Bill Text: TX HB1535 | 2019-2020 | 86th Legislature | Enrolled


Bill Title: Relating to the continuation and functions of the State Securities Board.

Spectrum: Slight Partisan Bill (Republican 4-2)

Status: (Passed) 2019-06-10 - Effective on 9/1/19 [HB1535 Detail]

Download: Texas-2019-HB1535-Enrolled.html
 
 
  H.B. No. 1535
 
 
 
 
AN ACT
  relating to the continuation and functions of the State Securities
  Board.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsections J and O, Section 2, The Securities
  Act (Article 581-2, Vernon's Texas Civil Statutes), are amended to
  read as follows:
         J.  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 as to its
  administration of this Act, as well as 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 Subsection B of Section 3 of this Act; and
               (2)  with respect to cases referred during the
  preceding year by the Board under Subsection A of Section 3 of this
  Act, 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.
         O.  The State Securities Board is subject to Chapter 325,
  Government Code (Texas Sunset Act). Unless continued in existence
  as provided by that chapter, the board is abolished and this Act
  expires September 1, 2031 [2019].
         SECTION 2.  Section 2-3, The Securities Act (Article
  581-2-3, Vernon's Texas Civil Statutes), is amended by amending
  Subsection B and adding Subsection D to read as follows:
         B.  The training program must provide the person with
  information regarding:
               (1)  the law governing [legislation that created the]
  Board operations;
               (2)  the programs, [operated by the Board;
               [(3)  the role and] functions, rules, and budget of the
  Board;
               (3)  the scope of and limitations on the rulemaking
  authority [(4)  the rules] of the Board [with an emphasis on the
  rules that relate to disciplinary and investigatory authority];
               (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 current budget for the Board;
               [(6)]  the results of the most recent formal audit of
  the Board;
               (6) [(7)]  the requirements of:
                     (A)  laws relating to [the] open meetings, [law,
  Chapter 551, Government Code;
                     [(B)  the] public information [law], [Chapter
  552, Government Code;
                     [(C)  the] administrative procedure [law],
  [Chapter 2001, Government Code;] and disclosing
  conflicts-of-interest; and
                     (B) [(D)]  other laws applicable [relating] to
  members of a state policymaking body in performing their duties
  [public officials, including conflict-of-interest laws]; and
               (7) [(8)]  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 of this section.
  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.
         SECTION 3.  Section 2-6, The Securities Act (Article
  581-2-6, Vernon's Texas Civil Statutes), is amended to read as
  follows:
         Art. 581-2-6.  COMPLAINTS INFORMATION.  A.  The
  Commissioner or the Commissioner's designee shall maintain a system
  to promptly and efficiently act [file] on complaints [each written
  complaint] filed with the Commissioner or Board.  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 [concerning an employee, former
  employee, or person registered under this Act. The file must
  include:
               [(1)  the name of the person who filed the complaint;
               [(2)     the date the complaint is received by the
  Commissioner or Board;
               [(3)  the subject matter of the complaint;
               [(4)     the name of each person contacted in relation to
  the complaint;
               [(5)     a summary of the results of the review or
  investigation of the complaint; and
               [(6)     an explanation of the reason the file was closed,
  if the Commissioner closed the file without taking action other
  than to investigate the complaint].
         B.  The Commissioner or the Commissioner's designee shall
  make information available describing [provide to the person filing
  the complaint and to each person who is a subject of the complaint a
  copy of] the Board's [policies and] procedures for [relating to]
  complaint investigation and resolution.
         C.  The Commissioner or the Commissioner's designee [, at
  least quarterly until final disposition of the complaint,] shall
  periodically notify the [person filing the] complaint parties [and
  each person who is a subject of the complaint] of the status of the
  complaint until final disposition [investigation] unless the
  notice would jeopardize a law enforcement [an undercover]
  investigation.
         SECTION 4.  The Securities Act (Article 581-1 et seq.,
  Vernon's Texas Civil Statutes) is amended by adding Section 2-8 to
  read as follows:
         Sec. 2-8.  ALTERNATIVE RULEMAKING AND DISPUTE RESOLUTION.
  A. The Board shall develop a policy to encourage the use of:
               (1)  negotiated rulemaking procedures under Chapter
  2008, Government Code, for the adoption of Board rules; and
               (2)  appropriate alternative dispute resolution
  procedures under Chapter 2009, Government Code, 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 of this section;
               (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.
         SECTION 5.  Section 3, The Securities Act (Article 581-3,
  Vernon's Texas Civil Statutes), is amended to read as follows:
         Art. 581-3.  ADMINISTRATION AND ENFORCEMENT BY THE
  SECURITIES COMMISSIONER AND THE ATTORNEY GENERAL AND LOCAL LAW
  ENFORCEMENT OFFICIALS. A. The administration of the provisions of
  this Act shall be vested in the Securities Commissioner. It shall
  be the duty of the Securities Commissioner and the Attorney General
  to see that its provisions are at all times obeyed and to take such
  measures and to make such investigations as will prevent or detect
  the violation of any provision thereof. The Commissioner shall at
  once lay before the District or County Attorney of the proper county
  any evidence which shall come to his knowledge of criminality under
  this Act. In the event of the neglect or refusal of such attorney to
  institute and prosecute such violation, the Commissioner shall
  submit such evidence to the Attorney General, who is hereby
  authorized to proceed therein with all the rights, privileges and
  powers conferred by law upon district or county attorneys,
  including the power to appear before grand juries and to
  interrogate witnesses before such grand juries.
         B.  Subject to Subsection E of this section, the Board may
  provide assistance to a county or district attorney who requests
  assistance in a criminal prosecution involving an alleged violation
  of this Act that is referred by the Board to the attorney under
  Subsection A of this section.
         C.  Before referring a case to a county or district attorney
  for prosecution as required by Subsection A of this section, 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.
         D.  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 A of this section 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 28 of this Act, 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.
         E.  In response to a request for assistance under Subsection
  B of this section, the Board may provide only those Board employees
  or resources, if any, determined to be available for that case in
  accordance with Subsection C of this section.  If a change in
  circumstances occurs after the time of the determination under
  Subsection C of this section, 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 D of this section.
         F.  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 C of this section and any subsequent
  determination of those resources made by the Commissioner as
  authorized under Subsection E of this section. 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.
         SECTION 6.  The Securities Act (Article 581-1 et seq.,
  Vernon's Texas Civil Statutes) is amended by adding Section 32-1 to
  read as follows:
         Sec. 32-1.  REFUND. A. Subject to Subsection B of this
  section, the Commissioner may order a dealer, agent, investment
  adviser, or investment adviser representative regulated under this
  Act 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.
         SECTION 7.  Subsection B, Section 35, The Securities Act
  (Article 581-35, Vernon's Texas Civil Statutes), is amended to read
  as follows:
         B.  The Commissioner or Board shall charge and collect the
  following fees and shall daily pay all fees received into the State
  Treasury:
               (1)  for any filing to amend the registration
  certificate of a dealer or investment adviser or evidence of
  registration of an agent or investment adviser representative, or
  issue a duplicate certificate or evidence of registration, [or
  register a branch office,] $25;
               (2)  for the examination of any original or amended
  application filed under Subsection A, B, or C of Section 7 of this
  Act, regardless of whether the application is denied, abandoned,
  withdrawn, or approved, a fee of one-tenth (1/10) of one percent
  (1%) of the aggregate amount of securities described and proposed
  to be sold to persons located within this state based upon the price
  at which such securities are to be offered to the public;
               (3)  for certified copies of any papers filed in the
  office of the Commissioner, the Commissioner shall charge such fees
  as are reasonably related to costs; however, in no event shall such
  fees be more than those which the Secretary of State is authorized
  to charge in similar cases;
               (4)  for the filing of any application for approval of a
  stock exchange so that securities fully listed thereon will be
  exempt, a fee of $10,000;
               (5)  for the filing of a request to take the Texas
  Securities Law Examination, $35;
               (6)  for the filing of an initial notice required by the
  Commissioner to claim a secondary trading exemption, a fee of $500,
  and for the filing of a secondary trading exemption renewal notice,
  a fee of $500;
               (7)  for the filing of an initial notice required by the
  Commissioner to claim a limited offering exemption, a fee of
  one-tenth (1/10) of one percent (1%) of the aggregate amount of
  securities described as being offered for sale, but in no case more
  than $500; and
               (8)  for an interpretation by the Board's general
  counsel of this Act or a rule adopted under this Act, a fee of $100,
  except that an officer or employee of a governmental entity and the
  entity that the officer or employee represents are exempt from the
  fee under this subsection when the officer or employee is
  conducting official business of the entity.
         SECTION 8.  (a) Except as provided by Subsection (b) of this
  section, Section 2-3, The Securities Act (Article 581-2-3, Vernon's
  Texas Civil Statutes), as amended by this Act, applies to a member
  of the State Securities Board appointed before, on, or after the
  effective date of this Act.
         (b)  A member of the State Securities Board who, before the
  effective date of this Act, completed the training program required
  by Section 2-3, The Securities Act (Article 581-2-3, Vernon's Texas
  Civil Statutes), as that law existed before the effective date of
  this Act, is required to complete additional training only on
  subjects added by this Act to the training program as required by
  Section 2-3, The Securities Act (Article 581-2-3, Vernon's Texas
  Civil Statutes), as amended by this Act. A board member described
  by this subsection may not vote, deliberate, or be counted as a
  member in attendance at a meeting of the board held on or after
  December 1, 2019, until the member completes the additional
  training.
         SECTION 9.  Subsection A, Section 2-6, The Securities Act,
  (Article 581-2-6, Vernon's Texas Civil Statutes), as amended by
  this Act, applies only to a complaint filed with the State
  Securities Board on or after the effective date of this Act. A
  complaint filed before the effective date of this Act is governed by
  the law in effect on the date the complaint was filed, and the
  former law is continued in effect for that purpose.
         SECTION 10.  Not later than March 1, 2020, the State
  Securities Board shall adopt rules necessary to implement the
  changes in law made by this Act to Section 3, The Securities Act
  (Article 581-3, Vernon's Texas Civil Statutes).
         SECTION 11.  The change in law made by this Act to Section
  35, The Securities Act (Article 581-35, Vernon's Texas Civil
  Statutes), does not entitle a person to a refund of a registration
  or other fee paid by the person before the effective date of this
  Act.
         SECTION 12.  This Act takes effect September 1, 2019.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1535 was passed by the House on April
  17, 2019, by the following vote:  Yeas 123, Nays 2, 2 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 1535 on May 22, 2019, by the following vote:  Yeas 143, Nays 0,
  1 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1535 was passed by the Senate, with
  amendments, on May 14, 2019, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor       
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