SMU Law Review
The definition of securities is constantly evolving, and court cases help define this concept. Other cases help illuminate standing to sue. Two courts considered the application of the Texas Securities Acts in multi-state situations.
The State Securities Board amended its hearings rules to give the Director of Inspections and Compliance Division authorization to sign a notice of hearing in administrative cases. The Board initiated numerous enforcement actions against issuers who did not register their securities. It also issued a number of no-action letters dealing with issuers. In addition, the Board amended its rules for registration of dealers several times during the Survey period and pursued numerous enforcement actions against selling agents and dealers. In regard to investment advisors, the Board twice amended its rules for registration and had several enforcement actions.
Investors can now recover their moneys through a fraud action that removes the most difficult elements, namely scienter and privity. The Securities Litigation Uniform Standards Acts of 1998 provides for removal to federal court and dismissal of state law securities class actions. Since securities transactions are “transactions involving commerce,” the Federal Arbitration Act rather than the Texas Arbitration Act, applies. There were several arbitrations against brokers conducted by the NASD involving the Texas Securities Act (“TSA”).
The fraud provisions of the TSA are modeled on federal statutes. As a result, Texas courts interpreting the TSA frequently look to the federal decisions. During the Survey period, the Fifth Circuit decided four cases concerning security fraud, most under Rule 10b-5.
George Lee Flint, Jr., Texas Annual Survey: Securities Regulation, 58 S.M.U. L. Rev. 1135 (2005).