The following words and terms, when used in Part VII of this title (relating to the State Securities Board), shall have the following meanings, unless the context clearly indicates otherwise.

1. (1) Act or Securities Act or Texas Securities Act--The Texas Securities Act, Texas Civil Statutes, Article 581-1 et seq., as amended.
2. (2) Affiliate--An "affiliate" of, or person "affiliated" with a specified person, is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
3. (3) APA or Administrative Procedure Act--The Administrative Procedure Act, Texas Government Code, Title 10, Chapter 2001, as amended.
4. (4) Applicant--A person who submits an application for registration of securities, documents in connection with the offer and sale of federal covered securities, or for registration as a dealer, investment adviser, or salesman, or who files an application for an order of the Securities Commissioner.
5. (5) Board or Securities Board--The State Securities Board of the State of Texas.
6. (6) Business days--For the purpose of filing Form 133.29 pursuant to the requirements of §109.13(l) of this title (relating to Limited Offering Exemptions), means ordinary business days and does not include Saturdays, Sundays, or state holidays.
7. (7) Certified--In conjunction with the term "financial statement(s)," means financial statement(s) prepared in accordance with generally accepted accounting principles and examined in accordance with generally accepted auditing standards by independent certified public accountants or independent public accountants for the purposes of expressing an opinion thereon. Such opinion shall be one acceptable to the Securities Commissioner.
8. (8) Code or Internal Revenue Code--The Internal Revenue Code of 1986, as amended.
9. (9) Commissioner or Securities Commissioner--The State Securities Commissioner for the State of Texas.
10. (10) Contested case--A proceeding in which the legal rights, duties, or privileges of a party are to be determined by the Securities Commissioner, or the Securities Board, after an opportunity for adjudicative hearing before an administrative law judge of the State Office of Administrative Hearings.
11. (11) 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.
12. (12) Credit union--For definition see the Texas Credit Union Act (Texas Finance Code, Chapter 121, as amended), which regulates such credit unions.
13. (13) Detailed balance sheet--A balance sheet.
14. (14) Detailed statement showing all assets and liabilities--A balance sheet.
15. (15) Domestic corporation--A corporation incorporated under the laws of the State of Texas.
16. (16) Employer--For purposes of the Texas Securities Act, §5.I(b), includes a general partner of a limited partnership with respect to a security sold or distributed by such limited partnership in a transaction otherwise meeting the requirements of §5.I(b).
17. (17) Federal covered securities--Any security or securities described as a "covered security" or as "covered securities" in the Securities Act of 1933, §18(b), or rules or regulations promulgated thereunder. However, until October 11, 1999, or such other date Congress may authorize, federal covered securities for which a fee has not been paid and promptly remedied following written notification from the Securities Commissioner to the applicant of the nonpayment or underpayment of such fees required by the Texas Securities Act, shall be excluded from the definition of federal covered securities.
18. (18) Financial statement(s)--Balance sheet and related statements of income, changes in stockholders' equity, and cash flows, all (consolidated, if applicable) prepared in accordance with generally accepted accounting principles. The information contained in the previously described statements may vary according to presentation and titles as they relate to specific entities, such as individuals, partnerships, and nonprofit organizations.

19. (19) Investment adviser--Any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; but does not include:

    1. (A) a bank, or any bank holding company as defined in the federal Bank Holding Company Act of 1956, which is not an investment company;
    2. (B) any lawyer, accountant, engineer, teacher, or geologist, whose performance of such services is solely incidental to the practice of his or her profession;
    3. (C) any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor;
    4. (D) the publisher of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; or
    5. (E) any person whose advice, analyses, or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of Treasury, pursuant to the Securities Exchange Act of 1934, §3(a)(12), as exempted securities for the purposes of that Act.
20. (20) Investment Advisers Act of 1940--The federal statute of that name, as amended, 15 United States Code §80b-1, et seq.
21. (21) Investment Company Act of 1940--The federal statute of that name, as amended, 15 United States Code §80a-1, et seq.
22. (22) License--The whole or part of any registration as a dealer, salesman, or agent, or similar form of permission required by the Texas Securities Act to sell securities or render investment advice.
23. (23) Licensing--The process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license.
24. (24) Managing agent or manager--One who is authorized to act generally for an organization within a particular locality.
25. (25) NASD--The National Association of Securities Dealers, Inc., and NASD Regulation, Inc., a subsidiary of the National Association of Securities Dealers, Inc.
26. (26) 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.
27. (27) Operating statement--An income statement.
28. (28) Parent--A person controlling another person directly or indirectly.
29. (29) Profit and loss statement--An income statement.
30. (30) Proposed plan of business--As used in the Texas Securities Act, those aspects and only those aspects of the business set-up (other than that done or proposed in respect to the pricing and selling of its securities) which would materially affect the business relationship between the prospective investor and those in control of the business as such relationship would exist after the sale to the public of the securities sought to be registered.
31. (31) Regulatory standards--All standards coming within the meaning of "rule" as defined herein.
32. (32) Rendering services as an investment adviser--Any person coming within the designation cannot conduct such activity without first being registered as an investment adviser/dealer under the provisions of the Act or notice-filed under the provisions of §115.1(i) of this title (relating to General Provisions). Likewise, every person employed or appointed, or authorized by such person to render services which include the giving of investment advice cannot conduct such activities unless registered as a dealer/investment adviser, a salesman, or an agent under the provisions of the Act, or notice-filed as a dealer/investment adviser, a salesman, or an agent under the provisions of §115.1(i) of this title.
33. (33) Rule--Any statement by the Board or the Securities Commissioner of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the Board or Securities Commissioner.
34. (34) Savings and loan association--For definition see the Texas Savings and Loan Act (Texas Finance Code, Chapter 61, as amended), which regulates such savings and loan associations.
35. (35) SEC--The United States Securities and Exchange Commission.
36. (36) Securities Act of 1933--The federal statute of that name, as amended, 15 United States Code §77a, et seq.
37. (37) Securities Exchange Act of 1934--The federal statute of that name, as amended, 15 United States Code §78a, et seq.
38. (38) Security holders or purchasers of securities--As such terms are used in the Texas Securities Act, §5.I, do not include holders of any options granted pursuant to a plan which falls within the exemption for employee plans provided by the Texas Securities Act, §5.I(b).
39. (39) Solicitor--Any person or entity who, for compensation, acts as an agent of an investment adviser in referring potential clients.
40. (40) Staff--Personnel of the Securities Board, excluding the members of the Board, the Securities Commissioner, and the Deputy Commissioner.
41. (41) State, territory, or insular possession of the United States--As used in the Texas Securities Act, includes a commonwealth.
42. (42) Statement to reflect the financial condition--A balance sheet.
43. (43) Telephone or telegram--For purposes of the Texas Securities Act, §7.C(2)(c), includes any means of electronic transmission such as, but not limited to, telephone, telegraph, wireless, graphic scanning, modem, or facsimile; provided, however, that the office of the State Securities Board has the necessary equipment to accept such a transmission.

44. (44) Within this state--

    1. (A) A person is a "dealer" who engages "within this state" in one or more of the activities set out in the Texas Securities Act, §4.C, if either the person or the person's agent is present in this state or the offeree/purchaser or the offeree/purchaser's agent is present in this state at the time of the particular activity. A person can be a dealer in more than one state at the same time.
    2. (B) Likewise, a person is a "salesman" who engages "within this state" in one or more of the activities set out in the Texas Securities Act, §4.D, whether by direct act or through subagents except as otherwise provided, if either the salesman or the salesman's agent is present in this state or the offeree/purchaser or the offeree/purchaser's agent is present in this state at the time of the particular activity. A person can be a salesman in more than one state at the same time.
    3. (C) Offers and sales can be made by personal contact, mail, telegram, telephone, wireless, electronic communication, or any other form of oral or written communication.

Source Note:The provisions of this §107.2 adopted to be effective January 1, 1976; amended to be effective September 14, 1977, 2 TexReg 3338; amended to be effective September 6, 1979, 4 TexReg 3014; amended to be effective March 19, 1984, 9 TexReg 1436; amended to be effective June 1, 1984, 9 TexReg 2774; amended to be effective August 29, 1985, 10 TexReg 2999; amended to be effective October 30, 1985, 10 TexReg 4081; amended to be effective February 15, 1989, 14 TexReg 692; amended to be effective November 29, 1989, 14 TexReg 6075; amended to be effective March 17, 1994, 19 TexReg 1543; amended to be effective April 8, 1997, 22 TexReg 3216; amended to be effective August 21, 1997, 22 TexReg 7485; amended to be effective August 24, 1998, 23 TexReg 8667.