TITLE 7. BANKING AND SECURITIES
PART 7. STATE SECURITIES BOARD
CHAPTER 105. RULES OF PRACTICE IN CONTESTED CASES
7 TAC §§105.1, 105.2, 105.4 - 105.9, 105.12 - 105.19, 105.22, 105.23
(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the State Securities Board or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.)
The State Securities Board proposes the repeal of Chapter 105, concerning rules of practice in contested cases and consisting of §§105.1, 105.2, 105.4 - 105.9, 105.12 - 105.19, 105.22, and 105.23. A new Chapter 105 is being concurrently proposed.
Kara L. Kennedy, General Counsel; Patricia Loutherback, Director, Registration Division; Ronak Patel, Director, Inspections and Compliance Division; and Joe Rotunda, Director, Enforcement Division, have determined that for the first five-year period the repeals are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the repeals.
Ms. Kennedy, Ms. Loutherback, Mr. Patel, and Mr. Rotunda also have determined that for each year of the first five years the repeals are in effect the public benefit anticipated as a result of enforcing the repeals will be that the outdated provisions can be replaced with updated provisions that will better inform parties to a contested case of the relevant procedures. There will be no effect on micro- or small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. There is no anticipated impact on local employment.
Comments on the proposal to be considered by the Board should be submitted in writing within 30 days after publication of the proposed repeals in the Texas Register. Comments should be sent to Kara L. Kennedy, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 or sent by facsimile to (512) 305-8336.
The repeals are proposed under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposed repeals affect Texas Civil Statutes, Articles 581-14, 581-23, 581-23-2, and 581-24.
§105.1.Scope.
§105.2.Service of Notice of Hearing.
§105.4.Request for Hearing.
§105.5.Informal Disposition.
§105.6.Notice of Hearing.
§105.7.Written Response to Notice of Hearing.
§105.8.Default.
§105.9.Copies to Securities Commissioner's Representative.
§105.12.Burden of Proof.
§105.14.Assessment of Hearing Costs.
§105.15.Proposal for Decision.
§105.16.Orders Issued by Securities Commissioner.
§105.17.Motion for Rehearing.
§105.18.Final Decisions and Appeals.
§105.19.Record.
§105.22.Board Action on Motion for Rehearing.
§105.23.Ex Parte Communications.
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 1, 2011.
TRD-201105270
Carla James
Interim Securities Commissioner
State Securities Board
Earliest possible date of adoption: January 15, 2012
For further information, please call: (512) 305-8303
7 TAC §§105.1 - 105.20
The State Securities Board proposes new Chapter 105, concerning rules of practice in contested cases, consisting of §§105.1 - 105.20. The current Chapter 105 has been proposed for repeal. The new chapter would update the provisions to coordinate more closely with the Texas Securities Act ("TSA"), Administrative Procedure Act ("APA"), and the rules of the State Office of Administrative Hearings ("SOAH"). A brief description of each of the new sections follows.
New §105.1 (Scope) sets out the scope of the chapter.
New §105.2 (Definitions) contains definitions specific to Chapter 105. The proposed definitions are based on definitions contained in the APA, in §107.2 of the Board rules, and in the SOAH procedural rules described in 1 TAC Chapter 155 ("SOAH Rules of Procedure").
New §105.3 (Computation of Time) would provide a consistent method for computing time by referencing the SOAH Rules of Procedure for such calculation. Many provisions in the TSA and in Chapter 105 include deadlines by which certain events must occur, including the filing of notices and motions, the scheduling of hearings, and the date on which orders become final. In its procedural rules, SOAH has adopted a method similar to that found in the Texas Rules of Civil Procedure for counting days, including holidays, which is fair, reasonable and consistent with general practices.
New §105.4 (Opportunity for Hearing) is based on current §105.4 and §105.1. It also contains provisions to: (1) include references to investment advisers and investment adviser representatives; (2) include references to TSA, §14 and §10; (3) require at least 10 days notice of a hearing to be consistent with the APA; and (4) provide an exception to the 10-day notice requirements for a hearing on an emergency cease-and-desist order to be consistent with the TSA.
New §105.5 (Contents of Notice of Hearing) is based on current §105.6. It also would: (1) change the required font size for the Staff's disclosure language in the notice of hearing to be consistent with the APA requirements; (2) modify parts of the disclosure to comport with the APA; (3) clarify that a respondent should "file" a response with the Securities Commissioner and "serve" a copy on the Staff rather than "filing" the response with the Staff, which is consistent with SOAH's Rules of Procedure; and (4) include language from current §105.9 requiring Staff to include the identity and contact information of the Securities Commissioner's Representative in the notice of hearing.
New §105.6 (Service) is based on current §105.2. It also would provide for different methods of service for various types of documents while still adequately addressing the purpose of service for each type of document. For example, in accordance with due process and to ensure a respondent receives notice of a proceeding, the TSA requires the initial document in a proceeding, whether it be a notice of hearing or an emergency order, be served by personal delivery or by registered or certified mail. However, after the initial notice has been received, SOAH's Rules of Procedure recognize there may be more cost-efficient and convenient methods for parties to serve one another, including the use of electronic mail, if the parties agree, or through facsimile. Finally, in accordance with due process and the right to appeal an order resolving a dispute, the TSA and the APA require that orders be served in such a way to provide certainty with respect to the order's finality, which affects the deadlines for appealing.
New §105.7 (Written Response to Notice of Hearing) is based on current §105.7 and modified to address those situations in which a notice of hearing is not mailed to or personally served on a party at least 30 days prior to the hearing date. For example, when a person against whom an emergency order has been issued requests a hearing, the TSA requires the Staff serve a notice for a hearing to be held not later than 10 days after the Agency receives the request. The new rule would also clarify that, consistent with SOAH's Rules of Procedure, a respondent should "file" a response with the Securities Commissioner and SOAH and "serve" a copy on the Staff rather than "filing" a response with the Staff.
New §105.8 (Copies to Securities Commissioner's Representative) is based on current §105.9. It also would change "after" to "upon" to clarify that not just those documents filed subsequent to the notice of hearing, but also the notice of hearing itself should be filed with the Securities Commissioner. The language requiring the notice of hearing include the identity and contact information for the Securities Commissioner's Representative in current §105.9 has been relocated to the new §105.5.
New §105.9 (Informal Disposition) is based on current §105.5.
New §105.10 (Default) is based on current §105.8. It also would: (1) update internal cross-references; (2) change "legal representative" to "authorized representative" consistent with the definitions in SOAH Rules of Procedure; and (3) implement language relating to motions for rehearing consistent with the APA.
New §105.11 (Burden of Proof) is based on current §105.12.
New §105.12 (Subpoenas and Depositions) is based on current §105.13. It also would adopt by reference the APA provisions for issuing subpoenas and administering depositions, thereby eliminating the inconsistencies and redundancies in the current rule while preserving the Staff's current authority to request a commission prior to the initiation of a contested case if there is a risk a witness's testimony may not be available after the action is commenced.
New §105.13 (Assessment of Hearing Costs) is based on current §105.14. It also would make changes consistent with the APA allowing a state agency to pay the costs for a hearing transcript or to assess it to one or more parties similar to a prior SOAH Rule of Procedure that allowed the Administrative Law Judge ("ALJ"), rather than the agency, to assess the cost to one or more parties. The current SOAH Rule of Procedure states the cost should ordinarily be assessed to the party requesting the transcript. Although the APA does not provide an agency with guidelines for determining how to assess the costs, the Staff's notice of hearing includes a request to assess all costs to the respondent(s), which provides the parties with both a notice and an opportunity for hearing on the issue.
New §105.14 (Proposal for Decision) is based on current §105.15.
New §105.15 (Orders Issued by Securities Commissioner) is based on current §105.16. It also would: (1) clarify when SOAH loses jurisdiction over a case; and (2) clarify that the Proposal for Decision ("PFD") is included in the records that must be sent to the Securities Commissioner once SOAH loses jurisdiction.
New §105.16 (Decisions; When Final) is based on current §105.18. It also would: (1) add language required by the APA for emergency orders; and (2) move current text relating to motions for rehearing to the proposed new §105.17.
New §105.17 (Motion for Rehearing) is consistent with the TSA, §23-2.E, and would: (1) clarify that a motion for rehearing is not a prerequisite for appealing an emergency order; but rather, such orders become immediately final and appealable; (2) clarify that when a motion for rehearing is required, the deadlines for filing and responding should be calculated from the day the Securities Commissioner issues a decision or order on the ALJ's PFD rather than from the day the PFD is issued; and (3) implement language relating to motions for rehearing consistent with the APA.
New §105.18 (Board Action on Motion for Rehearing) is based on current §105.22.
New §105.19 (Record) is consistent with the APA, and would: (1) expand the record to include all briefs, memoranda or data considered not only by the ALJ, but also by any members of the Agency involved in making the decision; and (2) limit the record to include only those decisions, opinions, or reports made by the ALJ at the hearing. In contrast to the APA, but consistent with current §105.19, the new rule does not limit the record to include just the Staff's memoranda and data submitted to or considered by the ALJ, but rather includes all parties' briefs, memoranda and data submitted to or considered by the ALJ.
New §105.20 (Ex Parte Communications) is based on current §105.23 with some modifications. The new rule would: (1) clarify that ex parte communications are prohibited up until the Securities Commissioner's decision or order becomes final as prescribed by Chapter 105; (2) distinguish the Agency's employees whose special skills the Commissioner may utilize during the pendency of a contested case from the Staff who are participating in the contested case hearing; and (3) limit the information with which the Agency's employees' special skills may be utilized to only the evidence rather than the entire record, which is consistent with the APA.
Kara L. Kennedy, General Counsel; Patricia Loutherback, Director, Registration Division; Ronak Patel, Director, Inspections and Compliance Division; and Joe Rotunda, Director, Enforcement Division, have determined that for the first five-year period the rules are in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the rules.
Ms. Kennedy, Ms. Loutherback, Mr. Patel, and Mr. Rotunda also have determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules will be that the rules will better reflect current practice before SOAH and provide additional guidance to parties to a contested case. There will be no effect on micro- or small businesses. There is no anticipated economic cost to persons who are required to comply with the rules as proposed. There is no anticipated impact on local employment.
Comments on the proposal to be considered by the Board should be submitted in writing within 30 days after publication of the proposed sections in the Texas Register. Comments should be sent to Kara L. Kennedy, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 or sent by facsimile to (512) 305-8336.
The new rules are proposed under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects Texas Civil Statutes, Articles 581-14, 581-23, 581-23-2, and 581-24.
§105.1.Scope.
This chapter is applicable to contested cases under the Texas Securities Act.
§105.2.Definitions.
(a) The following words and terms, when used in this chapter, shall have the same meaning as set forth in the Administrative Procedure Act, Government Code, Chapter 2001 (the "APA"), unless the context clearly indicates otherwise:
(1) Contested case;
(2) License;
(3) Licensing;
(4) Party;
(5) Person; and
(6) State agency.
(b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Act or Securities Act or Texas Securities Act--The Securities Act, Texas Revised Civil Statutes, Article 581-1 et seq., as amended.
(2) APA--The Administrative Procedure Act, Texas Government Code, Title 10, Chapter 2001, as amended.
(3) Commissioner or Securities Commissioner--The State Securities Commissioner for the State of Texas.
(4) SOAH--The State Office of Administrative Hearings.
(5) SOAH Rules of Procedure--The procedural rules of the State Office of Administrative Hearings, described in 1 TAC Chapter 155, as amended.
(6) Staff--Personnel of the Securities Board, excluding the members of the Board, the Securities Commissioner, the Deputy Commissioner, and the Commissioner's Representative or any designee thereof responsible for assisting or advising members of the Board, the Securities Commissioner or the Deputy Commissioner.
§105.3.Computation of Time.
The method for computing any period of time prescribed or allowed by this chapter shall be in accordance with the SOAH Rules of Procedure.
§105.4.Opportunity for Hearing.
(a) An applicant taking exception to the failure or refusal of the Securities Commissioner to register the applicant as a dealer, agent, investment adviser, or investment adviser representative under the Act, §14, §15, or §18, or to the failure or refusal of the Commissioner to register securities of the applicant or to issue a permit to the applicant under the Act, §7 or §10, may request a hearing pursuant to the Act, §24, by filing a written request with the Commissioner.
(b) Except when an emergency order has been issued pursuant to the Act, §23-2, each party in a contested case is entitled to an opportunity for hearing after reasonable notice of not less than 10 days and to respond and present evidence and argument on each issue involved in the case.
(c) Such hearings shall be open to the public in accordance with the Open Meetings Act, Texas Government Code, Chapter 551, except as may be required by this chapter.
(d) In a contested case filed at SOAH, SOAH Rules of Procedure, the APA, and the Board rules shall apply.
(e) Procedure in a contested case is governed by the law in effect on the date of the filing of the Notice of Hearing.
§105.5.Contents of Notice of Hearing.
(a) The contents of a notice of hearing shall comport with the requirements of the APA, the SOAH Rules of Procedure, and Board rules.
(1) If the notice of hearing provides for at least 30 days notice to a party prior to the hearing in a contested case, such a notice of hearing shall include the following disclosure language set forth in capital letters and 12-point boldface type: "IF YOU DO NOT FILE A WRITTEN ANSWER OR OTHER WRITTEN RESPONSIVE PLEADING TO THIS NOTICE OF HEARING ON OR BEFORE THE 20TH DAY AFTER THE DATE ON WHICH THIS NOTICE WAS MAILED TO YOU OR PERSONALLY SERVED ON YOU, THE FACTUAL ALLEGATIONS IN THIS NOTICE COULD BE DEEMED ADMITTED, AND THE SECURITIES COMMISSIONER MAY DISPOSE OF THIS CASE WITHOUT A HEARING AND MAY GRANT THE RELIEF SOUGHT IN THIS NOTICE. THE RESPONSE MUST BE FILED IN AUSTIN, TEXAS WITH THE SECURITIES COMMISSIONER AND THE STATE OFFICE OF ADMINISTRATIVE HEARINGS, AND ALSO SERVED ON THE STAFF OF THE STATE SECURITIES BOARD. IF YOU FAIL TO ATTEND THE HEARING, EVEN IF A WRITTEN ANSWER OR OTHER RESPONSIVE PLEADING HAS BEEN FILED AND SERVED, THE FACTUAL ALLEGATIONS IN THIS NOTICE COULD BE DEEMED ADMITTED, AND THE SECURITIES COMMISSIONER MAY DISPOSE OF THIS CASE WITHOUT A HEARING AND MAY GRANT THE RELIEF SOUGHT IN THIS NOTICE."
(2) In all other circumstances, the notice of hearing shall include the following disclosure language set forth in capital letters and 12-point boldface type: "IF YOU FAIL TO ATTEND THE HEARING, THE FACTUAL ALLEGATIONS IN THIS NOTICE COULD BE DEEMED ADMITTED, AND THE SECURITIES COMMISSIONER MAY DISPOSE OF THIS CASE WITHOUT A HEARING AND MAY GRANT THE RELIEF SOUGHT IN THIS NOTICE."
(b) The notice of hearing shall also include: /
(1) the mailing address where the response may be filed with the Securities Commissioner, including the identity and contact information of the Commissioner's Representative;
(2) the mailing address where the response may be filed with SOAH; and
(3) the mailing address where the response may be served on the Staff.
(c) Either the Director of the Enforcement Division or the Director of the Inspections and Compliance Division may sign notices of hearings.
§105.6.Service.
(a) Service of notice of hearing. A notice of hearing shall be served by personal delivery or by registered or certified mail, return receipt requested, to the person's last known address.
(b) Service of orders.
(1) All emergency orders issued pursuant to the Act, §23-2, shall be sent in the manner prescribed therein.
(2) All other orders shall be served in the manner prescribed by the APA.
(c) Service of all other documents. Unless otherwise required by the Act, the APA, SOAH Rules of Procedure, or Board rules, all documents, other than a notice of hearing or an order, may be served on each party or the party's representative by:
(1) hand-delivery;
(2) regular, certified, or registered mail;
(3) electronic mail, upon agreement of the parties; or
(4) facsimile transmission.
§105.7.Written Response to Notice of Hearing.
(a) If the notice of hearing was mailed to or personally served on a party at least 30 days prior to the hearing in a contested case, the respondent shall file with both the Securities Commissioner and SOAH, and also serve the Staff with, a written answer or other responsive pleading to the matters asserted in the notice of hearing no later than the 20th day after the date the notice was mailed to or personally served on the respondent.
(b) In all other circumstances, no answer need be filed, and all allegations will be deemed to be denied by the party if the party attends the hearing. At the time of such hearing the Administrative Law Judge shall, on motion of the Staff or on its own motion, inquire of a party which, if any, of the matters pled in the notice are contested by the party.
(c) A general denial of matters pled by the Staff shall be sufficient to put the same in issue. When the respondent has pled a general denial, and the Staff afterward amends its pleadings, the general denial shall be presumed to extend to all matters subsequently alleged by the Staff.
§105.8.Copies to Securities Commissioner's Representative.
Upon the filing of a notice of hearing, the parties shall file with the Securities Commissioner, by delivering same to the Commissioner's Representative, a copy of all documents, other than business records and transcripts, filed with SOAH contemporaneously with such filing. SOAH shall likewise provide the Commissioner's Representative with copies of all documents issued by the Administrative Law Judge.
§105.9.Informal Disposition.
An informal disposition of a contested case may be made by the Securities Commissioner by stipulation of the parties, agreed settlement, consent order, or default, without further proceedings by SOAH.
§105.10.Default.
(a) The Securities Commissioner may make an informal disposition of the contested case by default by issuing an order in which the relief requested in the notice of hearing is granted and the matters set forth in the notice are deemed admitted as true upon proof to the Commissioner that the notice was mailed to or personally served on a respondent in accordance with §105.6 of this title (relating to Service) and that such respondent has failed to:
(1) file a written response as provided in §105.7 of this title (relating to Written Response to Notice of Hearing); or
(2) appear in person or through an authorized representative on the day and at the time set for the hearing of the case, whether or not a written response has been filed.
(b) Upon the motion of a respondent, the Commissioner may, for good cause shown, set aside a default order and reschedule a hearing with SOAH.
(1) A motion by a respondent to set aside a default order shall be filed with the Commissioner not later than the 20th day after the date on which the respondent or the respondent's attorney of record is notified of the default order in the manner prescribed by the APA.
(2) A reply by the Staff to the motion by a respondent to set aside a default order must be filed with the Commissioner not later than the 30th day after the date on which the respondent or the respondent's attorney of record is notified of the default order in the manner prescribed by the APA.
(3) The Commissioner shall act on a motion for rehearing not later than the 45th day after the date on which the respondent or the respondent's attorney of record is notified of the default order in the manner prescribed by the APA or the motion for rehearing is overruled by operation of law.
§105.11.Burden of Proof.
The Staff will assume the burden of proving a prima facie case by a preponderance of the evidence based upon reasonable inferences drawn from the evidence presented, except that the burden of proof of an exemption shall be upon the party claiming the same.
§105.12.Subpoenas and Depositions.
(a) In general. Except when in conflict with the provisions of the Act, including §28, and Board rules, such as §127.1 of this title (relating to Enforcement), subpoenas and depositions shall be administered in the manner prescribed by the APA and the SOAH Rules of Procedure.
(b) Pre-contested case. When the Staff anticipates the commencement of a contested case and determines that it is necessary to perpetuate testimony to prevent a failure or delay of justice due to the risk of unavailability of the testimony after the action is commenced, such as with the acute illness of a potential witness or receipt of information that the potential witness intends to leave the subpoena jurisdiction of the Commissioner, the Staff may file a request with the Commissioner for a commission to take a deposition as set forth in the APA, §2001.094.
(1) The request shall show:
(A) the Staff anticipates the commencement of a contested case;
(B) the subject matter of the anticipated action and the jurisdiction therein;
(C) the names and addresses, if known, of the persons expected to be interested adversely to the Staff; and
(D) the names and addresses of the persons to be examined, the substance of the testimony which the Staff expects to elicit from each, and the reasons why the testimony is necessary to prevent a failure or delay of justice.
(2) Upon filing a request with the Commissioner, a notice and copy of the request shall be served upon the witness, or witnesses, and upon each person named in the request as an expected adverse party. Each person served with a copy of the request shall have the right to respond to the request within 10 days of service of notice by filing a response with the Staff and the Commissioner.
(3) In any case where justice or necessity so requires, the Commissioner may permit the taking of such depositions upon shorter notice than required by paragraph (2) of this subsection, or may extend such time in order to permit service on any adverse party.
(4) If satisfied that the perpetuation of testimony may prevent a failure or delay of justice, the Commissioner may issue a commission authorizing the taking of such deposition. At such deposition the parties identified by the Staff as adverse persons or other parties identified shall have the right to attend and pose questions to the deponent.
§105.13.Assessment of Hearing Costs.
The State Securities Board may pay the costs charged by a court reporting service in transcribing a hearing in a contested case or the Securities Commissioner may assess the cost to one or more parties.
§105.14.Proposal for Decision.
(a) At the conclusion of a hearing in a contested case, the Administrative Law Judge assigned to hear the case at SOAH will issue orders:
(1) setting appropriate deadlines for the filing of the parties' Proposed Findings of Fact and Conclusions of Law in the case, if any, and the responses thereto, if any; and
(2) setting appropriate deadlines for the filing of exceptions, if any, to the Administrative Law Judge's Proposal for Decision, and replies thereto, if any.
(b) In the event exceptions to the Administrative Law Judge's Proposal for Decision are not filed, SOAH loses jurisdiction over the case upon the expiration of the deadline for the filing of such exceptions.
(c) In the event exceptions to the Administrative Law Judge's Proposal for Decision are filed, SOAH loses jurisdiction over the case upon the issuance of the Administrative Law Judge's ruling on the said exceptions.
§105.15.Orders Issued by Securities Commissioner.
(a) When SOAH loses jurisdiction over the case as prescribed in §105.14 of this title (relating to Proposal for Decision), the complete transcript and record of the case and the Proposal for Decision shall be sent directly to the Securities Commissioner.
(b) The Commissioner may change a finding of fact or conclusion of law made by the Administrative Law Judge, or may vacate or modify an order issued by the Administrative Law Judge only on grounds set forth in the APA. The Commissioner shall state in writing the reason or basis for such a change.
§105.16.Decisions; When Final.
(a) A decision is final:
(1) if a motion for rehearing is not filed on time, on the expiration of the period for filing a motion for rehearing;
(2) if a motion for rehearing is filed on time, on the date:
(A) the order overruling the motion for rehearing is rendered; or
(B) the motion is overruled by operation of law; or
(3) if the Commissioner finds that an imminent peril to the public health, safety, or welfare requires immediate effect of a decision or order, on the date the decision is rendered.
(b) If a decision or order is final under subsection (a)(3) of this section, the Commissioner must recite in the decision or order the finding made under subsection (a)(3) of this section and the fact that the decision or order is final and effective on the date rendered.
(c) A person who is aggrieved by a final decision of the Commissioner in a contested case may seek judicial review of the decision. Judicial review of such a decision is under the substantial evidence rule.
§105.17.Motion for Rehearing.
(a) In general. A timely motion for rehearing is a prerequisite to an appeal in a contested case except that a motion for rehearing of a decision or order that is final under the Act, §23-2.E, is not a prerequisite for appeal. Rather, a decision or order affirming or modifying an emergency order under the Act, §23-2.E, is immediately final and appealable.
(b) A party's motion for rehearing must be filed with the Securities Commissioner not later than the 20th day after the date on which the party or the party's attorney of record is notified of the Commissioner's decision or order on the Administrative Law Judge's Proposal for Decision in the manner prescribed by the APA. A motion for rehearing must set forth the particular finding(s) of fact, conclusion(s) of law, ruling(s), or other action(s) which the complaining party asserts were in error, such as violation of a constitutional or statutory provision(s), lack of authority, unlawful procedure(s), lack of substantive evidence, abuse of discretion or other error(s) of law, or other good cause specifically described in the motion. In the absence of specific grounds in the motion, the Commissioner shall presume that the motion should be overruled.
(c) A reply to a motion for rehearing must be filed not later than the 30th day after the date on which the party or the party's attorney of record is notified of the Commissioner's decision or order on the Administrative Law Judge's Proposal for Decision in the manner prescribed by the APA.
(d) The Commissioner shall act on a motion for rehearing not later than the 45th day after the date on which the party or the party's attorney of record is notified of the Commissioner's decision or order on the Administrative Law Judge's Proposal for Decision in the manner prescribed by the APA or the motion for rehearing is overruled by operation of law.
(e) The Commissioner may by written order extend the time for filing a motion for rehearing, for filing a reply thereto, or for taking action in relation thereto under this section, except that an extension may not extend the period for action beyond the 90th day after the date on which the party or the party's attorney of record is notified of the Commissioner's decision or order on the Administrative Law Judge's Proposal for Decision in the manner prescribed by the APA.
(f) In the event of an extension, a motion for rehearing is overruled by operation of law on the date fixed by the order or, in the absence of a fixed date, 90 days after the date on which the party or the party's attorney of record is notified of the Commissioner's decision or order on the Administrative Law Judge's Proposal for Decision in the manner prescribed by the APA.
§105.18.Board Action on Motion for Rehearing.
(a) The Board may determine to act in place of the Securities Commissioner in ruling on a Motion for Rehearing filed by a party in a contested case. The decision to take such action is within the sound discretion of the Board and is not mandated by any request or motion.
(b) Upon receipt of a timely filed Motion for Rehearing in a contested case, the Commissioner shall provide a copy of the Motion to each member of the Board. Thereafter, the Commissioner shall provide to each member of the Board any response filed by a party to the proceeding in support of, or opposition to, the Motion for Rehearing.
(c) If requested by a member of the Board, a meeting of the Board shall be held for the purpose of determining whether the Board should act in place of the Commissioner in ruling on the Motion for Rehearing and, if so, whether the order of the Commissioner should be vacated or modified or a new hearing should be held. The meeting and all deliberations by the Board on the Motion for Rehearing shall be conducted in accordance with the Texas Open Meetings Act.
(d) The Board may change a finding of fact or conclusion of law, or vacate or modify an order only as permitted by the APA.
§105.19.Record.
(a) The record in a contested case includes the following:
(1) all pleadings, motions, and intermediate rulings;
(2) evidence received or considered;
(3) a statement of matters officially noticed;
(4) questions and offers of proof, objections, and rulings on them;
(5) proposed findings and exceptions;
(6) any decision, opinion, or report by the Administrative Law Judge at the hearing; and
(7) all briefs, memoranda, or data submitted to or considered by the Administrative Law Judge or by members of the agency who are involved in making the decision.
(b) In the event a final decision or order is appealed and the agency is required to transmit to the reviewing court a copy of the record of the administrative proceeding, or any part thereof, the appealing party shall pay all of the costs of the preparation of any original or certified copy of the record of the administrative proceeding that is required to be transmitted to the reviewing court. The charges imposed by this subsection will be the same as those charged by the agency for requests for photographic reproductions and certified copies of public records made pursuant to the provisions of the Public Information Act, Texas Government Code, Chapter 552. These charges are considered to be a court cost and may be assessed, all or in part, by the reviewing court in accordance with the Texas Rules of Civil Procedure.
§105.20.Ex Parte Communications.
(a) Upon the issuance of a Notice of Hearing in a contested case and continuing until the Securities Commissioner's decision or order becomes final as described in §105.16 of this title (relating to Decisions; When Final), the Commissioner (or other person assigned to render a decision in a contested case) and members of the Board may not communicate directly or indirectly with any party or a representative of a party in a contested case in connection with any issue of fact or law in the proceeding except on notice and opportunity for all parties to participate. Prohibited ex parte communications shall not include any written communication if the communicator contemporaneously serves copies of the communication on all parties to the proceeding.
(b) The Commissioner (or other person assigned to render a decision in a contested case) and members of the Board, individually, may communicate ex parte with employees of the Agency who have not participated in a hearing in the case in order to utilize special skills or knowledge of the Agency's employees in evaluating the evidence in the case.
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 1, 2011.
TRD-201105271
Carla James
Interim Securities Commissioner
State Securities Board
Earliest possible date of adoption: January 15, 2012
For further information, please call: (512) 305-8303
CHAPTER 113. REGISTRATION OF SECURITIES
7 TAC §113.11
The State Securities Board proposes an amendment to §113.11, concerning shelf registration of securities, to correct a cross-reference.
Patricia Loutherback, Director, Registration Division, has determined that for the first five-year period the rule is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the rule.
Ms. Loutherback also has determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule will be references in the rule will be correct. There will be no effect on micro- or small businesses. There is no anticipated economic cost to persons who are required to comply with the rule as proposed. There is no anticipated impact on local employment.
Comments on the proposal to be considered by the Board should be submitted in writing within 30 days after publication of the proposed section in the Texas Register. Comments should be sent to Kara L. Kennedy, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 or sent by facsimile to (512) 305-8336.
The amendment is proposed under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects Texas Civil Statutes, Article 581-7.
§113.11.Shelf Registration of Securities.
(a) Applicability.
(1) - (2) (No change.)
(3) Where appropriate, the statements of policy in §113.14(b) of this title (relating to Statements of Policy) [ provisions of Chapters 117, 121, 129, 141, and 143 of this title (relating to Administrative Guidelines for Registration of Real Estate Programs; Administrative Guidelines for Registration of Oil and Gas Programs; Administrative Guidelines for Registration of Asset-Backed Securities; Administrative Guidelines for Registration of Equipment Programs; and Administrative Guidelines for Registration of Real Estate Investment Trusts),] and other provisions of this chapter [also] will be applied.
(b) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 1, 2011.
TRD-201105272
Carla James
Interim Securities Commissioner
State Securities Board
Earliest possible date of adoption: January 15, 2012
For further information, please call: (512) 305-8303
CHAPTER 135. INDUSTRIAL DEVELOPMENT CORPORATIONS AND AUTHORITIES
7 TAC §135.1
The State Securities Board proposes an amendment to §135.1, concerning exemption, to update the citation to the Development Corporation Act.
Patricia Loutherback, Director, Registration Division, has determined that for the first five-year period the rule is in effect there will be no foreseeable fiscal implications for state or local government as a result of enforcing or administering the rule.
Ms. Loutherback also has determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule will be that the statute referenced in the rule can be more easily located by persons reading the exemption. There will be no effect on micro- or small businesses. There is no anticipated economic cost to persons who are required to comply with the rule as proposed. There is no anticipated impact on local employment.
Comments on the proposal to be considered by the Board should be submitted in writing within 30 days after publication of the proposed section in the Texas Register. Comments should be sent to Kara L. Kennedy, General Counsel, State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167 or sent by facsimile to (512) 305-8336.
The amendment is proposed under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.
The proposal affects Texas Civil Statutes, Articles 581-5 and 581-7, and Texas Local Government Code, Title 12, Subtitle C1.
§135.1.Exemption.
The State Securities Board, pursuant to the Texas Securities Act, §5.T, exempts from the securities registration requirements of the Act, securities issued pursuant to the Development Corporation Act, Texas Local Government Code, Title 12, Subtitle C1 [ of 1979, Texas Civil Statutes, Article 5190.6].
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 1, 2011.
TRD-201105273
Carla James
Interim Securities Commissioner
State Securities Board
Earliest possible date of adoption: January 15, 2012
For further information, please call: (512) 305-8303