2021 Legislative Changes to the Codified Texas Securities Act, effective January 1, 2022

Text as changed by the 87th Texas Legislature, Regular Session, 2021.  Italic faced type indicates text added by the 87th Legislature.

Amendment to Section 4002.002, Government Code, contained in House Bill 3607:

Sec. 4002.002.  Sunset Provision.  The State Securities Board is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the Board is abolished and this title expires September 1, 2031.

Amendments to Subsection (b) and (d) of Section 4002.058, Government Code, contained in House Bill 3607:

Sec. 4002.058.  Board Member Training.

(b)  The training program must provide the person with information regarding:

(1)  the law governing Board operations;

(2)  the programs, functions, rules, and budget of the Board;

(3)  the scope of and limitations on the rulemaking authority of the Board;

(4)  the types of Board rules, interpretations, and enforcement actions that may implicate federal antitrust law by limiting competition or impacting prices charged by persons engaged in a profession or business the Board regulates, including any rule, interpretation, or enforcement action that:

(A)  regulates the scope of practice of persons in a profession or business the Board regulates;

(B)  restricts advertising by persons in a profession or business the Board regulates;

(C)  affects the price of goods or services provided by persons in a profession or business the Board regulates; or

(D)  restricts participation in a profession or business the Board regulates;

(5)  the results of the most recent formal audit of the Board;

(6)  the requirements of:

(A)  laws relating to open meetings, public information, administrative procedure, and disclosing conflicts of interest; and

(B)  other laws applicable to members of a state policymaking body in performing their duties; and

(7)  any applicable ethics policies adopted by the Board or the Texas Ethics Commission.

(d)  The Commissioner shall create a training manual that includes the information required by Subsection (b). The Commissioner shall distribute a copy of the training manual annually to each member of the Board. Each member of the Board shall sign and submit to the Commissioner a statement acknowledging that the member received and has reviewed the training manual.

Amendment to Section 4002.107, Government Code, contained in House Bill 3607:

Sec. 4002.107.  Written Employee Complaint Procedure.

(a)  The Commissioner or the Commissioner's designee shall maintain a system to promptly and efficiently act on complaints filed with the Commissioner or Board concerning an employee or former employee. The Commissioner or the Commissioner's designee shall maintain the information listed in Section 4007.051 for files maintained under that section for complaints against persons registered under this title.

(b)  The Commissioner or the Commissioner's designee shall  make information available describing the Board's procedures for complaint investigation and resolution.

(c)  The Commissioner or the Commissioner's designee shall periodically notify the complaint parties of the status of the complaint until final disposition unless the notice would jeopardize a law enforcement investigation.

Addition of Section 4002.1535, Government Code, contained in House Bill 3607:

Sec. 4002.1535.  Alternative Rulemaking and Dispute Resolution.

(a)  The Board shall develop a policy to encourage the use of:

(1)  negotiated rulemaking procedures under Chapter 2008 for the adoption of Board rules; and

(2)  appropriate alternative dispute resolution procedures under Chapter 2009 to assist in the resolution of internal and external disputes under the Board's jurisdiction.

(b)  The Board's procedures relating to alternative dispute resolution must conform, to the extent possible, to any model guidelines issued by the State Office of Administrative Hearings for the use of alternative dispute resolution by state agencies.

(c)  The Board shall:

(1)  coordinate the implementation of the policy adopted under Subsection (a);

(2)  provide training as needed to implement the procedures for negotiated rulemaking or alternative dispute resolution; and

(3)  collect data concerning the effectiveness of those procedures.

Amendment to Section 4002.163, Government Code, contained in House Bill 3607:

Sec. 4002.163.  Annual Report.  On or before January 1 of each year, the Board, with the advice of the Commissioner, shall report to the Governor and the presiding officer of each house of the legislature about the administration of this title and plans and needs for future securities regulation. The report must include:

(1)  a detailed accounting of all funds received and disbursed by the Board during the preceding year, including the amount spent by the Board assisting in the criminal prosecution of cases under Section 4007.001(e); and

(2)  with respect to cases referred during the preceding year by the board under Section 4007.001(c), a breakdown by county and district attorney of the number of cases where:

(A)  criminal charges were filed;

(B)  prosecution is ongoing; or

(C)  prosecution was completed.

Amendment to subsection (2) of Section 4004.351, Government Code, contained in House Bill 3607:

Sec. 4004.351.  Definitions.

(2)  "Exploitation," "financial exploitation," and "vulnerable adult" have the meanings assigned by Section 281.001, Finance Code.

Amendments to subsections (a) and (b) of Section 4004.355, Government Code, contained in House Bill 4477:

Sec. 4004.355. Temporary Hold on Transactions in Certain Cases of Suspected Financial Exploitation of Vulnerable Adults.

(a)  Notwithstanding any other law, a dealer or investment adviser:

(1)  may place a hold on any transaction that involves an account of a vulnerable adult if the dealer or investment adviser:

(A)  submits a report of suspected financial exploitation of the vulnerable adult to the Commissioner and the Department under Section 4004.352(b); and

(B)  has cause to believe the transaction is related to the suspected financial exploitation alleged in the report; and

(2)  must place a hold on any transaction involving an account of a vulnerable adult if the hold is requested by the Commissioner, the Department, or a law enforcement agency.

(b)  Subject to Subsection (c), a hold placed on any transaction under Subsection (a) expires on the 10th business day after the date the hold is placed.

Amendment to Section 4006.054, Government Code, contained in House Bill 3607:

Sec. 4006.054.  Amendment or Duplicate of Registration Certificate or Evidence of Registration.  The Commissioner or Board shall charge and collect a fee of $25 for a filing to:

(1)  amend the registration certificate of a dealer or investment adviser or the evidence of registration of an agent or investment adviser representative; or

(2)  issue a duplicate certificate or evidence of registration.

Addition of Subsections (e), (f), (g), (h), and (i) to Section 4007.001, Government Code, contained in House Bill 3607:

Sec. 4007.001. Enforcement by Commissioner, Attorney General, and District or County Attorney.

(e)  Subject to Subsection (h), the Board may provide assistance to a county or district attorney who requests assistance in a criminal prosecution involving an alleged violation of this title that is referred by the board to the attorney under Subsection (c).

(f)  Before referring a case to a county or district attorney for prosecution as required by Subsection (c), the Commissioner shall make a determination of:

(1)  the potential resources of the Board, including the number and types of Board employees, that would be needed to assist in the prosecution of the case; and

(2)  the availability of Board employees and other resources necessary to carry out any request for assistance.

(g)  The Board by rule shall establish a process to enable the Commissioner to determine whether to provide any requested assistance to the appropriate prosecuting attorney following referral of a case under Subsection (c) and, if so, the appropriate amount of such assistance. The rules must require the Commissioner to consider:

(1)  whether resources are available after taking into account any ongoing Board investigations, investigations under Section 4007.053, and criminal prosecutions for which assistance is being provided;

(2)  the seriousness of the alleged violation or violations in the case, including the severity of the harm and number of victims involved; and

(3)  the state's interest in the prosecution of a particular case and the availability of other methods of redress for the alleged violations, including the pursuit of a civil action.

(h)  In response to a request for assistance under Subsection (e), the Board may provide only those board employees or resources, if any, determined to be available for that case in accordance with Subsection (f). If a change in circumstances occurs after the time of the determination under Subsection (f), the Commissioner may reconsider the Commissioner's determination under that subsection and may increase or reduce the number of Board employees or other resources to be made available for a case using the process established under Subsection (g).

(i)  The Attorney General, at least biennially, shall review a sample of criminal cases for which the Board provided requested assistance to county or district attorneys under this section. The review must include an evaluation of the pre-referral determination of available resources to support each case being reviewed as required by Subsection (f) and any subsequent determination of those resources made by the Commissioner as authorized under Subsection (h).  The Attorney General may report any concerns the Attorney General has in connection with the Board's provision of assistance to the standing committee of each house of the legislature with primary jurisdiction over Board matters.

Amendment to Section 4007.051, Government Code, contained in House Bill 3607:

Sec. 4007.051.  Complaints Filed with Commissioner or Board. 

(a) The Commissioner or the Commissioner's designee shall maintain a system to promptly and efficiently act on complaints filed with the Commissioner or Board concerning a person registered under this title. The Commissioner or the Commissioner's designee shall maintain information about parties to the complaint, the subject matter of the complaint, a summary of the results of the review or investigation of the complaint, and its disposition.

(b)  The Commissioner or the Commissioner's designee shall  make information available describing the Board's procedures for complaint investigation and resolution.

(c)  The Commissioner or the Commissioner's designee shall periodically notify the complaint parties of the status of the complaint until final disposition unless the notice would jeopardize a law enforcement investigation.

Addition of Section 4007.108, Government Code, contained in House Bill 3607:

Sec. 4007.108.  Refund. 

(a)  Subject to Subsection (b), the Commissioner may order a dealer, agent, investment adviser, or investment adviser representative regulated under this title to pay a refund to a client or a purchaser of securities or services from the person or company as provided in an agreed order or an enforcement order instead of or in addition to imposing an administrative penalty or other sanctions.

(b)  The amount of a refund ordered as provided in an agreed order or an enforcement order may not exceed the amount the client or purchaser paid to the dealer, agent, investment adviser, or investment adviser representative for a service or transaction regulated by the Board. The Commissioner may not require payment of other damages or estimate harm in a refund order.

Amendment to Subsection (a) of Section 4008.051, Government Code, contained in Senate Bill 1280:

Sec. 4008.051. Offeror or Seller Liability: Registration and Related Violations.

(a) A person who offers or sells a security in violation of the following is liable to a person who buys the security from the offeror or seller:

(1) Section 4003.001(a), 4004.051, 4004.052, 4004.101(a), or 4004.102(a); or 4007.103;

(2) Subchapter G, Chapter 4003, other than Section 4003.304, or a requirement of the Commissioner under Subchapter G, Chapter 4003, other than Section 4003.304; or

(3) an order under Section 4007.101 or 4007.104.

 

The full text of House Bill 3607, House Bill 4477, and Senate Bill 1280 may be obtained on the Texas Legislature Online website located at https://capitol.texas.gov.