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AN ACT
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relating to certain violations of and offenses under The Securities |
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Act; providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subsections A and B, Section 23-1, The |
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Securities Act (Article 581-23-1, Vernon's Texas Civil Statutes), |
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are amended to read as follows: |
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A. After giving notice and opportunity for a hearing, the |
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Commissioner may, in addition to any other remedies, issue an order |
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which assesses an administrative fine against any person or company |
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found to have: |
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(1) engaged in fraud or a fraudulent practice in |
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connection with: |
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(A) the offer for sale or sale of a security; or |
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(B) the rendering of services as an investment |
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adviser or investment adviser representative; |
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(2) made an offer containing a statement that is |
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materially misleading or is otherwise likely to deceive the public; |
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[or] |
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(3) engaged in an act or practice that violates this |
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Act or a Board rule or order; or |
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(4) with intent to deceive or defraud or with reckless |
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disregard for the truth or the law, materially aided any person in |
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engaging in an act or practice described by Subdivision (1) , (2), |
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or (3) of this subsection. |
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B. Any administrative fine assessed under this Section, |
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together with the amount of any civil penalty already awarded under |
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Subsection C of Section 32, must be in an amount not to exceed: |
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(1) the greater of: |
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(A) $20,000 per violation; or |
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(B) the gross amount of any economic benefit |
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gained by the person or company a result of the act or practice for |
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which the fine was assessed; and |
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(2) if the act or practice was committed against a |
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person 65 years of age or older, an additional amount of not more |
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than $250,000 [that does not exceed $10,000 for a single violation
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or $100,000 for multiple violations in a single proceeding or a
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series of related proceedings]. |
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SECTION 2. Section 29, The Securities Act (Article 581-29, |
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Vernon's Texas Civil Statutes), is amended to read as follows: |
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Art. 581-29. PENAL PROVISIONS. Any person who shall: |
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A. Sell, offer for sale or delivery, solicit subscriptions |
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or orders for, dispose of, invite offers for, or who shall deal in |
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any other manner in any security or securities without being a |
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registered dealer or agent as in this Act provided shall be deemed |
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guilty of a felony of the third degree [, and upon conviction
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thereof shall be sentenced to pay a fine of not more than $5,000 or
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imprisonment in the penitentiary for not less than two or more than
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10 years, or by both such fine and imprisonment]. |
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B. Sell, offer for sale or delivery, solicit subscriptions |
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to and orders for, dispose of, invite orders for, or who shall deal |
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in any other manner in any security or securities issued after |
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September 6, 1955, unless said security or securities have been |
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registered or granted a permit as provided in Section 7 of this Act, |
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shall be deemed guilty of a felony of the third degree [, and upon
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conviction thereof shall be sentenced to pay a fine of not more than
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$5,000 or imprisonment in the penitentiary for not less than two or
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more than 10 years, or by both such fine and imprisonment]. |
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C. In connection with the sale, offering for sale or delivery |
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of, the purchase, offer to purchase, invitation of offers to |
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purchase, invitations of offers to sell, or dealing in any other |
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manner in any security or securities, whether or not the |
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transaction or security is exempt under Section 5 or 6 of this Act, |
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or in connection with the rendering of services as an investment |
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adviser or an investment adviser representative, directly or |
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indirectly: |
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(1) engage in any fraud or fraudulent practice; |
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(2) employ any device, scheme, or artifice to defraud; |
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(3) knowingly make any untrue statement of a material |
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fact or omit to state a material fact necessary in order to make the |
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statements made, in the light of the circumstances under which they |
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are made, not misleading; or |
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(4) engage in any act, practice or course of business |
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which operates or will operate as a fraud or deceit upon any person, |
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is [guilty of a felony and upon conviction shall be]: |
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(a) guilty of a felony of the third degree |
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[imprisoned for not less than 2 or more than 10 years and fined not
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more than $10,000], if the amount involved in the offense is less |
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than $10,000; |
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(b) guilty of a felony of the second degree |
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[imprisoned for not less than 2 or more than 20 years and fined not
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more than $10,000], if the amount involved in the offense is $10,000 |
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or more but less than $100,000; or |
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(c) guilty of a felony of the first degree |
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[imprisoned for life or for not less than 5 or more than 99 years and
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fined not more than $10,000], if the amount involved is $100,000 or |
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more. |
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D. Knowingly violate a cease and desist order issued by the |
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commissioner under the authority of Section 23A, 23B, or 23-2 of |
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this Act shall be deemed guilty of a felony of the third degree [,
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and upon conviction thereof shall be sentenced to pay a fine of not
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more than $5,000 or imprisonment in the penitentiary for not more
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than two years, or by both such fine and imprisonment]. |
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E. Knowingly make or cause to be made, in any document filed |
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with the commissioner or in any proceeding under this Act, whether |
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or not such document or proceeding relates to a transaction or |
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security exempt under the provisions of Sections 5 or 6 of this Act, |
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any statement which is, at the time and in the light of the |
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circumstances under which it is made, false or misleading in any |
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material respect shall be deemed guilty of a felony of the third |
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degree [, and upon conviction thereof shall be sentenced to pay a
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fine of not more than $5,000 or imprisonment in the penitentiary for
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not less than two or more than 10 years, or by both such fine and
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imprisonment]. |
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F. Knowingly make any false statement or representation |
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concerning any registration made or exemption claimed under the |
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provisions of this Act shall be deemed guilty of a state jail |
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felony[, and upon conviction thereof shall be sentenced to pay a
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fine of not more than $5,000 or imprisonment in the penitentiary for
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not more than two years, or by both such fine and imprisonment]. |
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G. Make an offer of any security within this State that is |
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not in compliance with the requirements governing offers set forth |
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in Section 22 of this Act shall be deemed guilty of a state jail |
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felony[, and upon conviction thereof, shall be sentenced to pay a
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fine of not more than $5,000 or imprisonment in the penitentiary for
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not more than two years, or by both such fine and imprisonment]. |
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H. Knowingly make an offer of any security within this State |
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prohibited by a cease publication order issued by the Commissioner |
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under Section 23C of this Act shall be deemed guilty of a state jail |
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felony[, and upon conviction thereof, shall be sentenced to pay a
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fine of not more than $5,000 or imprisonment in the penitentiary for
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not more than two years, or by both such fine and imprisonment]. |
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I. Render services as an investment adviser or an investment |
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adviser representative without being registered as required by this |
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Act shall be deemed guilty of a felony of the third degree [and on
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conviction of the felony shall be sentenced to pay a fine of not
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more than $5,000 or imprisonment in the penitentiary for not less
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than two or more than 10 years, or by both the fine and
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imprisonment]. |
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J. A conviction of an offense under this section may be |
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enhanced as provided by Section 12.42, Penal Code. |
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SECTION 3. Section 32, The Securities Act (Article 581-32, |
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Vernon's Texas Civil Statutes), is amended to read as follows: |
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Art. 581-32. INJUNCTIONS, [AND] RESTITUTION, AND CIVIL |
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PENALTIES. A. Whenever it shall appear to the Commissioner either |
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upon complaint or otherwise, that any person has engaged, is |
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engaging, or is about to engage in fraud or a fraudulent practice in |
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connection with the sale of a security, has engaged, is engaging, or |
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is about to engage in fraud or a fraudulent practice in the |
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rendering of services as an investment adviser or investment |
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adviser representative, has made an offer containing a statement |
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that is materially misleading or is otherwise likely to deceive the |
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public, or has engaged, is engaging, or is about to engage in an act |
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or practice that violates this Act or a Board rule or order, the |
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Attorney General may, on request by the Commissioner, and in |
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addition to any other remedies, bring action in the name and on |
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behalf of the State of Texas against such person or company and any |
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person who, with intent to deceive or defraud or with reckless |
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disregard for the truth or the law, has materially aided, is |
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materially aiding, or is about to materially aid such person and any |
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other person or persons heretofore concerned in or in any way |
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participating in or about to participate in such acts or practices, |
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to enjoin such person or company and such other person or persons |
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from continuing such acts or practices or doing any act or acts in |
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furtherance thereof. The Commissioner shall verify, on information |
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and belief, the facts contained in an application for injunction |
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under this section. In any such court proceedings, the Attorney |
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General may apply for and on due showing be entitled to have issued |
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the court's subpoena requiring the forthwith appearance of any |
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defendant and the defendant's employees or agents and the |
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production of documents, books and records as may appear necessary |
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for the hearing of such petition, to testify and give evidence |
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concerning the acts or conduct or things complained of in such |
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application for injunction. The District Court of any county, |
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wherein it is shown that the acts complained of have been or are |
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about to be committed, or a district court in Travis County shall |
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have jurisdiction of any action brought under this section, and |
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this provision shall be superior to any provision fixing the |
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jurisdiction or venue with regard to suits for injunction. No bond |
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for injunction shall be required of the Commissioner or Attorney |
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General in any such proceeding. |
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B. In addition to any other remedies, the [The] Attorney |
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General may, on the request of the Commissioner, either in an action |
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under Subsection A of this section or in a separate action in |
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District Court, seek equitable relief, including restitution, for a |
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victim of fraudulent practices and may seek the disgorgement of any |
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economic benefit gained by a defendant through an act or practice |
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that violates this Act or for which this Act provides the |
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Commissioner or the Attorney General with a remedy. The court may |
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grant any equitable relief that the court considers appropriate and |
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may order the defendant to deliver to each victim of any act or |
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practice that violates this Act or for which this Act provides the |
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Commissioner or the Attorney General with a remedy [the person
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defrauded] the amount of money or the property that the defendant |
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obtained from the victim, including any bonus, fee, commission, |
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option, proceeds, or profit from or loss avoided through the sale of |
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the security or through the rendering of services as an investment |
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adviser or investment adviser representative, or any other tangible |
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benefit [person by the fraudulent practices]. |
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C. In addition to any other remedies, the Attorney General |
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may, on the request of the Commissioner, either in an action under |
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Subsection A of this section or in a separate action in District |
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Court, seek a civil penalty to be paid to the State in an amount, |
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together with the amount of any administrative fine already |
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assessed under Subsection B of Section 23-1, not to exceed: |
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(1) the greater of: |
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(A) $20,000 per violation; or |
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(B) the gross amount of any economic benefit |
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gained by the person or company as a result of the commission of the |
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act or practice; and |
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(2) if the act or practice was committed against a |
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person 65 years of age or older, an additional amount of not more |
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than $250,000. |
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D. In an action brought under this section, the [for fraud or
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a fraudulent practice in connection with the sale of a security, the
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Attorney General may seek, for an aggrieved person, the
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disgorgement of any economic benefit gained by the defendant
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through the violation, including a bonus, fee, commission, option,
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proceeds, profit from or loss avoided through the sale of the
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security, or any other tangible benefit. The] Attorney General may |
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recover [from an order of disgorgement obtained under this
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subsection] reasonable costs and expenses incurred by the Attorney |
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General in bringing the action. |
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SECTION 4. (a) The changes in law made by this Act apply |
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only to a violation that occurs or an offense committed on or after |
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the effective date of this Act. A violation that occurs or an |
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offense committed before the effective date of this Act is governed |
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by the law in effect on the date the violation occurred or the |
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offense was committed, and the former law is continued in effect for |
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that purpose. |
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(b) For purposes of Subsection (a) of this section, a |
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violation occurred or an offense was committed before the effective |
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date of this Act if any element of the violation or offense occurred |
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before that date. |
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SECTION 5. This Act takes effect September 1, 2011. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2342 was passed by the House on April |
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27, 2011, by the following vote: Yeas 146, Nays 1, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2342 was passed by the Senate on May |
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18, 2011, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |