Wednesday, June 10, 2015

Texas Adopts General Records Rules, Proposes Application Reviews

By Jay Fishman, J.D.

The Texas State Securities Board adopted amendments to general records, notice and compliance rules, and repealed Form 133.1, Texas Public Information Request Form. Separately, the Securities Board proposed amendments to application reviews and financial statement requirements for securities, dealer and investment adviser registration applicants.

Adopted Rule Changes

Open records requests. Agency records requests will be handled in accordance with the open records provisions of the Public Information Act, Texas Government Code, Title 5, Chapter 552. The requesting party must indicate in writing the specific nature of the documents requested for examination or duplication.

Notice. General notice of the adoption, amendment or repeal of any rule must be given as required by law and sent by U.S. mail, or by email if the requestor has provided an email address, to all persons who have made timely written requests for advance notice or rulemaking proceedings. However, failure to send the notice will not invalidate any actions taken or rules adopted.

Compliance. No adopted rule will be valid unless its adopted in substantial compliance with the rulemaking provisions of the Texas Government Code, Title 10, Chapter 2001.

Proposed Rule Changes

Securities registration application reviews. Written communications between the Texas Registration Division and a securities registration applicant could be transmitted by fax, email, U.S. mail or by another more timely communication method. The Registration Division would send a written deficiency letter to the applicant setting forth a list of the yet-unfiled items and exhibits, within seven days of the Agency’s receipt of the application. The Registration Division would, within 45 days of receiving the requested items and exhibits, review the application and send the applicant a written initial comment letter setting forth any deviations from the Texas Securities Act’s or Board rules’ substantive requirements that relate to the securities registration.

Dealer/investment adviser application reviews. Written communications between the Texas Registration Division and a dealer or investment adviser applicant could be transmitted by fax, email, U.S. mail or by another more timely communication method. The Registration Division would send a written deficiency letter to the applicant setting forth a list of the yet-unfiled and/or error-containing items and exhibits, within 14 days of the Agency’s receipt of the application. Procedural or non-disciplinary deficiency corrections on applications filed through the CRD or IARD would be handled by those organizations. Insufficient fees submitted with an application would be returned to the applicant with notification of the correct fee amount, and the application will be held in abeyance until the Agency receives the correct fee. The Registration Division would, within 14 days of receiving the requested items and exhibits, review the application and, if necessary, send the applicant a written comment letter setting forth any deviations from the Act’s or Board rules’ substantive requirements that relate to the dealer or investment adviser registration.

Dealer/investment adviser application requirements. Dealer and investment adviser applications would consist of a U.S. GAAP-prepared balance sheet reflecting the financial condition of the dealer or investment adviser as of a date not more than 90 days before the application filing date. The balance sheet should be compiled, reviewed and audited by independent certified public accountants or independent public accountants or, instead, be attested by the sworn notarized statement of the applicant’s principal financial officer on Form 133.18, Certification of Balance Sheet by Principal Financial Officer.

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