Texas High School Rule - Can someone explain it?

In FED, prior to the stretch, the pitcher's hand must be either a. behind his back, or b. at his side. The ball can either be in the hand or the glove.

The arm position your son was using is often referred to as the "Gorilla Stance". So called because some pitchers actually swing their arm in front of their leg while taking signs from the catcher. I'm guessing that you son was working in the set position when this occurred.

When in the set position the pitcher is required to have his pitching hand at his side or behind his back prior to his stretch. The reason is so the runner can tell that the pitcher has not yet put his hands together or started his pitching motion.

Your son was fortunate that the ump gave him only a warning. He could have called a balk.