TITLE 7. BANKING AND SECURITIES
PART 7. STATE SECURITIES BOARD
CHAPTER 101. GENERAL ADMINISTRATION
7 TAC §101.7
The Texas State Securities Board proposes new §101.7, concerning References to the Texas Securities Act in Board Rules, to provide interim guidance to the industry and public until the Board rules are updated during the next rule review cycle beginning in September 2022. Specifically, subsection (a) of new §101.7 would provide a short history of the upcoming transition of the current Texas Securities Act from the Civil Statutes (e.g., the non-codified version) to the codified version of the Act to be located in the Government Code (which will become effective January 1, 2022) and would refer readers to a disposition table posted on the Agency’s website. Subsection (b) would clarify that a Board rule that references or cites the non-codified version of the Act is also a reference or cite to the equivalent provision in the codified Act. Subsection (c) would clarify that when a Board rule is amended in the future to refer to the codified Act, the requirements, obligations, or duties that existed in such rule will be preserved and continue to apply. It would also clarify that existing provisions under the Board rules will continue to apply to activities occurring prior to a later update of the rules.
Travis J. Iles, Securities Commissioner; Clint Edgar, Deputy Securities Commissioner; Tommy Green, Director, Inspections and Compliance Division; Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division; and Joseph Rotunda, Director, Enforcement Division, have determined that for the first five-year period the proposed rule is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed rule.
Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for each year of the first five years the proposed rule is in effect the public benefit expected as a result of adoption of the proposed rule will be to assist the public and industry when reading the Board Rules to understand the effect of the non-substantive codification and direct them to a resource to locate the correct codified sections of the Act which correspond to the former, non-codified sections of the Act appearing in the rules. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed rule will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the rule as proposed. There is no anticipated impact on local employment.
Mr. Iles, Mr. Edgar, Mr. Green, Ms. Diaz, Mr. Yarroll, and Mr. Rotunda have also determined that for the first five-year period the proposed rule is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule’s applicability; and it does not positively or negatively affect the state’s economy. Additionally, the proposed rule does not limit, expand or repeal an existing regulation. The rule as proposed would create a new regulation but is informational in nature and relates to already existing requirements, obligations, or duties in Board rules.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 or faxed to (512) 305-8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The new rule is proposed under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects: none applicable.
§101.7. References to the Texas Securities Act in Board Rules.
(a) Transition. The Securities Act, Tex. Rev. Civ. Stat. Ann. art. 581-1 through 581-45, effective through December 31, 2021, will be replaced by the nonsubstantive codification of that Act, effective January 1, 2022. The codification is located in Title 12 of the Texas Government Code, Chapters 4001 through 4008. Because of the extensive reorganization of the Securities Act, a reader may find it helpful to compare the source law (Civil Statutes) with the revised law (Government Code) and refer to a disposition table that is available on the Agency’s website.
(b) References and citations to the Act (Civil Statutes). A Board Rule that references or cites the Texas Securities Act, as set out in the Civil Statutes, is also a reference or citation to the equivalent provision in the codified Securities Act.
(c) Preservation of existing requirements, obligations, or duties. When an existing Board Rule is changed to update a reference or citation from the Civil Statutes to the codified Securities Act, that change does not invalidate or remove the requirement, obligation, or duty in the Board Rule arising prior to the effective date of the reference or citation change. A requirement, obligation, or duty accruing under a Board Rule is governed by the Board Rule as it existed on the date the action, inaction, or omission occurs.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 3, 2021.
TRD-202103514
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: October 17, 2021
For further information, please call: (512) 305-8303
7 TAC §101.8
The Texas State Securities Board proposes new §101.8, concerning Employee Leave Pools. The proposed rule is in response to House Bill (H.B.) 2063, 87th Legislature, Regular Session (2021), which amended Government Code, Chapter 661 by adding new Subchapter A-1 to require each state agency to create and administer an employee family leave pool. Under the provisions of new Government Code Section 661.022, the governing body of each state agency is required to adopt rules and prescribe procedures relating to the operation of the agency family leave pool. The Government Code, Section 661.002, has a similar provision that the governing body of each state agency is required to adopt rules and prescribe procedures relating to the operation of an agency's sick leave pool. The proposed new rule would also acknowledge, through formal rulemaking, the existence of the Agency's employee sick leave pool. The proposed new rule would set forth the purpose of each leave pool, designate the Securities Commissioner as the administrator of the leave pools, and require the Commissioner to develop and implement operating procedures consistent with the requirements of the proposed new rule and relevant laws governing operation of the pools.
Derek Lauterjung, Director, Staff Services Division, has determined that for the first five-year period the proposed rule is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the proposed rule.
Mr. Lauterjung has also determined that for each year of the first five years the proposed rule is in effect the public benefit expected as a result of adoption of the proposed will be compliance with the directives of the legislature. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed rule will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the rule as proposed. There is no anticipated impact on local employment.
Mr. Lauterjung has also determined that for the first five-year period the proposed rule is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed rule does not limit, expand or repeal an existing regulation. The rule as proposed would create a new regulation (the creation of leave pools to comply with the requirements in the Government Code).
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The new rule is proposed under the authority of Government Code, §661.002 and §661.022. Section 661.002 requires that the governing body of each state agency adopt rules and prescribe procedures relating to the operation of an agency's sick leave pool. Section 661.022 requires the governing bodies of state agencies to adopt rules to create and administer an employee family leave pool.
The proposed new rule affects Government Code, Chapter 661.
§101.8. Employee Leave Pools.
(a) Family leave pool. A family leave pool is established to provide eligible employees more flexibility in bonding and caring for children during a child's first year following birth, adoption, or foster placement, and caring for a seriously ill family member or the employee, including pandemic-related illnesses or complications caused by a pandemic.
(1) The Securities Commissioner is designated as the pool administrator.
(2) The pool administrator will establish operating procedures consistent with the requirements of this subsection and relevant law governing operation of the pool.
(3) Donations to the pool are strictly voluntary.
(b) Sick leave pool. A sick leave pool is established to provide for the alleviation of the hardship caused to an employee and the employee's family if a catastrophic illness or injury forces the employee to exhaust all leave time earned by that employee and to lose compensation from the state.
(1) The Securities Commissioner is designated as the pool administrator.
(2) The pool administrator will establish operating procedures consistent with the requirements of this subsection and relevant law governing operation of the pool.
(3) Donations to the pool are strictly voluntary.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 3, 2021.
TRD-202103515
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: October 17, 2021
For further information, please call: (512) 305-8303
CHAPTER 115. SECURITIES DEALERS AND AGENTS
7 TAC §115.18
The Texas State Securities Board proposes an amendment to §115.18, concerning Special Provisions Relating to Military Applicants, to implement the requirements of House Bill 139, passed by the 87th Legislature, Regular Session (2021), which amended the definition of "Armed Forces of the United States" in §55.001 of the Texas Occupations Code to add the Space Force as the newest branch of the Armed Forces and amended §55.004 of the Texas Occupations Code to allow military spouse applicants to establish Texas residency for occupational licensing purposes by providing copies of the military service member's change of station orders. The amendment would align the requirements and procedures for military applicants to become registered as securities professionals with the updated sections of the Occupations Code. Comparable amendments to the corresponding rule for investment advisers and investment adviser representatives are being concurrently proposed.
Clinton Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the amendment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be to ease or reduce regulatory burdens of certain military service members and spouses, licensed in good standing as securities professionals in another state, who are relocating to Texas. The proposed amendment would also make the rule consistent with Chapter 55 of the Occupations Code and the current structure of the Armed Forces of the United States. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or negatively affect the state's economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under Texas Civil Statutes, Article 581-28-1 and §55.0041 of the Texas Occupations Code. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 55.0041 of the Texas Occupations Code requires a state agency that issues a license to adopt rules to implement §55.0041 and authorizes a state agency to adopt rules to provide for the issuance of a license to a military spouse to whom the agency provides confirmation under subsection (b)(3) of §55.0041.
The proposal affects Texas Civil Statutes, Articles 581‑12, 581-13, 581-14, 581-15, 581-18, and 581-35.
§115.18. Special Provisions Relating to Military Applicants.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) - (6) (No change.)
(7) Armed forces of the United States--The Army, Navy, Space Force, Air Force, Coast Guard, or Marine Corps of the United States or a reserve unit of one of those branches of the armed forces.
(8) (No change.)
(b) - (g) (No change.)
(h) Recognition of out-of-state license or registration of a military spouse as authorized by Occupations Code, §55.0041.
(1) - (3) (No change.)
(4) Option 2: notification and authorization of activity without registration. Upon confirmation under subparagraph (C) or (D) of this paragraph, the military spouse will be considered to be notice filed in Texas. Such notice filing expires at the end of the calendar year.
(A) - (B) (No change.)
(C) Before engaging in an activity requiring registration in Texas, the military spouse must initially:
(i) provide notice of his or her intent to engage in activity in Texas and specify the type of activity by filing with the Securities Commissioner:
(I) (No change.)
(II) proof of his or her residency in Texas (a permanent change of station (PCS) order may serve as proof of residency for spouses of active military service members); and
(III) (No change.)
(ii) (No change.)
(D) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 3, 2021.
TRD-202103516
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: October 17, 2021
For further information, please call: (512) 305-8303
CHAPTER 116. INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES
7 TAC §116.18
The Texas State Securities Board proposes an amendment to §116.18, concerning Special Provisions Relating to Military Applicants, to implement the requirements of House Bill 139, passed by the 87th Legislature, Regular Session (2021), which amended the definition of "Armed Forces of the United States" in §55.001 of the Texas Occupations Code to add the Space Force as the newest branch of the Armed Forces and amended §55.004 of the Texas Occupations Code to allow military spouse applicants to establish Texas residency for occupational licensing purposes by providing copies of the military service member's change of station orders. The amendment would align the requirements and procedures for military applicants to become registered as securities professionals with the updated sections of the Occupations Code. Comparable amendments to the corresponding rule for securities dealers and agents are being concurrently proposed.
Clinton Edgar, Deputy Securities Commissioner; and Emily Diaz and Shaun Yarroll, Assistant Directors, Registration Division, have determined that for the first five-year period the proposed amendment is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the amendment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for each year of the first five years the proposed amendment is in effect the public benefit expected as a result of adoption of the proposed amendment will be to ease or reduce regulatory burdens of certain military service members and spouses, licensed in good standing as securities professionals in another state, who are relocating to Texas. The proposed amendment would also make the rule consistent with Chapter 55 of the Occupations Code and the current structure of the Armed Forces of the United States. There will be no adverse economic effect on micro- or small businesses or rural communities. Since the proposed amendment will have no adverse economic effect on micro- or small businesses or rural communities, preparation of an economic impact statement and a regulatory flexibility analysis is not required. There is no anticipated economic cost to persons who are required to comply with the amendment as proposed. There is no anticipated impact on local employment.
Mr. Edgar, Ms. Diaz, and Mr. Yarroll have also determined that for the first five-year period the proposed amendment is in effect: it does not create or eliminate a government program; it does not require the creation or elimination of existing employee positions; it does not require an increase or decrease in future legislative appropriations to this agency; it does not require an increase or decrease in fees paid to this agency; it does not increase or decrease the number of individuals subject to the rule’s applicability; and it does not positively or negatively affect the state’s economy. Additionally, the proposed amendment does not create a new regulation, or expand, limit, or repeal an existing regulation.
Comments on the proposal must be in writing and will be accepted for 30 days following publication of the proposed section in the Texas Register. Written comments should be submitted to Marlene K. Sparkman, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711‑3167 or faxed to (512) 305‑8336. Comments may also be submitted electronically to proposal@ssb.texas.gov. In order to be considered by the Board at adoption, comments must be received no later than 30 days following publication.
The amendment is proposed under Texas Civil Statutes, Article 581-28-1 and §55.0041 of the Texas Occupations Code. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. Section 55.0041 of the Texas Occupations Code requires a state agency that issues a license to adopt rules to implement §55.0041 and authorizes a state agency to adopt rules to provide for the issuance of a license to a military spouse to whom the agency provides confirmation under subsection (b)(3) of §55.0041.
The proposal affects Texas Civil Statutes, Articles 581‑12, 581-13, 581-14, 581-15, 581-18, and 581-35.
§116.18. Special Provisions Relating to Military Applicants.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) - (6) (No change.)
(7) Armed forces of the United States--The Army, Navy, Air Force, Space Force, Coast Guard, or Marine Corps of the United States or a reserve unit of one of those branches of the armed forces.
(8) (No change.)
(b) - (g) (No change.)
(h) Recognition of out-of-state license or registration of a military spouse as authorized by Occupations Code, §55.0041.
(1) - (3) (No change.)
(4) Option 2: notification and authorization of activity without registration, or notice filing pursuant to §116.1(b)(2) of this chapter. Upon confirmation under subparagraph (C) or (D) of this paragraph, the military spouse will be considered to be notice filed in Texas. Such notice filing expires at the end of the calendar year.
(A) - (B) (No change.)
(C) Before engaging in an activity requiring registration in Texas, or a notice filing pursuant to §116.1(b)(2) of this chapter, in Texas, the military spouse must initially:
(i) provide notice of his or her intent to engage in activity in Texas and specify the type of activity by filing with the Securities Commissioner:
(I) (No change.)
(II) proof of his or her residency in Texas (a permanent change of station (PCS) order may serve as proof of residency for spouses of active military service members); and
(III) (No change.)
(ii) (No change.)
(D) (No change.)
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 3, 2021.
TRD-202103517
Travis J. Iles
Securities Commissioner
State Securities Board
Earliest possible date of adoption: October 17, 2021
For further information, please call: (512) 305-8303