| (a) Intrastate portal. A Texas crowdfunding portal:
(1) must be an entity incorporated or organized under
the laws of Texas, authorized to do business in Texas, and engaged
exclusively in intrastate offers and sales of securities in Texas;
(2) must limit its activities to operating an Internet
website utilized to offer and sell securities exempt from registration
pursuant to §139.25 of this title (relating to Intrastate Crowdfunding
Exemption) and/or §139.26 of this title (relating to Intrastate
Crowdfunding Exemption for SEC Rule 147A Offerings); and
(3) does not operate or facilitate a secondary market
in securities.
(b) Internet website. The Internet website operated
by the Texas crowdfunding portal must meet the following requirements:
(1) if the issuer is utilizing the exemption provided
by §139.25 of this title (relating to Intrastate Crowdfunding
Exemption) the website must contain:
(A) a disclaimer that reflects that access to securities
offerings on the website is limited to Texas residents and offers
and sales of the securities appearing on the website are limited to
persons that are Texas residents;
(B) an affirmative representation by a visitor to the
Internet website that the visitor is a resident of Texas is required
before the visitor can view securities-related offering materials
on the website;
(C) evidence of residency within Texas is required
before a sale is made to a prospective purchaser. An affirmative representation
made by a prospective purchaser that the prospective purchaser is
a Texas resident and proof of at least one of the following would
be considered sufficient evidence that the individual is a resident
of this state:
(i) a valid Texas driver license or official personal
identification card issued by the State of Texas;
(ii) a current Texas voter registration; or
(iii) general property tax records showing the individual
owns and occupies property in this state as his or her principal residence;
(2) prior to offering an investment opportunity to
residents of Texas and throughout the term of the offering, the portal
shall give the Securities Commissioner access to the Internet website;
and
(3) prior to permitting an investment in any securities
listed on the Internet website, the portal shall obtain an affirmative
acknowledgment from the investor of the following:
(A) There is no ready market for the sale of the securities
acquired from this offering; it may be difficult or impossible for
an investor to sell or otherwise dispose of this investment. An investor
may be required to hold and bear the financial risks of this investment
indefinitely;
(B) The securities have not been registered under federal
or state securities laws and, therefore, cannot be resold unless the
securities are registered or qualify for an exemption from registration
under federal and state law;
(C) In making an investment decision, investors must
rely on their own examination of the issuer and the terms of the offering,
including the merits and risks involved; and
(D) No federal or state securities commission or regulatory
authority has confirmed the accuracy or determined the adequacy of
the disclosure statement or any other information on this Internet
website.
(c) Prohibited activities. A Texas crowdfunding portal
shall not:
(1) offer investment advice or recommendations;
(2) compensate employees, agents, or other persons
not registered with the Securities Commissioner for soliciting offers
or sales of securities displayed or referenced on its platform or
portal;
(3) hold, manage, possess or otherwise handle investor
funds or securities, except through the use of a segregated account
if permitted under §139.25(f) of this title (relating to Intrastate
Crowdfunding Exemption) or §139.26(e) of this title (relating
to Intrastate Crowdfunding Exemption for SEC Rule 1474A Offerings).
When a segregated account is used to hold investor payments, the portal
must disclose this to prospective purchasers and investors along with
a statement that the portal, in administering the segregated account,
must:
(A) be responsible for the prudent processing, safeguarding,
and accounting for funds entrusted to the portal by the investors
and the issuer;
(B) act to the advantage of and in the best interests
of the investors and the issuer; and
(C) ensure that all requirements of the Account Agreement
between the portal and the issuer are met before funds are disbursed
from the segregated account;
(4) be affiliated with or under common control with
an issuer whose securities appear on the Internet website;
(5) hold a financial interest in any issuer offering
securities on the portal's Internet website; or
(6) receive a financial interest in an issuer as compensation
for services provided to or on behalf of an issuer.
(d) Background and regulatory checks. Prior to offering
securities to residents of Texas, the Texas crowdfunding portal shall
conduct a reasonable investigation of the background and regulatory
history of each issuer whose securities are offered on the portal's
Internet website and of each of the issuer's control persons. "Control
persons" for purposes of this subsection means the issuer's officers;
directors; or other persons having the power, directly or indirectly,
to direct the management or policies of the issuer, whether by contract
or otherwise; and persons holding more than 20% of the outstanding
equity of the issuer. The portal must deny an issuer access to its
Internet website if the portal has a reasonable basis for believing
that:
(1) the issuer or any of its control persons is subject
to a disqualification under §139.25 of this title (relating to
Intrastate Crowdfunding Exemption) or under §139.26 of this title
(relating to Intrastate Crowdfunding Exemption for SEC Rule 147A Offerings);
(2) the issuer has engaged in, is engaging in, or the
offering involves any act, practice, or course of business that will,
directly or indirectly, operate as a fraud or deceit upon any person;
or
(3) it cannot adequately or effectively assess the
risk of fraud by the issuer or its potential offering.
(e) Recordkeeping.
(1) A Texas crowdfunding portal is not required to
maintain the records listed in §115.5 of this title (relating
to Minimum Records) or to maintain a supervisory system under §115.10
of this title (relating to Supervisory Requirements).
(2) A portal shall maintain and preserve for a period
of five (5) years from either the date of the document or communication
or the date of the closing or termination of the securities offering,
whichever is later, the following records related to offers and sales
made through the Internet website and to transactions where the portal
receives compensation:
(A) records of compensation received for acting as
a portal, including the name of the payor, the date of payment, name
of the issuer, and name of the investor;
(B) copies of information provided by the portal to
issuers offering securities through the portal, prospective purchasers,
and investors;
(C) any agreements and/or contracts between the portal
and an issuer, prospective purchaser, investor, bank or other depository
institution;
(D) any information used to establish that an issuer,
prospective purchaser, or investor is a Texas resident;
(E) any information used to establish that a prospective
purchaser or investor is an accredited investor as defined in §107.2
of this title (relating to Definitions);
(F) any correspondence or other communications with
issuers, prospective purchasers, and/or investors;
(G) any information made available through the portal's
Internet website relating to an offering;
(H) ledgers (or other records) that reflect all assets
and liabilities, income and expense, capital accounts, and escrow
or segregated accounts; and
(I) any other records relating to the offers and/or
sales of securities made through the Internet website.
(3) A portal shall maintain and preserve a copy of
the Form 133.15 (relating to Texas Crowdfunding Portal Registration),
Form 133.16 (relating to Texas Crowdfunding Portal Withdrawal of Registration),
and the Form U-4 (Uniform Application for Securities Industry Registration
or Transfer) used to register the portal and its designated officer,
and any amendments thereto, for a period of five (5) years from the
termination of the portal's registration.
(4) The records required to be maintained and preserved
under this subsection may be archived if they are over two years old.
(5) A portal shall, upon written request of the Securities
Commissioner, furnish to the Commissioner any records required to
be maintained and preserved under this subsection.
(6) The portal shall provide to the Commissioner access,
inspection, and review of any Internet website operated by a portal
and records maintained by the portal; and
(7) The records required to be kept and preserved under
this subsection must be maintained in a manner, including by any electronic
storage media, that will permit the immediate location of any particular
document so long as such records are available for immediate and complete
access by representatives of the Commissioner. Any electronic storage
system must preserve the records exclusively in a non-rewriteable,
non-erasable format; verify automatically the quality and accuracy
of the storage media recording process; serialize the original and,
if applicable, duplicate units of storage media, and time-date for
the required period of retention the information placed on such electronic
storage media; and can download indexes and records preserved on electronic
storage media to an acceptable medium. In the event that a records
retention system commingles records required to be kept under this
subsection with records not required to be kept, representatives of
the Commissioner may review all commingled records.
(f) Filings.
(1) Application. In lieu of the application requirements
in §115.2 of this title (relating to Application Requirements),
a complete application for a Texas crowdfunding portal consists of
the following and must be filed with the Securities Commissioner:
(A) Form 133.15, including all applicable schedules
and supplemental information;
(B) Form U-4, for the designated officer and a Form
U-4 for each agent to be registered (officers of a corporation or
partners of a partnership shall not be deemed agents solely because
of their status as officers or partners);
(C) a copy of the articles of incorporation or other
documents which indicate the form of organization, certified by the
Texas Secretary of State or by an officer or partner of the applicant;
(D) any other information deemed necessary by the Commissioner
to determine the financial responsibility, business repute, or qualifications
of the portal; and
(E) the appropriate registration fee(s).
(2) Post-reporting requirements. A portal is subject
to the dealer and agent requirements in §115.9 of this title
(relating to Post-Registration Reporting Requirements).
(3) Renewal. Registration as a portal expires at the
close of the calendar year, but subsequent registration for the succeeding
year shall be issued upon written application and upon payment of
the appropriate renewal fee(s), without filing of further statements
or furnishing any further information unless specifically requested
by the Commissioner.
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