Opinion ID: 159203
Heading Depth: 3
Heading Rank: 5

Heading: Texas Securities Act Claims

Text: 138 Similarly, the district court refused to submit to the jury the Texas Plaintiffs' Texas Securities Act claims. The district court determined the Act required proof that the stock at issue no longer exists and no such evidence had been presented to support that requirement. On appeal, the Texas Plaintiffs argue the district court improperly construed the statute. They acknowledge, however, that their appeal on this issue depends upon this court's concluding the materiality element of fraud under the Texas Securities Act is a subjective one. 139 Unlike actions under Texas common law fraud or section 27.01, 22 however, a fraud claim pursuant to the Texas Securities Act does require proof of objective materiality. Most recently, the Texas Court of Appeals stated that under the Texas Securities Act an omission or misrepresentation is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding to invest. Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 648-49 (Tex. App. 1995, writ dism'd w.o.j.) (emphasis added); see alsoAnheuser-Busch Companies v. Summit Coffee Co., 858 S.W.2d 928, 936 (Tex. App. 1993, writ denied) (same), vacated on other grounds 514 U.S. 1001 (1995); Granader v. McBee, 23 F.3d 120, 123 (5th Cir. 1994) (same). Indeed, one commentator explicitly noted that materiality is defined objectively under the Texas Securities Act, but subjectively under Texas common law fraud and section 23.01. See Keith A. Rowley, The Sky is Still Blue in Texas: State Law Alternatives to Federal Securities Remedies, 50 Baylor L. Rev. 99, 121 n.104, 163 n.198 (1998). The Texas Plaintiffs have cited no authority suggesting a subjective materiality standard under the Texas Securities Act, and this court has found none. Therefore, because materiality is defined objectively under the Texas Securities Act and the jury found the Defendants' omissions and misrepresentations were not objectively material, the district court's refusal to submit Texas Securities Act claims to the jury, if error, was harmless. 140