December 15, 2023

TITLE 7. BANKING AND SECURITIES

PART 7. STATE SECURITIES BOARD

CHAPTER 106. GUIDELINES FOR THE ASSESSMENT OF ADMINSITRATIVE FINES

7 TAC §106.1

The Texas State Securities Board proposes an amendment to §106.1, concerning Guidelines for the Assessment of Administrative Fines, to update the statutory reference to the Texas Securities Act in the rule to refer to the codified version of the Texas Securities Act, which became effective January 1, 2022. The nonsubstantive amendment is being made pursuant to the Agency's periodic review of its rules.

Travis J. Iles, Securities Commissioner; Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division; and Joseph Rotunda, Director, Enforcement Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be improved statutory compliance by ensuring the rule is current and accurate and that it conforms to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.

Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.

The proposed amendment affects Texas Government Code §4007.106.

§106.1.Guidelines for the Assessment of Administrative Fines.

For the purpose of determining the amount of an administrative fine assessed against a person or company under The Securities Act, §4007.106 [~~§23-1~~], the Securities Commissioner shall consider the following factors:

(1) - (6) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304437

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 107. TERMINOLOGY

7 TAC §107.1, §107.2

The Texas State Securities Board proposes amendments to §107.1, concerning General; and §107.2, concerning Definitions, to update the statutory references to the Texas Securities Act in the rules to refer to the codified version of the Act, which became effective January 1, 2022. Section 107.1 would also be amended to capitalize the word "Board" to conform terminology. Other amendments would be made to existing definitions in §107.2, which would be relocated; repealed because they are no longer used in the Act or elsewhere in the Board Rules; or amended to conform to terms now used in the Act or in the rules. New definitions would also be added for the terms "NASAA," and "CFR," so those definitions that appear elsewhere in the rules can be eliminated. These nonsubstantive amendments are being made pursuant to the Agency's periodic review of its rules.

Travis J. Iles, Securities Commissioner; Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division; and Joseph Rotunda, Director, Enforcement Division, have determined that for the first five-year period the proposed amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendments.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for each year of the first five years the proposed amendments are in effect the public benefits expected as a result of adoption of the proposed amendments will be (1) improved readability and clarity; (2) defined terms that are no longer used will be removed; and (3) statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act, which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendments will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed. There is no anticipated impact on local employment.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for the first five-year period the proposed amendments are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; and they do not positively or negatively affect the state's economy. Additionally, the proposed amendments do not create a new regulation, or expand, limit, or repeal an existing regulation.

Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed sections in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.

The proposed amendments affect the Texas Securities Act, Texas Government Code, §§4001.001-4008.105.

§107.1.General.

All of the terms used in these rules have the same meaning as defined in Texas Government Code, Chapter 4001, Subchapter B [~~section 4~~] of the Texas Securities Act. In addition, the Board [~~board~~] may from time to time define and interpret certain terms, whether or not used in the Act, insofar as the definition and interpretation are not inconsistent with the purpose fairly intended by the policy and provisions of the Act.

§107.2.Definitions.

The following words and terms, when used in Part 7 of this title (relating to the State Securities Board), shall have the following meanings, unless the context clearly indicates otherwise.

(1) Act or Securities Act or Texas Securities Act--The Texas Securities Act, located in Title 12 of the Texas Government Code, Chapters 4001 through 4008 [~~Texas Revised Civil Statutes, Article 581-1~~ ~~et seq.~~ ], as amended.

(2) - (6) (No change.)

(7) CFR--The Code of Federal Regulations [~~Code or Internal Revenue Code--The Internal Revenue Code of 1986~~], as amended.

(8) - (11) (No change.)

(12) Qualified institutional buyer--An entity described in Rule 144A, as promulgated by the SEC under the Securities Act of 1933 (17 CFR §230.144A, as amended) [~~Detailed statement showing all assets and liabilities--A balance sheet~~].

(13) - (33) (No change.)

(34) Securities Exchange Act of 1934 or Federal Securities Exchange Act of 1934--The federal statute of that name, as amended, 15 United States Code §78a, et seq.

(35) - (36) (No change.)

(37) NASAA--The North American Securities Administrators Association, Inc. [~~Statement to reflect the financial condition--A balance sheet.~~]

(38) Telephone or telegram--For purposes of the Texas Securities Act, §4003.103 [~~§7.C(2)(c)~~], includes any means of electronic transmission such as, but not limited to, telephone, telegraph, wireless, email, graphic scanning, modem, or facsimile; provided, however, that the office of the State Securities Board has the necessary equipment to accept such a transmission.

(39) Within this state or in this state--

(A) A person is a "dealer" who engages "within this state" or "in this state" in one or more of the activities set out in the Texas Securities Act, §4001.056 [~~§4.C~~], if either the person or the person's agent is present in this state or the offeree/purchaser or the offeree/purchaser's agent is present in this state at the time of the particular activity. A person can be a dealer in more than one state at the same time.

(B) Likewise, a person is an "agent" who engages "within this state" or "in this state" in one or more of the activities set out in the Texas Securities Act, §4001.052 [~~§4.D~~], whether by direct act or through subagents except as otherwise provided, if either the agent or the agent's subagent is present in this state or the offeree/purchaser or the offeree/purchaser's agent is present in this state at the time of the particular activity. A person can be an agent in more than one state at the same time.

(40) - (43) (No change.)

(44) EFD System--The Electronic Filing Depository system provided by NASAA [~~the North American Securities Administrators Association (NASAA)~~] that is used for making an electronic filing with the Securities Commissioner of Form D and such other filings as permitted by Board rule.

[~~(45) Qualified institutional buyer--An entity described in Rule 144A, as promulgated by the SEC under the Securities Act of 1933 (17 CFR §230.144A, as amended).~~]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304440

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 113. REGISTRATION OF SECURITIES

7 TAC §113.1

The Texas State Securities Board proposes the repeal of §113.1, concerning Qualification of Securities. The text of this section is concurrently proposed to be relocated to existing §113.2, which would be renamed to reflect the added relocated text. A new §113.1, concerning Definitions, has also been concurrently proposed which would add a new definitions section to this chapter. The repeal and the related concurrent proposals are being made pursuant to the Agency's periodic review of its rules and make no substantive changes.

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed repeal is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed repeal.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed repeal is in effect the public benefit expected as a result of the repealed section will be the text can be relocated to another rule as part of the reorganization of the chapter to improve clarity and readability.

There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed repeal will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the repeal as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed repeal is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed repeal does not create a new regulation; and it does not limit or expand an existing regulation. The proposal would repeal an existing rule so that a new definitions section can be added to the chapter in its place, but the existing text of this rule would be relocated to another rule.

Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed repeal in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.

The repeal is proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.

The repeal affects the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C.

§113.1.Qualification of Securities.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304449

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

7 TAC §113.1 - 113.6, 113.8, 113.9, 113.11 - 113.14

The Texas State Securities Board proposes a new rule and amendments to eleven rules in this chapter to make nonsubstantive changes. Specifically, the Board proposes new §113.1, concerning Definitions; and proposes amendments to §113.2, concerning Registration by Coordination; §113.3, concerning Fair, Just, and Equitable Standards; §113.4, concerning Application for Registration; §113.5, concerning Financial Statements; §113.6, concerning Renewal Update; §113.8; concerning Notification of Status in Other States; §113.9, concerning Securities Underlying Transferable Warrants and Employee Stock Options; §113.11, concerning Shelf Registration of Securities; §113.12, concerning Applicability of Statements of Policy to Exempt Offerings; §113.13, concerning Multijurisdictional Disclosure System--MJDS Offerings; and §113.14, concerning Statements of Policy. The existing §113.1, concerning Qualification of Securities, is concurrently proposed for repeal. The new rule and amendments are being made pursuant to the agency's periodic review of its rules and make no substantive changes.

New §113.1, concerning Definitions, would add a new definitions section to this chapter. The text of existing §113.1 of this title (relating to Qualification of Securities), would be relocated to existing §113.2 of this title (relating to Registration by Coordination), which would be renamed to reflect the relocated text.

The references to sections of the Texas Securities Act in §§113.2, 113.3, 113.5, 113.6, 113.8, 113.9, 113.11, 113.12, 113.13, and 113.14 would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022, or to the newly defined terms in proposed new §113.1, as applicable.

Sections 113.2, 113.11, and 113.13 would be amended to remove references to the "Securities and Exchange Commission" and language that defines this term as the "SEC" since this term is already defined in §107.2 of this title (relating to Definitions) as "SEC."

Section 113.4 would also be amended in (d)(2) to allow the Registration Division to send notices required by this section by methods other than regular mail, such as by email, and to remove the definition of the Texas Securities Act, as this term is already defined in §107.2 of this title (relating to Definitions). Language in §113.4(e) concerning registration of excess securities that duplicates text from the Act would be replaced with references to the applicable statutory provisions.

Section 113.5 would also be amended to reflect that an exemption referenced in this rule has been repealed by adding the word "former" to such reference.

Section 113.8 would also be amended for clarity and to improve readability.

Section 113.9 would also be amended to divide it into three subsections for clarity and to improve readability.

Section 113.11(a)(1) and (b)(1) would also be amended to revise the references to the "Code of Federal Regulations" in this subsection to "CFR." Rule 107.2 of this title (relating to Definitions) is concurrently proposed for amendment to add "CFR" as a defined term.

Section 113.13(b), (c), and (e) would also be amended to remove a reference to an obsolete SEC form and to revise the cross reference to §113.2 to state its proposed new caption, and subsection (e) would also be amended to conform terminology.

Section 113.14(a) would also be amended to remove the definition of the term "NASAA." Rule 107.2 of this title (relating to Definitions) is concurrently proposed for amendment to add "NASAA" as a defined term. Subsection (c) would be revised to remove the reference to "print" copies to allow for the requestor's preferred format (most likely electronic).

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed new rule and amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed new rule and amendments.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed new rule and amendments are in effect the public benefits expected as a result of adoption of the proposed new rule and amendments will be (1) statutory compliance by ensuring the rules are current and accurate, that they conform to the codified version of the Act and that they accurately coordinate with federal standards and requirements; (2) improved clarity and readability; and (3) with respect to the proposed amendment to §113.4, applicants receiving timelier notice of a possible abandonment of their registration applications.

There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed new rule and amendments will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the proposed new rule and amendments. There is no anticipated impact on local employment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed new rule and amendments are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; and they do not positively or negatively affect the state's economy. Additionally, the proposed new rule and amendments do not create a new regulation, or expand, limit, or repeal an existing regulation. Although the rulemaking involves the creation of a new rule, there would be no new regulation created since the net effect is to merely add definitions to the chapter to improve readability, while leaving the scope and content of the current regulations unchanged.

Comments on the proposed new rule and amendments must be in writing and will be accepted for 30 days following publication of the proposed sections in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.

The new section and amendments are proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The amendment to §113.5 is also proposed under the authority of Texas Government Code §4003.004(b), which provides the Board with the authority to define and provide requirements for small business issuers permitted to submit reviewed financial statements.

The new section and proposed amendments affect the following sections of the Texas Securities Act: Texas Government Code Chapter 4003, Subchapters A, B, and C.

§113.1.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Exemptions Sections--Refers to Subchapters A and B of Chapter 4005 of the Texas Securities Act.

(2) Registration by Coordination--Refers to Subchapter C of Chapter 4003 of the Texas Securities Act.

(3) Registration by Qualification--Refers to Subchapter A of Chapter 4003 of the Texas Securities Act.

(4) Registration Sections--Refers to Subchapters A, B, and C of Chapter 4003 of the Texas Securities Act.

§113.2.Registration by Qualification or Coordination.

(a) Registration by Qualification. A Regulation "A" filing with the SEC is a form of exemption and cannot be the basis for a filing for Registration by Coordination with the State Securities Board. Such a registration should meet the requirements as outlined in the sections of the Act concerning Registration by Qualification or, if federal covered securities, the requirements in §114.4 of this title (relating to Filings and Fees).

[(a) Time to file. Applications for registration under the Texas Securities Act, §7.C, should be filed contemporaneously with the Securities and Exchange Commission ("SEC") registration application. Delayed filings will jeopardize coordination effectiveness. Applications filed after effectiveness with the SEC are not eligible to use §7.C.]

(b) Registration by Coordination.

(1) Time to file. Applications for Registration by Coordination should be filed contemporaneously with the SEC registration application. Delayed filings will jeopardize coordination effectiveness. Applications filed after effectiveness with the SEC are not eligible to use Registration by Coordination.

(2) Who should file. Applications to register securities of open-end investment companies and unit investment trusts subject to the provisions of the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, will be considered and treated as applications for Registration by Coordination, if the securities are not federal covered securities as that term is defined in §107.2 of this title (relating to Definitions). Filings and fees relating to federal covered securities are addressed in Chapter 114 of this title (relating to Federal Covered Securities).

[(b) Who should file. Applications to register securities of open-end investment companies and unit investment trusts subject to the provisions of the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, will be considered and treated as applications to register securities by coordination, if the securities are not federal covered securities as that term is defined in §107.2 of this title (relating to Definitions). Filings and fees relating to federal covered securities are addressed in Chapter 114 of this title (relating to Federal Covered Securities).]

§113.3.Fair, Just, and Equitable Standards.

The following factors, among others, will usually be considered in determining whether or not a securities issue is fair, just, and equitable.

(1) General meaning. "Fair, just, and equitable" as used in the Texas Securities Act, §4003.006 and §4003.103 [~~§7.C and §10.A~~], means fair, just, and equitable to the new investors. It does not relate to customers or competitors of the business as such and does not apply to other business relationships of the issuer, promoter, or business. The words "fair, just, and equitable" are accorded their generally recognized meanings and are not used in any narrow, technical sense.

(2) (No change.)

§113.4.Application for Registration.

(a) - (c) (No change.)

(d) Abandonment of application.

(1) (No change.)

(2) Except for good cause shown, the application for registration of securities that fails to meet registration requirements within one year of the filing date of the application will expire and become null and void. A copy of this rule will be provided [~~mailed~~] to an applicant at least 60 days prior to the expiration of the application.

(e) Sales in excess of amount registered. [~~An offeror who sells securities in this state in excess of the amount of securities registered may do the following.~~]

(1) An offeror who sells securities in this state in excess of the amount of securities registered may take the actions described in and pay the fee or fees, as applicable, as required under and prescribed by the Act, §4006.151(a).

[~~(1) If the registration is still in effect an offeror may:~~]

[(A) apply to register the excess securities by paying three times the difference between the initial fee paid and the fee required under the Texas Securities Act (Act), §35, for the securities sold to persons in this state; and]

[~~(B) pay the amendment fee prescribed by the Act, §35.A(1).~~]

(2) Registration of the excess securities, if granted, shall be effective as provided in the Act, §4006.151(b). [~~If the registration is no longer in effect an offeror may:~~]

[(A) apply to register the excess in accordance with paragraph (1)(A) of this subsection, plus interest on the amount of fees owed computed at the rate of 6.0% from the date the registration was no longer in effect until the date the subsequent application is filed; and]

[~~(B) pay the amendment fee prescribed by the Act, §35.A(1).~~]

[~~(3) Registration of the excess securities, if granted, shall be effective retroactively to the effective date of the initial registration for the offering.~~]

(3) [~~(4)~~] As an alternative to paragraph (1) [~~or (2)~~] of this subsection, the offeror may issue letters of rescission to persons who bought excess securities and include a statement in the prospectus admitting the error, or show sales of unregistered securities as a contingent liability.

§113.5.Financial Statements.

(a) Audited financial statements. Except as provided in subsection (b) of this section, all financial statements submitted to the Securities Commissioner pursuant to the Texas Securities Act, §§4003.002, 4003.003 or 4003.004 [~~§7.A.(1)(f)~~] (including all financial statements of the issuer and any entity that is being taken over by an issuer which has not been operating) must be audited, and an opinion must be expressed by an independent certified public accountant or an independent public accountant. Such opinion shall be one acceptable to the Commissioner.

(b) (No change.)

(c) Small business issuer. For purposes of subsection (b) of this section, the term "small business issuer" shall mean any corporation:

(1) that has not previously sold securities by means of an offering involving public solicitation or advertising unless such offering was made in compliance with:

(A) former §139.25 of this title (relating to Intrastate Crowdfunding Exemption);

(B) - (E) (No change.)

(F) the Texas Securities Act, §4005.011 [~~§5.H~~];

(2) - (7) (No change.)

(d) - (e) (No change.)

§113.6.Renewal Update.

It is the responsibility of the applicant for renewal to see that all exhibits and information required to be filed with the Securities Commissioner for an original registration pursuant to the Registration Sections [~~Texas Securities Act, §7,~~] are maintained current with the Commissioner for the issuer whose registration is renewed under the Act, [~~§10.B,~~] so long as the permit is outstanding. Whenever there are material changes, the prospectus must be amended and filed with the Commissioner.

§113.8.Notification of Status in Other States.

Any issuer with an application for Registration by Coordination pending must file [~~under the Texas Securities Act, §7.C, in addition to filing~~] with the Securities Commissioner the original list of other states where filing has been made or is expected to be made as required by the Act, §4003.102(1)(B) [~~§7.C(1)(c)~~], and must make a timely report of the names of any states where such an application is subsequently made, withdrawn, or denied (together with the reasons for any withdrawal or denial).

§113.9.Securities Underlying Transferable Warrants and Employee Stock Options.

(a) When equity securities underlying transferable warrants or employee stock options are registered under the Registration Sections [~~Texas Securities Act, §7~~], those equity securities shall thereafter be deemed to be properly registered in Texas regardless of the time at which the warrants are exercised by warrant or option holders. Continuous registration (or annual renewal of registration) of the underlying equity securities during the life of the warrants or options shall not be required solely because of the existence of outstanding warrants or options.

(b) Once the distribution process is completed pursuant to the registration, the issuer or dealer who sold such registered securities is not required to remain continuously registered pursuant to the Texas Securities Act, §4004.051, [~~§12~~] solely because of the existence of outstanding warrants or options. However, if the issuer or dealer solicits the holders to exercise their warrants or options, the issuer or dealer must be registered as a securities dealer if the transaction does not fall within an exemption other than this section.

(c) This section is adopted pursuant to the authority granted by the Texas Securities Act, §4004.001 and §4005.024 [~~§5.T~~].

§113.11.Shelf Registration of Securities.

(a) Applicability.

(1) This section shall apply to the Registration [~~registration~~] by Coordination [~~coordination~~] in Texas of securities registered with the SEC [~~Securities and Exchange Commission (SEC)~~] for offer and sale on a delayed or continuous basis under SEC Rule 415 (17 CFR §230.415, as amended) [~~(17 Code of Federal Regulations §230.415)~~].

(2) - (3) (No change.)

(b) Certain debt offerings by substantial issuers.

(1) This subsection (b) applies to the registration of debt securities of issuers eligible to use SEC Form S-3 (17 CFR §239.13, as amended) [~~(17 Code of Federal Regulations §239.13)~~], to register debt securities with the SEC under SEC Rule 415.

(2) - (3) (No Change.)

§113.12.Applicability of Statements of Policy to Exempt Offerings.

This chapter and the statements of policy listed in §113.14 of this title (relating to Statements of Policy) do not apply to offerings made pursuant to an exemption under the Exemptions Sections [~~either the Texas Securities Act, §5 or §6~~], or an exemption by Board rule pursuant to the Texas Securities Act, §4005.024 [~~§5.T~~], or to an offering of federal covered securities, as that term is defined in §107.2 of this title (relating to Definitions).

§113.13.Multijurisdictional Disclosure System-MJDS Offerings.

(a) This section shall apply to the Registration [~~registration~~] by Coordination [~~coordination~~] in Texas of securities registered with the SEC [~~Securities and Exchange Commission (SEC)~~] in accordance with the multijurisdictional disclosure system (MJDS) adopted in SEC Release Number 33-6902.

(b) For purposes of the sections in the Act concerning Registration by Coordination [~~Texas Securities Act, §7.C~~], MJDS offerings filed on SEC Form F-7, Form F-8, [~~Form F-9~~] or Form F-10, shall become effective the later of three days after filing, or the effective date with the SEC, as long as the application for registration is filed contemporaneously with the SEC registration application in accordance with subsection (b) of §113.2 of this title (relating to Registration by Qualification or Coordination).

(c) Financial statements and financial information for offerings filed under subsection (b) of this section shall comply with instructions provided with SEC Form F-7, Form F-8, [~~Form F-9,~~] or Form F-10.

(d) (No change.)

(e) After the SEC has declared effective an issuer's Form F-8 [~~, Form F-9~~] or Form F-10 registration statement, a non-issuer transaction in any class of the issuer's securities is exempt from registration, whether or not the transaction is effected through a broker-dealer [~~broker dealer~~].

§113.14.Statements of Policy.

(a) The Securities Commissioner, where applicable, will utilize the criteria contained in the NASAA [~~North American Securities Administrators Association, Inc. (NASAA)~~] Statements of Policy set forth in subsection (b) of this section for offerings registering pursuant to the Registration Sections [~~Texas Securities Act, §7~~]. While applications not conforming to a statement of policy shall be looked upon with disfavor, where good cause is shown or to protect investors, certain provisions may be modified or waived by the Commissioner.

(b) (No change.)

(c) Copies of the NASAA Statements of Policy are available online at the NASAA web site (www.nasaa.org) and the Texas State Securities Board web site (www.ssb.texas.gov). Copies [~~Print copies~~] may be obtained by contacting the Texas State Securities Board, P.O. Box 13167, Austin, Texas 78711, or by calling (512) 305-8300.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304445

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 114. FEDERAL COVERED SECURITIES

7 TAC §§114.1, 114.2, 114.4

The Texas State Securities Board proposes amendments to §114.1, concerning Introduction; §114.2, concerning Definitions; and §114.4, concerning Filings and Fees. These nonsubstantive amendments are being made pursuant to the Agency's periodic review of its rules.

The references to sections of the Texas Securities Act in §§114.1, 114.2, and 114.4 would be updated to refer to either a newly defined term in §114.2, or to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022.

Section 114.2 would also be amended to add a definition for "Exemptions Sections," and §114.1 would also be amended to refer to this new defined term.

Definitions of the "Act" and the "SEC" would be removed from §114.2, since they are already defined in Rule 107.2 of this title.

Section 114.4 would also be amended to remove language in subsection (a)(3) defining the "Act," since this term is already defined in Rule 107.2 of this title.

Language in §114.4(a)(3), (b)(1)(B), and (b)(4)(C) concerning fees that replicates language in the Act would be replaced with references to the applicable statutory provisions.

Additionally, the period in §114.4(d)(1) preceding "the following" language would be replaced with a colon to improve accuracy, consistency, and readability; and the words "a year" would be added after "6%" in §114.4(d)(1)(B)(i) and (d)(2)(B) to better track the applicable language in Section 302.002 of the Texas Finance Code.

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendments.

(2) statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendments will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendments are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; and they do not positively or negatively affect the state's economy. Additionally, the proposed amendments do not create a new regulation, or expand, limit, or repeal an existing regulation.

The amendments are proposed under the authority of the Texas Government Code, §§4002.151 and 4005.024. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 4005.024 provides that the Board may prescribe new exemptions by rule.

The proposed amendments affect the following sections of the Texas Securities Act: Texas Government Code, Chapter 4005, Subchapters A and B; and Chapter 4006.

§114.1.Introduction.

(a) (No change.)

(b) Availability of a corresponding state exemption. Except as otherwise provided herein, the filing and fee requirements detailed in this chapter do not apply to federal covered securities that are exempt from registration pursuant to the Exemptions Sections [~~Texas Securities Act, §5 or §6~~], or by Board rule pursuant to the Texas Securities Act, §4005.024 [~~§5.T~~]. Transactions in federal covered securities may be exempt under any other Board rule or section of the Texas Securities Act; however, nothing in this chapter shall act as an election. Should for any reason, the offer and sale of federal covered securities fail to comply with all of the conditions in this chapter, a person may claim the availability of any other applicable exemption. A person, claiming an exemption outside this chapter, must comply with all conditions associated with that exemption.

§114.2.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Exemptions Sections--Refers to Subchapters A and B of Chapter 4005 of the Texas Securities Act [~~Act or Securities Act or Texas Securities Act--The Texas Securities Act, Texas Civil Statutes, Article 581-1, et seq., as amended~~].

(2) - (3) (No change.)

[~~(4) SEC--The United States Securities and Exchange Commission.~~]

§114.4.Filings and Fees.

(a) Generally. Unless otherwise provided in subsection (b) of this section, prior to the initial offer of the federal covered securities in this state, the issuer shall provide to the Securities Commissioner:

(1) - (2) (No change.)

(3) the fees [~~fee~~] provided for in the Texas Securities Act [~~(Act)~~], §4006.001(1) and §4006.055 [§35.A(1) plus one-tenth of 1.0% of the aggregate amount of federal covered securities proposed to be sold to persons located within this state based on the price at which such securities are to be offered to the public, as provided in the Act, §35.B(2)].

(b) Special circumstances.

(1) SEC Regulation D, Rule 506 offerings. In connection with an offering described in both §109.13(k) of this title (relating to Limited Offering Exemptions) and SEC Regulation D, Rule 506, at the time the Form D is filed with the SEC, but no later than 15 days after the first sale of the federal covered securities in this state, the issuer shall provide to the Securities Commissioner:

(A) (No change.)

(B) the [a] fee [~~of one-tenth of 1.0% of the aggregate amount of federal covered securities described as being offered for sale, but in no case more than $500,~~] as provided in the Texas Securities Act, §4006.052 [~~§35.B(7)~~].

(2) - (3) (No change.)

(4) Secondary trading. A registered dealer or issuer that chooses to comply with the Texas Securities Act, §4005.019(b)(9)(B) [~~§5.O(9)~~], by filing a form, shall provide to the Securities Commissioner, prior to the sale of the securities in this state:

(A) - (B) (No change.)

(D) (No change.)

(5) SEC Regulation A, Tier 2. Prior to the initial offer of the federal covered securities in this state, the issuer shall provide to the Securities Commissioner:

(A) - (B) (No change.)

(C) the fees [~~fee~~] provided for in the Act, §4006.001(1) and §4006.055 [§35.A(1), plus one-tenth of 1.0% of the aggregate amount of federal covered securities proposed to be sold to persons located within this state based on the price at which such securities are to be offered to the public, as provided in the Act, §35.B(2)].

(d) Excess sales.

(1) Except as provided in paragraph (2) of this subsection, an offeror who sells securities in this state in excess of the amount of federal covered securities authorized may do the following:[.]

(A) If the authorization is still in effect an offeror may:

(i) request authorization for the excess securities by paying three times the difference between the initial fee paid and one-tenth of 1.0% of the aggregate amount of the securities sold to persons in this state, as provided in the Texas Securities Act, §4006.055 [~~§§35.B(2)~~] and §4006.151 [~~35-1.A~~]; and

(ii) pay the amendment fee provided for in the Texas Securities Act, §4006.001(1) [~~§35.A(1)~~].

(B) If the authorization is no longer in effect an offeror may:

(i) request authorization of the excess securities in accordance with subparagraph (A)(i) of this paragraph, plus interest on the amount of fees owed computed at the rate of 6.0% a year from the date the authorization was no longer in effect until the date the subsequent request is made; and

(ii) pay the amendment fee provided for in the Texas Securities Act, §4006.001(1) [~~§35.A(1)~~].

(2) An offeror in an SEC Regulation D, Rule 506 offering, who paid less than the maximum fee prescribed in subsection (b)(1) of this section and offered a greater amount of federal covered securities than authorized may do the following:

(A) (No change.)

(B) pay three times the difference between the initial fee paid and the fee which should have been paid, plus interest on the fee owed computed at the rate of 6.0% a year from the date the original Form D was received by the Securities Commissioner until the date the amended notice is received by the Securities Commissioner, as provided in the Texas Securities Act, §4006.152 [~~§35-1.B~~].

(3) (No change.)

(e) (No change.)

(f) Period of effectiveness.

(1) - (3) (No change.)

(4) The renewal of an authorization for federal covered securities under this chapter may be renewed for additional periods of one year if the notice filing and renewal fees are received prior to the expiration date of the existing authorization. Failure to tender the renewal fee prior to the expiration date may subject the issuer to higher fees, pursuant to the Texas Securities Act, §§4006.151, 4006.152, or 4006.153 [~~§§35-1 or 35-2~~].

(5) (No change.)

(g) - (i) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304453

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 115. SECURITIES DEALERS AND AGENTS

7 TAC §§115.18

The Texas State Securities Board proposes an amendment to §115.18, concerning Special Provisions Relating to Military Applicants. The amendment is proposed, in part, to implement the requirements of Senate Bill 422, passed in the 2023 Texas Legislative Session, which amended §55.0041 of the Texas Occupations Code, effective September 1, 2023.

Related forms are being concurrently proposed as are comparable amendments to the corresponding rule for investment advisers and investment adviser representatives.

To reflect the statutory changes, the proposed amendment would expand out-of-state occupational license recognition to include military service members, as long as certain criteria are met. The time period for which verification of good standing occurs would also be modified from "as soon as practicable" to no later than 30 days. The proposed amendment would also address the term of the recognition in situations of divorce or other events impacting the military spouse's status. Finally, a statement of purpose would be added to the rule to make it clear that this rule addresses the requirements provided under Chapter 55, Texas Occupations Code, and not federal law.

The proposed rulemaking also would make some nonsubstantive changes to conform terminology, and the references to sections of the Texas Securities Act in the rule would also be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022.

Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that, for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment. The fiscal note to Senate Bill 422 also reflected that no significant fiscal implication to the State is anticipated.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that, for each year of the first five years the proposed amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be consistency with the applicable statutory requirements, as well as improved readability, clarity, and statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that there will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that, except as noted below, for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does do not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; it does not positively or negatively affect the state's economy; and it does not create a new regulation, or limit, or repeal an existing regulation. The proposed substantive changes required by SB 422 will increase the number of individuals subject to the rule's applicability.

The amendment is proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The amendment is also proposed under §55.0041 of the Texas Occupations Code, as amended by SB 422, which requires state agencies that issue licenses to adopt rules for the recognition of out-of-state licenses for military applicants.

The proposal affects the following sections of the Texas Securities Act, Texas Government Code: §§4006.001 and 4007.105; and Chapter 4004, Subchapters B through F.

§115.18.Special Provisions Relating to Military Applicants.

(a) (No change.)

(b) Expedited review of an application submitted by a military applicant as authorized by Occupations Code, §§55.004, 55.005, and [-] 55.006.

(1) (No change.)

(2) If the military applicant is not registered within five days of submitting an application, the military applicant may request special consideration of his or her application for registration by filing Form 133.4, Request for Consideration of a Registration Application by a Military Applicant, with the Securities Commissioner [~~("Commissioner")~~]. Within five business days of receipt of the completed Form 133.4, the military applicant will be notified in writing of the reason(s) for the pending or deficient status assigned to the application.

(3) In addition to the waivers of examination requirements set out in §115.3 of this title (relating to Examination), the Commissioner in his or her discretion is authorized by the Board to grant full or partial waivers of the examination requirements of the Texas Securities Act, §4004.151 [~~Section 13.D~~], on a showing of alternative demonstrations of competency to meet the requirements for obtaining the registration sought.

(4) - (5) (No change.)

(d) Registration of persons with military experience as authorized by Occupations Code, §55.007.

(1) (No change.)

(2) The procedure authorized by this subsection is not available to a military service member or military veteran who:

(A) (No change.)

(B) has been convicted of a crime that could be the basis for denial of the registration pursuant to the Texas Securities Act, §4007.105 [~~§14.A~~].

(e) Renewals by military service members, as authorized by Occupations Code, §55.002 and §55.003. If a military service member's registration is not renewed in a timely manner, the military service member may renew the registration pursuant to this subsection.

(1) - (6) (No change.)

(f) - (g) (No change.)

(h) Recognition of out-of-state license or registration of an individual who is either a military service member or a military spouse as authorized by Occupations Code, §55.0041.

(1) An individual who is a resident of Texas and who is either a military service member or a [A] military spouse may use the procedure set out in this subsection if the individual [~~he or she~~] holds a current registration in another jurisdiction;

(2) The period covered by this subsection is only for the time during which the military service member [~~to whom the military spouse is married~~] is stationed at a military installation in Texas. Notwithstanding, if the individual is a military spouse, in the event of a divorce or other event that affects the individual's status as a military spouse, the recognition period covered by this subsection may continue, but for all individuals using the procedure set out in this subsection, this recognition [~~This~~] period may not exceed three years from the date the individual [~~military spouse~~]:

(A) - (B) (No change.)

(3) Option 1: registration in Texas with waiver or refund of the initial registration and renewal fees. If the individual [~~military spouse~~] is registered in Texas, for all or part of the period set out in paragraph (2) of this subsection, the individual [~~he or she~~] may request a waiver or refund of a fee previously paid.

(A) (No change.)

(B) A renewal fee may be waived by submitting Form 133.22, Waiver or Refund Request by a Military Service Member or Military Spouse for a Renewal Fee, at the time the renewal is submitted. A refund of a renewal fee that was paid in error, is requested by submitting Form 133.22 within four years from the date the fee was collected or received.

(4) Option 2: notification and authorization of activity without registration. Upon confirmation under subparagraph (C) or (D) of this paragraph, the individual [~~military spouse~~] will be considered to be notice filed in Texas. Such notice filing expires at the end of the calendar year.

(A) An individual [~~A military spouse~~] may engage in activity without a license or registration under the authority of Occupations Code, §55.0041, and this paragraph, only for the period specified in paragraph (2) of this subsection.

(B) An individual [~~A military spouse~~] who becomes ineligible under Occupations Code, §55.0041, or paragraph (1) or (2) of this subsection prior to the three year period identified in paragraph (2) of this subsection, must notify the Securities Commissioner of such ineligibility within 30 days and immediately cease activity until such time as the individual [~~he or she~~] is registered in the appropriate capacity to conduct activity in Texas.

(i) provide notice of the individual's [~~his or her~~] intent to engage in activity in Texas and specify the type of activity by filing with the Securities Commissioner:

(I) Form 133.23, Request for Recognition of Out-Of-State License or Registration Pursuant to Occupations Code §55.0041 [~~by a Military Spouse~~];

(II) proof of the individual's [~~his or her~~] residency in Texas (a permanent change of station (PCS) order may serve as proof of residency [~~for spouses of active military service members~~]); and

(III) a copy of the individual's [~~his or her~~] military identification card.

(ii) receive confirmation that the Registration Division:

(I) has verified the individual's license in another jurisdiction, which the Registration Division shall complete such verification no later than the 30th day after the date the individual provides the notice and submits the information required by subparagraph (C)(i) of this paragraph; and

(II) (No change.)

(D) To continue to conduct business in Texas without registration under Option 2, after the expiration of the initial confirmation under subparagraph (C)(ii) of this paragraph, the individual [~~military spouse~~] must renew annually on the same schedule as renewals of registration. This enables the Registration Division to determine that the individual [~~military spouse~~] remains eligible under Occupations Code, §55.0041, to continue to conduct securities activities in Texas without being registered.

(i) (No change.)

(ii) A renewal is not effective until the individual [~~military spouse~~] receives confirmation that the Registration Division:

(I) - (II) (No change.)

(i) The purpose of this section is to establish procedures authorized by Texas Occupations Code, Chapter 55, and is not intended to modify or alter rights that may be provided under federal law.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304460

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 116. INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES

7 TAC §§116.18

The Texas State Securities Board proposes an amendment to §116.18, concerning Special Provisions Relating to Military Applicants. The amendment is proposed, in part, to implement the requirements of Senate Bill 422, passed in the 2023 Texas Legislative Session, which amended §55.0041 of the Texas Occupations Code, effective September 1, 2023.

Related forms are being concurrently proposed as are comparable amendments to the corresponding rule for dealers and agents.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that there will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

The proposal affects the following sections of the Texas Securities Act, Texas Government Code: §§4006.001 and 4007.105; and Chapter 4004, Subchapters B through G.

§116.18.Special Provisions Relating to Military Applicants.

(a) (No change.)

(b) Expedited review of an application submitted by a military applicant as authorized by Occupations Code, §§55.004, 55.005, and [-] 55.006.

(1) (No change.)

(3) In addition to the waivers of examination requirements set out in §116.3 of this title (relating to Examination), the Commissioner in his or her discretion is authorized by the Board to grant full or partial waivers of the examination requirements of the Texas Securities Act, §4004.151 [~~§13.D~~], on a showing of alternative demonstrations of competency to meet the requirements for obtaining the registration sought.

(4) - (5) (No change.)

(d) Registration of persons with military experience as authorized by Occupations Code, §55.007.

(1) (No change.)

(2) The procedure authorized by this subsection is not available to a military service member or military veteran who:

(A) (No change.)

(B) has been convicted of a crime that could be the basis for denial of the registration pursuant to the Texas Securities Act, §4007.105 [~~§14.A~~].

(1) - (6) (No change.)

(f) - (g) (No change.)

(h) Recognition of out-of-state license or registration of an individual who is either a military service member or a military spouse as authorized by Occupations Code, §55.0041.

(A) - (B) (No change.)

(3) Option 1: registration in Texas, or a notice filing made pursuant to §116.1(b)(2) of this chapter, with waiver or refund of the initial filing fee and renewal fees. If the individual [~~military spouse~~] is registered or notice filed in Texas, for all or part of the period set out in paragraph (2) of this subsection, the individual [~~he or she~~] may request a waiver or refund of a fee previously paid.

(A) (No change.)

(4) Option 2: notification and authorization of activity without registration, or notice filing pursuant to §116.1(b)(2) of this chapter. Upon confirmation under subparagraph (C) or (D) of this paragraph, the individual [~~military spouse~~] will be considered to be notice filed in Texas. Such notice filing expires at the end of the calendar year.

(B) An individual [~~A military spouse~~] who becomes ineligible under Occupations Code, §55.0041, or paragraph (1) or (2) of this subsection prior to the three year period identified in paragraph (2) of this subsection, must notify the Securities Commissioner of such ineligibility within 30 days and immediately cease activity until such time as the individual [~~he or she~~] is registered in Texas, or makes a notice filing pursuant to §116.1(b)(2) of this chapter, in the appropriate capacity to conduct activity in Texas.

(C) Before engaging in an activity in Texas requiring registration [~~in Texas~~], or a notice filing pursuant to §116.1(b)(2) of this chapter, [~~in Texas,~~] the individual [~~military spouse~~] must initially:

(i) provide notice of the individual's [~~his or her~~] intent to engage in activity in Texas and specify the type of activity by filing with the Securities Commissioner:

(I) Form 133.23, Request for Recognition of Out-Of-State License or Registration Pursuant to Occupations Code §55.0041 [~~by a Military Spouse~~];

(III) a copy of the individual's [~~his or her~~] military identification card.

(ii) receive confirmation that the Registration Division:

(II) (No change.)

(D) To continue to conduct business in Texas without registration [~~in Texas~~], or a notice filing pursuant to §116.1(b)(2) of this chapter, under Option 2, after the expiration of the initial confirmation under subparagraph (C)(ii) of this paragraph, the individual [~~military spouse~~] must renew annually on the same schedule as renewals of registration. This enables the Registration Division to determine that the individual [~~military spouse~~] remains eligible under Occupations Code, §55.0041, to continue to conduct securities activities in Texas without being registered.

(i) (No change.)

(ii) A renewal is not effective until the individual [~~military spouse~~] receives confirmation that the Registration Division:

(I) - (II) (No change.)

(i) The purpose of this section is to establish procedures authorized by Texas Occupations Code, Chapter 55, and is not intended to modify or alter rights that may be provided under federal law.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304462

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 123. ADMINISTRATIVE GUIDELINES FOR REGISTRATION OF OPEN-END INVESTMENT COMPANIES

7 TAC §123.3

The Texas State Securities Board proposes an amendment to §123.3, concerning Conditional Exemption for Money Market Funds. The nonsubstantive amendment is being made pursuant to the Agency's periodic review of its rules.

The references to sections of the Texas Securities Act in the rule would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022. The rule would also be amended to replace a reference to a Securities and Exchange Commission Release found in subsection (b)(2) with a reference to a cite to the SEC rule in the Code of Federal Regulations, and to update terminology in subsections (b)(7) and (g).

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefits expected as a result of adoption of the proposed amendment will be (1) improved readability and clarity by updating terminology and references; and (2) statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.

The amendment is proposed under the authority of the Texas Government Code, §§4002.151 and 4005.024. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 4005.024 provides that the Board may prescribe new exemptions by rule.

The proposed amendment affects the following sections of the Texas Securities Act: Texas Government Code, Chapter 4003, Subchapters A, B, and C; Chapter 4005, Subchapter A; and Chapter 4006.

§123.3.Conditional Exemption for Money Market Funds.

(a) Introduction.

(1) Certain open-end investment companies commonly known as money market funds have investment characteristics and sales patterns materially different from other types of mutual funds and other securities. These funds, defined in subsection (b) of this section, are designed to attract a large volume of comparatively short-term investments by purchasers. As early redemptions are contemplated by both purchaser and seller, and because these funds continuously offer to repurchase their own securities and issue new securities to new and repeat investors, an excessive amount of fees may be paid under the Texas Securities Act, §4006.055 [~~§35.B(2)~~], for the securities issued. Therefore, pursuant to the Act, §4005.024 [~~§5.T~~], the State Securities Board conditionally exempts from the fee provisions of the Texas Securities Act certain investment company securities defined herein provided all the requirements of this section are satisfied.

(2) (No change.)

(b) Definition. In this section, a "money market fund" or "fund" is an open-end investment company which must meet all of the following conditions.

(1) (No change.)

(2) The fund must hold itself out to be a money market fund or an equivalent to a money market fund and must be in compliance with the Investment Company Act of 1940, Rule 2a-7 (17 CFR §270.2a-7, as amended) [~~, as revised in Securities and Exchange Commission Release Number IC-31166~~].

(3) - (6) (No change.)

(7) A currently authorized fund which has been granted money market status is not required to comply with this subsection until the fund files its Year-End [~~Year End~~] Report of Sales of Federal Covered Securities by a Money Market Fund on Form 133.27, but it is required to comply with the subsection as it was in effect at the time that the fund was designated a money market fund for purposes of this section.

(1) (No change.)

(2) If the request is made after the issuance of the fund's original authorization, an amendment fee as prescribed by the Texas Securities Act, §4006.001(1) [~~§35.A(1)~~] will be required. Additional sales information will be required since only the federal covered securities authorized and sold after the date the Securities Commissioner determines that the issuer is a money market fund will be subject to the reduced fees under subsection (d) of this section.

(d) Conditional exemption. Subject to the other provisions of this section, federal covered securities issued by money market funds are exempt from the fee imposed by the Texas Securities Act, §4006.055 [~~§35.B(2)~~], provided all of the following requirements are satisfied at the time of sale of the federal covered securities.

(1) - (2) (No change.)

(3) For each filing of an original, renewal, or amended authorization under the conditional exemption provided by this section, the applicant has paid the filing fee required by the Act, §4006.001(1) [~~§35.A(1)~~], in addition to the reduced fee imposed by paragraph (5) of this subsection.

(4) - (5) (No change.)

(e) Oversales. The reduced authorization fee schedule imposed by subsection (d)(5) of this section shall not apply to any federal covered securities authorized under the Act, §4006.151 [~~§35-1~~]. All fees paid for authorization of federal covered securities of money market funds pursuant to §4006.151 [~~§35-1~~] shall be computed as set forth in the Act, §§4006.001(1) [~~§§35.A(1)~~], 4006.055 [~~35.B(2)~~], and 4006.151 [~~35-1~~].

(f) (No change.)

(g) Year end reports. To qualify for the reduced fees accorded to a fund granted money market fund status pursuant to this section, the fund must file a year end report of sales on Form 133.27 of this title (relating to Year-End [~~Year End~~] Report of Sales of Federal Covered Securities by a Money Market Fund) in January of each year which reflects the amount of federal covered securities sold in the previous year, the balance of fees paid for authorization of any unsold balance in the previous year and the recalculated balance of authorized federal covered securities at the beginning of the current year. In calculating fees applied to sales during the previous year, fees will first be applied at the higher rates specified in the reduced fee schedule in subsection (d)(5) of this section, and then at more reduced rates as sales volume increases, and not vice versa. Funds should consult Form 133.27 in determining how to compute fees.

(h) Effect of noncompliance. If at any time the business or plan of business of any fund has been altered so that it is no longer a money market fund within subsection (b) of this section, such an issuer shall not be entitled to any reduction of fees as provided in subsection (d)(5) of this section. Such fund shall not be entitled to any reduction in fees as provided in subsection (d)(5) of this section for any sales of its securities from the time at which it ceases to comply with subsection (b) of this section until the Securities Commissioner redetermines in a subsequent calendar year that the issuer is again a money market fund as defined in subsection (b) of this section, and instead fees shall be calculated for such issuer as provided in the Act, Chapter 4006, Subchapters A, B, and D [~~§35 and §35-1~~].

(i) Appeals. If any person should take exception to an action of the Securities Commissioner in making, failing to make, or revoking a determination whether that person is a money market fund, the aggrieved person may appeal the decision of the Securities Commissioner as provided in the Act, §4007.107 [~~§24~~].

(j) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304454

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 127. MISCELLANEOUS

7 TAC §§127.1, 127.3, 127.4

The Texas State Securities Board proposes amendments to §127.1, concerning Enforcement; §127.3, concerning Seal of the State; and §127.4, concerning Prosecutorial Assistance to County or District Attorneys. These nonsubstantive amendments are being made pursuant to the Agency's periodic review of its rules.

The references to sections of the Texas Securities Act in §§127.1, 127.3, and 127.4 would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022. Section 127.1 would also be amended to remove the statutory quotations to the Act in subsection (b) and revised to improve readability. Section 127.1 would also be amended to capitalize the term "Commissioner" in subsections (a) and (b) for consistency.

Travis J. Iles, Securities Commissioner; Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division; and Joseph Rotunda, Director, Enforcement Division, and have determined that for the first five-year period the proposed amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendments.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for each year of the first five years the proposed amendments are in effect the public benefits expected as a result of adoption of the proposed amendments will be improved readability, clarity, and statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendments will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed. There is no anticipated impact on local employment.

The amendments are proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The amendment to §127.4 is also proposed under the authority of Texas Government Code §4007.001(g). Section 4007.001(g) requires the Board to establish by rule a process to enable the Commissioner to determine whether to provide any requested assistance to the appropriate prosecuting attorney following referral of a case, and, if so, the appropriate amount of such assistance.

The proposed amendment to §127.1 affects the Texas Government Code, §§4007.001 and 4007.053. The proposed amendment to §127.3 affects the Texas Government Code, §4001.154(c). The proposed amendment to §127.4 affects Texas Government Code, §4007.001.

§127.1.Enforcement.

(a) Complaints signed by investigators. Investigators or other members of the staff, on instructions from the Commissioner [~~commissioner~~], may sign complaints before appropriate district or county attorneys where there is sufficient evidence of a violation of the penal section of the Act and where no complaint of such violation has been made by any other person.

(b) Disclosure of [~~section 28~~] testimony taken during an investigation. A deposition and [~~The language ". . .that~~] all information received in connection with an investigation under §4007.053 of the Securities Act and all internal notes, memoranda, reports, or communications made in connection with an investigation under that section are [~~of every kind and nature contained therein shall be~~] treated as confidential by §4007.056 of the Securities Act. The provisions in the Securities Act against disclosure of confidential investigatory information prohibit [the Commissioner and shall not be disclosed to the public except under order of court; but nothing in this section shall be interpreted to prohibit or limit the publication of rulings or decisions of the Commissioner nor shall this limitation apply to hearings provided for in sections 24 and 25 of this Act . . . ," in section 28 of the Securities Act prohibits] the Commissioner [~~commissioner~~] and staff from permitting a witness in an investigative proceeding under §4007.053 [~~section 28~~] to have a copy of his or her own statement [~~and from permitting the distribution or dissemination of testimony to anyone except under order of court~~], or permitting [~~tape~~] recorders or private court reporters to be present at any hearing or investigation. The Commissioner may not disclose confidential investigatory information in the Commissioner's possession except as authorized by the Securities Act and Board rule. This section may not be interpreted to prohibit or limit the publication of rulings or decisions of the Commissioner.

§127.3.Seal of the State.

The term "state seal" as used in the Securities Act, §4001.154 [~~§30~~], includes the official seal of the State Securities Board.

§127.4.Prosecutorial Assistance to County or District Attorneys.

(a) Prior to referring a case to a county or district attorney for prosecution pursuant to the Texas Securities Act, §4007.001 [~~Section 3.A~~], the Commissioner shall make a determination of:

(1) - (2) (No change.)

(b) In making the determination in subsection (a) of this section, the Commissioner must consider:

(1) whether resources are available after taking into account any ongoing Board investigations, investigations under §4007.053 [~~§28~~] of this Act, and criminal prosecutions for which assistance is being provided;

(2) - (3) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304455

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 131. GUIDELINES FOR CONFIDENTIALITY OF INFORMATION

7 TAC §131.1

The Texas State Securities Board proposes an amendment to §131.1, concerning Information Sharing, to update the statutory reference to the Texas Securities Act in the rule to refer to the codified version of the Texas Securities Act, which became effective January 1, 2022. The nonsubstantive amendment is being made pursuant to the Agency's periodic review of its rules.

Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be improved statutory compliance by ensuring the rule is current and accurate and that it conforms to the codified version of the Act, which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

The amendment is proposed under the authority of the Texas Government Code, §§4002.151 and 4002.161. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 4002.161 provides that the Board approve governmental and regulatory authorities and associations of governmental and regulatory authorities to which the Commissioner may disclose confidential information at the Commissioner's discretion.

The proposed amendment affects the Texas Government Code, §§4002.161 and 4007.056.

§131.1.Information Sharing.

(a) The Board recognizes the need for cooperative law enforcement among agencies responsible for the prevention, detection, and prosecution of white collar crime, for the regulation and policing of persons who offer and sell securities, and for the regulation of offerings of securities. Pursuant to the authority given the Board under the Texas Securities Act, §4002.161 and §4007.056 [~~§28~~], the Board authorizes the Securities Commissioner in his or her discretion to supply any confidential information in the Commissioner's possession to:

(1) - (2) (No change.)

(b) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304456

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 133. FORMS

7 TAC §133.22, §133.23

The Texas State Securities Board proposes the repeal of two rules, concerning forms adopted by reference. Specifically, the State Securities Board proposes the repeal of §133.22, a form concerning Waiver or Refund Request by a Military Spouse for a Renewal Fee; and §133.23, a form concerning Request for Recognition of Out-Of-State License or Registration by a Military Spouse.

The two sections proposed for repeal adopt by reference forms that implement portions of §115.18 and §116.18. New forms §133.22 and §133.23 are being concurrently proposed to implement amendments to §115.18 and §116.18, which are also being concurrently proposed and implement the requirements of Senate Bill 422, passed in the 2023 Texas Legislative Session. Senate Bill 422 amended the Texas Occupations Code §55.0041 to expand this section to apply to eligible military service members, in addition to eligible military spouses.

Existing form §133.22, which would be repealed, allows an eligible military spouse falling within the provisions of Texas Occupations Code §55.0041 to apply for a waiver or refund of a renewal fee pursuant to §115.18 or §116.18. Senate Bill 422 amended Texas Occupations Code §55.0041 to expand this section to apply to eligible military service members. Therefore, new Form §133.22 concurrently proposed would allow either a military service member or military spouse falling within the provisions of Texas Occupations Code §55.0041 to apply for a waiver or refund of a renewal fee pursuant to proposed amendments to §115.18 or §116.18, which are being concurrently proposed for amendment.

Existing Form 133.23, which would be repealed, may be filed by a military spouse eligible for non-registration under Texas Occupations Code §55.0041, to provide the Agency with information needed to determine eligibility for such treatment. New Form 133.23 would perform the same function as the existing form to be repealed but would be filed by either a military service member or military spouse eligible for non-registration under Texas Occupations Code §55.0041.

Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed repeals are in effect, there will be no foreseeable fiscal implications for state or local government as a result of administering the proposed repeals.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed repeals are in effect the public benefit expected as a result of adoption of the proposed repeals will be that current forms can be replaced with new forms that comply with new statutory requirements. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed repeals will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed repeals of the rules adopting by reference the forms are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; they do not positively or negatively affect the state's economy; and they do not create a new regulation, or expand or limit an existing regulation. The rulemaking involves repealing two existing forms to replace them with two new forms that are being concurrently proposed, as part of the implementation of Senate Bill 422.

Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed repeals in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.

The repeals are proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The repeals are also proposed under §55.0041 of the Texas Occupations Code, as amended by SB 422, which requires state agencies that issue licenses to adopt rules for the recognition of out-of-state licenses for military applicants.

The proposal affects the following sections of the Texas Securities Act, Texas Government Code: §§4006.001 and 4007.105; and Chapter 4004, Subchapters B through G.

§133.22.Waiver or Refund Request by a Military Spouse for a Renewal Fee.

§133.23.Request for Recognition of Out-Of-State License or Registration by a Military Spouse.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304464

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

7 TAC §133.22, §133.23

The Texas State Securities Board proposes new §133.22, a form concerning Waiver or Refund Request by a Military Service Member or Military Spouse for a Renewal Fee; and new §133.23, a form concerning Request for Recognition of Out-Of-State License or Registration Pursuant to Texas Occupations Code §55.0041. The new sections would adopt by reference forms that are created to implement amendments to §115.18 and §116.18, which are being concurrently proposed and implement the requirements of Senate Bill 422, passed in the 2023 Texas Legislative Session, which amended §55.0041 to the Texas Occupations Code.

Existing forms §133.22 and §133.23 are being concurrently proposed for repeal.

Existing form §133.22 allows an eligible military spouse falling within the provisions of Texas Occupations Code §55.0041 to apply for a waiver or refund of a renewal fee pursuant to §115.18 or §116.18. Senate Bill 422 amended Texas Occupations Code §55.0041 to expand this section to apply to eligible military service members. Therefore, new Form §133.22 would allow either a military service member or military spouse falling within the provisions of Texas Occupations Code §55.0041 to apply for a waiver or refund of a renewal fee pursuant to §115.18 or §116.18, which are being concurrently proposed for amendment.

Existing Form 133.23 may be filed by a military spouse eligible for non-registration under Texas Occupations Code §55.0041, to provide the Agency with information needed to determine eligibility for such treatment. New Form 133.23 would perform the same function as the existing form but would be filed by either a military service member or military spouse eligible for non-registration under Texas Occupations Code §55.0041. The form would need to be resubmitted annually during the period that the individual qualifies for unique treatment under Texas Occupations Code §55.0041. Upon issuance of the confirmation by the Registration Division for the initial or a renewal filing, the individual would be considered to be notice filed for purposes of recordkeeping and certification.

Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed forms are used there will be no foreseeable fiscal implications for state or local government as a result of using the proposed forms.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed forms are used the public benefit expected as a result of adoption of the proposed forms will be that an eligible military service member can complete the forms to either obtain a waiver or refund of renewal fees or to practice securities business in Texas without being registered. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed forms will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to use the forms as proposed. There is no anticipated impact on local employment.

Mr. Edgar, Mr. Green, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed rules adopting by reference the forms are in effect: they do not create or eliminate a government program; they do not require the creation or elimination of existing employee positions; they do not require an increase or decrease in future legislative appropriations to this agency; they do not require an increase or decrease in fees paid to this agency; they do not increase or decrease the number of individuals subject to the rules' applicability; they do not positively or negatively affect the state's economy; and they do not create a new regulation, or expand, limit or repeal an existing regulation. Although the rulemaking involves the creation of new forms, the forms are created as part of the implementation of Senate Bill 422.

The new rules are proposed under the authority of the Texas Government Code, §4002.151. Section 4002.151 provides the Board with the authority to adopt rules as necessary to implement the provisions of the Texas Securities Act, including rules governing registration statements, applications, notices, and reports; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The new rules are also proposed under §55.0041 of the Texas Occupations Code, as amended by SB 422, which requires state agencies that issue licenses to adopt rules for the recognition of out-of-state licenses for military applicants.

The proposal affects the following sections of the Texas Securities Act, Texas Government Code: §§4006.001 and 4007.105; and Chapter 4004, Subchapters B through G.

§133.22.Waiver or Refund Request by a Military Service Member or Military Spouse for a Renewal Fee.

This form is available from the State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 and at www.ssb.texas.gov.

§133.23.Request for Recognition of Out-Of-State License or Registration Pursuant to Occupations Code §55.0041.

This form is available from the State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 and at www.ssb.texas.gov.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304463

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 135. INDUSTRIAL DEVELOPMENT CORPORATIONS AND AUTHORITIES

7 TAC §135.1

The Texas State Securities Board proposes an amendment to §135.1, concerning Exemption, to update the statutory reference to the Texas Securities Act in the rule to refer to the codified version of the Texas Securities Act, which became effective January 1, 2022. The nonsubstantive amendment is being made pursuant to the Agency's periodic review of its rules.

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be statutory compliance by ensuring the rule is current and accurate and that it conforms to the codified version of the Act which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.

The proposed amendment affects the following sections of the Texas Securities Act: Texas Government Code, Chapter 4003, Subchapters A, B, and C; Chapter 4005, Subchapter A; and Texas Local Government Code, Title 12, Subtitle C1, particularly Local Government Code §501.203.

§135.1.Exemption.

The State Securities Board, pursuant to the Texas Securities Act, §4005.024 [~~§5.T~~], exempts from the securities registration requirements of the Act, securities issued pursuant to the Development Corporation Act, Texas Local Government Code, Title 12, Subtitle C1.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304457

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

CHAPTER 137. ADMINISTRATIVE GUIDELINES FOR REGULATION OF OFFERS

7 TAC §§137.1 - 137.3, 137.6

The Texas State Securities Board proposes amendments to §137.1, concerning Application; §137.2, concerning Filing Requirements; 137.3, concerning Preliminary Prospectus; and §137.6, concerning Standards for Supplemental Advertising. These nonsubstantive amendments are being made pursuant to the Agency's periodic review of its rules.

The references to sections of the Texas Securities Act in §§137.1, 137.2, and 137.3 would be updated to refer to the correct sections in the codified version of the Act in the Texas Government Code, which became effective January 1, 2022. The rest of the amendments would make other nonsubstantive and cleanup changes.

Section 137.1 would also be amended to subdivide the text into subsections by subject.

Sections 137.2 and 137.6 would also be amended to capitalize the term "Commissioner" for consistency.

Subsection 137.2(c) would also be amended to correct a reference to a Securities and Exchange Commission rule.

The reference to the term "Securities and Exchange Commission" in Section 137.3 would be replaced with "SEC," which is already defined in §107.2 of this title. The section would also be amended to abbreviate a cite to the Code of Federal Regulations. Rule 107.2 of this title, concerning Definitions, is concurrently proposed for amendment to add "CFR" as a defined term.

Subsection 137.6(e) would also be amended to update outdated terminology.

Clint Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendments are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed amendments.

Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendments are in effect the public benefits expected as a result of adoption of the proposed amendments will be improved readability, clarity, and statutory compliance by ensuring the rules are current and accurate and that they conform to the codified version of the Act, which would promote transparency and efficient regulation. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendments will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendments as proposed. There is no anticipated impact on local employment.

The proposed amendments affect Chapter 4003, Subchapter E, of the Texas Government Code.

§137.1.Application.

(a) This chapter relates to offers to sell securities which must be filed with the Commissioner under the Texas Securities Act, Chapter 4003, Subchapter E [~~§22~~].

(b) This chapter does not apply to advertising for sales made in reliance upon exemptions contained in the Act, Chapter 4005, Subchapters A or B [~~§5 or §6~~], including exemptions by rule adopted by the State Securities Board pursuant to the Texas Securities Act, §4005.024 [~~§5.T~~].

(c) This chapter does not require the filing of any offering documents, prepared by or on behalf of the issuer, in connection with the offer of federal covered securities, as that term is defined in §107.2 of this title (relating to Definitions).

(d) The Texas Securities Act [~~, §§29, 32, and 33~~], prohibits fraud or fraudulent practices in connection with the purchase or sale of any security, whether exempt or not. The Agency has jurisdiction to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a dealer or agent, in connection with any securities subject to the Texas Securities Act, including federal covered securities or transactions involving federal covered securities.

§137.2.Filing Requirements.

(a) Written or printed offers required to be filed with the Commissioner [~~commissioner~~] pursuant to the Securities Act, §4003.203(1) [~~§22.A(1)~~], must be received by the Commissioner [~~commissioner~~] within 10 days after the date of their first use in Texas, including distribution of the offers to dealers; provided this shall not apply to offers by preliminary or final prospectus or to tombstone ads. Material filed under this section may be used unless expressly prohibited by the Commissioner [~~commissioner~~].

(b) Draft copies of material, galley proofs, and scripts of film or slide presentations may be submitted to the Commissioner [~~commissioner~~] to satisfy the filing requirement of §4003.203(1) [~~§22.A(1)~~], but true, final copies of any such material or filmed presentation must be provided to the Commissioner [~~commissioner~~], and adequate equipment or facilities made available to actually view the material or presentation, within 10 days after the date of their first use in Texas.

(c) "Generic" advertisements, which under SEC Rule 135a (17 CFR §230.135a, as amended) [~~Rule 135A of the SEC~~] are not deemed to offer any security for sale, need not be filed pursuant to this section.

(d) If with respect to any issues of securities which are part of a series of offerings of similar nature, an advertisement is proposed to be used in substantially the same form for more than one issue of securities in the series, the offeror or sponsor may file within 10 days after the date of its first use in Texas a final copy of each such advertisement with the Commissioner [~~commissioner~~].

§137.3.Preliminary Prospectus.

The language adopted by the SEC [~~Securities and Exchange Commission~~] in paragraph (b)(10) of Item 501 of Regulation S-K (17 CFR §229.501, as amended) [~~(17 Code of Federal Regulations §229.501)~~] meets the requirements of the Texas Securities Act, §4003.203(4)(B) [~~§22.A(4)(b)~~], and is approved for use on preliminary prospectuses in Texas.

§137.6.Standards for Supplemental Advertising.

(a) Advertising or sales material, other than tombstone ads, must be consistent with and conform to disclosures contained in the prospectus. Advertising and sales materials which depict predominately the positive elements of an offering and exclude such negative elements as are required to be disclosed in the offering prospectus may be found by the Commissioner [~~commissioner~~] to be false, misleading, and likely to deceive a reader thereof. Sales materials which refer to specific issuers of securities by name must be accompanied by or preceded by a prospectus. Sales materials that include comparisons to other investment vehicles or indexes which are unwarranted or not fully explained may be considered misleading.

(b) - (d) (No change.)

(e) Any bonus, prize, gift, or similar consideration which is offered to investors as an inducement to buy securities or offered to dealers or agents [~~salesmen~~] as an inducement to sell a specific offering or issue of securities (but not as an inducement in connection with general public relations or goodwill-building activities unrelated to the sale of a specific issue) must be fully disclosed to investors and to the Commissioner [~~commissioner~~].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 1, 2023.

TRD-202304458

Travis J. Iles

Securities Commissioner

State Securities Board

Earliest possible date of adoption: January 14, 2024

For further information, please call: (512) 305-8303

TITLE 7. BANKING AND SECURITIES

PART 7. STATE SECURITIES BOARD

CHAPTER 106. GUIDELINES FOR THE ASSESSMENT OF ADMINSITRATIVE FINES

7 TAC §106.1

CHAPTER 107. TERMINOLOGY

7 TAC §107.1, §107.2

CHAPTER 113. REGISTRATION OF SECURITIES

7 TAC §113.1

7 TAC §113.1 - 113.6, 113.8, 113.9, 113.11 - 113.14

CHAPTER 114. FEDERAL COVERED SECURITIES

7 TAC §§114.1, 114.2, 114.4

CHAPTER 115. SECURITIES DEALERS AND AGENTS

7 TAC §§115.18

CHAPTER 116. INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES

7 TAC §§116.18

CHAPTER 123. ADMINISTRATIVE GUIDELINES FOR REGISTRATION OF OPEN-END INVESTMENT COMPANIES

7 TAC §123.3

CHAPTER 127. MISCELLANEOUS

7 TAC §§127.1, 127.3, 127.4

CHAPTER 131. GUIDELINES FOR CONFIDENTIALITY OF INFORMATION

7 TAC §131.1

CHAPTER 133. FORMS

7 TAC §133.22, §133.23

7 TAC §133.22, §133.23

CHAPTER 135. INDUSTRIAL DEVELOPMENT CORPORATIONS AND AUTHORITIES

7 TAC §135.1

CHAPTER 137. ADMINISTRATIVE GUIDELINES FOR REGULATION OF OFFERS

7 TAC §§137.1 - 137.3, 137.6

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