# Untitled Texas Attorney General Opinion > Texas Attorney General Reports ยท July 2, 1947 URL: https://www.frixlaw.com/law-library/cases/4138691 ## Case - **Court:** Texas Attorney General Reports - **Decided:** July 2, 1947 - **Precedential status:** Published - **Opinion:** Opinion - **Judges:** Price Daniel - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4138691 ## Opinion text R-95 OFFICE OF THE ATTORNEY GENERAL PRICE DANIEL ATTORNEYGENERAL March 10, 1947 Honorable Paul B. Drown Opinion NO. v-81 Secretary of State Austin, Texas Re: Whether certain foreign securities "registered" with the Securities and Exchange Commission of the United States are 'on the list ap- proved by the Securi- ties and Exchange Commission", as con- templated by subdivl- sion (b) of Sec. 23, of the Texas Securi- ties Act, and there- fore exempt from the provisions of the Act. Dear Sip: You request advice as follows: "Subdivision (b) of Section 23 of the Texas Securities Act, under exemptions, pro- vides as follows: "'Any security Issued OP guaranteed by any foreign government with which the United States is at the time of the sale, or offer of sale thereof, maintaining diplomatic re- lations, OP by any State, province OF poli- tical subdivision thereof having the power of taxation or assessment, which security is recognized at the time it is offered for sale in this State as valid obligation by suah foreign government OP by such State, province, or political subdivision thereof issuing the same, provided however, that such securities must be on the list approved by the Securities and Bchange Commission of the United States.' "We have had several requests for informa- tion In regard to possible exemptions under Hon. Paul I-i. Brown, page 2 - v-81 this provision. The trouble seems to be that the Securities and Exchange Commis- sion does not approve an issue but simply registers the same. It would appear that the Legislature had in mind sn actual approval by this Commission before an ex- emption could be claimed. In the registra- tion of these Issues by the Securities and Exchange Commission they always state that this should not be considered as an approv- al. "The question is, shall we consider a security, which meets all other require- ments of'this-exemption as exempt when the same is simply registered with the Securi- ties anrf. Exchange Commission and not ap- proved. The authority and duties of the Securities end Exchange Commission as they pertain to the type of securities inquired about are set out in Title 15, Chap- ter 2A of the United States Code Annotated. As we con- strue the provisions of Chapter 2A, the Conznisslonhas no authority OP duty to 'approve" any of the securities inquired about. We have also directed an Inquiry to the Chief Counsel, Corporations Finance Division, Securi- ties and Exchange Commission, requesting confirmation of our construction of the Federal Act. The reply received by this office is to the effect that the Commission does not and has not approved, nor has it been author- ized to approve any such securities since the creation of the Commission. The only authority granted the Commission by Federal law, in this connection, Is to allow securities to be "registered' upon application by the issuer after submission by, the issuer of extensive data disclosing matters of Interest to Investors as required by the Act. Apparently, the only decision required of the Commission is a determination that the application contains the data required by law. Ho authority or duty is placed upon the Commission by the Federal act to pass upon the investment merits of the securities so "registered , nor upon whether OP not the securities have investment value. On the other hand, the Texas Securities Act, which is published as Art. 600a of Vernon's Civil Statutes of Texas, contemplates a determination hy the Secretary of . 1 Eon. Paul H. Brown, page 3 - v-81 State that "the plan of business of the applicant appears to be fair, just and equitable, and that the secuPities which it proposes to issue and the method to be used by it in issuing and disposing of the same ar8 not su% as will work a fraud upon the purchasers thereof. This determination is made in the form Of a "finding". Without a permit, the sale of such securities is unlavful. Th8 issuance of the permit contemplated depends upon a favorable "finding". See Sections 8 and 9 of the Securities Act. It Will be noted that the word "approved" Is also used in paragraph (f) of Sec. 23 of Art. 600a, which exempts securities listed on recognized and responsible stock exchanges, which exchanges have been I'approved"by the Secretary of State. Such ap- proval under paragraph (f) is conditioned that the exchanges supply to the Secretary OS State facts and data which "shall b8 found to establish: 'I** * "(2) That the governing constitution, by-laws, and/or regulations of such ex- changes shall require: "* * * "3rd. Securities listed and traded in on such 8XChange to be restricted to those of ascertained, sound asset and/or income value." Thus, consistent with the scheme of the Act, the "approval" under paragraph (f) contemplates more than a mere disclosure of true facts as a condition precedent to engaging in the issuance and Sale of secu- rities in Texas. As a safeguard to the investor, it contemplates that qualifications be imposed on the issuer tending to guarantee value. And 'appPovaln appears to mean that ,the Secsy of State has ascer- tained that the saf8gtIardsexist. It thus appears that "approval" as used in the Texas seCUPiti8S Act means more than "registration" under the Federal Act, and no reason appear8 tOnoon- strue "registration" to mean the same thing as appPo- val" or to hold that a list of registered securities is Hon. Paul H. Brown, page 4 - v-81 a 'list approved" b the Conmtissionwithin the mean- ing of subdivision 9b) of Sec. 23 of the Texas Securi- tie8 Act. Since the Securities and Exchange Commission could haV8 been given powers by Congress of a nature leading to an approval substantially similar to that contemplated by the Texas Act, and since such may yet be done by Congress at its pleasure, it is our opinion that the exemption contained In paragraph (b) of Sec- tion 23 of the Texas Securities Act is and will remain inoperative until actual approval by the Securities and Exchange Conaaissionof such securities is author- ized or required by Congressional enactment. Certain foreign securities "registered" with the Securities and Exchange COnunissiOn of the United States are not "on the list approved by the Securities and Exchange Com- mission" as contemplated by the exemption contained in subdivision (b) of Section 23 of the Texas Securities Act. (Art. 60Oa, V.C.S.) Very truly yours ATTORREX GENERAL OF TEXAS BY N&d McDaniel NM:rt;djm Assistant --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4138691. Public record. Not legal advice.