Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 7 - STATE SECURITIES BOARD › Chapter 116 - INVESTMENT ADVISERS AND INVESTMENT ADVISER REPRESENTATIVES › Section 116.1 - General Provisions

Current through Reg. 49, No. 28; July 12, 2024
(a)
				Definitions. Words and terms used in this chapter are also defined in
				§107.2 of this title (relating to Definitions). The following words and
				terms, when used in this chapter, shall have the following meanings unless the
				context clearly indicates otherwise.
(1)
				Applicant--A person who submits an application for registration as an
				investment adviser or an investment adviser representative.
(2) Branch office--Any location where one or
				more representatives of an investment adviser regularly conduct investment
				advisory services or that is held out as such.
(A) This definition excludes:
(i) any location that is established solely
				for customer service and/or back office type functions where no advisory
				services are conducted and that is not held out to the public as a branch
				office;
(ii) any location that is
				the investment adviser representative's primary residence, provided that:
(I) only one investment adviser
				representative, or multiple representatives who reside at that location and are
				members of the same immediate family, conduct business at the
				location;
(II) the location is not
				held out to the public as an office and the investment adviser representative
				does not meet with customers at the location;
(III) neither customer funds nor securities
				are handled at that location;
(IV)
				the investment adviser representative is assigned to a designated branch
				office, and such designated branch office is reflected on all business cards,
				stationery, advertisements, and other communications to the public by such
				representative;
(V) the investment
				adviser representative's correspondence and communications with the public are
				subject to the investment adviser's supervision;
(VI) electronic communications (e.g., e-mail)
				are made through the investment adviser's electronic system;
(VII) all orders are entered through the
				designated branch office or an electronic system established by the investment
				adviser that is reviewable at the branch office;
(VIII) written supervisory procedures
				pertaining to supervision of investment advisory services conducted at the
				residence are maintained by the investment adviser; and
(IX) a list of the residence locations are
				maintained by the investment adviser;
(iii) any location, other than a primary
				residence, that is used for investment advisory services for less than 30
				business days in any one calendar year, provided the investment adviser
				complies with the provisions of clause (ii)(II) - (VIII) of this
				subparagraph;
(iv) any office of
				convenience, where investment adviser representatives occasionally and
				exclusively by appointment meet with customers, which is not held out to the
				public as an office;
(v) any
				location that is used primarily to engage in non-securities activities and from
				which the investment adviser representative(s) effects no more than 25
				investment advisory services in any one calendar year; provided that any
				advertisement or sales literature identifying such location also sets forth the
				address and telephone number of the location from which the representative(s)
				conducting business at the non-branch locations are directly supervised;
				and
(vi) a temporary location
				established in response to the implementation of a business continuity
				plan.
(B)
				Notwithstanding the exclusions in subparagraph (A) of this paragraph, any
				location that is responsible for supervising the activities of persons
				associated with the investment adviser at one or more non-branch locations of
				the investment adviser is considered to be a branch office.
(C) The term "business day" shall not include
				any partial business day provided that the investment adviser representative
				spends at least four hours on such business day at his or her designated branch
				office during the hours that such office is normally open for
				business.
(3)
				Supervisor--The person named by the investment adviser to supervise the
				activities of a branch office and registered as an investment adviser
				representative.
(4) Control--The
				possession, direct or indirect, of the power to direct or cause the direction
				of the management and policies of a person or company, whether through the
				ownership of voting securities, by contract, or otherwise.
(5) In this state--
(A) A person renders services as an
				investment adviser "in this state" as set out in the Texas Securities Act,
				§12.B, if either the person or the person's agent is present in this state
				or the client/customer or the client/customer's agent is present in this state
				at the time of the particular activity. A person can be an investment adviser
				in more than one state at the same time.
(B) Likewise, a person renders services as an
				investment adviser representative "in this state" as set out in the Texas
				Securities Act, §12.B, whether by direct act or through subagents except
				as otherwise provided, if either the person or the person's agent is present in
				this state or the client/customer or the client/customer's agent is present in
				this state at the time of the particular activity. A person can be an
				investment adviser representative in more than one state at the same
				time.
(C) Rendering services as an
				investment adviser or as an investment adviser representative can be made by
				personal contact, mail, telegram, telephone, wireless, electronic
				communication, or any other form of oral or written communication.
(6) Investment adviser--A person
				who, for compensation, engages in the business of advising others, either
				directly or through publications or writings, with respect to the value of
				securities or to the advisability of investing in, purchasing, or selling
				securities or a person who, for compensation and as part of a regular business,
				issues or adopts analyses or a report concerning securities. The term does not
				include:
(A) a bank or a bank holding
				company, as defined by the Bank Holding Company Act of 1956 (12 U.S.C.
				§1841 et seq.), as amended, that is not an investment company;
(B) a lawyer, accountant, engineer, teacher,
				or geologist whose performance of the services is solely incidental to the
				practice of the person's profession;
(C) a dealer or agent who receives no special
				compensation for those services and whose performance of those services is
				solely incidental to transacting business as a dealer or agent;
(D) the publisher of a bona fide newspaper,
				news magazine, or business or financial publication of general and regular
				circulation; or
(E) a person whose
				advice, analyses, or report does not concern a security other than a security
				that is:
(i) a direct obligation of or an
				obligation the principal or interest of which is guaranteed by the United
				States government, or
(ii) issued
				or guaranteed by a corporation in which the United States has a direct or
				indirect interest and designated by the United States Secretary of the Treasury
				under Securities Exchange Act of 1934, §3(a)(12), (15 U.S.C.
				§78c(a)(12)), as amended, as an exempt security for purposes of that
				Act.
(7)
				Investment adviser representative or representative of an investment
				adviser--Each person or company who, for compensation, is employed, appointed,
				or authorized by an investment adviser to solicit clients for the investment
				adviser or who, on behalf of an investment adviser, provides investment advice,
				directly or through subagents, to the investment adviser's clients. The term
				does not include a partner of a partnership or an officer of a corporation or
				other entity that is registered as an investment adviser under the Texas
				Securities Act solely because of the person's status as an officer or partner
				of that entity.
(8) Rendering
				services as an investment adviser--Any act by which investment advisory
				services are provided for compensation.
(9) Solicitor--Any investment adviser or
				investment adviser representative who limits their activities to referring
				potential clients to an investment adviser for compensation.
(10) Federal covered investment adviser--An
				investment adviser who is registered under the Investment Advisers Act of 1940
				(15 U.S.C. §80b-1 et seq.), as amended. A federal covered investment
				adviser is not required to be registered pursuant to the Texas Securities
				Act.
(11) Registered investment
				adviser--An investment adviser who has been issued a registration certificate
				by the Securities Commissioner under the Texas Securities Act, §15. (A
				federal covered investment adviser is not prohibited from being registered with
				the Securities Commissioner. If a federal covered investment adviser elects to
				register with the Securities Commissioner, it is subject to all of the
				registration requirements of the Act.)
(12) Officer--A president, vice president,
				secretary, treasurer, or principal financial officer, comptroller, or principal
				accounting officer, or any other person occupying a similar status or
				performing similar functions with respect to any organization or entity,
				whether incorporated or unincorporated.