A meeting of the State Securities Board was held on November 14, 2017, in Room 320, Thomas Jefferson Rusk State Office Building, at 10:00 a.m. Those present were: Beth Ann Blackwood, Chair; E. Wally Kinney, Member; Member; G. Alan Waldrop, Member; Miguel Romano, Jr., Member; Travis J. Iles, Securities Commissioner; Clinton Edgar, Deputy Commissioner; Tommy Green, Director, Inspections and Compliance Division; Derek Lauterjung, Director, Staff Services Division; Joseph J. Rotunda, Director, Enforcement Division; Marlene K. Sparkman, General Counsel; Robert Elder, Communications and Investor Education; Tina Lawrence, Assistant Director, Enforcement Division; Emily Diaz, Assistant Director, Registration Division; Cheryn Netz, Assistant General Counsel; and Sonia Fergerson, Executive Assistant. Also attending were Rene Gonzales, Kim Lopez-Gonzales, Christopher Smith, and Bryan Evans.
Chair Blackwood called the meeting to order at 10:00 a.m.
Minutes of the August 1, 2017, meeting were approved.
The Board voted to excuse Member Appleby’s absence from the meeting.
The Board voted to adopt the following proposed rule:
1. Amending §139.25(f), concerning intrastate crowdfunding exemption, to raise the maximum offering amount when a segregated account may be used in lieu of an escrow account.
The Board voted to publish for public comment the following new rule proposals:
1. Creating new §139.26, concerning intrastate crowdfunding exemption for SEC Rule 147A offerings.
2. Adopting new Form 133.21, concerning crowdfunding exemption notice for SEC Rule 147A offerings using §139.26.
3. Amending §115.19, concerning Texas crowdfunding portal registration and activities, and §115.20, concerning Texas crowdfunding portal registration and activities of small business development entities, to add SEC Rule 147A offerings as ones that may be offered and sold through the registered portal’s Internet website.
4. Adopting new Form 133.15, Texas crowdfunding portal registration, and new Form 133.20, Texas crowdfunding portal registration by an authorized small business
development entity, to correspond to the changes being made to §115.19 and §115.20 adding SEC Rule 147A offerings.
5. Repeal of Form 133.15, Texas crowdfunding portal registration, and Form 133.20, Texas crowdfunding portal registration by an authorized small business development entity.
6. Amending §113.14, concerning statements of policy, to add the NASAA Statement of Policy (SOP) for Use of Electronic Offering Documents and Electronic Signatures; update the rule to reflect revisions to the NASAA SOPs for Preferred Stock, Promoters’ Equity Investment, Specificity in Use of Proceeds, and Unequal Voting Rights; and update the Agency’s website homepage.
7. Creating new §115.21, System Addressing Suspected Financial Exploitation of Vulnerable Customers Pursuant to the Texas Securities Act, Section 45.
8. Creating new §116.21, System Addressing Suspected Financial Exploitation of Vulnerable Customers Pursuant to the Texas Securities Act, Section 45.
The Board acknowledged and accepted a grant of $50,375 from the Investor Protection Trust to update the Agency’s website content and the Texas Investor Guide: Strategies for Investing Wisely and Avoiding Financial Fraud publication.
The Audit Committee reported on the Agency’s Internal Audit Report for Fiscal Year 2017 and the Board reviewed and approved the report. Upon the recommendation of the Audit Committee, the Board voted to retain Garza/Gonzales & Associates as the internal auditor for FY 2018.
The Commissioner provided an update on the conclusion of the 85th Legislative Session, including the Agency’s appropriations for the next biennium.
The Commissioner gave a report on the Agency’s budget and performance measures.
The Board confirmed the designation of Clinton Edgar as Deputy Securities Commissioner.
A draft resolution honoring John Morgan, former Securities Commissioner, was provided to the Board. The Board voted to adopt the resolution and directed that the resolution be included in the Minutes. The resolution reads as follows:
WHEREAS, The State Securities Board in Regular Session on November 14, 2017, in Austin, Texas, does hereby take note the recent retirement from the Agency of the Honorable John Morgan;
WHEREAS, Mr. Morgan served the public of Texas with honor and distinction over 33 years as an employee of the State Securities Board, including 6 years as Securities Commissioner, 14 years as Deputy Commissioner, 9 years as Director of the Enforcement Division, 2 years as Assistant Director of Enforcement, and 2 years as an Enforcement Attorney; and
WHEREAS, Those who worked with Mr. Morgan know him to be an unusually dedicated public servant whose loyalty and commitment to the Agency has left a lasting impression upon the Board and the Staff at the Agency through his insistence upon, and personal example of, patient persistence, professionalism, and unimpeachable integrity; and
WHEREAS, Mr. Morgan’s leadership has enabled others to do their best work through his mentorship, coaching, and consensus building, and through his embrace and implementation of technological efficiencies and advancements that have enabled the Agency to do more with less; and
WHEREAS, Although Mr. Morgan has outstandingly and reliably performed his duties throughout his career at the Agency, his consistent humility as to his achievements and accomplishments have earned him the respect and admiration of his colleagues while enhancing the reputation of the Agency; and
NOW, THEREFORE, BE IT RESOLVED that the Members of the State Securities Board, his successor in office, and all personnel of the State Securities Board hereby acknowledge the lasting debt of gratitude that the citizens of this State owe to John Morgan for his outstanding and distinguished service as Securities Commissioner of the State of Texas;
AND BE IT FURTHER RESOLVED that this Resolution be included in the official minutes of the November 14, 2017, meeting of the State Securities Board.
The Commissioner gave a general update on Agency operations.
The meeting was then adjourned.