Texas Register, Volume 10, Number 44, Pages 1807-1878, June 7, 1985 Page: 1,815
1807-1878 p. ; 28 cm.View a full description of this periodical.
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portunities, consumer goods, or other
goods and services;
(B) has been convicted within five
years prior to commencement of the offer-
ing of any felony or misdemeanor of which
fraud is an essential element, or which is a
violation of the securities laws or regula-
tions of this state, or of any other state of
the United States, or of the United States,
or any foreign jurisdiction; or which is a
crime involving moral turpitude; or which
is a criminal violation of statutes designed
to protect consumers against unlawful prac-
tices involving insurance, securities, com-
modities or commodity futures, real estate,
franchises, business opportunities, con-
sumer goods, or other goods and services;
(C) is subject to any order, judg-
ment, or decree entered within five years
prior to commencement of the offering by
any court of competent jurisdiction which
temporarily or permanently restrains or en-
joins such person from engaging in or con-
tinuing any conduct or practice in connec-
tion with the purchase or sale of any securi-
ty or involving any false filing with any
state; or which restrains or enjoins such per-
son from activities subject to federal or state
statutes designed to protecet consumers
against unlawful or deceptive practices in-
volving insurance, commodities or com-
modity futures, real estate, franchises,
business opportunities, consumer goods, or
other goods and services;
(D) the prohibitions of subpara-
graphs (A)-(C) of this paragraph shall not
apply if the party subject to the disqualify-
ing order is duly licensed to conduct secur-
ities-related business in the state in which
the administrative order or judgment was
entered against such party or, if the order
or judgment was entered by federal author-
ities, the prohibitions of subparagraphs (A)-
(C) of this paragraph shall not apply if the
party subject to the disqualifying order is
duly licensed to conduct securities-related
business by the Securities and Exchange
Commission. Any disqualification caused
by this paragraph is automatically waived
if the state or federal authorities which
created the basis for disqualification deter-
mine upon a showing of good cause that it
is not necessary under the circumstances
that the exemption be denied;
(E) for purposes of this para-
graph only, issuer includes any directors, ex-
ecutive officers, general partners, or bene-
ficial owners of 100o or more of any class
of its equity securities (beneficial ownership
meaning the power to vote or direct the vote
and/or the power to dispose or direct the
disposition of such securities), and regis-
tered dealer shall include any partners, di-
rectors, executive officers, or beneficial
owner of 10% or more of any class of the
equity securities of the registered dealer
(beneficial ownership meaning the power to
vote or direct the vote and/or the power to
dispose or direct the disposition of such
securities);(F) Upon application, and for
good cause shown, the commissioner may
waive a disqualification contained in this
paragraph.
(3) The offering complies with
subsections (a)-(d) and (j) of this section.
However, persons who are accredited inves-
tors as defined in paragraph (8) of this sub-
section are deemed to be sophisticated as
defined in subsection (a)(1) of this sec-
tion.
(4) This subsection may not be
combined with the Securities Act, 5.I(a) or
5.1(c), or subsection (k) of this section to
make sales to more than 35 unaccredited se-
curity holders during a 12-month period.
Except for accredited investors who became
security holders pursuant to this subsection,
security holders who purchase in sales made
in compliance with this subsection are in-
cluded in the count of security holders un-
der 5.I(a) or purchasers under 5.I(c), but
this subsection may be used to exceed the
numbers of security holders or purchasers
allowed by such sections over an extended
period of time.
(5) Issuers who offer and sell secur-
ities under this subsection only through a
securities dealer registered in Texas may do
so without filing any notice with the State
Securities Board.
(6) For sales under paragraph
(1)(B) of this subsection, in whole or in part
to accredited investors listed in paragraph
(8)(E)-(H) of this subsection of such defini-
tion of accredited investor issuers who are
not registered securities dealers and who do
not sell securities by or through registered
securities dealers shall file a sworn notice
on Form 133.29 or a reproduction thereof
not less than 10 business days before any
sale claimed to be exempt under this subsec-
tion may be consummated. However, no
notice is required for sales made under
paragraph (1)(A) of this subsection or under
paragrpah (1)(B) of this subsection where
the sales are made exclusively to accredited
investors as defined in paragraph (8)(A)-(D)
of this subsection or to entities in which all
of the equity owners are accredited investors
listed in paragraph (8)(A)-(D) of this subsec-
tion of such definition. The issuer may be
required by the securities commissioner to
give details concerning any information re-
quested in Form 133.29 and may be re-
quired to furnish any additional informa-
tion deemed necessary by the securities com-
missioner to determine the issuer's business
repute and qualifications.
(7) Accredited investor security
holders who purchase in sales made under
this exemption are not counted as security
holders under 5.I(a) or purchasers under
5.I(c) in determining whether any other
sales to other security holders or purchasers
are exempt under 5.I. That is to say, this
exemption for sales to accredited investors
is cumulative with and in addition to the ex-
emptions contained in 5.I, and sales made
under paragraph (I)(B) of this subsectionare not considered in determining whether
sales made in reliance on the exemptions
contained in 5.1 would be within the nu-
merical limits on the number of security
holders or purchasers contained in 5.I.
(8) For purposes of this subsection,
accredited investor shall mean any person
who comes within any of the following cat-
egories, or who the issuer reasonably be-
lieves comes within any of the following
categories, at the time of the sale of the
securities to that person:
(A) any bank as defined in the
Securities Act of 1933, 3(a)(2), whether
acting in its individual or fiduciary capaci-
ty; insurance company as defined in the Se-
curities Act of 1933, 2(13); investment
company registered under the Investment
Company Act of 1940 or a business
development company as defined in that
Act, 2(a)(48); small business investment
company licensed by the U.S. Small
Business Administration under the Small
Business Investment Act of 1958, 301(c)
or (d); employee benefit plan within the
meaning of the Employee Retirement In-
come Security Act of 1974, Title 1, if the
investment decision is made by a plan
fiduciary, as defined in such Act, 3(21),
which is either a bank, insurance, company,
or investment adviser registered under the
Investment Advisers Act of 1940, or if the
employee benefit plan has total assets in ex-
cess of $5 million;
(B) any private business devel-
opment company as defined in the Invest-
ment Advisers Act of 1940, 202(a)(22);
(C) any organization described
in the Internal Revenue Code, 501(c)(3),
with total assets in excess of $5 million;
(D) any director, executive offi-
cer, or general partner of the issuer of the
securities being offered or sold, or any di-
rector, executive officer, or general partner
of a general partner of that issuer;
(E) any person who purchases at
least $150,000 of the securities being of-
fered, where the purchaser's total purchase
price does not exceed 20070 of the purchas-
er's net worth at the time of sale, or joint
net worth with that person's spouse, for one
or any combination of the following:
(i) cash;
(ii) securities for which
market quotations are readily available;
(iii) any unconditional obliga-
tion to pay cash or securities for which mar-
ket quotations are readily available which
obligation is to be discharged within five
years of the sale of securites to the pur-
chaser; or
(iv) the cancellation of any in-
debtedness owed by the issuer to the pur-
chaser;
(F) any natural person whose in-
dividual net worth, or joint net worth with
that person's spouse, at the time of his pur-
chase exceeds $1 million;
(G) any natural person who had
an individual income or joint income with4 Proposed Rules June 7, 1985 10 TexReg 1815
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Texas. Secretary of State. Texas Register, Volume 10, Number 44, Pages 1807-1878, June 7, 1985, periodical, June 7, 1985; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth243695/m1/11/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.