Texas Administrative Code
Title 7 - BANKING AND SECURITIES
Part 7 - STATE SECURITIES BOARD
Chapter 115 - SECURITIES DEALERS AND AGENTS
Section 115.11 - Finder Registration and Activities
Universal Citation: 7 TX Admin Code ยง 115.11
Current through Reg. 49, No. 38; September 20, 2024
(a) Prohibited activities. A finder shall not:
(1) participate in negotiating any of
the terms of an investment;
(2)
give advice to an accredited investor or an issuer regarding the advantages or
disadvantages of entering into an investment;
(3) conduct due diligence on behalf of a
potential issuer or potential investor, provide valuation, or provide other
analysis to an accredited investor or an issuer regarding an
investment;
(4) advertise to seek
accredited investors or issuers;
(5) have custody of an accredited investor's
funds or securities;
(6) serve as
an escrow agent for the parties; or
(7) disclose information to an accredited
investor or to an issuer other than the information described in subsections
(b) and (c) of this section.
(b) Required disclosures.
(1) A finder must disclose the following to
each accredited investor:
(A) that
compensation will be paid to the finder;
(B) that the finder can neither recommend nor
advise the accredited investor with respect to the offering; and
(C) any potential conflict of interest in
connection with the finder's activities.
(2) The disclosures required by paragraph (1)
of this subsection must be provided in writing.
(c) Permitted disclosures.
(1) A finder may provide to an accredited
investor some or all of the following information:
(A) the name, address, and telephone number
of the issuer of the securities;
(B) the name, a brief description, and price
(if known) of any security to be issued;
(C) a brief description of the business of
the issuer in 25 words or less;
(D)
the type, number, and aggregate amount of securities being offered;
and/or
(E) the name, address, and
telephone number of the person to contact for additional information.
(2) A finder may provide to an
issuer contact information regarding an accredited investor.
(d) Recordkeeping.
(1) A finder is not required to maintain the
records listed in §
RSA 115.5 of this
title (relating to Minimum Records); however, compliance with the recordkeeping
requirements of §
RSA 115.5 of this
title will satisfy the requirements of this subsection.
(2) A finder shall maintain and preserve a
copy of the Form BD and the Form U-4 used to register the finder, and any
amendments thereto, for a period of five (5) years from the date of the
termination of the finder's registration.
(3) A finder shall maintain and preserve for
a period of five (5) years the following records related to transactions that
are completed and to transactions where the finder receives compensation:
(A) records of compensation received for
acting as a finder, including the name of the payor, the date of payment, name
of the issuer, and name of the accredited investor;
(B) copies of information provided by the
finder to prospective accredited investors;
(C) any agreements and/or contracts between
the finder and the accredited investor;
(D) any agreements and/or contracts between
the finder and the issuer;
(E) any
lists of contacts/prospective accredited investors and/or issuers;
and
(F) any correspondence with
accredited investors and/or issuers.
(4) The records required to be maintained and
preserved pursuant to this subsection must be maintained in a manner that will
permit the immediate location of any particular document.
(5) The records required to be maintained and
preserved pursuant to this subsection may be archived if they are more than two
years old.
(6) A finder shall not
commingle records to be maintained and preserved pursuant to this subsection
with other records.
(7) A finder
shall, upon written request of the Securities Commissioner, furnish to the
Securities Commissioner any records required to be maintained and preserved
under this subsection.
(e) Supervisory requirements. Because a finder is an individual who will not have agents, a finder is not required to maintain a supervisory system as provided in § RSA 115.10 of this title (relating to Supervisory Requirements).
(f) Filings.
(1) Application. In lieu of the application
requirements listed in §
RSA
115.2 of this title (relating to Application
Requirements), a complete application for a finder consists of the following
and must be filed in paper form with the Securities Commissioner:
(A) Form BD, including all applicable
Disclosure Reporting Pages. For any question that does not pertain to the
finder's business, the finder must indicate that the question is not
applicable. To identify the finder's activities, the finder must mark Form BD,
Item 12.Z, that refers to "Other," and describe such activities on Form BD,
Schedule D, Section II. A finder is not required to complete certain schedules
of the Form BD unless requested to do so by the Securities Commissioner. Such
schedules include Schedule A, B, C, and E, and Schedule D, Sections IV, V and
VI.
(B) Form U-4, with the
following items completed:
(i) Item 1
(General Information) limited to completion of the:
(I) first, middle, last name; and
(II) individual social security
number.
(ii) Item 3
(Registration With Unaffiliated Firms);
(iii) Item 6 (Registration Requests With
Affiliated Firms);
(iv) Item 9
(Identifying Information/Name Change);
(v) Item 10 (Other Names);
(vi) Item 11 (Residential History);
(vii) Item 12 (Employment History);
(viii) Item 13 (Other Business);
(ix) Item 14 (Disclosure Questions and
related Disclosure Reporting Pages if applicable);
(x) Item 15 (Signatures);
(xi) Item 15A (Individual/Applicant's
Acknowledgement and Consent); and
(xii) Item 15D (Amendment
Individual/Applicant's Acknowledgement and Consent).
(C) any other information deemed necessary by
the Securities Commissioner to determine a finder's financial responsibility or
a finder's business repute or qualifications; and
(D) the appropriate registration
fee(s).
(2)
Post-reporting requirements. A finder is subject to the dealer and agent
requirements contained in §
RSA
115.9 of this title (relating to
Post-Registration Reporting Requirements).
Disclaimer: These regulations may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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