The Texas State Securities Board (TSSB) strongly encourages persons to do their own due diligence before purchasing a security or other investment product. Legitimate securities professionals will be happy to answer your questions.
If the investment is being offered by someone other than your brokerage firm or advisor, you should contact them or another trusted advisor for a second opinion.
Questions to ask the Persons Offering you the investment:
Questions about the persons offering the investment:
Are you on BrokerCheck?
Are you registered to sell securities with the TSSB?
Questions about the company:
Is the company (or entity) registered with the Texas Secretary of State? Are they in good standing? If not, why? If so, please provide the company’s Certificate of Formation and proof of good standing in Texas.
Questions about the company’s management:
Who are the individuals managing the entity that I am investing in?
What are their credentials? Do they have a LinkedIn profile or other social media?
How can I verify that they are real people and do not have any criminal history, bankruptcies, etc.?
How can I contact them?
Questions about the investment:
Does this investment need to be registered with the TSSB?
If the investment does not have to be registered with the TSSB, please explain the securities exemption found in the Texas Securities Act or TSSB rules that the investment qualifies for.
If the investment is not a security, how would it be classified and who regulates this type of investment? If no one regulates this type of investment, what protections do I have after I have given you my money?
Does this investment need to be registered with any other Texas state regulator? If not, why not?
What written information will I be provided about this investment before I decide to invest?
How is my investment being used by the company?
How are profits made?
Will investors get regular financial reports from the project managers?
When and how can I pull out my investment? Is my investment frozen for any period of time, and if so, why?
How risky is this investment? What are the risks? How could I lose money in this investment?
Questions to Ask Yourself:
Does my broker or advisor recommend this investment?
How much risk am I willing to take on?
What tactics are being used to solicit my investment? Am I being pressured in any way?
Can I explain the investment to other people?
If I sense there is fraud related to my investment, who can I sue?
Do I know where the company is physically located? Have I visited it?
Do I know the names of the people involved in the company? Have I met any of them? Do they have an online presence, such as a social media profile?
Do I know anyone who personally knows anyone involved in the company? What is their opinion of the individual?
Securities Searches:
You can search for certain securities and notice filings made directly with the TSSB on this page.
- You can also search for certain notice filings through EFDNASAA, such a Form D and Form NF filings (see here for a list of filings that can be made on EFD).
Check State and Federal Websites for Information:
You can use the search bar in the top right corner of the TSSB website to search for press releases and orders related to particular companies or individuals.
You may contact the TSSB to inquire about a firm or individual's current registration status, or the registration status of a securities offering, or whether an exemption has been filed for a particular securities offering.
In addition to contacting the TSSB to find out if the securities offering and its salespersons are complying with the securities laws there are two ways to generally check if the company itself is legally operating in Texas:
For no cost or fee, you can check the status of a company through the Comptroller’s franchise tax account status search.
For a $1.00 fee per search you can check the Texas Secretary of State (SOS) business entity filings database called SOSDirect for current information about the company to determine if it exists and is in good standing in Texas. Filings can be found for any company registered to do business in Texas or formerly registered.
You can use BrokerCheck to see if a brokerage firm or individual working for a brokerage firm is currently licensed in a particular state. BrokerCheck is a database hosted by Financial Industry Regulatory Authority (FINRA), which is overseen by the United States Securities and Exchange Commission (SEC). If the firm or individual is registered as or works for an investment adviser firm, BrokerCheck will redirect you to the SEC’s Investment Adviser Public Disclosure (IAPD) website to search for investment adviser firms and representatives of investment adviser firms registered with the SEC.
Aside from the Texas State Securities Board, each state has its own securities regulator that licenses firms and individuals and where securities offerings must be registered. If you know a company or individual is operating in another state, check with that state’s securities regulator to see if any registrations exist related to the potential investment or the company or individuals offering the investment. You may find contact information for all North American securities regulators through the North American Securities Administrators Association website.
For general guidance on investments and securities professionals, please review the below Texas State Securities Board’s publications:
Additionally, check out the NASAA's list of top investor threats.