Texas Securities Fraud Laws

Texas Statutes – Title 19: Blue Sky Law–Securities

What’s Prohibited?

Under Texas securities fraud laws, it is unlawful for any person in connection with the sale, offering for sale or delivery of, the purchase, offer to purchase, invitation of offers to purchase, invitations of offers to sell, or dealing in any other manner in any security or securities, directly or indirectly:

• Engage in any fraud or fraudulent practice;

• Employ any device, scheme, or artifice to defraud;

• Knowingly make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or

• Engage in any act, practice or course of business which operates or will operate as a fraud or deceit upon any person.

Criminal Penalties

If a person is convicted of the above crime, the person is guilty of a felony and will be:

• Imprisoned for a minimum of 2 years and up to 10 years and fined up to $10,000, if the amount involved in the offense is less than $10,000;

• Imprisoned for a minimum of 2 years or up to 20 years and fined up to $10,000, if the amount involved in the offense is $10,000 or more but less than $100,000; or

• Imprisoned for life or a minimum of 5 years or a maximum of 99 years plus fined up to $10,000, if the amount involved is $100,000 or more.

Civil Liabilities

A person who offers or sells a security in violation of Texas securities fraud laws is liable to the person buying the security from him. The buyer may sue either at law or in equity for rescission or for damages if the buyer no longer owns the security.