PROPOSED RULES
Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the Texas 
Register at least 30 days before action is taken. The 30-day time period gives 
interested persons an opportunity to review and make oral or written comments on 
the section. Also, in the case of substantive action, a public hearing must be 
granted if requested by at least 25 persons, a governmental subdivision or 
agency, or an association having at least 25 members.
Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of bold text. [Brackets] indicate deletion of existing 
material within a section.

TITLE 7. BANKING AND SECURITIES
PART VII. State Securities Board
CHAPTER 105.Rules of Practice in Contested Cases
7 TAC sec.sec.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(Editor's note: The text of the following sections proposed for repeal will not 
be published.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 sec.sec.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result of enforcing the repeals will be the elimination of outdated procedures.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 
sec.105.1. Scope.
sec.105.2. Notice.
sec.105.3. Presiding Officer or Body.
sec.105.4. Appearance.
sec.105.5. Postponements.
sec.105.6. Written Answers, Briefs, and Stipulations. 
sec.105.7. Presentation of Evidence.
sec.105.8. Subpoenas and Depositions.
sec.105.9. Disposition.
sec.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 sec.sec.105.1-105.19
The State Securities Board proposes new sec.sec.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 Texas Register. Comments 
should be sent to David Weaver, State Securities Board, P.O. Box 13167, Austin, 
Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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.

sec.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, sec.sec.15 or 18, applicant 
for registration of securities under the Act, sec.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. 

sec.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. 

sec.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. 

sec.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, 
sec.sec.15 or 18, or failure to register securities of the applicant under the 
Act, sec.7, may request a hearing pursuant to the Act, sec.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, sec.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. 

sec.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. 

sec.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 sec.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. 

sec.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 sec.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. 

sec.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 sec.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. 

sec.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. 

sec.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. 

sec.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. 

sec.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. 

sec.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. 

sec.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.

sec.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. 

sec.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.

sec.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. 

sec.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.

sec.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

CHAPTER 107.Terminology
7 TAC sec.107.2
The State Securities Board proposes an amendment to sec.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 Texas Register. Comments should be 
sent to David Weaver, State Securities Board, P.O. Box 13167, Austin, Texas 
78711-3167, or sent by facsimile to (512) 305-8310. 
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. 

sec.107.2. Definitions.
The following words and terms, when used in <nl> Part VII of <ol> this <nl> 
Title (relating to the State Securities Board)<ol> [chapter], shall have the 
following meanings, unless the context clearly indicates otherwise. 
Act or Securities Act or Texas Securities Act - The <nl> Texas <ol> Securities 
Act, Texas Civil Statutes, Article <nl> 581-1 <ol> [581] et seq., as amended. 
Affiliate - An <nl>"<ol> affiliate <nl>"<ol> of, or person <nl>"<ol> affiliated 
<nl>"<ol> with a specified person, is a person that directly, or indirectly 
through one or more intermediaries, controls or is controlled by, or is under 
common control with, the person specified. 
Applicant - A person who submits an application for registration of 
securities,<nl> documents in connection with an authorization to offer and sell 
federal covered securities,<ol> or for registration as a dealer, investment 
adviser, or salesman, or who files an application for an order of the <nl> 
Securities <ol> Commissioner.
Business days - For the purpose of filing Form 133.29 pursuant to the 
requirements of <nl>sec.109.13(l)<ol> [sec.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 <nl> Securities <ol> Commissioner. 
Detailed balance sheet - A balance sheet <nl> prepared in accordance with either 
generally accepted accounting principles or generally accepted auditing 
standards <ol>. 
Employer - For purposes of the <nl> Texas<ol> Securities Act, sec.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 sec.5.I(b).
<nl> Federal covered securities <ol> - <nl>Any security or securities described 
as a "covered security" or as "covered securities" in the Securities Act of 
1933, sec.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.<ol> 
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 <nl> previously described <ol> [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 <nl> 
writings <ol> [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 
<nl> services <ol> [practices] is solely incidental to the practice of his <nl> 
or her <ol> profession; or 
(C) (No change.)
<nl> Investment Advisers Act of 1940 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.80b-1, et seq.<ol>
<nl> Investment Company Act of 1940 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.80a-1, et seq.<ol>
NASD - <nl> The <ol> National Association of Securities Dealers, Inc.
Profit and loss statement - An income statement <nl> prepared in accordance with 
either generally accepted accounting principles or generally accepted auditing 
standards <ol>. 
Proposed plan of business - As used in the <nl> Texas <ol> 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 <nl> Securities <ol> Commissioner of 
general applicability that implements, interprets, or prescribes law or policy, 
or describes the procedure or practice requirements of the Board or <nl> 
Securities <ol> Commissioner.
Savings and loan association - For definition see the Texas Savings and Loan Act 
(Texas Civil Statutes, Article 852a, as amended) <nl>,<ol> which regulates such 
savings and loan associations.
<nl> Securities Act of 1933 <ol>- <nl>The federal statute of that name, as 
amended, 15 United States Code sec.77a, et seq.<ol>
<nl> Securities Exchange Act of 1934 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.78a, et seq.<ol>
Security holders or purchasers of securities - As such terms are used in the 
<nl> Texas <ol> Securities Act, sec.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 <nl> Texas <ol> Securities Act, sec.5.I(b). 
Staff - Personnel of the Securities Board, excluding the members of the Board, 
the <nl> Securities <ol> Commissioner <nl>,<ol> and the Deputy Commissioner. 
State, territory, or insular possession of the United States - As used in the 
<nl> Texas <ol> Securities Act <nl>,<ol> includes a commonwealth. 
Statement of surplus - A statement of stockholders' equity <nl> prepared in 
accordance with either generally accepted accounting principles or generally 
accepted auditing standards <ol>. 
Telephone or telegram - For purposes of the <nl> Texas <ol> Securities Act, 
sec.7.C(2)(c), includes any means of electronic transmission such as, but not 
limited to, telephone, telegraph, graphic scanning, modem, or facsimile; 
provided <nl>,<ol> 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 [sec.4.C of] the <nl> Texas <ol> Securities Act, 
<nl>sec.4.C, <ol> if either <nl> the person <ol> [he] or <nl> the person's <ol> 
[his] agent is present in this state or the offeree/purchaser or <nl> the 
offeree/purchaser's <ol> [his] agent is present in this state at the time of the 
particular activity. A person can be a dealer in more than one state at the same 
time.
(B) Likewise, a person is a "salesman" who engages "within this state" in one or 
more of the activities set out in [sec.4.D of] the <nl> Texas Securities <ol> 
Act, <nl>sec.4.D, <ol> whether by direct act or through subagents except as 
otherwise provided, if either <nl> the salesman <ol> [he] or <nl> the salesman's 
<ol> [his] agent is present in this state or the offeree/purchaser or <nl> the 
offeree/purchaser's <ol> [his] agent is present in this state at the time of the 
particular activity. A person can be a salesman in more than one state at the 
same time. 
(C) Offers and sales can be made by personal contact, mail, telegram, telephone, 
<nl> electronic communication, <ol> 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

CHAPTER 109.Transactions Exempt From Registration
7 TAC sec.109.13
The State Securities Board proposes an amendment to sec.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 Texas Register<ol>. 
Comments should be sent to David Weaver, State Securities Board, P.O. Box 13167, 
Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 

sec.109.13. Limited Offering Exemptions.
(a)-(j) (No change.) 
(k) Uniform limited offering exemption. In addition to sales made under the 
Texas Securities Act, sec.5.I, the State Securities Board, pursuant to the Act, 
sec.5.T, exempts from the registration requirements of the Act, sec.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.) 
<nl>(16)<ol> <nl> 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 sec.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.<ol> 
(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

CHAPTER 113.Registration of Securities
7 TAC sec.113.2, sec.113.12
The State Securities Board proposes amendments to sec.113.2, concerning 
registration by coordination, and sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 

sec.113.2. Registration by Coordination.
(a) Time to file. Applications for registration under the <nl> Texas <ol> 
Securities Act, sec.7.C, should be filed contemporaneously with the Securities 
and Exchange Commission ("SEC") registration application. Delayed filings will 
jeopardize coordination effectiveness.
(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 <nl>, if the securities are not federal covered securities as 
that term is defined in sec.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)<ol>. 

sec.113.12. Applicability of Guidelines.
The guidelines listed in this section do not apply to offerings made pursuant to 
an exemption under either the <nl> Texas <ol> Securities Act [(Act)], sec.5 or 
sec.6 <nl>, or to an offering of federal covered securities, as that term is 
defined in sec.107.2 of this title (relating to Definitions)<ol>. 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);] 
<nl>(4)<ol> [(5)] Chapter 124 of this title (relating to Administrative 
Guidelines for Registration of Periodic Payment Plans); 
<nl>(5)<ol> <nl> Chapter 129 of this title (relating to Administrative 
Guidelines for Registration of Asset-Backed Securities);<ol> 
(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

CHAPTER 114.Federal Covered Securities
7 TAC sec.sec.114.1-114.4
The State Securities Board proposes new Chapter 114, sec.sec.114.1-114.4, 
concerning federal covered securities. A definition of "federal covered 
securities" is being concurrently proposed in an amendment to sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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.

sec.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, sec.5 or sec.6. 

sec.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 
sec.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, sec.18(b)(1).
SEC - The United States Securities and Exchange Commission. 

sec.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, sec.8. 

sec.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 
sec.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, sec.sec.35.D and 35.E. 
(b) Special circumstances. 
(1) SEC Regulation D, Rule 506 offerings. In connection with an offering 
described in both sec.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 
sec.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, sec.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 
sec.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 sec.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 
sec.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 sec.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, sec.35-1.A; and 
(ii) pay an amendment fee of $10, as provided in the Texas Securities Act, 
sec.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, 
sec.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, sec.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, 
sec.sec.35-1 or 35-2. 
(g) Money market fund determinations pursuant to sec.123.3. A fund, offering 
federal covered securities, that is determined to be a money market fund 
pursuant to sec.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

CHAPTER 115.Dealers and Salesmen
7 TAC sec.sec.115.1-115.7
The State Securities Board proposes amendments to sec.sec.115.1-115.7, 
concerning dealers, investment advisers, agents, and salesmen. Throughout 
sec.sec.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 
sec.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, sec.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 sec.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 sec.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 sec.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 sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or submitted by facsimile to (512) 305-
8310. 
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. 

sec.115.1. General <nl> Provisions<ol>.
(a) Registration. 
(1)-(2) (No change.) 
(3) <nl> Except as provided in subsection (i) of this section, <ol> [The 
Securities Act requires the registration of] investment advisers and their 
agents <nl> who solicit clients or who are <ol> [actually] involved in the 
rendering of investment advice <nl> 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 <ol>.
(4)-(5) (No change.) 
(b) Restricted registration. 
(1) Any person or company may apply for, and the <nl> Securities <ol> 
Commissioner may grant, restricted registration for the purpose of <nl> 
rendering advice regarding or <ol> 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 <nl> Securities <ol> 
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 <nl>; and <ol>
<nl>(L)<ol> <nl>registration to deal exclusively in corporate securities.<ol> 
(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 <nl> accordance with the provisions of sec.115.7 of this title 
(relating to Maintenance and Inspection of Records) <ol> [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 <nl> control person <ol> [principal] 
registered <nl> in Texas via <ol> [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 <nl> Securities <ol> 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) <nl> Each person registered as a dealer or <ol> [All registered dealers and] 
investment advisers <nl> or as an agent thereof <ol> shall report to the <nl> 
Securities Commissioner <ol> [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 <nl> that person or an 
employee, officer, or agent thereof <ol> [the dealer or any salesmen or officer 
of the dealer]. Upon request by the <nl> Securities <ol> Commissioner, <nl> that 
person <ol> [the dealer] may be required to furnish to the <nl> Securities <ol> 
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) <nl> 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 <ol> [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) <nl> any felony criminal action or conviction, or any misdemeanor action or 
conviction based on fraud, deceit, or wrongful taking of property <ol> [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.) 
<nl>(E)<ol> <nl> any change in any other information previously disclosed to the 
Securities Commissioner on any application form or filing. <ol> 
<nl>(3)<ol> [(E)] <nl> For <ol> [for] purposes of this subsection, <nl>" <ol> 
dealer <nl>"<ol> 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.) 
<nl>(i)<ol> <nl>Persons not required to register as an investment adviser or an 
agent of an investment adviser on or after April 9, 1997.<ol> 
<nl>(1)<ol> <nl>Registration as an investment adviser is not required for the 
following:<ol> 
<nl>(A)<ol> <nl> an investment adviser subject to registration under the 
Investment Advisers Act of 1940, sec.203, and properly registered 
thereunder;<ol> 
<nl>(B)<ol> <nl> a person not registered under the Investment Advisers Act of 
1940, sec.203, because such person is excepted from the definition of an 
investment adviser under the Investment Advisers Act of 1940, sec.202(a)(11); or 
<ol>
<nl>(C)<ol> <nl> 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.<ol> 
<nl>(2)<ol> <nl> 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.<ol> 
<nl>(3)<ol> <nl> Preservation of filing requirements and fees for investment 
advisers and agents exempted from registration pursuant to this subsection 
only.<ol>
<nl>(A)<ol> <nl> Initially, the provisions of paragraphs (1) and (2) of this 
subsection are available provided that the investment adviser or agent 
files:<ol> 
<nl>(i)<ol> <nl>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;<ol> 
<nl>(ii)<ol> <nl> a consent to service of process; and <ol> 
<nl>(iii)<ol> <nl> an initial fee equal to the amount that would have been paid 
had the investment adviser or agent filed for registration in Texas.<ol> 
<nl>(B)<ol> <nl> Upon amendment to its Form ADV, the investment adviser or agent 
files:<ol>
<nl>(i)<ol> <nl>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 <ol> 
<nl>(ii)<ol> <nl> an amendment fee of $25, as provided in the Texas Securities 
Act, sec.35.C. <ol> 
<nl>(C)<ol> <nl>Annually, the investment adviser or agent files:<ol> 
<nl>(i)<ol> <nl>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 <ol> 
<nl>(ii)<ol> <nl> renewal fees which would have been paid had the investment 
adviser or agent been registered in Texas.<ol> 
<nl>(j)<ol> <nl>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, sec.15(h)(3), provided such person is:<ol> 
<nl>(1)<ol> <nl>not ineligible to register with this state for any reason other 
than such a transaction; and <ol> 
<nl>(2)<ol> <nl> registered with a registered securities association and at 
least one other state.<ol> 
<nl>(k)<ol> <nl>Applicability of antifraud provisions. With regard to 
subsections (i) and (j) of this section, the Texas Securities Act (sec.sec.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, sec.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, sec.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, sec.25-1, authorizes the Securities Commissioner, under 
certain circumstances, to appoint a receiver for any person or company acting as 
a dealer.<ol>

sec.115.2. Application.
(a)-(b) (No change.) 
(c) Investment <nl> advisers <ol> [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 <nl> Securities <ol> Commissioner a copy of its standard advisory 
contract. 
(2) <nl> All registered investment advisers must deliver to all clients or 
prospective clients a written disclosure statement which may be <ol> [The 
applicant must also undertake to the Commissioner to disclose to each client or 
prospective client the following]:
(A) <nl> 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. sec.279.1)) as made 
effective in Release Number IA-991 and corrected in Release Number IA-991A; or 
<ol> [the applicant's affiliation(s), if any, with other securities dealers or 
investment advisers, and the nature of such affiliation(s);] 
(B) <nl> 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.<ol> [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 sec.279.1)) as made 
effective in Release Number IA-991 and corrected in Release Number IA-991A.] 
<nl>(3)<ol> [(4)] The disclosure <nl> statement <ol> required by paragraph (2) 
[(A)-(C)] of this subsection shall be delivered to a client or prospective 
client either:
(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. 
<nl>(4)<ol> <nl> 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."<ol> 
(5) <nl> 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 <ol> [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 <nl> case law, 
interpretative opinions, and administrative actions by the Securities and 
Exchange Commission (as in existence on April 8, 1997) <ol> or state law to 
disclose any information to its clients not specifically required by this 
section. 
(d) (No change.)

sec.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 
sec.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 
sec.115.1(b)(1)(B) of this title (relating to General Provisions), the Series 52 
-- Municipal Securities Representative Examination <nl>; and <ol>[.] 
<nl>(v)<ol> <nl>for persons seeking the type of restricted registration 
specified in sec.115.1(b)(1)(L) of this title (relating to General Provisions), 
the Series 62 -- Corporate Securities Representative Examination.<ol> 
(2) (No change.) 
(c) Exemptions from examination requirements. 
(1)-(2) (No change.) 
(3) A partial waiver of the examination requirements of the <nl> Texas <ol> 
Securities Act, sec.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 <nl>; and <ol> 
[.] 
<nl>(J)<ol> <nl> 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. <ol> 
(4)-(5) (No change.) 
(d)-(f) (No change.) 

sec.115.4. Evidences of Registration. 
(a) (No change.) 
(b) Amendments and successor entities. 
(1)-(2) (No change.) 
<nl>(3)<ol> <nl> 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.<ol> 
(c)-(g) (No change.)

sec.115.5. Minimum Records. 
(a) Dealer records. (Compliance with the <nl> record-keeping <ol> 
[recordkeeping] requirements of the United States Securities and Exchange 
Commission (17 Code of Federal Regulations sec.240.17a-3and sec.240.17a-4) will 
satisfy the following requirements <nl>.<ol>)[.] 
(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 <nl> 
Securities <ol> Commissioner pursuant to [sec.6.F of] the <nl> Texas <ol> 
Securities Act <nl>, sec.6.F,<ol> 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 <nl> Securities <ol> 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 <nl> adviser <ol> [advisor] records. [Investment adviser records 
(compliance] <nl> (Compliance <ol> with the record-keeping requirements of the 
United States Securities and Exchange Commission <nl>(17 Code of Federal 
Regulations sec.275.204-2 <ol> [(CFR sec.275-204-2]) will satisfy the following 
requirements <nl>.<ol>) [shall satisfy the following requirements:] 
(1) Records to be made by investment advisers. Persons registered as investment 
advisers <nl> 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 <ol> 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 <nl> Securities <ol> Commissioner together with 
facilities for immediate, easily readable projection of the microfilm or other 
photograph and for the production of easily readable facsimile enlargements. 
<nl> 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.<ol> 

sec.115.6. Registration of Persons with Criminal Backgrounds. 
(a) The application for registration may be denied, suspended, or revoked if the 
<nl> Securities <ol> 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 <nl> Securities <ol> 
Commissioner shall consider:
(1)-(2) (No change.) 
(3) the extent to which the <nl> registration <ol> [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 
<nl> Securities <ol> 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 <nl> Securities <ol> Commissioner the recommendation 
of the prosecution, law enforcement, and correctional authorities as required 
under this section <nl>. The <ol> [; the] applicant shall also furnish proof
to the <nl> Securities <ol> Commissioner that he or she has maintained a record 
of steady employment and has supported his or her dependents and has otherwise 
maintained a record of good conduct and has paid all outstanding court costs, 
supervision fees, fines, and restitution as may have been ordered in all 
criminal cases in which he or she has been convicted. 
(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 <nl> or 
which involves wrongful taking of property<ol>; 
(2) any criminal violation of the securities <nl> laws <ol> [law] or regulations 
of this state, or of any other state in the United States, or of the United 
States, or any foreign jurisdiction; <nl> and <ol> 
[(3) any crime involving moral turpitude; and] 
<nl>(3)<ol> [(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 <nl> Securities <ol> Commissioner's denial of registration to an 
applicant, the applicant may exercise his or her right to a hearing in 
accordance with [sec.24 of] the <nl> Texas <ol> Securities Act <nl> , sec.24 
<ol> (Texas Civil Statutes, Article 581-24). 
(2) Upon the <nl> Securities <ol> Commissioner's suspension or revocation of a 
<nl> registration <ol> [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 [sec.24 of] the <nl> 
Texas <ol> Securities Act <nl>, sec.24 <ol>(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 <nl> registration <ol> 
[licenses] for dealers, agents, or salesmen, as set out in the <nl> Texas <ol> 
Securities Act [of Texas] (Texas Civil Statutes, Article 581-1 et seq.), as this 
section relates only to such actions based upon the matters stated in this 
section.
(4) If the <nl> Securities <ol> Commissioner denies, suspends, or revokes a <nl> 
registration <ol> [license] under this section, the <nl> Securities <ol> 
Commissioner shall notify the person affected in writing: 
(A) (No change.) 
(B) that a person whose <nl> registration <ol> [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 <nl> 
Securities <ol> Commissioner and his <nl> or her <ol> decision, in
accordance with [sec.27 of] the <nl> Texas <ol> Securities Act <nl>, sec.27 <ol> 
(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 <nl> Securities <ol> Commissioner's decision is final 
and appealable.

sec.115.7. Maintenance and Inspection of Records.
(a) (No change.) 
(b) The Securities Commissioner or his <nl> or her <ol> 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 
<nl> or her <ol> authorized representative shall be permitted to make 
photostatic <nl> or computer <ol> copies of such records. 
(c) <nl> In the alternative, the <ol> [The] Securities Commissioner or his <nl> 
or her <ol> authorized representative may require that records maintained 
pursuant to Board rules be made available in <nl> any <ol> [the] office of the 
Texas State Securities Board <nl> designated by the Securities Commissioner or 
his or her representative <ol> within 48 hours of a request <nl> or within a 
greater time period as the Securities Commissioner or the Securities 
Commissioner's authorized representative deems reasonable <ol>. 
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

CHAPTER 123.Administrative Guidelines for Registration of Open-End Investment 
Companies
7 TAC sec.123.1, sec.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 sec.sec.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 sec.sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 
sec.123.1. Generally.
sec.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 sec.123.3
The State Securities Board proposes an amendment to sec.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 sec.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 
sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 

sec.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 <nl>,<ol> 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 
<nl> Texas <ol> Securities Act, sec.35.E, for the securities issued. Therefore, 
pursuant to the Act, sec.5.T, the State Securities Board conditionally exempts 
from the [registration] fee provisions of the <nl> Texas <ol> Securities Act 
certain investment company securities defined herein provided all the 
requirements of this <nl> section <ol> [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 <nl> or in Chapter 114 
of this title (relating to Federal Covered Securities)<ol>. [No securities of 
open-end investment companies may be registered with the State Securities Board 
or conditionally exempted from registration under this section unless the 
Commissioner has determined that the offering is fair, just, and equitable to 
purchasers thereof in accordance with the requirements of the Act, sec.7 and 
sec.10.] 
(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 <nl>, and IC-21837 <ol>. 
(3)-(6) (No change.) 
(7) A currently <nl> authorized <ol> [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 <nl> of Federal Covered Securities <ol> 
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 <nl> submits documents or fees in connection with 
an authorization to sell federal covered <ol> [applies for registration of] 
securities [issued by an open-end investment company under the Act, sec.7], or 
at any time thereafter, the applicant may request the <nl> Securities <ol> 
Commissioner [to] determine that the issuer is a money market fund as defined in 
this <nl> section <ol> [rule]. The request shall be made in writing on Form 
133.26 of this title (relating to Request for Determination of Money Market Fund 
Status <nl> for Federal Covered Securities <ol>). The <nl> Securities <ol> 
Commissioner shall review the request and any other information the <nl> 
Securities <ol> Commissioner deems relevant <nl> to the determination of 
<ol>whether [and shall determine if] the issuer is a money market fund for 
purposes of this section. 
(2) If the request is made after the issuance of the fund's original <nl> 
authorization <ol> [permit], an amendment fee of $10 will be required. 
Additional sales information [also] will be required since only the <nl> federal 
covered <ol> securities <nl> authorized <ol> [registered] and sold after the 
date the <nl> Securities <ol> 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, <nl> 
federal covered <ol> securities issued by money market funds are exempt from the 
[registration] fee [requirement] imposed by the <nl> Texas <ol> Securities Act, 
sec.35.E, provided all of the following requirements are satisfied at the time 
of sale of the <nl> federal covered <ol> securities. 
(1) An applicant has requested that the <nl> Securities <ol> Commissioner 
determine that the issuer is a money market fund as defined in this section. 
(2) The <nl> Securities <ol> 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 <nl> authorization <ol> 
[application for registration] under the conditional exemption provided by this 
section, the applicant has paid the $10 filing fee required by the Act, 
sec.35.D, in addition to the reduced [registration] fee imposed by paragraph (5) 
of this subsection. 
(4) During the current calendar year, the fund has [registered] an aggregate 
<nl> authorized <ol> amount of $10 million of <nl> federal covered <ol> 
securities for sale in Texas. 
(5) The fund has paid the reduced <nl> authorization <ol> [registration] fee 
imposed by this paragraph for the aggregate amount of <nl> federal covered <ol> 
securities proposed to be sold during the current calendar year under this 
conditional exemption. The reduced <nl> authorization <ol> [registration] fee 
imposed by this paragraph for <nl> authorization <ol> [registration] of <nl> 
federal covered <ol> securities in excess of the first $10 million aggregate 
amount of securities sold is: 
(A) for the next $10 million of <nl> federal covered <ol> securities <nl> 
authorized <ol> [registered], 1/20 of 1.0% of the aggregate amount to be sold; 
(B) for the next $30 million of <nl> federal covered <ol> securities <nl> 
authorized <ol> [registered], 1/50 of 1.0% of the aggregate amount to be sold; 
(C) for the next $50 million of <nl> federal covered <ol> securities to be <nl> 
authorized <ol> [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 <nl> federal 
covered <ol> securities <nl> authorized <ol> [registered] to be sold. 
(e) Oversales. The reduced <nl> authorization <ol> [registration] fee schedule 
imposed by subsection (d)(5) of this section shall not apply to [the 
registration of] any <nl> federal covered <ol> securities <nl> authorized <ol> 
[registered] under the Act, sec.35-1. All fees paid for <nl> authorization <ol> 
[registration] of <nl> federal covered <ol> securities of money market funds 
pursuant to sec.35-1 shall be computed as set forth in the Act, sec.35.D <nl>, 
sec.35.E,<ol> and [E and] sec.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 <nl> federal covered <ol> securities sold in any other year. If, at the 
end of any calendar year a money market fund has a remaining unsold balance of 
<nl> federal covered <ol> securities authorized to be sold, the dollar amount of 
fees paid under subsection (d) of this section for <nl> authorization <ol> 
[registration] of the unsold balance may be reapplied to fees required in the 
next calendar year, but no unsold balance of <nl> authorized <ol> [registered] 
but unsold <nl> federal covered <ol> securities will be carried forward to the 
subsequent calendar year. 
(g) Year end reports. <nl> To qualify for the reduced fees accorded to a fund 
granted money market fund status pursuant to this section, the fund <ol> [All 
funds] must file a year end report of sales on Form 133.27 of this title 
(relating to Year End Report of Sales <nl> of Federal Covered Securities <ol> by 
<nl> a <ol> Money Market Fund) in January of each year which reflects the amount 
of <nl> federal covered <ol> securities sold in the previous year, the balance 
of fees paid for <nl> authorization <ol> [registration] of any unsold balance in 
the previous year and the recalculated balance of authorized <nl> federal 
covered <ol> securities at the beginning of the current year. In calculating 
fees applied to sales during the previous year, fees will first be applied at 
the higher rates specified in the reduced [registration] fee schedule in 
subsection (d)(5) of this section, and then at more reduced rates as sales 
volume increases, and not vice versa. Funds should consult [the examples 
contained in] Form 133.27 in determining how to compute fees. 
(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 <nl> subsection (b) of this section <ol> [sec.(6)] until the <nl> 
Securities <ol> 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, sec.35 and sec.35-1. 
(i) Appeals. If any person should take exception to an action of the <nl> 
Securities <ol> 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 <nl> Securities <ol> Commissioner as provided in 
the Act, sec.24. 
<nl>(j)<ol> <nl>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.<ol> 
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

CHAPTER 133.Forms
7 TAC sec.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 sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305- 8310. 
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.
sec.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 sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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.

sec.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 sec.133.26, sec.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 sec.133.26, concerning request 
for determination of money market fund status, and sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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. 
sec.133.26. Request for Determination of Money Market Fund Status.
sec.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 sec.133.26, concerning request for 
determination of money market fund status, and sec.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 
sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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.

sec.133.26. Request for Determination of Money Market Fund Status for Federal 
Covered Securities (Pursuant to sec.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.
sec.133.27. Year-End Report of Sales of Federal Covered Securities by a Money 
Market Fund (Pursuant to sec.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 sec.133.33
The State Securities Board proposes an amendment to sec.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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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.

sec.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 <nl> Company <ol> [Corporate] Offerings Registration Form may be 
used as a disclosure guide when making a small <nl> company <ol> [corporate] 
offering of securities pursuant to an exemption under the Act or when making 
small public offerings pursuant to the Act, sec.7.A. 
(b) (No change.) 
(c) Section 109.13(k)(5) of this title (relating to Limited Offering Exemptions) 
<nl> and sec.114.4(b)(1) of this title (relating to Filings and Fees) require 
<ol> [requires] the filing of a Form D, "Notice of Sale of Securities Pursuant 
to Regulation D, sec.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 137.Administrative Guidelines for Regulation of Offers 
7 TAC sec.137.1
The State Securities Board proposes an amendment to sec.137.1, concerning 
guidelines for regulation of offers. The amendment reflects a change 
necessitated by the passage of the National Securities Markets Improvement Act 
of 1996 ("NSMIA"), Public Law No. 104-290. After NSMIA, the state will not be 
able to require the filing of offering documents for federal covered securities 
in all cases. Accordingly, the section has been amended to make this 
clarification. 
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 filing requirements 
connected with the offer of federal covered securities. 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 Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
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 581-22. 

sec.137.1. Application.
This chapter relates to offers to sell securities which must be filed with the 
Commissioner under the <nl> Texas <ol> Securities Act, sec.22. This <nl> chapter 
<ol> [section] does not apply to advertising for sales made in reliance upon 
exemptions contained in the Act, sec.5 or sec.6, including exemptions by rule 
adopted by the State Securities Board pursuant to the <nl> Texas <ol> Securities 
Act, sec.5.T. <nl> This chapter does not require the filing of any offering 
documents, prepared by or on behalf of the issuer, in connection with the offer 
of federal covered securities, as that term is defined in sec.107.2 of this 
title (relating to Definitions). <ol> The Act, sec.sec.29, 32, and 33, <nl> 
prohibit <ol> [prohibits] the use of false or misleading statements in 
connection with the purchase or sale of any security, whe