The Fifth Circuit’s determination of a passive investor’s equity interest in a limited liability company as “securities” brings this class of investors under the protection of the Texas Securities Act (“TSA”). The TSA recognizes vicarious liability theories of aiding and abetting liability and control person liability, which hold secondary parties accountable for their actions. During the Survey period, several cases found secondary parties with positions of control or who met the elements of common law fraud culpable. In Fernea v. Merrill Lynch Pierce Fenner & Smith, Inc., the court found that a business could be liable for an employee’s actions under control liability regardless of the business’s actual knowledge of the employee’s actions, since an employee policy concerning outside activities might constitute an issue of contractual control exerted by the business. The State Securities Board, established under the TSA, enhanced fines and criminal punishments to deter big investors from defrauding Texas residents. The legislature also added protections for Texas residents from entities operating in foreign countries. Under Texas Stock Fraud Act (“TSFA”), courts require release clauses to expressly and clearly waive fraud claims or reliance on disputed matters to gain the release from liability under contract.