7 Tex. Admin. Code § 115.1 - General Provisions
(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;
(vii) a temporary location established in response to the implementation of a business
continuity plan; and
(viii) a location identified and designated with FINRA by the registered dealer as a
residential supervisory location (RSL) in accordance with FINRA Rule 3110.19, and which location has been provided to FINRA in accordance with FINRA
Rule 3110.19(d).
(B) Notwithstanding the exclusions in subparagraph (A) of this paragraph, any
location other than an RSL that meets the requirements of §115.1(a)(2)(A)(viii) 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,
§§4001.052, 4001.056, 4004.051, and 4004.101, has the same meaning as the term "within this state" as defined in §
107.2 of this title 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 or in this state--
(A) A person is a "dealer" who engages "within this state" or "in this state" in one or more of the activities set
out in the Texas Securities Act, §4001.056 or §4004.051, 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" or
"in this state" in one or more of the activities set out in the Texas Securities Act, §4001.052 or §4004.101, 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.
(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 chapter (relating to Examination) 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, Chapter 4005, Subchapter A, or by Board rule pursuant to the Texas Securities Act, §4004.001 or
§4005.024, contained in Chapter 109 or 139 of this title.
Notes
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