Chapter 102 of the State Securities Board Rules states it is the policy of the Agency to:
1) review, prioritize and investigate all complaints received in a timely manner;
(2) ensure conduct found to be in violation of the Texas Securities Act or a Board rule is brought to a fair, just, and equitable resolution; and
(3) protect confidential, investigatory, and inspection information while maximizing Agency transparency.
Filing a Complaint
A complaint pertaining to a securities dealer, agent, investment adviser, or investment adviser representative registered under the Texas Securities Act must be submitted to the Texas State Securities Board in writing. To file a complaint about the offer and sale of securities or about your securities dealer or investment adviser, please download and complete this form and send it to the address on the form. The complaint form is available in Spanish.
Complaints relating to fraud or other violations of the Texas Securities Act or a Board rule or order not pertaining to a registrant may be submitted to the Texas State Securities Board in writing or by telephone.
How a Complaint is Processed
Upon receipt of a complaint, the Agency will review the matter to determine whether it has authority to investigate the complaint. The Agency may refer the complaint to the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), another state regulatory agency, or other governmental entity with more appropriate jurisdiction.
For complaints pertaining to an individual or entity registered with the Securities Commissioner as a securities dealer, agent, investment adviser, or investment adviser representative, the Inspections & Compliance Division will review the allegations in the complaint. For other complaints under the Agency’s jurisdiction, the Enforcement Division will review the allegations in the complaint.
Complaints will be entered in a complaint tracking system for the division leading the review and investigation. The person filing the complaint will be notified of the Agency’s receipt of the complaint and will be given the name and contact information for an Agency staff member assigned the complaint.
How a Complaint is Prioritized
While it is the Agency’s policy to review all complaints in a timely manner, certain complaints must be given more resources than others. In prioritizing complaints, the Agency will consider the following factors:
- The ongoing nature of the alleged conduct;
- The potential financial harm presented by the alleged conduct;
- Whether the alleged conduct relates to a senior or vulnerable victim;
- The risk of the investment product involved in the alleged conduct;
- The history of previous misconduct by the individual or entity alleged to be responsible for the conduct; and
- Other factors, depending on the circumstances or situations listed in Board Rule §102.5.
How a Complaint is Investigated
Generally, information provided to the Texas State Securities Board as part of the inquiry is confidential and may not be disclosed by the Agency except under order of the court or as otherwise specified in Section 28 of the Texas Securities Act. However, the Agency may send a copy of a complaint or portions of the complaint to a registered firm or individual who is the subject of the complaint to facilitate any regulatory reporting obligations.
Information requested from a registered firm or individual by the Texas State Securities Board is expected to be provided within the time specified in the request. Failure to comply with the Agency's request is a basis for enforcement action.
During the investigation of a complaint, Agency staff will determine appropriate action under the particular facts and circumstances. Staff will further maintain a record of the summary of the complaint, the subject matter of the complaint, a summary of the results of the review or investigation of the complaint, and the disposition of the complaint.
The Texas State Securities Board will periodically notify the person filing the complaint and each individual or entity who is the subject of the complaint of the status of the inquiry until the matter is closed, unless such notice would jeopardize a law enforcement investigation.
How a Complaint is Resolved
Complaints may be resolved in a variety of ways depending on the results of the investigation and the agency staff’s determination, considering both mitigating and aggravating factors. Likely considerations include:
- The extent of financial harm to the complainant or other victims;
- Prior conduct of the individual or entity that is the subject of the complaint;
- Cooperation by the individual or entity that is subject of the complaint, and
- The Agency’s history with redressing similar conduct.
Formal enforcement action taken by the agency for a violation of the Texas Securities Act or a Board rule or order may include:
- Public consent order or an administrative proceeding to assess an administrative fine, require a refund, or to reprimand, suspend, or revoke registration;
- Civil lawsuit for injunction or receivership; or
- Referral of the matter to appropriate authorities for criminal prosecution.
The Agency may also resolve complaints by informal, non-public action to bring the individual or entity into compliance with applicable securities laws and regulations.
A person seeking rescission or restitution of funds should consult with private counsel as soon as possible. Enforcement actions do not generally return money money to individual investors.
The range of possible Agency sanctions is contained in the Penalty Matrix.
Contested matters occur before the State Office of Administrative Hearings.