Bill Text: TX SB1281 | 2011-2012 | 82nd Legislature | Engrossed
Bill Title: Relating to certain violations of and offenses under The Securities Act; providing penalties.
Spectrum: Bipartisan Bill
Status: (Engrossed - Dead) 2011-05-03 - Comm. report sent to Local & Consent Calendar [SB1281 Detail]
Download: Texas-2011-SB1281-Engrossed.html
By: Watson | S.B. No. 1281 |
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relating to certain violations of and offenses under The Securities | ||
Act; providing penalties. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subsections A and B, Section 23-1, The | ||
Securities Act (Article 581-23-1, Vernon's Texas Civil Statutes), | ||
are amended to read as follows: | ||
A. After giving notice and opportunity for a hearing, the | ||
Commissioner may, in addition to any other remedies, issue an order | ||
which assesses an administrative fine against any person or company | ||
found to have: | ||
(1) engaged in fraud or a fraudulent practice in | ||
connection with: | ||
(A) the offer for sale or sale of a security; or | ||
(B) the rendering of services as an investment | ||
adviser or investment adviser representative; | ||
(2) made an offer containing a statement that is | ||
materially misleading or is otherwise likely to deceive the public; | ||
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(3) engaged in an act or practice that violates this | ||
Act or a Board rule or order; or | ||
(4) with intent to deceive or defraud or with reckless | ||
disregard for the truth or the law, materially aided any person in | ||
engaging in an act or practice described by Subdivision (1), (2), or | ||
(3) of this subsection. | ||
B. Any administrative fine assessed under this Section, | ||
together with the amount of any civil penalty already awarded under | ||
Subsection C of Section 32, must be in an amount not to exceed: | ||
(1) the greater of: | ||
(A) $20,000 per violation; or | ||
(B) the gross amount of any economic benefit | ||
gained by the person or company as a result of the act or practice | ||
for which the fine was assessed; and | ||
(2) if the act or practice was committed against a | ||
person 65 years of age or older, an additional amount of not more | ||
than $250,000 [ |
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SECTION 2. Section 29, The Securities Act (Article 581-29, | ||
Vernon's Texas Civil Statutes), is amended to read as follows: | ||
Art. 581-29. PENAL PROVISIONS. Any person who shall: | ||
A. Sell, offer for sale or delivery, solicit subscriptions | ||
or orders for, dispose of, invite offers for, or who shall deal in | ||
any other manner in any security or securities without being a | ||
registered dealer or agent as in this Act provided shall be deemed | ||
guilty of a felony of the third degree[ |
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B. Sell, offer for sale or delivery, solicit subscriptions | ||
to and orders for, dispose of, invite orders for, or who shall deal | ||
in any other manner in any security or securities issued after | ||
September 6, 1955, unless said security or securities have been | ||
registered or granted a permit as provided in Section 7 of this Act, | ||
shall be deemed guilty of a felony of the third degree[ |
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C. In connection with the sale, offering for sale or | ||
delivery of, the purchase, offer to purchase, invitation of offers | ||
to purchase, invitations of offers to sell, or dealing in any other | ||
manner in any security or securities, whether or not the | ||
transaction or security is exempt under Section 5 or 6 of this Act, | ||
or in connection with the rendering of services as an investment | ||
adviser or an investment adviser representative, directly or | ||
indirectly: | ||
(1) engage in any fraud or fraudulent practice; | ||
(2) employ any device, scheme, or artifice to defraud; | ||
(3) knowingly make any untrue statement of a material | ||
fact or omit to state a material fact necessary in order to make the | ||
statements made, in the light of the circumstances under which they | ||
are made, not misleading; or | ||
(4) engage in any act, practice or course of business | ||
which operates or will operate as a fraud or deceit upon any person, | ||
is [ |
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(a) guilty of a felony of the third degree | ||
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than $10,000; | ||
(b) guilty of a felony of the second degree | ||
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or more but less than $100,000; or | ||
(c) guilty of a felony of the first degree | ||
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more. | ||
D. Knowingly violate a cease and desist order issued by the | ||
commissioner under the authority of Section 23A, 23B, or 23-2 of | ||
this Act shall be deemed guilty of a felony of the third degree[ |
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E. Knowingly make or cause to be made, in any document filed | ||
with the commissioner or in any proceeding under this Act, whether | ||
or not such document or proceeding relates to a transaction or | ||
security exempt under the provisions of Sections 5 or 6 of this Act, | ||
any statement which is, at the time and in the light of the | ||
circumstances under which it is made, false or misleading in any | ||
material respect shall be deemed guilty of a felony of the third | ||
degree[ |
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F. Knowingly make any false statement or representation | ||
concerning any registration made or exemption claimed under the | ||
provisions of this Act shall be deemed guilty of a state jail | ||
felony[ |
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G. Make an offer of any security within this State that is | ||
not in compliance with the requirements governing offers set forth | ||
in Section 22 of this Act shall be deemed guilty of a state jail | ||
felony[ |
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H. Knowingly make an offer of any security within this State | ||
prohibited by a cease publication order issued by the Commissioner | ||
under Section 23C of this Act shall be deemed guilty of a state jail | ||
felony[ |
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I. Render services as an investment adviser or an investment | ||
adviser representative without being registered as required by this | ||
Act shall be deemed guilty of a felony of the third degree [ |
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J. A conviction of an offense under this section may be | ||
enhanced as provided by Section 12.42, Penal Code. | ||
SECTION 3. Section 32, The Securities Act (Article 581-32, | ||
Vernon's Texas Civil Statutes), is amended to read as follows: | ||
Art. 581-32. INJUNCTIONS, [ |
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PENALTIES. A. Whenever it shall appear to the Commissioner either | ||
upon complaint or otherwise, that any person has engaged, is | ||
engaging, or is about to engage in fraud or a fraudulent practice in | ||
connection with the sale of a security, has engaged, is engaging, or | ||
is about to engage in fraud or a fraudulent practice in the | ||
rendering of services as an investment adviser or investment | ||
adviser representative, has made an offer containing a statement | ||
that is materially misleading or is otherwise likely to deceive the | ||
public, or has engaged, is engaging, or is about to engage in an act | ||
or practice that violates this Act or a Board rule or order, the | ||
Attorney General may, on request by the Commissioner, and in | ||
addition to any other remedies, bring action in the name and on | ||
behalf of the State of Texas against such person or company and any | ||
person who, with intent to deceive or defraud or with reckless | ||
disregard for the truth or the law, has materially aided, is | ||
materially aiding, or is about to materially aid such person and any | ||
other person or persons heretofore concerned in or in any way | ||
participating in or about to participate in such acts or practices, | ||
to enjoin such person or company and such other person or persons | ||
from continuing such acts or practices or doing any act or acts in | ||
furtherance thereof. The Commissioner shall verify, on information | ||
and belief, the facts contained in an application for injunction | ||
under this section. In any such court proceedings, the Attorney | ||
General may apply for and on due showing be entitled to have issued | ||
the court's subpoena requiring the forthwith appearance of any | ||
defendant and the defendant's employees or agents and the | ||
production of documents, books and records as may appear necessary | ||
for the hearing of such petition, to testify and give evidence | ||
concerning the acts or conduct or things complained of in such | ||
application for injunction. The District Court of any county, | ||
wherein it is shown that the acts complained of have been or are | ||
about to be committed, or a district court in Travis County shall | ||
have jurisdiction of any action brought under this section, and | ||
this provision shall be superior to any provision fixing the | ||
jurisdiction or venue with regard to suits for injunction. No bond | ||
for injunction shall be required of the Commissioner or Attorney | ||
General in any such proceeding. | ||
B. In addition to any other remedies, the [ |
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General may, on the request of the Commissioner, either in an action | ||
under Subsection A of this section or in a separate action in | ||
District Court, seek equitable relief, including restitution, for a | ||
victim of fraudulent practices and may seek the disgorgement of any | ||
economic benefit gained by a defendant through an act or practice | ||
that violates this Act or for which this Act provides the | ||
Commissioner or the Attorney General with a remedy. The court may | ||
grant any equitable relief that the court considers appropriate and | ||
may order the defendant to deliver to each victim of any act or | ||
practice that violates this Act or for which this Act provides the | ||
Commissioner or the Attorney General with a remedy [ |
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obtained from the victim, including any bonus, fee, commission, | ||
option, proceeds, or profit from or loss avoided through the sale of | ||
the security or through the rendering of services as an investment | ||
adviser or investment adviser representative, or any other tangible | ||
benefit [ |
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C. In addition to any other remedies, the Attorney General | ||
may, on the request of the Commissioner, either in an action under | ||
Subsection A of this section or in a separate action in District | ||
Court, seek a civil penalty to be paid to the State in an amount, | ||
together with the amount of any administrative fine already | ||
assessed under Subsection B of Section 23-1, not to exceed: | ||
(1) the greater of: | ||
(A) $20,000 per violation; or | ||
(B) the gross amount of any economic benefit | ||
gained by the person or company as a result of the commission of the | ||
act or practice; and | ||
(2) if the act or practice was committed against a | ||
person 65 years of age or older, an additional amount of not more | ||
than $250,000. | ||
D. In an action brought under this section, the [ |
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recover [ |
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General in bringing the action. | ||
SECTION 4. (a) The changes in law made by this Act apply | ||
only to a violation that occurs or an offense committed on or after | ||
the effective date of this Act. A violation that occurs or an | ||
offense committed before the effective date of this Act is governed | ||
by the law in effect on the date the violation occurred or the | ||
offense was committed, and the former law is continued in effect for | ||
that purpose. | ||
(b) For purposes of Subsection (a) of this section, a | ||
violation occurred or an offense was committed before the effective | ||
date of this Act if any element of the violation or offense occurred | ||
before that date. | ||
SECTION 5. This Act takes effect September 1, 2011. |