Tenn. Comp. R. & Regs. 0780-04-02-.11 - RESCISSION OFFERS.

(1) By the authority delegated to the commissioner in T.C.A §§ 48-1-103(b)(11) and 48-1-116, rescission offers are exempt from T.C.A § 48-1-104 if all requirements set forth in this rule are met. All rescission offers that do not meet the requirements of this rule must comply with the registration requirements of T.C.A. § 48-1-104.

(2) No rescission offer exempted by this rule may be conducted in this state without obtaining the Division's prior written approval of the offer.

(3) Any person seeking approval to conduct a rescission offer pursuant to this rule shall first notify the Division in writing. Such notice shall include:

(a) A description of the securities sold;

(b) The dates the securities were sold;

(c) The names of the Tennessee investors who purchased the securities;

(d) When the violation was discovered, if applicable;

(e) How the violation was discovered, if applicable; and

(f) A draft copy of the proposed rescission offer document(s).

(4) The draft copy of the proposed rescission offer document(s) must include the following information:

(a) A statement specifying why the rescission offer is being conducted;

(b) Disclosure of all material facts regarding the rescission offer as well as any material facts that have arisen with respect to the issuer and the investment since the initial sale(s) of securities;

(c) Notice of the investor's right to rescind the purchase and recover the consideration paid plus interest at the legal rate from the date the subscription amount was paid by the investor, calculated in accordance with T.C.A. § 48-1-122(k);

(d) A statement specifying the amount of time in which the investor must elect to accept or reject the offer of rescission, which shall be no less than thirty (30) days from the date the investor received notice of the offer;

(e) A statement describing the effect of the failure of an investor to accept or reject the rescission offer within the designated time period;

(f) A description of the procedure for accepting or rejecting the rescission offer;

(g) A statement that the offeree may wish to consult with independent counsel before deciding to accept or reject the rescission offer so as to be fully informed about the risks and the consequences attached to either choice; and

(h) Any other such information as the Division may deem appropriate and necessary for the protection of investors.

(5) The Division reserves the right to review the rescission offer by applying the same standards for a registered offering under the following rules:

(a) 0780-04-02-.03;

(b) 0780-04-02-.04; and

(c) 0780-04-02-.06.

(6) A summary of the results of the rescission offer shall be provided to the Division in writing within thirty (30) days of the offer's conclusion. The summary shall include:

(a) The names of the investors accepting the offer;

(b) The names of the investors declining the offer; and

(c) Certified mailing receipts for investors who declined to respond to the offer.

(7) Successful completion of a rescission offer does not relieve the offeror of any civil or administrative liability available under the Act.

Notes

Tenn. Comp. R. & Regs. 0780-04-02-.11

New rule filed February 3, 2021; effective 5/4/2021.

Authority: T.C.A §§ 48-1-103(b)(11), 48-1-104, and 48-1-116.