VERNON'S TEXAS CIVIL STATUTES

TITLE 19. BLUE SKY LAW--SECURITIES


	Art. 581-1. SHORT TITLE OF ACT.  This Act shall be known and 
may be cited as "The Securities Act."

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 1.                                


	Art. 581-2. CREATING THE STATE SECURITIES BOARD AND 
PROVIDING FOR APPOINTMENT OF SECURITIES COMMISSIONER.  A. The 
State Securities Board is hereby created.  The Board shall consist 
of five citizens of the state appointed by the governor with the 
advice and consent of the Senate. Members of the Board serve for 
staggered terms of six years, with as near as possible to one-third 
of the members' terms expiring January 20 of each odd-numbered 
year. Vacancies shall be filled by the Governor for the unexpired 
term.  Members shall be eligible for reappointment.  Appointments 
to the Board shall be made without regard to the race, color, 
disability, sex, religion, age, or national origin of the 
appointees.
	B. Board members must be members of the general public.  A 
person is not eligible for appointment as a member if the person or 
the person's spouse:
	(1)  is registered as a dealer, agent, investment adviser, or 
investment adviser representative;
	(2)  has an active notice filing under this Act to engage in 
business in this state as an investment adviser or investment 
adviser representative;
	(3)  is employed by or participates in the management of a 
business entity engaged in business as a securities dealer or 
investment adviser;  or
	(4)  has, other than as a consumer, a financial interest in a 
business entity engaged in business as a securities dealer or 
investment adviser.
	D. Each member of the Board is entitled to per diem as set by 
legislative appropriation for each day that the member engages in 
the business of the Board.
	The Governor shall designate a member of the Board as the 
presiding officer of the Board to serve in that capacity at the will 
of the Governor. A majority of the members shall constitute a quorum 
for the transaction of any business.
	E. It is a ground for removal from the Board that a member:                    
	(1)  does not have at the time of taking office the 
qualifications required by Subsection A or B of this section for 
appointment to the Board;
	(2)  does not maintain during service on the Board the 
qualifications required by Subsection A or B of this section for 
appointment to the Board;
	(3)  is ineligible for membership under Subsection B of this 
section or Subsection B or C of Section 2-1 of this Act;
	(4)  cannot, because of illness or disability, discharge the 
member's duties for a substantial part of the member's term;  or
	(5)  is absent from more than half of the regularly scheduled 
Board meetings that the member is eligible to attend during a 
calendar year without an excuse approved by a majority vote of the 
Board.
	F. The validity of an action of the Board is not affected by 
the fact that it is taken when a ground for removal of a Board member 
exists. If the Commissioner has knowledge that a potential ground 
for removal exists, the Commissioner shall notify the presiding 
officer of the Board of the potential ground.  The presiding officer 
shall then notify the Governor and the attorney general that a 
potential ground for removal exists.  If the potential ground for 
removal involves the presiding officer, the Commissioner shall 
notify the next highest ranking officer of the Board, who shall then 
notify the Governor and the attorney general that a potential 
ground for removal exists.
	G. The Board shall appoint a Securities Commissioner who 
serves at the pleasure of the Board and who shall, under the 
supervision of the Board, administer the provisions of this Act.  
Each member of the Board shall have access to all offices and 
records under his supervision, and the Board, or a majority 
thereof, may exercise any power or perform any act authorized to the 
Securities Commissioner by the provisions of this Act.
	H. The Commissioner, with the consent of the Board, may 
designate a Deputy Securities Commissioner who shall perform all 
the duties required by law to be performed by the Securities 
Commissioner when the said Commissioner is absent or unable to act 
for any reason.  The Commissioner shall appoint other persons as 
necessary to carry out the powers and duties of the Commissioner 
under this Act and other laws granting jurisdiction or applicable 
to the Board or the Commissioner.  The Commissioner may delegate to 
the other persons appointed under this subsection powers and duties 
of the Commissioner as the Commissioner considers necessary.
	I. Repealed by Acts 2003, 78th Leg., ch. 285, Sec. 31(48).                     
	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 a detailed 
accounting of all funds received and disbursed by the Board during 
the preceding year.
	K. The Commissioner or his designee shall develop an 
intraagency career ladder program, one part of which shall be the 
intraagency posting of all nonentry level positions for at least 
ten (10) days before any public posting.  The Commissioner or his 
designee shall develop a system of annual performance evaluations 
based on measurable job tasks.  All merit pay for Board employees 
must be based on the system established under this section.
	L. The Board shall prepare information of consumer interest 
describing the regulatory functions of the Board and Commissioner 
and describing the Board's and Commissioner's procedures by which 
consumer complaints are filed with and resolved by the Board or 
Commissioner.  The Board shall make the information available to 
the general public and appropriate state agencies.  There shall be 
prominently displayed at all times in the place of business of each 
dealer, agent, investment adviser, or investment adviser 
representative regulated under this Act, a sign containing the 
name, mailing address, and telephone number of the Board and a 
statement informing consumers that complaints against a dealer, 
agent, investment adviser, or investment adviser representative 
may be directed to the Board.
	M. The financial transactions of the Board are subject to 
audit by the state auditor in accordance with Chapter 321, 
Government Code.
	N. The Board and Commissioner are subject to Chapters 551, 
2001, and 2002, Government Code.
	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, 2013 .

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 2.                                

Subsec. F added by Acts 1977, 65th Leg., p. 1841, ch. 735, Sec. 
2.066, eff. Aug. 29, 1977.  Amended by Acts 1983, 68th Leg., p. 
2688, ch. 465, Sec. 1, eff. Sept. 1, 1983.  Subsec. C amended by Acts 
1985, 69th Leg., ch. 479, Sec. 5, eff. Sept. 1, 1985;  Subsec. O 
amended by Acts 1985, 69th Leg., ch. 479, Sec. 83, eff. Sept. 1, 
1985;  Subsec. M amended by Acts 1989, 71st Leg., ch. 584, Sec. 13, 
eff. Sept. 1, 1989;  Subsec. O amended by Acts 1991, 72nd Leg., 1st 
C.S., ch. 17, Sec. 5.07, eff. Nov. 12, 1991;  Subsec. N amended by 
Acts 1995, 74th Leg., ch. 228, Sec. 1, eff. Sept. 1, 1995.  Amended 
by Acts 2001, 77th Leg., ch. 1091, Sec. 1.01, eff. Sept. 1, 2001;  
Subsec. I amended by Acts 2003, 78th Leg., ch. 285, Sec. 31(48), 
eff. Sept. 1, 2003.


	Art. 581-2-1. CONFLICT OF INTEREST.  A. In this section, 
"Texas trade association" means a cooperative and voluntarily 
joined association of business or professional competitors in this 
state designed to assist its members and its industry or profession 
in dealing with mutual business or professional problems and in 
promoting their common interest.
	B. A person may not be a member of the Board and may not be a 
Board employee employed in a "bona fide executive, administrative, 
or professional capacity," as that phrase is used for purposes of 
establishing an exemption to the overtime provisions of the federal 
Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) and 
its subsequent amendments, if:
	(1)  the person is an officer, employee, or paid consultant 
of a Texas trade association in a field regulated by the Board;  or
	(2)  the person's spouse is an officer, manager, or paid 
consultant of a Texas trade association in a field regulated by the 
Board.
	C. A person may not be a member of the Board or act as the 
general counsel to the Board if the person is required to register 
as a lobbyist under Chapter 305, Government Code, because of the 
person's activities for compensation on behalf of a profession 
related to the operation of the Board. 

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-2. INFORMATION ABOUT STANDARDS OF CONDUCT.  The 
Commissioner or the Commissioner's designee shall provide to 
members of the Board and to Board employees, as often as necessary, 
information regarding the requirements for office or employment 
under this Act, including information regarding a person's 
responsibilities under applicable laws relating to standards of 
conduct for state officers or employees.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-3. TRAINING.  A. A person who is appointed to and 
qualifies for office as a member of the Board may not vote, 
deliberate, or be counted as a member in attendance at a meeting of 
the Board until the person completes a training program that 
complies with this section.
	B. The training program must provide the person with 
information regarding:  
	(1)  the legislation that created the Board;                                   
	(2)  the programs operated by the Board;                                       
	(3)  the role and functions of the Board;                                      
	(4)  the rules of the Board with an emphasis on the rules that 
relate to disciplinary and investigatory authority;
	(5)  the current budget for the Board;                                         
	(6)  the results of the most recent formal audit of the 
Board;               
	(7)  the requirements of:                                                      
	(A)  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   
	(D)  other laws relating to public officials, including 
conflict-of-interest laws;  and
	(8)  any applicable ethics policies adopted by the Board or 
the Texas Ethics Commission.
	C. A person appointed to the Board is entitled to 
reimbursement, as provided by the General Appropriations Act, for 
the travel expenses incurred in attending the training program 
regardless of whether the attendance at the program occurs before 
or after the person qualifies for office.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-4. DIVISION OF POLICY AND MANAGEMENT 
RESPONSIBILITIES.  The Board shall develop and implement policies 
that clearly separate the policymaking responsibilities of the 
Board and the management responsibilities of the Commissioner and 
employees of the Board.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-5. PUBLIC TESTIMONY.  The Board by rule shall 
develop and implement policies that provide the public with a 
reasonable opportunity to appear before the Board and to speak on 
any issue under the jurisdiction of the Board.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-6. COMPLAINTS INFORMATION.  A. The Commissioner 
or the Commissioner's designee shall maintain a file on each 
written complaint filed with the Commissioner or Board 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 
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 relating to complaint investigation and resolution.
	C. The Commissioner or the Commissioner's designee, at least 
quarterly until final disposition of the complaint, shall notify 
the person filing the complaint and each person who is a subject of 
the complaint of the status of the investigation unless the notice 
would jeopardize an undercover investigation.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-7. EQUAL EMPLOYMENT OPPORTUNITY POLICY 
STATEMENT.  A. The Commissioner or the Commissioner's designee 
shall prepare and maintain a written policy statement that 
implements a program of equal employment opportunity to ensure that 
all personnel decisions are made without regard to race, color, 
disability, sex, religion, age, or national origin.
	B. The policy statement must include:                                          
	(1)  personnel policies, including policies relating to 
recruitment, evaluation, selection, training, and promotion of 
personnel, that show the intent of the Board to avoid the unlawful 
employment practices described by Chapter 21, Labor Code;  and
	(2)  an analysis of the extent to which the composition of 
the Board's personnel is in accordance with state and federal law 
and a description of reasonable methods to achieve compliance with 
state and federal law.
	C. The policy statement must:                                                  
	(1)  be updated annually;                                                      
	(2)  be reviewed by the state Commission on Human Rights for 
compliance with Subsection B(1) of this section;  and
	(3)  be filed with the governor's office.                                      

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-2-8. INFORMATION ABOUT STATE EMPLOYEE INCENTIVE 
PROGRAM.  The Commissioner or the Commissioner's designee shall 
provide to Board employees information and training on the benefits 
and methods of participation in the state employee incentive 
program.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.02, eff. Sept. 1, 
2001.     


	Art. 581-3. ADMINISTRATION AND ENFORCEMENT BY THE SECURITIES 
COMMISSIONER AND THE ATTORNEY GENERAL AND LOCAL LAW ENFORCEMENT 
OFFICIALS.  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.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 3.                                


	Art. 581-3-1. NONEXCLUSIVITY OF MEANS OF ENFORCEMENT.  The 
Commissioner may utilize any or all penalties, sanctions, remedies, 
or relief as the Commissioner deems necessary.

Added by Acts 1995, 74th Leg., ch. 228, Sec. 2, eff. Sept. 1, 1995.           


	Art. 581-4. DEFINITIONS.  The following terms shall, unless 
the context otherwise indicates, have the following respective 
meanings:
	A. The term "security" or "securities" shall include any 
limited partner interest in a limited partnership, share, stock, 
treasury stock, stock certificate under a voting trust agreement, 
collateral trust certificate, equipment trust certificate, 
preorganization certificate or receipt, subscription or 
reorganization certificate, note, bond, debenture, mortgage 
certificate or other evidence of indebtedness, any form of 
commercial paper, certificate in or under a profit sharing or 
participation agreement, certificate or any instrument 
representing any interest in or under an oil, gas or mining lease, 
fee or title, or any certificate or instrument representing or 
secured by an interest in any or all of the capital, property, 
assets, profits or earnings of any company, investment contract, or 
any other instrument commonly known as a security, whether similar 
to those herein referred to or not.  The term applies regardless of 
whether the "security" or "securities" are evidenced by a written 
instrument.  Provided, however, that this definition shall not 
apply to any insurance policy, endowment policy, annuity contract, 
optional annuity contract, or any contract or agreement in relation 
to and in consequence of any such policy or contract, issued by an 
insurance company subject to the supervision or control of the 
Texas Department of Insurance when the form of such policy or 
contract has been duly filed with the Department as now or hereafter 
required by law.

Subsec. A amended by Acts 1989, 71st Leg., ch. 733, Sec. 1, eff. 
Sept. 1, 1989;  Acts 1993, 73rd Leg., ch. 917, Sec. 3, eff. Jan. 1, 
1994;  Acts 1995, 74th Leg., ch. 228, Sec. 3, eff. Sept. 1, 1995;  
Acts 2003, 78th Leg., ch. 108, Sec. 1, eff. May 20, 2003.
	B. The terms "person" and "company" shall include a 
corporation, person, joint stock company, partnership, limited 
partnership, association, company, firm, syndicate, trust, 
incorporated or unincorporated, heretofore or hereafter formed 
under the laws of this or any other state, country, sovereignty or 
political subdivision thereof, and shall include a government, or a 
political subdivision or agency thereof.  As used herein, the term 
"trust" shall be deemed to include a common law trust, but shall not 
include a trust created or appointed under or by virtue of a last 
will and testament or by a court of law or equity.

Subsec. B amended by Acts 1971, 62nd Leg., p. 1085, ch. 235, Sec. 1, 
eff. May 17, 1971;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	C. The term "dealer" shall include every person or company 
other than an agent, who engages in this state, either for all or 
part of his or its time, directly or through an agent, in selling, 
offering for sale or delivery or soliciting subscriptions to or 
orders for, or undertaking to dispose of, or to invite offers for 
any security or securities and every person or company who deals in 
any other manner in any security or securities within this state.  
Any issuer other than a registered dealer of a security or 
securities, who, directly or through any person or company, other 
than a registered dealer, offers for sale, sells or makes sales of 
its own security or securities shall be deemed a dealer and shall be 
required to comply with the provisions hereof;  provided, however, 
this section or provision shall not apply to such issuer when such 
security or securities are offered for sale or sold either to a 
registered dealer or only by or through a registered dealer acting 
as fiscal agent for the issuer;  and provided further, this section 
or provision shall not apply to such issuer if the transaction is 
within the exemptions contained in the provisions of Section 5 of 
this Act.

Subsec. C amended by Acts 1989, 71st Leg., ch. 733, Sec. 1, eff. 
Sept. 1, 1989;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	D. The term "agent" shall include every person or company 
employed or appointed or authorized by a dealer to sell, offer for 
sale or delivery, or solicit subscriptions to or orders for, or deal 
in any other manner, in securities within this state, whether by 
direct act or through subagents;  provided, that the officers of a 
corporation or partners of a partnership shall not be deemed agents 
solely because of their status as officers or partners, where such 
corporation or partnership is registered as a dealer hereunder.

Subsec. D amended by Acts 1989, 71st Leg., ch. 733, Sec. 1, eff. 
Sept. 1, 1989;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	E. The terms "sale" or "offer for sale" or "sell" shall 
include every disposition, or attempt to dispose of a security for 
value.  The term "sale" means and includes contracts and agreements 
whereby securities are sold, traded or exchanged for money, 
property or other things of value, or any transfer or agreement to 
transfer, in trust or otherwise.  Any security given or delivered 
with or as a bonus on account of any purchase of securities or other 
thing of value, shall be conclusively presumed to constitute a part 
of the subject of such purchase and to have been sold for value.  The 
term "sell" means any act by which a sale is made, and the term 
"sale" or "offer for sale" shall include a subscription, an option 
for sale, a solicitation of sale, a solicitation of an offer to buy, 
an attempt to sell, or an offer to sell, directly or by an agent, by 
a circular, letter, or advertisement or otherwise, including the 
deposit in a United States Post Office or mail box or in any manner 
in the United States mails within this State of a letter, circular 
or other advertising matter.  Nothing herein shall limit or 
diminish the full meaning of the terms " sale," "sell" or "offer for 
sale" as used by or accepted in courts of law or equity.  The sale of 
a security under conditions which entitle the purchaser or 
subsequent holder to exchange the same for, or to purchase some 
other security, shall not be deemed a sale or offer for sale of such 
other security;  but no exchange for or sale of such other security 
shall ever be made unless and until the sale thereof shall have been 
first authorized in Texas under this Act, if not exempt hereunder, 
or by other provisions of law.

Subsec. E amended by Acts 1979, 66th Leg., p. 348, ch. 160, Sec. 1, 
eff. May 15, 1979;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	F. The terms "fraud" or "fraudulent practice" shall include 
any misrepresentations, in any manner, of a relevant fact;  any 
promise or representation or predication as to the future not made 
honestly and in good faith, or an intentional failure to disclose a 
material fact;  the gaining, directly or indirectly, through the 
sale of any security, of an underwriting or promotion fee or profit, 
selling or managing commission or profit, so gross or exorbitant as 
to be unconscionable;  any scheme, device or other artifice to 
obtain such profit, fee or commission;  provided, that nothing 
herein shall limit or diminish the full meaning of the terms 
"fraud," "fraudulent," and "fraudulent practice" as applied or 
accepted in courts of law or equity.
	G. "Issuer" shall mean and include every company or person 
who proposes to issue, has issued, or shall hereafter issue any 
security.
	H. "Broker" shall mean dealer as herein defined.                               
	I. "Mortgage" shall be deemed to include a deed of trust to 
secure a debt.   
	J. If the sense requires it, words in the present tense 
include the future tense, in the masculine gender include the 
feminine and neuter gender, in the singular number include the 
plural number, and in the plural number include the singular 
number;  "and" may be read "or" and "or" may be read "and".
	K. "No par value" or "non-par" as applied to shares of stock 
or other securities shall mean that such shares of stock or other 
securities are without a given or specified par value.  Whenever any 
classification or computation in this Act mentioned is based upon 
"par value" as applied to shares of stock or other securities of no 
par value, the amount for which such securities are sold or offered 
for sale to the public shall be used as a basis of such 
classification or computation.
	L. The term "include" when used in a definition contained in 
this Act shall not be deemed to exclude other things or persons 
otherwise within the meaning of the term defined.
	M. "Registered dealer" shall mean a dealer as hereinabove 
defined who has been duly registered by the Commissioner as in 
Section 15 of this Act provided.
	N. "Investment adviser" includes a person who, for 
compensation, engages in the business of advising another, either 
directly or through publications or writings, with respect to the 
value of securities or to the advisability of investing in, 
purchasing, or selling securities or a person who, for compensation 
and as part of a regular business, issues or adopts analyses or a 
report concerning securities, as may be further defined by Board 
rule.  The term does not include:
	(1)  a bank or a bank holding company, as defined by the Bank 
Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as 
amended, that is not an investment company;
	(2)  a lawyer, accountant, engineer, teacher, or geologist 
whose performance of the services is solely incidental to the 
practice of the person's profession;
	(3)  a dealer or agent who receives no special compensation 
for those services and whose performance of those services is 
solely incidental to transacting business as a dealer or agent;
	(4)  the publisher of a bona fide newspaper, news magazine, 
or business or financial publication of general and regular 
circulation;  or
	(5)  a person whose advice, analyses, or report does not 
concern a security other than a security that is:
	(A)  a direct obligation of or an obligation the principal or 
interest of which is guaranteed by the United States government;  or
	(B)  issued or guaranteed by a corporation in which the 
United States has a direct or indirect interest and designated by 
the United States Secretary of the Treasury under Section 3(a)(12), 
Securities Exchange Act of 1934 (15 U.S.C. Section 78c(a)(12)), as 
amended, as an exempt security for purposes of that Act.

Subsec. N added by Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	O. "Federal covered investment adviser" means an investment 
adviser who is registered under the Investment Advisers Act of 1940 
(15 U.S.C. Section 80b-1 et seq.), as amended.

Subsec. O added by Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	P. "Investment adviser representative" or "representative of 
an investment adviser" includes each person or company who, for 
compensation, is employed, appointed, or authorized by an 
investment adviser to solicit clients for the investment adviser or 
who, on behalf of an investment adviser, provides investment 
advice, directly or through subagents, as defined by Board rule, to 
the investment adviser's clients.  The term does not include a 
partner of a partnership or an officer of a corporation or other 
entity that is registered as an investment adviser under this Act 
solely because of the person's status as an officer or partner of 
that entity.

Subsec. P added by Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.
	Q. "Registered investment adviser" means an investment 
adviser who has been issued a registration certificate by the 
Commissioner under Section 15 of this Act.

Subsec. Q added by Acts 2001, 77th Leg., ch. 1091, Sec. 2.01, eff. 
Sept. 1, 2001.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 4.                                


	Art. 581-5. EXEMPT TRANSACTIONS.  Except as hereinafter in 
this Act specifically provided, the provisions of this Act shall 
not apply to the sale of any security when made in any of the 
following transactions and under any of the following conditions, 
and the company or person engaged therein shall not be deemed a 
dealer within the meaning of this Act;  that is to say, the 
provisions of this Act shall not apply to any sale, offer for sale, 
solicitation, subscription, dealing in or delivery of any security 
under any of the following transactions or conditions:
	A. At any judicial, executor's, administrator's, guardian's 
or conservator's sale, or any sale by a receiver or trustee in 
insolvency or bankruptcy.
	B. The sale by or for the account of a pledge holder or 
mortgagee, selling or offering for sale or delivery in the ordinary 
course of business to liquidate a bona fide debt, of a security 
pledged in good faith as security for such debt.
	C. (1) Sales of securities made by or in behalf of a vendor, 
whether by dealer or other agent, in the ordinary course of bona 
fide personal investment of the personal holdings of such vendor, 
or change in such investment, if such vendor is not engaged in the 
business of selling securities and the sale or sales are isolated 
transactions not made in the course of repeated and successive 
transactions of a like character;  provided, that in no event shall 
such sales or offerings be exempt from the provisions of this Act 
when made or intended by the vendor or his agent, for the benefit, 
either directly or indirectly, of any company or corporation except 
the individual vendor (other than a usual commission to said 
agent), and provided further, that any person acting as agent for 
said vendor shall be registered pursuant to this Act;
	(2)  Sales by or on behalf of any insurance company subject 
to the supervision or control of the Texas Department of Insurance 
of any security owned by such company as a legal and bona fide 
investment, provided that in no event shall any such sale or 
offering be exempt from the provisions of this Act when made or 
intended, either directly or indirectly, for the benefit of any 
other company as that term is defined in this Act.
	D. The distribution by a corporation of securities direct to 
its stockholders as a stock dividend or other distribution paid out 
of earnings or surplus.
	E. Any offer and any transaction pursuant to any offer by the 
issuer of its securities to its existing security holders 
(including persons who at the time of the transaction are holders of 
convertible securities or nontransferable warrants) if no 
commission or other remuneration (other than a stand-by commission) 
is paid or given directly or indirectly for soliciting any security 
holder in this State.
	F. The issue in good faith of securities by a company to its 
security holders, or creditors, in the process of a bona fide 
reorganization of the company made in good faith, or the issue in 
good faith of securities by a company, organized solely for the 
purpose of taking over the assets and continuing the business of a 
predecessor company, to the security holders or creditors of such 
predecessor company, provided that in either such case such 
securities are issued in exchange for the securities of such 
holders or claims of such creditors, or both, and in either such 
case security holders or creditors do not pay or give or promise and 
are not obligated to pay or give any consideration for the 
securities so issued other than the securities of or claims against 
said company or its predecessor then held or owned by them.
	G. The issue or sale of securities (a) by one corporation to 
another corporation or the security holders thereof pursuant to a 
vote by one or more classes of such security holders, as required by 
the certificate of incorporation or the applicable corporation 
statute, in connection with a merger, consolidation or sale of 
corporate assets, or (b) by one corporation to its own stockholders 
in connection with the change of par value stock to no par value 
stock or vice versa, or the exchange of outstanding shares for the 
same or a greater or smaller number of shares;  provided that in any 
such case such security holders do not pay or give or promise and 
are not obligated to pay or give any consideration for the 
securities so issued or sold other than the securities of the 
corporation then held by them.
	H. The sale of any security to any bank, trust company, 
building and loan association, insurance company, surety or 
guaranty company, savings institution, investment company as 
defined in the Investment Company Act of 1940, small business 
investment company as defined in the Small Business Investment Act 
of 1958, as amended, or to any registered dealer actually engaged in 
buying and selling securities.
	I. Provided such sale is made without any public solicitation 
or advertisements:
	(a)  the sale of any security by the issuer thereof so long as 
the total number of security holders of the issuer thereof does not 
exceed thirty-five (35) persons after taking such sale into 
account;
	(b)  the sale or distribution by an issuer or a participating 
subsidiary of the issuer, if any, of a security under a bona fide 
thrift, savings, stock purchase, retirement, pension, 
profit-sharing, option, bonus, appreciation right, incentive, or 
similar written compensation plan or written compensation contract 
established by the issuer or its subsidiary for the benefit of 
employees, directors, general partners, managers, or officers of 
the issuer or subsidiary, for the benefit of its trustees if the 
issuer or subsidiary is a business trust, or for the benefit of 
consultants or advisors who provide to the issuer or subsidiary 
bona fide services unrelated to the offer or sale of securities in a 
capital-raising transaction;  or
	(c)  the sale by an issuer of its securities during the 
period of twelve (12) months ending with the date of the sale in 
question to not more than fifteen (15) persons (excluding, in 
determining such fifteen (15) persons, purchasers of securities in 
transactions exempt under other provisions of this Section 5, 
purchasers of securities exempt under Section 6 hereof and 
purchasers of securities which are part of an offering registered 
under Section 7 hereof), provided such persons purchased such 
securities for their own account and not for distribution.
	J. Wherein the securities disposed of consist exclusively of 
notes or bonds secured by mortgage or vendor's lien upon real estate 
or tangible personal property, and the entire mortgage is sold or 
transferred with all of the notes or bonds secured thereby in a 
single transaction.
	K. Any security or membership issued by a corporation or 
association, organized exclusively for religious, educational, 
benevolent, fraternal, charitable, or reformatory purposes and not 
for pecuniary profit, and no part of the net earnings of which 
inures to the benefit of any stockholder, shareholder, or 
individual members, and where no commission or remuneration is paid 
or given or is to be paid or given in connection with the 
disposition thereof.
	L. The sale by the issuer itself, or by a registered dealer, 
of any security issued or guaranteed by any bank organized and 
subject to regulation under the laws of the United States or under 
the laws of any State or territory of the United States, or any 
insular possession thereof, or by any savings and loan association 
organized and subject to regulation under the laws of this State, or 
the sale by the issuer itself of any security issued by any federal 
savings and loan association.
	M. The sale by the issuer itself, or by a registered dealer, 
of any security either issued or guaranteed by the United States or 
by any territory or insular possession thereof, or by the District 
of Columbia, or by any state of the United States, or political 
subdivision thereof (including but not limited to any county, city, 
municipal corporation, district, or authority), or by any public or 
governmental agency or instrumentality of any of the foregoing.
	N. The sale and issuance of any securities issued by any 
farmers' cooperative marketing association organized under Chapter 
52, Agriculture Code, or the predecessor of that law (Article 5737 
et seq., Revised Statutes);  the sale and issuance of any securities 
issued by any mutual loan corporation organized under Chapter 54, 
Agriculture Code, or the predecessor of that law (Article 2500 et 
seq., Revised Statutes);  the sale and issuance of any equity 
securities issued by any cooperative association organized under 
the Cooperative Association Act, as amended (Article 1396-50. 01, 
Vernon's Texas Civil Statutes);  and the sale of any securities 
issued by any farmers' cooperative society organized under Chapter 
51, Agriculture Code, or the predecessor of that law (Article 2514 
et seq., Revised Statutes). Provided, however, this exemption shall 
not be applicable to agents of any farmers' cooperative marketing 
association, mutual loan corporation, cooperative association, or 
farmers' cooperative society when the sale of such securities is 
made to non-members, or when the sale of such securities is made to 
members or non-members and a commission is paid or contracted to be 
paid to the said agents.
	O. The sale by a registered dealer of outstanding securities 
provided that:  
	(1)  Such securities form no part of an unsold allotment to 
or subscription by such dealer as a participant in the distribution 
of such securities by the issuer thereof;  and
	(2)  Securities of the same class, of the same issuer, are 
outstanding in the hands of the public;  and
	(3)  Such securities are offered for sale, in good faith, at 
prices reasonably related to the current market price of such 
securities at the time of such sale;  and
	(4)  No part of the proceeds of such sale are paid directly or 
indirectly to the issuer of such securities;  and
	(5)  Such sale is not directly or indirectly for the purposes 
of providing or furthering any scheme to violate or evade any 
provision of this Act;  and
	(6)  The right to sell or resell such securities has not been 
enjoined by any court of competent jurisdiction in this State by 
proceedings instituted by an officer or agency of this State 
charged with enforcement of this Act;  and
	(7)  The right to sell such securities has not been revoked 
or suspended by the commissioner under any of the provisions of this 
Act, or, if so, revocation or suspension is not in force and effect;  
and
	(8)  At the time of such sale, the issuer of such securities 
shall be a going concern actually engaged in business and shall then 
be neither in an organization stage nor in receivership or 
bankruptcy;  and
	(9)  Such securities or other securities of the issuer of the 
same class have been registered by qualification, notification or 
coordination under Section 7 of this Act;  or at the time of such 
sale at least the following information about the issuer shall 
appear in a recognized securities manual or in a statement, in form 
and extent acceptable to the commissioner, filed with the 
commissioner by the issuer or by a registered dealer:
	(a)  A statement of the issuer's principal business;                           
	(b)  A balance sheet as of a date within eighteen (18) months 
of the date of such sale;  and
	(c)  Profit and loss statements and a record of the dividends 
paid, if any, for a period of not less than three (3) years prior to 
the date of such balance sheet or for the period of existence of the 
issuer, if such period of existence is less than three (3) years.
	The term "recognized securities manual" means a nationally 
distributed manual of securities that is approved for use hereunder 
by the Board.
	The Commissioner may issue a stop order or by order prohibit, 
revoke or suspend the exemption under this Subsection O with 
respect to any security if the Commissioner has reasonable cause to 
believe that the plan of business of the issuer of such security, 
the security, or the sale thereof would tend to work a fraud or 
deceit upon any purchaser or purchasers thereof, such order to be 
subject to review in the manner provided by Section 24 of this Act.  
Notice of any court injunction enjoining the sale, or resale, of any 
such security, or of an order revoking or suspending the exemption 
under this subdivision with respect to any security, shall be 
delivered or shall be mailed by certified or registered mail with 
return receipt requested, to any dealers believed to be selling, or 
offering for sale, securities of the type referred to in the notice;  
and the prohibitions of (6) and (7) above of this Subsection O shall 
be inapplicable to any dealer until the dealer has received actual 
notice from the commissioner of such revocation or suspension.
	The Board may for cause shown revoke or suspend the 
recognition hereunder of any manuals previously approved under this 
Subsection but no such action may be taken unless upon notice and 
opportunity for hearing before the Board or a hearings officer as 
now or hereafter required by law.  A judgment sustaining the Board 
in the action complained of shall not bar after one year an 
application by the plaintiff for approval of its manual or manuals 
hereunder, nor shall a judgment in favor of the plaintiff prevent 
the Board from thereafter revoking such recognition for any proper 
cause which may thereafter accrue or be discovered.
	P. The execution by a dealer of an unsolicited order for the 
purchase of securities, where the initial offering of such 
securities has been completed and provided that the dealer acts 
solely as an agent for the purchaser, has no direct or indirect 
interest in the sale or distribution of the security ordered, and 
receives no commission, profit, or other compensation from any 
source other than the purchaser.
	Q. The sales of interests in and under oil, gas or mining 
leases, fees or titles, or contracts relating thereto, where (1) 
the total number of sales by any one owner of interests, whether 
whole, fractional, segregated or undivided in any single oil, gas 
or mineral lease, fee or title, or contract relating thereto, shall 
not exceed thirty-five (35) within a period of twelve (12) 
consecutive months and (2) no use is made of advertisement or public 
solicitation;  provided, however, if such sale or sales are made by 
an agent for such owner or owners, such agent shall be licensed 
pursuant to this Act.  No oil, gas or mineral unitization or pooling 
agreement shall be deemed a sale under this Act.
	R. The sale by the issuer itself, or by a subsidiary of such 
issuer, of any securities which would be exempt if sold by a 
registered dealer under Section 6 (other than Section 6E) of this 
Act.
	S. The sale by or through a registered dealer of any option if 
at the time of the sale of the option:
	(1)  the performance of the terms of the option is guaranteed 
by any broker-dealer registered under the federal Securities 
Exchange Act of 1934, as amended, which guaranty and broker-dealer 
are in compliance with such requirements or regulations as may be 
approved or adopted by the board;
	(2)  the option is not sold by or for the benefit of the 
issuer of the security which may be purchased or sold upon exercise 
of the option;
	(3)  the security which may be purchased or sold upon 
exercise of the option is either (a) exempted under Subsection F of 
Section 6 of this Act or (b) quoted on the NASDAQ stock market and 
meets the requirements of Paragraphs (1), (6), (7), and (8) of 
Subsection O of Section 5 of this Act;  and
	(4)  such sale is not directly or indirectly for the purposes 
of providing or furthering any scheme to violate or evade any 
provisions of this Act.
	For purposes of this subsection the term "option" shall mean 
and include any put, call, straddle, or other option or privilege of 
buying or selling a specified number of securities at a specified 
price from or to another person, without being bound to do so, on or 
prior to a specified date, but such term shall not include any 
option or privilege which by its terms may terminate prior to such 
specified date upon the occurrence of a specified event.
	T. Such other transactions or conditions as the board by 
rule, regulation, or order may define or prescribe, conditionally 
or unconditionally.
	U. The issuance or transfer of securities by the issuer of its 
securities to a corporation or association, organized exclusively 
for religious, educational, benevolent, fraternal, charitable, or 
reformatory purposes and not for pecuniary profit, only if:
	(a)  the corporation or association does not provide 
anything of value for the securities other than, in the case of any 
security that is an option, payment of the exercise price of the 
option to acquire the securities at a price not to exceed the fair 
market value of the underlying securities on the date the option was 
granted;
	(b)  the issuance or transfer of securities is not made for 
the purpose of raising capital for the issuer;
	(c)  no commission or other form of consideration is paid or 
provided to a third party with respect to the issuance or transfer;  
and
	(d)  the issuance or transfer is not directly or indirectly 
for the purpose of providing or furthering a scheme in violation of 
or to evade this Act.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 5.  Amended by Acts 1959, 
56th Leg., p. 147, ch. 88, Sec. 1;  Acts 1963, 58th Leg., p. 473, ch. 
170, Sec. 1 to 6.

Amended by Acts 1975, 64th Leg., p. 199, ch. 78, Sec. 1, eff. Sept. 
1, 1975;  Acts 1977, 65th Leg., p. 865, ch. 327, Sec. 1, eff. Aug. 
29, 1977;  Acts 1979, 66th Leg., p. 349, ch. 160, Sec. 2, eff. May 
15, 1979;  Acts 1981, 67th Leg., p. 3198, ch. 839, Sec. 1, eff. June 
17, 1981;  Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. Sept. 
1, 1983;  Acts 1989, 71st Leg., ch. 733, Sec. 2, eff. Sept. 1, 1989;  
Acts 1995, 74th Leg., ch. 228, Sec. 4, eff. Sept. 1, 1995;  Acts 
2001, 77th Leg., ch. 561, Sec. 1, eff. June 11, 2001;  Acts 2001, 
77th Leg., ch. 663, Sec. 1, eff. Sept. 1, 2001;  Acts 2001, 77th 
Leg., ch. 1091, Sec. 2.02, eff. Sept. 1, 2001.


	Art. 581-6. EXEMPT SECURITIES.  Except as hereinafter in 
this Act expressly provided, the provisions of this Act shall not 
apply to any of the following securities when offered for sale, or 
sold, or dealt in by a registered dealer or agent of a registered 
dealer:
	A to C. Deleted by Acts 1979, 66th Leg., p. 354, ch. 160, Sec. 
3, eff. May 15, 1979.
	D. Any security issued or guaranteed either as to principal, 
interest, or dividend, by a corporation owning or operating a 
railroad or any other public service utility;  provided, that such 
corporation is subject to regulation or supervision either as to 
its rates and charges or as to the issue of its own securities by the 
Railroad Commission of Texas, or by a public commission, agency, 
board or officers of the Government of the United States, or of any 
territory or insular possession thereof, or of any state or 
municipal corporation, or of the District of Columbia, or of the 
Dominion of Canada, or any province thereof;  also equipment trust 
certificates or equipment notes or bonds based on chattel 
mortgages, leases or agreements for conditional sale of cars, 
motive power or other rolling stock mortgages, leased or sold to or 
furnished for the use of or upon a railroad or other public service 
utility corporation, provided that such corporation is subject to 
regulation or supervision as above;  or equipment trust 
certificates, or equipment notes or bonds where the ownership or 
title of such equipment is pledged or retained in accordance with 
the provisions of the laws of the United States, or of any state, 
territory or insular possession thereof, or of the District of 
Columbia, or the Dominion of Canada, or any province thereof, to 
secure the payment of such equipment trust certificates, bonds or 
notes.
	E. Any security issued and sold by a domestic corporation 
without capital stock and not organized and not engaged in business 
for profit.
	F. Securities which at the time of sale have been fully listed 
upon the American Stock Exchange, the Boston Stock Exchange, the 
Chicago Stock Exchange or the New York Stock Exchange, have been 
designated or approved for designation on notice of issuance on the 
national market system of the NASDAQ stock market, or have been 
fully listed upon any recognized and responsible stock exchange 
approved by the Commissioner as hereinafter in this section 
provided, and also all securities senior to, or if of the same 
issues, upon a parity with, any securities so listed or designated 
or represented by subscription rights which have been so listed or 
designated, or evidence of indebtedness guaranteed by any company, 
any stock of which is so listed or designated, such securities to be 
exempt only so long as the exchange upon which such securities are 
so listed remains approved under the provisions of this Section.  
Application for approval by the Commissioner may be made by any 
organized stock exchange in such manner and upon such forms as may 
be prescribed by the Commissioner, but no approval of any exchange 
shall be given unless the facts and data supplied with the 
application shall be found to establish:
	(1)  That the requirements for the listing of securities upon 
the exchange so seeking approval are such as to effect reasonable 
protection to the public;
	(2)  That the governing constitution, by-laws or regulations 
of such exchange shall require:
	1st:  An adequate examination into the affairs of the issuer 
of the securities which are to be listed before permitting trading 
therein;
	2nd:  That the issuer of such securities, so long as they be 
listed, shall periodically prepare, make public and furnish 
promptly to the exchange, appropriate financial, income, and profit 
and loss statements;
	3rd:  Securities listed and traded in on such exchange to be 
restricted to those of ascertained, sound asset or income value;
	4th:  A reasonable surveillance of its members, including a 
requirement for periodical financial statements and a 
determination of the financial responsibility of its members and 
the right and obligation in the governing body of such exchange to 
suspend or expel any member found to be financially embarrassed or 
irresponsible or found to have been guilty of misconduct in his 
business dealings, or conduct prejudicial of the rights and 
interests of his customers;
	The approval of any such exchange by the Commissioner shall 
be made only after a reasonable investigation and hearing, and 
shall be by a written order of approval upon a finding of fact 
substantially in accordance with the requirements hereinabove 
provided.  The Commissioner, upon ten (10) days notice and hearing, 
shall have power at any time to withdraw approval theretofore 
granted by him to any such stock exchange which does not at the time 
of hearing meet the standards of approval under this Act, and 
thereupon securities so listed upon such exchange shall be no 
longer entitled to the benefit of such exemption except upon the 
further order of said Commissioner approving such exchange.
	By the same procedure set out in the preceding paragraph with 
respect to exchanges approved by the Commissioner, the Commissioner 
may suspend the exempt status of any trading system exempted by the 
Legislature on or after January 1, 1989, if that system does not at 
the time of hearing meet the applicable standards for approval of 
exchanges prescribed by this Act.  The suspension has the same 
effect as the removal of approval of an exchange.  The suspension 
remains in effect until the Commissioner by order determines that 
the trading system has corrected the deficiency or deficiencies on 
which the suspension was based and maintains standards and 
procedures that provide reasonable protection to the public.
	H. Any commercial paper that arises out of a current 
transaction or the proceeds of which have been or are to be used for 
current transactions, and that evidences an obligation to pay cash 
within nine months of the date of issuance, exclusive of days of 
grace, or any renewal of such paper that is likewise limited, or any 
guarantee of such paper or of any such renewal.
	I. Notes, bonds, or other evidence of indebtedness or 
certificates of ownership which are equally and proportionately 
secured without reference of priority of one over another, and 
which, by the terms of the instrument creating the lien, shall 
continue to be so secured by the deposit with a trustee of 
recognized responsibility approved by the Commissioner of any of 
the securities specified in Subsection M of Section 5 or Subsection 
D of Section 6;  such deposited securities, if of the classes 
described in Subsection M of Section 5, having an aggregate par 
value of not less than one hundred and ten per cent (110%) of the par 
value of the securities thereby secured, and if of class specified 
in Subsection D of Section 6, having an aggregate par value of not 
less than one hundred and twenty five per cent (125%) of the par 
value of the securities thereby secured.
	J. Notes, bonds or other evidence of indebtedness of 
religious, charitable or benevolent corporations.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 6.                                

Amended by Acts 1979, 66th Leg., p. 354, ch. 160, Sec. 3, eff. May 
15, 1979;  Acts 1989, 71st Leg., ch. 40, Sec. 1, eff. April 26, 1989;  
Acts 1989, 71st Leg., ch. 733, Sec. 3, eff. Sept. 1, 1989;  Acts 
2001, 77th Leg., ch. 1091, Sec. 2.03, eff. Sept. 1, 2001.


	Art. 581-7. PERMIT OR REGISTRATION FOR ISSUE BY 
COMMISSIONER;  INFORMATION FOR ISSUANCE OF PERMIT OR 
REGISTRATION.  A. Qualification of Securities.  (1) No dealer or 
agent shall sell or offer for sale any securities issued after 
September 6, 1955, except those which shall have been registered by 
Notification under subsection B or by Coordination under subsection 
C of this Section 7 and except those which come within the classes 
enumerated in Section 5 or Section 6 of this Act, until the issuer 
of such securities or a dealer registered under the provisions of 
this Act shall have been granted a permit by the Commissioner;  and 
no such permit shall be granted by the Commissioner until the issuer 
of such securities or a dealer registered under the provisions of 
this Act shall have filed with the Commissioner a sworn statement 
verified under the oath of an executive officer or partner of the 
issuer, or of such registered dealer, and attested by the secretary 
or partner thereof, setting forth the following information:
	a. The names, residences and post office addresses of the 
officers and directors of the company;
	b. The location of its principal office and of all branch 
offices in this State, if any;
	c. A copy of its articles of incorporation or partnership or 
association, as the case may be, and of any amendments thereto, if 
any;  if a corporation, a copy of all minutes of any proceedings of 
its directors, stockholders or members relating to or affecting the 
issue of said security;  if a corporation, a copy of its bylaws and 
of any amendments thereto;  if a trustee, a copy of all instruments 
by which the trust is created and in which it is accepted, 
acknowledged or declared;
	d. A statement showing the amount of capital stock, if any, 
and if no capital stock, the amount of capital of the issuer that is 
contemplated to be employed;  the number of shares into which such 
stock is divided, or if not divided into shares of stock, what 
division is to be made or is contemplated;  the par value of each 
share, or if no par stock, the price at which such security is 
proposed to be sold;  the promotional fees or commissions to be paid 
for the sale of same, including any and all compensations of every 
nature that are in any way to be allowed the promoters or allowed 
for the sale of same;  and how such compensation is to be paid, 
whether in cash, securities, service or otherwise, or partly of 
either or both;  also, the amount of cash to be paid, or securities 
to be issued, given, transferred or sold to promoters for promotion 
or organization services and expenses, and the amount of promotion 
or organization services and expenses which will be assumed or in 
any way paid by the issuer;
	e. Copies of certificates of the stock and all other 
securities to be sold, or offered for sale, together with 
application blanks therefor;  a copy of any contract it proposes to 
make concerning such security;  a copy of any prospectus or 
advertisement or other description of security prepared by or for 
it for distribution or publication;
	f. 1. A detailed statement prepared in accordance with 
generally accepted auditing standards and procedures and generally 
accepted accounting principles, showing all the assets and all the 
liabilities of the issuer, said statement to reflect the financial 
condition of the issuer on a day not more than ninety (90) days 
prior to the date such statement is filed.  Such statement shall 
list all assets in detail and shall show how the value of such 
assets was determined, that is, whether the value set forth in said 
statement represents the actual cost in money of such assets, or 
whether such value represents their present market value, or some 
other value than the actual cost in money, and shall show the 
present actual value of said assets;  also, whether the value set 
forth in the statement is greater or less than the actual cost value 
in money and greater or less than the present market value of such 
assets.  If any of the assets consist of real estate, then said 
statement shall show the amount for which said real estate is 
rendered for State and county taxes, or assessed for taxes.  If any 
such assets listed shall consist of anything other than cash and 
real estate, same shall be set out in detail so as to give the 
Commissioner the fullest possible information concerning same, and 
the Commissioner shall have the power to require the filing of such 
additional information as the Commissioner may deem necessary to 
determine whether or not the true value of said assets are reflected 
in the statement filed.  Should any of the assets listed in said 
statement be subject to any repurchase agreement, or any other 
agreement of like character, by the terms of which the absolute 
ownership of, or title to said assets is qualified or limited in any 
way, then the terms and conditions of said agreement by which the 
absolute ownership of, or title to said assets is qualified or 
limited, as well as the amount and character of the assets subject 
thereto shall be fully stated.  Said statement shall list all 
current liabilities, that is, all liabilities which will mature and 
become due within one year from the date of such application, and 
shall list separately from such current liabilities, all other 
liabilities, contingent or otherwise, showing the amount of those 
which are secured by mortgage or otherwise, the assets of the issuer 
which are subject to such mortgage, and the dates of maturity of any 
such mortgage indebtedness.  Such application shall also include a 
detailed income statement, prepared in accordance with generally 
accepted auditing standards and procedures and generally accepted 
accounting principles, which shall cover the last three (3) years' 
operations of the issuer, if such issuer has been in operation for 
three (3) years, but if not, said income statement shall cover the 
time that said issuer has been operating.  If said issuer has not 
been operating, but is taking over a concern of any kind which has 
been previously operating, an income statement showing the 
operations of the concern thus taken over for a period of the last 
three (3) years next preceding the taking over of said concern shall 
be included in said statement;  said income statement shall clearly 
reflect the amount of net income or net loss incurred during each of 
the years shown.
	2. The financial statements required in subparagraph (1) of 
this paragraph for a small business issuer, as defined by Board 
rule, may be reviewed by an independent certified public accountant 
in accordance with the Statements on Standards for Accounting and 
Review Services promulgated by the American Institute of Certified 
Public Accountants in lieu of being audited and certified, provided 
that the small business issuer otherwise meets all of the 
requirements that the Board by rule, regulation, or order may 
prescribe, conditionally or unconditionally.

Subsec. A(1) amended by Acts 1977, 65th Leg., p. 870, ch. 327, Sec. 
2, eff. Aug. 29, 1977;  Acts 1979, 66th Leg., p. 356, ch. 160, Sec. 
4, eff. May 15, 1979;  Subsec. A amended by Acts 1995, 74th Leg., ch. 
228, Sec. 5, eff. Sept. 1, 1995;  Subsec. A amended by Acts 2001, 
77th Leg., ch. 1091, Sec. 2.04, eff. Sept. 1, 2001.
	B. Registration by Notification.                                               
	(1)  Securities may be registered by notification under this 
subsection B if they are issued by an issuer which has been in 
continuous operation for not less than three (3) years and which has 
shown, during the period of not less than three (3) years next prior 
to the date of registration under this section, average annual net 
earnings after deducting all prior charges including income taxes 
except charges upon securities to be retired out of the proceeds of 
sale, as follows:
	a. In the case of interest-bearing securities, not less than 
one and one-half times the annual interest charges on such 
securities and on all other outstanding interest-bearing 
securities of equal rank;
	b. In the case of securities having a specified dividend 
rate, not less than one and one-half times the annual dividend 
requirements on such securities and on all outstanding securities 
of equal rank;
	c. In the case of securities wherein no dividend rate is 
specified, not less than five percent (5%) on all outstanding 
securities of equal rank, together with the amount of such 
securities then offered for sale, based upon the maximum price at 
which such securities are to be offered for sale.  The ownership by 
an issuer of more than fifty percent (50%) of the outstanding voting 
stock of a corporation shall be construed as the proportionate 
ownership of such corporation and shall permit the inclusion of the 
earnings of such corporation applicable to the payment of dividends 
upon the stock so owned in the earnings of the issuer of the 
securities being registered by notification.
	(2)  Securities entitled to registration by notification 
shall be registered by the filing with the Commissioner by the 
issuer or by a registered dealer of a registration statement as 
required by paragraph a of this subdivision, and completion of the 
procedures outlined in paragraph b of this subdivision:
	a. A registration statement in a form prescribed by the 
Commissioner signed by the applicant filing such statement and 
containing the following information:
	1. Name and business address of main office of issuer and 
address of issuer's principal office, if any, in this state;
	2. Title of securities being registered and total amount of 
securities to be offered;
	3. Price at which securities are to be offered for sale to the 
public, amount of securities to be offered in this state, and amount 
of registration fee, computed as hereinafter provided;
	4. A brief statement of the facts which show that the 
securities are entitled to be registered by notification;
	5. Name and business address of the applicant filing the 
statement;          
	6. Financial statements to include a certified income 
statement, a certified balance sheet, and a certified statement of 
stockholders' equity, each to be for a period of not less than three 
(3) years prior to the date of registration.  These financial 
statements shall reflect the financial condition of the issuer as 
of a date not more than ninety (90) days prior to the date of such 
filing with the Commissioner;
	7. A copy of the prospectus, if any, describing such 
securities;             
	8. Filing of a consent to service of process conforming to the 
requirements of Section 8 of this Act, if the issuer is registering 
the securities and is not a resident of this state or is not 
incorporated under the laws of this state.
	b. Such filing with the Commissioner shall constitute the 
registration of securities by notification and such registration 
shall become effective five (5) days after receipt of the 
registration statement and all accompanying papers by the 
Commissioner;  provided that the Commissioner may in his discretion 
waive or reduce the five (5) days waiting period in any case where 
he finds no injury to the public will result therefrom.  Upon such 
registration by notification, securities may be sold in this state 
by registered dealers and registered salesmen.  Upon the receipt of 
a registration statement, prospectus, if any, payment of the filing 
fee and registration fee, and, if required, a consent to service of 
process, the Commissioner shall record the registration by 
notification of the securities described.  Such registration shall 
be effective for a period of one (1) year and may be renewed for 
additional periods of one (1) year, if the securities are entitled 
to registration under this subsection at the time of renewal, by a 
new filing under this section together with the payment of the 
renewal fee of Ten Dollars ($10.00).
	c. If at any time, before or after registration of securities 
under this section, in the opinion of the Commissioner the 
information in a registration statement filed with him is 
insufficient to establish the fact that the securities described 
therein are, or were, entitled to registration by notification 
under this section, or that the registration information contains, 
or contained, false, misleading or fraudulent facts, he may order 
the applicant who filed such statement to cease and desist from 
selling, or offering for sale, such securities registered, or 
proposed to be registered, under provisions of this section, until 
there is filed with the Commissioner such further information as 
may in his judgment be necessary to establish the fact that such 
securities are, or were, entitled to registration under this 
section.  The provisions of Section 24 of this Act as to hearing 
shall be applicable to an order issued hereunder.

Subsec. B(2) amended by Acts 1977, 65th Leg., p. 871, ch. 327, Sec. 
3, eff. Aug. 29, 1977;  Subsec. B amended by Acts 1995, 74th Leg., 
ch. 228, Sec. 5, eff. Sept. 1, 1995.
	C. Registration by Coordination.                                               
	(1)  Any security for which a registration statement has been 
filed under the federal Securities Act of 1933, as amended, in 
connection with the same offering, may be registered by 
coordination.  A registration statement under this section shall be 
filed with the Commissioner by the issuer or any registered dealer, 
shall contain the following information, and shall be accompanied 
by the following documents:
	a. One copy of the prospectus filed under the Securities Act 
of 1933 together with all amendments thereto;
	b. The amount of securities to be offered in this state;                       
	c. The states in which a registration statement or similar 
document in connection with the offering has been or is expected to 
be filed;
	d. Any adverse order, judgment or decree previously entered 
in connection with the offering by any court or the Securities and 
Exchange Commission;
	e. A copy of the articles of incorporation and by-laws (or 
their substantial equivalents) currently in effect, a copy of any 
agreements with or among underwriters, a copy of any indenture or 
other instrument governing the issuance of the security to be 
registered, and a specimen or copy of the security;
	f. If the Commissioner requests any other information, or 
copies of any other documents, filed under the Federal Securities 
Act of 1933;
	g. An undertaking to forward promptly all amendments to the 
federal registration statement, other than an amendment which 
merely delays the effective date;  and
	h. If the registration statement is filed by the issuer, or by 
a dealer who will offer such securities for sale as the agent of the 
issuer, and the issuer is not a resident of this state or is not 
incorporated under the laws of this state, a consent to service of 
process conforming to the requirements of Section 8.
	(2)  Upon receipt of a registration statement under this 
section the Commissioner shall examine such registration statement 
and he may enter an order denying registration of the securities 
described therein if he finds that the registrant has not proven the 
proposed plan of business of the issuer to be fair, just and 
equitable, and also that any consideration paid, or to be paid, for 
such securities by promoters is fair, just and equitable when such 
consideration for such securities is less than the proposed 
offering price to the public, and that the securities which it 
proposes to issue and the methods to be used by it in issuing and 
disposing of the same will be such as will not work a fraud upon the 
purchaser thereof.  If the Commissioner enters an order denying the 
registration of securities under this section, he shall notify the 
registrant immediately.  The provisions of Section 24 of this Act as 
to hearing shall be applicable to an order issued hereunder.  A 
registration statement under this section automatically becomes 
effective at the moment the federal registration statement becomes 
effective if all the following conditions are satisfied:
	a. No order has been entered by the Commissioner denying 
registration of the securities;
	b. The registration statement has been on file with the 
Commissioner for at least ten (10) days;  and
	c. A statement of the maximum and minimum proposed offering 
prices and the maximum underwriting discounts and commissions has 
been on file for two full business days or such shorter period as 
the Commissioner expressly permits and the offering is made within 
those limitations.  The registrant shall promptly notify the 
Commissioner by telephone or telegram of the date and time when the 
federal registration statement became effective and the content of 
the price amendment, if any, and shall promptly file a 
post-effective amendment containing the information and documents 
in the price amendment. "Price amendment" means the final federal 
amendment which includes a statement of the offering price, 
underwriting and selling discounts or commissions, amount of 
proceeds, conversion rates, call prices, and other matters 
dependent upon the offering price.
	Upon failure to receive the required notification and 
post-effective amendment with respect to the price amendment, the 
Commissioner may enter a stop order, without notice or hearing, 
retroactively denying effectiveness to the registration statement 
or suspending its effectiveness until compliance with this 
subsection, if he promptly notifies the registrant by telephone or 
telegram (and promptly confirms by letter or telegram when he 
notifies by telephone) of the issuance of the order.  If the 
registrant proves compliance with the requirements of this 
subsection as to notice and post-effective amendment, the stop 
order is void as of the time of its entry.  The Commissioner may 
waive either or both of the conditions specified in clauses b and c. 
If the federal registration statement becomes effective before all 
these conditions are satisfied and they are not waived, the 
registration statement automatically becomes effective as soon as 
all the conditions are satisfied.  If the registrant advises the 
Commissioner of the date when the federal registration statement is 
expected to become effective the Commissioner shall promptly advise 
the registrant by telephone or telegram, at the registrant's 
expense, whether all the conditions are satisfied and whether he 
then contemplates the issuance of an order denying registration;  
but this advice by the Commissioner does not preclude the issuance 
of such an order at any time.
	(3)  Registration of securities under this subsection shall 
be effective for the following periods:
	a. The initial registration of securities of an open-end 
investment company, as defined in the Investment Company Act of 
1940, shall be effective until two (2) months after the end of the 
issuer's fiscal year.  After the initial registration, the issuer 
or its agent may renew the registration by submitting the 
appropriate registration forms and renewal fees within two (2) 
months after the end of the issuer's fiscal year.
	b. The registration of securities of a unit investment trust, 
as defined in the Investment Company Act of 1940, shall be effective 
until one (1) year from the date of effectiveness granted by the 
federal Securities and Exchange Commission.
	c. Any other registration of securities shall be effective 
for a period of one (1) year from the date the registration is 
declared effective by the Commissioner.
	(4)  Registrations of securities under subdivision (3) may 
be renewed for additional periods of one (1) year if the appropriate 
registration forms and renewal fees are received prior to the 
expiration date.  The same standards of fairness, justice and 
equity as prescribed by this subsection for original approval will 
apply to the renewal of all registrations.

Subsec. C(1) amended by Acts 1977, 65th Leg., p. 873, ch. 327, Sec. 
4, eff. Aug. 29, 1977;  Subsec. C amended by Acts 1995, 74th Leg., 
ch. 228, Sec. 5, eff. Sept. 1, 1995.
	D. Termination Of Fiscal Year;  Certification Of Statements.                   
	If the fiscal year of the issuer terminated on a date more 
than 90 days prior to the date of the filing, then the financial 
statements required in Subsections A and B of this Section 7, which 
must be as of a date not more than 90 days prior to the date of 
filing, need not be certified by an independent certified public or 
independent public accountant if there are filed in addition 
thereto financial statements containing the information required 
by the applicable subdivision which are certified by an independent 
certified public or independent public accountant as of the end of 
the preceding fiscal year of the issuer.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 7.  Amended by Acts 1963, 
58th Leg., p. 473, ch. 170, Sec. 7, 12a;  Acts 1977, 65th Leg., p. 
870, ch. 327, Sec. 2 to 4, eff. Aug. 29, 1977;  Acts 1979, 66th Leg., 
p. 356, ch. 160, Sec. 4, eff. May 15, 1979.

Effect of 1963 amendment of this article on all suits, actions, 
proceedings, rights, liabilities and causes of action pending or 
accruing before the effective date of the amendatory act, see note 
under art. 581-5.


	Art. 581-8. CONSENT TO SERVICE.  Unless the Board by rule 
otherwise specifies, any application filed or notice filing 
submitted by an issuer, or by a dealer or investment adviser who is 
organized under the laws of any other state, territory, or 
government, or domiciled in any other state than Texas, shall 
contain a provision that appoints the Commissioner the issuer's, 
dealer's, or investment adviser's true and lawful attorney upon 
whom all process may be served in any action or proceedings against 
such issuer, dealer, or investment adviser arising out of any 
transaction subject to this Act with the same effect as if such 
issuer, dealer, or investment adviser were organized or created 
under the laws of this state and had been lawfully served with 
process therein.  The provision shall be duly executed by an 
authorized agent of the issuer, dealer, or investment adviser. 
Whenever the Commissioner shall have been served with any process 
as is herein provided, it shall be the duty of the Commissioner to 
forward same by United States mail to the last known address of such 
issuer, dealer, or investment adviser.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 8.                                

Amended by Acts 1995, 74th Leg., ch. 228, Sec. 6, eff. Sept. 1, 
1995;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.05, eff. Sept. 1, 
2001.


	Art. 581-9. PROTECTION TO PURCHASERS OF SECURITIES.  A. In 
the event any company, as defined herein, shall sell, or offer for 
sale, any securities, as defined in this Act, the Commissioner, if 
he deems it necessary to protect the interests of prospective 
purchasers of such securities, may require the company so offering 
such securities for sale to deposit all, or any part, of the 
proposed securities, or all, or any part, of the moneys and funds 
received from the sale thereof, except such amounts thereof as the 
Commissioner deems necessary to be used, and not to exceed the 
amount allowed as expenses and commissions for the sale of such 
securities, to be deposited in a trust account in some bank or trust 
company approved by the Commissioner and doing business in the 
State of Texas, until such time as such proposed company or existing 
company shall have sold a specified monetary amount or number of 
shares of such securities as in his opinion will reasonably assure 
protection of the public.  When the Commissioner makes a written 
finding that the terms of the escrow agreement have been fully met, 
the bank or trust company shall transfer such funds to the proposed 
or existing corporation and its executive officers for the purpose 
of permitting it to use such securities or money in its business.  
In the event such proposed or existing company shall fail within two 
(2) years to sell the minimum amount of capital necessary under the 
escrow agreement, the Commissioner may authorize, and the bank or 
trust company shall return to the subscribers, upon receipt of such 
authority from the Commissioner, that portion of the funds which 
were deposited or escrowed under such escrow agreement;  provided, 
however, that any securities held by such bank or trust company 
under the escrow agreement shall be returned to the corporation 
only after the bank or trust company has received evidence of 
cancellation thereof from the issuer.  At the time of making the 
deposits, as herein provided for, the dealer or issuer shall 
furnish to such bank or trust company, and to the Commissioner, the 
names of the persons purchasing or subscribing for such securities, 
and the amount of money paid in by each.
	B. The total expenses for marketing securities, including all 
commissions for the sale of such securities, and all other 
incidental selling expenses, shall not in the aggregate exceed 
twenty per cent (20%) of the price at which the stock or other 
securities of any proposed or existing company are to be sold, or 
offered for sale, to the public of this State;  and this amount may 
be limited by the Commissioner to a less percentage which is in his 
opinion fair, just and equitable under the facts of the particular 
case.
	C. In connection with any permit to sell securities the 
Commissioner shall require all offers for sale of said securities 
to be made through and by prospectus which fairly discloses the 
material facts about the plan of finance and business.  Said 
prospectus shall be filed with and approved by the Commissioner;  
provided, however, if the applicant files a prospectus or offering 
circular with the Commissioner which is also filed with the S.E.C. 
under the Securities Act of 1933, as amended, or the regulations 
thereunder, this subsection shall in all respects be satisfied.  
Failure to comply with this requirement shall be treated as a 
violation of this Act, subjecting the parties responsible to the 
consequences thereof as provided herein.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 9.  Amended by Acts 1963, 
58th Leg., p. 473, ch. 170, Sec. 8.


	Art. 581-10. EXAMINATION OF APPLICATION;  PERMIT.  A. 
Commissioner to Examine Application;  Grant or Deny.
	Upon the filing of an application for qualifying securities 
under Section 7A, it shall be the duty of the Commissioner to 
examine the same and the papers and documents filed therewith.  If 
he finds that the proposed plan of business of the applicant appears 
to be fair, just and equitable, and also that any consideration 
paid, or to be paid, for such securities by promoters is fair, just 
and equitable when such consideration for such securities is less 
than the proposed offering price to the public, and that the 
securities which it proposes to issue and the methods to be used by 
it in issuing and disposing of the same are not such as will work a 
fraud upon the purchaser thereof, the Commissioner shall issue to 
the applicant a permit authorizing it to issue and dispose of such 
securities.  Should the Commissioner find that the proposed plan of 
business of the applicant appears to be unfair, unjust or 
inequitable, he shall deny the application for a permit and notify 
the applicant in writing of his decision.
	B. Permit, Form and Contents;  Term and Renewals.                              
	Every permit qualifying securities shall be in such form as 
the Commissioner may prescribe, and shall recite in bold type that 
the issuance thereof is permissive only, and does not constitute a 
recommendation or endorsement of the securities permitted to be 
issued.  Such permit shall be for a period of one (1) year;  
provided, however, that if the securities authorized to be sold are 
not sold within the term provided by the permit, a renewal 
application may be filed with the Commissioner.  Such renewal 
application shall recite the total number of shares sold in Texas, 
the total number of shares sold elsewhere, total number of shares 
outstanding, and shall contain a detailed balance sheet, an 
operating statement, and such other information as the Commissioner 
may require.  The Commissioner shall examine applications for 
renewal by the same standards as stated in subsection A of this 
section for original applications and upon that basis issue or deny 
renewal permits;  such permits, if issued, shall be for a period of 
one (1) year and be in such form as the Commissioner may prescribe.  
The Commissioner shall charge such fees for the issuance of permits 
to sell securities as are hereinafter provided.  No permit 
instrument need be issued if securities are registered under 
Sections 7B or C of this Act, but the Commissioner will examine the 
registration papers to determine their sufficiency under the 
requirements there stated.
	C. Use of Permit to Aid Sale of Securities Prohibited.  It 
shall be unlawful for any dealer, issuer, or agent to use a permit 
authorizing the issuance of securities in connection with any sale 
or effort to sell any security.

Subsec. C amended by Acts 2001, 77th Leg., ch. 1091, Sec. 2.06, eff. 
Sept. 1, 2001.
	D. Commissioner's Discretion.  In applying the standards of 
this Act, the Commissioner may waive or relax any restriction or 
requirement in the Board's rules that, in his opinion, is 
unnecessary for the protection of investors in a particular case.

Subsec. D added by Acts 1983, 68th Leg., p. 2716, ch. 465, Sec. 4, 
eff. Sept. 1, 1983.

Acts 1957, 55th Leg., p. 575, ch.  269, Sec. 10.                              


	Art. 581-10-1. PURPOSES.  A. This Act may be construed and 
implemented to effectuate its general purpose to maximize 
coordination with federal and other states' law and administration, 
particularly with respect to:
	(1)  procedure, reports, and forms;  and                                       
	(2)  exemptions.                                                               
	B. This Act may be construed and implemented to effectuate 
its general purposes to protect investors and consistent with that 
purpose, to encourage capital formation, job formation, and free 
and competitive securities markets and to minimize regulatory 
burdens on issuers and persons subject to this Act, especially 
small businesses.

Added by Acts 1983, 68th Leg., p. 2716, ch. 465, Sec. 3, eff. Sept. 
1, 1983.


	Art. 581-11. PAPERS FILED WITH COMMISSIONER;  RECORDS OPEN TO 
INSPECTION.  All information, papers, documents, instruments and 
affidavits required by this Act to be filed with the Commissioner 
shall be deemed public records of this state, and shall be open to 
the inspection and examination of any purchaser or prospective 
purchaser of said securities or the agent or representative of such 
purchaser or prospective purchaser;  and the Commissioner shall 
give out to any such purchaser or prospective purchaser or his agent 
or representative any information required to be filed with him 
under the provisions of this section, or any other part of this Act, 
and shall furnish any such purchaser, prospective purchaser, or his 
agent or representative requesting it, certified copies of any and 
all papers, documents, instruments and affidavits filed with him 
under the provisions of this section or of any part of this Act.  The 
Commissioner shall maintain a record, which shall be open for 
public inspection, upon which shall be entered the names and 
addresses of all registered dealers, registered agents, registered 
investment advisers, registered investment adviser 
representatives, and persons who have submitted a notice filing 
under this Act, and all orders of the Commissioner denying, 
suspending or revoking registration.  This section does not affect 
information considered confidential by Section 13-1 or 28 of this 
Act or other law.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 11.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.07, eff. 
Sept. 1, 2001.


	Art. 581-12. REGISTRATION OF PERSONS SELLING SECURITIES OR 
RENDERING INVESTMENT ADVICE.  A. Except as provided in Section 5 of 
this Act, no person, firm, corporation or dealer shall, directly or 
through agents, offer for sale, sell or make a sale of any 
securities in this state without first being registered as in this 
Act provided.  No agent shall, in behalf of any dealer, sell, offer 
for sale, or make sale of any securities within the state unless 
registered as an agent for that particular registered dealer under 
the provisions of this Act.
	B. Except as provided by Section 5 of this Act, a person may 
not, directly or through an investment adviser representative, 
render services as an investment adviser in this state unless the 
person is registered under this Act, submits a notice filing as 
provided by Section 12-1 of this Act, or is otherwise exempt under 
this Act.  A person may not act or render services as an investment 
adviser representative for a certain investment adviser in this 
state unless the person is registered or submits a notice filing as 
an investment adviser representative for that particular 
investment adviser as provided in Section 18 or 12-1 of this Act.
	C. The Board may adopt rules and regulations exempting 
certain classes of persons from the dealer, agent, investment 
adviser, and investment adviser representative registration 
requirements, or providing conditional exemptions from 
registration, if the Board determines that such rules and 
regulations are consistent with the purposes of this Act.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 12.                               

Amended by Acts 1995, 74th Leg., ch. 228, Sec. 7, eff. Sept. 1, 
1995;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.08, eff. Sept. 1, 
2001.


	Art. 581-12-1. NOTICE FILING FOR FEDERAL COVERED INVESTMENT 
ADVISERS AND REPRESENTATIVES OF FEDERAL COVERED INVESTMENT 
ADVISERS.  A. This section does not apply to an investment adviser 
or investment adviser representative that is exempt from 
registration under this Act or Board rule.
	B. The Board by rule shall authorize a federal covered 
investment adviser or a representative of a federal covered 
investment adviser to engage in rendering services as an investment 
adviser in this state on submission to and receipt by the 
Commissioner of:
	(1)  a notice filing on the form and containing the 
information prescribed by the Commissioner and, if applicable, a 
consent to service appointing the Commissioner as the adviser's 
agent for service of process as required by Section 8 of this Act;  
and
	(2)  a fee in the amount determined under Sections 35 and 41 
of this Act.    
	C. After the notice filing fee is paid and all the 
requirements for a notice filing under Subsection B of this section 
are met, a notice filing submitted under this section takes effect 
and is valid for the remainder of the calendar year.  A federal 
covered investment adviser or federal covered investment adviser 
representative may renew a notice filing on or before its 
expiration date on submission to and receipt by the Commissioner 
of:
	(1)  a renewal notice filing;  and                                             
	(2)  a renewal fee in the amount determined under Sections 35 
and 41 of this Act.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 2.09, eff. Sept. 1, 
2001.     


	Art. 581-13. METHOD AND CONDITION OF REGISTRATION REQUIRED 
FOR DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER 
REPRESENTATIVE.  A. A dealer or investment adviser to be registered 
must submit a sworn application therefor to the Commissioner, which 
shall be in such form as the Commissioner may determine and which 
shall state:
	(1)  The principal place of business of the applicant 
wherever situated;     
	(2)  The location of the principal place of business and all 
branch offices in this state, if any;
	(3)  The name or style of doing business and the address of 
the applicant;   
	(4)  The names, residences and the business addresses of all 
persons interested in the business as principal, officer, director 
or managing agent, specified as to each his capacity and title;  and
	(5)  The general plan and character of business of such 
applicant and the length of time during and the places at which the 
applicant has been engaged in the business.
	B. An application filed by a dealer or investment adviser 
shall also contain such additional information as to the 
applicant's previous history, record, associations and present 
financial condition as may be required by the Commissioner, or as is 
necessary to enable the Commissioner to determine whether the sale 
of any securities proposed to be issued or dealt in by such 
applicant would result in fraud.
	C. Each application shall be accompanied by certificates or 
other evidences satisfactory to the Commissioner establishing the 
good reputation of the applicant, his directors, officers, 
copartners or principals.
	D. The Commissioner shall require as a condition of 
registration for all registrations granted after the effective date 
of this Subsection D that the applicant (and, in the case of a 
corporation or partnership, the officers, directors or partners to 
be licensed by the applicant) pass successfully a written 
examination to determine the applicant's qualifications and 
competency to engage in the business of dealing in and selling 
securities as a dealer or agent, or rendering services as an 
investment adviser or investment adviser representative.  This 
condition may be waived as to any applicant or class of applicants 
by action of the State Securities Board.
	E. Not later than the 30th day after the date a person takes a 
registration examination under this Act, the Board shall notify the 
person of the results of the examination.  If the examination is 
graded or reviewed by a testing service:
	(1)  the Board shall notify the person of the results of the 
examination not later than the 14th day after the date the Board 
receives the results from the testing service;  and
	(2)  if notice of the examination results will be delayed for 
longer than 90 days after the examination date, the Board shall 
notify the person of the reason for the delay before the 90th day.
	F. The Board may require a testing service to notify a person 
of the results of the person's examination.  If requested in writing 
by a person who fails a registration examination administered under 
this Act, the Board shall furnish the person with an analysis of the 
person's performance on the examination.
	G. If the applicant is a corporation organized under the laws 
of any other state or territory or government or shall have its 
principal place of business therein, it shall accompany the 
application with a copy of its Articles of Incorporation and all 
amendments thereto, certified by the proper officer of such state 
or government or of the corporation, and its regulations and by 
laws.
	H. If a limited partnership, either a copy of its Articles of 
Copartnership or a verified statement of the plan of doing 
business.
	I. If an unincorporated association or organization under the 
laws of any other state, territory or government, or having its 
principal place of business therein, a copy of its Articles of 
Association, Trust Agreement or other form of organization.
	J. It shall be the duty of the Commissioner to prepare a 
proper form to be used by the applicant under the terms of this 
Section, and the Commissioner shall furnish copies thereof to all 
persons desiring to make application to be registered as a dealer or 
investment adviser.
	K. The Commissioner may accept some or all of the 
examinations administered by securities self-regulatory 
organizations to fulfill the examination requirements of 
Subsection D.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 13;  Acts 1963, 58th 
Leg., p. 473, ch. 170, Sec. 9.

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983;  Subsec. K amended by Acts 1995, 74th Leg., ch. 228, 
Sec. 8, eff. Sept. 1, 1995.  Amended by Acts 2001, 77th Leg., ch. 
1091, Sec. 2.10, eff. Sept. 1, 2001.


	Art. 581-13-1. INSPECTION.  A. The Commissioner, without 
notice, may inspect a registered dealer or registered investment 
adviser as necessary to ensure compliance with this Act and Board 
rules.
	B. The Commissioner, during regular business hours, may:                       
	(1)  enter the business premises of a registered dealer or 
registered investment adviser;  and
	(2)  examine and copy books and records pertinent to the 
inspection.         
	C. During the inspection, the dealer or investment adviser 
shall:            
	(1)  provide to the Commissioner or the Commissioner's 
authorized representative immediate and complete access to the 
person's office, place of business, files, safe, and any other 
location in which books and records pertinent to the inspection are 
located;  and
	(2)  allow the Commissioner or the Commissioner's authorized 
representative to make photostatic or electronic copies of books or 
records subject to inspection.
	D. A dealer or investment adviser may not charge a fee for 
copying information under this section.
	E. Information obtained under this section and any 
intra-agency or interagency notes, memoranda, reports, or other 
communications consisting of advice, analyses, opinions, or 
recommendations that are made in connection with the inspection are 
confidential and may not be disclosed to the public or released by 
the Commissioner except to the same extent provided for the release 
or disclosure of confidential documents or other information made 
or obtained in connection with an investigation under Section 28 of 
this Act.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 3.01, eff. Sept. 1, 
2001.     


	Art. 581-14. DENIAL, SUSPENSION OR REVOCATION OF 
REGISTRATION AS DEALER, AGENT, INVESTMENT ADVISER, OR INVESTMENT 
ADVISER REPRESENTATIVE.  A. The Commissioner may deny, revoke, or 
suspend a registration issued under this Act, place on probation a 
dealer, agent, investment adviser, or investment adviser 
representative whose registration has been suspended under this 
Act, or reprimand a person registered under this Act if the person:
	(1)  has been convicted of any felony;                                         
	(2)  has been convicted of any misdemeanor which directly 
relates to the person's securities-related duties and 
responsibilities;
	(3)  has engaged in any inequitable practice in the sale of 
securities or in rendering services as an investment adviser, or in 
any fraudulent business practice;
	(4)  is a dealer or investment adviser who is insolvent;                       
	(5)  meets one of the following criteria:                                      
	(a)  is a dealer who is selling or has sold securities in this 
state through an agent other than a registered agent;
	(b)  is an investment adviser who is engaging or has engaged 
in rendering services as an investment adviser in this state 
through a representative who is not registered to perform services 
for that investment adviser as required by this Act;
	(c)  is an agent who is selling or has sold securities in this 
state for a dealer, issuer or controlling person with knowledge 
that such dealer, issuer or controlling person has not complied 
with the provisions of this Act;  or
	(d)  is an investment adviser representative who is 
rendering or has rendered services as an investment adviser for an 
investment adviser in this state for whom the representative is not 
or was not registered to represent as required by this Act;
	(6)  has violated any of the provisions of this Act or a rule 
of the Board;  
	(7)  has made any material misrepresentation to the 
Commissioner or Board in connection with any information deemed 
necessary by the Commissioner or Board to determine a dealer's or 
investment adviser's financial responsibility or a 
dealer's,agent's, investment adviser's or investment adviser 
representative's business repute or qualifications, or has refused 
to furnish any such information requested by the Commissioner or 
Board;
	(8)  became registered as a dealer, agent, investment 
adviser, or investment adviser representative after August 23, 
1963, and has not complied with a condition imposed by the 
Commissioner under Section 13-D;
	(9)  is the subject of any of the following orders that are 
currently effective and were issued within the last five years:
	(a)  an order by the securities agency or administrator of 
any state, by the financial regulatory authority of a foreign 
country, or by the Securities and Exchange Commission, entered 
after notice and opportunity for hearing, denying, suspending, or 
revoking the person's license as a dealer, agent, investment 
adviser, or investment adviser representative or the substantial 
equivalent of those terms;
	(b)  a suspension or expulsion from membership in or 
association with a member of a self-regulatory organization;
	(c)  a United States Postal Service fraud order;                               
	(d)  an order by the securities agency or administrator of 
any state, the financial regulatory authority of a foreign country, 
the Securities and Exchange Commission, or by the Commodity Futures 
Trading Commission, finding, after notice and opportunity for 
hearing, that the person engaged in acts involving fraud, deceit, 
false statements or omissions, or wrongful taking of property;
	(e)  an order by the Commodity Futures Trading Commission 
denying, suspending, or revoking registration under the Commodity 
Exchange Act;
	(10)  is subject to any order, judgment, or decree entered by 
any court of competent jurisdiction which permanently restrains or 
enjoins such person from engaging in or continuing any conduct, 
action, or practice in connection with any aspect of the purchase or 
sale of securities or the rendering of security investment advice;  
or
	(11)  has violated any provision of any order issued by the 
Commissioner or has violated any provision of any undertaking or 
agreement with the Commissioner.
	B. If the Commissioner proposes to suspend or revoke a 
person's registration, the person is entitled to a hearing before 
the Commissioner or a hearings officer as now or hereafter required 
by law.  Proceedings for the suspension or revocation of a 
registration are governed by Chapter 2001, Government Code.
	C. This section does not affect the confidentiality of 
investigative records maintained by the Commissioner or Board.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 14.  Amended by Acts 
1963, 58th Leg., p. 473, ch. 170, Sec. 10.

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983.  Subsec. A amended by Acts 1985, 69th Leg., ch. 578, 
Sec. 1, eff. June 12, 1985;  Subsecs. A, D amended by Acts 1995, 74th 
Leg., ch. 228, Sec. 9, eff. Sept. 1, 1995.  Amended by Acts 2001, 
77th Leg., ch. 1091, Sec. 3.02, eff. Sept. 1, 2001.


	Art. 581-15. ISSUANCE OF REGISTRATION CERTIFICATES TO 
DEALERS AND INVESTMENT ADVISERS.  If the Commissioner is satisfied 
that the applicant for a dealer's or investment adviser's 
certificate of registration has complied with the requirements of 
the Act above, that the applicant has filed a written consent to 
service as and when required by Section 8 of this Act, and upon the 
payment of the fees required by Section 35 of this Act, the 
Commissioner shall register the applicant and issue to it or him a 
registration certificate, stating the principal place of business 
and address of the dealer or investment adviser, the names and 
business addresses of all persons interested in the business as 
principals, officers, directors or managing agents, and the fact 
that the dealer or investment adviser has been registered for a 
current calendar year as a dealer in securities or as an investment 
adviser.  Pending final disposition of an application, the 
Commissioner may, for special cause shown, grant temporary 
permission, revocable at any time and subject to such terms and 
conditions as the Commissioner may prescribe, to transact business 
as a dealer or investment adviser under this Act.  Any dealer or 
investment adviser acting under such a temporary permission, shall 
be considered a registered dealer or investment adviser for all 
purposes of this Act.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 15.                               

Amended by Acts 1983, 68th Leg., p. 5219, ch. 953, Sec. 1, eff. 
Sept. 1, 1983;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.11, eff. 
Sept. 1, 2001.


	Art. 581-17. FORM OF CERTIFICATES TO DEALERS AND INVESTMENT 
ADVISERS.  The certificate shall be in such form as the 
Commissioner may determine.  Any changes in the personnel of a 
partnership or in the principals, officers, directors or managing 
agents of any dealer or investment adviser shall be immediately 
certified under oath to the Commissioner and any change in the 
certificate necessitated thereby may be made at any time, upon 
written application setting forth the fact necessitating the 
change.  Upon the issue of the amended certificates, the original 
certificate and the certified copies thereof outstanding shall be 
promptly surrendered to the Commissioner.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 17.                               

Amended by Acts 2001, 77th Leg., ch. 1091, Sec. 2.12, eff. Sept. 1, 
2001.   


	Art. 581-18. REGISTRATION OF AGENTS OF DEALERS OR OF 
REPRESENTATIVES OF INVESTMENT ADVISERS.  Upon written application 
by a registered dealer or investment adviser, and upon satisfactory 
compliance with the requirements of the Act above, the Commissioner 
shall register as an agent of such dealer or as a representative of 
the investment adviser such persons as the dealer or investment 
adviser may request.  The application shall be in such form as the 
Commissioner may prescribe and shall state the residences and 
addresses of the persons whose registration is requested, together 
with such information as to such agent's or investment adviser 
representative's previous history, record and association as may be 
required by the Commissioner.  Such application shall also be 
signed and sworn to by the agent or investment adviser 
representative for whom registration is requested.  The 
Commissioner shall issue to such dealer or investment adviser, to 
be retained by such dealer or investment adviser for each person so 
registered, evidence of registration stating the person's name, the 
address of the dealer or investment adviser, and the fact that the 
person is registered for the current calendar year as an agent or 
investment adviser representative of the dealer or investment 
adviser, as appropriate.  The evidence of registration shall be in 
such form as the Commissioner shall determine.  Upon application by 
the dealer or the investment adviser, the registration of any agent 
or investment adviser representative shall be cancelled.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 18.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983;  Acts 1983, 68th Leg., p. 5220, ch. 953, Sec. 2, eff. 
Sept. 1, 1983;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.13, eff. 
Sept. 1, 2001.


	Art. 581-19. ANNUAL REGISTRATION;  RENEWALS.  A. Except as 
provided in Subsections B and C of this section, all registrations 
shall expire at the close of the calendar year, but new 
registrations for the succeeding year shall be issued upon written 
application and upon payment of the fees as hereinafter provided, 
without filing of further statements or furnishing any further 
information unless specifically requested by the Commissioner.  If 
any applicant is registered after December 1st of any year, he may 
immediately apply for a renewal of his registration for the ensuing 
year.
	B. The Board by rule may adopt a system under which 
registrations expire on various dates during the year.  For the year 
in which the registration expiration date is changed, registration 
fees payable after the 60th day and before the 30th day before 
January 1st of the next year shall be prorated on a monthly basis so 
that each person shall pay only that portion of the registration fee 
that is allocable to the number of months during which the 
registration is valid.  On renewal of the registration on the new 
expiration date, the total registration renewal fee is payable.
	C. Renewal of Registration.  (1) A person may renew an 
unexpired registration by filing a renewal application in the form 
prescribed by the Commissioner and paying to the Board, before the 
expiration date of the registration, the required renewal fee.
	(2)  If a person's registration has been expired for ninety 
(90) days or less, the person may renew the registration by filing a 
renewal application with the Commissioner and paying to the Board 
the required renewal fee and a fee that is equal to one-half of the 
original application fee for the registration.
	(3)  If a person's registration has been expired for longer 
than ninety (90) days but less than two years, the person may renew 
the registration by filing a renewal application with the 
Commissioner and paying to the Board all unpaid renewal fees and a 
fee that is equal to the original application fee for the 
registration.
	(4)  If a person's registration has been expired for two 
years or more, the person may not renew the registration.  The 
person may obtain a new registration by submitting to reexamination 
and complying with the requirements and procedures for obtaining an 
original registration.  The person must pay to the Board a fee that 
is equal to the original application fee.
	(5)  At least thirty (30) days before the expiration of a 
person's registration, the Commissioner shall send to the person at 
the person's last known address according to the records of the 
Board a written notice of the impending expiration of the 
registration.
	(6)  A person who sells securities or renders investment 
advisory services after the person's registration has expired and 
before it is renewed is subject to the sanctions provided by this 
Act for selling securities or rendering investment advice without 
being registered.
	D. The Board may recognize, prepare, or administer continuing 
education programs for a person who is registered under this Act. If 
participation is required by the Board as a condition of 
maintaining the certificate or evidence of registration, a person 
who is registered under this Act must participate in the continuing 
education programs.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 19.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983.  Subsec. A amended by Acts 1989, 71st Leg., ch. 733, 
Sec. 4, eff. Sept. 1, 1989;  Subsec. C amended by Acts 1995, 74th 
Leg., ch. 228, Sec. 11, eff. Sept. 1, 1995;  Subsec. D amended by 
Acts 2001, 77th Leg., ch. 1091, Sec. 2.14, eff. Sept. 1, 2001.


	Art. 581-20. DISPLAY OR ADVERTISEMENT OF FACT OF 
REGISTRATION UNLAWFUL.  It shall be unlawful for any dealer, agent, 
investment adviser, or investment adviser representative to use the 
fact of his registry, by public display or advertisement, except as 
hereinafter expressly provided, for the registration certificate 
or evidence of registration or any certified copy thereof, in 
connection with any sale or effort to sell any security or any 
rendering of services as an investment adviser.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 20.                               

Amended by Acts 1989, 71st Leg., ch. 733, Sec. 5, eff. Sept. 1, 
1989;  Acts 2001, 77th Leg., ch. 1091, Sec. 2.15, eff. Sept. 1, 
2001.


	Art. 581-21. POSTING REGISTRATION 
CERTIFICATES.  Immediately upon receipt of the dealer's or 
investment adviser's registration certificate issued pursuant to 
the authority of this Act, the dealer or investment adviser named 
therein shall cause such certificate to be posted and at all times 
conspicuously displayed in such dealer's or investment adviser's 
principal place of business, if one is maintained in this state, and 
shall likewise forthwith cause a duplicate of such certificate to 
be posted and at all times conspicuously displayed in each branch 
office located within this state.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 21.                               

Amended by Acts 2001, 77th Leg., ch. 1091, Sec. 2.16, eff. Sept. 1, 
2001.   


	Art. 581-22. REGULATION OF OFFERS.  A. Permitted Written, 
Pictorial, or Broadcast Offers.  A written or printed offer 
(including a pictorial demonstration with any accompanying script) 
or a broadcast offer (i.e., an offer disseminated by radio, 
television, recorded telephone presentation, or other mass media) 
to sell a security may be made in this State if:
	(1)  a copy of the offer is filed with the Commissioner 
within 10 days after the date of its first use in this State;  and
	(2)  the person making or distributing the offer in this 
State is a registered dealer or a registered agent of a registered 
dealer, as required by this Act;  and
	(3)  either:                                                                   
	(a)  the security is registered under Subsection B or C of 
Section 7 or a permit has been granted for the security under 
Section 10, or
	(b)  an application for registration under Subsection B or C 
of Section 7 or for a permit under Section 10 has been filed with the 
Commissioner;  and
	(4)  if registration has not become effective under 
Subsection B or C of Section 7 or a permit has not been granted under 
Section 10, the offer prominently states on the first page of a 
written or printed offer or as a preface to any pictorial or 
broadcast offer either:
	(a)                                                                            

THE SECURITIES HEREIN DESCRIBED HAVE NOT 
BEEN QUALIFIED OR REGISTERED FOR SALE IN 
TEXAS. ANY REPRESENTATION TO THE CONTRARY 
OR CONSUMMATION OF SALE OF THESE SECURITIES 
IN TEXAS PRIOR TO QUALIFICATION OR 
REGISTRATION THEREOF IS A CRIMINAL OFFENSE.

INFORMATIONAL ADVERTISING ONLY.

or                                                                            
	(b)  other language required by the United States Securities 
and Exchange Commission that in the Commissioner's opinion will 
inform investors that the securities may not yet be sold;  and
	(5)  the person making or distributing the offer in this 
State;              
	(a)  has not received notice in writing of an order 
prohibiting the offer under Subsection A or B of Section 23, or
	(b)  has received such notice but the order is no longer in 
effect;  and     
	(6)  payment is not accepted from the offeree and no contract 
of sale is made before registration is effective under Subsection B 
or C of Section 7 or a permit is granted under Section 10.
	B. Permitted Oral Offers.  An oral offer (not broadcast, 
i.e., not disseminated by radio, television, recorded telephone 
presentation, or other mass media) to sell a security may be made in 
this State in person, by telephone, or by other direct individual 
communication if:
	(1)  the person making the offer in this State is a 
registered dealer or a registered agent of a registered dealer, as 
required by this Act;  and
	(2)  either:                                                                   
	(a)  the security is registered under Subsection B or C of 
Section 7 or a permit has been granted for the security under 
Section 10, or
	(b)  an application for registration under Subsection B or C 
of Section 7 or for a permit under Section 10 has been filed with the 
Commissioner;  and
	(3)  the person making or distributing the offer in this 
State:              
	(a)  has not received notice in writing of an order 
prohibiting the offer under Subsection A or B of Section 23, or
	(b)  has received such notice but the order is no longer in 
effect;  and     
	(4)  payment is not accepted from the offeree and no contract 
of sale is made before registration is effective under Subsection B 
or C of Section 7 or before a permit is granted under Section 10.
	C. Effect of Compliance.  An offer in compliance with 
Subsection A or B of Section 22 is not a violation of Section 7.
	D. Effect of Noncompliance.  An offer not in compliance with 
Subsection A or B of Section 22 is unlawful and a violation of this 
Act.
	E. Applicability.  Section 22 does not apply to transactions 
or securities exempt under Section 5 or Section 6.
	F. Dealers Named in Offer.  A dealer whose name is included in 
a written or printed or broadcast offer along with the name of a 
registered dealer is not deemed to make an offer in this State by 
that fact alone.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 22;  Acts 1961, 57th 
Leg., p. 1047, ch. 466, Sec. 2.

Subsec. A amended by Acts 1977, 65th Leg., p. 873, ch. 327, Sec. 5, 
eff. Aug. 29, 1977.  Amended by Acts 1979, 66th Leg., p. 357, ch. 
160, Sec. 5, eff. May 15, 1979;  Subsec. A amended by Acts 1987, 70th 
Leg., ch. 732, Sec. 1, eff. Sept. 1, 1987;  Subsecs. A, B amended by 
Acts 2001, 77th Leg., ch. 1091, Sec. 2.17, eff. Sept. 1, 2001.


	Art. 581-23. CEASE AND DESIST ORDERS;  CEASE PUBLICATION 
ORDERS;  LIST OF SECURITIES OFFERED.  Anything in this Act to the 
contrary notwithstanding,
	A. If it appears to the commissioner at any time that the sale 
or proposed sale or method of sale of any securities, whether exempt 
or not, is a fraudulent practice or would not be in compliance with 
this Act or would tend to work a fraud on any purchaser thereof or 
would not be fair, just or equitable to any purchaser thereof, the 
commissioner may hold a hearing on a date determined by the 
commissioner within 30 days after the date of receipt of actual 
notice by, or notice by registered or certified mail to the person's 
last known address is given to, the issuer, the registrant, the 
person on whose behalf such securities are being or are to be 
offered, or any person acting as a dealer or agent in violation of 
this Act.  If the commissioner shall determine at such hearing that 
such sale would not be in compliance with the Act, is a fraudulent 
practice, or would tend to work a fraud on any purchaser thereof or 
would not be fair, just or equitable to any purchaser thereof, the 
commissioner may issue a written cease and desist order, 
prohibiting or suspending the sale of such securities or denying or 
revoking the registration of such securities, prohibiting an 
unregistered person from acting as a dealer or an agent, or 
prohibiting the fraudulent conduct.  No dealer or agent shall 
thereafter knowingly sell or offer for sale any security named in 
such cease and desist order.
	B. If it appears to the Commissioner at any time that an 
investment adviser or investment adviser representative is 
engaging or is likely to engage in fraud or a fraudulent practice 
with respect to rendering services as an investment adviser or 
investment adviser representative or that a person is acting as an 
investment adviser or investment adviser representative in 
violation of this Act, the Commissioner may hold a hearing not later 
than the 30th day after the date on which the person receives actual 
notice or is provided notice by registered or certified mail, 
return receipt requested, to the person's last known address.  
After the hearing, the Commissioner shall issue or decline to issue 
a cease and desist order.  An order issued under this subsection 
must:
	(1)  require the investment adviser or investment adviser 
representative to immediately cease and desist from the fraudulent 
conduct;  or
	(2)  prohibit an unregistered or other unauthorized person 
who is not exempt from the registration or notice filing 
requirements of this Act from acting as an investment adviser or 
investment adviser representative in violation of this Act.
	C. If it appears to the Commissioner at any time that an offer 
contains any statement that is materially false or misleading or is 
otherwise likely to deceive the public, the Commissioner may issue 
a cease publication order.  No person shall make an offer prohibited 
by such cease publication order.
	D.  The commissioner may, in the exercise of reasonable 
discretion hereunder, at any time, require a dealer to file with the 
commissioner a list of securities which he has offered for sale or 
has advertised for sale within this State during the preceding six 
months, or which he is at the time offering for sale or advertising, 
or any portion thereof.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 23.                               

Amended by Acts 1973, 63rd Leg., p. 216, ch. 97, Sec. 1, eff. Aug. 
27, 1973;  Acts 1979, 66th Leg., p. 359, ch. 160, Sec. 6, eff. May 
15, 1979;  Acts 1987, 70th Leg., ch. 732, Sec. 2, eff. Sept. 1, 1987;  
Acts 1989, 71st Leg., ch. 733, Sec. 6, eff. Sept. 1, 1989;  Acts 
1995, 74th Leg., ch. 228, Sec. 12, eff. Sept. 1, 1995;  Acts 2001, 
77th Leg., ch. 1091, Sec. 3.03, eff. Sept. 1, 2001.


	Art. 581-23-1. ASSESSMENT OF ADMINISTRATIVE FINES.  A. After 
giving notice and opportunity for a hearing, the Commissioner may 
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;  or
	(3)  engaged in an act or practice that violates this Act or a 
Board rule or order.
	B. Any administrative fine assessed under this Section must 
be in an amount that does not exceed $10,000 for a single violation 
or $100,000 for multiple violations in a single proceeding or a 
series of related proceedings.
	C. For purposes of determining the amount of an 
administrative fine assessed under this Section, the Commissioner 
shall consider factors set out in guidelines established by the 
Board.
	D. For purposes of private civil litigation, the payment of a 
fine assessed in an agreed order under this Act shall not constitute 
an admission of any misconduct described in the agreed order.
	E. Any proceeding for the assessment of an administrative 
fine must be commenced within five years after the violation 
occurs.

Added by Acts 1995, 74th Leg., ch. 228, Sec. 13, eff. Sept. 1, 1995.  
Subsec. A amended by Acts 2001, 77th Leg., ch. 1091, Sec. 3.04, eff. 
Sept. 1, 2001.


	Art. 581-23-2. EMERGENCY CEASE AND DESIST ORDER.  A. On the 
Commissioner's determination that the conduct, act, or practice 
threatens immediate and irreparable public harm, the Commissioner 
may issue an emergency cease and desist order to a person whom the 
Commissioner reasonably believes:
	(1)  is engaging in or is about to engage 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)  has made an offer containing a statement that is 
materially misleading or is otherwise likely to deceive the public;  
or
	(3)  is engaging or is about to engage in an act or practice 
that violates this Act or a Board rule.
	B. The order must:                                                             
	(1)  be sent on issuance to each person affected by the order 
by personal delivery or registered or certified mail, return 
receipt requested, to the person's last known address;
	(2)  state the specific charges and require the person to 
immediately cease and desist from the unauthorized activity;  and
	(3)  contain a notice that a request for hearing may be filed 
under this section.
	C. Unless a person against whom the emergency order is 
directed requests a hearing in writing before the 31st day after the 
date it is served on the person, the emergency order is final and 
nonappealable as to that person.  A request for a hearing must:
	(1)  be in writing and directed to the Commissioner;  and                      
	(2)  state the grounds for the request to set aside or modify 
the order.     
	D. On receiving a request for a hearing, the Commissioner 
shall serve notice of the time and place of the hearing by personal 
delivery or registered or certified mail, return receipt requested.  
The hearing must be held not later than the 10th day after the date 
the Commissioner receives the request for a hearing unless the 
parties agree to a later hearing date.  At the hearing, the 
Commissioner has the burden of proof and must present evidence in 
support of the order.
	E. After the hearing, the Commissioner shall affirm, modify, 
or set aside in whole or part the emergency order.  An order 
affirming or modifying the emergency order is immediately final for 
purposes of enforcement and appeal.
	F. An emergency order continues in effect unless the order is 
stayed by the Commissioner.  The Commissioner may impose any 
condition before granting a stay of the order.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 3.05, eff. Sept. 1, 
2001.     


	Art. 581-24. HEARINGS UPON EXCEPTION TO ACTIONS OF 
COMMISSIONER.  A. If any person or company should take exception to 
the action of the Commissioner in failing or refusing to register 
and issue certificate for a dealer or investment adviser or 
evidence of registration for an investment adviser representative 
or agent under Section 15 or 18 of this Act, in issuing an order 
under Section 23 or 23-2 of this Act, or in any other particular 
where this Act specifies no other procedure, the complaining party 
may request a hearing before the Commissioner or before a hearings 
officer as now or hereafter required by law.
	B. On complaint by a person aggrieved by a denial of a permit 
for the sale of securities under Section 10 of this article or a 
failure or refusal to register securities under Section 7 of this 
article, the Board or a hearings officer as now or hereafter 
required by law shall conduct a hearing.
	C. Hearings under this Section are subject to the 
requirements of Chapter 2001, Government Code.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 24.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983;  Acts 1995, 74th Leg., ch. 228, Sec. 14, eff. Sept. 1, 
1995;  Subsec. A amended by Acts 2001, 77th Leg., ch. 1091, Sec. 
3.06, eff. Sept. 1, 2001.


	Art. 581-25. REVOCATION OF REGISTRATION OF ANY DEALER, 
AGENT, INVESTMENT ADVISER, OR INVESTMENT ADVISER 
REPRESENTATIVE.  The revocation of a dealer's or investment 
adviser's registration shall constitute a revocation of the 
registration of any agent of the dealer or any investment adviser 
representative of the investment adviser and notice of its 
operation on such agent or investment adviser representative shall 
be forthwith sent by the Commissioner to each of such agents or 
investment adviser representatives.  All registrations and 
evidences of registration revoked shall at once be surrendered to 
the Commissioner upon request.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 25.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1 eff. Sept. 
1, 1983;  Acts 2001, 77th Leg., ch. 1091, Sec. 3.07, eff. Sept. 1, 
2001.


	Art. 581-25-1. RECEIVERSHIPS OF PERSONS OR ASSETS.  A. 
Whenever it shall appear to the commissioner, either upon complaint 
or otherwise, that:
	(1)  any person or company acting as a dealer, agent, 
investment adviser, investment adviser representative, or issuer 
(as defined in Section 4 of this Act), or an affiliate of a dealer, 
agent, investment adviser, investment adviser representative, or 
issuer, whether or not required to be registered by the 
commissioner as in this Act provided, shall have engaged in any act, 
transaction, practice, or course of business declared by Section 32 
of this Act to be a fraudulent practice;
	(2)  such person or company shall have acted as a dealer, 
agent, investment adviser, investment adviser representative, or 
issuer or an affiliate of a dealer, agent, investment adviser, 
investment adviser representative, or issuer in connection with 
such fraudulent practice;  and
	(3)  the appointment of a receiver for such person or 
company, or the assets of such a person or company is necessary in 
order to conserve and protect the assets of such person or company 
for the benefit of customers, security holders, and other actual 
and potential claimants of such person or company the commissioner 
may request the attorney general to bring an action for the 
appointment of a receiver for such person or company or the assets 
of such person or company.
	B. Upon request by the commissioner pursuant to Subsection A 
of this Section 25-1, and if it appears to the attorney general that 
the facts enumerated in Paragraphs (1) through (3) of Subsection A 
of this Section 25-1 exist with respect to any person or company, 
the attorney general may bring an action in the name and on behalf 
of the State of Texas for the appointment of a receiver for such 
person or company.  The facts set forth in the petition for such 
relief shall be verified by the commissioner upon information and 
belief.  Such action may be brought in a district court of any 
county wherein the fraudulent practice complained of has been 
committed in whole or part, or of any county wherein any defendant 
with respect to whom appointment of a receiver is sought has its 
principal place of business, and such district court shall have 
jurisdiction and venue of such action;  this provision shall be 
superior to any other provision of law fixing jurisdiction or venue 
with regard to suits for receivership.  In any such action 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 his employees, investment adviser 
representatives, or agents and the production of documents, books, 
and records as may appear necessary for any hearing, to testify and 
give evidence concerning matters relevant to the appointment of a 
receiver.
	C. In any action brought by the attorney general pursuant to 
Subsection B of this Section 25-1, the court, upon a proper showing 
by the attorney general of the existence of the facts enumerated in 
Paragraphs (1) through (3) of Subsection A of this Section 25-1 with 
respect to any person or company, may appoint a receiver for such 
person or company or the assets of such person or company.  If such 
receiver is appointed without notice to and opportunity to be heard 
for such person or company, such person or company shall be entitled 
to apply in writing to the court for an order dissolving the 
receivership, and, if such application is made within 30 days after 
service upon such person or company of the court's order making such 
appointment, shall be entitled to a hearing thereon upon 10 days 
written notice to the attorney general.
	D. No person shall be appointed a receiver pursuant to this 
Section 25-1 unless such person be found by the court, after hearing 
the views of the attorney general, the commissioner, and, if deemed 
by the court to be practicable, the person or company against whom 
such relief is sought, to be qualified to discharge the duties of 
receiver giving due consideration to the probable nature and 
magnitude of the duties of receiver in the particular case.  No bond 
for receivership shall be required of the commissioner or attorney 
general in any proceeding under this Section 25-1, but the court 
shall require a bond of any receiver appointed hereunder, 
conditioned upon faithful discharge of the receiver's duties, in an 
amount found by the court to be sufficient giving due consideration 
to the probable nature and magnitude of the duties of receiver in 
the particular case.
	E. The remedy of receivership provided by this Section 25-1 
shall be in addition to any and all other remedies afforded the 
commissioner or the attorney general by other provisions of 
statutory or decisional law of this state, including, without 
limitation of the generality of the foregoing, any such provision 
authorizing receiverships.

Added by Acts 1975, 64th Leg., p. 206, ch. 78, Sec. 4, eff. Sept. 1, 
1975.  Amended by Acts 1989, 71st Leg., ch. 733, Sec. 7, eff. Sept. 
1, 1989;  Subsecs. A, B amended by Acts 2001, 77th Leg., ch. 1091, 
Sec. 3.08, eff. Sept. 1, 2001.


	Art. 581-26. NOTICES BY REGISTERED MAIL.  Any notice 
required by this Act shall be sufficient if sent by registered or 
certified mail unless otherwise specified in this Act, addressed to 
a person at the address designated in any filings submitted by the 
person to the Commissioner or the person's last known address. A 
full and complete record shall be kept of all proceedings had before 
the Commissioner on any hearing or investigation.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 26.                               

Amended by Acts 2001, 77th Leg., ch. 1091, Sec. 2.18, eff. Sept. 1, 
2001.   


	Art. 581-27. JUDICIAL REVIEW.  Judicial review of a decision 
of the Commissioner or Board is under the substantial evidence 
rule.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 27.                               

Amended by Acts 1981, 67th Leg., p. 763, ch. 291, Sec. 4, eff. Sept. 
1, 1981;  Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. Sept. 
1, 1983.


	Art. 581-28. INVESTIGATIONS, INVESTIGATORY MATERIALS, AND 
REGISTRATION RELATED MATERIALS.  A. Investigations by 
Commissioner.  The Commissioner shall conduct investigations as the 
Commissioner considers necessary to prevent or detect the violation 
of this Act or a Board rule or order.  For this purpose, the 
Commissioner may require, by subpoena or summons issued by the 
Commissioner, the attendance and testimony of witnesses and the 
production of all records, whether maintained by electronic or 
other means, relating to any matter which the Commissioner has 
authority by this Act to consider or investigate, and may sign 
subpoenas, administer oaths and affirmations, examine witnesses 
and receive evidence;  provided, however, that all information of 
every kind and nature received in connection with an investigation 
and all internal notes, memoranda, reports, or communications made 
in connection with an investigation shall be treated as 
confidential by the Commissioner and shall not be disclosed to the 
public except under order of court for good cause shown.  Nothing in 
this section shall be interpreted to prohibit or limit the 
publication of rulings or decisions of the Commissioner nor shall 
this limitation apply if disclosure is made, in the discretion of 
the Commissioner, as part of an administrative proceeding or a 
civil or criminal action to enforce this Act.  In case of 
disobedience of any subpoena, or of the contumacy of any witness 
appearing before the Commissioner, the Commissioner may invoke the 
aid of the District Court within whose jurisdiction any witness may 
be found, and such court may thereupon issue an order requiring the 
person subpoenaed to obey the subpoena or give evidence, or produce 
books, accounts, records, papers, and correspondence touching the 
matter in question.  Any failure to obey such order of the court may 
be punished by such court as contempt thereof.
	In the course of an investigation looking to the enforcement 
of this Act, or in connection with the application of a person or 
company for registration or to qualify securities, the Commissioner 
or Deputy Commissioner shall have free access to all records and 
reports of and to any department or agency of the state government.  
In the event, however, that the Commissioner or Deputy Commissioner 
should give out any information which the law makes confidential, 
the affected corporation, firm or person shall have a right of 
action on the official bond of the Commissioner or Deputy for the 
corporation's, firm's, or person's injuries, in a suit brought in 
the name of the state at the relation of the injured party.
	The Commissioner may in any investigation cause the 
deposition of witnesses residing within or without the state to be 
taken in the manner prescribed for depositions in civil actions 
under the laws of Texas.
	Each witness required to attend before the Commissioner shall 
receive a fee, for each day's attendance, in an amount set by Board 
rule.  All disbursements made in the payment of such fees shall be 
made in accordance with Board rule and shall be included in, and 
paid in the same manner as is provided for, the payment of other 
expenses incident to the administration and enforcement of this 
Act.
	The sheriff's or constable's fee for serving the subpoena 
shall be the same as those paid the sheriff or constable for similar 
services.  The fees, expenses and costs incurred at or in connection 
with any hearing may be imposed by the Commissioner upon any party 
to the record, or may be divided between any and all parties to the 
record in such proportions as the Commissioner may determine.
	Any subpoena, summons, or other process issued by the 
Commissioner may be served, at the Commissioner's discretion, by 
the Commissioner, the Commissioner's authorized agent, a sheriff, 
or a constable.
	The Commissioner may, at the Commissioner's discretion, 
disclose any confidential information in the Commissioner's 
possession to any governmental or regulatory authority or 
association of governmental or regulatory authorities approved by 
Board rule or to any receiver appointed under Section 25-1 of this 
Act.  The disclosure does not violate any other provision of this 
Act or Chapter 552, Government Code.
	B. Confidentiality of Certain Registration-Related and Other 
Materials.  To the extent not already provided for by this Act, any 
intraagency or interagency notes, memoranda, reports, or other 
communications consisting of advice, analyses, opinions, or 
recommendations shall be treated as confidential by the 
Commissioner and shall not be disclosed to the public, except under 
order of court, for good cause shown.  The Commissioner may, at the 
Commissioner's discretion, disclose any confidential information 
in the Commissioner's possession to any governmental or regulatory 
authority or association of governmental or regulatory authorities 
approved by Board rule or to any receiver appointed under Section 
25-1 of this Act.  The disclosure does not violate any other 
provision of this Act or Chapter 552, Government Code.
	C. Assistance to Securities Regulator of Another 
Jurisdiction.  The Commissioner may provide assistance to a 
securities regulator of another state or a foreign jurisdiction who 
requests assistance in conducting an investigation to determine 
whether a person has violated, is violating, or is about to violate 
a law or rule of the other state or foreign jurisdiction relating to 
a securities matter the securities regulator is authorized to 
administer or enforce.  The Commissioner may provide assistance by 
using the authority to investigate and any other power conferred by 
this section as the Commissioner determines is necessary and 
appropriate.  In determining whether to provide the assistance, the 
Commissioner may consider:
	(1)  whether the securities regulator is permitted and has 
agreed to provide assistance within the regulator's jurisdiction to 
the Commissioner reciprocally and at the Commissioner's request 
concerning securities matters;
	(2)  whether compliance with the request for assistance 
would violate or otherwise prejudice the public policy of this 
state;
	(3)  whether the conduct described in the request would also 
constitute a violation of this Act or another law of this state had 
the conduct occurred in this state;  and
	(4)  the availability of Board employees and resources of the 
Board or Commissioner necessary to carry out the request for 
assistance.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 28.                               

Amended by Acts 1977, 65th Leg., p. 873, ch. 327, Sec. 6, eff. Aug. 
29, 1977;  Acts 1989, 71st Leg., ch. 733, Sec. 8, eff. Sept. 1, 1989;  
Acts 1995, 74th Leg., ch. 228, Sec. 15, eff. Sept. 1, 1995;  Acts 
2001, 77th Leg., ch. 1091, Sec. 3.09, eff. Sept. 1, 2001.  Subsec. C 
added by Acts 2003, 78th Leg., ch. 108, Sec. 2, eff. May 20, 2003.


	Art. 581-28-1. ADOPTION OF RULES AND REGULATIONS.  A. For 
purposes of this Section 28-1, the term "rule and regulation" shall 
mean any statement by the board of general and future applicability 
that implements, interprets, or prescribes law or policy or 
describes the organization, procedure, or practice requirements of 
the board.  The term includes the amendment or repeal of a prior 
rule or regulation, but does not include statements concerning only 
the internal management of the board not affecting private rights 
or procedures or forms or orders adopted or made by the board or the 
commissioner pursuant to other provisions of this Act.
	B. The board may, from time to time, in accordance with the 
provisions of this Section 28-1, make or adopt such rules and 
regulations as may be necessary to carry out and implement the 
provisions of this Act, including rules and regulations governing 
registration statements, applications, notices, and reports, and 
defining any terms, whether or not used in this Act, insofar as the 
definitions are not inconsistent with the purposes fairly intended 
by the policy and provisions of this Act.  For the purpose of 
adoption of rules and regulations, the board may classify 
securities, persons, and matters within its jurisdiction, and 
prescribe different requirements for different classes.  The board 
may, in its discretion, waive any requirement of any rule or 
regulation in situations where, in its opinion, such requirement is 
not necessary in the public interest or for the protection of 
investors.
	C. No rule or regulation may be made or adopted unless the 
board finds, after notice and opportunity for comment in accordance 
with the provisions of this Section 28-1, that the action is 
necessary or appropriate in the public interest or for the 
protection of investors and consistent with the purposes fairly 
intended by the policy and provisions of this Act.
	D. The board may, by rule or regulation adopted in accordance 
with this Section 28-1, delegate to the commissioner or the deputy 
commissioner such of the authority granted to the board under this 
Section 28-1 to hold hearings for adoption of rules and regulations 
and to make or adopt rules and regulations, or to waive the 
requirements thereof, as it may, from time to time, deem 
appropriate.  All rules and regulations made or adopted by the 
commissioner or the deputy commissioner pursuant to such delegated 
authority shall be made or adopted in accordance with this Section 
28-1.
	E. No provision of this Act imposing any liability or penalty 
applies to any act done or omitted in good faith in conformity with 
any rule or regulation of the board, notwithstanding that the rule 
or regulation may later be amended or rescinded or be determined by 
judicial or other authority to be invalid for any reason.
	F. The Board may not adopt rules restricting competitive 
bidding or advertising by a person registered under this Act except 
to prohibit false, misleading, or deceptive practices by the 
person.  The Board may not include in its rules to prohibit false, 
misleading, or deceptive practices by a person regulated by the 
Board a rule that restricts the person's use of any medium for 
advertising, restricts the person's personal appearance or use of 
his voice in an advertisement, relates to the size or duration of an 
advertisement by the person, or restricts the person's 
advertisement under a trade name.  However, this section does not 
affect limitations on advertising contained in Subsections I or Q 
of Section 5 of this Act or in rules adopted by the Board under 
Subsection T of Section 5 of this Act.
	G to L. Repealed by Acts 1983, 68th Leg., p. 2717, ch. 465, 
Sec. 5, eff. Sept. 1, 1983.

Added by Acts 1975, 64th Leg., p. 204, ch. 78, Sec. 2, eff. Sept. 1, 
1975.  Subsec. F amended by Acts 1983, 68th Leg., p. 2715, ch. 465, 
Sec. 2, eff. Sept. 1, 1983.


	Art. 581-29. PENAL PROVISIONS.                                                 

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, and upon conviction thereof shall be sentenced 
to pay a fine of not more than $5,000 or imprisonment in the 
penitentiary for not less than two or more than 10 years, or by both 
such fine and imprisonment.
	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, and upon conviction thereof 
shall be sentenced to pay a fine of not more than $5,000 or 
imprisonment in the penitentiary for not less than two or more than 
10 years, or by both such fine and imprisonment.
	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, 
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 
guilty of a felony and upon conviction shall be:
	(a)  imprisoned for not less than 2 or more than 10 years and 
fined not more than $10,000, if the amount involved in the offense 
is less than $10,000;
	(b)  imprisoned for not less than 2 or more than 20 years and 
fined not more than $10,000, if the amount involved in the offense 
is $10,000 or more but less than $100,000;  or
	(c)  imprisoned for life or for not less than 5 or more than 
99 years and fined not more than $10,000, if the amount involved is 
$100,000 or 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, and upon conviction 
thereof shall be sentenced to pay a fine of not more than $5,000 or 
imprisonment in the penitentiary for not more than two years, or by 
both such fine and imprisonment.
	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, and upon 
conviction thereof shall be sentenced to pay a fine of not more than 
$5,000 or imprisonment in the penitentiary for not less than two or 
more than 10 years, or by both such fine and imprisonment.
	F. Knowingly make any false statement or representation 
concerning any registration made under the provisions of this Act 
shall be deemed guilty of a felony, and upon conviction thereof 
shall be sentenced to pay a fine of not more than $5,000 or 
imprisonment in the penitentiary for not more than two years, or by 
both such fine and imprisonment.
	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 felony, and upon 
conviction thereof, shall be sentenced to pay a fine of not more 
than $5,000 or imprisonment in the penitentiary for not more than 
two years, or by both such fine and imprisonment.
	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 felony, 
and upon conviction thereof, shall be sentenced to pay a fine of not 
more than $5,000 or imprisonment in the penitentiary for not more 
than two years, or by both such fine and imprisonment.
	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 and on conviction of the 
felony shall be sentenced to pay a fine of not more than $5,000 or 
imprisonment in the penitentiary for not less than two or more than 
10 years, or by both the fine and imprisonment.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 29.  Amended by Acts 
1961, 57th Leg., p. 1047, ch. 466, Sec. 1;  Acts 1963, 58th Leg., p. 
473, ch. 170, Sec. 11.

Amended by Acts 1973, 63rd Leg., p. 217, ch. 97, Sec. 2, eff. Aug. 
27, 1973;  Acts 1979, 66th Leg., p. 359, ch. 160, Sec. 7, eff. May 
15, 1979;  Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. Sept. 
1, 1983;  Acts 1989, 71st Leg., ch. 733, Sec. 9, eff. Sept. 1, 1989;  
Acts 1991, 72nd Leg., ch. 565, Sec. 9, eff. Sept. 1, 1991;  Acts 
1995, 74th Leg., ch. 228, Sec. 16, eff. Sept. 1, 1995;  Acts 2001, 
77th Leg., ch. 1091, Sec. 3.10, eff. Sept. 1, 2001;  Acts 2003, 78th 
Leg., ch. 108, Sec. 3, eff. May 20, 2003.


	Art. 581-29-1. LIMITATION.  An indictment for an offense 
under Subsection C of Section 29 may be brought only before the 
fifth anniversary of the day on which the offense is committed.

Added by Acts 1983, 68th Leg., p. 2716, ch. 465, Sec. 3, eff. Sept. 
1, 1983.


	Art. 581-29-2. AGGREGATION OF AMOUNTS INVOLVED IN SECURITIES 
FRAUD.  When amounts are obtained in violation of this Act under 
one scheme or continuing course of conduct, whether from the same or 
several sources, the conduct may be considered as one offense and 
the amounts aggregated in determining the grade of the offense.

Added by Acts 1991, 72nd Leg., ch. 565, Sec. 10, eff. Sept. 1, 1991.          


	Art. 581-29-3. CRIMINAL RESPONSIBILITY OF CORPORATION OR 
ASSOCIATION.  A. In this section:
	(1)  "Association" and "corporation" have the meanings 
assigned by Section 1.07, Penal Code.
	(2)  "High managerial agent" has the meaning assigned by 
Section 7.21, Penal Code.
	B. If conduct constituting an offense under Section 29 of 
this Act is performed by an agent acting in behalf of a corporation 
or association and within the scope of the person's office or 
employment, the corporation or association is criminally 
responsible for the offense only if its commission was authorized, 
requested, commanded, performed, or recklessly tolerated by:
	(1)  a majority of the governing board acting in behalf of 
the corporation or association;  or
	(2)  a high managerial agent acting in behalf of the 
corporation or association and within the scope of the high 
managerial agent's office or employment.
	C. It is an affirmative defense to prosecution of a 
corporation or association under Subsection B of this section that 
the high managerial agent having supervisory responsibility over 
the subject matter of the offense employed due diligence to prevent 
its commission.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 3.11, eff. Sept. 1, 
2001.     


	Art. 581-30. CERTIFIED COPIES OF PAPERS FILED WITH 
COMMISSIONER AS EVIDENCE.  Copies of all papers, instruments, or 
documents filed in the office of the Commissioner, certified by the 
Commissioner, shall be admitted to be read in evidence in all courts 
of law and elsewhere in this state in all cases where the original 
would be admitted in evidence;  provided, that in any proceeding in 
the court having jurisdiction, the court may, on cause shown, 
require the production of the originals.
	The Commissioner shall assume custody of all records of the 
Securities Divisions within the offices of the Secretary of State 
and of the Board of Insurance Commissioners, and henceforth these 
prior records shall be proven under certificate of the 
Commissioner.
	In any prosecution, action, suit or proceeding before any of 
the several courts of this state based upon or arising out of or 
under the provisions of this Act, a certificate under the state 
seal, duly signed by the Commissioner, showing compliance or 
non-compliance with the provisions of this Act respecting 
compliance or non-compliance with the provisions of this Act by any 
dealer, agent, investment adviser, or investment adviser 
representative, shall constitute prima facie evidence of such 
compliance or of such non-compliance with the provisions of this 
Act, as the case may be, and shall be admissible in evidence in any 
action at law or in equity to enforce the provisions of this Act.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 30.                               

Amended by Acts 1993, 73rd Leg., ch. 300, Sec. 10, eff. Aug. 30, 
1993;  Acts 2001, 77th Leg., ch. 1091, Sec. 3.12, eff. Sept. 1, 
2001.


	Art. 581-31. CONSTRUCTION.  Nothing herein contained shall 
limit or diminish the liability of any person or company, or of its 
officers or agents, now imposed by law to prevent the prosecution of 
any person or company, or of its officers or agents, for the 
violation of the provisions of any other statute.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 31.                               


	Art. 581-32. INJUNCTIONS AND RESTITUTION.  A. Whenever it 
shall appear to the Commissioner either upon complaint or 
otherwise, that any person has engaged or is about to engage in 
fraud or a fraudulent practice in connection with the sale of a 
security, has engaged 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 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. The Attorney General may, 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.  The court may grant any equitable relief that the court 
considers appropriate and may order the defendant to deliver to the 
person defrauded the amount of money or the property that the 
defendant obtained from the person by the fraudulent practices.
	C. In an action brought under this section for fraud or a 
fraudulent practice in connection with the sale of a security, the 
Attorney General may seek, for an aggrieved person, the 
disgorgement of any economic benefit gained by the defendant 
through the violation, including a bonus, fee, commission, option, 
proceeds, profit from or loss avoided through the sale of the 
security, or any other tangible benefit.  The Attorney General may 
recover from an order of disgorgement obtained under this 
subsection reasonable costs and expenses incurred by the Attorney 
General in bringing the action.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 32.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1. 1983;  Acts 1989, 71st Leg., ch. 733, Sec. 10, eff. Sept. 1, 
1989;  Subsec. A amended by Acts 2001, 77th Leg., ch. 1091, Sec. 
3.13, eff. Sept. 1, 2001;  Subsecs. B and C amended by Acts 2003, 
78th Leg., ch. 108, Sec. 4, eff. May 20, 2003.


	Art. 581-33. CIVIL LIABILITY WITH RESPECT TO ISSUANCE OR SALE 
OF A SECURITY.  A. Liability of Sellers.  (1) Registration and 
Related Violations.  A person who offers or sells a security in 
violation of Section 7, 9 (or a requirement of the Commissioner 
thereunder), 12, 23C, or an order under 23A or 23-2 of this Act is 
liable to the person buying the security from him, who may sue 
either at law or in equity for rescission or for damages if the 
buyer no longer owns the security.
	(2)  Untruth or Omission.  A person who offers or sells a 
security (whether or not the security or transaction is exempt 
under Section 5 or 6 of this Act) by means of an untrue statement of 
a material fact or an omission 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, is liable to the person 
buying the security from him, who may sue either at law or in equity 
for rescission, or for damages if the buyer no longer owns the 
security.  However, a person is not liable if he sustains the burden 
of proof that either (a) the buyer knew of the untruth or omission 
or (b) he (the offeror or seller) did not know, and in the exercise 
of reasonable care could not have known, of the untruth or omission.  
The issuer of the security (other than a government issuer 
identified in Section 5M) is not entitled to the defense in clause 
(b) with respect to an untruth or omission (i) in a prospectus 
required in connection with a registration statement under Section 
7A, 7B, or 7C, or (ii) in a writing prepared and delivered by the 
issuer in the sale of a security.
	B. Liability of Buyers.  A person who offers to buy or buys a 
security (whether or not the security or transaction is exempt 
under Section 5 or 6 of this Act) by means of an untrue statement of 
a material fact or an omission 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, is liable to the person 
selling the security to him, who may sue either at law or in equity 
for rescission or for damages if the buyer no longer owns the 
security.  However, a person is not liable if he sustains the burden 
of proof that either (a) the seller knew of the untruth or omission, 
or (b) he (the offeror or buyer) did not know, and in the exercise of 
reasonable care could not have known, of the untruth or omission.
	C. Liability of Nonselling Issuers Which Register.                             
	(1)  This Section 33C applies only to an issuer which 
registers under Section 7A, 7B, or 7C of this Act, or under Section 
6 of the U.S. Securities Act of 1933, its outstanding securities for 
offer and sale by or for the owner of the securities.
	(2)  If the prospectus required in connection with the 
registration contains, as of its effective date, an untrue 
statement of a material fact or an omission 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, the issuer 
is liable to a person buying the registered security, who may sue 
either at law or in equity for rescission or for damages if the 
buyer no longer owns the securities.  However, an issuer is not 
liable if it sustains the burden of proof that the buyer knew of the 
untruth or omission.
	D. Rescission and Damages.  For this Section 33:                               
	(1)  On rescission, a buyer shall recover (a) the 
consideration he paid for the security plus interest thereon at the 
legal rate from the date of payment by him, less (b) the amount of 
any income he received on the security, upon tender of the security 
(or a security of the same class and series).
	(2)  On rescission, a seller shall recover the security (or a 
security of the same class and series) upon tender of (a) the 
consideration he received for the security plus interest thereon at 
the legal rate from the date of receipt by him, less (b) the amount 
of any income the buyer received on the security.
	(3)  In damages, a buyer shall recover (a) the consideration 
the buyer paid for the security plus interest thereon at the legal 
rate from the date of payment by the buyer, less (b) the greater of:
	(i)  the value of the security at the time the buyer disposed 
of it plus the amount of any income the buyer received on the 
security;  or
	(ii)  the actual consideration received for the security at 
the time the buyer disposed of it plus the amount of any income the 
buyer received on the security.
	(4)  In damages, a seller shall recover (a) the value of the 
security at the time of sale plus the amount of any income the buyer 
received on the security, less (b) the consideration paid the 
seller for the security plus interest thereon at the legal rate from 
the date of payment to the seller.
	(5)  For a buyer suing under Section 33C, the consideration 
he paid shall be deemed the lesser of (a) the price he paid and (b) 
the price at which the security was offered to the public.
	(6)  On rescission or as a part of damages, a buyer or a 
seller shall also recover costs.
	(7)  On rescission or as a part of damages, a buyer or a 
seller may also recover reasonable attorney's fees if the court 
finds that the recovery would be equitable in the circumstances.
	E. Time of Tender.  Any tender specified in Section 33D may be 
made at any time before entry of judgment.
	F. Liability of Control Persons and Aiders.                                    
	(1)  A person who directly or indirectly controls a seller, 
buyer, or issuer of a security is liable under Section 33A, 33B, or 
33C jointly and severally with the seller, buyer, or issuer, and to 
the same extent as if he were the seller, buyer, or issuer, unless 
the controlling person sustains the burden of proof that he did not 
know, and in the exercise of reasonable care could not have known, 
of the existence of the facts by reason of which the liability is 
alleged to exist.
	(2)  A person who directly or indirectly with intent to 
deceive or defraud or with reckless disregard for the truth or the 
law materially aids a seller, buyer, or issuer of a security is 
liable under Section 33A, 33B, or 33C jointly and severally with the 
seller, buyer, or issuer, and to the same extent as if he were the 
seller, buyer, or issuer.
	(3)  There is contribution as in cases of contract among the 
several persons so liable.
	G. Survivability of Actions.  Every cause of action under 
this Act survives the death of any person who might have been a 
plaintiff or defendant.
	H. Statute of Limitations.                                                     
	(1)  No person may sue under Section 33A(1) or 33F so far as 
it relates to Section 33A(1):
	(a)  more than three years after the sale;  or                                 
	(b)  if he received a rescission offer (meeting the 
requirements of Section 33I) before suit unless he (i) rejected the 
offer in writing within 30 days of its receipt and (ii) expressly 
reserved in the rejection his right to sue;  or
	(c)  more than one year after he so rejected a rescission 
offer meeting the requirements of Section 33I.
	(2)  No person may sue under Section 33A(2), 33C, or 33F so 
far as it relates to 33A(2) or 33C:
	(a)  more than three years after discovery of the untruth or 
omission, or after discovery should have been made by the exercise 
of reasonable diligence;  or
	(b)  more than five years after the sale;  or                                  
	(c)  if he received a rescission offer (meeting the 
requirements of Section 33I) before suit, unless he (i) rejected 
the offer in writing within 30 days of its receipt, and (ii) 
expressly reserved in the rejection his right to sue;  or
	(d)  more than one year after he so rejected a rescission 
offer meeting the requirements of Section 33I.
	(3)  No person may sue under Section 33B or 33F so far as it 
relates to Section 33B:
	(a)  more than three years after discovery of the untruth or 
omission, or after discovery should have been made by the exercise 
of reasonable diligence;  or
	(b)  more than five years after the purchase;  or                              
	(c)  if he received a rescission offer (meeting the 
requirements of Section 33J) before suit unless he (i) rejected the 
offer in writing within 30 days of its receipt, and (ii) expressly 
reserved in the rejection his right to sue;  or
	(d)  more than one year after he so rejected a rescission 
offer meeting the requirements of Section 33J.
	I. Requirements of a Rescission Offer to Buyers.  A 
rescission offer under Section 33H(1) or (2) shall meet the 
following requirements:
	(1)  The offer shall include financial and other information 
material to the offeree's decision whether to accept the offer, and 
shall not contain an untrue statement of a material fact or an 
omission 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.
	(2)  The offeror shall deposit funds in escrow in a state or 
national bank doing business in Texas (or in another bank approved 
by the commissioner) or receive an unqualified commitment from such 
a bank to furnish funds sufficient to pay the amount offered.
	(3)  The amount of the offer to a buyer who still owns the 
security shall be the amount (excluding costs and attorney's fees) 
he would recover on rescission under Section 33D(1).
	(4)  The amount of the offer to a buyer who no longer owns the 
security shall be the amount (excluding costs and attorney's fees) 
he would recover in damages under Section 33D(3).
	(5)  The offer shall state:                                                    
	(a)  the amount of the offer, as determined pursuant to 
Paragraph (3) or (4) above, which shall be given (i) so far as 
practicable in terms of a specified number of dollars and a 
specified rate of interest for a period starting at a specified 
date, and (ii) so far as necessary, in terms of specified elements 
(such as the value of the security when it was disposed of by the 
offeree) known to the offeree but not to the offeror, which are 
subject to the furnishing of reasonable evidence by the offeree.
	(b)  the name and address of the bank where the amount of the 
offer will be paid.
	(c)  that the offeree will receive the amount of the offer 
within a specified number of days (not more than 30) after receipt 
by the bank, in form reasonably acceptable to the offeror, and in 
compliance with the instructions in the offer, of:
	(i)  the security, if the offeree still owns it, or evidence 
of the fact and date of disposition if he no longer owns it;  and
	(ii)  evidence, if necessary, of elements referred to in 
Paragraph (a)(ii) above.
	(d)  conspicuously that the offeree may not sue on his 
purchase under Section 33 unless:
	(i)  he accepts the offer but does not receive the amount of 
the offer, in which case he may sue within the time allowed by 
Section 33H(1)(a) or 33H(2)(a) or (b), as applicable;  or
	(ii)  he rejects the offer in writing within 30 days of its 
receipt and expressly reserves in the rejection his right to sue, in 
which case he may sue within one year after he so rejects.
	(e)  in reasonable detail, the nature of the violation of 
this Act that occurred or may have occurred.
	(f)  any other information the offeror wants to include.                       
	J. Requirements of a Rescission Offer to Sellers.  A 
rescission offer under Section 33H(3) shall meet the following 
requirements:
	(1)  The offer shall include financial and other information 
material to the offeree's decision whether to accept the offer, and 
shall not contain an untrue statement of a material fact or an 
omission 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.
	(2)  The offeror shall deposit the securities in escrow in a 
state or national bank doing business in Texas (or in another bank 
approved by the commissioner).
	(3)  The terms of the offer shall be the same (excluding 
costs and attorney's fees) as the seller would recover on 
rescission under Section 33D(2).
	(4)  The offer shall state:                                                    
	(a)  the terms of the offer, as determined pursuant to 
Paragraph (3) above, which shall be given (i) so far as practicable 
in terms of a specified number and kind of securities and a 
specified rate of interest for a period starting at a specified 
date, and (ii) so far as necessary, in terms of specified elements 
known to the offeree but not the offeror, which are subject to the 
furnishing of reasonable evidence by the offeree.
	(b)  the name and address of the bank where the terms of the 
offer will be carried out.
	(c)  that the offeree will receive the securities within a 
specified number of days (not more than 30) after receipt by the 
bank, in form reasonably acceptable to the offeror, and in 
compliance with the instructions in the offer, of:
	(i)  the amount required by the terms of the offer;  and                       
	(ii)  evidence, if necessary, of elements referred to in 
Paragraph (a)(ii) above.
	(d)  conspicuously that the offeree may not sue on his sale 
under Section 33 unless:
	(i)  he accepts the offer but does not receive the 
securities, in which case he may sue within the time allowed by 
Section 33H(3)(a) or (b), as applicable;  or
	(ii)  he rejects the offer in writing within 30 days of its 
receipt and expressly reserves in the rejection his right to sue, in 
which case he may sue within one year after he so rejects.
	(e)  in reasonable detail, the nature of the violation of 
this Act that occurred or may have occurred.
	(f)  any other information the offeror wants to include.                       
	K. Unenforceability of Illegal Contracts.  No person who has 
made or engaged in the performance of any contract in violation of 
any provision of this Act or any rule or order or requirement 
hereunder, or who has acquired any purported right under any such 
contract with knowledge of the facts by reason of which its making 
or performance was in violation, may base any suit on the contract.
	L. Waivers Void.  A condition, stipulation, or provision 
binding a buyer or seller of a security or a purchaser of services 
rendered by an investment adviser or investment adviser 
representative to waive compliance with a provision of this Act or a 
rule or order or requirement hereunder is void.
	M. Saving of Existing Remedies.  The rights and remedies 
provided by this Act are in addition to any other rights (including 
exemplary or punitive damages) or remedies that may exist at law or 
in equity.
	N. Limitation of Liability in Small Business Issuances.  (1) 
For purposes of this Section 33N, unless the context otherwise 
requires, "small business issuer" means an issuer of securities 
that, at the time of an offer to which this Section 33N applies:
	(a)  has annual gross revenues in an amount that does not 
exceed $25 million;  and
	(b)  does not have a class of equity securities registered, 
or required to be registered, with the Securities and Exchange 
Commission under Section 12 of the Securities Exchange Act of 1934, 
as amended (15 U.S.C. Section 78l).
	(2)  This Section 33N applies only to:                                         
	(a)  an offer of securities made by a small business issuer 
or by the seller of securities of a small business issuer that is in 
an aggregate amount that does not exceed $5 million;  and
	(b)  a person who has been engaged to provide services 
relating to an offer of securities described by Section 33N(2)(a), 
including an attorney, an accountant, a consultant, or the firm of 
the attorney, accountant, or consultant.
	(3)  The maximum amount that may be recovered against a 
person to which this Section 33N applies in any action or series of 
actions under Section 33 relating to an offer of securities to which 
this Section 33N applies is an amount equal to three times the fee 
paid by the issuer or other seller to the person for the services 
related to the offer of securities, unless the trier of fact finds 
the person engaged in intentional wrongdoing in providing the 
services.
	(4)  A small business issuer making an offer of securities 
shall provide to the prospective buyer a written disclosure of the 
limitation of liability created by this Section 33N and shall 
receive a signed acknowledgement that the disclosure was provided.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 33;  Acts 1963, 58th 
Leg., p. 473, ch. 170, Sec. 12.

Amended by Acts 1977, 65th Leg., p. 344, ch. 170, Sec. 1, eff. Aug. 
29, 1977;  Subsec. A(2) amended by Acts 1979, 66th Leg., p. 361, ch. 
160, Sec. 8, eff. May 15, 1979;  Subsec. N added by Acts 1997, 75th 
Leg., ch. 638, Sec. 1, eff. Sept. 1, 1997; 

 Art. heading amended by 
Acts 2001, 77th Leg., ch. 1091, Sec. 3.14, eff. Sept. 1, 2001;  
Subsec. A amended by Acts 2001, 77th Leg., ch. 1091, Sec. 3.16, eff. 
Sept. 1, 2001;  Subsec. D amended by Acts 2001, 77th Leg., ch. 1091, 
Sec. 3.17, eff. Sept. 1, 2001;  Subsec. L amended by Acts 2001, 77th 
Leg., ch. 1091, Sec. 3.15, eff. Sept. 1, 2001.

Effect of 1963 amendment of this article on all suits, actions, 
proceedings, rights, liabilities and causes of action pending or 
accruing before the effective date of the amendatory act, see note 
under art. 581-5.


	Art. 581-33-1. CIVIL LIABILITY OF INVESTMENT ADVISERS AND 
INVESTMENT ADVISER REPRESENTATIVES.  A. Liability of Investment 
Advisers and Investment Adviser Representatives.  (1) An investment 
adviser or investment adviser representative who renders services 
as an investment adviser in violation of Section 12 or an order 
under Section 23B or 23-2 of this Act is liable to the purchaser, 
who may sue at law or in equity, for damages in the amount of any 
consideration paid for the services.
	(2)  Except as provided by Subsection C of this section, an 
investment adviser or investment adviser representative who 
commits fraud or engages in a fraudulent practice in rendering 
services as an investment adviser is liable to the purchaser, who 
may sue at law or in equity, for damages.
	B. Damages.  In damages under Subsection A(2) of this 
section, the purchaser is entitled to recover:
	(1)  the amount of any consideration paid for the services, 
less the amount of any income the purchaser received from acting on 
the services;
	(2)  any loss incurred by the person in acting on the 
services provided by the adviser or representative;
	(3)  interest at the legal rate for judgments accruing from 
the date of the payment of consideration;  and
	(4)  to the extent the court considers equitable, court costs 
and reasonable attorney's fees.
	C. Untruth or Omission.  An investment adviser or investment 
adviser representative who in rendering services as an investment 
adviser makes a false statement of a material fact or omits to state 
a material fact necessary in order to make the statement made, in 
light of the circumstances under which the statement is made, not 
misleading, may not be found liable under Subsection A(2) of this 
section if the adviser or representative proves:
	(1)  the purchaser knew of the truth or omission;  or                          
	(2)  the adviser or representative did not know, and in the 
exercise of reasonable care could not have known, of the untruth or 
omission.
	D. Statute of Limitations.  (1) A person may not sue under 
Subsection A(1) of this section more than three years after the 
violation occurred.
	(2)  A person may not sue under Subsection A(2) of this 
section more than five years after the violation occurs or more than 
three years after the person knew or should have known, by the 
exercise of reasonable diligence, of the occurrence of the 
violation.
	E. Liability of Control Persons and Assistants.  (1) A person 
who directly or indirectly controls an investment adviser is 
jointly and severally liable with the investment adviser under this 
section, and to the same extent as the investment adviser, unless 
the controlling person sustains the burden of proof that the person 
did not know, and in the exercise of reasonable care could not have 
known, of the existence of the facts by reason of which liability is 
alleged to exist.
	(2)  A person who directly or indirectly with intent to 
deceive or defraud or with reckless disregard for the truth or the 
law materially aids an investment adviser in conduct for which a 
cause of action is authorized by this section is jointly and 
severally liable with the investment adviser in an action to 
recover damages under this section.
	F. A remedy provided by this section is not exclusive of any 
other applicable remedy provided by law.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 3.18, eff. Sept. 1, 
2001.     


	Art. 581-34. ACTIONS FOR COMMISSION;  ALLEGATIONS AND PROOF 
OF COMPLIANCE.  No person or company shall bring or maintain any 
action in the courts of this state for collection of a commission or 
compensation for services rendered in the sale or purchase of 
securities, as that term is defined in this Act, without alleging 
and proving that such person or company was duly registered under 
the provisions of this Act (or duly exempt from such registration 
pursuant to rules adopted under Section 12C of this Act) and the 
securities so sold were duly registered under the provisions of 
this Act at the time the alleged cause of action arose;  provided, 
however, that this section shall not apply to any company or person 
that rendered services in connection with any transaction exempted 
by Section 5 of this Act or by any rule promulgated by the Board 
pursuant to Subsection T of Section 5 of this Act if the company or 
person was not required to be registered by the terms of the 
exemption.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 34.                               

Amended by Acts 1975, 64th Leg., p. 206, ch. 78, Sec. 3, eff. Sept. 
1, 1975;  Acts 1995, 74th Leg., ch. 228, Sec. 17, eff. Sept. 1, 1995;  
Acts 2001, 77th Leg., ch. 1091, Sec. 2.19, eff. Sept. 1, 2001.


	Art. 581-35. FEES.  A. The Board shall establish the 
following fees in amounts so that the aggregate amount that exceeds 
the amount of the fees on September 1, 2002, produces sufficient 
revenue to cover the costs of administering and enforcing this Act:
	(1)  for the filing of any original, amended, or renewal 
application to sell or dispose of securities, an amount not to 
exceed $100;
	(2)  for the filing of any original application of a dealer 
or investment adviser or for the submission of a notice filing for a 
federal covered investment adviser, an amount not to exceed $100;
	(3)  for the filing of any renewal application of a dealer or 
investment adviser or for the submission of a renewal notice filing 
for a federal covered investment adviser, an amount not to exceed 
$100;
	(4)  for the filing of any original application for each 
agent, officer, or investment adviser representative or for the 
submission of a notice filing for each representative of a federal 
covered investment adviser, an amount not to exceed $100;  and
	(5)  for the filing of any renewal application for each 
agent, officer, or investment adviser representative or for the 
submission of a renewal notice filing for each representative of a 
federal covered investment adviser, an amount not to exceed $100.
	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, 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.
	C. Subject to Subsection A of this section, the Board shall 
set a fee under this section in an amount that is reasonable and 
necessary to defray costs.
	D. A cost incurred by the Board in administering this Act may 
be paid only from a fee collected under Subsection A of this 
section.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 35. Amended by Acts 
1959, 56th Leg., p. 982, ch. 457, Sec. 1.

Amended by Acts 1977, 65th Leg., p. 875, ch. 327, Sec. 7, eff. Aug. 
29, 1977;  Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. Sept. 
1, 1983;  Acts 1983, 68th Leg., p. 5220, ch. 953, Sec. 3, eff. Sept. 
1, 1983;  Acts 1985, 69th Leg., ch. 239, Sec. 81, eff. Sept. 1, 1985;  
Acts 1987, 70th Leg., ch. 732, Sec. 3, eff. Sept. 1, 1987;  Acts 
1989, 71st Leg., ch. 733, Sec. 11, eff. Sept. 1, 1989;  Acts 1991, 
72nd Leg., 1st C.S., ch. 5, Sec. 9.16, eff. Sept. 1, 1991;  Acts 
2001, 77th Leg., ch. 1091, Sec. 2.20, eff. Sept. 1, 2001;  Acts 
2003, 78th Leg., ch. 1077, Sec. 1, eff. June 20, 2003.


	Art. 581-35-1. FEES FOR SALES OF EXCESS SECURITIES.  A. An 
offeror who sells securities in this State in excess of the 
aggregate amount of securities registered for the offering may 
apply to register the excess securities by paying three times the 
difference between the initial fee paid and the fee required under 
Subsection B(2) of Section 35, plus, if the registration is no 
longer in effect, interest on that amount computed at the rate 
provided by Section 302.002, Finance Code, from the date the 
registration was no longer in effect until the date the subsequent 
application is filed, for the securities sold to persons within 
this State, plus the amendment fee prescribed by Subsection A(1) of 
Section 35.  Registration of the excess securities, if granted, 
shall be effective retroactively to the effective date of the 
initial registration for the offering.
	B. An offeror who has filed a notice to claim a limited 
offering exemption, who paid less than the maximum fee prescribed 
in Subsection B(7) of Section 35, and who offered a greater amount 
of securities in the offering than authorized pursuant to the 
formula prescribed in Subsection B(7) of Section 35, may file an 
amended notice disclosing the amount of securities offered and 
paying three times the difference between the fee initially paid 
and the fee which should have been paid, plus interest on that 
amount computed at the rate provided by Section 302.002, Finance 
Code, from the date the original notice was received by the 
Commissioner until the date the amended notice is received by the 
Commissioner.  The amended notice shall be retroactive to the date 
of the initial filing.

Added by Acts 1979, 66th Leg., p. 361, ch. 160, Sec. 9, eff. May 15, 
1979.  Amended by Acts 1987, 70th Leg., ch. 732, Sec. 4, eff. Sept. 
1, 1987;  Acts 1989, 71st Leg., ch. 733, Sec. 12, eff. Sept. 1, 1989;  
Acts 1997, 75th Leg., ch. 1396, Sec. 40, eff. Sept. 1, 1997;  Acts 
1999, 76th Leg., ch. 62, Sec. 7.97, eff. Sept. 1, 1999;  Acts 2003, 
78th Leg., ch. 1077, Sec. 2, eff. June 20, 2003.


	Art. 581-35-2. FEES FOR SALES OF UNREGISTERED 
SECURITIES.  If, after notice and hearing, the commissioner or any 
court of competent jurisdiction finds that an offeror has sold 
securities in this State pursuant to an offering no part of which 
has been registered under Section 7 or 10  of this Act and for which 
the transactions or securities are not exempt under Section 5 or 6  
of this Act, the commissioner or said court may impose a fee equal 
to six times the amount that would have been paid if the issuer had 
filed an application to register the securities and paid the fee 
prescribed by Subsection B(2) of Section 35  based on the aggregate 
amount of sales made in this State within the prior three years, 
plus interest on that amount at the rate provided by Section 
302.002, Finance Code, from the date of the first such sale made in 
this State until the date the fee is paid.  The payment of the fee 
prescribed by this Section does not effect registration of the 
securities or affect the application of any other Section of this 
Act.  The payment of the fee prescribed by this Section is not an 
admission that the transactions or securities were not exempt and 
is not admissible as evidence in a suit or proceeding for failure to 
register the securities.

Added by Acts 1989, 71st Leg., ch. 733, Sec. 13, eff. Sept. 1, 1989.  
Amended by Acts 1997, 75th Leg., ch. 1396, Sec. 41, eff. Sept. 1, 
1997;  Acts 1999, 76th Leg., ch. 62, Sec. 7.98, eff. Sept. 1, 1999;  
Acts 2003, 78th Leg., ch. 1077, Sec. 3, eff. June 20, 2003.


	Art. 581-36. DEPOSIT TO GENERAL REVENUE FUND.  Upon and 
after the effective date of this Act all moneys received from fees, 
assessments, or charges under this Act shall be paid by the 
Commissioner or Board into the General Revenue Fund.  If the 
Commissioner or Board determines that all or part of a registration 
fee should be refunded, the Commissioner may make the refund by 
warrant on the State Treasury from funds appropriated from the 
General Revenue Fund for that purpose.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 36.                               

Amended by Acts 1983, 68th Leg., p. 2688, ch. 465, Sec. 1, eff. 
Sept. 1, 1983.


	Art. 581-37. PLEADING EXEMPTIONS.  It shall not be necessary 
to negative any of the exemptions in this Act  in any complaint, 
information or indictment, or any writ or proceeding laid or 
brought under this Act;  and the burden of proof of any such 
exemption shall be upon the party claiming the same.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 37.                               


	Art. 581-38. PARTIAL INVALIDITY;  SEVERABILITY.  The 
provisions of this Act  are severable, and in the event that any 
provision thereof should be declared void or unconstitutional, it 
is hereby declared that the remaining provisions would have been 
enacted notwithstanding such judicial determination of the 
invalidity of any particular provision or provisions in any 
respect, and said sections shall remain in full force and effect.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 38.                               


	Art. 581-39. REPEAL OF SECURITIES ACT AND INSURANCE 
SECURITIES ACT NOW IN EFFECT;  SAVING CLAUSE AS TO PENDING 
PROCEEDINGS.  The Acts now in effect being currently known as the 
Securities Act of Texas and the Insurance Securities Act of Texas, 
as embraced in Senate Bill No. 149, Chapter 67, and House Bill No. 
39, Chapter 384, Acts of the 54th Legislature, 1955, and codified as 
Articles 579 and 580 of Vernon's Civil Statutes of Texas, be and the 
same are hereby repealed;  provided, however, that all permits, 
orders, and licenses issued by the Secretary of State or Board of 
Insurance Commissioners pursuant to said laws prior to the 
effective date of this Act  shall be valid during the period for 
which they were issued unless sooner revoked by the Commissioner 
for any cause for which the Commissioner is authorized by this Act 
to revoke hereunder;  provided further, that all prosecutions and 
legal or other proceedings begun, and any violation of law whether 
prosecution or administrative action is commenced or not, and any 
cause of action of civil or criminal nature existing under the 
provisions of that law now in effect, shall continue in effect and 
remain in full force and effect until terminated as under the terms 
of the law now in force, notwithstanding the passage of this Act.

Acts 1957, 55th Leg., p. 575, ch. 269, Sec. 39.                               


	Art. 581-41. INCREASE IN FEES.  (a) Each of the following 
fees imposed by or under another section of this Act is increased by 
$200:
	(1)  fee for filing any original application of a dealer or 
investment adviser or for submitting a notice filing for a federal 
covered investment adviser;
	(2)  fee for filing any renewal application of a dealer or 
investment adviser or for submitting a renewal notice filing for a 
federal covered investment adviser;
	(3)  fee for filing any original application for agent, 
officer, or investment adviser representative or for submitting a 
notice filing for an investment adviser representative of a federal 
covered investment adviser;  and
	(4)  fee for filing any renewal application for agent, 
officer, or investment adviser representative or for submitting a 
renewal notice filing for an investment adviser representative of a 
federal covered investment adviser.
	(b)  Of each fee increase collected, $50 shall be deposited 
to the credit of the foundation school fund and $150 shall be 
deposited to the credit of the general revenue fund.  This 
subsection applies to the disposition of each fee increase 
regardless of any other provision of law providing for a different 
disposition of funds.

Added by Acts 1991, 72nd Leg., 1st C.S., ch. 5, Sec. 10.10(a), eff. 
Sept. 1, 1991.  Subsec. (a) amended by Acts 2001, 77th Leg., ch. 
1091, Sec. 2.21, eff. Sept. 1, 2001.


	Art. 581-42. REDUCED FEES.  A. The Board by rule may adopt 
reduced fees, under Sections 35 and 41 of this Act, for original and 
renewal applications of dealers, agents, officers, investment 
advisers, or investment adviser representatives who have assumed 
inactive status as defined by the Board.
	B. The Board by rule may adopt reduced fees, under Sections 35 
and 41 of this Act, as appropriate to accomodate a small business 
required by this Act to register in two or more of the following 
capacities:
	(1)  dealer;                                                                   
	(2)  agent;                                                                    
	(3)  investment adviser;                                                       
	(4)  investment adviser representative;  or                                    
	(5)  officer.                                                                  
	C. Notwithstanding Sections 35 and 41 of this Act, a person 
shall pay only one fee required under those sections to engage in 
business in this state concurrently for the same person or company 
as:
	(1)  a dealer and an investment adviser;  or                                   
	(2)  an agent and investment adviser representative.                           

Added by Acts 1995, 74th Leg., ch. 228, Sec. 18, eff. Sept. 1, 1995.  
Amended by Acts 2001, 77th Leg., ch. 1091, Sec. 2.22, eff. Sept. 1, 
2001.


	Art. 581-43. INVESTOR EDUCATION.  A. The Commissioner, with 
Board approval, shall develop and implement investor education 
initiatives to inform the public about the basics of investing in 
securities, with a special emphasis placed on the prevention and 
detection of securities fraud.  Materials developed for and 
distributed as part of the initiatives must be published in both 
Spanish and English.
	B. In developing and implementing the initiatives, the 
Commissioner shall use the Commissioner's best efforts to 
collaborate with public or nonprofit entities with an interest in 
investor education.
	C. Subject to Chapter 575, Government Code, the Commissioner 
may accept grants and donations from a person who is not affiliated 
with the securities industry or from a nonprofit association, 
regardless of whether the entity is affiliated with the securities 
industry, for use in providing investor education initiatives.

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 1.03, eff. Sept. 1, 
2001.