2023 Texas Statutes › Government Code › Title 12 - Securities Act › Chapter 4005 - Exemptions › Subchapter A. Exempt Transactions › Section 4005.019. Secondary Market Sales

Sec. 4005.019.  SECONDARY MARKET SALES.  (a)  In this section, "recognized securities manual" means a nationally distributed manual of securities that is approved by the board for use under this section.
(b)  The exemption provided by Section 4005.001 applies to the sale of outstanding securities by a registered dealer if:
(1)  the securities do not form part of an unsold allotment to or subscription by the dealer as a participant in the securities' distribution by the issuer of the securities;
(2)  the securities are of the same class and the same issuer and are outstanding in the hands of the public;
(3)  the securities are offered for sale, in good faith, at prices reasonably related to the current market price of the securities at the time of the sale;
(4)  none of the sale proceeds are paid directly or indirectly to the issuer of the securities;
(5)  the sale is not directly or indirectly for the purposes of providing or furthering a scheme to violate or evade this title;
(6)  the right to sell or resell the securities has not been enjoined by a court in this state by a proceeding instituted by an officer or agency of this state charged with enforcement of this title;
(7)  the commissioner has not revoked or suspended the right to sell the securities under this title or, if the commissioner has revoked or suspended the right to sell the securities, the revocation or suspension is not in effect;
(8)  at the time of the sale, the issuer of the securities is:
(A)  a going concern actually engaged in business; and
(B)  not in an organization stage or in receivership or bankruptcy; and
(9)  either:
(A)  the securities or other securities of the issuer of the same class have been:
(i)  qualified for sale by a permit issued under Subchapter A, Chapter 4003;
(ii)  registered by notification under Subchapter B, Chapter 4003; or
(iii)  registered by coordination under Subchapter C, Chapter 4003; or
(B)  a recognized securities manual or a statement, in form and extent acceptable to the commissioner and filed with the commissioner by the issuer or a registered dealer, is provided at the time of the sale containing at least the following information about the issuer:
(i)  a statement of the issuer's principal business;
(ii)  a balance sheet as of a date not earlier than 18 months before the date of the sale; and
(iii)  profit and loss statements and a record of any dividends paid for:
(a)  a period of at least three years before the date of the balance sheet; or
(b)  the period of the issuer's existence, if the issuer has been in existence less than three years.
(c)  The commissioner may issue a stop order or by order may prohibit, revoke, or suspend the exemption under this section with respect to any security if the commissioner has reasonable cause to believe that the plan of business of the issuer of the security, the security, or the sale of the security would tend to work a fraud or deceit on any purchaser of the security.  The order is subject to review in the manner provided by Section 4007.107.
(d)  Notice of any court injunction enjoining the sale or resale of a security described by this section, or of an order revoking or suspending the exemption under Subsection (c) with respect to a security, shall be mailed by certified or registered mail with return receipt requested or otherwise delivered to any dealer believed to be selling or offering for sale the type of securities referred to in the notice. Subsections (b)(6) and (7) do not apply to a dealer until the dealer has received from the commissioner actual notice of the revocation or suspension.
(e)  The board, for cause shown, may revoke or suspend the recognition under this section of any manual previously approved under this section only after notice and an opportunity for a hearing is provided as required by law.
(f)  A judgment sustaining the board in the board action complained about does not bar an application by the plaintiff for approval of the manual as provided by this section after the first anniversary of the date of the action.
(g)  A judgment in favor of the plaintiff does not prevent the board from revoking the recognition of a manual previously approved under this section for any proper cause that may accrue or be discovered.
Added by Acts 2019, 86th Leg., R.S., Ch. 491 (H.B. 4171), Sec. 1.01, eff. January 1, 2022.