning money
market funds. Repeal of the existing forms will allow for the simultaneous
adoption new revised forms which are being concurrently proposed.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the repeals are in effect there will
be no fiscal implications for state or local government as a result of enforcing
or administering the repeals.
Mr. Northcutt also has determined that for each year of the first five
years the repeals are in effect the public benefit anticipated as a result
of enforcing the repeals will be the elimination of outdated forms. There
will be no effect on small businesses. There is no anticipated economic cost
to persons who are required to comply with the repeals as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The repeals are proposed under Texas Civil Statutes, Articles
581-28-1 and 581-5.T. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Section 5.T provides that the Board may prescribe
new exemptions by rule.
The repeals affect Texas Civil Statutes, Articles 581-7 and 581-35.
§133.26. Request for Determination of Money Market Fund Status.
§133.27. Year-End Report of Sales by a Money Market Fund.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's authority to
adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700908
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
The State Securities Board proposes
new §133.26, concerning request for determination of money market fund
status, and §133.27, concerning year-end report of sales, both concerning
federal covered securities. The new sections adopts by reference forms which
reflect changes being concurrently proposed to §123.3, concerning a
conditional exemption for money market funds, necessitated by the passage
of the National Securities Markets Improvement Act of 1996 ("NSMIA"), Public
Law No. 104-290. The Securities and Exchange Commission has a proposal outstanding
which, if adopted, may also be added to the releases listed on Form 133.26,
Item 5(b), when Form 133.26 is considered for adoption. The existing Forms
133.26 and 133.27 are being concurrently proposed for repeal.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rules are in effect there will be
no fiscal implications for state or local government as a result of enforcing
or administering the rules.
Mr. Northcutt also has determined that for each year of the first five
years the rules are in effect the public benefit anticipated as a result
of enforcing the rules will be to have forms allowing issuers of federal
covered securities qualify for the exemption even through registration is
no longer required after NSMIA. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the rules as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The new rules are proposed under Texas Civil Statutes, Articles
581-28-1 and 581-5.T. Section 28-1 provides the Board with the authority
to adopt rules and regulations necessary to carry out and implement the provisions
of the Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes. Article 581-5.T. Section 5.T provides that the Board
may prescribe new exemptions by rule.
The new rules affect Texas Civil Statutes, Articles 581-7 and 581-35.
§133.26. Request for Determination of Money Market Fund Status for Federal Covered Securities (Pursuant to §123.3(c)).
The State Securities Board proposes to adopt by reference the request
for determination of money market fund status form. This form is available
from the State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167.
§133.27. Year-End Report of Sales of Federal Covered Securities by a Money Market Fund (Pursuant to §123.3).
The State Securities Board proposes to adopt by reference the year-end
report of sales form. This form is available from the State Securities Board,
P.O. Box 13167, Austin, Texas 78711-3167.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700916
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
7 TAC §133.33
The State Securities Board proposes an amendment to §133.33,
concerning uniform forms accepted, required, or recommended. The amendment
would update the name of the U-7 Form; add a cross-reference to Chapter 114,
federal covered securities, which is being concurrently proposed; and remove
an unnecessary sentence.
Micheal Northcutt, Director, Securities Registration Division, has determined
that for the first five-year period the rule is in effect there will be no
fiscal implications for state or local government as a result of enforcing
or administering the rule.
Mr. Northcutt also has determined that for each year of the first five
years the rule is in effect the public benefit anticipated as a result of
enforcing the rule will be accuracy of terminology and cross-references.
There will be no effect on small businesses. There is no anticipated economic
cost to persons who are required to comply with the rule as proposed.
Comments on the proposal to be considered by the Board must be submitted
in writing within 30 days after publication of the proposed sections in the
The amendment is proposed under Texas Civil Statutes, Article
581-28-1. Section 28-1 provides the Board with the authority to adopt rules
and regulations necessary to carry out and implement the provisions of the
Texas Securities Act, including rules and regulations governing registration
statements and applications; defining terms; classifying securities, persons,
and matters within its jurisdiction; and prescribing different requirements
for different classes.
The proposed amendment affects Texas Civil Statutes, Article 581-7.
§133.33. Uniform Forms Accepted, Required, or Recommended.
(a)
Assuming the appropriate exhibits and supplements are filed,
the State Securities Board will accept for filing the following "Uniform
Forms" in lieu of the requisite Texas form, if any.
(1)-(8)
(No change.)
(9)
U-7. Small
Company
[Corporate] Offerings Registration Form may be used as a disclosure guide
when making a small
company
[corporate] offering
of securities pursuant to an exemption under the Act or when making small
public offerings pursuant to the Act, §7.A.
(b)
(No change.)
(c)
Section 109.13(k)(5) of this title (relating to Limited
Offering Exemptions)
and §114.4(b)(1) of this
title (relating to Filings and Fees) require
[requires] the filing
of a Form D, "Notice of Sale of Securities Pursuant to Regulation D, §4(6),
and/or Uniform Limited Offering Exemption." [No Texas form may be filed in
lieu of Form D.]
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700909
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300
Chapter 107.
Terminology
Chapter 109.
Transactions Exempt From Registration
Chapter 113.
Registration of Securities
Chapter 114.
Federal Covered Securities
Chapter 115.
Dealers and Salesmen
Chapter 123.
Administrative Guidelines for Registration of Open-End Investment Companies
Chapter 133.
Forms
Chapter 137.
Administrative Guidelines for Regulation of Offers