|(a) Definitions. Words and terms used in this chapter
are also defined in §107.2 of this title (relating to Definitions).
The following words and terms, when used in this chapter, shall have
the following meanings unless the context clearly indicates otherwise.
(1) Applicant--A person who submits an application
for registration as an investment adviser or an investment adviser
(2) Branch office--Any location where one or more representatives
of an investment adviser regularly conduct investment advisory services
or that is held out as such.
(A) This definition excludes:
(i) any location that is established solely for customer
service and/or back office type functions where no advisory services
are conducted and that is not held out to the public as a branch office;
(ii) any location that is the investment adviser representative's
primary residence, provided that:
(I) only one investment adviser representative, or
multiple representatives who reside at that location and are members
of the same immediate family, conduct business at the location;
(II) the location is not held out to the public as
an office and the investment adviser representative does not meet
with customers at the location;
(III) neither customer funds nor securities are handled
at that location;
(IV) the investment adviser representative is assigned
to a designated branch office, and such designated branch office is
reflected on all business cards, stationery, advertisements, and other
communications to the public by such representative;
(V) the investment adviser representative's correspondence
and communications with the public are subject to the investment adviser's
(VI) electronic communications (e.g., e-mail) are made
through the investment adviser's electronic system;
(VII) all orders are entered through the designated
branch office or an electronic system established by the investment
adviser that is reviewable at the branch office;
(VIII) written supervisory procedures pertaining to
supervision of investment advisory services conducted at the residence
are maintained by the investment adviser; and
(IX) a list of the residence locations are maintained
by the investment adviser;
(iii) any location, other than a primary residence,
that is used for investment advisory services for less than 30 business
days in any one calendar year, provided the investment adviser complies
with the provisions of clause (ii)(II) - (VIII) of this subparagraph;
(iv) any office of convenience, where investment adviser
representatives occasionally and exclusively by appointment meet with
customers, which is not held out to the public as an office;
(v) any location that is used primarily to engage in
non-securities activities and from which the investment adviser representative(s)
effects no more than 25 investment advisory services in any one calendar
year; provided that any advertisement or sales literature identifying
such location also sets forth the address and telephone number of
the location from which the representative(s) conducting business
at the non-branch locations are directly supervised; and
(vi) a temporary location established in response to
the implementation of a business continuity plan.
(B) Notwithstanding the exclusions in subparagraph
(A) of this paragraph, any location that is responsible for supervising
the activities of persons associated with the investment adviser at
one or more non-branch locations of the investment adviser is considered
to be a branch office.
(C) The term "business day" shall not include any partial
business day provided that the investment adviser representative spends
at least four hours on such business day at his or her designated
branch office during the hours that such office is normally open for
(3) Supervisor--The person named by the investment
adviser to supervise the activities of a branch office and registered
as an investment adviser representative.
(4) Control--The possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of a person or company, whether through the ownership of voting securities,
by contract, or otherwise.
(5) In this state--
(A) A person renders services as an investment adviser
"in this state" as set out in the Texas Securities Act, §12.B,
if either the person or the person's agent is present in this state
or the client/customer or the client/customer's agent is present in
this state at the time of the particular activity. A person can be
an investment adviser in more than one state at the same time.
(B) Likewise, a person renders services as an investment
adviser representative "in this state" as set out in the Texas Securities
Act, §12.B, whether by direct act or through subagents except
as otherwise provided, if either the person or the person's agent
is present in this state or the client/customer or the client/customer's
agent is present in this state at the time of the particular activity.
A person can be an investment adviser representative in more than
one state at the same time.
(C) Rendering services as an investment adviser or
as an investment adviser representative can be made by personal contact,
mail, telegram, telephone, wireless, electronic communication, or
any other form of oral or written communication.
(6) Investment adviser--A person who, for compensation,
engages in the business of advising others, 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. The term
does not include:
(A) a bank or a bank holding company, as defined by
the Bank Holding Company Act of 1956 (12 U.S.C. §1841 et seq.),
as amended, that is not an investment company;
(B) a lawyer, accountant, engineer, teacher, or geologist
whose performance of the services is solely incidental to the practice
of the person's profession;
(C) 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;
(D) the publisher of a bona fide newspaper, news magazine,
or business or financial publication of general and regular circulation;
(E) a person whose advice, analyses, or report does
not concern a security other than a security that is:
(i) a direct obligation of or an obligation the principal
or interest of which is guaranteed by the United States government,
(ii) 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 Securities Exchange
Act of 1934, §3(a)(12), (15 U.S.C. §78c(a)(12)), as amended,
as an exempt security for purposes of that Act.
(7) Investment adviser representative or representative
of an investment adviser--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, 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
the Texas Securities Act solely because of the person's status as
an officer or partner of that entity.
(8) Rendering services as an investment adviser--Any
act by which investment advisory services are provided for compensation.
(9) Solicitor--Any investment adviser or investment
adviser representative who limits their activities to referring potential
clients to an investment adviser for compensation.
(10) Federal covered investment adviser--An investment
adviser who is registered under the Investment Advisers Act of 1940
(15 U.S.C. §80b-1 et seq.), as amended. A federal covered investment
adviser is not required to be registered pursuant to the Texas Securities
(11) Registered investment adviser--An investment adviser
who has been issued a registration certificate by the Securities Commissioner
under the Texas Securities Act, §15. (A federal covered investment
adviser is not prohibited from being registered with the Securities
Commissioner. If a federal covered investment adviser elects to register
with the Securities Commissioner, it is subject to all of the registration
requirements of the Act.)
(12) Officer--A president, vice president, secretary,
treasurer, or principal financial officer, comptroller, or principal
accounting officer, or any other person occupying a similar status
or performing similar functions with respect to any organization or
entity, whether incorporated or unincorporated.
(b) Registration of investment advisers and investment
adviser representatives, and notice filings for branch offices.
(1) Requirements of registration or notice filing.
(A) Any person who renders services as an investment
adviser, including acting as a solicitor, may not engage in such activity
for compensation without first being registered as an investment adviser
under the provisions of the Texas Securities Act or notice-filed under
the provisions of paragraph (2) of this subsection. Likewise, every
person employed or appointed, or authorized by such person to render
services, which include the giving of investment advice or acting
as a solicitor, cannot conduct such activities unless registered as
an investment adviser or an investment adviser representative under
the provisions of the Act, or notice-filed as an investment adviser
or an investment adviser representative under the provisions of paragraph
(2) of this subsection.
(B) Each branch office of a registered investment adviser
in Texas must make a notice filing to become designated as a branch
office of the investment adviser. A registered officer, partner, or
investment adviser representative must be named as supervisor.
(2) Exemption from the registration requirements. The
Board pursuant to the Texas Securities Act, §§12.C and 5.T,
exempts from the registration provisions of the Act, §12, persons
not required to register as an investment adviser or an investment
adviser representative on or after July 8, 1997, by act of Congress
in Public Law Number 104-290, Title III.
(A) Registration as an investment adviser is not required
for the following:
(i) an investment adviser registered under the Investment
Advisers Act of 1940, §203;
(ii) an investment adviser registered with the Securities
and Exchange Commission pursuant to a rule or order adopted under
the Investment Advisers Act of 1940, §203A(c);
(iii) a person not registered under the Investment
Advisers Act of 1940, §203, because such person is excepted from
the definition of an investment adviser under the Investment Advisers
Act of 1940, §202(a)(11); or
(iv) an investment adviser who does not have a place
of business located in this state and, during the preceding 12-month
period, has had fewer than six clients who are Texas residents.
(B) Registration as an investment adviser representative
of an investment adviser described in subparagraph (A) of this paragraph
is not required for an investment adviser representative who does
not have a place of business located in Texas but who otherwise engages
in the rendering of investment advice in this state.
(C) Notice filing requirements and fees for investment
advisers and investment adviser representatives exempted from registration
pursuant to this subsection only.
(i) Initially, the provisions of subparagraphs (A)
and (B) of this paragraph are available provided that the investment
(I) Form ADV through the IARD designating Texas as
a jurisdiction in which the filing is to be made; and
(II) an initial fee equal to the amount that would
have been paid had the investment adviser and each investment adviser
representative filed for registration in Texas.
(ii) Annually, the investment adviser files renewal
fees which would have been paid had the investment adviser and each
investment adviser representative been registered in Texas.
(D) Persons not required to register with the Securities
Commissioner pursuant to subparagraphs (A) and (B) of this paragraph,
are reminded that the Texas Securities Act prohibits fraud or fraudulent
practices in dealing in any manner in any securities whether or not
the person engaging in fraud or fraudulent practices is required to
be registered. The Agency has jurisdiction to investigate and bring
enforcement actions to the full extent authorized in the Texas Securities
Act with respect to fraud or deceit, or unlawful conduct by an investment
adviser or investment adviser representative in connection with transactions
involving securities in Texas.
(c) Types of registrations.
(1) General registration. A general registration is
a registration to render advisory services regarding all categories
of securities, without limitation.