Texas 2019 - 86th Regular

Texas House Bill HB4171 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 4171
	1	+	86R21700 JAM-D
	2	+	By: Leach H.B. No. 4171
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to the nonsubstantive revision of The Securities Act,
6	8		including conforming amendments.
7	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	10		ARTICLE 1. NONSUBSTANTIVE REVISION OF THE SECURITIES ACT
9	11		SECTION 1.01. The Government Code is amended by adding Title 12 to read as follows:
10	12		TITLE 12. SECURITIES ACT
11	13		CHAPTER 4001. GENERAL PROVISIONS
12	14		SUBCHAPTER A. SHORT TITLE; PURPOSES; CONSTRUCTION
13	15		Sec. 4001.001. SHORT TITLE
14	16		Sec. 4001.002. PURPOSES; CONSTRUCTION
15	17		Sec. 4001.003. SEVERABILITY
16	18		SUBCHAPTER B. DEFINITIONS
17	19		Sec. 4001.051. APPLICABILITY OF DEFINITIONS;
18	20		CONSTRUCTION OF CERTAIN CONJUNCTIONS
19	21		Sec. 4001.052. AGENT
20	22		Sec. 4001.053. BOARD
21	23		Sec. 4001.054. BROKER
22	24		Sec. 4001.055. COMMISSIONER
23	25		Sec. 4001.056. DEALER
24	26		Sec. 4001.057. FEDERAL COVERED INVESTMENT ADVISER
25	27		Sec. 4001.058. FRAUD; FRAUDULENT PRACTICE
26	28		Sec. 4001.059. INVESTMENT ADVISER
27	29		Sec. 4001.060. INVESTMENT ADVISER REPRESENTATIVE
28	30		Sec. 4001.061. ISSUER
29	31		Sec. 4001.062. MORTGAGE
30	32		Sec. 4001.063. NO PAR VALUE; PAR VALUE
31	33		Sec. 4001.064. PERSON; COMPANY
32	34		Sec. 4001.065. REGISTERED DEALER
33	35		Sec. 4001.066. REGISTERED INVESTMENT ADVISER
34	36		Sec. 4001.067. SALE; OFFER FOR SALE; SELL
35	37		Sec. 4001.068. SECURITY
36	38		SUBCHAPTER C. GENERAL ADMINISTRATIVE PROVISIONS
37	39		Sec. 4001.101. SUFFICIENCY OF NOTICE
38	40		Sec. 4001.102. CONSENT FOR SERVICE OF PROCESS
39	41		SUBCHAPTER D. OTHER GENERAL PROVISIONS
40	42		Sec. 4001.151. PROSECUTION UNDER CERTAIN OTHER LAW
41	43		Sec. 4001.152. GOOD FAITH
42	44		Sec. 4001.153. BURDEN OF PROOF ON EXEMPTION
43	45		Sec. 4001.154. CERTIFIED COPIES OF CERTAIN DOCUMENTS
44	46		OR INSTRUMENTS AS EVIDENCE
45	47		Sec. 4001.155. PROOF OF CERTAIN RECORDS
46	48		TITLE 12. SECURITIES ACT
47	49		CHAPTER 4001. GENERAL PROVISIONS
48	50		SUBCHAPTER A. SHORT TITLE; PURPOSES; CONSTRUCTION
49	51		Sec. 4001.001. SHORT TITLE. This title may be cited as The
50	52		Securities Act. (V.A.C.S. Art. 581-1.)
51	53		Sec. 4001.002. PURPOSES; CONSTRUCTION. (a) The general
52	54		purposes of this title are to:
53	55		(1) protect investors and, consistent with that
54	56		purpose, encourage capital formation, job formation, and free and
55	57		competitive securities markets;
56	58		(2) maximize coordination with federal and other
57	59		states' laws and administration, particularly with respect to
58	60		procedure, reports, forms, and exemptions; and
59	61		(3) minimize regulatory burdens on issuers and other
60	62		persons subject to this title, especially small businesses.
61	63		(b) This title may be construed and implemented to
62	64		effectuate the title's general purposes. (V.A.C.S. Art. 581-10-1.)
63	65		Sec. 4001.003. SEVERABILITY. The provisions of this title
64	66		are severable. If any provision of this title is declared void or
65	67		unconstitutional, the remaining provisions of this title would have
66	68		been enacted notwithstanding such judicial determination of the
67	69		invalidity of the provision, and the remaining provisions shall
68	70		remain in effect. (V.A.C.S. Art. 581-38.)
69	71		SUBCHAPTER B. DEFINITIONS
70	72		Sec. 4001.051. APPLICABILITY OF DEFINITIONS; CONSTRUCTION
71	73		OF CERTAIN CONJUNCTIONS. (a) The definition for a term provided by
72	74		this chapter applies in this title unless the context in which the
73	75		term is used indicates a different meaning.
74	76		(b) The term "and" may be construed to mean "or," and the
75	77		term "or" may be construed to mean "and." (V.A.C.S. Art. 581-4
76	78		(part); Art. 581-4, Subsec. J (part).)
77	79		Sec. 4001.052. AGENT. (a) Except as provided by Subsection
78	80		(b), "agent" includes a person or company employed, appointed, or
79	81		authorized by a dealer to sell, offer for sale or delivery, solicit
80	82		subscriptions to or orders for, or deal in any other manner in,
81	83		securities in this state directly or through a subagent.
82	84		(b) If a corporation or partnership is registered as a
83	85		dealer under this title, an officer of the corporation or partner of
84	86		the partnership is not deemed an agent solely because of the
85	87		officer's or partner's status as an officer or partner of that
86	88		entity. (V.A.C.S. Art. 581-4, Subsec. D.)
87	89		Sec. 4001.053. BOARD. "Board" means the State Securities
88	90		Board. (New.)
89	91		Sec. 4001.054. BROKER. "Broker" means "dealer" as defined
90	92		in this title. (V.A.C.S. Art. 581-4, Subsec. H.)
91	93		Sec. 4001.055. COMMISSIONER. "Commissioner" means the
92	94		securities commissioner. (New.)
93	95		Sec. 4001.056. DEALER. (a) "Dealer" includes:
94	96		(1) a person or company, other than an agent, who for
95	97		all or part of the person's or company's time engages in this state,
96	98		directly or through an agent, in selling, offering for sale or
97	99		delivery, soliciting subscriptions to or orders for, undertaking to
98	100		dispose of, or inviting offers for any security; and
99	101		(2) a person or company who deals in any other manner
100	102		in any security in this state.
101	103		(b) Except as provided by Subsection (c), an issuer, other
102	104		than a registered dealer, who directly or through any person or
103	105		company, other than a registered dealer, offers for sale, sells, or
104	106		makes sales of the issuer's own securities is deemed a dealer and
105	107		shall comply with this title.
106	108		(c) An issuer is not deemed a dealer under Subsection (b)
107	109		if:
108	110		(1) the issuer sells or offers for sale securities to a
109	111		registered dealer or only by or through a registered dealer acting
110	112		as fiscal agent for the issuer; or
111	113		(2) the transaction is exempt as provided by
112	114		Subchapter A, Chapter 4005.
113	115		(d) Except as expressly provided otherwise in this title, a
114	116		person or company engaged in the sale of, offer for sale of,
115	117		solicitation of, subscription to, dealing in, or delivery of a
116	118		security made in a transaction or under a condition specified in
117	119		Subchapter A, Chapter 4005, is not deemed a dealer within the
118	120		meaning of this title. (V.A.C.S. Art. 581-4, Subsec. C; Art. 581-5
119	121		(part).)
120	122		Sec. 4001.057. FEDERAL COVERED INVESTMENT ADVISER.
121	123		"Federal covered investment adviser" means an investment adviser
122	124		who is registered under the Investment Advisers Act of 1940 (15
123	125		U.S.C. Section 80b-1 et seq.). (V.A.C.S. Art. 581-4, Subsec. O.)
124	126		Sec. 4001.058. FRAUD; FRAUDULENT PRACTICE. (a) "Fraud"
125	127		and "fraudulent practice" include:
126	128		(1) a misrepresentation of a relevant fact made in any
127	129		manner;
128	130		(2) a promise, representation, or predication as to
129	131		the future not made honestly and in good faith;
130	132		(3) an intentional failure to disclose a material
131	133		fact;
132	134		(4) a direct or indirect gain, through the sale of a
133	135		security, of an underwriting or promotion fee or profit, or of a
134	136		selling or managing commission or profit, that is so gross or
135	137		exorbitant as to be unconscionable; and
136	138		(5) a scheme, device, or other artifice to obtain a
137	139		profit, fee, or commission described by Subdivision (4).
138	140		(b) Nothing in this section limits the full meaning of
139	141		"fraud," "fraudulent," or "fraudulent practice" as applied or
140	142		accepted in courts. (V.A.C.S. Art. 581-4, Subsec. F.)
141	143		Sec. 4001.059. INVESTMENT ADVISER. "Investment adviser"
142	144		includes a person who, for compensation, engages in the business of
143	145		advising another, either directly or through publications or
144	146		writings, with respect to the value of securities or to the
145	147		advisability of investing in, purchasing, or selling securities or
146	148		a person who, for compensation and as part of a regular business,
147	149		issues or adopts analyses or a report concerning securities, as may
148	150		be further defined by board rule. The term does not include:
149	151		(1) a bank or a bank holding company, as defined by the
150	152		Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.),
151	153		that is not an investment company;
152	154		(2) a lawyer, accountant, engineer, teacher, or
153	155		geologist whose performance of the services is solely incidental to
154	156		the practice of the person's profession;
155	157		(3) a dealer or agent who receives no special
156	158		compensation for those services and whose performance of those
157	159		services is solely incidental to transacting business as a dealer
158	160		or agent;
159	161		(4) the publisher of a bona fide newspaper, news
160	162		magazine, or business or financial publication of general and
161	163		regular circulation; or
162	164		(5) a person whose advice, analyses, or report does
163	165		not concern a security other than a security that is:
164	166		(A) a direct obligation of or an obligation the
165	167		principal or interest of which is guaranteed by the United States
166	168		government; or
167	169		(B) issued or guaranteed by a corporation in
168	170		which the United States has a direct or indirect interest and
169	171		designated by the United States Secretary of the Treasury under
170	172		Section 3(a)(12), Securities Exchange Act of 1934 (15 U.S.C.
171	173		Section 78c(a)(12)), as an exempt security for purposes of that
172	174		Act. (V.A.C.S. Art. 581-4, Subsec. N.)
173	175		Sec. 4001.060. INVESTMENT ADVISER REPRESENTATIVE. (a)
174	176		Except as provided by Subsection (b), "investment adviser
175	177		representative" includes a person or company who, for compensation,
176	178		is employed, appointed, or authorized by an investment adviser to
177	179		solicit clients for the investment adviser or who provides
178	180		investment advice, directly or through subagents, as defined by
179	181		board rule, to an investment adviser's clients on behalf of the
180	182		investment adviser.
181	183		(b) "Investment adviser representative" does not include a
182	184		partner of a partnership or officer of a corporation or other entity
183	185		that is registered as an investment adviser under this title solely
184	186		because of the person's status as a partner or officer of that
185	187		entity. (V.A.C.S. Art. 581-4, Subsec. P.)
186	188		Sec. 4001.061. ISSUER. "Issuer" means and includes a
187	189		person or company who has issued, proposes to issue, or issues any
188	190		security. (V.A.C.S. Art. 581-4, Subsec. G.)
189	191		Sec. 4001.062. MORTGAGE. "Mortgage" includes a deed of
190	192		trust to secure a debt. (V.A.C.S. Art. 581-4, Subsec. I.)
191	193		Sec. 4001.063. NO PAR VALUE; PAR VALUE. (a) "No par value"
192	194		as applied to shares of stock or other securities means the
193	195		securities are without a given or specified par value.
194	196		(b) For purposes of classifying or computing the par value
195	197		of shares of stock or other securities of no par value, the amount
196	198		for which the securities are sold or offered for sale to the public
197	199		is used as a basis. (V.A.C.S. Art. 581-4, Subsec. K.)
198	200		Sec. 4001.064. PERSON; COMPANY. (a) The terms "person" and
199	201		"company" include:
200	202		(1) any of the following formed under the laws of this
201	203		or another state, country, sovereignty, or political subdivision of
202	204		a state, country, or sovereignty, and regardless of whether
203	205		incorporated or unincorporated:
204	206		(A) a corporation;
205	207		(B) a person;
206	208		(C) a company, including a joint stock company;
207	209		(D) a partnership, including a limited
208	210		partnership;
209	211		(E) an association;
210	212		(F) a firm;
211	213		(G) a syndicate; or
212	214		(H) a trust; and
213	215		(2) a government or a political subdivision or agency
214	216		of a government.
215	217		(b) As used in Subsection (a), "trust":
216	218		(1) is deemed to include a common law trust; and
217	219		(2) does not include a trust created or appointed
218	220		under or by virtue of a last will and testament or by a court.
219	221		(c) The definition of "person" assigned by Section 311.005
220	222		does not apply to any provision in this title. (V.A.C.S. Art.
221	223		581-4, Subsec. B; New.)
222	224		Sec. 4001.065. REGISTERED DEALER. "Registered dealer"
223	225		means a dealer the commissioner has registered under Sections
224	226		4004.054 and 4004.055, or Section 4004.056. (V.A.C.S. Art. 581-4,
225	227		Subsec. M.)
226	228		Sec. 4001.066. REGISTERED INVESTMENT ADVISER. "Registered
227	229		investment adviser" means an investment adviser to whom the
228	230		commissioner has issued a registration certificate under Sections
229	231		4004.054 and 4004.055, or Section 4004.056. (V.A.C.S. Art. 581-4,
230	232		Subsec. Q.)
231	233		Sec. 4001.067. SALE; OFFER FOR SALE; SELL. (a) "Sale,"
232	234		"offer for sale," and "sell" include every disposition or attempted
233	235		disposition of a security for value.
234	236		(b) "Sale" means and includes:
235	237		(1) a contract or agreement in which a security is
236	238		sold, traded, or exchanged for money, property, or another thing of
237	239		value; or
238	240		(2) a transfer of or agreement to transfer a security,
239	241		in trust or otherwise.
240	242		(c) "Sale" or "offer for sale" includes a subscription, an
241	243		option for sale, a solicitation of sale, a solicitation of an offer
242	244		to buy, an attempt to sell, or an offer to sell, directly or by an
243	245		agent, by a circular, letter, or advertisement or otherwise,
244	246		including the deposit in any manner in the United States mail within
245	247		this state of a circular, letter, or other advertising matter.
246	248		(d) "Sell" means any act by which a sale is made.
247	249		(e) A security given or delivered with or as a bonus on
248	250		account of a purchase of securities or other thing of value is
249	251		conclusively presumed to:
250	252		(1) constitute a part of the subject of the purchase;
251	253		and
252	254		(2) have been sold for value.
253	255		(f) The sale of a security under conditions that entitle the
254	256		purchaser or subsequent holder to exchange the security for another
255	257		security or to purchase another security is not deemed a sale or
256	258		offer for sale of the other security.
257	259		(g) This section does not limit the meaning of the terms
258	260		"sale," "offer for sale," or "sell" as used by or accepted in
259	261		courts. (V.A.C.S. Art. 581-4, Subsec. E (part).)
260	262		Sec. 4001.068. SECURITY. (a) The term "security":
261	263		(1) includes:
262	264		(A) a limited partner interest in a limited
263	265		partnership;
264	266		(B) a share;
265	267		(C) a stock;
266	268		(D) a treasury stock;
267	269		(E) a stock certificate under a voting trust
268	270		agreement;
269	271		(F) a collateral trust certificate;
270	272		(G) an equipment trust certificate;
271	273		(H) a preorganization certificate or receipt;
272	274		(I) a subscription or reorganization
273	275		certificate;
274	276		(J) a note, bond, debenture, mortgage
275	277		certificate, or other evidence of indebtedness;
276	278		(K) any form of commercial paper;
277	279		(L) a certificate in or under a profit sharing or
278	280		participation agreement;
279	281		(M) a certificate or instrument representing an
280	282		interest in or under an oil, gas, or mining lease, fee, or title;
281	283		(N) a certificate or instrument representing or
282	284		secured by an interest in any of the capital, property, assets,
283	285		profits, or earnings of a company;
284	286		(O) an investment contract; and
285	287		(P) any other instrument commonly known as a
286	288		security, regardless of whether the instrument is similar to
287	289		another instrument listed in this subsection; and
288	290		(2) applies regardless of whether the security is
289	291		evidenced by a written instrument.
290	292		(b) "Security" does not include an insurance policy,
291	293		endowment policy, annuity contract, or optional annuity contract,
292	294		or any contract or agreement in relation to and in consequence of
293	295		any such policy or contract, issued by an insurance company subject
294	296		to the supervision or control of the Texas Department of Insurance
295	297		when the form of such policy or contract has been filed with the
296	298		department as required by law. (V.A.C.S. Art. 581-4, Subsec. A.)
297	299		SUBCHAPTER C. GENERAL ADMINISTRATIVE PROVISIONS
298	300		Sec. 4001.101. SUFFICIENCY OF NOTICE. In this title unless
299	301		otherwise specified, a notice required by this title is sufficient
300	302		if sent by registered or certified mail addressed to a person at:
301	303		(1) the address designated in any filing the person
302	304		submitted to the commissioner; or
303	305		(2) the person's last known address. (V.A.C.S. Art.
304	306		581-26 (part).)
305	307		Sec. 4001.102. CONSENT FOR SERVICE OF PROCESS. (a) This
306	308		section applies only to an issuer, dealer, or investment adviser
307	309		that is:
308	310		(1) organized under the laws of any other state,
309	311		territory, or government; or
310	312		(2) domiciled in any other state.
311	313		(b) Unless a board rule specifies otherwise, an issuer,
312	314		dealer, or investment adviser subject to this section must include
313	315		in an application filed with or notice filing submitted to the
314	316		commissioner a provision that appoints the commissioner as the
315	317		attorney of the issuer, dealer, or investment adviser who may be
316	318		served with process in any action or proceeding against the issuer,
317	319		dealer, or investment adviser that arises out of any transaction
318	320		subject to this title.
319	321		(c) The provision required by Subsection (b) must be
320	322		executed by an authorized agent of the issuer, dealer, or
321	323		investment adviser filing the application or submitting the notice
322	324		filing.
323	325		(d) Service of process on the commissioner in accordance
324	326		with a provision executed under this section has the same effect as
325	327		if the issuer, dealer, or investment adviser was created or formed
326	328		under the laws of this state and served with process in this state.
327	329		(e) If the commissioner is served with process in accordance
328	330		with a provision executed under this section, the commissioner
329	331		shall forward the process by United States mail to the last known
330	332		address of the issuer, dealer, or investment adviser. (V.A.C.S.
331	333		Art. 581-8.)
332	334		SUBCHAPTER D. OTHER GENERAL PROVISIONS
333	335		Sec. 4001.151. PROSECUTION UNDER CERTAIN OTHER LAW.
334	336		Nothing in Chapter 269 (S.B. 294), Acts of the 55th Legislature,
335	337		Regular Session, 1957 (Article 581-1 et seq., Vernon's Texas Civil
336	338		Statutes), limits the liability of a person or company, or of its
337	339		officers or agents, imposed by law as of August 22, 1957, so as to
338	340		prevent the prosecution of the person or company, or of its officers
339	341		or agents, for violating another statute. (V.A.C.S. Art. 581-31.)
340	342		Sec. 4001.152. GOOD FAITH. (a) A provision of this title
341	343		that imposes liability or a penalty does not apply to an act or
342	344		omission made in good faith in conformity with a board rule.
343	345		(b) This section applies regardless of whether the rule is
344	346		subsequently amended, rescinded, or determined by judicial or other
345	347		authority to be invalid for any reason. (V.A.C.S. Art. 581-28-1,
346	348		Subsec. E.)
347	349		Sec. 4001.153. BURDEN OF PROOF ON EXEMPTION. (a) A
348	350		complaint, information or indictment, or a writ or proceeding
349	351		brought under this title is not required to negate an exemption
350	352		under this title.
351	353		(b) A party claiming an exemption under this title has the
352	354		burden of proof on the exemption. (V.A.C.S. Art. 581-37.)
353	355		Sec. 4001.154. CERTIFIED COPIES OF CERTAIN DOCUMENTS OR
354	356		INSTRUMENTS AS EVIDENCE. (a) Except as provided by Subsection (b),
355	357		a copy of a paper, document, or instrument filed in the office of
356	358		the commissioner and certified by the commissioner must be admitted
357	359		in evidence in a court and elsewhere in this state in any case in
358	360		which the original would be admitted in evidence.
359	361		(b) In any proceeding in a court, the court may, on cause
360	362		shown, require the production of the original paper, document, or
361	363		instrument.
362	364		(c) In a prosecution, suit, or other action or proceeding in
363	365		a court of this state that arises under this title, a certificate
364	366		showing compliance or noncompliance with a provision of this title
365	367		by a dealer, agent, investment adviser, or investment adviser
366	368		representative constitutes prima facie evidence of the person's
367	369		compliance or noncompliance with that provision if the certificate:
368	370		(1) is under the state seal; and
369	371		(2) is signed by the commissioner.
370	372		(d) A certificate described by Subsection (c) is admissible
371	373		in evidence in an action to enforce this title. (V.A.C.S. Art.
372	374		581-30 (part).)
373	375		Sec. 4001.155. PROOF OF CERTAIN RECORDS. All records of the
374	376		former securities divisions of the offices of the secretary of
375	377		state and the former Board of Insurance Commissioners for which
376	378		custody was assumed by the commissioner under Chapter 269, Acts of
377	379		the 55th Legislature, Regular Session, 1957, shall be proven under
378	380		the commissioner's certificate. (V.A.C.S. Art. 581-30 (part).)
379	381		CHAPTER 4002. STATE SECURITIES BOARD AND SECURITIES COMMISSIONER
380	382		SUBCHAPTER A. GENERAL PROVISIONS
381	383		Sec. 4002.001. APPLICABILITY OF OTHER LAW
382	384		Sec. 4002.002. SUNSET PROVISION
383	385		SUBCHAPTER B. STATE SECURITIES BOARD
384	386		Sec. 4002.051. APPOINTMENT OF BOARD
385	387		Sec. 4002.052. MEMBERSHIP ELIGIBILITY
386	388		Sec. 4002.053. MEMBERSHIP AND EMPLOYEE RESTRICTIONS
387	389		Sec. 4002.054. TERMS; VACANCY
388	390		Sec. 4002.055. PRESIDING OFFICER
389	391		Sec. 4002.056. GROUNDS FOR REMOVAL
390	392		Sec. 4002.057. PER DIEM
391	393		Sec. 4002.058. BOARD MEMBER TRAINING
392	394		SUBCHAPTER C. SECURITIES COMMISSIONER AND EMPLOYEES OF BOARD
393	395		Sec. 4002.101. SECURITIES COMMISSIONER
394	396		Sec. 4002.102. DEPUTY SECURITIES COMMISSIONER;
395	397		SECURITIES COMMISSIONER APPOINTEES
396	398		Sec. 4002.103. DIVISION OF RESPONSIBILITIES
397	399		Sec. 4002.104. STANDARDS OF CONDUCT INFORMATION
398	400		Sec. 4002.105. CAREER LADDER PROGRAM; PERFORMANCE
399	401		EVALUATIONS
400	402		Sec. 4002.106. EQUAL EMPLOYMENT OPPORTUNITY POLICY
401	403		Sec. 4002.107. WRITTEN EMPLOYEE COMPLAINT PROCEDURE
402	404		SUBCHAPTER D. POWERS AND DUTIES OF BOARD AND COMMISSIONER
403	405		Sec. 4002.151. RULES
404	406		Sec. 4002.152. RULES REGARDING COMPETITIVE BIDDING OR
405	407		ADVERTISING
406	408		Sec. 4002.153. BOARD DELEGATION OF RULEMAKING
407	409		AUTHORITY
408	410		Sec. 4002.154. COMMISSIONER DISCRETION REGARDING RULES
409	411		Sec. 4002.155. DEPOSIT OF RECEIPTS TO GENERAL REVENUE
410	412		FUND
411	413		Sec. 4002.156. BOARD AUTHORITY TO EXERCISE
412	414		COMMISSIONER'S POWERS
413	415		Sec. 4002.157. LIST OF SECURITIES OFFERED
414	416		Sec. 4002.158. RECORD OF PROCEEDINGS
415	417		Sec. 4002.159. RECORD OF CERTAIN FILINGS AND ORDERS
416	418		Sec. 4002.160. COMMISSIONER'S ACCESS TO RECORDS AND
417	419		REPORTS OF OTHER STATE AGENCIES
418	420		Sec. 4002.161. CONFIDENTIALITY OF CERTAIN INFORMATION
419	421		Sec. 4002.162. BOARD ACCESS TO OFFICES AND RECORDS
420	422		Sec. 4002.163. ANNUAL REPORT
421	423		SUBCHAPTER E. CONSUMER INTEREST AND OTHER PUBLIC INTEREST
422	424		INFORMATION
423	425		Sec. 4002.201. CONSUMER INTEREST INFORMATION
424	426		Sec. 4002.202. PUBLIC PARTICIPATION
425	427		Sec. 4002.203. DOCUMENTS AND OTHER INFORMATION FILED
426	428		WITH COMMISSIONER; PUBLIC RECORDS
427	429		CHAPTER 4002. STATE SECURITIES BOARD AND SECURITIES COMMISSIONER
428	430		SUBCHAPTER A. GENERAL PROVISIONS
429	431		Sec. 4002.001. APPLICABILITY OF OTHER LAW. The board and
430	432		commissioner are subject to Chapters 551, 2001, and 2002.
431	433		(V.A.C.S. Art. 581-2, Subsec. N.)
432	434		Sec. 4002.002. SUNSET PROVISION. The State Securities
433	435		Board is subject to Chapter 325 (Texas Sunset Act). Unless
434	436		continued in existence as provided by that chapter, the board is
435	437		abolished and this title expires September 1, 2019. (V.A.C.S. Art.
436	438		581-2, Subsec. O.)
437	439		SUBCHAPTER B. STATE SECURITIES BOARD
438	440		Sec. 4002.051. APPOINTMENT OF BOARD. (a) The State
439	441		Securities Board consists of five citizens of this state appointed
440	442		by the governor with the advice and consent of the senate.
441	443		(b) Members of the board must be members of the general
442	444		public.
443	445		(c) Appointments to the board shall be made without regard
444	446		to the race, color, disability, sex, religion, age, or national
445	447		origin of the appointee.
446	448		(d) A member of the board is eligible for reappointment.
447	449		(V.A.C.S. Art. 581-2, Subsecs. A (part), B (part).)
448	450		Sec. 4002.052. MEMBERSHIP ELIGIBILITY. A person is not
449	451		eligible for appointment to the board if the person or the person's
450	452		spouse:
451	453		(1) is registered as a dealer, agent, investment
452	454		adviser, or investment adviser representative;
453	455		(2) has an active notice filing under this title to
454	456		engage in business in this state as an investment adviser or
455	457		investment adviser representative;
456	458		(3) is employed by or participates in the management
457	459		of a business entity engaged in business as a securities dealer or
458	460		investment adviser; or
459	461		(4) has, other than as a consumer, a financial
460	462		interest in a business entity engaged in business as a securities
461	463		dealer or investment adviser. (V.A.C.S. Art. 581-2, Subsec. B
462	464		(part).)
463	465		Sec. 4002.053. MEMBERSHIP AND EMPLOYEE RESTRICTIONS. (a)
464	466		In this section, "Texas trade association" means a cooperative and
465	467		voluntarily joined association of business or professional
466	468		competitors in this state designed to assist its members and its
467	469		industry or profession in dealing with mutual business or
468	470		professional problems and in promoting their common interest.
469	471		(b) A person may not be a member of the board or an employee
470	472		of the board employed in a "bona fide executive, administrative, or
471	473		professional capacity," as that phrase is used for purposes of
472	474		establishing an exemption to the overtime provisions of the federal
473	475		Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.),
474	476		if:
475	477		(1) the person is an officer, employee, or paid
476	478		consultant of a Texas trade association in a field regulated by the
477	479		board; or
478	480		(2) the person's spouse is an officer, manager, or paid
479	481		consultant of a Texas trade association in a field regulated by the
480	482		board.
481	483		(c) A person may not be a member of the board or act as the
482	484		general counsel to the board if the person is required to register
483	485		as a lobbyist under Chapter 305 because of the person's activities
484	486		for compensation on behalf of a profession related to the operation
485	487		of the board. (V.A.C.S. Art. 581-2-1.)
486	488		Sec. 4002.054. TERMS; VACANCY. (a) Members of the board
487	489		serve staggered six-year terms, with as near as possible to
488	490		one-third of the members' terms expiring January 20 of each
489	491		odd-numbered year.
490	492		(b) The governor shall fill a vacancy on the board for the
491	493		unexpired term. (V.A.C.S. Art. 581-2, Subsec. A (part).)
492	494		Sec. 4002.055. PRESIDING OFFICER. The governor shall
493	495		designate a member of the board as the board's presiding officer to
494	496		serve in that capacity at the will of the governor. (V.A.C.S. Art.
495	497		581-2, Subsec. D (part).)
496	498		Sec. 4002.056. GROUNDS FOR REMOVAL. (a) It is a ground for
497	499		removal from the board that a member:
498	500		(1) does not have at the time of taking office the
499	501		qualifications required by Section 4002.051;
500	502		(2) does not maintain during service on the board the
501	503		qualifications required by Section 4002.051;
502	504		(3) is ineligible for membership under Section
503	505		4002.052 or 4002.053;
504	506		(4) cannot, because of illness or disability,
505	507		discharge the member's duties for a substantial part of the member's
506	508		term; or
507	509		(5) is absent from more than half of the regularly
508	510		scheduled board meetings that the member is eligible to attend
509	511		during a calendar year without an excuse approved by a majority vote
510	512		of the board.
511	513		(b) The validity of an action of the board is not affected by
512	514		the fact that it is taken when a ground for removal of a board member
513	515		exists.
514	516		(c) If the commissioner has knowledge that a potential
515	517		ground for removal exists, the commissioner shall notify the
516	518		board's presiding officer of the potential ground. The presiding
517	519		officer shall then notify the governor and the attorney general
518	520		that a potential ground for removal exists. If the potential ground
519	521		for removal involves the presiding officer, the commissioner shall
520	522		notify the board's next highest ranking officer, who shall then
521	523		notify the governor and the attorney general that a potential
522	524		ground for removal exists. (V.A.C.S. Art. 581-2, Subsecs. E, F.)
523	525		Sec. 4002.057. PER DIEM. A member of the board is entitled
524	526		to a per diem as set by legislative appropriation for each day the
525	527		member engages in the business of the board. (V.A.C.S. Art. 581-2,
526	528		Subsec. D (part).)
527	529		Sec. 4002.058. BOARD MEMBER TRAINING. (a) A person who is
528	530		appointed to and qualifies for office as a member of the board may
529	531		not vote, deliberate, or be counted as a member in attendance at a
530	532		meeting of the board until the person completes a training program
531	533		that complies with this section.
532	534		(b) The training program must provide the person with
533	535		information regarding:
534	536		(1) the legislation that created the board;
535	537		(2) the programs operated by the board;
536	538		(3) the role and functions of the board;
537	539		(4) the rules of the board, with an emphasis on the
538	540		rules that relate to disciplinary and investigatory authority;
539	541		(5) the current budget for the board;
540	542		(6) the results of the most recent formal audit of the
541	543		board;
542	544		(7) the requirements of:
543	545		(A) the open meetings law, Chapter 551;
544	546		(B) the public information law, Chapter 552;
545	547		(C) the administrative procedure law, Chapter
546	548		2001; and
547	549		(D) other laws relating to public officials,
548	550		including conflict-of-interest laws; and
549	551		(8) any applicable ethics policies adopted by the
550	552		board or the Texas Ethics Commission.
551	553		(c) A person appointed to the board is entitled to
552	554		reimbursement, as provided by the General Appropriations Act, for
553	555		travel expenses incurred in attending the training program
554	556		regardless of whether the attendance at the program occurs before
555	557		or after the person qualifies for office. (V.A.C.S. Art. 581-2-3.)
556	558		SUBCHAPTER C. SECURITIES COMMISSIONER AND EMPLOYEES OF BOARD
557	559		Sec. 4002.101. SECURITIES COMMISSIONER. The board shall
558	560		appoint a securities commissioner who serves at the pleasure of the
559	561		board and who, under the board's supervision, shall administer this
560	562		title. (V.A.C.S. Art. 581-2, Subsec. G (part).)
561	563		Sec. 4002.102. DEPUTY SECURITIES COMMISSIONER; SECURITIES
562	564		COMMISSIONER APPOINTEES. (a) The commissioner, with the consent
563	565		of the board, may designate a deputy securities commissioner who
564	566		shall perform all of the duties of the commissioner required by law
565	567		to be performed by the commissioner when the commissioner is absent
566	568		or unable to act for any reason.
567	569		(b) The commissioner shall appoint other persons as
568	570		necessary to carry out the powers and duties of the commissioner
569	571		under this title and under other laws granting jurisdiction to or
570	572		applicable to the board or the commissioner.
571	573		(c) The commissioner may delegate to a person appointed
572	574		under Subsection (b) powers and duties of the commissioner as the
573	575		commissioner considers necessary. (V.A.C.S. Art. 581-2, Subsec.
574	576		H.)
575	577		Sec. 4002.103. DIVISION OF RESPONSIBILITIES. The board
576	578		shall develop and implement policies that clearly separate the
577	579		policy-making responsibilities of the board and the management
578	580		responsibilities of the commissioner and board employees.
579	581		(V.A.C.S. Art. 581-2-4.)
580	582		Sec. 4002.104. STANDARDS OF CONDUCT INFORMATION. The
581	583		commissioner or the commissioner's designee shall provide to
582	584		members of the board and to board employees, as often as necessary,
583	585		information regarding the requirements for office or employment
584	586		under this title, including information regarding a person's
585	587		responsibilities under applicable laws relating to standards of
586	588		conduct for state officers or employees. (V.A.C.S. Art. 581-2-2.)
587	589		Sec. 4002.105. CAREER LADDER PROGRAM; PERFORMANCE
588	590		EVALUATIONS. (a) The commissioner or the commissioner's designee
589	591		shall develop an intra-agency career ladder program. The program
590	592		must require intra-agency posting of each nonentry level position
591	593		at least 10 days before the date of any public posting.
592	594		(b) The commissioner or the commissioner's designee shall
593	595		develop a system of annual performance evaluations based on
594	596		measurable job tasks. All merit pay for board employees must be
595	597		based on the system established under this subsection. (V.A.C.S.
596	598		Art. 581-2, Subsec. K.)
597	599		Sec. 4002.106. EQUAL EMPLOYMENT OPPORTUNITY POLICY. (a)
598	600		The commissioner or the commissioner's designee shall prepare and
599	601		maintain a written policy statement that implements a program of
600	602		equal employment opportunity to ensure that all personnel decisions
601	603		are made without regard to race, color, disability, sex, religion,
602	604		age, or national origin.
603	605		(b) The policy statement must include:
604	606		(1) personnel policies, including policies relating
605	607		to recruitment, evaluation, selection, training, and promotion of
606	608		personnel, that show the intent of the board to avoid the unlawful
607	609		employment practices described by Chapter 21, Labor Code; and
608	610		(2) an analysis of the extent to which the composition
609	611		of the board's personnel is in accordance with state and federal law
610	612		and a description of reasonable methods to achieve compliance with
611	613		state and federal law.
612	614		(c) The policy statement must be:
613	615		(1) updated annually;
614	616		(2) reviewed by the Texas Workforce Commission civil
615	617		rights division for compliance with Subsection (b)(1); and
616	618		(3) filed with the governor's office. (V.A.C.S. Art.
617	619		581-2-7.)
618	620		Sec. 4002.107. WRITTEN EMPLOYEE COMPLAINT PROCEDURE. (a)
619	621		The commissioner or the commissioner's designee shall maintain a
620	622		file on each written complaint filed with the commissioner or board
621	623		concerning an employee or former employee. The file must include
622	624		the information listed in Section 4007.051 for files maintained
623	625		under that section for complaints against persons registered under
624	626		this title.
625	627		(b) The commissioner or the commissioner's designee shall
626	628		provide to the person filing the complaint and to each person who is
627	629		a subject of the complaint a copy of the board's policies and
628	630		procedures relating to complaint investigation and resolution.
629	631		(c) The commissioner or the commissioner's designee, at
630	632		least quarterly until final disposition of the complaint, shall
631	633		notify the person filing the complaint and each person who is a
632	634		subject of the complaint of the status of the investigation unless
633	635		the notice would jeopardize an undercover investigation. (V.A.C.S.
634	636		Art. 581-2-6, Subsecs. A (part), B, C; New.)
635	637		SUBCHAPTER D. POWERS AND DUTIES OF BOARD AND COMMISSIONER
636	638		Sec. 4002.151. RULES. (a) Subject to Subsection (b), the
637	639		board may adopt rules as necessary to implement this title,
638	640		including rules:
639	641		(1) governing registration statements, applications,
640	642		notices, and reports; and
641	643		(2) defining terms, regardless of whether used in this
642	644		title, provided that the definitions are not inconsistent with the
643	645		purposes fairly intended by the policy and provisions of this
644	646		title.
645	647		(b) The board may not adopt a rule unless, after notice and
646	648		opportunity for comment, the board finds that the action is:
647	649		(1) necessary or appropriate in the public interest or
648	650		for the protection of investors; and
649	651		(2) consistent with the purposes fairly intended by
650	652		the policy and provisions of this title.
651	653		(c) For the purpose of adopting rules, the board may
652	654		classify securities, persons, and matters within the board's
653	655		jurisdiction and prescribe different requirements for different
654	656		classes.
655	657		(d) The board, in the board's discretion, may waive a
656	658		requirement of a rule in a situation in which, in the board's
657	659		opinion, the requirement is not necessary in the public interest or
658	660		for the protection of investors. (V.A.C.S. Art. 581-28-1, Subsecs.
659	661		B, C.)
660	662		Sec. 4002.152. RULES REGARDING COMPETITIVE BIDDING OR
661	663		ADVERTISING. (a) The board may not adopt rules restricting
662	664		competitive bidding or advertising by a person registered under
663	665		this title except to prohibit false, misleading, or deceptive
664	666		practices by the person.
665	667		(b) The board may not include in the board's rules to
666	668		prohibit false, misleading, or deceptive practices by a person
667	669		regulated by the board a rule that:
668	670		(1) restricts the person's use of any advertising
669	671		medium;
670	672		(2) restricts the person's personal appearance or use
671	673		of the person's voice in an advertisement;
672	674		(3) relates to the size or duration of an
673	675		advertisement by the person; or
674	676		(4) restricts the person's advertisement under a trade
675	677		name.
676	678		(c) This section does not affect limitations on advertising
677	679		in Section 4005.012, 4005.013, or 4005.021 or in rules adopted by
678	680		the board under Section 4005.024. (V.A.C.S. Art. 581-28-1, Subsec.
679	681		F.)
680	682		Sec. 4002.153. BOARD DELEGATION OF RULEMAKING AUTHORITY.
681	683		(a) The board by rule may delegate to the commissioner or the
682	684		deputy securities commissioner the authority granted to the board
683	685		under Section 4002.151 or 4002.152 to adopt rules or to waive the
684	686		requirements of rules as the board considers appropriate.
685	687		(b) Any rule adopted by the commissioner or the deputy
686	688		securities commissioner based on the authority delegated under this
687	689		section must be adopted in accordance with Sections 4002.151 and
688	690		4002.152. (V.A.C.S. Art. 581-28-1, Subsec. D.)
689	691		Sec. 4002.154. COMMISSIONER DISCRETION REGARDING RULES. In
690	692		applying the standards of this title, the commissioner may waive or
691	693		relax any restriction or requirement in a board rule that, in the
692	694		commissioner's opinion, is unnecessary for the protection of
693	695		investors in a particular case. (V.A.C.S. Art. 581-10, Subsec. D.)
694	696		Sec. 4002.155. DEPOSIT OF RECEIPTS TO GENERAL REVENUE FUND.
695	697		The commissioner or board shall deposit money received from
696	698		assessments or charges under this title to the credit of the general
697	699		revenue fund. (V.A.C.S. Art. 581-36 (part).)
698	700		Sec. 4002.156. BOARD AUTHORITY TO EXERCISE COMMISSIONER'S
699	701		POWERS. The board may exercise any power or perform any act the
700	702		commissioner is authorized to exercise or perform under this title.
701	703		(V.A.C.S. Art. 581-2, Subsec. G (part).)
702	704		Sec. 4002.157. LIST OF SECURITIES OFFERED. At any time, the
703	705		commissioner may, in the exercise of reasonable discretion under
704	706		this title, require a dealer to file with the commissioner a partial
705	707		or complete list of securities that the dealer:
706	708		(1) is offering or advertising for sale in this state
707	709		at the time of the request; or
708	710		(2) has offered or advertised for sale in this state
709	711		during the six-month period preceding the date of the request.
710	712		(V.A.C.S. Art. 581-23, Subsec. D.)
711	713		Sec. 4002.158. RECORD OF PROCEEDINGS. A complete record
712	714		shall be kept of all proceedings held before the commissioner on any
713	715		hearing or investigation. (V.A.C.S. Art. 581-26 (part).)
714	716		Sec. 4002.159. RECORD OF CERTAIN FILINGS AND ORDERS. (a)
715	717		The commissioner shall maintain a record of:
716	718		(1) the names and addresses of all registered dealers,
717	719		registered agents, registered investment advisers, registered
718	720		investment adviser representatives, and persons who have submitted
719	721		a notice filing under this title; and
720	722		(2) all orders of the commissioner denying,
721	723		suspending, or revoking a registration.
722	724		(b) A record maintained under Subsection (a) must be open
723	725		for public inspection.
724	726		(c) This section does not apply to information made
725	727		confidential by Section 4002.161, 4007.052, or 4007.056 or other
726	728		law. (V.A.C.S. Art. 581-11 (part).)
727	729		Sec. 4002.160. COMMISSIONER'S ACCESS TO RECORDS AND REPORTS
728	730		OF OTHER STATE AGENCIES. (a) During an investigation for the
729	731		purpose of enforcing this title or in connection with the
730	732		application of a person or company for registration or for a permit
731	733		qualifying securities for sale, the commissioner or deputy
732	734		securities commissioner shall have free access to all records of,
733	735		all reports of, and all reports made to an agency or department of
734	736		this state.
735	737		(b) If the commissioner or deputy securities commissioner
736	738		discloses any information made confidential by law, the affected
737	739		person or company has a right of action on the official bond of the
738	740		commissioner or deputy securities commissioner for the person's or
739	741		company's injuries in a suit brought in the name of the state at the
740	742		relation of the person or company.
741	743		(c) This section may not be interpreted to prohibit or limit
742	744		the publication of rulings or decisions of the commissioner.
743	745		(V.A.C.S. Art. 581-28, Subsec. A (part).)
744	746		Sec. 4002.161. CONFIDENTIALITY OF CERTAIN INFORMATION. (a)
745	747		To the extent not otherwise provided by this title, any
746	748		intra-agency or interagency notes, memoranda, reports, or other
747	749		communications consisting of advice, analyses, opinions, or
748	750		recommendations are confidential.
749	751		(b) Except as provided by Subsection (c) or Section
750	752		4007.056(b) or (c), the commissioner may not disclose a document or
751	753		other information made confidential by Subsection (a) unless the
752	754		disclosure is made to the public under court order for good cause
753	755		shown.
754	756		(c) The commissioner, at the commissioner's discretion, may
755	757		disclose confidential information in the commissioner's possession
756	758		to:
757	759		(1) a governmental or regulatory authority or any
758	760		association of governmental or regulatory authorities approved by
759	761		board rule; or
760	762		(2) any receiver appointed under Section 4007.151.
761	763		(d) Disclosure of information under Subsection (c) does not
762	764		violate any other provision of this title or Chapter 552.
763	765		(e) This section may not be interpreted to prohibit or limit
764	766		the publication of rulings or decisions of the commissioner.
765	767		(V.A.C.S. Art. 581-28, Subsecs. A (part), B; New.)
766	768		Sec. 4002.162. BOARD ACCESS TO OFFICES AND RECORDS. Each
767	769		member of the board shall have access to all of the offices and
768	770		records under the commissioner's supervision. (V.A.C.S. Art.
769	771		581-2, Subsec. G (part).)
770	772		Sec. 4002.163. ANNUAL REPORT. On or before January 1 of
771	773		each year, the board, with the advice of the commissioner, shall
772	774		report to the governor and the presiding officer of each house of
773	775		the legislature about the administration of this title and plans
774	776		and needs for future securities regulation. The report must
775	777		include a detailed accounting of all funds received and disbursed
776	778		by the board during the preceding year. (V.A.C.S. Art. 581-2,
777	779		Subsec. J.)
778	780		SUBCHAPTER E. CONSUMER INTEREST AND OTHER PUBLIC INTEREST
779	781		INFORMATION
780	782		Sec. 4002.201. CONSUMER INTEREST INFORMATION. (a) The
781	783		board shall prepare information of consumer interest describing:
782	784		(1) the regulatory functions of the board and
783	785		commissioner; and
784	786		(2) the procedures by which consumer complaints are
785	787		filed with and resolved by the board or commissioner.
786	788		(b) The board shall make the information available to the
787	789		public and appropriate state agencies. (V.A.C.S. Art. 581-2,
788	790		Subsec. L (part).)
789	791		Sec. 4002.202. PUBLIC PARTICIPATION. The board by rule
790	792		shall develop and implement policies that provide the public with a
791	793		reasonable opportunity to appear before the board and to speak on
792	794		any issue under the board's jurisdiction. (V.A.C.S. Art. 581-2-5.)
793	795		Sec. 4002.203. DOCUMENTS AND OTHER INFORMATION FILED WITH
794	796		COMMISSIONER; PUBLIC RECORDS. (a) All information, papers,
795	797		documents, instruments, and affidavits required by this title to be
796	798		filed with the commissioner are public records.
797	799		(b) All information, papers, documents, instruments, and
798	800		affidavits required by this title to be filed with the commissioner
799	801		must be open to inspection and examination by a purchaser or
800	802		prospective purchaser of securities, or by the agent or
801	803		representative of a purchaser or prospective purchaser of
802	804		securities. The commissioner shall:
803	805		(1) provide to a purchaser or prospective purchaser of
804	806		securities, or an agent or representative of those persons, any
805	807		information required to be filed with the commissioner under this
806	808		title; and
807	809		(2) on request by a person described by Subdivision
808	810		(1), provide a certified copy of any paper, document, instrument,
809	811		or affidavit filed with the commissioner under this title.
810	812		(c) This section does not apply to information made
811	813		confidential by Section 4002.161, 4007.052, or 4007.056 or other
812	814		law. (V.A.C.S. Art. 581-11 (part).)
813	815		CHAPTER 4003. SECURITIES
814	816		SUBCHAPTER A. PERMIT QUALIFYING SECURITIES FOR SALE
815	817		Sec. 4003.001. PERMIT REQUIRED; EXCEPTIONS
816	818		Sec. 4003.002. PERMIT APPLICATION TO QUALIFY
817	819		SECURITIES FOR SALE
818	820		Sec. 4003.003. STATEMENT OF FINANCIAL CONDITION AND
819	821		INCOME STATEMENT
820	822		Sec. 4003.004. EXCEPTIONS TO CERTIFICATION REQUIREMENT
821	823		FOR FINANCIAL STATEMENTS
822	824		Sec. 4003.005. PERMIT FEE
823	825		Sec. 4003.006. EXAMINATION OF AND DETERMINATION ON
824	826		PERMIT APPLICATION
825	827		Sec. 4003.007. FORM AND CONTENTS OF PERMIT
826	828		Sec. 4003.008. TERM OF PERMIT
827	829		Sec. 4003.009. RENEWAL OF PERMIT
828	830		Sec. 4003.010. USE OF PERMIT FOR CERTAIN PURPOSES
829	831		PROHIBITED
830	832		SUBCHAPTER B. REGISTRATION BY NOTIFICATION
831	833		Sec. 4003.051. ELIGIBILITY FOR REGISTRATION BY
832	834		NOTIFICATION
833	835		Sec. 4003.052. REGISTRATION STATEMENT REQUIRED
834	836		Sec. 4003.053. EXCEPTION TO CERTIFICATION REQUIREMENT
835	837		FOR FINANCIAL STATEMENTS
836	838		Sec. 4003.054. REGISTRATION PROCEDURES
837	839		Sec. 4003.055. EFFECTIVE DATE OF REGISTRATION BY
838	840		NOTIFICATION
839	841		Sec. 4003.056. EFFECT OF REGISTRATION BY NOTIFICATION
840	842		Sec. 4003.057. TERM OF REGISTRATION
841	843		Sec. 4003.058. RENEWAL OF REGISTRATION
842	844		Sec. 4003.059. INSUFFICIENT OR FRAUDULENT REGISTRATION
843	845		STATEMENT
844	846		SUBCHAPTER C. REGISTRATION BY COORDINATION
845	847		Sec. 4003.101. ELIGIBILITY FOR REGISTRATION BY
846	848		COORDINATION
847	849		Sec. 4003.102. REGISTRATION STATEMENT REQUIRED
848	850		Sec. 4003.103. EXAMINATION OF AND DETERMINATION ON
849	851		REGISTRATION STATEMENT
850	852		Sec. 4003.104. TERM OF REGISTRATION
851	853		Sec. 4003.105. RENEWAL OF REGISTRATION
852	854		SUBCHAPTER D. PROHIBITED SALES
853	855		Sec. 4003.151. CERTAIN SALES PROHIBITED
854	856		SUBCHAPTER E. REGULATION OF OFFERS
855	857		Sec. 4003.201. DEFINITION
856	858		Sec. 4003.202. APPLICABILITY
857	859		Sec. 4003.203. AUTHORIZED WRITTEN, PRINTED, OR
858	860		BROADCAST OFFERS
859	861		Sec. 4003.204. AUTHORIZED ORAL OFFERS
860	862		Sec. 4003.205. DEALER NAMED IN OFFER
861	863		Sec. 4003.206. EFFECT OF COMPLIANCE OR NONCOMPLIANCE
862	864		SUBCHAPTER F. CROWDFUNDING
863	865		Sec. 4003.251. DEFINITION
864	866		Sec. 4003.252. CROWDFUNDING
865	867		SUBCHAPTER G. PROTECTION FOR PURCHASERS OF SECURITIES
866	868		Sec. 4003.301. DEPOSIT IN TRUST ACCOUNT
867	869		Sec. 4003.302. MARKETING EXPENSES
868	870		Sec. 4003.303. PROSPECTUS REQUIRED FOR CERTAIN OFFERS
869	871		Sec. 4003.304. INVESTOR EDUCATION
870	872		CHAPTER 4003. SECURITIES
871	873		SUBCHAPTER A. PERMIT QUALIFYING SECURITIES FOR SALE
872	874		Sec. 4003.001. PERMIT REQUIRED; EXCEPTIONS. (a) A dealer
873	875		or agent may not sell or offer for sale any securities issued after
874	876		September 6, 1955, unless the commissioner has issued a permit
875	877		qualifying securities for sale for those securities to the issuer
876	878		of the securities or a registered dealer.
877	879		(b) This section does not apply to:
878	880		(1) securities that have been registered by
879	881		notification under Subchapter B or by coordination under Subchapter
880	882		C; or
881	883		(2) transactions or securities that are exempt under
882	884		Chapter 4005. (V.A.C.S. Art. 581-7, Subsec. A, Subdiv. (1) (part);
883	885		Art. 581-10, Subsec. B (part).)
884	886		Sec. 4003.002. PERMIT APPLICATION TO QUALIFY SECURITIES FOR
885	887		SALE. (a) The commissioner may not issue a permit qualifying
886	888		securities for sale required by Section 4003.001 until the issuer
887	889		of the securities or a registered dealer files with the
888	890		commissioner an application for the permit in the form of a
889	891		statement containing the following information:
890	892		(1) the name, residence, and post office address of
891	893		each of the company's officers and directors;
892	894		(2) the location of the company's principal office and
893	895		each branch office in this state;
894	896		(3) a copy of the company's certificate of formation or
895	897		articles of incorporation or partnership or association and any
896	898		amendments to those documents;
897	899		(4) if the company is a corporation, a copy of:
898	900		(A) all minutes of any proceedings of the
899	901		company's directors, stockholders, or members relating to or
900	902		affecting the issuance of the securities; and
901	903		(B) the company's bylaws and any amendments to
902	904		the bylaws;
903	905		(5) if the company is a trustee, a copy of all
904	906		instruments by which the trust is created and in which the trust is
905	907		accepted, acknowledged, or declared;
906	908		(6) a statement showing:
907	909		(A) the amount of capital stock and, if there is
908	910		no capital stock, the amount of capital of the issuer that is
909	911		contemplated to be employed;
910	912		(B) the number of shares into which the stock is
911	913		divided or, if not divided into shares, what division is to be made
912	914		or is contemplated;
913	915		(C) the par value of each share or, if there are
914	916		shares with no par value, the price at which the security is
915	917		proposed to be sold; and
916	918		(D) the promotional fees or commissions to be
917	919		paid for the sale of the securities, including:
918	920		(i) all compensation of every nature
919	921		allowed to be paid to the promoters or allowed for the sale of the
920	922		securities;
921	923		(ii) how the compensation is to be paid,
922	924		whether in cash, securities, service or otherwise, or partly of
923	925		either or both;
924	926		(iii) the amount of cash to be paid or
925	927		securities to be issued, given, transferred, or sold to promoters
926	928		for promotion or organization services and expenses; and
927	929		(iv) the amount of promotion or
928	930		organization services and expenses that the issuer will assume or
929	931		pay in any way;
930	932		(7) a copy of:
931	933		(A) certificates of the stock and all other
932	934		securities to be sold or offered for sale, together with
933	935		application blanks for the stock and securities;
934	936		(B) any contract the company proposes to make
935	937		concerning the securities; and
936	938		(C) any prospectus or advertisement or other
937	939		description of security prepared by or for the company for
938	940		distribution or publication; and
939	941		(8) the statement of financial condition and income
940	942		statement described by Section 4003.003.
941	943		(b) The statement in an application under this section must
942	944		be:
943	945		(1) verified under oath by an executive officer or
944	946		partner of the issuer or registered dealer filing the application;
945	947		and
946	948		(2) attested by the secretary or partner of the issuer
947	949		or registered dealer filing the application. (V.A.C.S. Art. 581-7,
948	950		Subsec. A, Subdiv. (1) (part).)
949	951		Sec. 4003.003. STATEMENT OF FINANCIAL CONDITION AND INCOME
950	952		STATEMENT. (a) In this section, "current liabilities" means all
951	953		liabilities that will mature and become due not later than the first
952	954		anniversary of the date the application listing the liabilities is
953	955		filed under this subchapter.
954	956		(b) A statement of financial condition required in the
955	957		application under this subchapter must:
956	958		(1) be detailed;
957	959		(2) be prepared in accordance with generally accepted
958	960		auditing standards and procedures and generally accepted
959	961		accounting principles;
960	962		(3) reflect the financial condition of the issuer of
961	963		the securities to be qualified for sale on a date not earlier than
962	964		the 90th day before the date the issuer or registered dealer files
963	965		the application;
964	966		(4) show all of the issuer's liabilities by listing all
965	967		current liabilities and, separately from current liabilities, all
966	968		other liabilities, including contingent liabilities, showing the
967	969		amount of those liabilities that are secured by mortgage or
968	970		otherwise, the issuer's assets that are subject to the mortgage,
969	971		and the dates of maturity of the mortgage indebtedness;
970	972		(5) list all of the issuer's assets in detail and show
971	973		how the value of the assets was determined;
972	974		(6) show whether the value of the assets represents:
973	975		(A) the assets' actual cost in money;
974	976		(B) the assets' present market value; or
975	977		(C) some other value of the assets;
976	978		(7) show the present actual value of the assets; and
977	979		(8) state whether the value listed in the statement is
978	980		greater or less than the assets':
979	981		(A) actual cost value in money; and
980	982		(B) present market value.
981	983		(c) The statement under Subsection (b) must show the amount
982	984		for which any real property listed as an asset is rendered for state
983	985		and county taxation or assessed for taxation.
984	986		(d) The statement under Subsection (b) must describe any
985	987		assets consisting of anything other than cash or real property in
986	988		detail to give the commissioner the fullest possible information.
987	989		The commissioner may require the filing of additional information
988	990		as the commissioner considers necessary to determine whether the
989	991		true value of those assets is reflected in the statement.
990	992		(e) A statement under Subsection (b) that lists assets
991	993		subject to a repurchase agreement or similar agreement under the
992	994		terms of which the absolute ownership of or title to the assets is
993	995		qualified or limited must fully state:
994	996		(1) the terms of the agreement; and
995	997		(2) the amount and character of the assets subject to
996	998		the agreement.
997	999		(f) Subject to Subsection (g), the income statement
998	1000		required in an application under this subchapter must:
999	1001		(1) be detailed;
1000	1002		(2) be prepared in accordance with generally accepted
1001	1003		auditing standards and procedures and generally accepted
1002	1004		accounting principles; and
1003	1005		(3) cover the lesser of:
1004	1006		(A) the preceding three years of the issuer's
1005	1007		operations; or
1006	1008		(B) the period the issuer has been operating.
1007	1009		(g) If the issuer has not been operating but is taking over a
1008	1010		concern of any kind that was previously operating, the income
1009	1011		statement required in an application under this subchapter must:
1010	1012		(1) show the operations of the concern taken over for
1011	1013		the three years preceding the taking over of the concern; and
1012	1014		(2) clearly reflect the amount of net income or net
1013	1015		loss incurred during each year shown. (V.A.C.S. Art. 581-7,
1014	1016		Subsec. A, Subdiv. (1) (part), Subsec. D (part).)
1015	1017		Sec. 4003.004. EXCEPTIONS TO CERTIFICATION REQUIREMENT FOR
1016	1018		FINANCIAL STATEMENTS. (a) Financial statements filed as required
1017	1019		by this subchapter are not required to be certified by an
1018	1020		independent certified public accountant or independent public
1019	1021		accountant if:
1020	1022		(1) the fiscal year of the issuer of the securities to
1021	1023		be qualified for sale ended on a date earlier than the 90th day
1022	1024		before the date of the filing; and
1023	1025		(2) financial statements in addition to those required
1024	1026		by this subchapter are filed that:
1025	1027		(A) contain the information required by Section
1026	1028		4003.003; and
1027	1029		(B) are certified by an independent certified
1028	1030		public accountant or independent public accountant as of the end of
1029	1031		the issuer's preceding fiscal year.
1030	1032		(b) Instead of being audited and certified, the financial
1031	1033		statements described by Section 4003.003 of a small business
1032	1034		issuer, as defined by board rule, that meets all other requirements
1033	1035		the board by rule or order prescribes, conditionally or
1034	1036		unconditionally, may be reviewed by an independent certified public
1035	1037		accountant in accordance with the Statements on Standards for
1036	1038		Accounting and Review Services promulgated by the American
1037	1039		Institute of Certified Public Accountants. (V.A.C.S. Art. 581-7,
1038	1040		Subsec. A, Subdiv. (1) (part), Subsec. D (part).)
1039	1041		Sec. 4003.005. PERMIT FEE. The commissioner shall charge
1040	1042		the fees provided by Chapter 4006 for the issuance of a permit
1041	1043		qualifying securities for sale. (V.A.C.S. Art. 581-10, Subsec. B
1042	1044		(part).)
1043	1045		Sec. 4003.006. EXAMINATION OF AND DETERMINATION ON PERMIT
1044	1046		APPLICATION. (a) On the filing of an application for a permit
1045	1047		qualifying securities for sale under this subchapter, the
1046	1048		commissioner shall examine the application and the papers and
1047	1049		documents filed with the application.
1048	1050		(b) After the examination, the commissioner shall:
1049	1051		(1) issue a permit to the applicant authorizing the
1050	1052		applicant to issue and dispose of the securities if the
1051	1053		commissioner determines that:
1052	1054		(A) the applicant's proposed plan of business
1053	1055		appears to be fair, just, and equitable;
1054	1056		(B) any consideration paid or to be paid by
1055	1057		promoters for the securities is fair, just, and equitable if that
1056	1058		consideration is less than the proposed offering price to the
1057	1059		public; and
1058	1060		(C) the securities the applicant proposes to
1059	1061		issue and the methods to be used by the applicant in issuing and
1060	1062		disposing of the securities will not work a fraud upon the purchaser
1061	1063		of the securities; or
1062	1064		(2) deny the application for a permit and notify the
1063	1065		applicant in writing of the commissioner's decision if the
1064	1066		commissioner determines that the applicant's proposed plan of
1065	1067		business appears to be unfair, unjust, or inequitable. (V.A.C.S.
1066	1068		Art. 581-10, Subsec. A.)
1067	1069		Sec. 4003.007. FORM AND CONTENTS OF PERMIT. A permit
1068	1070		qualifying securities for sale must:
1069	1071		(1) be in the form the commissioner prescribes; and
1070	1072		(2) state in bold type that the issuance of the permit
1071	1073		is permissive only and does not constitute a recommendation or
1072	1074		endorsement of the securities permitted to be issued. (V.A.C.S.
1073	1075		Art. 581-10, Subsec. B (part).)
1074	1076		Sec. 4003.008. TERM OF PERMIT. A permit qualifying
1075	1077		securities for sale that is issued under this subchapter is valid
1076	1078		for one year. (V.A.C.S. Art. 581-10, Subsec. B (part).)
1077	1079		Sec. 4003.009. RENEWAL OF PERMIT. (a) An issuer or
1078	1080		registered dealer may file a renewal application with the
1079	1081		commissioner if the securities authorized to be sold under a permit
1080	1082		qualifying securities for sale that is issued under this subchapter
1081	1083		are not sold before the permit expires.
1082	1084		(b) The renewal application must:
1083	1085		(1) state:
1084	1086		(A) the total number of shares sold in this
1085	1087		state;
1086	1088		(B) the total number of shares sold outside this
1087	1089		state; and
1088	1090		(C) the total number of shares outstanding;
1089	1091		(2) contain a detailed balance sheet;
1090	1092		(3) contain an operating statement; and
1091	1093		(4) provide any other information the commissioner may
1092	1094		require.
1093	1095		(c) The commissioner shall examine a renewal application
1094	1096		and issue a renewal permit or deny the application using the
1095	1097		standards stated in Section 4003.006 applicable to an original
1096	1098		application.
1097	1099		(d) If issued, a renewal permit:
1098	1100		(1) is valid for one year; and
1099	1101		(2) must be in the form the commissioner prescribes.
1100	1102		(V.A.C.S. Art. 581-10, Subsec. B (part).)
1101	1103		Sec. 4003.010. USE OF PERMIT FOR CERTAIN PURPOSES
1102	1104		PROHIBITED. A dealer, issuer, or agent may not use a permit
1103	1105		qualifying securities for sale in connection with a sale or effort
1104	1106		to sell a security. (V.A.C.S. Art. 581-10, Subsec. C.)
1105	1107		SUBCHAPTER B. REGISTRATION BY NOTIFICATION
1106	1108		Sec. 4003.051. ELIGIBILITY FOR REGISTRATION BY
1107	1109		NOTIFICATION. (a) Securities may be registered by notification
1108	1110		under this subchapter if the securities are issued by an issuer
1109	1111		that:
1110	1112		(1) has been in continuous operation for at least
1111	1113		three years; and
1112	1114		(2) has shown, during at least the three years
1113	1115		preceding the date of registration under this subchapter, average
1114	1116		annual net earnings after deducting all prior charges, including
1115	1117		income taxes but not including charges on securities to be retired
1116	1118		out of the proceeds of sale, as follows:
1117	1119		(A) for interest-bearing securities, not less
1118	1120		than one and one-half times the annual interest charges on those
1119	1121		securities and on all other outstanding interest-bearing
1120	1122		securities of equal rank;
1121	1123		(B) for securities with a specified dividend
1122	1124		rate, not less than one and one-half times the annual dividend
1123	1125		requirements on those securities and on all other outstanding
1124	1126		securities of equal rank; and
1125	1127		(C) for securities with no specified dividend
1126	1128		rate, not less than five percent on all outstanding securities of
1127	1129		equal rank, together with the amount of those securities then
1128	1130		offered for sale, based on the maximum price at which the securities
1129	1131		are to be offered for sale.
1130	1132		(b) For purposes of calculating average annual net earnings
1131	1133		under Subsection (a)(2)(C), an issuer's ownership of more than 50
1132	1134		percent of the outstanding voting stock of a corporation:
1133	1135		(1) is construed as the issuer's proportionate
1134	1136		ownership of that corporation; and
1135	1137		(2) permits the inclusion of that corporation's
1136	1138		earnings applicable to the payment of dividends on the stock owned
1137	1139		in the earnings of the issuer of the securities being registered by
1138	1140		notification. (V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (1).)
1139	1141		Sec. 4003.052. REGISTRATION STATEMENT REQUIRED. (a) To
1140	1142		register securities by notification that are entitled to that
1141	1143		registration, an issuer of the securities or a registered dealer
1142	1144		must file with the commissioner a registration statement that
1143	1145		complies with this section.
1144	1146		(b) A registration statement filed under this section must:
1145	1147		(1) be in the form the commissioner prescribes;
1146	1148		(2) be signed by the applicant filing the statement;
1147	1149		and
1148	1150		(3) contain the following information:
1149	1151		(A) the name and business address of the main
1150	1152		office of the issuer of the securities to be registered and the
1151	1153		address of the issuer's principal office, if any, in this state;
1152	1154		(B) the title of the securities to be registered
1153	1155		and the total amount of securities to be offered;
1154	1156		(C) the price at which the securities are to be
1155	1157		offered for sale to the public, the amount of securities to be
1156	1158		offered in this state, and the amount of the registration fee,
1157	1159		computed as provided by Chapter 4006;
1158	1160		(D) a brief statement of the facts showing that
1159	1161		the securities are entitled to be registered by notification;
1160	1162		(E) the name and business address of the
1161	1163		applicant filing the statement;
1162	1164		(F) subject to Subsection (c) and except as
1163	1165		provided by Section 4003.053, financial statements that include,
1164	1166		for at least the three years preceding the date of registration:
1165	1167		(i) a certified income statement;
1166	1168		(ii) a certified balance sheet; and
1167	1169		(iii) a certified statement of
1168	1170		stockholders' equity;
1169	1171		(G) a copy of any prospectus describing the
1170	1172		securities; and
1171	1173		(H) a filing of a consent to service of process
1172	1174		conforming to the requirements of Section 4001.102, if the issuer:
1173	1175		(i) is registering the securities; and
1174	1176		(ii) is not a resident of this state or
1175	1177		incorporated or formed under the laws of this state.
1176	1178		(c) The financial statements described by Subsection
1177	1179		(b)(3)(F) must reflect the financial condition of the issuer of the
1178	1180		securities to be registered on a date not earlier than the 90th day
1179	1181		before the date the issuer or registered dealer files the
1180	1182		registration statement.
1181	1183		(d) Filing a registration statement that complies with this
1182	1184		section constitutes the registration of the securities by
1183	1185		notification, subject to Section 4003.055. (V.A.C.S. Art. 581-7,
1184	1186		Subsec. B, Subdiv. (2) (part), Subsec. D (part).)
1185	1187		Sec. 4003.053. EXCEPTION TO CERTIFICATION REQUIREMENT FOR
1186	1188		FINANCIAL STATEMENTS. Financial statements filed as required by
1187	1189		this subchapter are not required to be certified by an independent
1188	1190		certified public accountant or independent public accountant if:
1189	1191		(1) the fiscal year of the issuer of the securities to
1190	1192		be registered ended on a date earlier than the 90th day before the
1191	1193		date of the filing; and
1192	1194		(2) financial statements in addition to those required
1193	1195		by this subchapter are filed that:
1194	1196		(A) contain the information required by Section
1195	1197		4003.052; and
1196	1198		(B) are certified by an independent certified
1197	1199		public accountant or independent public accountant as of the end of
1198	1200		the issuer's preceding fiscal year. (V.A.C.S. Art. 581-7, Subsec.
1199	1201		D (part).)
1200	1202		Sec. 4003.054. REGISTRATION PROCEDURES. (a) The
1201	1203		commissioner shall complete the procedures specified by this
1202	1204		section to register securities entitled to registration by
1203	1205		notification.
1204	1206		(b) The commissioner shall:
1205	1207		(1) examine the registration statement filed under
1206	1208		Section 4003.052 and the accompanying papers to determine their
1207	1209		sufficiency under the requirements of this subchapter; and
1208	1210		(2) record the registration by notification of the
1209	1211		securities described on receipt of:
1210	1212		(A) the registration statement;
1211	1213		(B) any prospectus;
1212	1214		(C) payment of the filing fee and registration
1213	1215		fee; and
1214	1216		(D) a consent to service of process, if required.
1215	1217		(V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part); Art. 581-10,
1216	1218		Subsec. B (part).)
1217	1219		Sec. 4003.055. EFFECTIVE DATE OF REGISTRATION BY
1218	1220		NOTIFICATION. (a) Except as provided by Subsection (b), the
1219	1221		registration of securities by notification takes effect five days
1220	1222		after the date the commissioner receives the registration statement
1221	1223		filed under Section 4003.052 and all accompanying papers.
1222	1224		(b) The commissioner may waive or reduce the five-day
1223	1225		waiting period if the commissioner determines that the public will
1224	1226		not be injured by the waiver or reduction of the waiting period.
1225	1227		(V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part).)
1226	1228		Sec. 4003.056. EFFECT OF REGISTRATION BY NOTIFICATION. On
1227	1229		registration of securities by notification, the securities may be
1228	1230		sold in this state by a registered dealer or a registered agent.
1229	1231		(V.A.C.S. Art. 581-7, Subsec. B, Subdiv. (2) (part).)
1230	1232		Sec. 4003.057. TERM OF REGISTRATION. A registration of
1231	1233		securities by notification is effective for one year. (V.A.C.S.
1232	1234		Art. 581-7, Subsec. B, Subdiv. (2) (part).)
1233	1235		Sec. 4003.058. RENEWAL OF REGISTRATION. A registration of
1234	1236		securities by notification may be renewed for additional periods of
1235	1237		one year if:
1236	1238		(1) the securities are entitled to registration under
1237	1239		this subchapter at the time of renewal; and
1238	1240		(2) a new filing is made under this subchapter
1239	1241		together with the payment of the renewal fee of $10. (V.A.C.S. Art.
1240	1242		581-7, Subsec. B, Subdiv. (2) (part).)
1241	1243		Sec. 4003.059. INSUFFICIENT OR FRAUDULENT REGISTRATION
1242	1244		STATEMENT. (a) If at any time, in the commissioner's opinion, the
1243	1245		information in a registration statement filed under this subchapter
1244	1246		is insufficient to establish that the securities described in the
1245	1247		statement are or were entitled to registration by notification
1246	1248		under this subchapter, or that the registration information
1247	1249		contains or contained false, misleading, or fraudulent facts, the
1248	1250		commissioner may order the applicant who filed the statement to
1249	1251		cease and desist from selling or offering for sale the securities
1250	1252		registered or proposed to be registered by notification under this
1251	1253		subchapter until additional information is filed with the
1252	1254		commissioner that in the commissioner's judgment is necessary to
1253	1255		establish that those securities are or were entitled to
1254	1256		registration by notification under this subchapter.
1255	1257		(b) The provisions of Section 4007.107 relating to hearings
1256	1258		apply to an order entered under this section. (V.A.C.S. Art. 581-7,
1257	1259		Subsec. B, Subdiv. (2) (part).)
1258	1260		SUBCHAPTER C. REGISTRATION BY COORDINATION
1259	1261		Sec. 4003.101. ELIGIBILITY FOR REGISTRATION BY
1260	1262		COORDINATION. A security may be registered by coordination if a
1261	1263		registration statement has been filed under the Securities Act of
1262	1264		1933 (15 U.S.C. Section 77a et seq.) in connection with the same
1263	1265		offering. (V.A.C.S. Art. 581-7, Subsec. C, Subdiv. (1) (part).)
1264	1266		Sec. 4003.102. REGISTRATION STATEMENT REQUIRED. To
1265	1267		register securities by coordination, an issuer of the securities or
1266	1268		a registered dealer must file with the commissioner a registration
1267	1269		statement that contains:
1268	1270		(1) the following information:
1269	1271		(A) the amount of securities to be offered in
1270	1272		this state;
1271	1273		(B) the states in which a registration statement
1272	1274		or similar document in connection with the offering has been or is
1273	1275		expected to be filed; and
1274	1276		(C) any adverse order, judgment, or decree
1275	1277		previously entered in connection with the offering by a court or the
1276	1278		Securities and Exchange Commission;
1277	1279		(2) one copy of the prospectus filed under the
1278	1280		Securities Act of 1933 (15 U.S.C. Section 77a et seq.) together with
1279	1281		all amendments to the prospectus;
1280	1282		(3) a copy of:
1281	1283		(A) the articles of incorporation and bylaws, or
1282	1284		their substantial equivalents, currently in effect;
1283	1285		(B) any agreements with or among underwriters;
1284	1286		and
1285	1287		(C) any indenture or other instrument governing
1286	1288		the issuance of the securities to be registered;
1287	1289		(4) a specimen or copy of the security;
1288	1290		(5) any other information or copies of any other
1289	1291		documents filed under the Securities Act of 1933 (15 U.S.C. Section
1290	1292		77a et seq.) the commissioner requests;
1291	1293		(6) an undertaking to promptly forward all amendments
1292	1294		to the federal registration statement other than an amendment that
1293	1295		delays the effective date only; and
1294	1296		(7) a consent to service of process conforming to the
1295	1297		requirements of Section 4001.102 if:
1296	1298		(A) the registration statement is filed by the
1297	1299		issuer or by a dealer that will offer the securities for sale as the
1298	1300		issuer's agent; and
1299	1301		(B) the issuer is not a resident of this state or
1300	1302		incorporated or formed under the laws of this state. (V.A.C.S. Art.
1301	1303		581-7, Subsec. C, Subdiv. (1) (part).)
1302	1304		Sec. 4003.103. EXAMINATION OF AND DETERMINATION ON
1303	1305		REGISTRATION STATEMENT. (a) In this section, "price amendment"
1304	1306		means the final federal amendment that includes a statement of the
1305	1307		offering price, underwriting and selling discounts or commissions,
1306	1308		amount of proceeds, conversion rates, call prices, and other
1307	1309		matters dependent on the offering price.
1308	1310		(b) The commissioner shall examine a registration statement
1309	1311		filed under Section 4003.102 and the accompanying documents on
1310	1312		receipt.
1311	1313		(c) The commissioner may enter an order denying
1312	1314		registration of the securities to be registered under the
1313	1315		registration statement if after the examination the commissioner
1314	1316		determines that the registrant has not proven that:
1315	1317		(1) the proposed plan of business of the issuer of the
1316	1318		securities is fair, just, and equitable;
1317	1319		(2) any consideration paid or to be paid by promoters
1318	1320		for the securities is fair, just, and equitable if that
1319	1321		consideration is less than the proposed offering price to the
1320	1322		public; and
1321	1323		(3) the securities the registrant proposes to issue
1322	1324		and the methods to be used by the registrant in issuing and
1323	1325		disposing of the securities will not work a fraud upon the purchaser
1324	1326		of the securities.
1325	1327		(d) If the commissioner enters an order denying the
1326	1328		registration of securities under this subchapter, the commissioner
1327	1329		shall notify the registrant immediately.
1328	1330		(e) A registration statement under this subchapter becomes
1329	1331		effective automatically at the moment the federal registration
1330	1332		statement becomes effective if all of the following conditions are
1331	1333		satisfied:
1332	1334		(1) the commissioner has not entered an order denying
1333	1335		registration of the securities;
1334	1336		(2) the registration statement has been on file with
1335	1337		the commissioner for at least 10 days; and
1336	1338		(3) a statement of the maximum and minimum proposed
1337	1339		offering prices and the maximum underwriting discounts and
1338	1340		commissions has been on file for two full business days or a shorter
1339	1341		period as the commissioner expressly permits and the offering is
1340	1342		made within those limitations.
1341	1343		(f) The commissioner may waive either or both of the
1342	1344		conditions specified in Subsections (e)(2) and (3).
1343	1345		(g) The registrant shall promptly:
1344	1346		(1) notify the commissioner by telephone or telegram
1345	1347		of the date and time when the federal registration statement became
1346	1348		effective and the content of any price amendment; and
1347	1349		(2) file a post-effective amendment containing the
1348	1350		information and documents in the price amendment.
1349	1351		(h) The commissioner may enter a stop order, without notice
1350	1352		or hearing, retroactively denying effectiveness to or suspending
1351	1353		effectiveness of the registration statement until the registrant
1352	1354		complies with this subchapter if the commissioner:
1353	1355		(1) does not receive the notification and
1354	1356		post-effective amendment required under Subsection (g); and
1355	1357		(2) promptly notifies the registrant by telephone or
1356	1358		telegram of the issuance of the stop order, and promptly confirms by
1357	1359		letter or telegram if the commissioner notifies by telephone.
1358	1360		(i) A stop order entered under Subsection (h) is void from
1359	1361		the time of the order's entry if the registrant proves compliance
1360	1362		with the notice and post-effective amendment requirements of this
1361	1363		section.
1362	1364		(j) If the federal registration statement becomes effective
1363	1365		before all conditions under this section are satisfied and the
1364	1366		conditions are not waived, the registration statement becomes
1365	1367		effective automatically when all the conditions are satisfied.
1366	1368		(k) If the registrant advises the commissioner of the date
1367	1369		the federal registration statement is expected to become effective,
1368	1370		the commissioner shall promptly advise the registrant by telephone
1369	1371		or telegram, at the registrant's expense, whether all the
1370	1372		conditions are satisfied and whether the commissioner then
1371	1373		contemplates the issuance of an order denying registration. This
1372	1374		advice by the commissioner does not preclude the issuance of the
1373	1375		order at any time. (V.A.C.S. Art. 581-7, Subsec. C, Subdiv. (2)
1374	1376		(part); Art. 581-10, Subsec. B (part).)
1375	1377		Sec. 4003.104. TERM OF REGISTRATION. (a) Except as
1376	1378		provided by this section, a registration by coordination of
1377	1379		securities under this subchapter is effective until the first
1378	1380		anniversary of the date the commissioner declares the registration
1379	1381		to be effective.
1380	1382		(b) The initial registration by coordination of securities
1381	1383		of an open-end investment company, as defined by the Investment
1382	1384		Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), is effective
1383	1385		until two months after the end of the issuer's fiscal year.
1384	1386		(c) The registration by coordination of securities of a unit
1385	1387		investment trust, as defined by the Investment Company Act of 1940
1386	1388		(15 U.S.C. Section 80a-1 et seq.), is effective until the first
1387	1389		anniversary of the date of effectiveness granted by the Securities
1388	1390		and Exchange Commission. (V.A.C.S. Art. 581-7, Subsec. C, Subdiv.
1389	1391		(3) (part).)
1390	1392		Sec. 4003.105. RENEWAL OF REGISTRATION. (a) Except as
1391	1393		provided by Subsection (b) and subject to Subsection (c), a
1392	1394		registration of securities under Section 4003.104 may be renewed
1393	1395		for additional periods of one year if the appropriate registration
1394	1396		forms and renewal fees are received before the expiration date of
1395	1397		the registration to be renewed.
1396	1398		(b) Subject to Subsection (c), for renewal of the initial
1397	1399		registration of securities described by Section 4003.104(b), the
1398	1400		issuer or the issuer's agent may renew the registration by
1399	1401		submitting the appropriate registration forms and renewal fees not
1400	1402		later than two months after the end of the issuer's fiscal year.
1401	1403		(c) The same standards of fairness, justice, and equity
1402	1404		prescribed by this subchapter for original approval of a
1403	1405		registration apply to the renewal of the registration. (V.A.C.S.
1404	1406		Art. 581-7, Subsec. C, Subdivs. (3) (part), (4).)
1405	1407		SUBCHAPTER D. PROHIBITED SALES
1406	1408		Sec. 4003.151. CERTAIN SALES PROHIBITED. If the sale of a
1407	1409		security entitles the purchaser or subsequent holder to exchange
1408	1410		that security for another, or to purchase another security, the
1409	1411		sale of, including an exchange for, the other security may not be
1410	1412		made unless the sale is authorized under this title, if not exempt
1411	1413		under this title, or by another provision of law. (V.A.C.S. Art.
1412	1414		581-4, Subsec. E (part).)
1413	1415		SUBCHAPTER E. REGULATION OF OFFERS
1414	1416		Sec. 4003.201. DEFINITION. In this subchapter, "broadcast
1415	1417		offer" means an offer disseminated by radio, television, recorded
1416	1418		telephone presentation, or other mass media. (V.A.C.S. Art. 581-22,
1417	1419		Subsecs. A (part), B (part).)
1418	1420		Sec. 4003.202. APPLICABILITY. This subchapter does not
1419	1421		apply to transactions or securities exempt under Chapter 4005.
1420	1422		(V.A.C.S. Art. 581-22, Subsec. E.)
1421	1423		Sec. 4003.203. AUTHORIZED WRITTEN, PRINTED, OR BROADCAST
1422	1424		OFFERS. A person may make in this state a written or printed offer,
1423	1425		including a pictorial demonstration with any accompanying script,
1424	1426		or broadcast offer to sell a security if:
1425	1427		(1) a copy of the offer is filed with the commissioner
1426	1428		not later than the 10th day after the date of the offer's first use
1427	1429		in this state;
1428	1430		(2) the person making or distributing the offer is a
1429	1431		registered dealer or registered agent of a registered dealer;
1430	1432		(3) either:
1431	1433		(A) the security is registered under Subchapter B
1432	1434		or C or the commissioner has issued a permit qualifying securities
1433	1435		for sale for the security under Subchapter A; or
1434	1436		(B) an application for registration under
1435	1437		Subchapter B or C or for a permit under Subchapter A has been filed
1436	1438		with the commissioner;
1437	1439		(4) for a registration for the security that has not
1438	1440		become effective under Subchapter B or C or for a permit that has
1439	1441		not been issued under Subchapter A, the offer prominently states on
1440	1442		the first page of a written or printed offer or as a preface to any
1441	1443		pictorial or broadcast offer either:
1442	1444		(A) "INFORMATIONAL ADVERTISING ONLY.
1443	1445		THE SECURITIES HEREIN DESCRIBED HAVE NOT BEEN QUALIFIED OR
1444	1446		REGISTERED FOR SALE IN TEXAS. ANY REPRESENTATION TO THE CONTRARY OR
1445	1447		CONSUMMATION OF SALE OF THESE SECURITIES IN TEXAS PRIOR TO
1446	1448		QUALIFICATION OR REGISTRATION THEREOF IS A CRIMINAL OFFENSE."; or
1447	1449		(B) other language required by the Securities and
1448	1450		Exchange Commission that in the commissioner's opinion will inform
1449	1451		investors that the securities may not yet be sold;
1450	1452		(5) the person making or distributing the offer in
1451	1453		this state:
1452	1454		(A) has not received written notice of an order
1453	1455		prohibiting the offer under Section 4007.101 or 4007.102; or
1454	1456		(B) has received notice of an order described by
1455	1457		Paragraph (A) but the order is no longer in effect; and
1456	1458		(6) payment is not accepted from the offeree and no
1457	1459		contract of sale is made before registration of the security is
1458	1460		effective under Subchapter B or C or a permit is issued under
1459	1461		Subchapter A. (V.A.C.S. Art. 581-22, Subsec. A (part).)
1460	1462		Sec. 4003.204. AUTHORIZED ORAL OFFERS. (a) In this
1461	1463		section, "oral offer" means an offer that is not a broadcast offer.
1462	1464		(b) A person may make in this state an oral offer to sell a
1463	1465		security in person, by telephone, or by other direct individual
1464	1466		communication if:
1465	1467		(1) the person making the offer is a registered dealer
1466	1468		or registered agent of a registered dealer;
1467	1469		(2) either:
1468	1470		(A) the security is registered under Subchapter B
1469	1471		or C or the commissioner has issued a permit qualifying securities
1470	1472		for sale for the security under Subchapter A; or
1471	1473		(B) an application for registration under
1472	1474		Subchapter B or C or for a permit under Subchapter A has been filed
1473	1475		with the commissioner;
1474	1476		(3) the person making or distributing the offer:
1475	1477		(A) has not received written notice of an order
1476	1478		prohibiting the offer under Section 4007.101 or 4007.102; or
1477	1479		(B) has received notice of an order described by
1478	1480		Paragraph (A) but the order is no longer in effect; and
1479	1481		(4) payment is not accepted from the offeree and no
1480	1482		contract of sale is made before registration of the security is
1481	1483		effective under Subchapter B or C or a permit is issued under
1482	1484		Subchapter A. (V.A.C.S. Art. 581-22, Subsec. B (part).)
1483	1485		Sec. 4003.205. DEALER NAMED IN OFFER. A dealer whose name
1484	1486		is included in a written, printed, or broadcast offer along with the
1485	1487		name of a registered dealer is not deemed, on that fact alone, to
1486	1488		have made an offer in this state to sell a security. (V.A.C.S. Art.
1487	1489		581-22, Subsec. F.)
1488	1490		Sec. 4003.206. EFFECT OF COMPLIANCE OR NONCOMPLIANCE. (a)
1489	1491		An offer to sell a security that complies with Section 4003.203 or
1490	1492		4003.204 does not violate Subchapter A, B, or C.
1491	1493		(b) An offer to sell a security that does not comply with
1492	1494		Section 4003.203 or 4003.204 violates this title. (V.A.C.S. Art.
1493	1495		581-22, Subsecs. C, D.)
1494	1496		SUBCHAPTER F. CROWDFUNDING
1495	1497		Sec. 4003.251. DEFINITION. In this subchapter, "authorized
1496	1498		small business development entity" means:
1497	1499		(1) a Type A corporation authorized under Chapter 504,
1498	1500		Local Government Code;
1499	1501		(2) a Type B corporation authorized under Chapter 505,
1500	1502		Local Government Code;
1501	1503		(3) a nonprofit organization authorized by an agency
1502	1504		or authority of the federal government to distribute housing and
1503	1505		community development block grants;
1504	1506		(4) a municipal corporation;
1505	1507		(5) the Texas Veterans Commission; or
1506	1508		(6) a nonprofit community development financial
1507	1509		institution certified by the Community Development Financial
1508	1510		Institutions Fund. (V.A.C.S. Art. 581-44, Subsec. (c).)
1509	1511		Sec. 4003.252. CROWDFUNDING. (a) The board shall adopt
1510	1512		rules to regulate and facilitate online intrastate crowdfunding
1511	1513		applicable to authorized small business development entities. The
1512	1514		board may create other requirements necessary to carry out this
1513	1515		subchapter.
1514	1516		(b) The rules must:
1515	1517		(1) allow an authorized small business development
1516	1518		entity to list on the entity's web portal offerings of securities by
1517	1519		issuers in which the entity is financially interested;
1518	1520		(2) allow an authorized small business development
1519	1521		entity and the entity's web portal to list offerings of securities
1520	1522		without offering investment advice;
1521	1523		(3) allow an authorized small business development
1522	1524		entity to subcontract the operations of a crowdfunding web portal
1523	1525		to a third party as permitted by board rule; and
1524	1526		(4) limit the offerings of securities on an authorized
1525	1527		small business development entity's web portal to securities of
1526	1528		issuers located within the service area of the entity. (V.A.C.S.
1527	1529		Art. 581-44, Subsecs. (a), (b).)
1528	1530		SUBCHAPTER G. PROTECTION FOR PURCHASERS OF SECURITIES
1529	1531		Sec. 4003.301. DEPOSIT IN TRUST ACCOUNT. (a) If the
1530	1532		commissioner considers it necessary to protect the interests of
1531	1533		prospective purchasers of securities a company sells or offers for
1532	1534		sale, the commissioner may require the company to deposit in a trust
1533	1535		account at a bank or trust company approved by the commissioner and
1534	1536		doing business in this state:
1535	1537		(1) all or part of the proposed securities; or
1536	1538		(2) subject to Subsection (b), all or part of the money
1537	1539		and other funds received from the sale of those securities.
1538	1540		(b) A company is not required to deposit funds received from
1539	1541		the sale of securities in a trust account to the extent the
1540	1542		commissioner considers the funds necessary to be used, provided
1541	1543		that the amount of the funds the company is not required to deposit
1542	1544		does not exceed the amount allowed as expenses and commissions for
1543	1545		the sale of the securities.
1544	1546		(c) The funds must remain on deposit until the proposed or
1545	1547		existing company sells a specified monetary amount or number of
1546	1548		shares of the securities that in the commissioner's opinion will
1547	1549		reasonably assure the public's protection.
1548	1550		(d) When the commissioner makes a written determination
1549	1551		that the terms of the escrow agreement have been fully met, the bank
1550	1552		or trust company in which the funds of a proposed or existing
1551	1553		corporation are deposited in a trust account as provided by this
1552	1554		section shall transfer to the corporation and the corporation's
1553	1555		executive officers the funds to allow the corporation to use the
1554	1556		securities or money in the corporation's business.
1555	1557		(e) If a proposed or existing company that deposits funds in
1556	1558		a trust account as provided by this section does not sell the
1557	1559		minimum amount of capital necessary under the escrow agreement
1558	1560		within two years, the commissioner may authorize the bank or trust
1559	1561		company at which the funds are deposited to return to the
1560	1562		subscribers the portion of the funds that were deposited or
1561	1563		escrowed under the escrow agreement. The bank or trust company
1562	1564		shall return the funds to the subscribers on receipt of
1563	1565		authorization from the commissioner under this subsection. If the
1564	1566		bank or trust company holds securities under the escrow agreement,
1565	1567		the bank or trust company may return the securities to the
1566	1568		corporation only after the bank or trust company receives from the
1567	1569		issuer evidence of cancellation thereof.
1568	1570		(f) A dealer or issuer of securities shall provide to the
1569	1571		commissioner and the bank or trust company at the time the dealer or
1570	1572		issuer makes the deposit required by this section:
1571	1573		(1) the names of the purchasers of or subscribers for
1572	1574		the securities; and
1573	1575		(2) the amount of money paid by each. (V.A.C.S. Art.
1574	1576		581-9, Subsec. A.)
1575	1577		Sec. 4003.302. MARKETING EXPENSES. (a) Total expenses for
1576	1578		marketing securities, including all commissions for the sale of the
1577	1579		securities, and all other incidental selling expenses, may not in
1578	1580		the aggregate exceed 20 percent of the price at which the stock or
1579	1581		other securities of a proposed or existing company are to be sold or
1580	1582		offered for sale to the public of this state.
1581	1583		(b) The commissioner may reduce the percentage listed in
1582	1584		Subsection (a) to a percentage that in the commissioner's opinion
1583	1585		is fair, just, and equitable under the facts of the particular case.
1584	1586		(V.A.C.S. Art. 581-9, Subsec. B.)
1585	1587		Sec. 4003.303. PROSPECTUS REQUIRED FOR CERTAIN OFFERS. (a)
1586	1588		Except as provided by Subsection (b), the commissioner shall
1587	1589		require that, in connection with a permit qualifying securities for
1588	1590		sale, all offers for the sale of the securities be made through a
1589	1591		prospectus that:
1590	1592		(1) fairly discloses the material facts about the plan
1591	1593		of finance and business; and
1592	1594		(2) must be filed with and approved by the
1593	1595		commissioner.
1594	1596		(b) The prospectus requirements of this section are
1595	1597		satisfied if the applicant files a prospectus or offering circular
1596	1598		with the commissioner that is also filed with the Securities and
1597	1599		Exchange Commission under the Securities Act of 1933 (15 U.S.C.
1598	1600		Section 77a et seq.) or the regulations under that law.
1599	1601		(c) Failure to comply with the prospectus requirements of
1600	1602		this section violates this title. (V.A.C.S. Art. 581-9, Subsec. C.)
1601	1603		Sec. 4003.304. INVESTOR EDUCATION. (a) The commissioner,
1602	1604		with board approval, shall develop and implement investor education
1603	1605		initiatives to inform the public about the basics of investing in
1604	1606		securities. The initiatives must place a special emphasis on the
1605	1607		prevention and detection of securities fraud. Materials developed
1606	1608		for and distributed as part of the initiatives must be published in
1607	1609		both English and Spanish.
1608	1610		(b) In developing and implementing the initiatives, the
1609	1611		commissioner shall use the commissioner's best efforts to
1610	1612		collaborate with public or nonprofit entities with an interest in
1611	1613		investor education.
1612	1614		(c) For use in providing investor education initiatives and
1613	1615		subject to Chapter 575, the commissioner may accept grants and
1614	1616		donations from:
1615	1617		(1) a person who is not affiliated with the securities
1616	1618		industry; or
1617	1619		(2) a nonprofit association, regardless of whether the
1618	1620		entity is affiliated with the securities industry. (V.A.C.S. Art.
1619	1621		581-43.)
1620	1622		CHAPTER 4004. REGULATION OF DEALERS, INVESTMENT ADVISERS, DEALERS'
1621	1623		AGENTS, AND INVESTMENT ADVISER REPRESENTATIVES
1622	1624		SUBCHAPTER A. GENERAL PROVISIONS
1623	1625		Sec. 4004.001. RULES FOR EXEMPTION FROM REGISTRATION
1624	1626		REQUIREMENTS
1625	1627		Sec. 4004.002. CERTAIN DISPLAYS OR ADVERTISEMENT OF
1626	1628		REGISTRATION PROHIBITED
1627	1629		Sec. 4004.003. DISPLAY OF INFORMATION REGARDING
1628	1630		COMPLAINTS
1629	1631		SUBCHAPTER B. REGISTRATION OF DEALERS AND INVESTMENT ADVISERS
1630	1632		Sec. 4004.051. REGISTRATION OF DEALERS REQUIRED
1631	1633		Sec. 4004.052. REGISTRATION OF INVESTMENT ADVISERS
1632	1634		REQUIRED
1633	1635		Sec. 4004.053. APPLICATION FOR REGISTRATION
1634	1636		Sec. 4004.054. ISSUANCE OF REGISTRATION CERTIFICATE
1635	1637		Sec. 4004.055. FORM AND CONTENTS OF REGISTRATION
1636	1638		CERTIFICATE
1637	1639		Sec. 4004.056. TEMPORARY PERMISSION TO ENGAGE IN
1638	1640		BUSINESS AS DEALER OR INVESTMENT
1639	1641		ADVISER
1640	1642		Sec. 4004.057. AMENDMENT OF REGISTRATION CERTIFICATE
1641	1643		Sec. 4004.058. POSTING REGISTRATION CERTIFICATES
1642	1644		SUBCHAPTER C. REGISTRATION OF AGENTS AND INVESTMENT ADVISER
1643	1645		REPRESENTATIVES
1644	1646		Sec. 4004.101. REGISTRATION OF AGENTS
1645	1647		Sec. 4004.102. REGISTRATION OF INVESTMENT ADVISER
1646	1648		REPRESENTATIVES
1647	1649		Sec. 4004.103. APPLICATION FOR REGISTRATION
1648	1650		Sec. 4004.104. ISSUANCE OF EVIDENCE OF REGISTRATION
1649	1651		Sec. 4004.105. FORM AND CONTENTS OF EVIDENCE OF
1650	1652		REGISTRATION
1651	1653		Sec. 4004.106. CANCELLATION OF REGISTRATION
1652	1654		SUBCHAPTER D. EXAMINATION REQUIREMENTS
1653	1655		Sec. 4004.151. EXAMINATION REQUIREMENTS
1654	1656		Sec. 4004.152. EXAMINATION RESULTS
1655	1657		SUBCHAPTER E. DENIAL OR REVOCATION OF REGISTRATION
1656	1658		Sec. 4004.201. DENIAL OF REGISTRATION
1657	1659		Sec. 4004.202. AUTOMATIC REVOCATION OF REGISTRATION OF
1658	1660		AGENTS AND INVESTMENT ADVISER
1659	1661		REPRESENTATIVES AFTER REVOCATION OF
1660	1662		REGISTRATION OF DEALER OR INVESTMENT
1661	1663		ADVISER
1662	1664		SUBCHAPTER F. EXPIRATION AND RENEWAL OF REGISTRATION
1663	1665		Sec. 4004.251. EXPIRATION OF REGISTRATION
1664	1666		Sec. 4004.252. RENEWAL OF REGISTRATION
1665	1667		Sec. 4004.253. STAGGERED RENEWAL; PRORATION OF
1666	1668		REGISTRATION RENEWAL FEE
1667	1669		Sec. 4004.254. NOTICE OF EXPIRATION REQUIRED
1668	1670		Sec. 4004.255. RENEWAL OF EXPIRED REGISTRATION
1669	1671		Sec. 4004.256. EFFECT OF EXPIRED REGISTRATION
1670	1672		Sec. 4004.257. CONTINUING EDUCATION
1671	1673		SUBCHAPTER G. NOTICE FILINGS OF FEDERAL COVERED INVESTMENT
1672	1674		ADVISERS AND CERTAIN REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
1673	1675		ADVISERS
1674	1676		Sec. 4004.301. APPLICABILITY
1675	1677		Sec. 4004.302. NOTICE FILING
1676	1678		Sec. 4004.303. EFFECTIVE DATE OF NOTICE FILING
1677	1679		Sec. 4004.304. RENEWAL
1678	1680		SUBCHAPTER H. REQUIREMENTS FOR PROTECTION OF VULNERABLE ADULTS
1679	1681		FROM FINANCIAL EXPLOITATION
1680	1682		Sec. 4004.351. DEFINITIONS
1681	1683		Sec. 4004.352. REPORTING SUSPECTED FINANCIAL
1682	1684		EXPLOITATION OF VULNERABLE ADULTS
1683	1685		Sec. 4004.353. FORM AND CONTENT OF REPORT
1684	1686		Sec. 4004.354. NOTIFYING THIRD PARTIES OF SUSPECTED
1685	1687		FINANCIAL EXPLOITATION OF VULNERABLE
1686	1688		ADULTS
1687	1689		Sec. 4004.355. TEMPORARY HOLD ON TRANSACTIONS IN
1688	1690		CERTAIN CASES OF SUSPECTED FINANCIAL
1689	1691		EXPLOITATION OF VULNERABLE ADULTS
1690	1692		Sec. 4004.356. IMMUNITY
1691	1693		Sec. 4004.357. RECORDS
1692	1694		CHAPTER 4004. REGULATION OF DEALERS, INVESTMENT ADVISERS, DEALERS'
1693	1695		AGENTS, AND INVESTMENT ADVISER REPRESENTATIVES
1694	1696		SUBCHAPTER A. GENERAL PROVISIONS
1695	1697		Sec. 4004.001. RULES FOR EXEMPTION FROM REGISTRATION
1696	1698		REQUIREMENTS. The board may adopt rules that exempt certain
1697	1699		classes of persons from the dealer, agent, investment adviser, and
1698	1700		investment adviser representative registration requirements, or
1699	1701		provide conditional exemptions from registration, if the board
1700	1702		determines that the rules are consistent with the purposes of this
1701	1703		title. (V.A.C.S. Art. 581-12, Subsec. C.)
1702	1704		Sec. 4004.002. CERTAIN DISPLAYS OR ADVERTISEMENT OF
1703	1705		REGISTRATION PROHIBITED. Except as expressly provided by this
1704	1706		title, a dealer, agent, investment adviser, or investment adviser
1705	1707		representative may not by public display or advertisement use the
1706	1708		fact that the person is registered under this title, the person's
1707	1709		registration certificate or evidence of registration, or a
1708	1710		certified copy of the certificate or evidence of registration in
1709	1711		connection with any sale or effort to sell any security or any
1710	1712		rendering of services as an investment adviser. (V.A.C.S. Art.
1711	1713		581-20.)
1712	1714		Sec. 4004.003. DISPLAY OF INFORMATION REGARDING
1713	1715		COMPLAINTS. A dealer, agent, investment adviser, or investment
1714	1716		adviser representative regulated under this title shall
1715	1717		prominently display at all times in the person's place of business:
1716	1718		(1) a sign containing the name, mailing address, and
1717	1719		telephone number of the board; and
1718	1720		(2) a statement informing consumers that complaints
1719	1721		against a dealer, agent, investment adviser, or investment adviser
1720	1722		representative may be directed to the board. (V.A.C.S. Art. 581-2,
1721	1723		Subsec. L (part).)
1722	1724		SUBCHAPTER B. REGISTRATION OF DEALERS AND INVESTMENT ADVISERS
1723	1725		Sec. 4004.051. REGISTRATION OF DEALERS REQUIRED. Except as
1724	1726		provided by Section 4001.056(d) or Subchapter A, Chapter 4005, a
1725	1727		dealer or other person or company, including a corporation or firm,
1726	1728		may not, directly or through the dealer's or other person's or
1727	1729		company's agents, offer for sale, sell, or make a sale of any
1728	1730		securities in this state unless the dealer or other person or
1729	1731		company is first registered as provided by this chapter. (V.A.C.S.
1730	1732		Art. 581-12, Subsec. A (part).)
1731	1733		Sec. 4004.052. REGISTRATION OF INVESTMENT ADVISERS
1732	1734		REQUIRED. Except as provided by Subchapter A, Chapter 4005, a
1733	1735		person may not, directly or through the person's investment adviser
1734	1736		representative, render services as an investment adviser in this
1735	1737		state unless the person:
1736	1738		(1) is registered under this chapter;
1737	1739		(2) submits a notice filing as provided by Subchapter
1738	1740		G; or
1739	1741		(3) is otherwise exempt under this title. (V.A.C.S.
1740	1742		Art. 581-12, Subsec. B (part).)
1741	1743		Sec. 4004.053. APPLICATION FOR REGISTRATION. (a) To be
1742	1744		registered, a dealer or investment adviser must submit to the
1743	1745		commissioner a sworn application that must be in the form the
1744	1746		commissioner prescribes and must state:
1745	1747		(1) the applicant's principal place of business;
1746	1748		(2) the location of the applicant's principal place of
1747	1749		business and all branch offices of the applicant in this state;
1748	1750		(3) the name or style of doing business and the address
1749	1751		of the applicant;
1750	1752		(4) the name, residence, and business address of each
1751	1753		person interested in the business as a principal, officer,
1752	1754		director, or managing agent of the applicant's business, specified
1753	1755		by capacity and title;
1754	1756		(5) the general plan and character of the applicant's
1755	1757		business;
1756	1758		(6) the period the applicant has been engaged in the
1757	1759		business; and
1758	1760		(7) the places at which the applicant has engaged in
1759	1761		the business.
1760	1762		(b) An application filed under this section must contain
1761	1763		additional information relating to the previous history, record,
1762	1764		associations, and present financial condition of the applicant as
1763	1765		the commissioner may require or as necessary to enable the
1764	1766		commissioner to determine whether the sale of any securities the
1765	1767		applicant proposes to issue or deal in would result in fraud.
1766	1768		(c) An application must be accompanied by a certificate or
1767	1769		other evidence satisfactory to the commissioner that establishes
1768	1770		the good reputation of:
1769	1771		(1) the applicant; and
1770	1772		(2) the directors, officers, copartners, or
1771	1773		principals of the applicant.
1772	1774		(d) For an applicant that is a corporation organized under
1773	1775		the laws of another state, territory, or government or that will
1774	1776		have the applicant's principal place of business therein, the
1775	1777		application must be accompanied by a copy of the corporation's:
1776	1778		(1) articles of incorporation or similar
1777	1779		organizational instrument, and all amendments to the document or
1778	1780		instrument, as applicable, certified by the appropriate officer of
1779	1781		the corporation or of the state or other jurisdiction in which the
1780	1782		corporation is organized;
1781	1783		(2) regulations; and
1782	1784		(3) bylaws.
1783	1785		(e) For an applicant that is a limited partnership, the
1784	1786		application must be accompanied by either:
1785	1787		(1) a copy of the articles of copartnership or similar
1786	1788		organizational instrument of the partnership; or
1787	1789		(2) a verified statement of the partnership's plan of
1788	1790		doing business.
1789	1791		(f) For an applicant that is an unincorporated association
1790	1792		or organization under the laws of another state, territory, or
1791	1793		government or is an unincorporated association or organization that
1792	1794		has its principal place of business therein, the application must
1793	1795		be accompanied by a copy of the association's or organization's
1794	1796		articles of association, trust agreement, or other form of
1795	1797		organization.
1796	1798		(g) The commissioner shall:
1797	1799		(1) prescribe the application form to be used by an
1798	1800		applicant under this section; and
1799	1801		(2) provide copies of the application form for
1800	1802		registration to all persons who seek to submit an application to
1801	1803		register as a dealer or investment adviser. (V.A.C.S. Art. 581-13,
1802	1804		Subsecs. A, B, C, G, H, I, J.)
1803	1805		Sec. 4004.054. ISSUANCE OF REGISTRATION CERTIFICATE. The
1804	1806		commissioner shall issue a certificate of registration to an
1805	1807		applicant for registration as a dealer or investment adviser if:
1806	1808		(1) the commissioner is satisfied that the applicant
1807	1809		has complied with the requirements of this chapter; and
1808	1810		(2) the applicant:
1809	1811		(A) if applicable, has filed a written consent to
1810	1812		service that complies with Section 4001.102; and
1811	1813		(B) has paid the fees required by Chapter 4006.
1812	1814		(V.A.C.S. Art. 581-15 (part).)
1813	1815		Sec. 4004.055. FORM AND CONTENTS OF REGISTRATION
1814	1816		CERTIFICATE. The registration certificate must be in the form the
1815	1817		commissioner prescribes and must state:
1816	1818		(1) the principal place of business and address of the
1817	1819		dealer or investment adviser;
1818	1820		(2) the name and business address of each person
1819	1821		interested in the business as a principal, officer, director, or
1820	1822		managing agent of the dealer or investment adviser; and
1821	1823		(3) that the dealer or investment adviser has been
1822	1824		registered for a current calendar year as a dealer in securities or
1823	1825		as an investment adviser, as appropriate. (V.A.C.S. Arts. 581-15
1824	1826		(part), 581-17 (part).)
1825	1827		Sec. 4004.056. TEMPORARY PERMISSION TO ENGAGE IN BUSINESS
1826	1828		AS DEALER OR INVESTMENT ADVISER. (a) Pending final disposition of
1827	1829		an application under this subchapter, the commissioner may, for
1828	1830		special cause shown, grant an applicant temporary permission to
1829	1831		engage in business as a dealer or investment adviser under this
1830	1832		title, subject to any terms and conditions that the commissioner
1831	1833		prescribes.
1832	1834		(b) Temporary permission granted by the commissioner under
1833	1835		this section may be revoked at any time.
1834	1836		(c) A dealer or investment adviser acting under temporary
1835	1837		permission granted under this section is considered to be a
1836	1838		registered dealer or registered investment adviser for any purpose
1837	1839		of this title. (V.A.C.S. Art. 581-15 (part).)
1838	1840		Sec. 4004.057. AMENDMENT OF REGISTRATION CERTIFICATE. (a)
1839	1841		A dealer or investment adviser shall immediately certify under oath
1840	1842		to the commissioner any change in the personnel of a partnership or
1841	1843		in the principals, officers, directors, or managing agents of the
1842	1844		dealer or investment adviser.
1843	1845		(b) A change in the registration certificate required as the
1844	1846		result of a change described by Subsection (a) may be made at any
1845	1847		time by submitting to the commissioner a written application that
1846	1848		specifies the reason for the change.
1847	1849		(c) On the issuance of an amended registration certificate,
1848	1850		the dealer or investment adviser shall promptly surrender the
1849	1851		original certificate and any outstanding certified copies of the
1850	1852		original certificate to the commissioner. (V.A.C.S. Art. 581-17
1851	1853		(part).)
1852	1854		Sec. 4004.058. POSTING REGISTRATION CERTIFICATES. On
1853	1855		receipt of a registration certificate issued under this chapter,
1854	1856		the dealer or investment adviser named in the certificate shall
1855	1857		immediately post and conspicuously display the certificate at all
1856	1858		times in the dealer's or investment adviser's principal place of
1857	1859		business, if the dealer's or investment adviser's principal place
1858	1860		of business is maintained in this state. The dealer or investment
1859	1861		adviser shall similarly post and conspicuously display a duplicate
1860	1862		copy of the dealer's or investment adviser's certificate in each
1861	1863		branch office located in this state. (V.A.C.S. Art. 581-21.)
1862	1864		SUBCHAPTER C. REGISTRATION OF AGENTS AND INVESTMENT ADVISER
1863	1865		REPRESENTATIVES
1864	1866		Sec. 4004.101. REGISTRATION OF AGENTS. (a) An agent may
1865	1867		not, on behalf of a registered dealer, sell, offer for sale, or make
1866	1868		a sale of any securities in this state unless the agent is
1867	1869		registered as an agent for that particular registered dealer under
1868	1870		this chapter.
1869	1871		(b) On written application by a registered dealer, and on
1870	1872		satisfactory compliance with the requirements of this title, the
1871	1873		commissioner shall register a person as an agent of the registered
1872	1874		dealer. (V.A.C.S. Art. 581-12, Subsec. A (part); Art. 581-18
1873	1875		(part).)
1874	1876		Sec. 4004.102. REGISTRATION OF INVESTMENT ADVISER
1875	1877		REPRESENTATIVES. (a) A person may not act or render services as an
1876	1878		investment adviser representative for an investment adviser in this
1877	1879		state unless the person is registered or submits a notice filing as
1878	1880		an investment adviser representative for that particular
1879	1881		investment adviser as provided by this subchapter and Subchapter G.
1880	1882		(b) On written application by an investment adviser and on
1881	1883		satisfactory compliance with the requirements of this title, the
1882	1884		commissioner shall register a person as an investment adviser
1883	1885		representative of that investment adviser. (V.A.C.S. Art. 581-12,
1884	1886		Subsec. B (part); Art. 581-18 (part).)
1885	1887		Sec. 4004.103. APPLICATION FOR REGISTRATION. The
1886	1888		application described by Sections 4004.101 and 4004.102 must:
1887	1889		(1) be in the form the commissioner prescribes;
1888	1890		(2) state:
1889	1891		(A) the residence and address of the person whose
1890	1892		registration as an agent or investment adviser representative is
1891	1893		requested through the application; and
1892	1894		(B) any other information relating to that
1893	1895		person's previous history, record, and associations that the
1894	1896		commissioner may require; and
1895	1897		(3) be signed and sworn to by the person whose
1896	1898		registration as an agent or investment adviser representative is
1897	1899		requested through the application. (V.A.C.S. Art. 581-18 (part).)
1898	1900		Sec. 4004.104. ISSUANCE OF EVIDENCE OF REGISTRATION. For
1899	1901		each person registered under this subchapter, the commissioner
1900	1902		shall issue evidence of registration of the agent or investment
1901	1903		adviser representative to the registered dealer or investment
1902	1904		adviser who requested the person's registration, as appropriate.
1903	1905		The registered dealer or investment adviser who requested the
1904	1906		person's registration shall retain the evidence of registration for
1905	1907		the dealer's agents or investment adviser's representatives, as
1906	1908		appropriate. (V.A.C.S. Art. 581-18 (part).)
1907	1909		Sec. 4004.105. FORM AND CONTENTS OF EVIDENCE OF
1908	1910		REGISTRATION. The evidence of registration described by Section
1909	1911		4004.104 must:
1910	1912		(1) be in the form the commissioner prescribes; and
1911	1913		(2) state:
1912	1914		(A) the name of the agent or investment adviser
1913	1915		representative;
1914	1916		(B) the address of the registered dealer or
1915	1917		investment adviser, as appropriate; and
1916	1918		(C) that the person is registered for the current
1917	1919		calendar year as an agent of the dealer or as an investment adviser
1918	1920		representative of the investment adviser, as appropriate.
1919	1921		(V.A.C.S. Art. 581-18 (part).)
1920	1922		Sec. 4004.106. CANCELLATION OF REGISTRATION. On
1921	1923		application by a registered dealer or investment adviser, the
1922	1924		commissioner shall cancel the registration of the registered
1923	1925		dealer's agent or the investment adviser's representative.
1924	1926		(V.A.C.S. Art. 581-18 (part).)
1925	1927		SUBCHAPTER D. EXAMINATION REQUIREMENTS
1926	1928		Sec. 4004.151. EXAMINATION REQUIREMENTS. (a) Except as
1927	1929		provided by Subsection (c), the commissioner shall require that, to
1928	1930		be registered under this chapter, each applicant must pass a
1929	1931		written examination to determine whether the applicant possesses
1930	1932		the qualifications and competency to engage in the business of
1931	1933		dealing in and selling securities as a dealer or agent, or rendering
1932	1934		services as an investment adviser or investment adviser
1933	1935		representative. If the applicant is a corporation or partnership,
1934	1936		the officers, directors, or partners to be licensed by the
1935	1937		corporation or partnership must pass the written examination
1936	1938		described by this section.
1937	1939		(b) The commissioner may accept some or all of the
1938	1940		examinations administered by securities self-regulatory
1939	1941		organizations to fulfill the examination requirements of this
1940	1942		section.
1941	1943		(c) The board may waive the examination requirement under
1942	1944		Subsection (a) for any applicant or class of applicants. (V.A.C.S.
1943	1945		Art. 581-13, Subsecs. D, K.)
1944	1946		Sec. 4004.152. EXAMINATION RESULTS. (a) Except as
1945	1947		provided by Subsection (b), the board shall notify each examinee of
1946	1948		the results of a registration examination required by this
1947	1949		subchapter not later than the 30th day after the date the examinee
1948	1950		takes the examination.
1949	1951		(b) If an examination is graded or reviewed by a testing
1950	1952		service:
1951	1953		(1) the board shall notify each examinee of the
1952	1954		results of the examination not later than the 14th day after the
1953	1955		date the board receives the results from the testing service; and
1954	1956		(2) if notice of the examination results will be
1955	1957		delayed for longer than 90 days after the examination date, the
1956	1958		board shall notify each examinee of the reason for the delay before
1957	1959		the 90th day.
1958	1960		(c) The board may require a testing service to notify an
1959	1961		examinee of the results of the examination.
1960	1962		(d) If requested in writing by an examinee who fails an
1961	1963		examination administered under this subchapter, the board shall
1962	1964		provide the examinee with an analysis of the examinee's performance
1963	1965		on the examination. (V.A.C.S. Art. 581-13, Subsecs. E, F.)
1964	1966		SUBCHAPTER E. DENIAL OR REVOCATION OF REGISTRATION
1965	1967		Sec. 4004.201. DENIAL OF REGISTRATION. The commissioner
1966	1968		may deny an application for registration under this chapter in
1967	1969		accordance with Section 4007.105. (New.)
1968	1970		Sec. 4004.202. AUTOMATIC REVOCATION OF REGISTRATION OF
1969	1971		AGENTS AND INVESTMENT ADVISER REPRESENTATIVES AFTER REVOCATION OF
1970	1972		REGISTRATION OF DEALER OR INVESTMENT ADVISER. (a) The revocation
1971	1973		of the registration of a dealer or an investment adviser under
1972	1974		Section 4007.105 constitutes a revocation of the registration of
1973	1975		any agent of the dealer or of any investment adviser representative
1974	1976		of the investment adviser, as appropriate.
1975	1977		(b) The commissioner shall promptly send notice of the
1976	1978		revocation of the registration of a dealer or of an investment
1977	1979		adviser to each applicable agent or investment adviser
1978	1980		representative.
1979	1981		(c) All evidences of registration that have been revoked
1980	1982		shall be immediately surrendered to the commissioner on request.
1981	1983		(V.A.C.S. Art. 581-25 (part).)
1982	1984		SUBCHAPTER F. EXPIRATION AND RENEWAL OF REGISTRATION
1983	1985		Sec. 4004.251. EXPIRATION OF REGISTRATION. Except as
1984	1986		provided by Sections 4004.252(a) and 4004.253, all registrations
1985	1987		expire at the end of the calendar year. (V.A.C.S. Art. 581-19,
1986	1988		Subsec. A (part).)
1987	1989		Sec. 4004.252. RENEWAL OF REGISTRATION. (a) A person may
1988	1990		renew an unexpired registration by filing a renewal application in
1989	1991		the form the commissioner prescribes and by paying the required
1990	1992		renewal fee to the board before the registration's expiration date.
1991	1993		(b) New registrations for the year succeeding the
1992	1994		expiration of registrations shall be issued on the filing of a
1993	1995		written application and payment of the fee as provided by this
1994	1996		subchapter. If an applicant registers after December 1 of any year,
1995	1997		the applicant may immediately apply for a renewal of the
1996	1998		applicant's registration for the ensuing year.
1997	1999		(c) The filing of additional statements or the provision of
1998	2000		additional information is not required for renewal unless
1999	2001		specifically requested by the commissioner. (V.A.C.S. Art. 581-19,
2000	2002		Subsecs. A (part), C, Subdiv. (1).)
2001	2003		Sec. 4004.253. STAGGERED RENEWAL; PRORATION OF
2002	2004		REGISTRATION RENEWAL FEE. (a) The board by rule may adopt a system
2003	2005		under which registrations expire on various dates during the year.
2004	2006		(b) For the year in which the registration expiration date
2005	2007		is changed, registration fees payable after the 60th day and before
2006	2008		the 30th day before January 1 of the next year shall be prorated on a
2007	2009		monthly basis so that each person pays only that portion of the
2008	2010		registration fee that is allocable to the number of months during
2009	2011		which the registration is valid. On renewal of the registration on
2010	2012		the new expiration date, the total registration renewal fee is
2011	2013		payable. (V.A.C.S. Art. 581-19, Subsec. B.)
2012	2014		Sec. 4004.254. NOTICE OF EXPIRATION REQUIRED. Not later
2013	2015		than the 30th day before the date a person's registration is
2014	2016		scheduled to expire, the commissioner shall send written notice of
2015	2017		the impending expiration to the person at the person's last known
2016	2018		address according to the board's records. (V.A.C.S. Art. 581-19,
2017	2019		Subsec. C, Subdiv. (5).)
2018	2020		Sec. 4004.255. RENEWAL OF EXPIRED REGISTRATION. (a) A
2019	2021		person whose registration has been expired for 90 days or less may
2020	2022		renew the registration by:
2021	2023		(1) filing a renewal application with the
2022	2024		commissioner; and
2023	2025		(2) paying to the board:
2024	2026		(A) the required renewal fee; and
2025	2027		(B) a fee that is equal to one-half of the
2026	2028		original registration application fee.
2027	2029		(b) A person whose registration has been expired for more
2028	2030		than 90 days but less than two years may renew the registration by:
2029	2031		(1) filing a renewal application with the
2030	2032		commissioner; and
2031	2033		(2) paying to the board:
2032	2034		(A) all unpaid renewal fees; and
2033	2035		(B) a fee that is equal to the original
2034	2036		registration application fee.
2035	2037		(c) A person whose registration has been expired for two
2036	2038		years or more may not renew the registration. The person may obtain
2037	2039		a new registration by complying with the requirements and
2038	2040		procedures, including the examination requirements, for obtaining
2039	2041		an original registration. The person must pay to the board a fee
2040	2042		that is equal to the original registration application fee.
2041	2043		(V.A.C.S. Art. 581-19, Subsec. C, Subdivs. (2), (3), (4).)
2042	2044		Sec. 4004.256. EFFECT OF EXPIRED REGISTRATION. A person
2043	2045		who sells securities or who renders investment advising services
2044	2046		after the person's registration has expired but before the
2045	2047		registration is renewed is subject to the sanctions provided by
2046	2048		this title for selling securities or rendering investment advice
2047	2049		without being registered. (V.A.C.S. Art. 581-19, Subsec. C,
2048	2050		Subdiv. (6).)
2049	2051		Sec. 4004.257. CONTINUING EDUCATION. (a) The board may
2050	2052		recognize, prepare, or administer continuing education programs
2051	2053		for a person who is registered under this chapter.
2052	2054		(b) A person who is registered under this chapter must
2053	2055		participate in continuing education programs if the board requires
2054	2056		participation as a condition of maintaining the person's
2055	2057		certificate or evidence of registration. (V.A.C.S. Art. 581-19,
2056	2058		Subsec. D.)
2057	2059		SUBCHAPTER G. NOTICE FILINGS OF FEDERAL COVERED INVESTMENT
2058	2060		ADVISERS AND CERTAIN REPRESENTATIVES OF FEDERAL COVERED INVESTMENT
2059	2061		ADVISERS
2060	2062		Sec. 4004.301. APPLICABILITY. This subchapter does not
2061	2063		apply to an investment adviser or investment adviser representative
2062	2064		who is exempt from registration under this title or by board rule.
2063	2065		(V.A.C.S. Art. 581-12-1, Subsec. A.)
2064	2066		Sec. 4004.302. NOTICE FILING. The board by rule shall
2065	2067		authorize a federal covered investment adviser or a representative
2066	2068		of a federal covered investment adviser to render services as an
2067	2069		investment adviser in this state if the commissioner receives:
2068	2070		(1) a notice filing submitted by the adviser or
2069	2071		representative that:
2070	2072		(A) is on the form and contains the information
2071	2073		the commissioner prescribes; and
2072	2074		(B) if applicable, contains a consent to service
2073	2075		appointing the commissioner as the adviser's attorney for service
2074	2076		of process, as required by Section 4001.102; and
2075	2077		(2) a notice filing fee in the amount determined under
2076	2078		Chapter 4006. (V.A.C.S. Art. 581-12-1, Subsec. B.)
2077	2079		Sec. 4004.303. EFFECTIVE DATE OF NOTICE FILING. On the
2078	2080		commissioner's receipt of a notice filing and fee payment that meet
2079	2081		the requirements of Section 4004.302, the notice filing takes
2080	2082		effect and is valid for the remainder of the calendar year.
2081	2083		(V.A.C.S. Art. 581-12-1, Subsec. C (part).)
2082	2084		Sec. 4004.304. RENEWAL. A federal covered investment
2083	2085		adviser or a representative of a federal covered investment adviser
2084	2086		may renew a notice filing on or before the filing's expiration date
2085	2087		if the commissioner receives:
2086	2088		(1) a renewal notice filing submitted by the adviser
2087	2089		or representative; and
2088	2090		(2) a renewal fee in the amount determined under
2089	2091		Chapter 4006. (V.A.C.S. Art. 581-12-1, Subsec. C (part).)
2090	2092		SUBCHAPTER H. REQUIREMENTS FOR PROTECTION OF VULNERABLE ADULTS
2091	2093		FROM FINANCIAL EXPLOITATION
2092	2094		Sec. 4004.351. DEFINITIONS. In this subchapter:
2093	2095		(1) "Department" means the Department of Family and
2094	2096		Protective Services.
2095	2097		(2) "Exploitation," "financial exploitation," and
2096	2098		"vulnerable adult" have the meanings assigned by Section 280.001,
2097	2099		Finance Code.
2098	2100		(3) "Securities professional" means an agent, an
2099	2101		investment adviser representative, or a person who serves in a
2100	2102		supervisory or compliance capacity for a dealer or investment
2101	2103		adviser. (V.A.C.S. Art. 581-45, Subsec. A.)
2102	2104		Sec. 4004.352. REPORTING SUSPECTED FINANCIAL EXPLOITATION
2103	2105		OF VULNERABLE ADULTS. (a) If a securities professional or a person
2104	2106		serving in a legal capacity for a dealer or investment adviser has
2105	2107		cause to believe that financial exploitation of a vulnerable adult
2106	2108		who is an account holder with the dealer or investment adviser has
2107	2109		occurred, is occurring, or has been attempted, the securities
2108	2110		professional or person serving in a legal capacity for the dealer or
2109	2111		investment adviser shall notify the dealer or investment adviser of
2110	2112		the suspected financial exploitation.
2111	2113		(b) If a dealer or investment adviser is notified of
2112	2114		suspected financial exploitation under Subsection (a) or otherwise
2113	2115		has cause to believe that financial exploitation of a vulnerable
2114	2116		adult who is an account holder with the dealer or investment adviser
2115	2117		has occurred, is occurring, or has been attempted, the dealer or
2116	2118		investment adviser shall assess the suspected financial
2117	2119		exploitation and submit a report to the commissioner, in accordance
2118	2120		with rules adopted under Section 4004.353, and the department in
2119	2121		the same manner as and containing the same information required to
2120	2122		be included in a report under Section 48.051, Human Resources Code.
2121	2123		The dealer or investment adviser shall submit the reports required
2122	2124		by this subsection not later than the earlier of:
2123	2125		(1) the date the dealer or investment adviser
2124	2126		completes the dealer's or investment adviser's assessment of the
2125	2127		suspected financial exploitation; or
2126	2128		(2) the fifth business day after the date the dealer or
2127	2129		investment adviser is notified of the suspected financial
2128	2130		exploitation under Subsection (a) or otherwise has cause to believe
2129	2131		that the suspected financial exploitation has occurred, is
2130	2132		occurring, or has been attempted.
2131	2133		(c) A dealer or investment adviser who submits a report to
2132	2134		the department of suspected financial exploitation of a vulnerable
2133	2135		adult under Subsection (b) is not required to make an additional
2134	2136		report of suspected abuse, neglect, or exploitation under Section
2135	2137		48.051, Human Resources Code, for the same conduct constituting the
2136	2138		reported suspected financial exploitation.
2137	2139		(d) Each dealer and investment adviser shall adopt internal
2138	2140		policies, programs, plans, or procedures for:
2139	2141		(1) the securities professionals or persons serving in
2140	2142		a legal capacity for the dealer or investment adviser to make the
2141	2143		notification required under Subsection (a); and
2142	2144		(2) the dealer or investment adviser to conduct the
2143	2145		assessment and submit the reports required under Subsection (b).
2144	2146		(e) The policies, programs, plans, or procedures adopted
2145	2147		under Subsection (d) may authorize the dealer or investment adviser
2146	2148		to report the suspected financial exploitation to other appropriate
2147	2149		agencies and entities in addition to the commissioner and the
2148	2150		department, including the attorney general, the Federal Trade
2149	2151		Commission, and the appropriate law enforcement agency. (V.A.C.S.
2150	2152		Art. 581-45, Subsecs. B, C, D, E.)
2151	2153		Sec. 4004.353. FORM AND CONTENT OF REPORT. The board by
2152	2154		rule shall prescribe the form and content of the report required to
2153	2155		be submitted by a dealer or investment adviser to the commissioner
2154	2156		under Section 4004.352(b). (V.A.C.S. Art. 581-45, Subsec. N.)
2155	2157		Sec. 4004.354. NOTIFYING THIRD PARTIES OF SUSPECTED
2156	2158		FINANCIAL EXPLOITATION OF VULNERABLE ADULTS. If a dealer or
2157	2159		investment adviser submits reports of suspected financial
2158	2160		exploitation of a vulnerable adult to the commissioner and the
2159	2161		department under Section 4004.352(b), the dealer or investment
2160	2162		adviser may at the time the dealer or investment adviser submits the
2161	2163		reports also notify a third party reasonably associated with the
2162	2164		vulnerable adult of the suspected financial exploitation, unless
2163	2165		the dealer or investment adviser suspects the third party of
2164	2166		financial exploitation of the vulnerable adult. (V.A.C.S. Art.
2165	2167		581-45, Subsec. F.)
2166	2168		Sec. 4004.355. TEMPORARY HOLD ON TRANSACTIONS IN CERTAIN
2167	2169		CASES OF SUSPECTED FINANCIAL EXPLOITATION OF VULNERABLE ADULTS.
2168	2170		(a) Notwithstanding any other law, if a dealer or investment
2169	2171		adviser submits reports of suspected financial exploitation of a
2170	2172		vulnerable adult to the commissioner and the department under
2171	2173		Section 4004.352(b), the dealer or investment adviser:
2172	2174		(1) may place a hold on any transaction that:
2173	2175		(A) involves an account of the vulnerable adult;
2174	2176		and
2175	2177		(B) the dealer or investment adviser has cause to
2176	2178		believe is related to the suspected financial exploitation; and
2177	2179		(2) must place a hold on any transaction involving an
2178	2180		account of the vulnerable adult if the hold is requested by the
2179	2181		commissioner, the department, or a law enforcement agency.
2180	2182		(b) Subject to Subsection (c), a hold placed on any
2181	2183		transaction under Subsection (a) expires on the 10th business day
2182	2184		after the date the dealer or investment adviser submits the reports
2183	2185		under Section 4004.352(b).
2184	2186		(c) A dealer or investment adviser may extend a hold placed
2185	2187		on any transaction under Subsection (a) for a period not to exceed
2186	2188		30 business days after the expiration of the period prescribed by
2187	2189		Subsection (b) if requested by a state or federal agency or a law
2188	2190		enforcement agency investigating the suspected financial
2189	2191		exploitation. The dealer or investment adviser may also petition a
2190	2192		court to extend a hold placed on any transaction under Subsection
2191	2193		(a) beyond the period prescribed by Subsection (b). A court may
2192	2194		enter an order extending or shortening a hold or providing other
2193	2195		relief.
2194	2196		(d) Each dealer and investment adviser shall adopt internal
2195	2197		policies, programs, plans, or procedures for placing a hold on a
2196	2198		transaction involving an account of a vulnerable adult under
2197	2199		Subsection (a). (V.A.C.S. Art. 581-45, Subsecs. G, H, I, J.)
2198	2200		Sec. 4004.356. IMMUNITY. (a) A securities professional or
2199	2201		person serving in a legal capacity for a dealer or investment
2200	2202		adviser who makes a notification under Section 4004.352(a), a
2201	2203		dealer or investment adviser that submits a report under Section
2202	2204		4004.352(b) or makes a notification to a third party under Section
2203	2205		4004.354, or a securities professional or person serving in a legal
2204	2206		capacity who or dealer or investment adviser that testifies or
2205	2207		otherwise participates in a judicial proceeding arising from a
2206	2208		notification or report is immune from any civil or criminal
2207	2209		liability arising from the notification, report, testimony, or
2208	2210		participation in the judicial proceeding, unless the securities
2209	2211		professional, person serving in a legal capacity for the dealer or
2210	2212		investment adviser, or dealer or investment adviser acted in bad
2211	2213		faith or with a malicious purpose.
2212	2214		(b) A dealer or investment adviser that in good faith and
2213	2215		with the exercise of reasonable care places or does not place a hold
2214	2216		on any transaction under Section 4004.355(a)(1) is immune from
2215	2217		civil or criminal liability or disciplinary action resulting from
2216	2218		the action or failure to act. (V.A.C.S. Art. 581-45, Subsecs. K,
2217	2219		L.)
2218	2220		Sec. 4004.357. RECORDS. To the extent permitted by state or
2219	2221		federal law, a dealer or investment adviser, on request, shall
2220	2222		provide access to or copies of records relevant to the suspected
2221	2223		financial exploitation of a vulnerable adult to the commissioner,
2222	2224		the department, a law enforcement agency, or a prosecuting
2223	2225		attorney's office, either as part of a report to the commissioner,
2224	2226		department, law enforcement agency, or prosecuting attorney's
2225	2227		office or at the request of the commissioner, department, law
2226	2228		enforcement agency, or prosecuting attorney's office in accordance
2227	2229		with an investigation. (V.A.C.S. Art. 581-45, Subsec. M.)
2228	2230		CHAPTER 4005. EXEMPTIONS
2229	2231		SUBCHAPTER A. EXEMPT TRANSACTIONS
2230	2232		Sec. 4005.001. SCOPE OF EXEMPTION
2231	2233		Sec. 4005.002. COURT SUPERVISED SALES
2232	2234		Sec. 4005.003. PLEDGED SECURITIES
2233	2235		Sec. 4005.004. ISOLATED TRANSACTIONS
2234	2236		Sec. 4005.005. INSURANCE COMPANY SALES
2235	2237		Sec. 4005.006. STOCK DIVIDENDS
2236	2238		Sec. 4005.007. EXISTING SECURITY HOLDERS
2237	2239		Sec. 4005.008. FINANCIAL DISTRESS
2238	2240		Sec. 4005.009. MERGER, CONSOLIDATION, AND ASSET SALES
2239	2241		Sec. 4005.010. EXCHANGE OF SHARES
2240	2242		Sec. 4005.011. INSTITUTIONAL INVESTORS
2241	2243		Sec. 4005.012. PRIVATE LIMITED OFFERINGS
2242	2244		Sec. 4005.013. COMPENSATION PLANS AND CONTRACTS
2243	2245		Sec. 4005.014. MORTGAGES AND LIENS
2244	2246		Sec. 4005.015. NONPROFITS
2245	2247		Sec. 4005.016. FINANCIAL INSTITUTIONS
2246	2248		Sec. 4005.017. GOVERNMENT ISSUANCE OR GUARANTEE
2247	2249		Sec. 4005.018. COOPERATIVES
2248	2250		Sec. 4005.019. SECONDARY MARKET SALES
2249	2251		Sec. 4005.020. UNSOLICITED ORDERS
2250	2252		Sec. 4005.021. OIL, GAS, OR MINING INTERESTS
2251	2253		Sec. 4005.022. ISSUER SALES OF EXEMPT SECURITIES
2252	2254		Sec. 4005.023. OPTIONS
2253	2255		Sec. 4005.024. EXEMPTIONS BY RULE OR ORDER
2254	2256		Sec. 4005.025. ISSUANCE OR TRANSFER TO NONPROFITS
2255	2257		SUBCHAPTER B. EXEMPT SECURITIES
2256	2258		Sec. 4005.051. SCOPE OF EXEMPTION
2257	2259		Sec. 4005.052. RAILROADS OR UTILITIES
2258	2260		Sec. 4005.053. NONPROFIT CORPORATIONS
2259	2261		Sec. 4005.054. LISTED SECURITIES
2260	2262		Sec. 4005.055. COMMERCIAL PAPER
2261	2263		Sec. 4005.056. SECURED DEBT
2262	2264		Sec. 4005.057. NONPROFIT DEBT
2263	2265		Sec. 4005.058. SUSPENSION OF EXEMPT STATUS OF TRADING
2264	2266		SYSTEM
2265	2267		SUBCHAPTER C. PROCEDURES FOR APPROVAL OF STOCK EXCHANGE
2266	2268		Sec. 4005.101. APPLICATION FOR APPROVAL
2267	2269		Sec. 4005.102. APPROVAL OF STOCK EXCHANGE
2268	2270		Sec. 4005.103. INVESTIGATION AND HEARING
2269	2271		Sec. 4005.104. ORDER OF APPROVAL
2270	2272		Sec. 4005.105. WITHDRAWAL OF APPROVAL
2271	2273		CHAPTER 4005. EXEMPTIONS
2272	2274		SUBCHAPTER A. EXEMPT TRANSACTIONS
2273	2275		Sec. 4005.001. SCOPE OF EXEMPTION. Except as expressly
2274	2276		provided otherwise in this title, this title does not apply to any
2275	2277		sale of, offer for sale of, solicitation of, subscription to,
2276	2278		dealing in, or delivery of a security made in a transaction or under
2277	2279		a condition specified in this subchapter. (V.A.C.S. Art. 581-5
2278	2280		(part).)
2279	2281		Sec. 4005.002. COURT SUPERVISED SALES. The exemption
2280	2282		provided by Section 4005.001 applies to the sale of a security made:
2281	2283		(1) at a judicial, executor's, administrator's,
2282	2284		guardian's, or conservator's sale; or
2283	2285		(2) by a receiver or trustee in insolvency or
2284	2286		bankruptcy. (V.A.C.S. Art. 581-5, Subsec. A.)
2285	2287		Sec. 4005.003. PLEDGED SECURITIES. The exemption provided
2286	2288		by Section 4005.001 applies to the sale of a security pledged in
2287	2289		good faith as security for a bona fide debt that is made by or for
2288	2290		the account of a pledge holder or mortgagee that is selling the
2289	2291		security or offering the security for sale or delivery in the
2290	2292		ordinary course of business to liquidate the debt. (V.A.C.S. Art.
2291	2293		581-5, Subsec. B.)
2292	2294		Sec. 4005.004. ISOLATED TRANSACTIONS. (a) The exemption
2293	2295		provided by Section 4005.001 applies to the sale of a security that
2294	2296		is made by a vendor or on a vendor's behalf by a dealer or other
2295	2297		agent and is made in the ordinary course of a bona fide personal
2296	2298		investment of the vendor's personal holdings or a change in the
2297	2299		investment if:
2298	2300		(1) the vendor is not engaged in the business of
2299	2301		selling securities; and
2300	2302		(2) the sale is an isolated transaction not made in the
2301	2303		course of repeated and consecutive transactions of a like
2302	2304		character.
2303	2305		(b) A sale or offer for sale under Subsection (a) is not
2304	2306		exempt from this title if the sale or offer is made or intended to be
2305	2307		made by the vendor or the vendor's agent for the direct or indirect
2306	2308		benefit of a company other than the individual vendor. The usual
2307	2309		commission of a vendor's agent is not a benefit for the purposes of
2308	2310		this subsection.
2309	2311		(c) A person acting as an agent for a vendor in any sale or
2310	2312		offer for sale under Subsection (a) must be registered under this
2311	2313		title. (V.A.C.S. Art. 581-5, Subsec. C (part).)
2312	2314		Sec. 4005.005. INSURANCE COMPANY SALES. (a) The exemption
2313	2315		provided by Section 4005.001 applies to the sale of a security made
2314	2316		by or on behalf of an insurance company that:
2315	2317		(1) is subject to the supervision or control of the
2316	2318		Texas Department of Insurance; and
2317	2319		(2) owns the security as a legal and bona fide
2318	2320		investment.
2319	2321		(b) A sale or offer for sale under Subsection (a) is not
2320	2322		exempt from this title if the sale or offer is made or intended to be
2321	2323		made directly or indirectly for the benefit of another company.
2322	2324		(V.A.C.S. Art. 581-5, Subsec. C (part).)
2323	2325		Sec. 4005.006. STOCK DIVIDENDS. The exemption provided by
2324	2326		Section 4005.001 applies to a distribution of securities by a
2325	2327		corporation directly to the corporation's stockholders as a stock
2326	2328		dividend or other distribution paid out of earnings or surplus.
2327	2329		(V.A.C.S. Art. 581-5, Subsec. D.)
2328	2330		Sec. 4005.007. EXISTING SECURITY HOLDERS. (a) In this
2329	2331		section, "existing security holder" includes a person who is a
2330	2332		holder of a convertible security or nontransferable warrant at the
2331	2333		time of the transaction.
2332	2334		(b) The exemption provided by Section 4005.001 applies to an
2333	2335		offer by the issuer of its securities to the issuer's existing
2334	2336		security holders and to any transaction pursuant to the offer if no
2335	2337		commission or other remuneration, other than a stand-by commission,
2336	2338		is paid or given directly or indirectly for soliciting any security
2337	2339		holder in this state. (V.A.C.S. Art. 581-5, Subsec. E.)
2338	2340		Sec. 4005.008. FINANCIAL DISTRESS. (a) The exemption
2339	2341		provided by Section 4005.001 applies to the issuance in good faith
2340	2342		of securities by a company:
2341	2343		(1) to the company's security holders or creditors in
2342	2344		the process of a bona fide reorganization of the company made in
2343	2345		good faith; or
2344	2346		(2) to the security holders or creditors of a
2345	2347		predecessor company if the issuing company is organized solely for
2346	2348		the purpose of taking over the assets and continuing the business of
2347	2349		the predecessor company.
2348	2350		(b) The exemption provided by Section 4005.001 applies to an
2349	2351		issuance of securities described by Subsection (a) only if:
2350	2352		(1) the securities are issued in exchange for
2351	2353		securities of the security holders, claims of the creditors, or
2352	2354		both; and
2353	2355		(2) the security holders or creditors do not pay,
2354	2356		give, or promise any consideration, and are not obligated to pay or
2355	2357		give any consideration, for the securities issued other than the
2356	2358		securities of or claims against the company or the company's
2357	2359		predecessor held or owned by the security holders or creditors at
2358	2360		the time of the issuance. (V.A.C.S. Art. 581-5, Subsec. F.)
2359	2361		Sec. 4005.009. MERGER, CONSOLIDATION, AND ASSET SALES.
2360	2362		(a) The exemption provided by Section 4005.001 applies to the
2361	2363		issuance or sale of securities by one corporation to another
2362	2364		corporation or to the security holders of the corporation pursuant
2363	2365		to a vote by one or more classes of those security holders, as
2364	2366		required by the certificate of formation, certificate of
2365	2367		incorporation, or applicable corporation statute, in connection
2366	2368		with:
2367	2369		(1) a merger;
2368	2370		(2) a consolidation; or
2369	2371		(3) a sale of corporate assets.
2370	2372		(b) The exemption provided by Section 4005.001 applies to an
2371	2373		issuance or sale described by Subsection (a) only if the security
2372	2374		holders do not pay, give, or promise any consideration, and are not
2373	2375		obligated to pay or give any consideration, for the securities
2374	2376		issued or sold other than the corporation's securities held by the
2375	2377		security holders at the time of the issuance or sale. (V.A.C.S.
2376	2378		Art. 581-5, Subsec. G (part).)
2377	2379		Sec. 4005.010. EXCHANGE OF SHARES. (a) The exemption
2378	2380		provided by Section 4005.001 applies to the issuance or sale of
2379	2381		securities by one corporation to the corporation's stockholders in
2380	2382		connection with:
2381	2383		(1) the change of par value stock to no par value stock
2382	2384		or vice versa; or
2383	2385		(2) the exchange of outstanding shares for the same or
2384	2386		a greater or smaller number of shares.
2385	2387		(b) The exemption provided by Section 4005.001 applies to an
2386	2388		issuance or sale described by Subsection (a) only if the security
2387	2389		holders do not pay, give, or promise any consideration, and are not
2388	2390		obligated to pay or give any consideration, for the securities
2389	2391		issued or sold other than the corporation's securities held by the
2390	2392		security holders at the time of the issuance or sale. (V.A.C.S.
2391	2393		Art. 581-5, Subsec. G (part).)
2392	2394		Sec. 4005.011. INSTITUTIONAL INVESTORS. The exemption
2393	2395		provided by Section 4005.001 applies to the sale of a security to:
2394	2396		(1) a bank;
2395	2397		(2) a trust company;
2396	2398		(3) a building and loan association;
2397	2399		(4) a savings and loan association;
2398	2400		(5) an insurance company;
2399	2401		(6) a surety or guaranty company;
2400	2402		(7) a savings institution;
2401	2403		(8) an investment company as defined by the Investment
2402	2404		Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.);
2403	2405		(9) a small business investment company as defined by
2404	2406		the Small Business Investment Act of 1958 (15 U.S.C. Section 661 et
2405	2407		seq.); or
2406	2408		(10) a registered dealer actually engaged in buying
2407	2409		and selling securities. (V.A.C.S. Art. 581-5, Subsec. H.)
2408	2410		Sec. 4005.012. PRIVATE LIMITED OFFERINGS. (a) The
2409	2411		exemption provided by Section 4005.001 applies to the following
2410	2412		sales made without any public solicitation or advertisement:
2411	2413		(1) the sale of a security by the issuer of the
2412	2414		security if the total number of security holders of the issuer does
2413	2415		not exceed 35 persons after the sale; or
2414	2416		(2) the sale by an issuer of the issuer's securities to
2415	2417		not more than 15 persons during the 12-month period ending with the
2416	2418		date of the sale if the persons purchased the securities for their
2417	2419		own account and not for distribution.
2418	2420		(b) For the purpose of determining the number of persons
2419	2421		under Subsection (a)(2), the following persons are not included:
2420	2422		(1) a purchaser of a security in a transaction exempt
2421	2423		under another provision of this subchapter;
2422	2424		(2) a purchaser of a security exempt under Subchapter
2423	2425		B; and
2424	2426		(3) a purchaser of a security that is part of an
2425	2427		offering registered under Subchapter A, B, or C, Chapter 4003.
2426	2428		(V.A.C.S. Art. 581-5, Subsec. I (part).)
2427	2429		Sec. 4005.013. COMPENSATION PLANS AND CONTRACTS. The
2428	2430		exemption provided by Section 4005.001 applies to the sale or
2429	2431		distribution of a security without any public solicitation or
2430	2432		advertisement if the sale or distribution is made:
2431	2433		(1) by an issuer of the security or any participating
2432	2434		subsidiary of the issuer; and
2433	2435		(2) under a bona fide thrift, savings, stock purchase,
2434	2436		retirement, pension, profit-sharing, option, bonus, appreciation
2435	2437		right, incentive, or similar written compensation plan or written
2436	2438		compensation contract established by the issuer or the issuer's
2437	2439		subsidiary for the benefit of:
2438	2440		(A) employees, directors, general partners,
2439	2441		managers, or officers of the issuer or subsidiary;
2440	2442		(B) the issuer's or subsidiary's trustees, if the
2441	2443		issuer or subsidiary is a business trust; or
2442	2444		(C) consultants or advisers who provide to the
2443	2445		issuer or subsidiary bona fide services unrelated to the offer or
2444	2446		sale of securities in a capital-raising transaction. (V.A.C.S.
2445	2447		Art. 581-5, Subsec. I (part).)
2446	2448		Sec. 4005.014. MORTGAGES AND LIENS. The exemption provided
2447	2449		by Section 4005.001 applies to a single transaction in which:
2448	2450		(1) the securities disposed of consist exclusively of
2449	2451		notes or bonds secured by a mortgage or vendor's lien on real
2450	2452		property or tangible personal property; and
2451	2453		(2) the entire mortgage or lien is sold or transferred
2452	2454		with all of the notes or bonds secured by the mortgage or lien.
2453	2455		(V.A.C.S. Art. 581-5, Subsec. J.)
2454	2456		Sec. 4005.015. NONPROFITS. The exemption provided by
2455	2457		Section 4005.001 applies to the disposition of a security or
2456	2458		membership:
2457	2459		(1) issued by a corporation or association:
2458	2460		(A) that is organized exclusively for a
2459	2461		religious, educational, benevolent, fraternal, charitable, or
2460	2462		reformatory purpose;
2461	2463		(B) that is not organized for pecuniary profit;
2462	2464		and
2463	2465		(C) for which no part of the net earnings inures
2464	2466		to the benefit of any stockholder, shareholder, or individual
2465	2467		member of the corporation or association; and
2466	2468		(2) for which no commission or remuneration is paid or
2467	2469		given or is to be paid or given. (V.A.C.S. Art. 581-5, Subsec. K.)
2468	2470		Sec. 4005.016. FINANCIAL INSTITUTIONS. The exemption
2469	2471		provided by Section 4005.001 applies to:
2470	2472		(1) the sale, by the issuer itself or by a registered
2471	2473		dealer, of any security issued or guaranteed by:
2472	2474		(A) a bank organized and subject to regulation
2473	2475		under the laws of:
2474	2476		(i) the United States; or
2475	2477		(ii) a state, territory, or insular
2476	2478		possession of the United States; or
2477	2479		(B) a savings and loan association organized and
2478	2480		subject to regulation under the laws of this state; or
2479	2481		(2) the sale, by the issuer itself, of any security
2480	2482		issued by a federal savings and loan association. (V.A.C.S. Art.
2481	2483		581-5, Subsec. L.)
2482	2484		Sec. 4005.017. GOVERNMENT ISSUANCE OR GUARANTEE. The
2483	2485		exemption provided by Section 4005.001 applies to the sale, by the
2484	2486		issuer itself or by a registered dealer, of any security either
2485	2487		issued or guaranteed by:
2486	2488		(1) the United States;
2487	2489		(2) the District of Columbia, a state, territory, or
2488	2490		insular possession of the United States;
2489	2491		(3) a political subdivision of a state of the United
2490	2492		States, including a county, city, municipal corporation, district,
2491	2493		and authority; or
2492	2494		(4) a public or governmental agency or instrumentality
2493	2495		of an entity described by Subdivisions (1)-(3). (V.A.C.S. Art.
2494	2496		581-5, Subsec. M.)
2495	2497		Sec. 4005.018. COOPERATIVES. (a) The exemption provided
2496	2498		by Section 4005.001 applies to:
2497	2499		(1) the sale and issuance of:
2498	2500		(A) any securities issued by a farmers'
2499	2501		cooperative marketing association organized under Chapter 52,
2500	2502		Agriculture Code, or the predecessor of that law (Article 5737 et
2501	2503		seq., Revised Statutes);
2502	2504		(B) any securities issued by a mutual loan
2503	2505		corporation organized under Chapter 54, Agriculture Code, or the
2504	2506		predecessor of that law (Article 2500 et seq., Revised Statutes);
2505	2507		or
2506	2508		(C) any equity securities issued by a cooperative
2507	2509		association organized under the Texas Cooperative Association Law
2508	2510		as described by Section 1.008(i), Business Organizations Code, or
2509	2511		the predecessor of that law (Article 1396-50.01, Vernon's Texas
2510	2512		Civil Statutes); or
2511	2513		(2) the sale of any securities issued by a farmers'
2512	2514		cooperative society organized under Chapter 51, Agriculture Code,
2513	2515		or the predecessor of that law (Article 2514 et seq., Revised
2514	2516		Statutes).
2515	2517		(b) The exemption provided by Section 4005.001 does not
2516	2518		apply to an agent of a farmers' cooperative marketing association,
2517	2519		mutual loan corporation, cooperative association, or farmers'
2518	2520		cooperative society if the sale of the securities is made to:
2519	2521		(1) nonmembers; or
2520	2522		(2) members and a commission is paid or contracted to
2521	2523		be paid to the agent. (V.A.C.S. Art. 581-5, Subsec. N.)
2522	2524		Sec. 4005.019. SECONDARY MARKET SALES. (a) In this
2523	2525		section, "recognized securities manual" means a nationally
2524	2526		distributed manual of securities that is approved by the board for
2525	2527		use under this section.
2526	2528		(b) The exemption provided by Section 4005.001 applies to
2527	2529		the sale of outstanding securities by a registered dealer if:
2528	2530		(1) the securities do not form part of an unsold
2529	2531		allotment to or subscription by the dealer as a participant in the
2530	2532		securities' distribution by the issuer of the securities;
2531	2533		(2) the securities are of the same class and the same
2532	2534		issuer and are outstanding in the hands of the public;
2533	2535		(3) the securities are offered for sale, in good
2534	2536		faith, at prices reasonably related to the current market price of
2535	2537		the securities at the time of the sale;
2536	2538		(4) none of the sale proceeds are paid directly or
2537	2539		indirectly to the issuer of the securities;
2538	2540		(5) the sale is not directly or indirectly for the
2539	2541		purposes of providing or furthering a scheme to violate or evade
2540	2542		this title;
2541	2543		(6) the right to sell or resell the securities has not
2542	2544		been enjoined by a court in this state by a proceeding instituted by
2543	2545		an officer or agency of this state charged with enforcement of this
2544	2546		title;
2545	2547		(7) the commissioner has not revoked or suspended the
2546	2548		right to sell the securities under this title or, if the
2547	2549		commissioner has revoked or suspended the right to sell the
2548	2550		securities, the revocation or suspension is not in effect;
2549	2551		(8) at the time of the sale, the issuer of the
2550	2552		securities is:
2551	2553		(A) a going concern actually engaged in business;
2552	2554		and
2553	2555		(B) not in an organization stage or in
2554	2556		receivership or bankruptcy; and
2555	2557		(9) either:
2556	2558		(A) the securities or other securities of the
2557	2559		issuer of the same class have been:
2558	2560		(i) qualified for sale by a permit issued
2559	2561		under Subchapter A, Chapter 4003;
2560	2562		(ii) registered by notification under
2561	2563		Subchapter B, Chapter 4003; or
2562	2564		(iii) registered by coordination under
2563	2565		Subchapter C, Chapter 4003; or
2564	2566		(B) a recognized securities manual or a
2565	2567		statement, in form and extent acceptable to the commissioner and
2566	2568		filed with the commissioner by the issuer or a registered dealer, is
2567	2569		provided at the time of the sale containing at least the following
2568	2570		information about the issuer:
2569	2571		(i) a statement of the issuer's principal
2570	2572		business;
2571	2573		(ii) a balance sheet as of a date not
2572	2574		earlier than 18 months before the date of the sale; and
2573	2575		(iii) profit and loss statements and a
2574	2576		record of any dividends paid for:
2575	2577		(a) a period of at least three years
2576	2578		before the date of the balance sheet; or
2577	2579		(b) the period of the issuer's
2578	2580		existence, if the issuer has been in existence less than three
2579	2581		years.
2580	2582		(c) The commissioner may issue a stop order or by order may
2581	2583		prohibit, revoke, or suspend the exemption under this section with
2582	2584		respect to any security if the commissioner has reasonable cause to
2583	2585		believe that the plan of business of the issuer of the security, the
2584	2586		security, or the sale of the security would tend to work a fraud or
2585	2587		deceit on any purchaser of the security. The order is subject to
2586	2588		review in the manner provided by Section 4007.107.
2587	2589		(d) Notice of any court injunction enjoining the sale or
2588	2590		resale of a security described by this section, or of an order
2589	2591		revoking or suspending the exemption under Subsection (c) with
2590	2592		respect to a security, shall be mailed by certified or registered
2591	2593		mail with return receipt requested or otherwise delivered to any
2592	2594		dealer believed to be selling or offering for sale the type of
2593	2595		securities referred to in the notice. Subsections (b)(6) and (7) do
2594	2596		not apply to a dealer until the dealer has received from the
2595	2597		commissioner actual notice of the revocation or suspension.
2596	2598		(e) The board, for cause shown, may revoke or suspend the
2597	2599		recognition under this section of any manual previously approved
2598	2600		under this section only after notice and an opportunity for a
2599	2601		hearing is provided as required by law.
2600	2602		(f) A judgment sustaining the board in the board action
2601	2603		complained about does not bar an application by the plaintiff for
2602	2604		approval of the manual as provided by this section after the first
2603	2605		anniversary of the date of the action.
2604	2606		(g) A judgment in favor of the plaintiff does not prevent
2605	2607		the board from revoking the recognition of a manual previously
2606	2608		approved under this section for any proper cause that may accrue or
2607	2609		be discovered. (V.A.C.S. Art. 581-5, Subsec. O.)
2608	2610		Sec. 4005.020. UNSOLICITED ORDERS. The exemption provided
2609	2611		by Section 4005.001 applies to a dealer's execution of an
2610	2612		unsolicited order for the purchase of securities for which the
2611	2613		initial offering of the securities has been completed if the
2612	2614		dealer:
2613	2615		(1) acts solely as an agent for the purchaser;
2614	2616		(2) does not have a direct or indirect interest in the
2615	2617		sale or distribution of securities ordered; and
2616	2618		(3) does not receive a commission, profit, or other
2617	2619		compensation from any source other than the purchaser. (V.A.C.S.
2618	2620		Art. 581-5, Subsec. P.)
2619	2621		Sec. 4005.021. OIL, GAS, OR MINING INTERESTS. (a) Subject
2620	2622		to Subsection (b), the exemption provided by Section 4005.001
2621	2623		applies to the sales of interests in and under oil, gas, or mining
2622	2624		leases, fees, or titles, or contracts relating to those interests
2623	2625		in which:
2624	2626		(1) the total number of sales by any one owner of
2625	2627		interests, whether whole, fractional, segregated, or undivided in
2626	2628		any single oil, gas, or mineral lease, fee, or title, or contract
2627	2629		relating to those interests, is not more than 35 during a 12
2628	2630		consecutive month period; and
2629	2631		(2) no use is made of advertisement or public
2630	2632		solicitation.
2631	2633		(b) If a sale of an interest described by Subsection (a) is
2632	2634		made for an owner of the interest by an agent of the owner, the
2633	2635		exemption under that subsection applies only if the agent is
2634	2636		registered under this title.
2635	2637		(c) An oil, gas, or mineral unitization or pooling agreement
2636	2638		may not be considered a sale under this title. (V.A.C.S. Art.
2637	2639		581-5, Subsec. Q.)
2638	2640		Sec. 4005.022. ISSUER SALES OF EXEMPT SECURITIES. (a) The
2639	2641		exemption provided by Section 4005.001 applies to the sale by the
2640	2642		issuer itself or by a subsidiary of the issuer of any securities
2641	2643		that would be exempt under Subchapter B if sold by a registered
2642	2644		dealer.
2643	2645		(b) This section does not apply to securities that would be
2644	2646		exempt under Section 4005.053. (V.A.C.S. Art. 581-5, Subsec. R.)
2645	2647		Sec. 4005.023. OPTIONS. (a) In this section, "option"
2646	2648		means and includes a put, call, straddle, or other option or
2647	2649		privilege of buying from another person or selling to another
2648	2650		person a specified number of securities at a specified price,
2649	2651		without being obligated to do so, on or before a specified date. The
2650	2652		term does not include an option or privilege that by its terms may
2651	2653		terminate before the specified date on the occurrence of a
2652	2654		specified event.
2653	2655		(b) The exemption provided by Section 4005.001 applies to a
2654	2656		sale of an option by or through a registered dealer if, at the time
2655	2657		of the sale:
2656	2658		(1) the performance of the terms of the option is
2657	2659		guaranteed by a broker-dealer registered under the Securities
2658	2660		Exchange Act of 1934 (15 U.S.C. Section 78a et seq.);
2659	2661		(2) the guaranty and broker-dealer described by
2660	2662		Subdivision (1) are in compliance with any requirements or rules
2661	2663		adopted or approved by the board;
2662	2664		(3) the option is not sold by or for the benefit of the
2663	2665		issuer of the security that may be purchased or sold on exercise of
2664	2666		the option;
2665	2667		(4) the security that may be purchased or sold on
2666	2668		exercise of the option is either:
2667	2669		(A) exempted under Section 4005.054; or
2668	2670		(B) quoted on the NASDAQ stock market and meets
2669	2671		the requirements of Sections 4005.019(b)(1), (6), (7), and (8); and
2670	2672		(5) the sale is not directly or indirectly for the
2671	2673		purposes of providing or furthering a scheme to violate or evade
2672	2674		this title. (V.A.C.S. Art. 581-5, Subsec. S.)
2673	2675		Sec. 4005.024. EXEMPTIONS BY RULE OR ORDER. The exemption
2674	2676		provided by Section 4005.001 applies to the sale of a security made
2675	2677		in other transactions or under other conditions not specified in
2676	2678		this subchapter as the board by rule or order may define or
2677	2679		prescribe, conditionally or unconditionally. (V.A.C.S. Art.
2678	2680		581-5, Subsec. T.)
2679	2681		Sec. 4005.025. ISSUANCE OR TRANSFER TO NONPROFITS. The
2680	2682		exemption provided by Section 4005.001 applies to the issuance or
2681	2683		transfer of securities by the issuer of its securities to a
2682	2684		corporation or association organized exclusively for a religious,
2683	2685		educational, benevolent, fraternal, charitable, or reformatory
2684	2686		purpose and not for pecuniary profit, only if:
2685	2687		(1) the corporation or association does not provide
2686	2688		anything of value for the securities other than, for a security that
2687	2689		is an option, payment of the exercise price of the option to acquire
2688	2690		the securities at a price not to exceed the fair market value of the
2689	2691		underlying securities on the date the option was granted;
2690	2692		(2) the issuance or transfer is not made for the
2691	2693		purpose of raising capital for the issuer;
2692	2694		(3) a commission or other form of consideration is not
2693	2695		paid or provided to a third party with respect to the issuance or
2694	2696		transfer; and
2695	2697		(4) the issuance or transfer is not directly or
2696	2698		indirectly for the purposes of providing or furthering a scheme to
2697	2699		violate or evade this title. (V.A.C.S. Art. 581-5, Subsec. U.)
2698	2700		SUBCHAPTER B. EXEMPT SECURITIES
2699	2701		Sec. 4005.051. SCOPE OF EXEMPTION. Except as expressly
2700	2702		provided otherwise in this title, this title does not apply to a
2701	2703		security described by this subchapter when offered for sale, sold,
2702	2704		or dealt in by a registered dealer or a registered dealer's agent.
2703	2705		(V.A.C.S. Art. 581-6 (part).)
2704	2706		Sec. 4005.052. RAILROADS OR UTILITIES. The exemption
2705	2707		provided by Section 4005.051 applies to:
2706	2708		(1) a security issued or guaranteed either as to
2707	2709		principal, interest, or dividend by a corporation that owns or
2708	2710		operates a railroad or any other public service utility if the
2709	2711		corporation is subject to regulation or supervision either as to
2710	2712		the corporation's rates and charges or as to the issuance of the
2711	2713		corporation's own securities by:
2712	2714		(A) the Texas Department of Transportation; or
2713	2715		(B) a public commission, an agency, a board, or
2714	2716		officers of:
2715	2717		(i) the government of the United States;
2716	2718		(ii) the District of Columbia, a state,
2717	2719		territory, or insular possession of the United States, or a
2718	2720		municipal corporation; or
2719	2721		(iii) Canada or a province of Canada; or
2720	2722		(2) equipment trust certificates or equipment notes or
2721	2723		bonds:
2722	2724		(A) that are based on chattel mortgages, leases
2723	2725		or agreements for conditional sale of cars, motive power or other
2724	2726		rolling stock mortgages, leased or sold to or provided for the use
2725	2727		of or on a railroad or other public service utility corporation if
2726	2728		the corporation is subject to regulation or supervision as
2727	2729		described by Subdivision (1); or
2728	2730		(B) for which the ownership or title of the
2729	2731		equipment is pledged or retained to secure the payment of the
2730	2732		equipment trust certificates, bonds, or notes, in accordance with
2731	2733		the laws of:
2732	2734		(i) the United States;
2733	2735		(ii) the District of Columbia or a state,
2734	2736		territory, or insular possession of the United States; or
2735	2737		(iii) Canada or a province of Canada.
2736	2738		(V.A.C.S. Art. 581-6, Subsec. D.)
2737	2739		Sec. 4005.053. NONPROFIT CORPORATIONS. The exemption
2738	2740		provided by Section 4005.051 applies to a security issued and sold
2739	2741		by a domestic corporation that:
2740	2742		(1) is not organized and engaged in business for
2741	2743		profit; and
2742	2744		(2) does not have capital stock. (V.A.C.S. Art. 581-6,
2743	2745		Subsec. E.)
2744	2746		Sec. 4005.054. LISTED SECURITIES. (a) The exemption
2745	2747		provided by Section 4005.051 applies to securities that at the time
2746	2748		of sale:
2747	2749		(1) are fully listed on:
2748	2750		(A) the American Stock Exchange;
2749	2751		(B) the Boston Stock Exchange;
2750	2752		(C) the Chicago Stock Exchange;
2751	2753		(D) the New York Stock Exchange; or
2752	2754		(E) a recognized and responsible stock exchange
2753	2755		approved by the commissioner, as provided by Subchapter C;
2754	2756		(2) are designated or approved for designation on
2755	2757		notice of issuance on the national market system of the NASDAQ stock
2756	2758		market; or
2757	2759		(3) are senior to, or if of the same issue, on a parity
2758	2760		with, any securities listed or designated as described by
2759	2761		Subdivision (1) or (2) or represented by subscription rights that
2760	2762		are listed or designated as described by Subdivision (1) or (2), or
2761	2763		evidence of indebtedness guaranteed by a company, any stock of
2762	2764		which is listed or designated as described by Subdivision (1) or
2763	2765		(2).
2764	2766		(b) Securities described by Subsection (a) are exempt only
2765	2767		so long as the exchange on which the securities are listed remains
2766	2768		approved under this section or Subchapter C. (V.A.C.S. Art. 581-6,
2767	2769		Subsec. F (part).)
2768	2770		Sec. 4005.055. COMMERCIAL PAPER. The exemption provided by
2769	2771		Section 4005.051 applies to:
2770	2772		(1) commercial paper that:
2771	2773		(A) arises out of a current transaction or the
2772	2774		proceeds of which have been or are to be used for current
2773	2775		transactions; and
2774	2776		(B) evidences an obligation to pay cash not later
2775	2777		than the ninth month after the issuance date of the commercial
2776	2778		paper, not including days of grace;
2777	2779		(2) a renewal of commercial paper described by
2778	2780		Subdivision (1) that is similarly limited; or
2779	2781		(3) a guarantee of commercial paper described by
2780	2782		Subdivision (1) or of a renewal described by Subdivision (2).
2781	2783		(V.A.C.S. Art. 581-6, Subsec. H.)
2782	2784		Sec. 4005.056. SECURED DEBT. The exemption provided by
2783	2785		Section 4005.051 applies to notes, bonds, or other evidence of
2784	2786		indebtedness or certificates of ownership that:
2785	2787		(1) are equally and proportionately secured without
2786	2788		reference of priority of one over another; and
2787	2789		(2) by the terms of the instrument creating the lien,
2788	2790		continue to be secured by the deposit with a trustee of recognized
2789	2791		responsibility approved by the commissioner of any of the
2790	2792		securities specified in:
2791	2793		(A) Section 4005.017, if the deposited
2792	2794		securities have an aggregate par value of not less than 110 percent
2793	2795		of the par value of the securities being secured; or
2794	2796		(B) Section 4005.052, if the deposited
2795	2797		securities have an aggregate par value of not less than 125 percent
2796	2798		of the par value of the securities being secured. (V.A.C.S. Art.
2797	2799		581-6, Subsec. I.)
2798	2800		Sec. 4005.057. NONPROFIT DEBT. The exemption provided by
2799	2801		Section 4005.051 applies to notes, bonds, or other evidence of
2800	2802		indebtedness of a religious, charitable, or benevolent
2801	2803		corporation. (V.A.C.S. Art. 581-6, Subsec. J.)
2802	2804		Sec. 4005.058. SUSPENSION OF EXEMPT STATUS OF TRADING
2803	2805		SYSTEM. (a) The commissioner, by the same procedures described by
2804	2806		Section 4005.105, may at any time suspend the exempt status of any
2805	2807		trading system exempted by the legislature on or after January 1,
2806	2808		1989, if at the time of the hearing the trading system does not meet
2807	2809		the applicable standards for approval of exchanges provided by this
2808	2810		title.
2809	2811		(b) The suspension of a trading system under Subsection (a)
2810	2812		has the same effect as the withdrawal of approval of a stock
2811	2813		exchange under Section 4005.105.
2812	2814		(c) The suspension under Subsection (a) remains in effect
2813	2815		until the commissioner by order determines that the trading system:
2814	2816		(1) has corrected each deficiency on which the
2815	2817		suspension was based; and
2816	2818		(2) maintains standards and procedures that provide
2817	2819		reasonable protection to the public. (V.A.C.S. Art. 581-6, Subsec.
2818	2820		F (part).)
2819	2821		SUBCHAPTER C. PROCEDURES FOR APPROVAL OF STOCK EXCHANGE
2820	2822		Sec. 4005.101. APPLICATION FOR APPROVAL. An organized
2821	2823		stock exchange may apply to the commissioner for approval in the
2822	2824		manner and on the forms the commissioner prescribes. (V.A.C.S. Art.
2823	2825		581-6, Subsec. F (part).)
2824	2826		Sec. 4005.102. APPROVAL OF STOCK EXCHANGE. The
2825	2827		commissioner may approve a stock exchange only if the commissioner
2826	2828		finds that the facts and data provided with the application
2827	2829		establish that:
2828	2830		(1) the requirements for the listing of securities on
2829	2831		the exchange seeking approval provide reasonable protection to the
2830	2832		public; and
2831	2833		(2) the governing constitution, bylaws, or
2832	2834		regulations of the exchange require:
2833	2835		(A) an adequate examination into the affairs of
2834	2836		the issuer of the securities to be listed on the exchange before
2835	2837		permitting trading on the exchange;
2836	2838		(B) that the issuer of the securities, while the
2837	2839		securities are listed on the exchange, shall periodically prepare,
2838	2840		make public, and provide promptly to the exchange appropriate
2839	2841		income, profit and loss, and other financial statements;
2840	2842		(C) that securities listed and traded on the
2841	2843		exchange be restricted to securities of ascertained, sound asset or
2842	2844		income value; and
2843	2845		(D) a reasonable surveillance of the exchange's
2844	2846		members, including a requirement for periodical financial
2845	2847		statements, a determination of the members' financial
2846	2848		responsibility, and the right and obligation of the exchange's
2847	2849		governing body to suspend or expel any member found:
2848	2850		(i) to be financially embarrassed or
2849	2851		irresponsible; or
2850	2852		(ii) guilty of misconduct in the member's
2851	2853		business dealings or of conduct prejudicial to the rights and
2852	2854		interests of the member's customers. (V.A.C.S. Art. 581-6, Subsec.
2853	2855		F (part).)
2854	2856		Sec. 4005.103. INVESTIGATION AND HEARING. The commissioner
2855	2857		may approve a stock exchange only after a reasonable investigation
2856	2858		and hearing. (V.A.C.S. Art. 581-6, Subsec. F (part).)
2857	2859		Sec. 4005.104. ORDER OF APPROVAL. The commissioner's
2858	2860		approval of a stock exchange must be made by a written order based
2859	2861		on a finding of fact substantially in accordance with the
2860	2862		requirements of Sections 4005.101 and 4005.102. (V.A.C.S. Art.
2861	2863		581-6, Subsec. F (part).)
2862	2864		Sec. 4005.105. WITHDRAWAL OF APPROVAL. At any time, the
2863	2865		commissioner, on 10 days' notice and hearing, may withdraw approval
2864	2866		of a stock exchange that at the time of the hearing does not meet the
2865	2867		standards for approval under this title. On the withdrawal of
2866	2868		approval, securities listed on the exchange are not exempt from
2867	2869		this title until the commissioner issues an order approving the
2868	2870		exchange. (V.A.C.S. Art. 581-6, Subsec. F (part).)
2869	2871		CHAPTER 4006. FEES
2870	2872		SUBCHAPTER A. CERTAIN REGISTRATION AND NOTICE FILING FEES
2871	2873		Sec. 4006.001. CERTAIN REGISTRATION AND NOTICE FILING
2872	2874		FEES
2873	2875		SUBCHAPTER B. EXEMPTION FEES AND OTHER FEES
2874	2876		Sec. 4006.051. NOTICE FOR SECONDARY TRADING EXEMPTION
2875	2877		Sec. 4006.052. NOTICE FOR LIMITED OFFERING EXEMPTION
2876	2878		Sec. 4006.053. APPLICATION FOR APPROVAL OF STOCK
2877	2879		EXCHANGE
2878	2880		Sec. 4006.054. AMENDMENT OR DUPLICATE OF REGISTRATION
2879	2881		CERTIFICATE OR EVIDENCE OF
2880	2882		REGISTRATION; REGISTRATION OF BRANCH
2881	2883		OFFICE
2882	2884		Sec. 4006.055. EXAMINATION OF CERTAIN APPLICATIONS OR
2883	2885		REGISTRATION STATEMENTS
2884	2886		Sec. 4006.056. CERTIFIED COPIES
2885	2887		Sec. 4006.057. REQUEST TO TAKE EXAMINATION
2886	2888		Sec. 4006.058. INTERPRETATION BY GENERAL COUNSEL
2887	2889		SUBCHAPTER C. PROVISIONS APPLICABLE TO CERTAIN FEES
2888	2890		Sec. 4006.101. REASONABLE AND NECESSARY REQUIREMENT
2889	2891		Sec. 4006.102. REDUCED FEES
2890	2892		Sec. 4006.103. PAYMENT OF CERTAIN COSTS
2891	2893		Sec. 4006.104. REFUND OF REGISTRATION FEE
2892	2894		SUBCHAPTER D. FEES FOR CERTAIN SALES OR OFFERS OF SECURITIES
2893	2895		Sec. 4006.151. FEE FOR SALE OF EXCESS SECURITIES
2894	2896		Sec. 4006.152. FEE FOR EXCEEDING LIMITED OFFERING
2895	2897		EXEMPTION
2896	2898		Sec. 4006.153. FEE FOR SALES OF UNREGISTERED
2897	2899		SECURITIES
2898	2900		SUBCHAPTER E. MISCELLANEOUS FEES
2899	2901		Sec. 4006.201. RENEWAL OF REGISTRATION BY NOTIFICATION
2900	2902		SUBCHAPTER F. DEPOSIT OF FEES
2901	2903		Sec. 4006.251. DEPOSIT OF FEES TO GENERAL REVENUE FUND
2902	2904		Sec. 4006.252. DAILY DEPOSIT OF CERTAIN FEES
2903	2905		CHAPTER 4006. FEES
2904	2906		SUBCHAPTER A. CERTAIN REGISTRATION AND NOTICE FILING FEES
2905	2907		Sec. 4006.001. CERTAIN REGISTRATION AND NOTICE FILING FEES.
2906	2908		The board shall establish the following fees in amounts so that the
2907	2909		aggregate amount that exceeds the amount of the fees on September 1,
2908	2910		2002, produces sufficient revenue to cover the costs of
2909	2911		administering and enforcing this title:
2910	2912		(1) for filing an original, amended, or renewal
2911	2913		application or registration statement to sell or dispose of
2912	2914		securities, an amount not to exceed $100;
2913	2915		(2) for filing an original application of a dealer or
2914	2916		investment adviser or submitting a notice filing for a federal
2915	2917		covered investment adviser, an amount not to exceed $100;
2916	2918		(3) for filing a renewal application of a dealer or
2917	2919		investment adviser or submitting a renewal notice filing for a
2918	2920		federal covered investment adviser, an amount not to exceed $100;
2919	2921		(4) for filing an original application for each agent,
2920	2922		officer, or investment adviser representative or submitting a
2921	2923		notice filing for each representative of a federal covered
2922	2924		investment adviser, an amount not to exceed $100; and
2923	2925		(5) for filing a renewal application for each agent,
2924	2926		officer, or investment adviser representative or submitting a
2925	2927		renewal notice filing for each representative of a federal covered
2926	2928		investment adviser, an amount not to exceed $100. (V.A.C.S. Art.
2927	2929		581-35, Subsec. A.)
2928	2930		SUBCHAPTER B. EXEMPTION FEES AND OTHER FEES
2929	2931		Sec. 4006.051. NOTICE FOR SECONDARY TRADING EXEMPTION. The
2930	2932		commissioner or board shall charge and collect:
2931	2933		(1) a fee of $500 for filing an initial notice required
2932	2934		by the commissioner to claim a secondary trading exemption; and
2933	2935		(2) a fee of $500 for filing a secondary trading
2934	2936		exemption renewal notice. (V.A.C.S. Art. 581-35, Subsec. B
2935	2937		(part).)
2936	2938		Sec. 4006.052. NOTICE FOR LIMITED OFFERING EXEMPTION. (a)
2937	2939		Subject to Subsection (b), for filing an initial notice required by
2938	2940		the commissioner to claim a limited offering exemption, the
2939	2941		commissioner or board shall charge and collect a fee of one-tenth of
2940	2942		one percent of the aggregate amount of securities described as
2941	2943		being offered for sale.
2942	2944		(b) A fee charged under this section may not exceed $500.
2943	2945		(V.A.C.S. Art. 581-35, Subsec. B (part).)
2944	2946		Sec. 4006.053. APPLICATION FOR APPROVAL OF STOCK EXCHANGE.
2945	2947		The commissioner or board shall charge and collect a fee of $10,000
2946	2948		for filing an application for approval of a stock exchange.
2947	2949		(V.A.C.S. Art. 581-35, Subsec. B (part).)
2948	2950		Sec. 4006.054. AMENDMENT OR DUPLICATE OF REGISTRATION
2949	2951		CERTIFICATE OR EVIDENCE OF REGISTRATION; REGISTRATION OF BRANCH
2950	2952		OFFICE. The commissioner or board shall charge and collect a fee of
2951	2953		$25 for a filing to:
2952	2954		(1) amend the registration certificate of a dealer or
2953	2955		investment adviser or the evidence of registration of an agent or
2954	2956		investment adviser representative;
2955	2957		(2) issue a duplicate certificate or evidence of
2956	2958		registration; or
2957	2959		(3) register a branch office. (V.A.C.S. Art. 581-35,
2958	2960		Subsec. B (part).)
2959	2961		Sec. 4006.055. EXAMINATION OF CERTAIN APPLICATIONS OR
2960	2962		REGISTRATION STATEMENTS. (a) For the examination of an original or
2961	2963		amended application or registration statement filed under
2962	2964		Subchapter A, B, or C, Chapter 4003, the commissioner or board shall
2963	2965		charge and collect a fee of one-tenth of one percent of the
2964	2966		aggregate amount of securities described and proposed to be sold to
2965	2967		persons located in this state based on the price at which the
2966	2968		securities will be offered to the public.
2967	2969		(b) A fee under this section applies regardless of whether
2968	2970		the application or registration statement is denied, abandoned,
2969	2971		withdrawn, or approved. (V.A.C.S. Art. 581-35, Subsec. B (part).)
2970	2972		Sec. 4006.056. CERTIFIED COPIES. (a) For a certified copy
2971	2973		of any papers filed in the office of the commissioner, the
2972	2974		commissioner shall charge and collect a fee that is reasonably
2973	2975		related to the costs of producing the certified copy.
2974	2976		(b) A fee charged under this section may not be more than a
2975	2977		fee that the secretary of state is authorized to charge for a
2976	2978		similar service. (V.A.C.S. Art. 581-35, Subsec. B (part).)
2977	2979		Sec. 4006.057. REQUEST TO TAKE EXAMINATION. The
2978	2980		commissioner or board shall charge and collect a fee of $35 for
2979	2981		filing a request to take the Texas Securities Law Examination.
2980	2982		(V.A.C.S. Art. 581-35, Subsec. B (part).)
2981	2983		Sec. 4006.058. INTERPRETATION BY GENERAL COUNSEL. (a)
2982	2984		Except as provided by Subsection (b), the commissioner or board
2983	2985		shall charge and collect a fee of $100 for an interpretation by the
2984	2986		board's general counsel of this title or a rule adopted under this
2985	2987		title.
2986	2988		(b) An officer or employee of a governmental entity and the
2987	2989		entity that the officer or employee represents are exempt from the
2988	2990		fee under this section if the officer or employee is conducting
2989	2991		official business of the entity. (V.A.C.S. Art. 581-35, Subsec. B
2990	2992		(part).)
2991	2993		SUBCHAPTER C. PROVISIONS APPLICABLE TO CERTAIN FEES
2992	2994		Sec. 4006.101. REASONABLE AND NECESSARY REQUIREMENT.
2993	2995		Subject to Subchapter A, the board shall set a fee under Subchapters
2994	2996		A and B in an amount that is reasonable and necessary to defray
2995	2997		costs. (V.A.C.S. Art. 581-35, Subsec. C.)
2996	2998		Sec. 4006.102. REDUCED FEES. (a) The board by rule may
2997	2999		adopt reduced fees under Section 4006.001 for original and renewal
2998	3000		applications of dealers, agents, officers, investment advisers, or
2999	3001		investment adviser representatives who have assumed inactive
3000	3002		status as defined by the board.
3001	3003		(b) The board by rule may adopt reduced fees under Section
3002	3004		4006.001 as appropriate to accommodate a small business required by
3003	3005		this title to register in two or more of the following capacities:
3004	3006		(1) dealer;
3005	3007		(2) agent;
3006	3008		(3) investment adviser;
3007	3009		(4) investment adviser representative; or
3008	3010		(5) officer.
3009	3011		(c) A person is not required to pay more than one fee
3010	3012		required under Section 4006.001 to engage in business in this state
3011	3013		concurrently for the same person or company as:
3012	3014		(1) a dealer and an investment adviser; or
3013	3015		(2) an agent and investment adviser representative.
3014	3016		(V.A.C.S. Art. 581-42.)
3015	3017		Sec. 4006.103. PAYMENT OF CERTAIN COSTS. A cost incurred by
3016	3018		the board in administering this title may be paid only from a fee
3017	3019		collected under Section 4006.001. (V.A.C.S. Art. 581-35,
3018	3020		Subsec. D.)
3019	3021		Sec. 4006.104. REFUND OF REGISTRATION FEE. If the
3020	3022		commissioner or board determines that all or part of a registration
3021	3023		fee should be refunded, the commissioner may make the refund by
3022	3024		warrant on the state treasury from money appropriated from the
3023	3025		general revenue fund for that purpose. (V.A.C.S. Art. 581-36
3024	3026		(part).)
3025	3027		SUBCHAPTER D. FEES FOR CERTAIN SALES OR OFFERS OF SECURITIES
3026	3028		Sec. 4006.151. FEE FOR SALE OF EXCESS SECURITIES. (a) An
3027	3029		offeror who sells securities in this state in excess of the
3028	3030		aggregate amount of securities registered for the offering may
3029	3031		apply to register the excess securities by paying:
3030	3032		(1) three times the difference between the initial fee
3031	3033		paid and the fee required under Section 4006.055 for the securities
3032	3034		sold to persons in this state;
3033	3035		(2) if the registration is no longer in effect,
3034	3036		interest on that amount computed at the rate provided by Section
3035	3037		302.002, Finance Code, from the date the registration was no longer
3036	3038		in effect until the date the subsequent application is filed; and
3037	3039		(3) the amendment fee prescribed by Section
3038	3040		4006.001(1).
3039	3041		(b) If an application to register excess securities is
3040	3042		granted under Subsection (a), the registration of the excess
3041	3043		securities is effective retroactively to the effective date of the
3042	3044		initial registration for the offering. (V.A.C.S. Art. 581-35-1,
3043	3045		Subsec. A.)
3044	3046		Sec. 4006.152. FEE FOR EXCEEDING LIMITED OFFERING
3045	3047		EXEMPTION. (a) This section applies only to an offeror who:
3046	3048		(1) has filed a notice to claim a limited offering
3047	3049		exemption;
3048	3050		(2) paid less than the maximum fee prescribed by
3049	3051		Section 4006.052; and
3050	3052		(3) offered a greater amount of securities in the
3051	3053		offering than authorized pursuant to the formula prescribed by
3052	3054		Section 4006.052.
3053	3055		(b) An offeror may:
3054	3056		(1) file an amended notice disclosing the amount of
3055	3057		securities offered; and
3056	3058		(2) pay:
3057	3059		(A) three times the difference between the fee
3058	3060		initially paid and the fee that should have been paid; and
3059	3061		(B) interest on that amount computed at the rate
3060	3062		provided by Section 302.002, Finance Code, from the date the
3061	3063		commissioner received the original notice until the date the
3062	3064		commissioner received the amended notice.
3063	3065		(c) An amended notice filed under Subsection (b) is
3064	3066		retroactive to the date of the initial filing of the notice to claim
3065	3067		the exemption. (V.A.C.S. Art. 581-35-1, Subsec. B.)
3066	3068		Sec. 4006.153. FEE FOR SALES OF UNREGISTERED SECURITIES.
3067	3069		(a) If, after notice and hearing, the commissioner or a court finds
3068	3070		that an offeror has sold securities in this state pursuant to an
3069	3071		offering no part of which has been registered under Chapter 4003 and
3070	3072		for which the transactions or securities are not exempt under
3071	3073		Chapter 4005, the commissioner or court may impose a fee equal to:
3072	3074		(1) six times the amount that would have been paid if
3073	3075		the issuer had filed an application or registration statement to
3074	3076		register the securities and paid the fee required under Section
3075	3077		4006.055 based on the aggregate amount of sales made in this state
3076	3078		in the preceding three years; and
3077	3079		(2) interest on that amount at the rate provided by
3078	3080		Section 302.002, Finance Code, from the date of the first such sale
3079	3081		made in this state until the date the fee is paid.
3080	3082		(b) Payment of the fee prescribed by this section does not
3081	3083		effect registration of the securities or affect the application of
3082	3084		any other provision of this title.
3083	3085		(c) Payment of the fee prescribed by this section is not an
3084	3086		admission that the transactions or securities were not exempt and
3085	3087		is not admissible as evidence in a suit or proceeding for failure to
3086	3088		register the securities. (V.A.C.S. Art. 581-35-2.)
3087	3089		SUBCHAPTER E. MISCELLANEOUS FEES
3088	3090		Sec. 4006.201. RENEWAL OF REGISTRATION BY NOTIFICATION. A
3089	3091		registration of securities by notification may be renewed as
3090	3092		provided by Section 4003.058, which includes the payment of the
3091	3093		renewal fee in the amount prescribed by that section. (New.)
3092	3094		SUBCHAPTER F. DEPOSIT OF FEES
3093	3095		Sec. 4006.251. DEPOSIT OF FEES TO GENERAL REVENUE FUND. The
3094	3096		commissioner or board shall deposit money received from fees under
3095	3097		this title to the credit of the general revenue fund. (V.A.C.S.
3096	3098		Art. 581-36 (part).)
3097	3099		Sec. 4006.252. DAILY DEPOSIT OF CERTAIN FEES. The
3098	3100		commissioner or board shall deposit daily all fees received under
3099	3101		Subchapter B to the credit of the general revenue fund. (V.A.C.S.
3100	3102		Art. 581-35, Subsec. B (part).)
3101	3103		CHAPTER 4007. ENFORCEMENT
3102	3104		SUBCHAPTER A. AUTHORITY TO ENFORCE TITLE
3103	3105		Sec. 4007.001. ENFORCEMENT BY COMMISSIONER, ATTORNEY
3104	3106		GENERAL, AND DISTRICT OR COUNTY
3105	3107		ATTORNEY
3106	3108		Sec. 4007.002. MEANS OF ENFORCEMENT NOT EXCLUSIVE
3107	3109		SUBCHAPTER B. INSPECTIONS AND INVESTIGATIONS
3108	3110		Sec. 4007.051. COMPLAINTS FILED WITH COMMISSIONER OR
3109	3111		BOARD
3110	3112		Sec. 4007.052. INSPECTIONS
3111	3113		Sec. 4007.053. INVESTIGATIVE AUTHORITY
3112	3114		Sec. 4007.054. SERVICE OF SUBPOENA, SUMMONS, OR OTHER
3113	3115		PROCESS
3114	3116		Sec. 4007.055. ENFORCEMENT OF SUBPOENA; CONTEMPT
3115	3117		Sec. 4007.056. CONFIDENTIALITY OF INVESTIGATIVE
3116	3118		INFORMATION
3117	3119		Sec. 4007.057. COMPENSATION OF WITNESSES
3118	3120		Sec. 4007.058. IMPOSITION OF COSTS ON PARTIES
3119	3121		Sec. 4007.059. ASSISTANCE TO SECURITIES REGULATORS IN
3120	3122		OTHER JURISDICTIONS
3121	3123		SUBCHAPTER C. ADMINISTRATIVE ACTIONS
3122	3124		Sec. 4007.101. CEASE AND DESIST ORDER: OFFER OR SALE
3123	3125		OF SECURITIES
3124	3126		Sec. 4007.102. CEASE AND DESIST ORDER: INVESTMENT
3125	3127		ADVISER OR INVESTMENT ADVISER
3126	3128		REPRESENTATIVE
3127	3129		Sec. 4007.103. CEASE PUBLICATION ORDER
3128	3130		Sec. 4007.104. EMERGENCY CEASE AND DESIST ORDER
3129	3131		Sec. 4007.105. DENIAL, SUSPENSION, OR REVOCATION OF
3130	3132		REGISTRATION
3131	3133		Sec. 4007.106. ASSESSMENT OF ADMINISTRATIVE FINE
3132	3134		Sec. 4007.107. HEARINGS ON CERTAIN MATTERS
3133	3135		SUBCHAPTER D. CIVIL PROCEEDINGS
3134	3136		Sec. 4007.151. RECEIVERSHIP
3135	3137		Sec. 4007.152. INJUNCTIVE RELIEF
3136	3138		Sec. 4007.153. EQUITABLE RELIEF AND RESTITUTION
3137	3139		Sec. 4007.154. CIVIL PENALTY
3138	3140		Sec. 4007.155. RECOVERY OF COSTS
3139	3141		SUBCHAPTER E. CRIMINAL PROVISIONS
3140	3142		Sec. 4007.201. UNAUTHORIZED SALE OF SECURITIES;
3141	3143		OFFENSE
3142	3144		Sec. 4007.202. UNAUTHORIZED RENDERING OF SERVICES AS
3143	3145		INVESTMENT ADVISER OR INVESTMENT
3144	3146		ADVISER REPRESENTATIVE; OFFENSE
3145	3147		Sec. 4007.203. FRAUDULENT CONDUCT; OFFENSE
3146	3148		Sec. 4007.204. MATERIALLY FALSE STATEMENT IN DOCUMENT
3147	3149		OR PROCEEDING; OFFENSE
3148	3150		Sec. 4007.205. FALSE STATEMENT OR REPRESENTATION
3149	3151		CONCERNING REGISTRATION; OFFENSE
3150	3152		Sec. 4007.206. VIOLATION OF CEASE AND DESIST ORDER;
3151	3153		OFFENSE
3152	3154		Sec. 4007.207. NONCOMPLIANT OFFER OR OFFER PROHIBITED
3153	3155		BY CEASE PUBLICATION ORDER; OFFENSE
3154	3156		Sec. 4007.208. AGGREGATION OF AMOUNTS
3155	3157		Sec. 4007.209. LIABILITY OF CORPORATION
3156	3158		CHAPTER 4007. ENFORCEMENT
3157	3159		SUBCHAPTER A. AUTHORITY TO ENFORCE TITLE
3158	3160		Sec. 4007.001. ENFORCEMENT BY COMMISSIONER, ATTORNEY
3159	3161		GENERAL, AND DISTRICT OR COUNTY ATTORNEY. (a) The administration
3160	3162		of the provisions of this title is vested in the commissioner.
3161	3163		(b) The commissioner and the attorney general shall:
3162	3164		(1) ensure that the provisions of this title are
3163	3165		obeyed; and
3164	3166		(2) conduct investigations and take measures to
3165	3167		prevent or detect a violation of this title.
3166	3168		(c) The commissioner shall at once submit any evidence of a
3167	3169		criminal violation of this title to the district or county attorney
3168	3170		of the appropriate county after the evidence comes to the
3169	3171		commissioner's knowledge.
3170	3172		(d) If the district or county attorney neglects or refuses
3171	3173		to prosecute the alleged criminal violation, the commissioner shall
3172	3174		submit the evidence of the alleged violation to the attorney
3173	3175		general. The attorney general may proceed with the criminal
3174	3176		prosecution of the alleged violation and has all the rights,
3175	3177		privileges, and powers conferred by law on a district or county
3176	3178		attorney, including the authority to appear before a grand jury and
3177	3179		to interrogate witnesses before a grand jury. (V.A.C.S. Art.
3178	3180		581-3.)
3179	3181		Sec. 4007.002. MEANS OF ENFORCEMENT NOT EXCLUSIVE. The
3180	3182		commissioner may use any or all penalties, sanctions, remedies, or
3181	3183		relief that the commissioner considers necessary. (V.A.C.S. Art.
3182	3184		581-3-1.)
3183	3185		SUBCHAPTER B. INSPECTIONS AND INVESTIGATIONS
3184	3186		Sec. 4007.051. COMPLAINTS FILED WITH COMMISSIONER OR BOARD.
3185	3187		(a) The commissioner or the commissioner's designee shall maintain
3186	3188		a file on each written complaint filed with the commissioner or
3187	3189		board concerning a person registered under this title. The file
3188	3190		must include:
3189	3191		(1) the name of the person who filed the complaint;
3190	3192		(2) the date the complaint was received by the
3191	3193		commissioner or board;
3192	3194		(3) the subject matter of the complaint;
3193	3195		(4) the name of each person contacted in relation to
3194	3196		the complaint;
3195	3197		(5) a summary of the results of the review or
3196	3198		investigation of the complaint; and
3197	3199		(6) an explanation of the reason the file was closed,
3198	3200		if the commissioner closed the file without taking action other
3199	3201		than the investigation of the complaint.
3200	3202		(b) The commissioner or the commissioner's designee shall
3201	3203		provide to the person filing the complaint and to each person who is
3202	3204		a subject of the complaint a copy of the board's policies and
3203	3205		procedures relating to complaint investigation and resolution.
3204	3206		(c) The commissioner or the commissioner's designee, at
3205	3207		least quarterly until final disposition of the complaint, shall
3206	3208		notify the person filing the complaint and each person who is a
3207	3209		subject of the complaint of the status of the investigation, unless
3208	3210		the notice would jeopardize an undercover investigation. (V.A.C.S.
3209	3211		Art. 581-2-6, Subsecs. A (part), B, C.)
3210	3212		Sec. 4007.052. INSPECTIONS. (a) The commissioner without
3211	3213		notice may inspect a registered dealer or registered investment
3212	3214		adviser as necessary to ensure compliance with this title and board
3213	3215		rules.
3214	3216		(b) The commissioner, during regular business hours, may
3215	3217		enter the business premises of a registered dealer or registered
3216	3218		investment adviser and examine and copy books and records pertinent
3217	3219		to the inspection.
3218	3220		(c) During the inspection, the registered dealer or
3219	3221		registered investment adviser shall:
3220	3222		(1) provide to the commissioner or the commissioner's
3221	3223		authorized representative immediate and complete access to the
3222	3224		registered dealer's or registered investment adviser's office,
3223	3225		place of business, files, safe, and any other location at which
3224	3226		books and records pertinent to the inspection are located; and
3225	3227		(2) allow the commissioner or the commissioner's
3226	3228		authorized representative to make photostatic or electronic copies
3227	3229		of books or records subject to inspection.
3228	3230		(d) A registered dealer or registered investment adviser
3229	3231		may not charge a fee for copying information under this section.
3230	3232		(e) Information obtained under this section and any
3231	3233		intra-agency or interagency notes, memoranda, reports, or other
3232	3234		communications consisting of advice, analyses, opinions, or
3233	3235		recommendations that are made in connection with the inspection are
3234	3236		confidential. The commissioner may not disclose to the public or
3235	3237		release documents or other information made confidential by this
3236	3238		subsection except to the same extent provided for the release or
3237	3239		disclosure of confidential documents or other information made or
3238	3240		obtained in connection with an investigation under Section
3239	3241		4007.053. (V.A.C.S. Art. 581-13-1.)
3240	3242		Sec. 4007.053. INVESTIGATIVE AUTHORITY. (a) The
3241	3243		commissioner shall conduct investigations as the commissioner
3242	3244		considers necessary to prevent or detect a violation of this title
3243	3245		or a board rule or order.
3244	3246		(b) For the purpose of conducting an investigation under
3245	3247		this section, the commissioner may:
3246	3248		(1) administer oaths;
3247	3249		(2) sign subpoenas;
3248	3250		(3) issue subpoenas or summons to compel the
3249	3251		attendance and testimony of witnesses and the production of all
3250	3252		records, electronic or otherwise, relating to any matter that the
3251	3253		commissioner has the authority under this title to consider or
3252	3254		investigate;
3253	3255		(4) examine witnesses; and
3254	3256		(5) receive evidence.
3255	3257		(c) During an investigation, the commissioner may cause the
3256	3258		deposition of witnesses residing inside or outside this state to be
3257	3259		taken in the manner prescribed by the laws of this state for taking
3258	3260		a deposition in a civil action. (V.A.C.S. Art. 581-28, Subsec. A
3259	3261		(part).)
3260	3262		Sec. 4007.054. SERVICE OF SUBPOENA, SUMMONS, OR OTHER
3261	3263		PROCESS. (a) The commissioner may serve a subpoena, summons, or
3262	3264		other process issued by the commissioner or have the subpoena,
3263	3265		summons, or other process served by an authorized agent of the
3264	3266		commissioner, a sheriff, or a constable.
3265	3267		(b) The sheriff's or constable's fee for serving the
3266	3268		subpoena is the same as the fee paid the sheriff or constable for
3267	3269		similar services. (V.A.C.S. Art. 581-28, Subsec. A (part).)
3268	3270		Sec. 4007.055. ENFORCEMENT OF SUBPOENA; CONTEMPT. (a) If a
3269	3271		person disobeys a subpoena or if a witness appearing before the
3270	3272		commissioner refuses to give evidence, the commissioner may
3271	3273		petition the district court of a jurisdiction in which the person or
3272	3274		witness may be found, and the court on this petition may issue an
3273	3275		order requiring the person or witness to, as applicable, obey the
3274	3276		subpoena, testify, or produce a book, an account, a record, a paper,
3275	3277		and correspondence relating to the matter in question.
3276	3278		(b) The district court may punish as contempt the failure to
3277	3279		obey an order under Subsection (a). (V.A.C.S. Art. 581-28, Subsec.
3278	3280		A (part).)
3279	3281		Sec. 4007.056. CONFIDENTIALITY OF INVESTIGATIVE
3280	3282		INFORMATION. (a) All information received in connection with an
3281	3283		investigation under Section 4007.053 and all internal notes,
3282	3284		memoranda, reports, or communications made in connection with an
3283	3285		investigation under that section are confidential.
3284	3286		(b) The commissioner may not disclose a document or other
3285	3287		information made confidential by Subsection (a) unless the
3286	3288		disclosure is made:
3287	3289		(1) to the public under court order for good cause
3288	3290		shown; or
3289	3291		(2) at the commissioner's discretion, as part of an
3290	3292		administrative proceeding or a civil or criminal action to enforce
3291	3293		this title.
3292	3294		(c) The commissioner, at the commissioner's discretion, may
3293	3295		disclose confidential information in the commissioner's possession
3294	3296		to:
3295	3297		(1) a governmental or regulatory authority or any
3296	3298		association of governmental or regulatory authorities approved by
3297	3299		board rule; or
3298	3300		(2) any receiver appointed under Section 4007.151.
3299	3301		(d) Disclosure of information under Subsection (c) does not
3300	3302		violate any other provision of this title or Chapter 552.
3301	3303		(e) This section may not be interpreted to prohibit or limit
3302	3304		the publication of rulings or decisions of the commissioner.
3303	3305		(V.A.C.S. Art. 581-28, Subsec. A (part).)
3304	3306		Sec. 4007.057. COMPENSATION OF WITNESSES. (a) A witness
3305	3307		required to attend a hearing before the commissioner shall receive
3306	3308		for each day's attendance a fee in an amount set by board rule.
3307	3309		(b) A disbursement made in payment of a fee under this
3308	3310		section shall be:
3309	3311		(1) made in accordance with board rule; and
3310	3312		(2) included in, and paid in the same manner that is
3311	3313		provided for, the payment of other expenses incurred in the
3312	3314		administration and enforcement of this title. (V.A.C.S. Art.
3313	3315		581-28, Subsec. A (part).)
3314	3316		Sec. 4007.058. IMPOSITION OF COSTS ON PARTIES. The
3315	3317		commissioner may impose on a party of record fees, expenses, or
3316	3318		costs incurred in connection with a hearing or may divide the fee,
3317	3319		expense, or cost among any or all parties of record as determined by
3318	3320		the commissioner. (V.A.C.S. Art. 581-28, Subsec. A (part).)
3319	3321		Sec. 4007.059. ASSISTANCE TO SECURITIES REGULATORS IN OTHER
3320	3322		JURISDICTIONS. (a) On request from a securities regulator of
3321	3323		another state or of a foreign jurisdiction, the commissioner may
3322	3324		provide assistance to the regulator in conducting an investigation
3323	3325		to determine whether a person has violated, is violating, or is
3324	3326		about to violate a law or rule of the other state or foreign
3325	3327		jurisdiction relating to a securities matter that the regulator is
3326	3328		authorized to administer or enforce.
3327	3329		(b) The commissioner may provide assistance under this
3328	3330		section through the use of the authority to investigate and any
3329	3331		other power conferred by this section or Section 4007.054,
3330	3332		4007.055, 4007.056, or 4007.057, as the commissioner determines to
3331	3333		be necessary and appropriate.
3332	3334		(c) In determining whether to provide assistance under this
3333	3335		section, the commissioner may consider whether:
3334	3336		(1) the securities regulator is permitted and has
3335	3337		agreed to provide assistance within the regulator's jurisdiction to
3336	3338		the commissioner reciprocally and at the commissioner's request
3337	3339		concerning securities matters;
3338	3340		(2) compliance with the request for assistance would
3339	3341		violate or otherwise prejudice the public policy of this state;
3340	3342		(3) the conduct described in the request would also
3341	3343		constitute a violation of this title or another law of this state
3342	3344		had the conduct occurred in this state; and
3343	3345		(4) board employees and board or commissioner
3344	3346		resources necessary to carry out the request for assistance are
3345	3347		available. (V.A.C.S. Art. 581-28, Subsec. C.)
3346	3348		SUBCHAPTER C. ADMINISTRATIVE ACTIONS
3347	3349		Sec. 4007.101. CEASE AND DESIST ORDER: OFFER OR SALE OF
3348	3350		SECURITIES. (a) The commissioner may hold a hearing as provided by
3349	3351		this section if at any time it appears to the commissioner that the
3350	3352		sale, proposed sale, or method of sale of securities, regardless of
3351	3353		whether exempt:
3352	3354		(1) is a fraudulent practice;
3353	3355		(2) does not comply with this title;
3354	3356		(3) would tend to work a fraud on any purchaser of the
3355	3357		securities; or
3356	3358		(4) would not be fair, just, or equitable to any
3357	3359		purchaser of the securities.
3358	3360		(b) The commissioner may hold a hearing under this section
3359	3361		on a date set by the commissioner that is not later than the 30th day
3360	3362		after the date the issuer or registrant of the securities, the
3361	3363		person on whose behalf the securities are being or will be offered,
3362	3364		or any person that is acting as a dealer or agent in violation of
3363	3365		this title, as applicable:
3364	3366		(1) receives actual notice; or
3365	3367		(2) is provided notice by registered or certified mail
3366	3368		to the person's last known address.
3367	3369		(c) If the commissioner determines at the hearing that the
3368	3370		sale, proposed sale, or method of sale of the securities is a
3369	3371		fraudulent practice, does not comply with this title, would tend to
3370	3372		work a fraud on any purchaser of the securities, or would not be
3371	3373		fair, just, or equitable to any purchaser of the securities, the
3372	3374		commissioner may issue a written cease and desist order:
3373	3375		(1) prohibiting or suspending the sale of the
3374	3376		securities;
3375	3377		(2) denying or revoking the registration of the
3376	3378		securities;
3377	3379		(3) prohibiting an unregistered person from acting as
3378	3380		a dealer or agent; or
3379	3381		(4) prohibiting the fraudulent conduct.
3380	3382		(d) After the issuance of a cease and desist order under
3381	3383		Subsection (c), a dealer or agent may not knowingly sell or offer
3382	3384		for sale any security named in the order. (V.A.C.S. Art. 581-23,
3383	3385		Subsec. A.)
3384	3386		Sec. 4007.102. CEASE AND DESIST ORDER: INVESTMENT ADVISER
3385	3387		OR INVESTMENT ADVISER REPRESENTATIVE. (a) Notwithstanding any
3386	3388		provision of this title to the contrary, the commissioner may hold a
3387	3389		hearing as provided by this section if at any time it appears to the
3388	3390		commissioner that:
3389	3391		(1) an investment adviser or investment adviser
3390	3392		representative is engaging or is likely to engage in fraud or a
3391	3393		fraudulent practice with respect to rendering services as an
3392	3394		investment adviser or investment adviser representative; or
3393	3395		(2) a person is acting as an investment adviser or
3394	3396		investment adviser representative in violation of this title.
3395	3397		(b) A hearing under this section must be held not later than
3396	3398		the 30th day after the date the person described by Subsection (a):
3397	3399		(1) receives actual notice; or
3398	3400		(2) is provided notice by registered or certified
3399	3401		mail, return receipt requested, to the person's last known address.
3400	3402		(c) After the hearing, the commissioner shall issue or
3401	3403		decline to issue a cease and desist order. An order issued under
3402	3404		this subsection must:
3403	3405		(1) require the investment adviser or investment
3404	3406		adviser representative to immediately cease and desist from the
3405	3407		fraudulent conduct; or
3406	3408		(2) prohibit an unregistered or other unauthorized
3407	3409		person who is not exempt from the registration or notice filing
3408	3410		requirements of this title from acting as an investment adviser or
3409	3411		investment adviser representative in violation of this title.
3410	3412		(V.A.C.S. Art. 581-23, Subsec. B.)
3411	3413		Sec. 4007.103. CEASE PUBLICATION ORDER. (a)
3412	3414		Notwithstanding any provision of this title to the contrary, the
3413	3415		commissioner may issue a cease publication order if at any time it
3414	3416		appears to the commissioner that an offer contains any statement
3415	3417		that is materially false or misleading or is otherwise likely to
3416	3418		deceive the public.
3417	3419		(b) A person may not make an offer that is prohibited by an
3418	3420		order issued under Subsection (a). (V.A.C.S. Art. 581-23, Subsec.
3419	3421		C.)
3420	3422		Sec. 4007.104. EMERGENCY CEASE AND DESIST ORDER. (a) On the
3421	3423		commissioner's determination that the conduct, act, or practice
3422	3424		threatens immediate and irreparable public harm, the commissioner
3423	3425		may issue an emergency cease and desist order to a person who the
3424	3426		commissioner reasonably believes:
3425	3427		(1) is engaging in or is about to engage in fraud or a
3426	3428		fraudulent practice in connection with:
3427	3429		(A) the offer for sale or sale of a security; or
3428	3430		(B) the rendering of services as an investment
3429	3431		adviser or investment adviser representative;
3430	3432		(2) has made an offer containing a statement that is
3431	3433		materially misleading or is otherwise likely to deceive the public;
3432	3434		or
3433	3435		(3) is engaging or is about to engage in an act or
3434	3436		practice that violates this title or a board rule.
3435	3437		(b) The emergency order must:
3436	3438		(1) be sent on issuance to each person affected by the
3437	3439		order by personal delivery or registered or certified mail, return
3438	3440		receipt requested, to the person's last known address;
3439	3441		(2) state the specific charges and require the person
3440	3442		to immediately cease and desist from the unauthorized activity; and
3441	3443		(3) contain a notice that a request for a hearing may
3442	3444		be filed under this section.
3443	3445		(c) Unless a person against whom the emergency order is
3444	3446		directed requests a hearing in writing before the 31st day after the
3445	3447		date the order is served on the person, the emergency order is final
3446	3448		and nonappealable as to that person. A request for a hearing must:
3447	3449		(1) be in writing and directed to the commissioner;
3448	3450		and
3449	3451		(2) state the grounds for the request to set aside or
3450	3452		modify the order.
3451	3453		(d) On receiving a request for a hearing, the commissioner
3452	3454		shall serve notice of the time and place of the hearing by personal
3453	3455		delivery or registered or certified mail, return receipt requested.
3454	3456		The hearing must be held not later than the 10th day after the date
3455	3457		the commissioner receives the request for a hearing unless the
3456	3458		parties agree to a later hearing date. At the hearing, the
3457	3459		commissioner has the burden of proof and must present evidence in
3458	3460		support of the emergency order.
3459	3461		(e) After the hearing, the commissioner shall affirm,
3460	3462		modify, or set aside, wholly or partly, the emergency order. An
3461	3463		order affirming or modifying the emergency order is immediately
3462	3464		final for purposes of enforcement and appeal.
3463	3465		(f) An emergency order continues in effect unless the order
3464	3466		is stayed by the commissioner. The commissioner may impose any
3465	3467		condition before granting a stay of the order. (V.A.C.S. Art.
3466	3468		581-23-2.)
3467	3469		Sec. 4007.105. DENIAL, SUSPENSION, OR REVOCATION OF
3468	3470		REGISTRATION. (a) The commissioner may deny an application for
3469	3471		registration under this title, suspend or revoke a registration
3470	3472		issued under this title, place on probation a dealer, agent,
3471	3473		investment adviser, or investment adviser representative whose
3472	3474		registration has been suspended under this title, or reprimand a
3473	3475		person registered under this title if the person:
3474	3476		(1) has been convicted of a felony;
3475	3477		(2) has been convicted of a misdemeanor that directly
3476	3478		relates to the person's securities-related duties and
3477	3479		responsibilities;
3478	3480		(3) has engaged in:
3479	3481		(A) an inequitable practice in the sale of
3480	3482		securities or in rendering services as an investment adviser; or
3481	3483		(B) a fraudulent business practice;
3482	3484		(4) is an insolvent dealer or investment adviser;
3483	3485		(5) is a dealer and is selling or sold securities in
3484	3486		this state through an agent other than a registered agent;
3485	3487		(6) is an investment adviser and is engaging or
3486	3488		engaged in rendering services as an investment adviser in this
3487	3489		state through a representative who is not registered to perform
3488	3490		services for that investment adviser;
3489	3491		(7) is an agent and is selling or sold securities in
3490	3492		this state for a dealer, issuer, or controlling person with
3491	3493		knowledge that the dealer, issuer, or controlling person has not
3492	3494		complied with this title;
3493	3495		(8) is an investment adviser representative and is
3494	3496		rendering or rendered services as an investment adviser for an
3495	3497		investment adviser in this state whom the representative is not or
3496	3498		was not registered to represent;
3497	3499		(9) has:
3498	3500		(A) made a material misrepresentation to the
3499	3501		commissioner or board in connection with information considered
3500	3502		necessary by the commissioner or board to determine:
3501	3503		(i) a dealer's or investment adviser's
3502	3504		financial responsibility; or
3503	3505		(ii) a dealer's, agent's, investment
3504	3506		adviser's, or investment adviser representative's business repute
3505	3507		or qualifications; or
3506	3508		(B) refused to provide information described by
3507	3509		Paragraph (A) that the commissioner or board has requested;
3508	3510		(10) is registered as a dealer, agent, investment
3509	3511		adviser, or investment adviser representative and has not complied
3510	3512		with an applicable requirement under Section 4004.151(a);
3511	3513		(11) is the subject of any of the following orders
3512	3514		issued within the preceding five years that remain effective:
3513	3515		(A) an order by the securities agency or
3514	3516		administrator of any state, the financial regulatory authority of a
3515	3517		foreign country, or the Securities and Exchange Commission, entered
3516	3518		after notice and opportunity for hearing, denying, suspending, or
3517	3519		revoking the person's license as a dealer, agent, investment
3518	3520		adviser, or investment adviser representative or the substantial
3519	3521		equivalent of those terms;
3520	3522		(B) an order suspending or expelling from
3521	3523		membership in or association with a member of a self-regulatory
3522	3524		organization;
3523	3525		(C) a United States Postal Service fraud order;
3524	3526		(D) an order by the securities agency or
3525	3527		administrator of any state, the financial regulatory authority of a
3526	3528		foreign country, the Securities and Exchange Commission, or the
3527	3529		Commodity Futures Trading Commission, finding, after notice and
3528	3530		opportunity for hearing, that the person engaged in acts involving
3529	3531		fraud, deceit, false statements or omissions, or wrongful taking of
3530	3532		property; or
3531	3533		(E) an order by the Commodity Futures Trading
3532	3534		Commission denying, suspending, or revoking registration under the
3533	3535		Commodity Exchange Act (7 U.S.C. Section 1 et seq.);
3534	3536		(12) is subject to any order, judgment, or decree
3535	3537		entered by a court that permanently restrains or enjoins the person
3536	3538		from engaging in or continuing any conduct, action, or practice in
3537	3539		connection with any aspect of the purchase or sale of securities or
3538	3540		the rendering of investment advice; or
3539	3541		(13) has violated:
3540	3542		(A) any provision of this title;
3541	3543		(B) a board rule;
3542	3544		(C) any order issued by the commissioner; or
3543	3545		(D) any undertaking or agreement with the
3544	3546		commissioner.
3545	3547		(b) If the commissioner proposes the suspension or
3546	3548		revocation of a person's registration, the person is entitled to a
3547	3549		hearing before the commissioner or a hearings officer as required
3548	3550		by law.
3549	3551		(c) All registration certificates that have been revoked
3550	3552		shall be immediately surrendered to the commissioner on request.
3551	3553		(d) This section does not affect the confidentiality of
3552	3554		investigative records maintained by the commissioner or board.
3553	3555		(V.A.C.S. Arts. 581-14, 581-25 (part).)
3554	3556		Sec. 4007.106. ASSESSMENT OF ADMINISTRATIVE FINE. (a) In
3555	3557		addition to any other remedies, the commissioner, after giving
3556	3558		notice and opportunity for a hearing, may issue an order that
3557	3559		assesses an administrative fine against a person or company found
3558	3560		to have:
3559	3561		(1) engaged in fraud or a fraudulent practice in
3560	3562		connection with:
3561	3563		(A) the offer for sale or sale of a security; or
3562	3564		(B) the rendering of services as an investment
3563	3565		adviser or investment adviser representative;
3564	3566		(2) made an offer containing a statement that is
3565	3567		materially misleading or is otherwise likely to deceive the public;
3566	3568		(3) engaged in an act or practice that violates this
3567	3569		title or a board rule or order; or
3568	3570		(4) with intent to deceive or defraud or with reckless
3569	3571		disregard for the truth or the law, materially aided any person in
3570	3572		engaging in an act or practice described by Subdivision (1), (2), or
3571	3573		(3).
3572	3574		(b) An administrative fine assessed under this section when
3573	3575		added to the amount of any civil penalty previously awarded under
3574	3576		Section 4007.154 must be in an amount that does not exceed:
3575	3577		(1) the greater of:
3576	3578		(A) $20,000 per violation; or
3577	3579		(B) the gross amount of any economic benefit
3578	3580		gained by the person or company as a result of the act or practice
3579	3581		for which the fine was assessed; and
3580	3582		(2) if the act or practice was committed against a
3581	3583		person 65 years of age or older, an additional amount of not more
3582	3584		than $250,000.
3583	3585		(c) For purposes of determining the amount of an
3584	3586		administrative fine assessed under this section, the commissioner
3585	3587		shall consider factors set out in guidelines established by the
3586	3588		board.
3587	3589		(d) For purposes of private civil litigation, the payment of
3588	3590		a fine assessed in an agreed order under this title does not
3589	3591		constitute an admission of any misconduct described in the order.
3590	3592		(e) A proceeding for the assessment of an administrative
3591	3593		fine must be commenced within five years after the violation
3592	3594		occurs. (V.A.C.S. Art. 581-23-1.)
3593	3595		Sec. 4007.107. HEARINGS ON CERTAIN MATTERS. (a) A person
3594	3596		or company may request a hearing to dispute the commissioner's:
3595	3597		(1) failure or refusal to:
3596	3598		(A) register and issue a certificate of
3597	3599		registration for a dealer or investment adviser under Section
3598	3600		4004.054; or
3599	3601		(B) register and issue evidence of registration
3600	3602		for an agent or investment adviser representative under Section
3601	3603		4004.104;
3602	3604		(2) issuance of an order under Section 4007.101,
3603	3605		4007.102, 4007.103, or 4007.104; or
3604	3606		(3) taking of an action in any other particular matter
3605	3607		for which no other procedure is specified by this title.
3606	3608		(b) A hearing under Subsection (a) must be held before the
3607	3609		commissioner or a hearings officer as required by law.
3608	3610		(c) On complaint by a person aggrieved by the denial of a
3609	3611		permit qualifying securities for sale under Subchapter A, Chapter
3610	3612		4003, or by the failure or refusal to register securities under
3611	3613		Subchapter B or C, Chapter 4003, the board or a hearings officer, as
3612	3614		required by law, shall conduct a hearing.
3613	3615		(d) A hearing under this section is subject to Chapter 2001.
3614	3616		(V.A.C.S. Art. 581-24.)
3615	3617		SUBCHAPTER D. CIVIL PROCEEDINGS
3616	3618		Sec. 4007.151. RECEIVERSHIP. (a) This section applies
3617	3619		only to a person or company acting as a dealer, agent, investment
3618	3620		adviser, investment adviser representative, or issuer or as an
3619	3621		affiliate of a dealer, agent, investment adviser, investment
3620	3622		adviser representative, or issuer, regardless of whether the person
3621	3623		or company is required to be registered as provided in this title.
3622	3624		(b) The commissioner may request the attorney general to
3623	3625		bring an action as provided by this section for the appointment of a
3624	3626		receiver for a person or company to which this section applies or
3625	3627		the assets of the person or company if it appears to the
3626	3628		commissioner, on complaint or otherwise, that:
3627	3629		(1) the person or company has:
3628	3630		(A) engaged in an act, transaction, practice, or
3629	3631		course of business declared as a fraudulent practice under Section
3630	3632		4007.152 or 4007.153; and
3631	3633		(B) acted as a dealer, agent, investment adviser,
3632	3634		investment adviser representative, or issuer or as an affiliate of
3633	3635		a dealer, agent, investment adviser, investment adviser
3634	3636		representative, or issuer in connection with the fraudulent
3635	3637		practice; and
3636	3638		(2) the appointment of a receiver for the person or
3637	3639		company or the assets of the person or company is necessary to
3638	3640		conserve and protect the assets for the benefit of customers,
3639	3641		security holders, and other claimants and potential claimants of
3640	3642		the person or company.
3641	3643		(c) On the commissioner's request under Subsection (b), the
3642	3644		attorney general may bring an action against a person or company in
3643	3645		the name and on behalf of the state if it appears to the attorney
3644	3646		general that the facts described by that subsection exist with
3645	3647		respect to the person or company. The facts contained in the
3646	3648		petition for the appointment of a receiver must be verified by the
3647	3649		commissioner on information and belief.
3648	3650		(d) An action under this section may be brought in a
3649	3651		district court of any county in which the fraudulent practice that
3650	3652		is the subject of the petition was wholly or partly committed or in
3651	3653		a county in which any defendant for whom the appointment of a
3652	3654		receiver is sought has the defendant's principal place of business.
3653	3655		A district court described by this subsection has jurisdiction and
3654	3656		venue of the action. This subsection is superior to any other
3655	3657		provision of law establishing jurisdiction or venue with regard to
3656	3658		an action for receivership.
3657	3659		(e) The attorney general may apply for and, on proper
3658	3660		showing, is entitled to have a subpoena issued by the court that
3659	3661		requires:
3660	3662		(1) the appearance, without delay, of a defendant or
3661	3663		any employee, investment adviser representative, or agent of the
3662	3664		defendant to testify and give evidence concerning a matter relevant
3663	3665		to the appointment of a receiver; and
3664	3666		(2) the production of documents, books, and records
3665	3667		that may be necessary for a hearing on the action.
3666	3668		(f) The court may appoint a receiver for the person or
3667	3669		company or the person's or company's assets on the attorney
3668	3670		general's proper showing of the existence of the facts described by
3669	3671		Subsection (b) with respect to the person or company.
3670	3672		(g) If the court appoints a receiver without providing the
3671	3673		person or company with notice and an opportunity for hearing, the
3672	3674		person or company may file with the court a written application for
3673	3675		an order dissolving the receivership. If the application is filed
3674	3676		not later than the 30th day after the date the person or company is
3675	3677		served with the order appointing the receiver, the person or
3676	3678		company is entitled to a hearing on the application not later than
3677	3679		the 10th day after the date written notice is provided to the
3678	3680		attorney general.
3679	3681		(h) A person may not be appointed as a receiver under this
3680	3682		section unless the court finds that the person is qualified to
3681	3683		discharge the duties of receiver after:
3682	3684		(1) hearing the views of:
3683	3685		(A) the attorney general;
3684	3686		(B) the commissioner; and
3685	3687		(C) the defendant against whom the appointment of
3686	3688		a receiver is sought, if the court considers it practicable; and
3687	3689		(2) considering the probable nature and magnitude of
3688	3690		the receiver's duties in the particular case.
3689	3691		(i) The commissioner or attorney general may not be required
3690	3692		to give a bond for receivership in an action brought under this
3691	3693		section. The court shall require a person appointed as a receiver
3692	3694		to give a bond that is:
3693	3695		(1) in an amount found by the court to be sufficient
3694	3696		after considering the probable nature and magnitude of the
3695	3697		receiver's duties in the particular case; and
3696	3698		(2) conditioned on the faithful discharge of the
3697	3699		receiver's duties.
3698	3700		(j) The remedy provided by this section is in addition to
3699	3701		any other remedy made available to the commissioner or the attorney
3700	3702		general by statutory laws or case law of this state, including any
3701	3703		provision authorizing receiverships. (V.A.C.S. Art. 581-25-1.)
3702	3704		Sec. 4007.152. INJUNCTIVE RELIEF. (a) The commissioner
3703	3705		may request the attorney general to bring an action as provided by
3704	3706		this section against a person or company if it appears to the
3705	3707		commissioner, on complaint or otherwise, that the person or
3706	3708		company:
3707	3709		(1) has engaged, is engaging, or is about to engage in
3708	3710		fraud or a fraudulent practice in connection with the sale of a
3709	3711		security;
3710	3712		(2) has engaged, is engaging, or is about to engage in
3711	3713		fraud or a fraudulent practice in rendering services as an
3712	3714		investment adviser or investment adviser representative;
3713	3715		(3) has made an offer containing a statement that is
3714	3716		materially misleading or is otherwise likely to deceive the public;
3715	3717		or
3716	3718		(4) has engaged, is engaging, or is about to engage in
3717	3719		an act or practice that violates this title or a board rule or
3718	3720		order.
3719	3721		(b) On the commissioner's request under Subsection (a), the
3720	3722		attorney general, in addition to other remedies, may bring an
3721	3723		action in the name and on behalf of the state:
3722	3724		(1) against:
3723	3725		(A) a person or company described by Subsection
3724	3726		(a);
3725	3727		(B) any person who, with intent to deceive or
3726	3728		defraud or with reckless disregard for the truth or the law, has
3727	3729		materially aided, is materially aiding, or is about to materially
3728	3730		aid the person or company; and
3729	3731		(C) any other person concerned with or in any
3730	3732		manner participating in or about to participate in the acts or
3731	3733		practices described by Subsection (a); and
3732	3734		(2) to enjoin the person or company and any other
3733	3735		person described by Subdivision (1) from continuing the acts or
3734	3736		practices that are the subject of the action for injunctive relief
3735	3737		or from doing any act to further the acts or practices.
3736	3738		(c) The facts contained in an application for injunctive
3737	3739		relief must be verified by the commissioner on information and
3738	3740		belief.
3739	3741		(d) The attorney general may apply for and, on proper
3740	3742		showing, is entitled to have a subpoena issued by the court that
3741	3743		requires:
3742	3744		(1) the appearance, without delay, of a defendant and
3743	3745		any employee or agent of the defendant to testify and give evidence
3744	3746		concerning the acts, conduct, or other matters complained about in
3745	3747		the application for injunctive relief; and
3746	3748		(2) the production of documents, books, and records
3747	3749		that may be necessary for the hearing on the action.
3748	3750		(e) A district court in any county in which it is shown that
3749	3751		the acts that are the subject of the application for injunctive
3750	3752		relief have been or are about to be committed or a district court in
3751	3753		Travis County has jurisdiction and venue of an action brought under
3752	3754		this section. This subsection is superior to any provision
3753	3755		establishing jurisdiction or venue with regard to an action for an
3754	3756		injunction.
3755	3757		(f) The commissioner or attorney general shall not be
3756	3758		required to give a bond for injunction in an action brought under
3757	3759		this section. (V.A.C.S. Art. 581-32, Subsec. A.)
3758	3760		Sec. 4007.153. EQUITABLE RELIEF AND RESTITUTION. (a) On
3759	3761		the commissioner's request, the attorney general may, in addition
3760	3762		to other remedies, seek:
3761	3763		(1) equitable relief, including restitution, for a
3762	3764		victim of a fraudulent practice; and
3763	3765		(2) the disgorgement of any economic benefit gained by
3764	3766		a defendant through an act or practice that violates this title or
3765	3767		for which this title provides the commissioner and attorney general
3766	3768		with a remedy.
3767	3769		(b) The attorney general may seek the remedies described by
3768	3770		Subsection (a) either in:
3769	3771		(1) an action under Section 4007.152; or
3770	3772		(2) a separate action brought in district court.
3771	3773		(c) The court may:
3772	3774		(1) grant any equitable relief the court considers
3773	3775		appropriate; and
3774	3776		(2) order the defendant to deliver to each victim of an
3775	3777		act or practice that violates this title, or for which this title
3776	3778		provides the commissioner or the attorney general with a remedy,
3777	3779		the amount of money or the property the defendant obtained from the
3778	3780		victim, including any bonus, fee, commission, option, proceeds, or
3779	3781		profit from or loss avoided through the sale of the security or
3780	3782		through the rendering of services as an investment adviser or
3781	3783		investment adviser representative, or any other tangible benefit.
3782	3784		(V.A.C.S. Art. 581-32, Subsec. B.)
3783	3785		Sec. 4007.154. CIVIL PENALTY. (a) On the commissioner's
3784	3786		request, the attorney general may, in addition to other remedies,
3785	3787		seek a civil penalty to be paid to the state in an amount that, when
3786	3788		added to the amount of any administrative fine previously assessed
3787	3789		under Section 4007.106(b), does not exceed:
3788	3790		(1) the greater of:
3789	3791		(A) $20,000 per violation; or
3790	3792		(B) the gross amount of any economic benefit
3791	3793		gained by the person or company as a result of the commission of the
3792	3794		act or practice; and
3793	3795		(2) if the act or practice was committed against a
3794	3796		person 65 years of age or older, an additional amount of not more
3795	3797		than $250,000.
3796	3798		(b) The attorney general may seek a civil penalty under this
3797	3799		section either in:
3798	3800		(1) an action under Section 4007.152; or
3799	3801		(2) a separate action in district court. (V.A.C.S.
3800	3802		Art. 581-32, Subsec. C.)
3801	3803		Sec. 4007.155. RECOVERY OF COSTS. In an action brought
3802	3804		under Section 4007.152, 4007.153, or 4007.154, the attorney general
3803	3805		may recover reasonable costs and expenses incurred by the attorney
3804	3806		general in bringing the action. (V.A.C.S. Art. 581-32, Subsec. D.)
3805	3807		SUBCHAPTER E. CRIMINAL PROVISIONS
3806	3808		Sec. 4007.201. UNAUTHORIZED SALE OF SECURITIES; OFFENSE.
3807	3809		(a) A person commits an offense if the person sells, offers for
3808	3810		sale or delivery, solicits subscriptions to or orders for, disposes
3809	3811		of, invites orders for, or deals in any other manner in a security
3810	3812		issued after September 6, 1955, unless:
3811	3813		(1) the security has been registered under Subchapter
3812	3814		B or C, Chapter 4003; or
3813	3815		(2) a permit qualifying securities for sale has been
3814	3816		issued under Subchapter A, Chapter 4003, with respect to the
3815	3817		security.
3816	3818		(b) A person commits an offense if the person sells, offers
3817	3819		for sale or delivery, solicits subscriptions to or orders for,
3818	3820		disposes of, invites offers for, or deals in any other manner in a
3819	3821		security without being a registered dealer or registered agent as
3820	3822		provided in this title.
3821	3823		(c) An offense under this section is a felony of the third
3822	3824		degree. (V.A.C.S. Art. 581-29 (part).)
3823	3825		Sec. 4007.202. UNAUTHORIZED RENDERING OF SERVICES AS
3824	3826		INVESTMENT ADVISER OR INVESTMENT ADVISER REPRESENTATIVE; OFFENSE.
3825	3827		(a) A person commits an offense if the person:
3826	3828		(1) renders services as an investment adviser or
3827	3829		investment adviser representative; and
3828	3830		(2) is not registered as an investment adviser or
3829	3831		investment adviser representative as required by this title.
3830	3832		(b) An offense under this section is a felony of the third
3831	3833		degree. (V.A.C.S. Art. 581-29 (part).)
3832	3834		Sec. 4007.203. FRAUDULENT CONDUCT; OFFENSE. (a) A person
3833	3835		commits an offense if:
3834	3836		(1) the person directly or indirectly:
3835	3837		(A) engages in any fraud or fraudulent practice;
3836	3838		(B) employs any device, scheme, or artifice to
3837	3839		defraud;
3838	3840		(C) knowingly makes an untrue statement of a
3839	3841		material fact or omits to state a material fact necessary in order
3840	3842		to make the statements made, in light of the circumstances under
3841	3843		which they are made, not misleading; or
3842	3844		(D) engages in any act, practice, or course of
3843	3845		business that operates or will operate as a fraud or deceit on any
3844	3846		person; and
3845	3847		(2) the applicable conduct is committed in connection
3846	3848		with:
3847	3849		(A) the sale of, the offering for sale or
3848	3850		delivery of, the purchase of, the offer to purchase, invitation of
3849	3851		offers to purchase, invitations of offers to sell, or dealing in any
3850	3852		other manner in any security, regardless of whether the transaction
3851	3853		or security is exempt under Chapter 4005; or
3852	3854		(B) the rendering of services as an investment
3853	3855		adviser or an investment adviser representative.
3854	3856		(b) An offense under this section is:
3855	3857		(1) a felony of the third degree, if the amount
3856	3858		involved in the offense is less than $10,000;
3857	3859		(2) a felony of the second degree, if the amount
3858	3860		involved in the offense is $10,000 or more but less than $100,000;
3859	3861		or
3860	3862		(3) a felony of the first degree, if the amount
3861	3863		involved is $100,000 or more.
3862	3864		(c) An indictment for an offense under this section may be
3863	3865		brought only before the fifth anniversary of the date the offense
3864	3866		was committed. (V.A.C.S. Art. 581-29 (part); Art. 581-29-1.)
3865	3867		Sec. 4007.204. MATERIALLY FALSE STATEMENT IN DOCUMENT OR
3866	3868		PROCEEDING; OFFENSE. (a) A person commits an offense if the person
3867	3869		knowingly makes or causes to be made any statement in a document
3868	3870		filed with the commissioner or in a proceeding under this title that
3869	3871		is, at the time and in light of the circumstances under which the
3870	3872		statement is made, false or misleading in any material respect.
3871	3873		(b) An offense is established under this section regardless
3872	3874		of whether the document or proceeding relates to a transaction or
3873	3875		security that is exempt under Chapter 4005.
3874	3876		(c) An offense under this section is a felony of the third
3875	3877		degree. (V.A.C.S. Art. 581-29 (part).)
3876	3878		Sec. 4007.205. FALSE STATEMENT OR REPRESENTATION
3877	3879		CONCERNING REGISTRATION; OFFENSE. (a) A person commits an offense
3878	3880		if the person knowingly makes a false statement or representation
3879	3881		concerning a registration made or an exemption claimed under this
3880	3882		title.
3881	3883		(b) An offense under this section is a state jail felony.
3882	3884		(V.A.C.S. Art. 581-29 (part).)
3883	3885		Sec. 4007.206. VIOLATION OF CEASE AND DESIST ORDER;
3884	3886		OFFENSE. (a) A person commits an offense if the person knowingly
3885	3887		violates a cease and desist order issued by the commissioner under
3886	3888		Section 4007.101, 4007.102, or 4007.104.
3887	3889		(b) An offense under this section is a felony of the third
3888	3890		degree. (V.A.C.S. Art. 581-29 (part).)
3889	3891		Sec. 4007.207. NONCOMPLIANT OFFER OR OFFER PROHIBITED BY
3890	3892		CEASE PUBLICATION ORDER; OFFENSE. (a) A person commits an offense
3891	3893		if the person:
3892	3894		(1) makes an offer of a security in this state that
3893	3895		does not comply with the requirements governing offers specified in
3894	3896		Subchapter E, Chapter 4003; or
3895	3897		(2) knowingly makes an offer of a security in this
3896	3898		state that is prohibited by a cease publication order issued by the
3897	3899		commissioner under Section 4007.103.
3898	3900		(b) An offense under this section is a state jail felony.
3899	3901		(V.A.C.S. Art. 581-29 (part).)
3900	3902		Sec. 4007.208. AGGREGATION OF AMOUNTS. When amounts are
3901	3903		obtained in violation of this title pursuant to one scheme or
3902	3904		continuing course of conduct, whether from the same or several
3903	3905		sources, the conduct may be considered as one offense and the
3904	3906		amounts aggregated in determining the grade of the offense.
3905	3907		(V.A.C.S. Art. 581-29-2.)
3906	3908		Sec. 4007.209. LIABILITY OF CORPORATION. (a) In this
3907	3909		section:
3908	3910		(1) "Association" and "corporation" have the meanings
3909	3911		assigned by Section 1.07, Penal Code.
3910	3912		(2) "High managerial agent" has the meaning assigned
3911	3913		by Section 7.21, Penal Code.
3912	3914		(b) If conduct constituting an offense under this
3913	3915		subchapter is performed by an agent acting on behalf of a
3914	3916		corporation or association and within the scope of the agent's
3915	3917		office or employment, the corporation or association is criminally
3916	3918		responsible for the offense only if the commission of the offense
3917	3919		was authorized, requested, commanded, performed, or recklessly
3918	3920		tolerated by:
3919	3921		(1) a majority of the governing board acting on behalf
3920	3922		of the corporation or association; or
3921	3923		(2) a high managerial agent acting on behalf of the
3922	3924		corporation or association and within the scope of the high
3923	3925		managerial agent's office or employment.
3924	3926		(c) It is an affirmative defense to prosecution of a
3925	3927		corporation or association under Subsection (b) that the high
3926	3928		managerial agent having supervisory responsibility over the
3927	3929		subject matter of the offense employed due diligence to prevent the
3928	3930		commission of the offense. (V.A.C.S. Art. 581-29-3.)
3929	3931		CHAPTER 4008. PRIVATE RIGHTS OF ACTION
3930	3932		SUBCHAPTER A. GENERAL PROVISIONS
3931	3933		Sec. 4008.001. UNENFORCEABILITY OF ILLEGAL CONTRACTS
3932	3934		Sec. 4008.002. CERTAIN WAIVERS VOID
3933	3935		Sec. 4008.003. ACTION FOR COLLECTION OF COMMISSION OR
3934	3936		COMPENSATION
3935	3937		Sec. 4008.004. STAY OF RECOGNITION OR ENFORCEMENT OF
3936	3938		FOREIGN-COUNTRY JUDGMENT
3937	3939		Sec. 4008.005. SURVIVABILITY OF ACTION
3938	3940		Sec. 4008.006. SAVING OF EXISTING RIGHTS AND REMEDIES
3939	3941		SUBCHAPTER B. CIVIL LIABILITY FOR ISSUANCE, SALE, OR PURCHASE OF
3940	3942		SECURITIES
3941	3943		Sec. 4008.051. OFFEROR OR SELLER LIABILITY: REGISTRATION AND
3942	3944		RELATED VIOLATIONS
3943	3945		Sec. 4008.052. OFFEROR OR SELLER LIABILITY: UNTRUTH OR OMISSION
3944	3946		Sec. 4008.053. BUYER LIABILITY
3945	3947		Sec. 4008.054. NONSELLING ISSUER LIABILITY
3946	3948		Sec. 4008.055. CONTROLLING PERSON OR AIDER LIABILITY
3947	3949		Sec. 4008.056. RESCISSION
3948	3950		Sec. 4008.057. DAMAGES
3949	3951		Sec. 4008.058. REQUIREMENTS OF RESCISSION OFFER TO
3950	3952		BUYERS
3951	3953		Sec. 4008.059. REQUIREMENTS OF RESCISSION OFFER TO
3952	3954		SELLERS
3953	3955		Sec. 4008.060. COSTS; ATTORNEY'S FEES
3954	3956		Sec. 4008.061. LIMITATION OF LIABILITY IN SMALL
3955	3957		BUSINESS ISSUANCES
3956	3958		Sec. 4008.062. STATUTE OF LIMITATIONS
3957	3959		SUBCHAPTER C. CIVIL LIABILITY OF INVESTMENT ADVISERS AND
3958	3960		INVESTMENT ADVISER REPRESENTATIVES
3959	3961		Sec. 4008.101. INVESTMENT ADVISER OR INVESTMENT
3960	3962		ADVISER REPRESENTATIVE LIABILITY
3961	3963		Sec. 4008.102. CONTROLLING PERSON OR AIDER LIABILITY
3962	3964		Sec. 4008.103. DAMAGES
3963	3965		Sec. 4008.104. STATUTE OF LIMITATIONS
3964	3966		Sec. 4008.105. REMEDY NOT EXCLUSIVE
3965	3967		CHAPTER 4008. PRIVATE RIGHTS OF ACTION
3966	3968		SUBCHAPTER A. GENERAL PROVISIONS
3967	3969		Sec. 4008.001. UNENFORCEABILITY OF ILLEGAL CONTRACTS. A
3968	3970		person may not base a suit on a contract if the person:
3969	3971		(1) made or engaged in the performance of the contract
3970	3972		in violation of this title or a rule, order, or requirement under
3971	3973		this title; or
3972	3974		(2) acquired any purported right under the contract
3973	3975		with knowledge of the facts by reason of which the contract's making
3974	3976		or performance was in violation of this title or a rule, order, or
3975	3977		requirement under this title. (V.A.C.S. Art. 581-33, Subsec. K.)
3976	3978		Sec. 4008.002. CERTAIN WAIVERS VOID. A condition,
3977	3979		stipulation, or provision is void if it binds a buyer or seller of a
3978	3980		security or a purchaser of services rendered by an investment
3979	3981		adviser or investment adviser representative to waive compliance
3980	3982		with this title or a rule, order, or requirement under this title.
3981	3983		(V.A.C.S. Art. 581-33, Subsec. L.)
3982	3984		Sec. 4008.003. ACTION FOR COLLECTION OF COMMISSION OR
3983	3985		COMPENSATION. (a) This section does not apply to a person or
3984	3986		company that rendered services in connection with a transaction
3985	3987		that is exempt under Subchapter A, Chapter 4005, or under a rule
3986	3988		adopted by the board under Section 4005.024 if the person or company
3987	3989		was not required to be registered by the terms of the exemption.
3988	3990		(b) A person or company may not bring or maintain any action
3989	3991		in a court of this state for collection of a commission or
3990	3992		compensation for services rendered in the sale or purchase of
3991	3993		securities unless the person or company alleges and proves that:
3992	3994		(1) the person or company was:
3993	3995		(A) registered under this title; or
3994	3996		(B) exempt from registration under rules adopted
3995	3997		under Section 4004.001; and
3996	3998		(2) the securities sold were registered under this
3997	3999		title at the time the alleged cause of action arose. (V.A.C.S. Art.
3998	4000		581-34.)
3999	4001		Sec. 4008.004. STAY OF RECOGNITION OR ENFORCEMENT OF
4000	4002		FOREIGN-COUNTRY JUDGMENT. (a) Before a court's recognition or
4001	4003		enforcement of a foreign-country judgment under Chapter 36A, Civil
4002	4004		Practice and Remedies Code, or otherwise, a party against whom
4003	4005		recognition or enforcement of the foreign-country judgment is
4004	4006		sought is entitled to de novo review by a court in this state to
4005	4007		determine whether a party, or the party's successors, assigns,
4006	4008		agents, or representatives seeking recognition or enforcement of
4007	4009		the foreign-country judgment have violated this title or Chapter
4008	4010		17, Business & Commerce Code.
4009	4011		(b) A party seeking de novo review under this section must
4010	4012		file with the court a verified pleading asserting a violation of
4011	4013		this title or Chapter 17, Business & Commerce Code, not later than
4012	4014		the 30th day after the date of service of the notice of filing of the
4013	4015		foreign-country judgment with the court for recognition or
4014	4016		enforcement.
4015	4017		(c) A pleading filed in accordance with Subsection (b)
4016	4018		operates as a stay of the commencement or continuation of a
4017	4019		proceeding to recognize or enforce the foreign-country judgment
4018	4020		until the court completes its de novo review under this section and
4019	4021		renders a final judgment.
4020	4022		(d) A finding by a court of a violation of this title or
4021	4023		Chapter 17, Business & Commerce Code, is a sufficient ground for
4022	4024		nonrecognition of a foreign-country judgment.
4023	4025		(e) This section applies to a foreign-country judgment
4024	4026		involving a contract or agreement for a sale, offer for sale, or
4025	4027		sell as defined by this title, or investment, that imposes an
4026	4028		obligation of indemnification or liquidated damages on a resident
4027	4029		of this state. (V.A.C.S. Art. 581-33-2.)
4028	4030		Sec. 4008.005. SURVIVABILITY OF ACTION. A cause of action
4029	4031		under this title survives the death of a person who might have been
4030	4032		a plaintiff or defendant. (V.A.C.S. Art. 581-33, Subsec. G.)
4031	4033		Sec. 4008.006. SAVING OF EXISTING RIGHTS AND REMEDIES. The
4032	4034		rights and remedies provided by this title are in addition to any
4033	4035		other rights, including exemplary damages, or remedies that exist.
4034	4036		(V.A.C.S. Art. 581-33, Subsec. M.)
4035	4037		SUBCHAPTER B. CIVIL LIABILITY FOR ISSUANCE, SALE, OR PURCHASE OF
4036	4038		SECURITIES
4037	4039		Sec. 4008.051. OFFEROR OR SELLER LIABILITY: REGISTRATION
4038	4040		AND RELATED VIOLATIONS. (a) A person who offers or sells a
4039	4041		security in violation of the following is liable to a person who
4040	4042		buys the security from the offeror or seller:
4041	4043		(1) Section 4003.001(a), 4003.002, 4003.003, or
4042	4044		4003.004; Subchapter B, Chapter 4003, other than Section
4043	4045		4003.054(b)(1); Subchapter C, Chapter 4003, other than Section
4044	4046		4003.103(b); Section 4004.001, 4004.051, 4004.052, 4004.101(a), or
4045	4047		4004.102(a); or Section 4007.103;
4046	4048		(2) Subchapter G, Chapter 4003, other than Section
4047	4049		4003.304, or a requirement of the commissioner under Subchapter G,
4048	4050		Chapter 4003, other than Section 4003.304; or
4049	4051		(3) an order under Section 4007.101 or 4007.104.
4050	4052		(b) The buyer of the security may sue for:
4051	4053		(1) rescission; or
4052	4054		(2) damages if the buyer no longer owns the security.
4053	4055		(V.A.C.S. Art. 581-33, Subsec. A, Subdiv. (1).)
4054	4056		Sec. 4008.052. OFFEROR OR SELLER LIABILITY: UNTRUTH OR
4055	4057		OMISSION. (a) Except as provided by Subsection (c), a person who
4056	4058		offers or sells a security and from whom another person buys the
4057	4059		security is liable to the buyer of the security, regardless of
4058	4060		whether the security or transaction is exempt under Chapter 4005,
4059	4061		if the person offers or sells the security by means of an untrue
4060	4062		statement of a material fact or an omission to state a material fact
4061	4063		necessary in order to make the statements made, in light of the
4062	4064		circumstances under which they are made, not misleading.
4063	4065		(b) The buyer may sue for:
4064	4066		(1) rescission; or
4065	4067		(2) damages if the buyer no longer owns the security.
4066	4068		(c) Except as provided by Subsection (d), a person offering
4067	4069		or selling a security is not liable under Subsection (a) if the
4068	4070		person sustains the burden of proof that either:
4069	4071		(1) the buyer knew of the untruth or omission; or
4070	4072		(2) the offeror or seller did not know, and in the
4071	4073		exercise of reasonable care could not have known, of the untruth or
4072	4074		omission.
4073	4075		(d) The issuer of the security, other than a government
4074	4076		issuer identified in Section 4005.017, is not entitled to the
4075	4077		defense in Subsection (c)(2) regarding an untruth or omission:
4076	4078		(1) in a prospectus required in connection with an
4077	4079		application or registration statement under Subchapter A, B, or C,
4078	4080		Chapter 4003; or
4079	4081		(2) in a writing prepared and delivered by the issuer
4080	4082		in the sale of the security. (V.A.C.S. Art. 581-33, Subsec. A,
4081	4083		Subdiv. (2).)
4082	4084		Sec. 4008.053. BUYER LIABILITY. (a) Except as provided by
4083	4085		Subsection (c), a person who offers to buy or buys a security and to
4084	4086		whom another person sells the security is liable to the seller,
4085	4087		regardless of whether the security or transaction is exempt under
4086	4088		Chapter 4005, if the person offers to buy or buys the security by
4087	4089		means of an untrue statement of a material fact or an omission to
4088	4090		state a material fact necessary in order to make the statements
4089	4091		made, in light of the circumstances under which they are made, not
4090	4092		misleading.
4091	4093		(b) The seller may sue for:
4092	4094		(1) rescission; or
4093	4095		(2) damages if the buyer no longer owns the security.
4094	4096		(c) A person who offers to buy or buys a security is not
4095	4097		liable under Subsection (a) if the offeror or buyer sustains the
4096	4098		burden of proof that either:
4097	4099		(1) the seller knew of the untruth or omission; or
4098	4100		(2) the offeror or buyer did not know, and in the
4099	4101		exercise of reasonable care could not have known, of the untruth or
4100	4102		omission. (V.A.C.S. Art. 581-33, Subsec. B.)
4101	4103		Sec. 4008.054. NONSELLING ISSUER LIABILITY. (a) This
4102	4104		section applies only to an issuer that registers under Subchapter
4103	4105		A, B, or C, Chapter 4003, or under Section 6, Securities Act of 1933
4104	4106		(15 U.S.C. Section 77f), the issuer's outstanding securities for
4105	4107		offer and sale by or for the owner of the securities.
4106	4108		(b) Except as provided by Subsection (d), the issuer is
4107	4109		liable to a person buying the registered security if the prospectus
4108	4110		required in connection with the registration contains, as of its
4109	4111		effective date, an untrue statement of a material fact or an
4110	4112		omission to state a material fact necessary in order to make the
4111	4113		statements made, in light of the circumstances under which they are
4112	4114		made, not misleading.
4113	4115		(c) The buyer of the registered security may sue for:
4114	4116		(1) rescission; or
4115	4117		(2) damages if the buyer no longer owns the security.
4116	4118		(d) The issuer is not liable under Subsection (b) if the
4117	4119		issuer sustains the burden of proof that the buyer knew of the
4118	4120		untruth or omission. (V.A.C.S. Art. 581-33, Subsec. C.)
4119	4121		Sec. 4008.055. CONTROLLING PERSON OR AIDER LIABILITY. (a)
4120	4122		Except as provided by Subsection (b), a person who directly or
4121	4123		indirectly controls a seller, buyer, or issuer of a security is
4122	4124		liable under Section 4008.051, 4008.052, 4008.053, or 4008.054
4123	4125		jointly and severally with the seller, buyer, or issuer and to the
4124	4126		same extent as the seller, buyer, or issuer.
4125	4127		(b) The controlling person is not liable under Subsection
4126	4128		(a) if the controlling person sustains the burden of proof that the
4127	4129		controlling person did not know, and in the exercise of reasonable
4128	4130		care could not have known, of the existence of the facts by reason
4129	4131		of which the liability is alleged to exist.
4130	4132		(c) A person who directly or indirectly with intent to
4131	4133		deceive or defraud or with reckless disregard for the truth or the
4132	4134		law materially aids a seller, buyer, or issuer of a security is
4133	4135		liable under Section 4008.051, 4008.052, 4008.053, or 4008.054
4134	4136		jointly and severally with the seller, buyer, or issuer and to the
4135	4137		same extent as the seller, buyer, or issuer.
4136	4138		(d) There is contribution under this section as in cases of
4137	4139		contract among the several persons who are liable. (V.A.C.S. Art.
4138	4140		581-33, Subsec. F.)
4139	4141		Sec. 4008.056. RESCISSION. (a) On rescission under this
4140	4142		subchapter, a buyer of a security shall, on tender of the security
4141	4143		or a security of the same class and series, recover the
4142	4144		consideration the buyer paid for the security plus interest on the
4143	4145		consideration at the legal rate from the date the buyer made the
4144	4146		payment, less the amount of any income the buyer received on the
4145	4147		security.
4146	4148		(b) On rescission under this subchapter, a seller of a
4147	4149		security shall recover the security or a security of the same class
4148	4150		and series, on tender of the consideration the seller received for
4149	4151		the security plus interest on the consideration at the legal rate
4150	4152		from the date the seller received the payment, less the amount of
4151	4153		any income the buyer received on the security.
4152	4154		(c) For a buyer suing under Section 4008.054, the
4153	4155		consideration the buyer paid for the security is deemed to be the
4154	4156		lesser of:
4155	4157		(1) the price the buyer paid; or
4156	4158		(2) the price at which the security was offered to the
4157	4159		public.
4158	4160		(d) A tender specified in this section may be made at any
4159	4161		time before a judgment is entered. (V.A.C.S. Art. 581-33, Subsec.
4160	4162		D, Subdivs. (1), (2), (5), Subsec. E.)
4161	4163		Sec. 4008.057. DAMAGES. (a) In damages under this
4162	4164		subchapter, a buyer of a security shall recover the consideration
4163	4165		the buyer paid for the security plus interest on the consideration
4164	4166		at the legal rate from the date the buyer made the payment, less the
4165	4167		greater of:
4166	4168		(1) the value of the security at the time the buyer
4167	4169		disposed of the security plus the amount of any income the buyer
4168	4170		received on the security; or
4169	4171		(2) the actual consideration received for the security
4170	4172		at the time the buyer disposed of the security plus the amount of
4171	4173		any income the buyer received on the security.
4172	4174		(b) In damages under this subchapter, a seller of a security
4173	4175		shall recover the value of the security at the time of sale plus the
4174	4176		amount of any income the buyer received on the security, less the
4175	4177		consideration paid to the seller for the security plus interest on
4176	4178		the consideration at the legal rate from the date of payment to the
4177	4179		seller.
4178	4180		(c) For a buyer suing under Section 4008.054, the
4179	4181		consideration the buyer paid for the security is deemed to be the
4180	4182		lesser of:
4181	4183		(1) the price the buyer paid; or
4182	4184		(2) the price at which the security was offered to the
4183	4185		public. (V.A.C.S. Art. 581-33, Subsec. D, Subdivs. (3), (4), (5).)
4184	4186		Sec. 4008.058. REQUIREMENTS OF RESCISSION OFFER TO BUYERS.
4185	4187		(a) A rescission offer is sufficient for purposes of Section
4186	4188		4008.062(a) or (b) only if the offer meets the requirements of this
4187	4189		section.
4188	4190		(b) The offer must include financial and other information
4189	4191		material to the offeree's decision whether to accept the offer. The
4190	4192		offer may not contain an untrue statement of a material fact or an
4191	4193		omission to state a material fact necessary in order to make the
4192	4194		statements made, in light of the circumstances under which they are
4193	4195		made, not misleading.
4194	4196		(c) The offeror shall:
4195	4197		(1) deposit funds in escrow in a state or national bank
4196	4198		doing business in this state, or in another bank approved by the
4197	4199		commissioner; or
4198	4200		(2) receive an unqualified commitment from a bank
4199	4201		described by Subdivision (1) to provide funds sufficient to pay the
4200	4202		amount offered.
4201	4203		(d) The amount of the offer to a buyer who still owns the
4202	4204		security must be the amount, excluding costs and attorney's fees,
4203	4205		the buyer would recover on rescission under Section 4008.056(a).
4204	4206		(e) The amount of the offer to a buyer who no longer owns the
4205	4207		security must be the amount, excluding costs and attorney's fees,
4206	4208		the buyer would recover in damages under Section 4008.057(a).
4207	4209		(f) The offer must state:
4208	4210		(1) the amount of the offer, as determined under
4209	4211		Subsection (d) or (e), which must be given:
4210	4212		(A) to the extent practicable, in terms of a
4211	4213		specified number of dollars and a specified rate of interest for a
4212	4214		period starting at a specified date; and
4213	4215		(B) to the extent necessary, in terms of
4214	4216		specified elements, such as the value of the security when the
4215	4217		offeree disposed of the security, that are known to the offeree but
4216	4218		not to the offeror, subject to the provision of reasonable evidence
4217	4219		by the offeree;
4218	4220		(2) the name and address of the bank at which the
4219	4221		amount of the offer will be paid;
4220	4222		(3) that the offeree will receive the amount of the
4221	4223		offer within a specified number of days that is not more than 30
4222	4224		days after the date the bank receives, in form reasonably
4223	4225		acceptable to the offeror and in compliance with the instructions
4224	4226		in the offer:
4225	4227		(A) the security, if the offeree still owns the
4226	4228		security, or evidence of the fact and date of disposition if the
4227	4229		offeree no longer owns the security; and
4228	4230		(B) evidence, if necessary, of elements
4229	4231		described by Subdivision (1)(B);
4230	4232		(4) in a conspicuous manner that the offeree may not
4231	4233		sue on the offeree's purchase under this subchapter unless:
4232	4234		(A) the offeree accepts the offer but does not
4233	4235		receive the amount of the offer, in which case the offeree may sue
4234	4236		within the time allowed by Section 4008.062(a)(1), (b)(1), or
4235	4237		(b)(2), as applicable; or
4236	4238		(B) the offeree rejects the offer in writing
4237	4239		within 30 days of the date the offeree receives the offer and
4238	4240		expressly reserves in the rejection the right to sue, in which case
4239	4241		the offeree may sue not later than one year after the date of the
4240	4242		rejection;
4241	4243		(5) in reasonable detail, the nature of the violation
4242	4244		of this title that occurred or may have occurred; and
4243	4245		(6) any other information the offeror wants to
4244	4246		include. (V.A.C.S. Art. 581-33, Subsec. I.)
4245	4247		Sec. 4008.059. REQUIREMENTS OF RESCISSION OFFER TO SELLERS.
4246	4248		(a) A rescission offer is sufficient for purposes of Section
4247	4249		4008.062(c) only if the offer meets the requirements of this
4248	4250		section.
4249	4251		(b) The offer must include financial and other information
4250	4252		material to the offeree's decision whether to accept the offer. The
4251	4253		offer may not contain an untrue statement of a material fact or an
4252	4254		omission to state a material fact necessary in order to make the
4253	4255		statements made, in light of the circumstances under which they are
4254	4256		made, not misleading.
4255	4257		(c) The offeror shall deposit the securities in escrow in a
4256	4258		state or national bank doing business in this state, or in another
4257	4259		bank approved by the commissioner.
4258	4260		(d) The terms of the offer must be the same, excluding costs
4259	4261		and attorney's fees, as the seller would recover on rescission
4260	4262		under Section 4008.056(b).
4261	4263		(e) The offer must state:
4262	4264		(1) the terms of the offer, as determined under
4263	4265		Subsection (d), which must be given:
4264	4266		(A) to the extent practicable, in terms of a
4265	4267		specified number and kind of securities and a specified rate of
4266	4268		interest for a period starting at a specified date; and
4267	4269		(B) to the extent necessary, in terms of
4268	4270		specified elements that are known to the offeree but not to the
4269	4271		offeror, subject to the provision of reasonable evidence by the
4270	4272		offeree;
4271	4273		(2) the name and address of the bank at which the terms
4272	4274		of the offer will be carried out;
4273	4275		(3) that the offeree will receive the securities
4274	4276		within a specified number of days that is not more than 30 days
4275	4277		after the date the bank receives, in form reasonably acceptable to
4276	4278		the offeror and in compliance with the instructions in the offer:
4277	4279		(A) the amount required by the terms of the
4278	4280		offer; and
4279	4281		(B) evidence, if necessary, of elements
4280	4282		described by Subdivision (1)(B);
4281	4283		(4) in a conspicuous manner that the offeree may not
4282	4284		sue on the offeree's sale under this subchapter unless:
4283	4285		(A) the offeree accepts the offer but does not
4284	4286		receive the securities, in which case the offeree may sue within the
4285	4287		time allowed by Section 4008.062(c)(1) or (2), as applicable; or
4286	4288		(B) the offeree rejects the offer in writing
4287	4289		within 30 days of the date the offeree receives the offer and
4288	4290		expressly reserves in the rejection the right to sue, in which case
4289	4291		the offeree may sue not later than one year after the date of the
4290	4292		rejection;
4291	4293		(5) in reasonable detail, the nature of the violation
4292	4294		of this title that occurred or may have occurred; and
4293	4295		(6) any other information the offeror wants to
4294	4296		include. (V.A.C.S. Art. 581-33, Subsec. J.)
4295	4297		Sec. 4008.060. COSTS; ATTORNEY'S FEES. (a) On rescission
4296	4298		or as a part of damages under this subchapter, a buyer or a seller of
4297	4299		a security shall also recover costs.
4298	4300		(b) On rescission or as a part of damages under this
4299	4301		subchapter, a buyer or a seller of a security may also recover
4300	4302		reasonable attorney's fees if the court finds that the recovery is
4301	4303		equitable under the circumstances. (V.A.C.S. Art. 581-33, Subsec.
4302	4304		D, Subdivs. (6), (7).)
4303	4305		Sec. 4008.061. LIMITATION OF LIABILITY IN SMALL BUSINESS
4304	4306		ISSUANCES. (a) In this section, "small business issuer" means an
4305	4307		issuer that, at the time of an offer to which this section applies:
4306	4308		(1) has annual gross revenues in an amount that does
4307	4309		not exceed $25 million; and
4308	4310		(2) does not have a class of equity securities
4309	4311		registered, or required to be registered, with the Securities and
4310	4312		Exchange Commission under Section 12, Securities Exchange Act of
4311	4313		1934 (15 U.S.C. Section 78l).
4312	4314		(b) This section applies only to:
4313	4315		(1) an offer of securities in an aggregate amount that
4314	4316		does not exceed $5 million made by a small business issuer or by the
4315	4317		seller of securities of a small business issuer; and
4316	4318		(2) a person who has been engaged to provide services
4317	4319		relating to an offer of securities described by Subdivision (1),
4318	4320		including an attorney, an accountant, a consultant, or the firm of
4319	4321		the attorney, accountant, or consultant.
4320	4322		(c) In an action or series of actions under this subchapter
4321	4323		relating to an offer of securities to which this section applies,
4322	4324		the maximum amount that may be recovered against a person to whom
4323	4325		this section applies is three times the fee paid by the small
4324	4326		business issuer or other seller to the person for the services
4325	4327		related to the offer of securities, unless the trier of fact finds
4326	4328		the person engaged in intentional wrongdoing in providing the
4327	4329		services.
4328	4330		(d) A small business issuer making an offer of securities
4329	4331		shall:
4330	4332		(1) provide to the prospective buyer a written
4331	4333		disclosure of the limitation of liability created by this section;
4332	4334		and
4333	4335		(2) receive a signed acknowledgment that the
4334	4336		disclosure was provided. (V.A.C.S. Art. 581-33, Subsec. N.)
4335	4337		Sec. 4008.062. STATUTE OF LIMITATIONS. (a) A person may
4336	4338		not sue under Section 4008.051 or 4008.055 to the extent that
4337	4339		section relates to Section 4008.051:
4338	4340		(1) more than three years after the date of the sale;
4339	4341		(2) if the person received a rescission offer meeting
4340	4342		the requirements of Section 4008.058 before suit, unless the
4341	4343		person:
4342	4344		(A) rejected the offer in writing within 30 days
4343	4345		of the date the person received the offer; and
4344	4346		(B) expressly reserved in the rejection the right
4345	4347		to sue; or
4346	4348		(3) more than one year after the date the person so
4347	4349		rejected a rescission offer meeting the requirements of Section
4348	4350		4008.058.
4349	4351		(b) A person may not sue under Section 4008.052, 4008.054,
4350	4352		or 4008.055 to the extent that section relates to Section 4008.052
4351	4353		or 4008.054:
4352	4354		(1) more than three years after the date of discovery
4353	4355		of the untruth or omission, or after the date discovery should have
4354	4356		been made by the exercise of reasonable diligence;
4355	4357		(2) more than five years after the date of the sale;
4356	4358		(3) if the person received a rescission offer meeting
4357	4359		the requirements of Section 4008.058 before suit, unless the
4358	4360		person:
4359	4361		(A) rejected the offer in writing within 30 days
4360	4362		of the date the person received the offer; and
4361	4363		(B) expressly reserved in the rejection the right
4362	4364		to sue; or
4363	4365		(4) more than one year after the date the person so
4364	4366		rejected a rescission offer meeting the requirements of Section
4365	4367		4008.058.
4366	4368		(c) A person may not sue under Section 4008.053 or 4008.055
4367	4369		to the extent that section relates to Section 4008.053:
4368	4370		(1) more than three years after the date of discovery
4369	4371		of the untruth or omission, or after the date discovery should have
4370	4372		been made by the exercise of reasonable diligence;
4371	4373		(2) more than five years after the date of the
4372	4374		purchase;
4373	4375		(3) if the person received a rescission offer meeting
4374	4376		the requirements of Section 4008.059 before suit, unless the
4375	4377		person:
4376	4378		(A) rejected the offer in writing within 30 days
4377	4379		of the date the person received the offer; and
4378	4380		(B) expressly reserved in the rejection the right
4379	4381		to sue; or
4380	4382		(4) more than one year after the date the person so
4381	4383		rejected a rescission offer meeting the requirements of Section
4382	4384		4008.059. (V.A.C.S. Art. 581-33, Subsec. H.)
4383	4385		SUBCHAPTER C. CIVIL LIABILITY OF INVESTMENT ADVISERS AND
4384	4386		INVESTMENT ADVISER REPRESENTATIVES
4385	4387		Sec. 4008.101. INVESTMENT ADVISER OR INVESTMENT ADVISER
4386	4388		REPRESENTATIVE LIABILITY. (a) An investment adviser or investment
4387	4389		adviser representative who renders services as an investment
4388	4390		adviser in violation of Section 4004.052 or 4004.102(a) or an order
4389	4391		under Section 4007.102 or 4007.104 is liable to the purchaser, who
4390	4392		may sue for damages in the amount of any consideration paid for the
4391	4393		services.
4392	4394		(b) Except as provided by Subsection (c), an investment
4393	4395		adviser or investment adviser representative who commits fraud or
4394	4396		engages in a fraudulent practice in rendering services as an
4395	4397		investment adviser is liable to the purchaser, who may sue for
4396	4398		damages.
4397	4399		(c) An investment adviser or investment adviser
4398	4400		representative who in rendering services as an investment adviser
4399	4401		makes an untrue statement of a material fact or omits to state a
4400	4402		material fact necessary in order to make the statement made, in
4401	4403		light of the circumstances under which the statement is made, not
4402	4404		misleading is not liable under Subsection (b) if the adviser or
4403	4405		representative proves:
4404	4406		(1) the purchaser knew of the truth or omission; or
4405	4407		(2) the adviser or representative did not know, and in
4406	4408		the exercise of reasonable care could not have known, of the untruth
4407	4409		or omission. (V.A.C.S. Art. 581-33-1, Subsecs. A, C.)
4408	4410		Sec. 4008.102. CONTROLLING PERSON OR AIDER LIABILITY. (a)
4409	4411		Except as provided by Subsection (b), a person who directly or
4410	4412		indirectly controls an investment adviser is jointly and severally
4411	4413		liable with the investment adviser under this subchapter and to the
4412	4414		same extent as the investment adviser.
4413	4415		(b) The controlling person is not liable under Subsection
4414	4416		(a) if the controlling person sustains the burden of proof that the
4415	4417		controlling person did not know, and in the exercise of reasonable
4416	4418		care could not have known, of the existence of the facts by reason
4417	4419		of which liability is alleged to exist.
4418	4420		(c) A person who directly or indirectly with intent to
4419	4421		deceive or defraud or with reckless disregard for the truth or the
4420	4422		law materially aids an investment adviser in conduct for which a
4421	4423		cause of action is authorized by this subchapter is jointly and
4422	4424		severally liable with the investment adviser in an action to
4423	4425		recover damages under this subchapter. (V.A.C.S. Art. 581-33-1,
4424	4426		Subsec. E.)
4425	4427		Sec. 4008.103. DAMAGES. In damages under Section
4426	4428		4008.101(b), the purchaser is entitled to recover:
4427	4429		(1) the amount of any consideration paid for the
4428	4430		services, less the amount of any income the purchaser received from
4429	4431		acting on the services;
4430	4432		(2) any loss incurred by the purchaser in acting on the
4431	4433		services provided by the investment adviser or investment adviser
4432	4434		representative;
4433	4435		(3) interest at the legal rate for judgments accruing
4434	4436		from the date the purchaser paid the consideration; and
4435	4437		(4) to the extent the court considers equitable, court
4436	4438		costs and reasonable attorney's fees. (V.A.C.S. Art. 581-33-1,
4437	4439		Subsec. B.)
4438	4440		Sec. 4008.104. STATUTE OF LIMITATIONS. (a) A person may
4439	4441		not sue under Section 4008.101(a) more than three years after the
4440	4442		date the violation occurs.
4441	4443		(b) A person may not sue under Section 4008.101(b) more
4442	4444		than:
4443	4445		(1) five years after the date the violation occurs; or
4444	4446		(2) three years after the date the person knew or
4445	4447		should have known, by the exercise of reasonable diligence, of the
4446	4448		occurrence of the violation. (V.A.C.S. Art. 581-33-1, Subsec. D.)
4447	4449		Sec. 4008.105. REMEDY NOT EXCLUSIVE. A remedy provided by
4448	4450		this subchapter is not exclusive of any other applicable remedy
4449	4451		provided by law. (V.A.C.S. Art. 581-33-1, Subsec. F.)
4450	4452		ARTICLE 2. CONFORMING AMENDMENTS
4451	4453		SECTION 2.01. Section 52.063(c), Agriculture Code, is
4452	4454		amended to read as follows:
4453	4455		(c) A marketing association may not sell and issue shares of
4454	4456		preferred stock to a person who is not a member of the association
4455	4457		unless the association first complies with The Securities Act
4456	4458		(Title 12, Government Code) [, as amended (Article 581-1 et seq.,
4457	4459		Vernon's Texas Civil Statutes)].
4458	4460		SECTION 2.02. Section 58.034(b), Agriculture Code, is
4459	4461		amended to read as follows:
4460	4462		(b) The bonds issued under this chapter and interest
4461	4463		coupons, if any, are investment securities under the terms of
4462	4464		Chapter 8, Business & Commerce Code. The bonds are exempt
4463	4465		securities under The Securities Act (Title 12, Government Code)
4464	4466		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)], and
4465	4467		unless specifically provided otherwise, under any subsequently
4466	4468		enacted securities act. Any contract, guaranty, or any other
4467	4469		document executed in connection with the issuance of bonds pursuant
4468	4470		to this chapter is not a security under The Securities Act (Title
4469	4471		12, Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4470	4472		Statutes),] and, unless specifically provided otherwise, any
4471	4473		subsequently enacted securities act. The board is authorized to do
4472	4474		all things necessary to qualify the bonds for offer and sale under
4473	4475		the securities laws and regulations of the United States and of the
4474	4476		states and other jurisdictions in the United States as the board
4475	4477		shall determine.
4476	4478		SECTION 2.03. Section 302.053, Business & Commerce Code, is
4477	4479		amended to read as follows:
4478	4480		Sec. 302.053. EXEMPTION: PERSONS REGULATED BY OTHER LAW.
4479	4481		This chapter does not apply to:
4480	4482		(1) a person offering or selling a security that has
4481	4483		been qualified for sale under Chapter 4003, Government Code
4482	4484		[Section 7, The Securities Act (Article 581-7, Vernon's Texas Civil
4483	4485		Statutes)], or that is subject to an exemption under Chapter 4005,
4484	4486		Government Code [Section 5 or 6 of that Act];
4485	4487		(2) a publicly traded corporation registered with the
4486	4488		Securities and Exchange Commission or the State Securities Board,
4487	4489		or a subsidiary or agent of the corporation;
4488	4490		(3) a person who holds a license issued under the
4489	4491		Insurance Code if the solicited transaction is governed by that
4490	4492		code;
4491	4493		(4) a supervised financial institution or a parent, a
4492	4494		subsidiary, or an affiliate of a supervised financial institution;
4493	4495		(5) a person whose business is regulated by the Public
4494	4496		Utility Commission of Texas or an affiliate of that person, except
4495	4497		that this chapter applies to such a person or affiliate only with
4496	4498		respect to one or more automated dial announcing devices;
4497	4499		(6) a person subject to the control or licensing
4498	4500		regulations of the Federal Communications Commission;
4499	4501		(7) a person selling a contractual plan regulated by
4500	4502		the Federal Trade Commission trade regulation on use of negative
4501	4503		option plans by sellers in commerce under 16 C.F.R. Part 425;
4502	4504		(8) a person subject to filing requirements under
4503	4505		Chapter 1803, Occupations Code; or
4504	4506		(9) a person who:
4505	4507		(A) is soliciting a transaction regulated by the
4506	4508		Commodity Futures Trading Commission; and
4507	4509		(B) is registered or holds a temporary license
4508	4510		for the activity described by Paragraph (A) with the Commodity
4509	4511		Futures Trading Commission under the Commodity Exchange Act (7
4510	4512		U.S.C. Section 1 et seq.), if the registration or license has not
4511	4513		expired or been suspended or revoked.
4512	4514		SECTION 2.04. Section 304.002(3), Business & Commerce Code,
4513	4515		is amended to read as follows:
4514	4516		(3) "Consumer good or service" means property of any
4515	4517		kind that is normally used for personal, family, or household
4516	4518		purposes. The term does not include a security, as defined by
4517	4519		Section 4001.068, Government Code [4, The Securities Act (Article
4518	4520		581-4, Vernon's Texas Civil Statutes)].
4519	4521		SECTION 2.05. Section 23.052, Business Organizations Code,
4520	4522		is amended to read as follows:
4521	4523		Sec. 23.052. ORGANIZERS. Subject to The Securities Act
4522	4524		(Title 12, Government Code) [(Article 581-1 et seq., Vernon's Texas
4523	4525		Civil Statutes)], 25 or more persons, the majority of whom must be
4524	4526		residents of this state, may form a business development
4525	4527		corporation to promote, develop, and advance the prosperity and
4526	4528		economic welfare of this state.
4527	4529		SECTION 2.06. Article 59.01(2), Code of Criminal Procedure,
4528	4530		is amended to read as follows:
4529	4531		(2) "Contraband" means property of any nature,
4530	4532		including real, personal, tangible, or intangible, that is:
4531	4533		(A) used in the commission of:
4532	4534		(i) any first or second degree felony under
4533	4535		the Penal Code;
4534	4536		(ii) any felony under Section 15.031(b),
4535	4537		20.05, 20.06, 21.11, 38.04, or Chapter 43, 20A, 29, 30, 31, 32, 33,
4536	4538		33A, or 35, Penal Code;
4537	4539		(iii) any felony under The Securities Act
4538	4540		(Title 12, Government Code) [(Article 581-1 et seq., Vernon's Texas
4539	4541		Civil Statutes)]; or
4540	4542		(iv) any offense under Chapter 49, Penal
4541	4543		Code, that is punishable as a felony of the third degree or state
4542	4544		jail felony, if the defendant has been previously convicted three
4543	4545		times of an offense under that chapter;
4544	4546		(B) used or intended to be used in the commission
4545	4547		of:
4546	4548		(i) any felony under Chapter 481, Health
4547	4549		and Safety Code (Texas Controlled Substances Act);
4548	4550		(ii) any felony under Chapter 483, Health
4549	4551		and Safety Code;
4550	4552		(iii) a felony under Chapter 151, Finance
4551	4553		Code;
4552	4554		(iv) any felony under Chapter 34, Penal
4553	4555		Code;
4554	4556		(v) a Class A misdemeanor under Subchapter
4555	4557		B, Chapter 365, Health and Safety Code, if the defendant has been
4556	4558		previously convicted twice of an offense under that subchapter;
4557	4559		(vi) any felony under Chapter 32, Human
4558	4560		Resources Code, or Chapter 31, 32, 35A, or 37, Penal Code, that
4559	4561		involves the state Medicaid program;
4560	4562		(vii) a Class B misdemeanor under Chapter
4561	4563		522, Business & Commerce Code;
4562	4564		(viii) a Class A misdemeanor under Section
4563	4565		306.051, Business & Commerce Code;
4564	4566		(ix) any offense under Section 42.10, Penal
4565	4567		Code;
4566	4568		(x) any offense under Section 46.06(a)(1)
4567	4569		or 46.14, Penal Code;
4568	4570		(xi) any offense under Chapter 71, Penal
4569	4571		Code;
4570	4572		(xii) any offense under Section 20.05 or
4571	4573		20.06, Penal Code; or
4572	4574		(xiii) an offense under Section 326.002,
4573	4575		Business & Commerce Code;
4574	4576		(C) the proceeds gained from the commission of a
4575	4577		felony listed in Paragraph (A) or (B) of this subdivision, a
4576	4578		misdemeanor listed in Paragraph (B)(vii), (ix), (x), or (xi) of
4577	4579		this subdivision, or a crime of violence;
4578	4580		(D) acquired with proceeds gained from the
4579	4581		commission of a felony listed in Paragraph (A) or (B) of this
4580	4582		subdivision, a misdemeanor listed in Paragraph (B)(vii), (ix), (x),
4581	4583		or (xi) of this subdivision, or a crime of violence;
4582	4584		(E) used to facilitate or intended to be used to
4583	4585		facilitate the commission of a felony under Section 15.031 or
4584	4586		43.25, Penal Code; or
4585	4587		(F) used to facilitate or intended to be used to
4586	4588		facilitate the commission of a felony under Section 20A.02 or
4587	4589		Chapter 43, Penal Code.
4588	4590		SECTION 2.07. Section 54.6385, Education Code, is amended
4589	4591		to read as follows:
4590	4592		Sec. 54.6385. EXEMPTION FROM SECURITIES LAWS. The
4591	4593		registration requirements of The Securities Act (Title 12,
4592	4594		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4593	4595		Statutes)] do not apply to the sale of a prepaid tuition contract by
4594	4596		the board or by a registered securities dealer or registered
4595	4597		investment adviser.
4596	4598		SECTION 2.08. Section 54.768, Education Code, is amended to
4597	4599		read as follows:
4598	4600		Sec. 54.768. EXEMPTION FROM SECURITIES LAWS. The
4599	4601		registration requirements of The Securities Act (Title 12,
4600	4602		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4601	4603		Statutes)] do not apply to the sale of a prepaid tuition contract by
4602	4604		the board or by a registered securities dealer or registered
4603	4605		investment adviser.
4604	4606		SECTION 2.09. Section 54.907, Education Code, is amended to
4605	4607		read as follows:
4606	4608		Sec. 54.907. EXEMPTION FROM SECURITIES LAWS. An ABLE
4607	4609		account is not a security within the meaning of the term as defined
4608	4610		by Section 4001.068, Government Code [4, The Securities Act
4609	4611		(Article 581-4, Vernon's Texas Civil Statutes)], and is exempt from
4610	4612		the provisions of The Securities Act (Title 12, Government Code)
4611	4613		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)].
4612	4614		SECTION 2.10. Section 255.251(1), Estates Code, is amended
4613	4615		to read as follows:
4614	4616		(1) "Securities" has the meaning assigned by Section
4615	4617		4001.068, Government Code [4, The Securities Act (Article 581-4,
4616	4618		Vernon's Texas Civil Statutes)].
4617	4619		SECTION 2.11. Section 31.007(a), Finance Code, is amended
4618	4620		to read as follows:
4619	4621		(a) An officer, director, or employee of a bank that has its
4620	4622		main office or a branch located in this state with fewer than 500
4621	4623		shareholders or of a bank holding company with fewer than 500
4622	4624		shareholders that controls a bank that has its main office or a
4623	4625		branch located in this state is exempt from the registration and
4624	4626		licensing provisions of The Securities Act (Title 12, Government
4625	4627		Code) [(Article 581-1 et seq., Vernon's Texas Civil Statutes)] with
4626	4628		respect to that person's participation in a transaction, including
4627	4629		a sale, involving securities issued by:
4628	4630		(1) the bank or bank holding company of which that
4629	4631		person is an officer, director, or employee;
4630	4632		(2) a bank holding company that controls the bank of
4631	4633		which that person is an officer, director, or employee; or
4632	4634		(3) a bank controlled by the bank holding company of
4633	4635		which that person is an officer, director, or employee.
4634	4636		SECTION 2.12. Section 89.005, Finance Code, is amended to
4635	4637		read as follows:
4636	4638		Sec. 89.005. EXEMPTION FROM SECURITIES LAWS. A savings
4637	4639		account, certificate, or other evidence of an interest in the
4638	4640		savings liability of an association or federal association is not
4639	4641		considered a security under The Securities Act (Title 12,
4640	4642		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4641	4643		Statutes)]. A security of these associations, other than an
4642	4644		interest in the savings liability of an association, is not subject
4643	4645		to the registration requirements of that act. A person whose
4644	4646		principal occupation is being an officer of an association is
4645	4647		exempt from the registration and licensing provisions of that act
4646	4648		with respect to that person's participation in a sale or other
4647	4649		transaction involving securities of the association of which the
4648	4650		person is an officer.
4649	4651		SECTION 2.13. Section 119.007, Finance Code, is amended to
4650	4652		read as follows:
4651	4653		Sec. 119.007. EXEMPTION FROM SECURITIES LAWS. A deposit
4652	4654		account, certificate, or other evidence of an interest in the
4653	4655		deposit liability of a savings bank or federal savings bank is not
4654	4656		considered a security under The Securities Act (Title 12,
4655	4657		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4656	4658		Statutes)]. A security of these savings banks, other than an
4657	4659		interest in the deposit liability of a savings bank, is not subject
4658	4660		to the registration requirements of that Act. A person whose
4659	4661		principal occupation is being an officer of a savings bank is exempt
4660	4662		from the registration and licensing provisions of that Act with
4661	4663		respect to that person's participation in a sale or other
4662	4664		transaction involving securities of the savings bank of which the
4663	4665		person is an officer.
4664	4666		SECTION 2.14. Section 149.002(c), Finance Code, is amended
4665	4667		to read as follows:
4666	4668		(c) In this section, "security" has the meaning assigned by
4667	4669		Section 4001.068, Government Code [4, The Securities Act (Article
4668	4670		581-4, Vernon's Texas Civil Statutes)].
4669	4671		SECTION 2.15. Section 181.006, Finance Code, is amended to
4670	4672		read as follows:
4671	4673		Sec. 181.006. EXEMPTION OF TRUST INSTITUTION DIRECTORS AND
4672	4674		PERSONNEL FROM SECURITIES LAW. An officer, director, manager,
4673	4675		managing participant, or employee of a trust institution with fewer
4674	4676		than 500 shareholders or participants, including a state trust
4675	4677		company or a trust institution organized under the laws of another
4676	4678		state that lawfully maintains an office in this state, or a holding
4677	4679		company with fewer than 500 shareholders or participants that
4678	4680		controls a trust institution is exempt from the registration and
4679	4681		licensing provisions of The Securities Act (Title 12, Government
4680	4682		Code) [(Article 581-1 et seq., Vernon's Texas Civil Statutes)] with
4681	4683		respect to that person's participation in a transaction, including
4682	4684		a sale, involving securities issued by the trust institution or the
4683	4685		holding company of which that person is an officer, director,
4684	4686		manager, managing participant, or employee if the person is not
4685	4687		compensated for the person's participation in the transaction.
4686	4688		SECTION 2.16. Section 273.004, Finance Code, is amended to
4687	4689		read as follows:
4688	4690		Sec. 273.004. EXEMPTION FROM SECURITIES ACT. (a) A
4689	4691		security issued by the corporation under this chapter is not
4690	4692		considered a "security" under The Securities Act (Title 12,
4691	4693		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4692	4694		Statutes)].
4693	4695		(b) A person authorized by and acting on behalf of the
4694	4696		corporation is exempt from the registration and licensing
4695	4697		provisions of The Securities Act (Title 12, Government Code)
4696	4698		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)] with
4697	4699		respect to that person's participation in a sale or other
4698	4700		transaction involving a security of the corporation.
4699	4701		SECTION 2.17. Section 103.033, Government Code, is amended
4700	4702		to read as follows:
4701	4703		Sec. 103.033. MISCELLANEOUS FEES AND COSTS: THE
4702	4704		SECURITIES ACT. A fee shall be collected for the sale of
4703	4705		securities under an offering that has not been registered, if the
4704	4706		transaction or securities are not exempt under Section 4006.153
4705	4707		[35-2, The Securities Act (Article 581-35-2, Vernon's Texas Civil
4706	4708		Statutes)], in an amount set by the securities commissioner or
4707	4709		court, but not to exceed six times the amount that would have been
4708	4710		paid if the issuer had filed an application to register the
4709	4711		securities and paid the fee prescribed based on the amount of sales
4710	4712		made in this state within the prior three years, plus interest on
4711	4713		that amount from the date of the first sale made in this state until
4712	4714		the date the fee is paid.
4713	4715		SECTION 2.18. Section 411.139, Government Code, is amended
4714	4716		to read as follows:
4715	4717		Sec. 411.139. ACCESS TO CRIMINAL HISTORY RECORD
4716	4718		INFORMATION: STATE SECURITIES BOARD. (a) The securities
4717	4719		commissioner is entitled to obtain from the department criminal
4718	4720		history record information maintained by the department that
4719	4721		relates to a person who is:
4720	4722		(1) an applicant for a certificate of registration
4721	4723		under The Securities Act (Title 12, Government Code) [(Article
4722	4724		581-1 et seq., Vernon's Texas Civil Statutes)];
4723	4725		(2) a holder of a certificate of registration under
4724	4726		The Securities Act (Title 12, Government Code) [(Article 581-1 et
4725	4727		seq., Vernon's Texas Civil Statutes)];
4726	4728		(3) an applicant for employment by the State
4727	4729		Securities Board; or
4728	4730		(4) an employee of the State Securities Board.
4729	4731		(b) Criminal history record information obtained by the
4730	4732		securities commissioner under this section may not be released by
4731	4733		any person or agency except on court order or with the consent of
4732	4734		the person who is the subject of the criminal history record
4733	4735		information, unless the information is entered into evidence by the
4734	4736		State Securities Board or a court at an administrative proceeding
4735	4737		or a civil or criminal action under The Securities Act (Title 12,
4736	4738		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4737	4739		Statutes)].
4738	4740		SECTION 2.19. Section 552.112(b), Government Code, is
4739	4741		amended to read as follows:
4740	4742		(b) In this section, "securities" has the meaning assigned
4741	4743		by The Securities Act (Title 12, Government Code) [(Article 581-1
4742	4744		et seq., Vernon's Texas Civil Statutes)].
4743	4745		SECTION 2.20. Section 815.301(f), Government Code, is
4744	4746		amended to read as follows:
4745	4747		(f) For purposes of the investment authority of the board of
4746	4748		trustees under Section 67, Article XVI, Texas Constitution,
4747	4749		"securities" means any investment instrument within the meaning of
4748	4750		the term as defined by Section 4001.068 [4, The Securities Act
4749	4751		(Article 581-4, Vernon's Texas Civil Statutes)], 15 U.S.C. Section
4750	4752		77b(a)(1), or 15 U.S.C. Section 78c(a)(10).
4751	4753		SECTION 2.21. Section 825.301(a), Government Code, is
4752	4754		amended to read as follows:
4753	4755		(a) The board of trustees shall invest and reinvest assets
4754	4756		of the retirement system without distinction as to their source in
4755	4757		accordance with Section 67, Article XVI, Texas Constitution. For
4756	4758		purposes of the investment authority of the board of trustees under
4757	4759		Section 67, Article XVI, Texas Constitution, "securities" includes
4758	4760		any investment instrument within the meaning of the term as defined
4759	4761		by Section 4001.068 [4, The Securities Act (Article 581-4, Vernon's
4760	4762		Texas Civil Statutes)], 15 U.S.C. Section 77b(a)(1), or 15 U.S.C.
4761	4763		Section 78c(a)(10), any derivative instrument, and any other
4762	4764		instrument commonly used by institutional investors to manage
4763	4765		institutional investment portfolios. An interest in a limited
4764	4766		partnership or investment contract is considered a security without
4765	4767		regard to the number of investors or the control, access to
4766	4768		information, or rights granted to or retained by the retirement
4767	4769		system. Any instrument or contract intended to manage transaction
4768	4770		or currency exchange risk in purchasing, selling, or holding
4769	4771		securities is considered to be a security. Investment decisions
4770	4772		are subject to the standard provided in the Texas Trust Code by
4771	4773		Section 117.004(b), Property Code.
4772	4774		SECTION 2.22. Section 840.301(c), Government Code, is
4773	4775		amended to read as follows:
4774	4776		(c) For purposes of the investment authority of the board of
4775	4777		trustees under Section 67, Article XVI, Texas Constitution,
4776	4778		"securities" means any investment instrument within the meaning of
4777	4779		the term as defined by Section 4001.068 [4, The Securities Act
4778	4780		(Article 581-4, Vernon's Texas Civil Statutes)], 15 U.S.C. Section
4779	4781		77b(a)(1), or 15 U.S.C. Section 78c(a)(10).
4780	4782		SECTION 2.23. Section 845.301(a), Government Code, is
4781	4783		amended to read as follows:
4782	4784		(a) The assets of the retirement system shall be invested
4783	4785		and reinvested without distinction as to their source in accordance
4784	4786		with Section 67, Article XVI, Texas Constitution. For purposes of
4785	4787		the investment authority of the board of trustees under Section 67,
4786	4788		Article XVI, Texas Constitution, "securities" means any investment
4787	4789		instrument within the meaning of the term as defined by Section
4788	4790		4001.068 [4, The Securities Act (Article 581-4, Vernon's Texas
4789	4791		Civil Statutes)], 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. Section
4790	4792		78c(a)(10). An interest in a limited partnership or investment
4791	4793		contract is considered a security without regard to the number of
4792	4794		investors or the control, access to information, or rights granted
4793	4795		to or retained by the retirement system. Any instrument or
4794	4796		contract intended to manage transaction, currency exchange, or
4795	4797		interest rate risk in purchasing, selling, or holding securities,
4796	4798		or that derives all or substantially all of its value from the value
4797	4799		or performance of one or more securities, including an index or
4798	4800		group of securities, is considered to be a security. Investment
4799	4801		decisions are subject to the standard provided in the Texas Trust
4800	4802		Code by Section 117.004(b), Property Code.
4801	4803		SECTION 2.24. Section 855.301(a), Government Code, is
4802	4804		amended to read as follows:
4803	4805		(a) The board of trustees shall invest and reinvest the
4804	4806		assets of the retirement system without distinction as to their
4805	4807		source in accordance with Section 67, Article XVI, Texas
4806	4808		Constitution. For purposes of the investment authority of the
4807	4809		board of trustees under Section 67, Article XVI, Texas
4808	4810		Constitution, "security" means any investment instrument within
4809	4811		the meaning of the term as defined by Section 4001.068 [4, The
4810	4812		Securities Act (Article 581-4, Vernon's Texas Civil Statutes)], 15
4811	4813		U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10).
4812	4814		SECTION 2.25. Section 1371.154(b), Government Code, is
4813	4815		amended to read as follows:
4814	4816		(b) To be eligible to be a financial adviser or an
4815	4817		investment adviser under this subchapter, the adviser must:
4816	4818		(1) be registered:
4817	4819		(A) as a dealer or investment adviser in
4818	4820		accordance with Section 4004.051, 4004.052, or 4004.302 [Section 12
4819	4821		or 12-1, The Securities Act (Article 581-12 or 581-12-1, Vernon's
4820	4822		Texas Civil Statutes)];
4821	4823		(B) with the United States Securities and
4822	4824		Exchange Commission under the Investment Advisers Act of 1940 (15
4823	4825		U.S.C. Section 80b-1 et seq.), if the adviser is providing advice on
4824	4826		the investment of bond proceeds and not on the issuance of a public
4825	4827		security or an interest rate management agreement; or
4826	4828		(C) with the United States Securities and
4827	4829		Exchange Commission as a municipal advisor under Section 15B,
4828	4830		Securities Exchange Act of 1934 (15 U.S.C. Section 78o-4);
4829	4831		(2) have relevant experience in providing advice to
4830	4832		issuers in connection with:
4831	4833		(A) the issuance of public securities;
4832	4834		(B) the valuation of interest rate management
4833	4835		agreements; or
4834	4836		(C) the investment of public security proceeds;
4835	4837		and
4836	4838		(3) acknowledge in writing to the issuer that in
4837	4839		connection with the transaction for which the adviser is providing
4838	4840		advice the adviser:
4839	4841		(A) is acting as the issuer's agent; and
4840	4842		(B) has complied with the requirements of this
4841	4843		subchapter.
4842	4844		SECTION 2.26. Sections 1433.069(b) and (c), Government
4843	4845		Code, are amended to read as follows:
4844	4846		(b) A bond issued under this chapter and any coupon
4845	4847		representing interest on the bond are exempt securities under The
4846	4848		Securities Act (Title 12, Government Code) [(Article 581-1 et seq.,
4847	4849		Vernon's Texas Civil Statutes)].
4848	4850		(c) A lease agreement under this chapter is not a security
4849	4851		under The Securities Act (Title 12, Government Code) [(Article
4850	4852		581-1 et seq., Vernon's Texas Civil Statutes)].
4851	4853		SECTION 2.27. Section 2306.556(b), Government Code, is
4852	4854		amended to read as follows:
4853	4855		(b) A bond or other obligation issued by the corporation is
4854	4856		an exempt security under The Securities Act (Title 12, Government
4855	4857		Code) [(Article 581-1 et seq., Vernon's Texas Civil Statutes)], and
4856	4858		unless specifically provided otherwise, under any subsequently
4857	4859		enacted securities act. Any contract, guaranty, or other document
4858	4860		executed in connection with the issuance of the bond or other
4859	4861		obligation is not an exempt security under that Act, and unless
4860	4862		specifically provided otherwise, under any subsequently enacted
4861	4863		securities act.
4862	4864		SECTION 2.28. Section 221.067, Health and Safety Code, is
4863	4865		amended to read as follows:
4864	4866		Sec. 221.067. EXEMPT SECURITIES. (a) Bonds issued under
4865	4867		this chapter and any interest coupons are exempt securities under
4866	4868		The Securities Act (Title 12, Government Code) [(Article 581-1 et
4867	4869		seq., Vernon's Texas Civil Statutes)].
4868	4870		(b) If the bonds are secured by an agreement by a user to pay
4869	4871		to the development corporation amounts sufficient to pay the
4870	4872		principal of and interest and any redemption premium on the bonds,
4871	4873		the agreement, for the purposes of The Securities Act (Title 12,
4872	4874		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4873	4875		Statutes)], is a separate security issued to purchasers of the
4874	4876		bonds by the user, and not by the corporation. The agreement is
4875	4877		exempt from that Act only if:
4876	4878		(1) that Act exempts the agreement; or
4877	4879		(2) the bonds or the payments to be made under the
4878	4880		agreement are guaranteed by any person and the guarantee is an
4879	4881		exempt security under that Act.
4880	4882		SECTION 2.29. Section 223.036(a), Health and Safety Code,
4881	4883		is amended to read as follows:
4882	4884		(a) Bonds issued under this chapter and any interest coupons
4883	4885		are investment securities under Chapter 8, Business & Commerce
4884	4886		Code, and are exempt securities under The Securities Act (Title 12,
4885	4887		Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4886	4888		Statutes)].
4887	4889		SECTION 2.30. Section 826.204(b), Insurance Code, is
4888	4890		amended to read as follows:
4889	4891		(b) A membership interest in a mutual holding company does
4890	4892		not constitute a security as defined by Section 4001.068,
4891	4893		Government Code [4, The Securities Act (Article 581-4, Vernon's
4892	4894		Texas Civil Statutes)].
4893	4895		SECTION 2.31. Section 829.007, Insurance Code, is amended
4894	4896		to read as follows:
4895	4897		Sec. 829.007. SALE OF SECURITIES. (a) A sale, issuance, or
4896	4898		offering of securities under this chapter is exempt from the
4897	4899		registration and licensing provisions of The Securities Act (Title
4898	4900		12, Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4899	4901		Statutes)].
4900	4902		(b) An officer, director, or employee of an exchange, an
4901	4903		intermediate holding company, a mutual holding company, or a
4902	4904		resulting company who participates in a conversion under this
4903	4905		chapter is exempt from the registration and licensing provisions of
4904	4906		The Securities Act (Title 12, Government Code) [(Article 581-1 et
4905	4907		seq., Vernon's Texas Civil Statutes)]. A person may not receive
4906	4908		compensation, other than that person's usual salary or
4907	4909		compensation, for services performed under the exemption provided
4908	4910		by this subsection.
4909	4911		SECTION 2.32. Section 829.152(b), Insurance Code, is
4910	4912		amended to read as follows:
4911	4913		(b) A membership interest in a mutual holding company does
4912	4914		not constitute a security as defined by Section 4001.068,
4913	4915		Government Code [4, The Securities Act (Article 581-4, Vernon's
4914	4916		Texas Civil Statutes)].
4915	4917		SECTION 2.33. Section 882.756, Insurance Code, is amended
4916	4918		to read as follows:
4917	4919		Sec. 882.756. SALE OF SECURITIES. (a) A sale, issuance, or
4918	4920		offering of securities under this subchapter is exempt from the
4919	4921		registration and licensing provisions of The Securities Act (Title
4920	4922		12, Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4921	4923		Statutes)].
4922	4924		(b) An officer, director, or employee of a mutual life
4923	4925		insurance company or a mutual insurance holding company or stock
4924	4926		life insurance company resulting from a conversion under this
4925	4927		subchapter who participates in the conversion is exempt from the
4926	4928		registration and licensing provisions of The Securities Act (Title
4927	4929		12, Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
4928	4930		Statutes)]. A person may not receive compensation, other than that
4929	4931		person's usual salary or compensation, for services performed under
4930	4932		the exemption provided by this subsection.
4931	4933		SECTION 2.34. Section 884.002(d), Insurance Code, is
4932	4934		amended to read as follows:
4933	4935		(d) The Securities Act (Title 12, Government Code)
4934	4936		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)] applies to
4935	4937		a stipulated premium company.
4936	4938		SECTION 2.35. Section 884.203, Insurance Code, is amended
4937	4939		to read as follows:
4938	4940		Sec. 884.203. PUBLIC OFFERING OF CAPITAL STOCK. A
4939	4941		stipulated premium company may not make to the public an offering
4940	4942		that is subject to The Securities Act (Title 12, Government Code)
4941	4943		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)], of any of
4942	4944		its capital stock before the company possesses:
4943	4945		(1) capital in an amount of at least $100,000; and
4944	4946		(2) unencumbered surplus in an amount of at least
4945	4947		$100,000.
4946	4948		SECTION 2.36. Section 394.056(a), Local Government Code, is
4947	4949		amended to read as follows:
4948	4950		(a) A bond issued under this chapter or a coupon
4949	4951		representing interest on the bond is, when delivered, a security as
4950	4952		that term is defined under Chapter 8 of the Uniform Commercial Code
4951	4953		(Chapter 8, Title 1, Business & Commerce Code) and is an exempt
4952	4954		security under The Securities Act (Title 12, Government Code)
4953	4955		[(Article 581-1 et seq., Vernon's Texas Civil Statutes)].
4954	4956		SECTION 2.37. Section 501.203, Local Government Code, is
4955	4957		amended to read as follows:
4956	4958		Sec. 501.203. SECURITIES COMMISSIONER PERMIT TO SELL
4957	4959		SECURITIES REQUIRED. A corporation may not sell or offer for sale
4958	4960		bonds or other securities until the securities commissioner grants
4959	4961		a permit authorizing the corporation to offer and sell the bonds or
4960	4962		other securities under the registration provisions of The
4961	4963		Securities Act (Title 12, Government Code) [(Article 581-1 et seq.,
4962	4964		Vernon's Texas Civil Statutes)], except as exempted from
4963	4965		registration by rule or order of the State Securities
4964	4966		Board. Appeal from an adverse decision of the securities
4965	4967		commissioner or the State Securities Board is under the
4966	4968		administrative procedure law, Chapter 2001, Government Code. The
4967	4969		substantial evidence rule applies in an appeal under this
4968	4970		subsection.
4969	4971		SECTION 2.38. Section 901.457(b), Occupations Code, is
4970	4972		amended to read as follows:
4971	4973		(b) This section does not prohibit a license holder from
4972	4974		disclosing information that is required to be disclosed:
4973	4975		(1) by the professional standards for reporting on the
4974	4976		examination of a financial statement;
4975	4977		(2) under a summons or subpoena under the provisions
4976	4978		of the Internal Revenue Code of 1986 and its subsequent amendments,
4977	4979		the Securities Act of 1933 (15 U.S.C. Section 77a et seq.) and its
4978	4980		subsequent amendments, the Securities Exchange Act of 1934 (15
4979	4981		U.S.C. Section 78a et seq.) and its subsequent amendments, or The
4980	4982		Securities Act (Title 12, Government Code) [(Article 581-1 et seq.,
4981	4983		Vernon's Texas Civil Statutes)];
4982	4984		(3) under a court order signed by a judge if the order:
4983	4985		(A) is addressed to the license holder;
4984	4986		(B) mentions the client by name; and
4985	4987		(C) requests specific information concerning the
4986	4988		client;
4987	4989		(4) in an investigation or proceeding conducted by the
4988	4990		board;
4989	4991		(5) in an ethical investigation conducted by a
4990	4992		professional organization of certified public accountants;
4991	4993		(6) in the course of a peer review under Section
4992	4994		901.159 or in accordance with the requirements of the Public
4993	4995		Company Accounting Oversight Board or its successor; or
4994	4996		(7) in the course of a practice review by another
4995	4997		certified public accountant or certified public accountancy firm
4996	4998		for a potential acquisition or merger of one firm with another, if
4997	4999		both firms enter into a nondisclosure agreement with regard to all
4998	5000		client information shared between the firms.
4999	5001		SECTION 2.39. Section 221.025(a), Property Code, is amended
5000	5002		to read as follows:
5001	5003		(a) A developer's compliance with this chapter exempts the
5002	5004		developer's offer and disposition of timeshare interests subject to
5003	5005		this chapter from securities and dealer registration under The
5004	5006		Securities Act (Title 12, Government Code) [(Article 581-1 et seq.,
5005	5007		Vernon's Texas Civil Statutes)].
5006	5008		SECTION 2.40. Section 222.013, Property Code, is amended to
5007	5009		read as follows:
5008	5010		Sec. 222.013. EXEMPT FROM SECURITIES ACT. The filing of a
5009	5011		registration under this chapter exempts the sale of a membership
5010	5012		interest or membership right in a membership camping resort subject
5011	5013		to this chapter from registration under The Securities Act (Title
5012	5014		12, Government Code) [(Article 581-1 et seq., Vernon's Texas Civil
5013	5015		Statutes)].
5014	5016		SECTION 2.41. Section 171.055, Tax Code, is amended to read
5015	5017		as follows:
5016	5018		Sec. 171.055. EXEMPTION--OPEN-END INVESTMENT COMPANY. An
5017	5019		open-end investment company, as defined by the Investment Company
5018	5020		Act of 1940 (15 U.S.C. Section 80a-1 et seq.[, 15 U.S.C.]), that is
5019	5021		subject to that Act and that is registered under The Securities Act
5020	5022		(Title 12, Government Code) [(Article 581-1 et seq., Vernon's Texas
5021	5023		Civil Statutes)] is exempted from the franchise tax.
5022	5024		SECTION 2.42. Section 161.063, Utilities Code, is amended
5023	5025		to read as follows:
5024	5026		Sec. 161.063. EXEMPTION FROM APPLICATION OF SECURITIES ACT.
5025	5027		The Securities Act (Title 12, Government Code) [(Article 581-1 et
5026	5028		seq., Vernon's Texas Civil Statutes)] does not apply to:
5027	5029		(1) an obligation issued to secure a debt of an
5028	5030		electric cooperative to the United States; or
5029	5031		(2) the issuance of a membership certificate by an
5030	5032		electric cooperative.
5031	5033		SECTION 2.43. Section 162.063, Utilities Code, is amended
5032	5034		to read as follows:
5033	5035		Sec. 162.063. EXEMPTION FROM APPLICATION OF SECURITIES ACT.
5034	5036		The Securities Act (Title 12, Government Code) [(Article 581-1 et
5035	5037		seq., Vernon's Texas Civil Statutes)] does not apply to:
5036	5038		(1) a note, bond, or other evidence of indebtedness
5037	5039		issued by a telephone cooperative doing business in this state to
5038	5040		the United States;
5039	5041		(2) an instrument executed to secure a debt of a
5040	5042		telephone cooperative to the United States; or
5041	5043		(3) the issuance of a membership certificate by a
5042	5044		telephone cooperative or a foreign corporation doing business in
5043	5045		this state under this chapter.
5044	5046		SECTION 2.44. Section 67.015, Water Code, is amended to
5045	5047		read as follows:
5046	5048		Sec. 67.015. EXEMPTION FROM SECURITIES ACT. The Securities
5047	5049		Act (Title 12, Government Code) [(Article 581-1 et seq., Vernon's
5048	5050		Texas Civil Statutes)] does not apply to:
5049	5051		(1) a note, bond, or other evidence of indebtedness
5050	5052		issued by a corporation doing business in this state to the United
5051	5053		States;
5052	5054		(2) an instrument executed to secure a debt of a
5053	5055		corporation to the United States; or
5054	5056		(3) the issuance of a membership certificate or stock
5055	5057		certificate of a corporation.
5056	5058		ARTICLE 3. REPEALER
5057	5059		SECTION 3.01. The Securities Act (Article 581-1 et seq.,
5058	5060		Vernon's Texas Civil Statutes) is repealed.
5059	5061		ARTICLE 4. GENERAL MATTERS
5060	5062		SECTION 4.01. This Act is enacted under Section 43, Article
5061	5063		III, Texas Constitution. This Act is intended as a recodification
5062	5064		only, and no substantive change in law is intended by this Act.
5063	5065		SECTION 4.02. This Act takes effect January 1, 2022.
5064		-	______________________________ ______________________________
5065		-	President of the Senate Speaker of the House
5066		-	I certify that H.B. No. 4171 was passed by the House on May 3,
5067		-	2019, by the following vote: Yeas 140, Nays 0, 2 present, not
5068		-	voting.
5069		-	______________________________
5070		-	Chief Clerk of the House
5071		-	I certify that H.B. No. 4171 was passed by the Senate on May
5072		-	21, 2019, by the following vote: Yeas 31, Nays 0.
5073		-	______________________________
5074		-	Secretary of the Senate
5075		-	APPROVED: _____________________
5076		-	Date
5077		-	_____________________
5078		-	Governor