TITLE 7. BANKING AND SECURITIES

PART 7. STATE SECURITIES BOARD

CHAPTER 139. EXEMPTIONS BY RULE OR ORDER

7 TAC §139.25

The Texas State Securities Board adopts an amendment to §139.25, concerning intrastate crowdfunding exemption without changes to the proposed text as published in the September 1, 2017 issue of the Texas Register (42 TexReg 4396).

The amendment permits a segregated account to be used in lieu of an escrow account for offerings up to $1 million conducted pursuant to the exemption.

Intrastate crowdfunding offerings seeking to raise between $100,000 and $1 million encountering difficulty accessing an escrow agent may use a segregated account instead of an escrow account.

One comment letter was received from Mass Venture Inc., a registered Texas crowdfunding portal. The commenter expressed strong support for the proposal that would allow a portal to handle investor funds through a segregated account. The commenter noted that the change will continue to ensure that investor funds are protected and will provide a competitive advantage to companies choosing to make their offering pursuant to the Texas intrastate crowdfunding exemption rather than Regulation CF. The Board agreed and adopted the amendment as published.

The amendment is adopted under Texas Civil Statutes, Article 581-28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Texas Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes.

The adopted amendment affects Texas Civil Statutes, Articles 581-12, 581-13, 581-14, 581-15, and 581-18.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 27, 2017.

TRD-201704802

Travis Iles

Securities Commissioner

State Securities Board

Effective date: January 14, 2018

Proposal publication date: September 1, 2017

For further information, please call: (512) 305-8303