| (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 a dealer or an agent.
(2) Branch office--Any location where one or more agents
of a dealer regularly conduct the business of effecting any transactions
in, or inducing or attempting to induce the purchase or sale of, any
security, 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 sales activities
are conducted and that is not held out to the public as a branch office;
(ii) any location that is the agent's primary residence,
provided that:
(I) only one agent, or multiple agents 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 agent does not meet with customers at the location;
(III) neither customer funds nor securities are handled
at that location;
(IV) the agent 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 agent;
(V) the agent's correspondence and communications with
the public are subject to the dealer's supervision;
(VI) electronic communications (e.g., e-mail) are made
through the dealer's electronic system;
(VII) all orders are entered through the designated
branch office or an electronic system established by the dealer that
is reviewable at the branch office;
(VIII) written supervisory procedures pertaining to
supervision of sales activities conducted at the residence are maintained
by the dealer; and
(IX) a list of the residence locations are maintained
by the dealer;
(iii) any location, other than a primary residence,
that is used for securities business for less than 30 business days
in any one calendar year, provided the dealer complies with the provisions
of clause (ii)(II) - (VIII) of this subparagraph;
(iv) any office of convenience, where agents 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 agent(s) effects no more
than 25 securities transactions 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 agent(s) conducting business at the non-branch locations
are directly supervised;
(vi) the floor of a registered national securities
exchange where a dealer conducts a direct access business with public
customers; and
(vii) 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 dealer at one or more
non-branch locations of the dealer is considered to be a branch office.
(C) The term "business day" shall not include any partial
business day provided that the agent 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 business.
(3) Supervisor--The person named by a dealer to supervise
the activities of a branch office and registered as an agent with
the Securities Commissioner.
(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--As used in the Texas Securities
Act, §12, has the same meaning as the term "within this state"
as defined in §107.2 of this title (relating to Definitions)
and paragraph (8) of this subsection.
(6) FINRA--The Financial Industry Regulatory Authority,
created through the consolidation of NASD and the member regulation,
enforcement, and arbitration functions of the New York Stock Exchange.
(7) 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.
(8) Within this state--
(A) A person is a "dealer" who engages "within this
state" in one or more of the activities set out in the Texas Securities
Act, §4.C, if either the person or the person's agent is present
in this state or the offeree/purchaser or the offeree/purchaser's
agent is present in this state at the time of the particular activity.
A person can be a dealer in more than one state at the same time.
(B) Likewise, a person is an "agent" who engages "within
this state" in one or more of the activities set out in the Texas
Securities Act, §4.D, 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 offeree/purchaser or the offeree/purchaser's
agent is present in this state at the time of the particular activity.
A person can be an agent in more than one state at the same time.
(C) Offers and sales can be made by personal contact,
mail, telegram, telephone, wireless, electronic communication, or
any other form of oral or written communication.
(9) Finder--An individual who receives compensation
for introducing an accredited investor to an issuer or an issuer to
an accredited investor solely for the purpose of a potential investment
in the securities of the issuer, but does not participate in negotiating
any of the terms of an investment and does not give advice to any
such parties regarding the advantages or disadvantages of entering
into an investment, and conducts this activity in accordance with §115.11
of this title (relating to Finder Registration and Activities). Note
that an individual registered as a finder is not permitted to register
in any other capacity; however, a registered general dealer is allowed
to engage in finder activity without separate registration as a finder.
(10) Texas crowdfunding portal--Any person registered
as a Texas dealer pursuant to §115.19 of this title (relating
to Texas Crowdfunding Portal Registration and Activities) or §115.20
of this title (relating to Texas Crowdfunding Portal Registration
and Activities of Small Business Development Entities).
(b) Registration requirements of dealers, issuers,
and agents, and notice filings for branch offices.
(1) Requirements of registration or notice filing.
(A) No dealer, issuer, or agent of a dealer or issuer
shall sell or offer for sale any securities within this state without
first being registered as a dealer or agent, or exempt from registration.
(B) Each branch office in Texas must make a notice
filing to become designated as a branch office of a dealer. A registered
officer, partner, or agent must be named as supervisor.
(2) Persons not required to register as an agent.
(A) Registration as an agent is not required for a
person, associated with a dealer registered in Texas, who effects
a transaction pursuant to the Securities Exchange Act of 1934, §15(i)(3),
(15 U.S.C. Sec. 78o(i)(3)), provided such person is:
(i) not ineligible to register with this state for
any reason other than such a transaction; and
(ii) registered with a registered securities association
and at least one other state.
(B) For purposes of this paragraph, a person is "ineligible
to register with this state," if the person:
(i) has been convicted of a securities-related felony;
or
(ii) has been convicted of a theft-related felony.
(C) For purposes of this paragraph, a "registered securities
association" is one currently recognized as such by the SEC pursuant
to the Securities Exchange Act of 1934, §15A.
(D) Persons not required to register with the Securities
Commissioner pursuant to subparagraph (A) 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 a dealer or agent in connection
with transactions involving securities in Texas.
(c) Types of registrations.
(1) General registration. A general registration is
a registration to deal in all categories of securities, without limitation.
(2) Restricted registration. The restricted registrations
are as follows:
(A) The Securities Commissioner recognizes the specialized
knowledge examinations administered by FINRA as restricted registration
categories. The registration of an applicant passing a specialized
knowledge examination in lieu of the general securities examination
pursuant to §115.3(b) of this title (relating to Examinations)
is restricted to and effective only for conducting the business and
securities activities and effecting transactions associated with the
specialized examination.
(B) Additional restricted registration categories include:
(i) registration to deal exclusively in the sale of
interests (other than interests in limited partnerships) in oil, gas,
and mining leases, fees, or titles or contracts relating thereto;
(ii) registration to deal exclusively in real estate
syndication interests and/or condominium securities, including interests
in real estate limited partnerships;
(iii) registration to deal exclusively in sales of
securities to the dealer's own employees;
(iv) registration for an issuer to deal exclusively
in its own securities;
(v) registration to act exclusively as a finder;
(vi) registration to act exclusively as a Texas crowdfunding
portal; and
(vii) registration with other restrictions which the
Securities Commissioner may impose based upon the facts.
(3) In restricted registrations, the evidence of registration
shall indicate that the holder thereof is entitled to act as a dealer
only in the specified issue or category of securities.
(d) Prohibition on fraud and availability of an exemption
from registration. 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 a dealer
or agent in connection with transactions involving securities in Texas.
However, the registration requirements detailed in this chapter do
not apply to dealers and agents that are exempt from registration
as such pursuant to the Texas Securities Act, §5, or by Board
rule pursuant to the Texas Securities Act, §5.T or §12.C,
contained in Chapter 109 or 139 of this title.
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| Source Note: The provisions of this §115.1 adopted to be effective August 12, 2001, 26 TexReg 5794; amended to be effective August 22, 2004, 29 TexReg 7966; amended to be effective January 8, 2006, 30 TexReg 8866; amended to be effective September 1, 2006, 31 TexReg 6709; amended to be effective February 21, 2008, 33 TexReg 1319; amended to be effective August 16, 2010, 35 TexReg 7050; amended to be effective November 8, 2012, 37 TexReg 8786; amended to be effective November 17, 2014, 39 TexReg 8961; amended to be effective December 23, 2018, 43 TexReg 8089; amended to be effective November 12, 2019, 44 TexReg 6859 |
