[JURIST] US District Judge Amos L. Mazzant III on Friday conditionally dismissed [opinion] the Securities and Exchange Commission‘s (SEC) [official website] suit against Texas Attorney General Ken Paxton [official websites]. The SEC alleged that Paxton misled investors in Servergy, Inc. [corporate website], a business purporting to make a new computer network server. Paxton recruited friends and business professionals to invest a total of $840,000 in the startup, but Paxton failed to disclose that he received a commission for the recruitments. The judge determined that Paxton had no obligation to disclose the financial relationship, but gave the SEC 14 days to submit “additional facts” to support its claims. Paxton is still facing criminal charges of securities fraud for which he could face between five and 99 years in jail.

Paxton was indicted [JURIST report] for securities fraud in August 2015 for recruiting investors while he was a member of the Texas House of Representatives. While he awaits the outcome of his criminal case, Paxton continues to act as Texas’ attorney general. Earlier this year, Paxton led Texas in a multi-state challenge to federal guidelines that allowed transgender students to use the bathroom according to the gender with which they identify. Last month, a federal judge ruled in the states’ favor [JURIST report], determining that the federal government overstepped its bounds in issuing the guidelines. And in January, Paxton announced [JURIST report] that daily fantasy sports websites in which players pay to participate are considered gambling and are therefore illegal in the state.