Texas Attorney General Ken Paxton has been indicted by a county grand jury on felony charges that he committed securities fraud and failed to register with the state’s securities board, people familiar with the matter said Saturday.

Mr. Paxton, a Republican, was elected last year amid questions about allegations that he solicited clients for a local investment firm without disclosing that he was being paid a commission by the firm and that he didn’t register as an investment adviser as required by the Texas Securities Act....