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Notice of Proposed Rule Changes to be published in the October 28, 2024, issue of the Texas Register:
Chapter 115 and Chapter 116 Rulemaking. The rule changes below incorporate and recognize certain FINRA rules on branch offices and internal inspections; adopt by reference certain conduct and marketing rules and related recordkeeping requirements; coordinate examination waivers with NASAA model rules, FINRA rules, and FINRA waivers; and would require registered persons to report certain misdemeanor actions and changes in legal status to the Commissioner.
Chapter 115, Securities Dealers and Agents. Rulemaking in connection with incorporating and recognizing FINRA rules on residential supervisory locations and remote inspections pilot program:
- Amend §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
- Amend §115.10, Supervisory Requirements, to amend subsection (c), internal inspections, to incorporate and recognize the FINRA remote inspections pilot program
Chapter 115, Securities Dealers and Agents. Rulemaking adopting recent SEC conduct rule (Regulation Best Interest) and other conduct rules:
Amend §115.5, Minimum Records, to add new recordkeeping obligations in subsection (h) relating to conduct rules
Add new §115.24, Adoption by Reference of Conduct Rules
Chapter 116, Investment Advisers and Investment Adviser Representatives. Rulemaking adopting recent SEC Marketing Rule:
Amend §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
Amend §116.15, Advertising Restrictions, to rename section and to adopt by reference the SEC Marketing Rule
Amendments Concerning Examination Requirements:
Amend §115.3, Examination:
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
Amend §116.3, Examination:
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
Post-Registration Reporting Requirement Amendments.
Amending §115.9, Post-Registration Reporting Requirement:
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 Requirement:
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
Other Amendments to Chapters 115 and 116 in connection with rule review. The nonsubstantive and other rule changes below generally would involve updating citations to reference the codified Texas Securities Act; updating other outdated quotations, references or citations; removing outdated, obsolete or redundant language or terminology; abbreviating citations; using defined terms; and/or edits to improve accuracy, consistency, and readability. Other changes specific to a rule are described below:
Chapter 115. Securities Dealers and Agents.
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 §115.3, Examination
Amending §115.4, Evidences of Registration
Amending §115.5, Minimum Records, to add reference to certificate of formation in (e)(5) to improve accuracy
Amending §115.6, Registration of Persons with Criminal Backgrounds
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
Chapter 116 Investment Advisers and Investment Adviser Representatives.
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