June 24, 1994
TO: INVESTMENT ADVISERS COMMITTEE NO. 39-94
STATE LIAISON COMMITTEE NO. 39-94
UNIT INVESTMENT TRUST COMMITTEE NO. 44-94
RE: INSTITUTE COMMENTS ON PROPOSED TEXAS REGULATIONS
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As we previously informed you, the Texas State Securities
Board (the "Board") has proposed revisions to the Texas Securities
Act that would amend or create provisions relating to assessment of
administrative fines, civil liability for investment advisers, sale
of excess securities, and registration by coordination, among
others. (See Memorandum to Investment Advisers Committee No. 34-
94, State Liaison Committee No. 32-94, and Unit Investment Trust
Committee No. 35-94, dated May 13, 1994.) The Institute filed the
attached comment letter with the Board that generally supports the
proposed revisions and recommends that minor modifications be made
to the proposed provisions relating to an investment adviser's
civil liability.
In particular, the Institute's letter recommends that, rather
than mandating the amount of an adviser's civil liability to a
client, the civil liability provision be amended to permit the
court to award the appropriate amount of damages based upon the
circumstances. Similarly, the Institute recommends that the
interest recoverable by an advisory client run, not from the date
of payment of consideration, but from the date of loss. The
Institute has recommended these changes to ensure that advisory
clients are reasonably compensated for unlawful conduct by an
investment adviser without being unduly enriched in the process.
Tamara K. Cain
Assistant Counsel
Attachment