DALLAS - An Austin public interest group has sued the Texas State Securities Board, seeking documents involving disciplinary action against Republican attorney general candidate Ken Paxton for violations of state securities law.
Paxton, a Tea Party favorite who is considered the heir apparent to current Attorney General Greg Abbott, was fined $1,000 and issued a reprimand in May for failing to register as a financial advisor while directing investments to a North Texas financial services firm.
"Mr. Paxton admitted under oath to facts constituting a felony," according to the lawsuit filed by the Texas Coalition for Lawyer Accountability.
According to the lawsuit, Paxton violated Disciplinary Rule 8.04(a)(3) by taking secret, illegal kickback-commissions for referring clients to Frederick Mowery and Mowery Capital Management.
"Mr. Paxton received 30% of all investment-adviser fees that Mowery charged them," the suit claims. The clients, a family named the Goettsches lost about $250,000 in the investments, according to the suit.
"Mr. Paxton also concealed from the Goettsches that Mr. Mowery went bankrupt," the suit adds.
Paxton spokesman Anthony Holm called the lawsuit "yet another shenanigan by liberal Democrat activists trying to prop up their failing Democrat nominee," according to the Houston Chronicle. "What's striking is the collusion between these liberal groups as they peddle blatantly false information."
If elected, Paxton will be required to approve all bond issues in Texas and will be considered the top prosecutor in the state.
Greg Abbott, the current attorney general, is running for governor against Democratic state Sen. Wendy Davis.
