Federal Covered Securities

The National Securities Markets Improvement Act of 1996 ("NSMIA") and the Jumpstart our Business Startups (“JOBS”) Act made substantial changes to state regulation of securities offerings, including a preemption of states' authority to register most securities offerings. With respect to four classes of "covered securities," concurrent registration at the state level is no longer required. States are also precluded from imposing any conditions on the use of any offering document prepared by or on behalf of the issuer of the covered securities.

The four classes of securities identified by NSMIA as covered securities are: federally registered mutual fund shares; national exchange-listed securities; exempt securities based on offers and sales to qualified purchasers; and exempt securities based on certain transactional exemptions under the Securities Act of 1933. Additional categories were created by the JOBS Act, including securities offered under new Regulation A, Tier 2, and Regulation CF.

Chapter 114 of the Board Rules was created to specifically address treatment of various kinds of federal covered securities, and to set forth fee and notice filing requirements, as well as registration requirements for issuers who refuse to comply.

The major change in NSMIA impacting securities issuances by small businesses is the change made to coordinate offerings made at the federal level pursuant to Securities and Exchange Commission ("SEC") Regulation D, Rule 506 and those made at the state level. Securities offered in a Rule 506 offering are "covered securities" and are not subject to registration in Texas; however, a notice filing on Form D and fee are still required. More information on how to file a Form D and the related fee can be found here

Filing and fee requirements for federal covered securities are detailed in Chapter 114 of the Board Rules.

As of May 1, 2019 an issuer offering or selling federal covered securities of a Unit Investment Trust, as defined in the Investment Company Act of 1940 and reliance on Board Rule 114, can now file forms and fees electronically through the EFD System. Filings such as, initial, renewal, amendment and sales reports for UITs can now be filed electronically. Information about the EFD System is available at the EFD website.

If you have any questions regarding the filing requirements, contact the Registration Division at 512-305-8300.