Texas 2011 - 82nd Regular

Texas Senate Bill SB1281 Compare Versions

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1	1	By: Watson S.B. No. 1281
2	2	(Truitt)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to certain violations of and offenses under The Securities
8	8	Act; providing penalties.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subsections A and B, Section 23-1, The
11	11	Securities Act (Article 581-23-1, Vernon's Texas Civil Statutes),
12	12	are amended to read as follows:
13	13	A. After giving notice and opportunity for a hearing, the
14	14	Commissioner may, in addition to any other remedies, issue an order
15	15	which assesses an administrative fine against any person or company
16	16	found to have:
17	17	(1) engaged in fraud or a fraudulent practice in
18	18	connection with:
19	19	(A) the offer for sale or sale of a security; or
20	20	(B) the rendering of services as an investment
21	21	adviser or investment adviser representative;
22	22	(2) made an offer containing a statement that is
23	23	materially misleading or is otherwise likely to deceive the public;
24	24	[or]
25	25	(3) engaged in an act or practice that violates this
26	26	Act or a Board rule or order; or
27	27	(4) with intent to deceive or defraud or with reckless
28	28	disregard for the truth or the law, materially aided any person in
29	29	engaging in an act or practice described by Subdivision (1), (2), or
30	30	(3) of this subsection.
31	31	B. Any administrative fine assessed under this Section,
32	32	together with the amount of any civil penalty already awarded under
33	33	Subsection C of Section 32, must be in an amount not to exceed:
34	34	(1) the greater of:
35	35	(A) $20,000 per violation; or
36	36	(B) the gross amount of any economic benefit
37	37	gained by the person or company as a result of the act or practice
38	38	for which the fine was assessed; and
39	39	(2) if the act or practice was committed against a
40	40	person 65 years of age or older, an additional amount of not more
41	41	than $250,000 [that does not exceed $10,000 for a single violation
42	42	or $100,000 for multiple violations in a single proceeding or a
43	43	series of related proceedings].
44	44	SECTION 2. Section 29, The Securities Act (Article 581-29,
45	45	Vernon's Texas Civil Statutes), is amended to read as follows:
46	46	Art. 581-29. PENAL PROVISIONS. Any person who shall:
47	47	A. Sell, offer for sale or delivery, solicit subscriptions
48	48	or orders for, dispose of, invite offers for, or who shall deal in
49	49	any other manner in any security or securities without being a
50	50	registered dealer or agent as in this Act provided shall be deemed
51	51	guilty of a felony of the third degree[, and upon conviction thereof
52	52	shall be sentenced to pay a fine of not more than $5,000 or
53	53	imprisonment in the penitentiary for not less than two or more than
54	54	10 years, or by both such fine and imprisonment].
55	55	B. Sell, offer for sale or delivery, solicit subscriptions
56	56	to and orders for, dispose of, invite orders for, or who shall deal
57	57	in any other manner in any security or securities issued after
58	58	September 6, 1955, unless said security or securities have been
59	59	registered or granted a permit as provided in Section 7 of this Act,
60	60	shall be deemed guilty of a felony of the third degree[, and upon
61	61	conviction thereof shall be sentenced to pay a fine of not more than
62	62	$5,000 or imprisonment in the penitentiary for not less than two or
63	63	more than 10 years, or by both such fine and imprisonment].
64	64	C. In connection with the sale, offering for sale or
65	65	delivery of, the purchase, offer to purchase, invitation of offers
66	66	to purchase, invitations of offers to sell, or dealing in any other
67	67	manner in any security or securities, whether or not the
68	68	transaction or security is exempt under Section 5 or 6 of this Act,
69	69	or in connection with the rendering of services as an investment
70	70	adviser or an investment adviser representative, directly or
71	71	indirectly:
72	72	(1) engage in any fraud or fraudulent practice;
73	73	(2) employ any device, scheme, or artifice to defraud;
74	74	(3) knowingly make any untrue statement of a material
75	75	fact or omit to state a material fact necessary in order to make the
76	76	statements made, in the light of the circumstances under which they
77	77	are made, not misleading; or
78	78	(4) engage in any act, practice or course of business
79	79	which operates or will operate as a fraud or deceit upon any person,
80	80	is [guilty of a felony and upon conviction shall be]:
81	81	(a) guilty of a felony of the third degree
82	82	[imprisoned for not less than 2 or more than 10 years and fined not
83	83	more than $10,000], if the amount involved in the offense is less
84	84	than $10,000;
85	85	(b) guilty of a felony of the second degree
86	86	[imprisoned for not less than 2 or more than 20 years and fined not
87	87	more than $10,000], if the amount involved in the offense is $10,000
88	88	or more but less than $100,000; or
89	89	(c) guilty of a felony of the first degree
90	90	[imprisoned for life or for not less than 5 or more than 99 years and
91	91	fined not more than $10,000], if the amount involved is $100,000 or
92	92	more.
93	93	D. Knowingly violate a cease and desist order issued by the
94	94	commissioner under the authority of Section 23A, 23B, or 23-2 of
95	95	this Act shall be deemed guilty of a felony of the third degree[,
96	96	and upon conviction thereof shall be sentenced to pay a fine of not
97	97	more than $5,000 or imprisonment in the penitentiary for not more
98	98	than two years, or by both such fine and imprisonment].
99	99	E. Knowingly make or cause to be made, in any document filed
100	100	with the commissioner or in any proceeding under this Act, whether
101	101	or not such document or proceeding relates to a transaction or
102	102	security exempt under the provisions of Sections 5 or 6 of this Act,
103	103	any statement which is, at the time and in the light of the
104	104	circumstances under which it is made, false or misleading in any
105	105	material respect shall be deemed guilty of a felony of the third
106	106	degree[, and upon conviction thereof shall be sentenced to pay a
107	107	fine of not more than $5,000 or imprisonment in the penitentiary for
108	108	not less than two or more than 10 years, or by both such fine and
109	109	imprisonment].
110	110	F. Knowingly make any false statement or representation
111	111	concerning any registration made or exemption claimed under the
112	112	provisions of this Act shall be deemed guilty of a state jail
113	113	felony[, and upon conviction thereof shall be sentenced to pay a
114	114	fine of not more than $5,000 or imprisonment in the penitentiary for
115	115	not more than two years, or by both such fine and imprisonment].
116	116	G. Make an offer of any security within this State that is
117	117	not in compliance with the requirements governing offers set forth
118	118	in Section 22 of this Act shall be deemed guilty of a state jail
119	119	felony[, and upon conviction thereof, shall be sentenced to pay a
120	120	fine of not more than $5,000 or imprisonment in the penitentiary for
121	121	not more than two years, or by both such fine and imprisonment].
122	122	H. Knowingly make an offer of any security within this State
123	123	prohibited by a cease publication order issued by the Commissioner
124	124	under Section 23C of this Act shall be deemed guilty of a state jail
125	125	felony[, and upon conviction thereof, shall be sentenced to pay a
126	126	fine of not more than $5,000 or imprisonment in the penitentiary for
127	127	not more than two years, or by both such fine and imprisonment].
128	128	I. Render services as an investment adviser or an investment
129	129	adviser representative without being registered as required by this
130	130	Act shall be deemed guilty of a felony of the third degree [and on
131	131	conviction of the felony shall be sentenced to pay a fine of not
132	132	more than $5,000 or imprisonment in the penitentiary for not less
133	133	than two or more than 10 years, or by both the fine and
134	134	imprisonment].
135	135	J. A conviction of an offense under this section may be
136	136	enhanced as provided by Section 12.42, Penal Code.
137	137	SECTION 3. Section 32, The Securities Act (Article 581-32,
138	138	Vernon's Texas Civil Statutes), is amended to read as follows:
139	139	Art. 581-32. INJUNCTIONS, [AND] RESTITUTION, AND CIVIL
140	140	PENALTIES. A. Whenever it shall appear to the Commissioner either
141	141	upon complaint or otherwise, that any person has engaged, is
142	142	engaging, or is about to engage in fraud or a fraudulent practice in
143	143	connection with the sale of a security, has engaged, is engaging, or
144	144	is about to engage in fraud or a fraudulent practice in the
145	145	rendering of services as an investment adviser or investment
146	146	adviser representative, has made an offer containing a statement
147	147	that is materially misleading or is otherwise likely to deceive the
148	148	public, or has engaged, is engaging, or is about to engage in an act
149	149	or practice that violates this Act or a Board rule or order, the
150	150	Attorney General may, on request by the Commissioner, and in
151	151	addition to any other remedies, bring action in the name and on
152	152	behalf of the State of Texas against such person or company and any
153	153	person who, with intent to deceive or defraud or with reckless
154	154	disregard for the truth or the law, has materially aided, is
155	155	materially aiding, or is about to materially aid such person and any
156	156	other person or persons heretofore concerned in or in any way
157	157	participating in or about to participate in such acts or practices,
158	158	to enjoin such person or company and such other person or persons
159	159	from continuing such acts or practices or doing any act or acts in
160	160	furtherance thereof. The Commissioner shall verify, on information
161	161	and belief, the facts contained in an application for injunction
162	162	under this section. In any such court proceedings, the Attorney
163	163	General may apply for and on due showing be entitled to have issued
164	164	the court's subpoena requiring the forthwith appearance of any
165	165	defendant and the defendant's employees or agents and the
166	166	production of documents, books and records as may appear necessary
167	167	for the hearing of such petition, to testify and give evidence
168	168	concerning the acts or conduct or things complained of in such
169	169	application for injunction. The District Court of any county,
170	170	wherein it is shown that the acts complained of have been or are
171	171	about to be committed, or a district court in Travis County shall
172	172	have jurisdiction of any action brought under this section, and
173	173	this provision shall be superior to any provision fixing the
174	174	jurisdiction or venue with regard to suits for injunction. No bond
175	175	for injunction shall be required of the Commissioner or Attorney
176	176	General in any such proceeding.
177	177	B. In addition to any other remedies, the [The] Attorney
178	178	General may, on the request of the Commissioner, either in an action
179	179	under Subsection A of this section or in a separate action in
180	180	District Court, seek equitable relief, including restitution, for a
181	181	victim of fraudulent practices and may seek the disgorgement of any
182	182	economic benefit gained by a defendant through an act or practice
183	183	that violates this Act or for which this Act provides the
184	184	Commissioner or the Attorney General with a remedy. The court may
185	185	grant any equitable relief that the court considers appropriate and
186	186	may order the defendant to deliver to each victim of any act or
187	187	practice that violates this Act or for which this Act provides the
188	188	Commissioner or the Attorney General with a remedy [the person
189	189	defrauded] the amount of money or the property that the defendant
190	190	obtained from the victim, including any bonus, fee, commission,
191	191	option, proceeds, or profit from or loss avoided through the sale of
192	192	the security or through the rendering of services as an investment
193	193	adviser or investment adviser representative, or any other tangible
194	194	benefit [person by the fraudulent practices].
195	195	C. In addition to any other remedies, the Attorney General
196	196	may, on the request of the Commissioner, either in an action under
197	197	Subsection A of this section or in a separate action in District
198	198	Court, seek a civil penalty to be paid to the State in an amount,
199	199	together with the amount of any administrative fine already
200	200	assessed under Subsection B of Section 23-1, not to exceed:
201	201	(1) the greater of:
202	202	(A) $20,000 per violation; or
203	203	(B) the gross amount of any economic benefit
204	204	gained by the person or company as a result of the commission of the
205	205	act or practice; and
206	206	(2) if the act or practice was committed against a
207	207	person 65 years of age or older, an additional amount of not more
208	208	than $250,000.
209	209	D. In an action brought under this section, the [for fraud
210	210	or a fraudulent practice in connection with the sale of a security,
211	211	the Attorney General may seek, for an aggrieved person, the
212	212	disgorgement of any economic benefit gained by the defendant
213	213	through the violation, including a bonus, fee, commission, option,
214	214	proceeds, profit from or loss avoided through the sale of the
215	215	security, or any other tangible benefit. The] Attorney General may
216	216	recover [from an order of disgorgement obtained under this
217	217	subsection] reasonable costs and expenses incurred by the Attorney
218	218	General in bringing the action.
219	219	SECTION 4. (a) The changes in law made by this Act apply
220	220	only to a violation that occurs or an offense committed on or after
221	221	the effective date of this Act. A violation that occurs or an
222	222	offense committed before the effective date of this Act is governed
223	223	by the law in effect on the date the violation occurred or the
224	224	offense was committed, and the former law is continued in effect for
225	225	that purpose.
226	226	(b) For purposes of Subsection (a) of this section, a
227	227	violation occurred or an offense was committed before the effective
228	228	date of this Act if any element of the violation or offense occurred
229	229	before that date.
230	230	SECTION 5. This Act takes effect September 1, 2011.