|(a) The State Securities Board, pursuant to the Texas Securities Act, §12.B, exempts a financial entity from the dealer registration requirements of the Texas Securities Act, when such financial entity is engaging in securities-related activity consisting solely of acting as a correspondent in a third party brokerage arrangement coordinated with a registered dealer on the premises of the financial entity. A financial entity may receive compensation for such an arrangement based on a percentage of commissions generated by the arrangement or on the basis of leased space of the premises; officers and employees of the financial entity may receive compensation as set forth in subsection (b) of this section. For purposes of this section, the following words and terms shall have the following meanings: (1) "financial entity" shall include any state or national bank, any federal savings and loan association or savings and loan association organized and subject to the laws and regulation of this State as defined in §109.17 of this title (relating to Banks Under The Securities Act, §5.L), or any credit union, insurance company, bank holding company, or financial holding company organized and subject to functional regulation under the laws of the United States or under the laws of any State or territory of the United States; (2) "acting as a correspondent in a third party brokerage arrangement" means that the activity of the financial entity is limited to providing an area on the financial entity premises for the dealer's brokerage activities, advertising the brokerage service, referring customers to a representative of the dealer, and performing clerical or ministerial functions in connection with brokerage transactions including scheduling appointments with agents of the dealer and transferring customer funds or securities; (3) "premises" shall include the physical location of the financial entity, including all of its branches, as well as the financial entity's web site. Thus, a financial entity may engage in linking arrangements with third party brokerages within this exemption. (b) The State Securities Board, pursuant to the Texas Securities Act, §12.B, exempts officers and employees of a financial entity from the agent registration requirements of the Texas Securities Act, when such employee or officer is engaging in securities-related activity consisting solely of referring customers to a representative of the registered dealer. For the purposes of this subsection, the officers and employees of a financial entity may receive a referral fee for this activity provided that: (1) the fee is a nominal, one time fee of a fixed dollar amount per referral; (2) the payment of such referral fee is not contingent on whether the referral results in a transaction; and (3) such payment is made directly by the registered dealer to the financial entity which, as a condition of this exemption, upon request agrees to provide the Securities Commissioner, or representative of the Commissioner, a statement or internal records itemizing such payments including, but not limited to, the date, amount of payment, the name of each person for whom a referral payment was made and the name of the person receiving the payment. (c) The filing and fee requirements for dealers and agents exempted from registration pursuant to this section are preserved. (1) Initially, the exemptions provided by subsections (a) and (b) of this section are available after the filing of: (A) a Form 133.9; (B) a consent to service of process (if the financial entity is domiciled outside of Texas); (C) a copy of the agreement with the third party dealer; and (D) an initial fee equal to the amount that would have been paid had the financial entity and designated officer of the financial entity filed for registration in Texas. (2) Upon amendment to its Form 133.9, the financial entity files an amended Form 133.9 and an amendment fee as provided in the Texas Securities Act, §35.B(1). (3) Annually, the financial entity files renewal fees which would have been paid had the financial entity been registered in Texas. (d) Any financial entity relying on this exemption shall, upon written request, furnish to the Securities Commissioner any information relative to the third party brokerage arrangement that the Commissioner deems relevant, including, but not limited to, records regarding referral fee payments to employees and officers of the financial entity, agreements between the financial entity and the registered dealer, and customer complaints regarding the brokerage activities. Standard compensation records are sufficient "records regarding referral fee payments to employees and officers." All records required by this subsection shall be kept for the life of the third party brokerage arrangement plus an additional five years and may be retained electronically, in hard copy form, microfilm, or microfiche.
|Source Note: The provisions of this §139.20 adopted to be effective December 3, 2000, 25 TexReg 11647; amended to be effective August 12, 2001, 26 TexReg 5806; amended to be effective February 24, 2004, 29 TexReg 1645