Tenn. Comp. R. & Regs. 0780-04-02-.04 - ADVERTISING AND SALES LITERATURE

(1) All advertising and sales literature of any kind to be used directly or indirectly in connection with the offer or sale of securities registered or subject to registration in this state, whether through written, radio, or television medium, except advertising and sales literature described in SEC Rule 134 ( 17 C.F.R. §230.134) , shall be filed with the Division prior to the proposed use date or circulation date.

(2) For purposes of this Rule, the term "advertising and sales literature" shall be deemed to include any communication distributed or made available to prospective investors or the public by any person to offer to sell or to induce the sale of securities other than a prospectus, a preliminary prospectus, or any prospectus supplements that have been filed with the Division as part of an application for registration. The sales material shall present a balanced discussion of both risk and reward. The contents of advertising and sales literature shall be consistent with representations in the prospectus.

(3) No advertising or sales literature of any kind shall contain:

(a) Any untrue statement of material fact or any omission to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

(b) Any statement or implication that the securities offered are without risk, that returns are assured, or that failure or loss of the investment is not possible.

(4) All advertising or sales literature of any kind used in connection with offerings registered or to be registered shall contain:

(a) The name of the issuer and of the person circulating or publishing the same.

(b) A statement showing the relationship between the issuer or dealer and every person whose name is used or from whom quotations are made.

(c) A statement clearly indicating the source and authority of all reports, statements, or claims used in whole or in part or in any manner referred to therein.

(d)

1. Substantially the following legend:

"THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. AN OFFERING IS MADE ONLY BY THE PROSPECTUS".

2. If printed, the legend shall appear on the face of the advertising or sales literature in type as large as that used generally in the body thereof.

(5) Oral statements made by salesmen or other persons in connection with the purchase or sale of a security registered or to be registered supplementing, interpreting, or explaining any advertising or sales literature or made in connection with sales meetings or seminars shall be consistent with representations in the prospectus.

(6) The commissioner may notify the filer in writing if he/she determines that the advertising and sales literature submitted in accordance with paragraph (1) of this Rule fails to conform with the provisions of this Rule, or the Act, or has been otherwise determined to be unfair or deceptive. Such notice shall specify the reason(s) for the commissioner's determination and shall afford the filer a right to a hearing in compliance with the UAPA.

(7) After notice and a hearing, the commissioner may order any person to cease and desist from using any advertising and sales literature that is determined to violate this Chapter.

(8) Failure of the commissioner to issue a notice pursuant to paragraph (6) of this Rule shall not relieve any person of responsibility for compliance with this chapter, nor will this failure waive any right of the commissioner to bring an action against a person for violation of this Chapter.

(9) The provisions of paragraphs (1) through (8) of this Rule shall not apply to advertising or sales literature of any kind meeting the requirements of SEC Rules 134 ( 17 C.F.R. §230.134) , 156 ( 17 C.F.R. §230.156) , and 482 ( 17 C.F.R. §230.482) or any successor rules relating to advertising and sales literature used in the sale of investment company shares registered pursuant to the Investment Company Act, unless such advertising or sales literature is not filed with and is not subject to review by the FINRA or the SEC.

Notes

Tenn. Comp. R. & Regs. 0780-04-02-.04

Original rule filed January 13, 1983; effective February 14, 1983. Amendment filed August 29, 1984; effective September 28, 1984. Amendment filed March 20, 1985; effective June 14, 1985. Amendment filed January 29, 1988; effective April 27, 1988. Repeal and new rule filed September 28, 1990; effective November 12, 1990. Repeal and new rule filed March 16, 2015; effective 6/14/2015.

Authority: T.C.A. §§ 48-1-105, 48-1-106, 48-1-107, 48-1-113, 48-1-115, 48-1-116, 48-1-121, 17 C.F.R. § 230.134, 17 C.F.R. § 230.156, and 17 C.F.R. §230.482.