A meeting of the State Securities Board was held on February 20, 2025, in the Kinney Conference Room, Thomas Jefferson Rusk State Office Building, at 10:00 a.m. Those present were: E. Wally Kinney, Chair; Robert Belt, Member; Melissa Tyroch, Member; Ejike E. Opka II, Member; David B. Montgomery, Member; Travis J. Iles, Securities Commissioner; Cristi Ramón Ochoa, Deputy Commissioner; Tommy Green, Director, Inspections and Compliance Division; Derek Lauterjung, Director, Staff Services Division; Emily Diaz, Director, Registration; Cheryn Netz, General Counsel; Joseph J. Rotunda, Director, Enforcement Division; Febe Collazo-Martinez, Assistant Director, Registration Division; Barbara Engle, Assistant Director, Inspections and Compliance Division; Matthew Bacon, Staff Attorney, General Counsel Division; Sonia Fergerson, Executive Assistant; Nadda Rungruangphol, Staff Attorney, Legal & Investigations Division; Brian Shepherd, Assistant General Attorney, General Counsel Division; and Shaun Yarroll, Senior Investigator, Legal and Investigations Division. Also attending were Marlene K. Sparkman, Brian Thorp, and Linda Kinney.
Chair Kinney called the meeting to order at 10:00 a.m.
Minutes of the September 19, 2024, meeting were approved.
The Board voted to retain the current audit committee members, Robert Belt and Melissa Tyroch, to serve on the committee to work with the Board’s internal auditor, with Robert Belt to continue as Chair.
The Board voted to adopt the following proposed rules with the nonsubstantive changes to §115.1 and §116.3 recommended by the staff:
- Amending §115.1(a)(2), General Provisions, to add a new subparagraph to the list of locations excluded from the definition of branch office to incorporate and recognize FINRA rules on residential supervisory locations.
- Amending §115.10, Supervisory Requirements, to amend subsection (c), internal inspections, to incorporate and recognize the FINRA remote inspections pilot program.
- Amending §115.5, Minimum Records, to add new recordkeeping obligations in subsection (h) relating to conduct rules, and to add reference to certificate of formation in (e)(5) to improve accuracy.
- New §115.24, Adoption by Reference of Conduct Rules
- Amending §116.5, Minimum Records, to add new paragraph (a)(13) to require registered investment advisers to comply with SEC recordkeeping requirements of the SEC Marketing Rule.
- Amending §116.15, Advertising Restrictions, to rename section and to adopt by reference the SEC Marketing Rule
- Amending §115.3, Examinations:
- to add subparagraphs (c)(5)(A) and (B) to recognize and grant waivers of reexamination requirements for certain classes of applicants who participate in recognized NASAA or FINRA continuing education programs (EVEP or MQP) and meet other requirements
- to add subparagraph (c)(5)(C) to recognize and grant waivers of examination requirements to applicants who have received an examination waiver from FINRA; and
- to amend subsection (d) to impose a waiting period for retaking the securities law examination and to add references to other sources of information concerning the Texas securities law examination process
- Amending §116.3, Examinations:
- to replace a discontinued professional designation in (c)(2)(E) with a new professional designation that is eligible for an examination waiver;
- to remove an unneeded requirement in (c)(3) and add new subparagraphs (c)(3)(A) and (B) to recognize and grant waivers of reexamination requirements for certain classes of applicants who participate in recognized NASAA or FINRA continuing education programs (EVEP or MQP) and meet other requirements
- to add subparagraph (c)(3)(C) to recognize and grant waivers of examination requirements to applicants who have received an examination waiver from FINRA; and
- to amend subsection (d) to impose a waiting period for retaking the securities law examination and to add references to other sources of information concerning the Texas securities law examination process.
- Amending §115.9, Post-Registration Reporting Requirements:
- to amend subparagraph (a)(3) to require registered dealers and agents to report misdemeanor offense actions that are listed in §115.6(c), Registration of Persons with Criminal Backgrounds; and
- to amend subparagraph (a)(6) to clarify that registered persons must notify the Commissioner of changes of legal status.
- Amending §116.9, Post-Registration Reporting Requirements:
- to amend subparagraph (a)(3) to require registered investment advisers and investment adviser representatives to report misdemeanor offense actions that are listed in §116.6(c), Registration of Persons with Criminal Backgrounds; and
- to amend subparagraph (a)(6) to clarify that registered persons must notify the Commissioner of changes of legal status.
- Amending §115.1, General Provisions, to adjust quotations in subsection (a) to be consistent with the codified Act, and to remove redundant language in (b)(2)(D).
- Amending §115.2, Application Requirements, to reorganize subsections (a) and (e) and to add cross reference to §115.22 in (a) to improve consistency and readability; to add reference to certificate of formation in (a)(2)(A) to improve accuracy; and to amend (d) to allow option to notify applicants by email of automatic withdrawal of applications
- Amending §115.4, Evidences of Registration.
- Amending §115.6, Registration of Persons with Criminal Background.
- Amending §115.8, Fee Requirements.
- Amending §115.11(a), Finder Registration and Activities, to inform finder applicants that finders by definition are not permitted to register in other capacities.
- Amending §115.16, Use of Senior-Specific Certifications and Professional Designations.
- Amending §115.21, System Addressing Suspected Financial Exploitation of Vulnerable Customers Pursuant to the Texas Securities Act, Section 45, to rename the section.
- Amending §115.22, Electronic Submission of Forms and Fees.
- Amending §116.1, General Provisions, to remove redundant language in (b)(2)(D).
- Amending §116.2, Application Requirements, to add cross reference to §116.22 in (a) to improve consistency and readability, to add reference to certificate of formation in (a)(2)(A) to improve accuracy; and to amend (d) to allow option to notify applicants by email of automatic withdrawal of applications.
- Amending §116.3, Examination.
- Amending §116.4, Evidences of Registration.
- Amending §116.5, Minimum Records, to add reference to certificate of formation in (b)(3) to improve accuracy.
- Amending §116.6, Registration of Persons with Criminal Backgrounds.
- Amending §116.8, Fee Requirements.
- Amending §116.16, Use of Senior-Specific Certifications and Professional Designations.
- Amending §116.21, System Addressing Suspected Financial Exploitation of Vulnerable Customers Pursuant to the Texas Securities Act, Section 45, to rename the section.
The Commissioner gave a report on the Agency’s budget and performance measures.
The Commissioner gave a general update on Agency operations.
The Commissioner gave an update on the Agency’s legislative appropriations request and gave a report on what may be expected during the upcoming legislative session.
A draft resolution honoring Marlene K. Sparkman, former General Counsel was presented. The Board voted to adopt the resolution and directed that the resolution be included in the Minutes. The resolution reads as follows:
WHEREAS, The State Securities Board on February 20, 2025, in Austin, Texas, does hereby take note of the recent retirement from the Agency of Marlene K. Sparkman;
WHEREAS, Ms. Sparkman served the public of Texas with honor and distinction over 34 years as an employee of the State Securities Board, including 11 years as General Counsel and 23 years as Assistant General Counsel; and
WHEREAS, Ms. Sparkman’s three-decade tenure in the General Counsel Division diligently tracked and masterfully managed what was (and continues to be) a drastically evolving securities regulation environment, with her uniquely quiet form of ambition combined with her unmatched work ethic facilitating the Agency’s emergence as the modern model state securities regulator; and
WHEREAS, Ms. Sparkman has been the foundation of strength behind many a herculean task; she has developed or prudently amended a majority of the Board Rules currently in existence; she provided tremendous aid and guidance to the Legislative Council in the codification of the Texas Securities Act; she met the Agency’s Sunset Review with fervent endurance; and she was a welcoming lighthouse during the pandemic’s ongoing uncertainty; and
WHEREAS, though Ms. Sparkman takes pride in her restrained and reserved demeanor, her prolific written works are evidence of the immense intellect that earned her the nickname of library of congress, such written works skillfully distilling the complex nature of securities regulation into digestible content for her intended audiences and providing an ongoing beacon of clarity that employees of the Agency can reflect upon and utilize;
WHEREAS, Ms. Sparkman has displayed the epitomic qualities of a public servant, having done more to ensure the Mission of the Agency than can be expressed in mere words, the long shadow of her decades long career shall persist for decades more;
NOW, THEREFORE, BE IT RESOLVED That the Members of the State Securities Board, the Securities Commissioner, and all personnel of the Texas State Securities Board hereby acknowledge our admiration for Marlene K. Sparkman, and thank her for her contributions, large and small, that have made this Agency a better place, and acknowledge the lasting debt of gratitude the State of Texas owes her for her outstanding and distinguished service as Assistant General Counsel and General Counsel of this Agency.
AND BE IT FURTHER RESOLVED That this Resolution be included in the official minutes of the February 20, 2025, meeting of the State Securities Board.
The meeting was then adjourned at 11:12 a.m.