* See Memorandum to SEC Rules Committee No. 16-97, Small Funds Committee No. 3-97. State Liaison Committee
No. 2-97 and Unit Investment Trust Committee No. 7-97, dated February 7, 1997.
March 13, 1997
TO: SEC RULES COMMITTEE No. 30-97
SMALL FUNDS COMMITTEE No. 5-97
STATE LIAISON COMMITTEE No. 4-97
UNIT INVESTMENT TRUST COMMITTEE No. 17-97
RE: INSTITUTE COMMENTS ON TEXAS RULE PROPOSAL TO IMPLEMENT
NSMIA
______________________________________________________________________________
As we previously informed you, in February the Texas State Securities Board (the
"Board") proposed for comment a series of rules and rule amendments that were intended, in
part, to accommodate the National Securities Markets Improvement Act of 1996 ("NSMIA").*
The rules were proposed in lieu of the Board recommending any legislative changes to the
Texas Securities Act this year. Attached is a copy of the comment letter the Institute filed with
the Board.
In its letter, the Institute recommends that the Board amend the proposal to:
Delete any reference to notice filers as "applicants" or to their obtaining "authorization"
from the Board prior to offering or selling securities pursuant to a notice filing;
Delete the provision in the proposed definition of "federal covered security" that would
exclude from such definition any federal covered securities for which a non-payment or
underpayment of fees has not been promptly remedied. As discussed in detail in the
Institute’s letter, we believe this exclusion is unnecessary, inappropriate, and inconsistent
with provisions being enacted in other states;
Replace the existing manual exemption as found in Rule 109.7 with the Revised Manual
Exemption as adopted by NASAA in 1996. [The major difference between the current
exemption and the revised exemption is that the revised exemption is available to issuers if
information concerning their offering is available through the SEC’s EDGAR system.];
Eliminate the need for issuers to annually file a consent to service of process;
Eliminate any reference to the "Securities Registration Depository" in the rule permitting the
electronic filing of documents;
Preserve the ability of issuers of covered securities to file a copy of their federal registration
statement in lieu of filing page one of Form U-1;
Clarify that a notice filing is effective upon receipt by the Board;
Exclude institutional investors when determining the number of clients an investment
adviser has for purposes of claiming the de minimis exemption from registration and
permit notice filers to claim such exemption;
Ensure that provisions regulating the conduct of investment advisers be appropriately
tailored to apply only to state-registered investment advisers; and
Clarify that, in the event the Board requires the registration of the securities of an
investment company (i.e., based upon a failure to promptly remedy a nonpayment or
underpayment of fees), such registration authority is limited by NSMIA and would not
permit the Board to subject such offering to any fairness or other merit standards.
Tamara Cain Reed
Associate Counsel
Attachment (in .pdf format)
Note: Not all recipients of this memo will receive an attachment. If you wish to obtain a copy
of the attachment referred to in this memo, please call the Institute’s Information Resource
Center at (202)326-8304, and ask for this memo’s attachment number: 8719.