Journal Title

SMU Law Review

Volume

57

Issue

3

First Page

1207

Document Type

Article

Publication Information

2004

Abstract

The ease of becoming judgment proof in Texas, with liberal exemptions from execution of judgment, makes secondary liability very important. Texas statutes provide for four such liability theories: aiding and abetting, control person liability, third party actual awareness liability, and third party beneficiary liability. In addition to these four liability theories, federal law adds primary liability for some secondary parties.

The 78th Texas Legislature made two changes geared toward reducing the cost to the State of Texas in operating the State Securities Board. The Board also made several rule changes to increase revenues and to make other non-substantive changes. Moreover, it initiated numerous enforcement actions against issuers who did not register their securities. The Board also pursued numerous enforcement actions against investment advisors and selling agents and dealers.

The legislature made three changes with respect to remedies for fraud. Since the legislature modeled the anti-fraud provision after the federal provision, Texas courts use federal cases in interpreting the Texas provision. The Fifth Circuit delivered four opinions involving federal securities laws. In addition, there were several arbitrations against brokers conducted by the NASD involving the Texas Securities Acts. While arbiters seldom explain their decisions and need not follow rules of law, some trends are ascertainable.

With respect to registration of public companies, Congress recently passed the Sarbanes-Oxley Act to correct perceived deficiencies in the reporting system and to impose certain obligations on public companies, their officers, and their agents to restore investor confidence.

Recommended Citation

George Lee Flint, Jr., Texas Annual Survey: Securities Regulation, 57 S.M.U. L. Rev. 1207 (2004).

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