Part 1.
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
Chapter 1.
ADMINISTRATION
Subchapter A. GENERAL POLICIES AND PROCEDURES
10 TAC §1.16
The Texas Department of Housing and Community Affairs (the
Department) proposes new §1.16, concerning ethics and disclosure requirements
for outside financial advisors and service providers. This section is proposed
new in order to implement new legislation enacted in the 78th Legislative
Session.
Edwina P. Carrington, Executive Director, has determined that for the first
five-year period the new section is in effect, there will be no fiscal implications
for state or local government as a result of enforcing or administering the
new section.
Ms. Carrington also has determined that for each year of the first five-years
the new section is in effect the public benefit anticipated as a result of
enforcing the new section will be to permit the adoption of new disclosure
rules for the State of Texas, thereby enhancing the State's ability to provide
decent, safe and sanitary housing administered by the Department. There will
be no effect on persons, small businesses or micro-businesses. There are no
anticipated economic costs to any person, business or micro-business required
to comply with the new section proposed. The proposed new section will not
have an impact on any local economy.
Comments may be submitted to Byron Johnson, Bond Finance Division, Texas
Department of Housing and Community Affairs, P.O. Box 13941, Austin, Texas,
78711-3941 or by email at the following address: bjohnson@tdhca.state.tx.us.
The proposed new section is proposed pursuant to the authority
of the Texas Government Code, Chapter 2263.
The proposed new section affects no other code, article or statute.
§1.16.Ethics and Disclosure Requirements for Outside Financial Advisors and Service Providers.
(a)
Purpose. The purpose of this section is to establish standards
of conduct applicable to financial advisors or service providers in accordance
with Chapter 2263, Texas Government Code.
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Department--The Texas Department of Housing and Community
Affairs, (the "Department").
(2)
Board--The Governing Board of the Department.
(3)
Financial advisor or service provider--A person or business
entity who acts as a financial advisor, financial consultant, money or investment
manager, or broker who:
(A)
may reasonably be expected to receive, directly or indirectly,
more than $10,000 in compensation from the Department during a fiscal year;
or
(B)
renders important investment or funds management advice
to the Department or a member of the Board.
(c)
Procedures.
(1)
A financial advisor or service provider shall disclose
in writing to the Executive Director of the Department and to the state auditor:
(A)
any relationship the financial advisor or service provider
has with any party to a transaction with the Department, other than a relationship
necessary to the investment or funds management services that the financial
advisor or service provider performs for the Department, if a reasonable person
could expect the relationship to diminish the financial advisor's or service
provider's independence of judgment in the performance of the person's responsibilities
to the Department; and
(B)
all direct or indirect pecuniary interests the financial
advisor or service provider has in any party to a transaction with the Department,
if the transaction is connected with any financial advice or service the financial
advisor or service provider provides to the Department or to a member of the
Board in connection with the management or investment of state funds.
(2)
The financial advisor or service provider shall disclose
a relationship described by this subsection without regard to whether the
relationship is a direct, indirect, personal, private, commercial, or business
relationship.
(3)
A financial advisor or service provider shall file annually
a statement with the Executive Director of the Department and with the state
auditor. The statement must disclose each relationship and pecuniary interest
described by this subsection, or if no relationship or pecuniary interest
described by that subsection existed during the disclosure period, the statement
must affirmatively state that fact.
(4)
The annual statement must be filed not later than April
15 in the following form. The statement must cover the reporting period of
the previous calendar year.
Figure: 10 TAC §1.16(c)(4) (.pdf)
(5)
The financial advisor or service provider shall promptly
file a new or amended statement with the Executive Director of the Department
and with the state auditor whenever there is new information to report under
this subsection.
(6)
A contract under which a financial advisor or service provider
renders financial services or advice to the Department or a member of the
Board is voidable by the Department if the financial advisor or service provider
violates a standard of conduct adopted under this section.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 15, 2004.
TRD-200401901
Edwina P. Carrington
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: April 25, 2004
For further information, please call: (512) 475-4595