Texas 2009 - 81st Regular

Texas Senate Bill SB2582 Compare Versions

Only one version of the bill is available at this time.

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1	1	81R31948 KFF-D
2	2	By: Van de Putte S.B. No. 2582
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to certain investment products made available to certain
8	8	public school employees and the companies authorized to provide
9	9	those products; providing civil penalties.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 4, Chapter 22 (S.B. 17), Acts of the 57th
12	12	Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
13	13	Texas Civil Statutes), is amended to read as follows:
14	14	Sec. 4. In this section and in Sections 5, 6, 7, 8, 8A, 9,
15	15	9A, 9B, 10, 11, 12, and 13 of this Act:
16	16	(1) "Board of trustees" means the board of trustees of
17	17	the Teacher Retirement System of Texas.
18	18	(2) "Educational institution" means a school district
19	19	or an open-enrollment charter school.
20	20	(3) "Eligible qualified investment" means a qualified
21	21	investment product offered by a company that:
22	22	(A) is certified to the board of trustees under
23	23	Section 5 of this Act; or
24	24	(B) is eligible to certify to the board of
25	25	trustees under Section 8 of this Act.
26	26	(4) "Employee" means an employee of an educational
27	27	institution.
28	28	(5) "Qualified investment product" means an annuity or
29	29	investment that:
30	30	(A) meets the requirements of Section 403(b),
31	31	Internal Revenue Code of 1986, and its subsequent amendments;
32	32	(B) complies with applicable federal insurance
33	33	and securities laws and regulations; and
34	34	(C) complies with applicable state insurance and
35	35	securities laws and rules.
36	36	(6) "Retirement system" means the Teacher Retirement
37	37	System of Texas.
38	38	(7) "Salary reduction agreement" means an agreement
39	39	between an educational institution and an employee to reduce the
40	40	employee's salary for the purpose of making direct contributions to
41	41	or purchases of a qualified investment product.
42	42	SECTION 2. Section 6, Chapter 22 (S.B. 17), Acts of the 57th
43	43	Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
44	44	Texas Civil Statutes), is amended by amending Subsections (c), (d),
45	45	(e), and (f) and adding Subsections (d-1), (d-2), and (f-1) to read
46	46	as follows:
47	47	(c) After consultation with the Texas Department of
48	48	Insurance, the Texas Department of Banking, and the State
49	49	Securities Board, the retirement system may adopt rules only to
50	50	administer this section and Sections 5, 7, 8, 8A, 9A, 9B, 11, 12,
51	51	and 13 of this Act.
52	52	(d) The retirement system shall refer all complaints about
53	53	qualified investment products, including complaints that allege
54	54	violations of this Act by companies that certify to the retirement
55	55	system under Section 5 or 8 of this Act that the companies offer
56	56	qualified investment products, to the appropriate division of the
57	57	Texas Department of Insurance, the Texas Department of Banking, or
58	58	the State Securities Board.
59	59	(d-1) Except as provided by Subsection (d-2) of this
60	60	section, the Texas Department of Insurance, the Texas Department of
61	61	Banking, or the State Securities Board shall investigate a
62	62	complaint received from the retirement system under Subsection (d)
63	63	of this section. If as a result of the investigation the Texas
64	64	Department of Insurance, the Texas Department of Banking, or the
65	65	State Securities Board, as applicable, determines that a violation
66	66	of this Act may have occurred, the Texas Department of Insurance,
67	67	the Texas Department of Banking, or the State Securities Board, as
68	68	applicable, shall forward the results of the investigation relating
69	69	to an alleged violation of this Act to the attorney general.
70	70	(d-2) If the Texas Department of Banking receives a
71	71	complaint from the retirement system under Subsection (d) of this
72	72	section that relates to a federally chartered financial
73	73	institution, the Texas Department of Banking shall:
74	74	(1) refer the complaint to the appropriate federal
75	75	regulatory agency; and
76	76	(2) notify the attorney general of the department's
77	77	referral.
78	78	(e) The Texas Department of Insurance, the Texas Department
79	79	of Banking, and the State Securities Board shall cooperate with the
80	80	retirement system in the administration of this Act and shall:
81	81	(1) submit a report to [notify] the retirement system
82	82	at the beginning of each quarter of the fiscal year that provides
83	83	the status of any enforcement action taken or investigation or
84	84	referral made [determination] regarding a product or a company that
85	85	is the subject of a complaint under Subsection (d) of this section;
86	86	and
87	87	(2) promptly notify the retirement system of any final
88	88	enforcement order issued regarding the product or company [violates
89	89	Section 5 or 8A of this Act].
90	90	(f) The retirement system may deny, suspend, [shall reject]
91	91	or revoke the certification of a company if the retirement system
92	92	receives notice that [under Subsection (e) of this section or
93	93	Section 5(c) of this Act of a violation regarding] the company or
94	94	the company's product was determined to be in violation of this Act
95	95	or another law in any judicial or administrative proceeding.
96	96	(f-1) A [The] company whose certification is denied,
97	97	suspended, or revoked under this section may recertify to the board
98	98	of trustees after any applicable period of suspension or
99	99	revocation.
100	100	SECTION 3. Section 8(a), Chapter 22 (S.B. 17), Acts of the
101	101	57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
102	102	Vernon's Texas Civil Statutes), is amended to read as follows:
103	103	(a) A company that offers qualified investment products
104	104	other than annuity contracts, including a company that offers
105	105	custodial accounts under Section 403(b)(7), Internal Revenue Code
106	106	of 1986, that hold only investment products registered with the
107	107	system under Section 8A of this Act, may certify to the retirement
108	108	system based on rules adopted by the board of trustees. The rules
109	109	shall be based on reasonable factors, including:
110	110	(1) the financial strength of the companies offering
111	111	products; and
112	112	(2) the administrative cost to employees.
113	113	SECTION 4. Section 9(a), Chapter 22 (S.B. 17), Acts of the
114	114	57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
115	115	Vernon's Texas Civil Statutes), is amended to read as follows:
116	116	(a) An educational institution may not:
117	117	(1) except as provided by Subdivision (8) of this
118	118	subsection and Subsection (b) of this section, refuse to enter into
119	119	a salary reduction agreement with an employee if the qualified
120	120	investment product that is the subject of the salary reduction is an
121	121	eligible qualified investment and is registered with the system
122	122	under Section 8A;
123	123	(2) require or coerce an employee's attendance at any
124	124	meeting at which qualified investment products are marketed;
125	125	(3) limit the ability of an employee to initiate,
126	126	change, or terminate a qualified investment product at any time the
127	127	employee chooses;
128	128	(4) grant exclusive access to an employee by
129	129	discriminating against or imposing barriers to any agent, broker,
130	130	or company that provides qualified investment products under this
131	131	Act;
132	132	(5) grant exclusive access to information about an
133	133	employee's financial information, including information about an
134	134	employee's qualified investment products, to a company or agent or
135	135	affiliate of a company offering qualified investment products
136	136	unless the employee consents in writing to the access;
137	137	(6) accept any benefit from a company or from an agent
138	138	or affiliate of a company that offers qualified investment
139	139	products; [or]
140	140	(7) use public funds to recommend a qualified
141	141	investment product offered by a company or an agent or affiliate of
142	142	a company that offers a qualified investment product; or
143	143	(8) enter into or continue a salary reduction
144	144	agreement with an employee if the qualified investment product that
145	145	is the subject of the salary reduction agreement is not an eligible
146	146	qualified investment, including the investment product of a company
147	147	whose certification has been denied, suspended, or revoked.
148	148	SECTION 5. Chapter 22 (S.B. 17), Acts of the 57th
149	149	Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
150	150	Texas Civil Statutes), is amended by adding Sections 9A and 9B to
151	151	read as follows:
152	152	Sec. 9A. A person may not enter into or renew a contract
153	153	with an educational institution to provide services for or
154	154	administer a plan offered by the institution under Section 403(b),
155	155	Internal Revenue Code of 1986, if the person is:
156	156	(1) a company that certifies to the retirement system
157	157	under Section 5 or 8 of this Act;
158	158	(2) a company owned by or otherwise affiliated by
159	159	common ownership or control with a company described by Subdivision
160	160	(1) of this section; or
161	161	(3) an agent of a company described by Subdivision (1)
162	162	or (2) of this section.
163	163	Sec. 9B. A person, other than an employee of an educational
164	164	institution, or an affiliate of the person may not enter into or
165	165	renew a contract under which the person is to provide services for
166	166	or administer a plan offered by the institution under Section
167	167	403(b), Internal Revenue Code of 1986, unless the person:
168	168	(1) holds a license or certificate of authority issued
169	169	by the Texas Department of Insurance;
170	170	(2) is registered as a securities dealer or agent or
171	171	investment advisor with the State Securities Board; or
172	172	(3) is a financial institution that:
173	173	(A) is authorized by state or federal law to
174	174	exercise fiduciary powers; and
175	175	(B) has its main office, a branch office, or a
176	176	trust office in this state.
177	177	SECTION 6. Section 10(a), Chapter 22 (S.B. 17), Acts of the
178	178	57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
179	179	Vernon's Texas Civil Statutes), is amended to read as follows:
180	180	(a) A person commits an offense if the person:
181	181	(1) sells or offers for sale an [a qualified]
182	182	investment product that is not an eligible qualified investment or
183	183	that is not registered under Section 8A of this Act and that the
184	184	person knows will be the subject of a salary reduction agreement;
185	185	(2) violates the licensing requirements of Title 13,
186	186	Insurance Code, with regard to a qualified investment product that
187	187	the person knows will be the subject of a salary reduction
188	188	agreement; or
189	189	(3) engages in activity described by Subchapter B,
190	190	Chapter 541, Insurance Code, with regard to a qualified investment
191	191	product that the person knows will be the subject of a salary
192	192	reduction agreement.
193	193	SECTION 7. Chapter 22 (S.B. 17), Acts of the 57th
194	194	Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
195	195	Texas Civil Statutes), is amended by adding Section 10A to read as
196	196	follows:
197	197	Sec. 10A. (a) A person who violates this Act is subject to a
198	198	civil penalty in an amount that does not exceed:
199	199	(1) $10,000 for a single violation; or
200	200	(2) $1,000,000 for multiple violations.
201	201	(b) For purposes of determining the amount of a civil
202	202	penalty under this section, the court shall consider the following
203	203	factors:
204	204	(1) the seriousness, nature, circumstances, extent,
205	205	and persistence of the conduct constituting the violation;
206	206	(2) the harm to other persons resulting directly or
207	207	indirectly from the violation;
208	208	(3) cooperation by the person in any inquiry conducted
209	209	by the state concerning the violation, efforts to prevent future
210	210	occurrences of the violation, and efforts to mitigate the harm
211	211	caused by the violation;
212	212	(4) the history of previous violations by the person;
213	213	(5) the need to deter the person or others from
214	214	committing such violations in the future; and
215	215	(6) other matters as justice may require.
216	216	(c) The attorney general may institute an action:
217	217	(1) for injunctive relief to restrain a violation by a
218	218	person who is or who appears to be in violation of or threatening to
219	219	violate this Act; or
220	220	(2) to collect a civil penalty under this section.
221	221	(d) An action under this section must be filed in a district
222	222	court in Travis County.
223	223	(e) The attorney general may recover reasonable expenses
224	224	incurred in obtaining injunctive relief under this section,
225	225	including court costs, reasonable attorney's fees, investigative
226	226	costs, witness fees, and deposition expenses.
227	227	SECTION 8. (a) Section 9(a), Chapter 22 (S.B. 17), Acts of
228	228	the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
229	229	Vernon's Texas Civil Statutes), as amended by this Act, applies to a
230	230	salary reduction agreement that is entered into or renewed on or
231	231	after the effective date of this Act. A salary reduction agreement
232	232	that is entered into or renewed before the effective date of this
233	233	Act is governed by the law in effect on the date the agreement was
234	234	entered into or renewed, and the former law remains in effect for
235	235	that purpose.
236	236	(b) Sections 9A and 9B, Chapter 22 (S.B. 17), Acts of the
237	237	57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
238	238	Vernon's Texas Civil Statutes), as added by this Act, apply to a
239	239	contract to administer a plan under Section 403(b), Internal
240	240	Revenue Code of 1986, offered by a school district or
241	241	open-enrollment charter school that is entered into or renewed on
242	242	or after the effective date of this Act. A contract entered into or
243	243	renewed before the effective date of this Act is governed by the law
244	244	in effect on the date the contract was entered into or renewed, and
245	245	the former law remains in effect for that purpose.
246	246	(c) Section 10(a), Chapter 22 (S.B. 17), Acts of the 57th
247	247	Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's
248	248	Texas Civil Statutes), as amended by this Act, and Section 10A,
249	249	Chapter 22 (S.B. 17), Acts of the 57th Legislature, 3rd Called
250	250	Session, 1962 (Article 6228a-5, Vernon's Texas Civil Statutes), as
251	251	added by this Act, apply only to a violation that occurs on or after
252	252	the effective date of this Act. A violation that occurred before
253	253	the effective date of this Act is covered by the law in effect at the
254	254	time the violation occurred, and the former law is continued in
255	255	effect for that purpose.
256	256	SECTION 9. This Act takes effect September 1, 2009.