Interpretive and Exemptive Letters

Texas State Securities Board's Interpretive and Exemption Letters from January 7, 1993 through March 5, 2012.

Harvey Universal Inc., §7; no action recommended 9/6/1996

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of the issuance of shares of a Delaware corporation to approximately 30 Texas residents as the result of the settlement of class action lawsuits against the corporation by certain purchasers of its shares. The settlement was approved by the U.S. District Court for the Central District of California after a hearing on the fairness of the terms of the settlement. The staff noted that the Texas residents had previously acquired shares pursuant to the exemption afforded by § 6.F.

High Plains Value Added Cooperative; Castor Oil, LLC, §5.N; §7; §12; no action recommended, 9/3/1999

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

§5.N available for the offer and sale by High Plains Value Added Cooperative, a Texas farmers’ cooperative marketing association (the “Cooperative”), of its stock to members-producers who grow and provide castor seeds to the Cooperative, which will process the seeds, manufacture products from them, and market the products to end users. The stock will have voting rights, but will be non-transferable and non-appreciable. Each member will beentitled to patronage returns based upon the quality and value of the seeds from that member marketed by the Cooperative. Because no commission or other payment will be made to the Cooperative’s directors for their activities in offering and selling the stock, the directors will not be required to register as agents or salesmen. Also, the staff recommended no action to require registration of the offer and sale of membership interests in a joint-venture Texas limited liability company, as an operational entity and manager of the Cooperative (the “LLC”), to the Cooperative and a separate Texas corporation in exchange for a seed-supply contract and seed-processing assets. The staff also recommended no action to require registration of the LLC or its managers as a dealer or salesman in connection with the offer and sale of the membership interests in the LLC to the Cooperative and the other member.

Hollywood Casino Corporation, §6.F; §7; no action recommended, 8/7/1995

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

§6.F available for issuance of senior notes by an issuer quoted on Nasdaq’s National Market System. No action recommended to require registration of guarantees of such notes by issuer’s subsidiary. The subsidiary guarantees were unconditional, not separately tradable from the senior notes, and no separate consideration was required to receive such guarantees.

HPL Technologies, Inc., §7; §12; no action, 10/10/1905

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of common stock to be distributed in settlement of a class action lawsuit.

Idaho Water Resource Board, § 6.D, 7/22/1997

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§6.D available for the issuance of bonds by the Idaho Water Resource Board, an agency of the State of Idaho. The proceeds of the bonds will be lent to a company and its subsidiary to finance part of certain water storage and treatment facilities and equipment. The subsidiary is a public utility whose rates and charges are subject to approval of the Idaho Public Utilities Commission.

Imperial Thrift and Loan Association, §5.L; §5.M, 5/2/1997

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

Imperial Thrift and Loan, a California-chartered industrial loan company that is subject to supervision and regulation by the Federal Deposit Insurance Corporation (“Imperial”), proposes to sell certificates of deposit and other depository instruments that are, in effect, debts of Imperial to depositors. The staff noted that §5.L is not available because Imperial is not a “bank” subject to regulation under federal or state law, but confirmed that §5.M is available so long as sales in Texas are restricted to persons that will not own depository instruments in excess of the FDIC insurance limit.

InBev SA/NV, §5.G; §7; no action recommended, 2/4/2005

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of exchange offer, mandatory under Brazilian law following acquisition of indirect control of a public company even though the vote of the target shareholders was in connection with contemporaneous merger rather than proposed exchange offer under which securities would be issued.

Independent Bankers Association of Texas, §4.C; §12, 4/30/1993

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

Participating banks under a program in which a registered dealer would sell securities products at such banks’ offices would fall within the definition of “dealer”; therefore, such banks would be required to register as dealers. Under three scenarios proposed, bank employees involved in the program would have varying degrees of participation in the process of selling securities to bank customers. Although all bank employees involved in the program would be required to register as agents, the employees may have been able to obtain a waiver of the agent exam requirements to the extent their involvement in the sale process was minimal.

Indiana Health Facility Financing Authority Hospital Revenue Bonds, §5.M, 4/16/1997

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

§5.M available for the issuance of bonds by the Indiana Health Financing Authority, a public instrumentality authorized to finance health facility properties. The proceeds of the bonds will be lent to an Indiana private non-profit corporation primarily to refinance outstanding bonds and finance the acquisition, construction, and equipping of certain health facilities operated by the nonprofit corporation.

Industrial Development Authority of the County of Pima, §5.M; §7; no action recommended, 11/30/1993

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

§5.M available for bond offering by a non-profit corporation designated as a political subdivision of the State of Arizona. Issuer was to re-loan the offering proceeds to a 501(c)(3) non-profit medical center. No action was recommended to require registration of the note to be issued by the medical center to bond issuer.

Industry Bancshares, Inc., §5.E; §5.I; Rule 109.13(l), 6/28/2001

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

Offer by bank holding company to existing shareholders exempt under §5.E. Sales made in offer exempt under §5.E would not be integrated with offer of unsold shares under §5.I and Rule 109.13(l) to determine whether shares were sold to more than 35 non-accredited investors.

Infrared Systems International, §5.D; potentially also §5.G and Rule 109.2, 11/26/2008

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

Registration not required for shares of subsidiary to be distributed to shareholders of parent following merger of parent into third corporation, held without shareholder vote. Shares to be distributed would be registered with SEC.

ISB Capital, LLC, §5.J, 3/29/2011

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

The company proposed to originate private mortgage money loans and sell each one in its entirety to a single investor. Staff noted that the § 5.J provides a relatively narrow exemption, and would not be available if the company or anyone under its control services the mortgage underlying a loan. Also, letter states that the 5.J exemption "is not available unless the note is secured by property that can be liquidated for at least the face amount of the note." Even though the company would receive a 4% fee from the underlying borrower for arranging the loan, personnel of the company are not required to be registered to the extent that the exemption under § 5.J is available.

Joel Adler, McDermott, Will & Emery, §12; Rule 109.3(c)(1) [now Rule 109.4(b)]; Rule 139.1(b); Rule 139.16, 8/1/1995

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

Rule 109.3(c)(1) and Rule 139.1(b) operate to render investment advisor registration requirements inapplicable to person who advises only to accredited investors who are entities. On the other hand, persons who provide investment advice to individual accredited investors (as such term is defined in Rule 107.2(41) and used in Rule 139.16(b)(1)) must register as investment advisors.

John Hancock Mutual Life Insurance Company, §7; §12; no action recommended, 7/30/1999

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of the offer and sale by John Hancock Mutual Life Insurance Company (“Hancock”) or a newly formed holding company of Hancock (the “Holding Company”) of shares to the policyholders of Hancock in connection with the conversion of Hancock from a mutual insurance company to a stock insurance company and Hancock’s becoming a wholly owned subsidiary of the Holding Company. The proposed conversion will be subject to the approval of the Commissioner of Insurance of the Commonwealth of Massachusetts, after a public hearing on the fairness of the conversion to the policyholders, and two-thirds of the policyholders of Hancock. The staff also recommended no action to require the registration of Hancock, the Holding Company, or their personnel as dealers or agents in connection with their offers and sales of the shares.

Jon D. DuBois Company, §4.N; §12; no action recommended, 4/7/2005

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of Company which proposed to license software trading programs for trading various index futures or commodity futures. Company desired to provide electronic monitoring and trading assistance, including phone calls to broker, in event of data loss or other service problems. Company cautioned about providing personalized investment advice without registration.

KENDA Systems, Incorporated 2000 Employee Stock Option Plan, §5.I(b), 8/31/2000

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

§5.I(b) available for the grant of options, and the issuance of shares upon exercise of options granted, under an employee stock option plan (the “Plan”) of KENDA Systems, Incorporated (the “Company”). The Plan is administered by the board of directors of the Company, and ministerial functions are performed by the Company's senior office personnel. No person will receive any remuneration for his or her activities in connection with the Plan. The staff also noted that none of the Company, its directors, or its senior office personnel must be registered as dealers or agents because of their activities in connection with the Plan.

Legacy Lofts Cooperative Association, Inc., §5.K; §5.N; Rule 109.13(g), Rule 139.16(b)(2); Rule 139.19(10), 1/14/2011

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

The co-op proposed to offer stock to students and alumni at Baylor University who would be entitled to lease residential units for a student housing complex to be built by a related foundation. The student housing complex would be leased and managed by a separate facilities management company. Staff confirmed that the §5.K exemption was available. Staff also confirmed that the §5.N exemption was available, and that a reference in §5.N to a repealed statute would be deemed to refer to the successor statute in Chapter 251 of the Texas Business Organizations Code. Staff also confirmed that the personnel would be exempted from registration as dealers or agents, citing criteria stated in rules.

Legg Mason Income Trust, Inc., §7; no action recommended, 12/17/1996

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

No action recommended to require registration of the shares of an investment company (the “Successor Fund”) pursuant to two plans of reorganization with two existing investment companies of a different sponsor or manager (the “Acquired Funds”). Under the plans, which were approved by the shareholders of the Acquired Funds, all of the assets of the Acquired Funds would be transferred and sold to the Successor Fund in exchange for shares of the Successor Fund and the Successor Fund’s assumption of all liabilities of the Acquired Funds. Following the exchange, the Acquired Funds would distribute the shares of the Successor Fund to their respective shareholders pro rata and then liquidate.

Lehman Brothers Inc., §5.L; §5.M, 1/24/1995

by General Counsel of TSSB — last modified Mar 21, 2019 02:02 AM

A broker-dealer’s proposal to publicly offer certificates of deposit (“CDs”) of various banks raised several issues. Staff declines to adopt the requested position that CD’s are not securities. Staff unable to render an opinion regarding the availability of §5.L or §5.M. because broker-dealer was unable to specifically identify the precise types of financial institutions issuing the CD’s and was unable to confirm that all such CD’s would enjoy full FDIC insurance coverage.