This is how people in charge of government use it to con the people they govern:
There’s a bill in the Texas Senate. It’s supposed to help Texas grow its financial tech industry. That would be a good thing, right?
And what better way to do it than to remove an onerous regulation?
That’s what this bill is purported to do. It would let investment advisers sell stock in these companies without having to register with the Texas State Securities Board like all the other investment advisers. They’d still get permission to sell, but the permission would come from the Texas Attorney General’s consumer protection division. And they wouldn’t have to follow all the securities board rules.
What’s wrong with this picture?
If this sounds like a license to dupe gullible investors, maybe so, maybe not. Frankly, it would be a lot harder to argue that it’s not.
But that may not even be the worst thing about this bill. What’s worse is that It appears to be nothing more than an attempt to get one specific individual off the hook for duping investors.Texas Attorney General Ken Paxton (
That specific individual is Ken Paxton, the Texas Attorney General. The bill would give Paxton the ultimate oversight over this kind of securities trading.
Paxton faces trial on felony charges accusing him of selling securities in a tech company without being registered and without bothering to tell the investors that he represented the company and would receive commissions for the sales.
Can it get worse?
Yes. The bill’s sponsor is his wife, Sen. Angela Paxton, R-McKinney. She’s a freshman first-time officeholder sworn in in January. Her previous work experience is as a counselor at a religious-affiliated school. If you’re wondering how she got to be so savvy about the financial tech industry, so are we.
Angela Paxton’s bill wouldn’t retroactively make the charges against Ken Paxton go away. It can’t.
But if it were to become law, how can a jury convict the Texas attorney general of a crime that isn’t even a crime anymore? What a sweet gift to his criminal defense team, some of the best lawyers money can buy.
If what Angela Paxton is trying to do were actionable in any way, it’s safe to say that she’d have nothing to fear from the Texas Attorney General’s Office or from anyone who has cause to fear the attorney general.
Investment adviser is, to say the least, an interesting sideline for Ken Paxton, a lawyer by trade and a politician whose previous offices were state representative and the Senate seat now occupied by Angela Paxton. He has claimed repeatedly that the criminal case against him is a politically motivated witch hunt. But the case against him involves a purely private-business interest. Its only political connections are the awesome advantages that being an elected official gave Paxton, and that one of his accusers is a former Texas House colleague.
What else is wrong?
In case you’re wondering whether Angela Paxton’s bill might be a good thing with only a bad optic, think again. Less oversight of securities sellers isn’t its only problem. The bill gives the attorney general’s office a duty way outside its bailiwick. It’s not exactly a financial or economic development institution. Nor should it be made into one. Not ever. But especially not now, considering the compromised individual in charge of it. Texas already has a securities board versed in how to oversee securities traders.
The potential for a new state senator whose husband is the attorney general to encounter conflicts of interest is huge. Angela Paxton wasted no time living up to that potential. This is what corrupt government looks like. Her Senate colleagues need to take a stand against it and kill this bill. And the voters of her district and the state of Texas need to hold both Paxtons accountable.