Texting your list? You may need to register.
Texas is changing the rules, and syndicators who rely on phone or SMS outreach to reach prospective investors must pay attention. On September 1, 2025, Senate Bill 140 (SB 140) went into effect, reshaping the state’s approach to phone solicitation laws, particularly text message marketing. With heightened registration requirements, mandatory security bonds, and the potential for private lawsuits, capital raisers using Texas SMS marketing need to act now.
This isn’t a hypothetical legal shift. It’s a direct response to rising litigation and judicial rulings like Powers v. One Technologies that exposed a loophole in existing law—one that allowed companies to avoid penalties for unsolicited text messages. SB 140 closes that gap and makes it clear: text = telemarketing.
For fund managers, real estate sponsors, and anyone raising capital under Reg D, especially 506(c) offerings, this new framework introduces both obligations and risks.
Let’s walk through what it means, what’s required, and how to stay compliant.
Yes, NOW Text Marketing Counts as Telemarketing
Under the updated statute, a “telephone call” is broadly defined to include voice, text, image, and graphic transmissions. Likewise, “telephone solicitation” has been expanded to cover any text or graphic message sent to induce someone to buy or invest.
This change eliminates ambiguity.
If you’re sending SMS or MMS messages promoting an investment opportunity, introducing yourself as a syndicator, or encouraging someone to watch your webinar or book a call, you may now be legally classified as a telephone solicitor. This applies even if you’re not calling anyone at all.
That reclassification comes with a long list of new obligations.
Mandatory Registration with the Secretary of State
One of the most important requirements under Chapter 302 of the Texas Business & Commerce Code is registration with the Texas Secretary of State. If your business markets by phone, SMS, or MMS, you must file Form 3401, pay a $200 filing fee, and post a $10,000 security bond.
This applies whether your office is in Texas or not.
It doesn’t matter if you’re sitting in Arizona or Florida. If you’re messaging Texas residents with an investment opportunity, this law may apply to you. And yes, the form asks for every address from which solicitations are made.
Once registered, you’re required to file quarterly addenda listing the salespeople (or VAs, team members, etc.) who participated in solicitations. Non-compliance isn’t just a slap on the wrist. Violations can be a Class A misdemeanor. This means you can go to prison.
Enforcement Is Serious and Private Lawsuits Are Coming
Here’s where things get even more real: SB 140 now allows private rights of action.
That means consumers can sue you directly, rather than just reporting you to a regulatory agency. And because SB 140 links violations of Chapter 302 and Chapter 304 to the Texas Deceptive Trade Practices Act (DTPA), plaintiffs may be able to pursue treble damages if the violation is found to be knowing or intentional.
Civil penalties range from $5,000 per violation up to $50,000 for violating a court-ordered injunction. And unlike many federal laws that cap recoveries, SB 140 doesn’t limit cumulative damages for repeat infractions.
In other words, if someone gets multiple unsolicited texts from you, you could be staring down some serious exposure.
What About Private Securities Offerings?
Here’s the good news: certain Reg D offerings may qualify for exemptions—but only under specific conditions.
According to TBOC Sec. 4005.012, if your raise involves 35 or fewer investors, and you’ve only sold securities to 15 or fewer individuals within the last 12 months, your offering may qualify as a private limited offering and be exempt from registration under Chapter 302.
But don’t let the word “private” create a false sense of security. Many syndicators operate multiple entities, including fund-of-funds or project-specific LLCs, and the exemption typically applies to the consolidated issuer, not just one deal.
Even then, the exemption may not protect you from the broader definition of solicitation introduced by SB 140. So if you’re sending messages that fall under this new framework, it’s worth running a compliance review with your securities counsel.
The Gray Zone: Who Counts as a “Customer”?
There’s also an exemption in the law for messaging former or current customers. But here’s the catch, “customer” isn’t clearly defined.
Is a webinar attendee a customer? What about someone who opted into your newsletter? Or someone who clicked your ad but never invested?
SB 140 leaves this wide open, which introduces risk. Regulators and courts may ultimately decide what “customer” means on a case-by-case basis. For now, it’s safest to assume that unless someone has invested or engaged in a substantial two-way communication, they may not qualify.
Watch Out for the Pattern of Solicitation Rule
Another exemption exists for isolated, non-repetitive solicitations. If you only reach out once, and it’s not part of an ongoing campaign, you might be safe.
But let’s be honest—that’s not how most capital raisers operate.
If your business model includes weekly newsletters, SMS follow-ups, or text-based appointment reminders for investor calls, it likely qualifies as a pattern of repeated solicitations—and the exemption doesn’t apply.
This is especially true if you’re using a CRM or automation platform to run text marketing in your funnel.
Reg D Syndicators: How This Affects Your Investor Funnel
If you’re raising under Rule 506(c), where public solicitation is allowed, your digital marketing may already include:
- Paid Facebook or LinkedIn ads
- Landing pages collecting opt-ins
- Webinar invites via SMS
- Calendar follow-ups with investors via text
This type of activity was already subject to federal laws like TCPA and CAN-SPAM, but now you must layer on Texas-specific compliance if you market to residents there.
For syndicators using 506(b) (no public solicitation), texting leads can be especially risky. The mere act of reaching out may be viewed as an unpermitted general solicitation unless a substantial pre-existing relationship exists.
The bottom line? SMS marketing might be easy to scale, but it just got a whole lot more dangerous in Texas.
What Should You Do Now to Comply?
Step one: Audit your outbound communications. Look at how your team or automation tools are sending text messages to potential investors. Are any of those numbers tied to Texas area codes? Do you know where those recipients reside?
Step two: Review your compliance framework. If you’re actively using Texas SMS marketing, you may need to register using Form 3401 (PDF), secure a $10,000 bond, and prepare for quarterly filings.
Step three: Get legal support. The law leaves room for interpretation, especially around who counts as a customer and what counts as an exempt offering. Your safest move is to document your exemptions and update your compliance SOPs right away! The deadline to get in compliance has passed..
A New Era of Text Marketing Regulation
This may be the beginning of a wider trend.
Texas is the latest state to close regulatory gaps on SMS, and other states are expected to follow suit—especially given the rise in litigation over text message marketing. As a capital raiser, staying ahead of these changes isn’t just about compliance. It’s about protecting your ability to communicate with investors, maintain trust, and avoid distractions that derail your raise.
If your investor includes SMS outreach, now’s the time to button it up.
If you’d like more information, you can schedule a free consultation to design your marketing to ensure compliance with all securities laws.