The Texas securities regulator summoned Sam Bankman-Fried to an FTX hearing

Sam Bankman-Fried, the former CEO of FTX, has been summoned to a hearing on February 2 to respond to allegations made by a Texas regulator that FTX US provided unregistered securities products through its yield-bearing service.

Even though the disgraced CEO is no longer in charge of the business he founded, which is currently embroiled in bankruptcy proceedings, the Texas State Securities Board (TSSB) scheduled the administrative hearing.

It accused Bankman-company Fried's of securities violations in Texas. The board suggested that the proceedings be conducted via Zoom after sending a registered letter to Bankman-address Fried's in the Bahamas informing him of the hearing.

The hearing notice from November 22 states that FTX Capital Markets LLC is listed with the board as a dealer and that “Texans were able to buy and sell publicly traded stock through the firm."

To stop securities fraud in the state, compensate affected investors, and fine Bankman-Fried, the state regulator, requests a cease-and-desist order for FTX.

The TSSB's investigation into FTX US came to light in October when Director of Enforcement Joe Rotunda asserted in a filing in the bankruptcy case of Voyager Digital that FTX US may have violated state law governing the registration and sale of securities products because it was providing a yield-bearing product to American customers.

In an interview with FTX General Counsel Ryne Miller during a panel discussion in New York in October, Rotunda said he thought about bringing an enforcement action as a last resort.

He added that FTX had been cooperative up to that point and that the TSSB preferred to work through issues with companies before taking enforcement action was required.

Several federal and international probes into FTX's operations may delay the state matter.

The SEC, DOJ, Bahamian police, and Senators Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.) are all looking into the circumstances leading up to and following the collapse of the exchange in the Bahamas.