Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-04 - Division of Securities
Chapter 0780-04-01 - General Administration
Section 0780-04-01-.04 - ADMINISTRATION OF THE ACT

Universal Citation: TN Comp Rules and Regs 0780-04-01-.04

Current through September 24, 2024

(1) General.

(a) The commissioner delegates to the assistant commissioner all of the power and duties granted to and imposed upon the commissioner by the Act, except the power:
1. To impose any sanction pursuant to T.C.A. §§ 48-1-104, 48-1-108, 48-1-109, 48-1-112, 48-1-116, or 48-1-121 in any contested case, as such term is defined in the UAPA;

2. To adopt any rule as such term is defined in the UAPA;

3. To grant immunity to any person pursuant to T.C.A. § 48-1-118(d); and

4. To appoint any investigative agent pursuant to T.C.A. § 48-1-118.

(b) Without limiting the foregoing delegation, the assistant commissioner is expressly empowered to:
1. Issue orders of investigation pursuant to T.C.A. § 48-1-118(a);

2. Conduct investigations as provided by T.C.A. § 48-1-118(b);

3. Issue exemption orders pursuant to T.C.A. § 48-1-103(b)(11);

4. Issue orders of effective registration, orders of denial, and other orders not involving any sanctions; and

5. Accept, on behalf of the commissioner, settlement agreements reached between the Division and any person pursuant to T.C.A. § 4-5-105.

(c) The Division's office hours shall be between 8:00 a.m. and 4:30 p.m. (Central Time) on weekdays, except legal holidays. Normally, appointments will not be made before 8:30 a.m. or after 4:00 p.m.

(d) Unless expressly required or requested otherwise, only the original executed copy of each form is required. If a document or form pertains to more than one security, subject, or application, a separate copy and transmittal letter for each security, subject, or application shall be filed, except as expressly provided otherwise elsewhere in these Rules.

(2) Filing Fees.

(a) All fees required by the Act that are submitted directly to the Division shall be made by check payable to the order of the Tennessee Department of Commerce and Insurance. Certified checks are not required.

(b) Pursuant to T.C.A. § 48-1-107(b), the minimum non-refundable filing fee for all applications for securities registration shall be three hundred dollars ($300). If an application is withdrawn prior to effectiveness or before a pre-effective stop order is entered, the Division shall retain the minimum filing fee and refund the remainder, if any, to the applicant in accordance with subparagraph (2)(c) of this Rule.

(c) Refunds of refundable fees will not be made unless a written request is filed with the Division specifying the following:
1. The name of the applicant;

2. The law under which the application was filed and the approximate date of filing; and

3. The amount of the funds claimed as due and the grounds upon which the claim is made.

(3) Filing Requirements.

(a) Applications, reports, and registration statements, including exhibits, shall be filed on good quality white paper, eight and one-half (8 1/2) inches by eleven (11) inches or eight and one-half (8 1/2) inches by fourteen (14) inches in size. Tables, charts, maps, and financial statements may be on larger paper if folded to those sizes and the final prospectus may be on smaller paper if the registrant so desires.

(b) All documents filed with the Division shall be in clear and easily readable form and suitable for photocopying and/or scanning.

(c) Exhibits may be attached or filed separately, properly marked or identified.

(d) Each copy of registration statements, prospectuses, offering circulars, and offering memoranda must be bound securely. The Division reserves the right to reject any such document the pages of which are not securely bound together.

(e)
1. All applications, reports, registration statements, financial statements, correspondence, exhibits, and/or other information required or requested pursuant to the Act or these Rules may be submitted to the Division in the paper format prescribed in this paragraph (3) or through the CRD System or other electronic data gathering, access, and retrieval methods acceptable to the Division.

2. Applications, reports, registration statements, financial statements, correspondence, exhibits, and/or other information filed through the CRD System or other electronic data gathering, access, and retrieval methods acceptable to the Division shall be in clear, easily accessible, and readable formats which shall be suitable for reproduction on good quality white paper eight an one-half (8 1/2) inches by eleven (11) inches or eight and one-half (8 1/2) inches by fourteen (14) inches in size.

3. Upon conversion and preservation through the CRD System or the Division's electronic data gathering, access, and retrieval methods, all original applications, reports, registration statements, financial statements, correspondence, exhibits, and/or other information filed in the paper format prescribed in this paragraph (3) may be stored and subsequently destroyed pursuant to records management procedures consistent with those adopted and amended by the Division from time to time.

(4) Forms.

(a) All filings submitted with the Division shall be on the proper form as designated under these Rules. An application shall be deemed submitted on the proper form unless objection to the form is made by the Division prior to the effective date of the application. The following forms, as in effect at the time of use, are approved for filing with the Division:
1. "Form U-1", Uniform Application to Register Securities;

2. "Form U-2", Uniform Consent to Service of Process (naming the commissioner as the party to be served);

3. "Form U-2A", Uniform Form of Corporate Resolution;

4. "Form U4", Uniform Application for Securities Industry Registration or Transfer;

5. "Form U5", Uniform Termination Notice for Securities Industry Registration;

6. "Form U7", Small Company Offering Registration Form;

7. "Form U-CF", Uniform Notice of Federal Crowdfunding Offering;

8. "Form USB", Uniform Surety Bond;

9. "Form BD", Uniform Application for Broker-Dealer Registration;

10. "Form BDW", Uniform Request for Broker-Dealer Withdrawal;

11. "Form ADV", Uniform Application for Investment Adviser Registration;

12. "Form ADV-E", Certificate of Accounting of Client Securities and Funds in the Possession or Custody of an Investment Adviser;

13. "Form ADV-W", Notice of Withdrawal from Registration as an Investment Adviser;

14. "Form D", Notice of Sale of Securities Pursuant to Regulation D, Section 4(6), and/or Uniform Limited Offering Exemption;

15. "Form NF", Uniform Investment Company Notice Filing;

16. "Form IN-0911", Application for Registration as an Oil and Gas Issuer-Dealer;

17. "Form IN-1460", Notice of Sale of Securities Pursuant to Accredited Investor Exemption;

18. "Form IN-1461", Notice of Sale of Securities Pursuant to Employee Stock Purchase/Option Plan Exemption;

19. "Form IN-1493", Designation of Accountant;

20. "Regulation A - Tier 2", Uniform Notice Filing of Regulation A - Tier 2 Offering; and

21. "Notice of Exemption", Notice of Intention to Offer or Sell Securities Pursuant to the Invest Tennessee Exemption.

(b) All instructions on the above named forms are applicable, except as expressly provided elsewhere in these Rules, and are adopted verbatim and incorporated herein by reference.

(c) In cases where a form, as set out in subparagraph (4)(a), directly or indirectly requires the maintenance of certain books and records, the registrant shall maintain adequate books and records to comply with the filing requirements of the form and all books and records requirements as provided in the Act and the Rules.

(5) Division Records.

(a) In compliance with the Tennessee Public Records Act, T.C.A. § 10-7-503(a)(2)(A-B), the Division shall make available to the public for inspection any part of an application to register securities, notice filing, or a filing pursuant to a claim of exemption from securities registration, except as set forth in subparagraph (5)(f) of this Rule.

(b)
1. The Division shall make available to the public for inspection in connection with any registered broker-dealer or investment adviser or applicant for broker-dealer or investment adviser registration or notice filing by an investment adviser:
(i) The current Form BD or the current Form ADV and all schedules and exhibits thereto; and

(ii) Financial statements filed pursuant to these Rules within the preceding five (5) years.

2. Any noncurrent Form BD filings, noncurrent Form ADV filings, noncurrent schedules and exhibits to such forms and financial statements filed pursuant to these Rules prior to the preceding five (5) years may be preserved by the Division in paper or electronic format for public inspection or may be stored and subsequently destroyed pursuant to records management procedures consistent with those adopted and amended by the Division from time to time.

(c) With respect to any registered agent or investment adviser representative or application for an agent's or investment adviser representative's registration, the Division shall make available to the public for inspection the Form U4 and Form U5 of such agent or investment adviser representative, together with all exhibits.

(d) The Division shall not make available to the public for inspection any document or other material it obtains in connection with any matter which is the subject of a private investigation or that it obtains for the purpose of determining whether to commence a private or public investigation until such time, if ever, such document or other material is used in litigation or in a contested case.

(e) Any document which is available for inspection shall also be available for copying (including electronic reproduction through the CRD System or other electronic data gathering, access, and retrieval method acceptable to the Division) upon payment of the cost of copies as determined by the Division from time to time.

(f) Requests for Confidentiality.
1. Introduction. Upon the grant of a request made pursuant to part (5)(f)2. of this Rule, the assistant commissioner will withhold from public inspection, for such time as in the assistant commissioner's judgment is necessary, information received in connection with a registration statement, application, or report, if the assistant commissioner finds that such information is reasonably shown to be:
(i) Proprietary information that is in fact confidential, including, but not limited to, trade secrets, the release of which would be damaging or prejudicial to the business concerned; or

(ii) Financial information that is in fact confidential, the release of which would be damaging or prejudicial to the person concerned.

2. Request for Confidentiality. A request for confidential treatment of any information received in connection with any registration statement, application, or report submitted to the assistant commissioner should accompany the submission of such information and such information must be submitted separately from other parts of the filing and marked "Confidential Treatment Requested". The request for confidentiality will itself be available for public inspection and should not contain information for which confidential treatment is requested. Such request must be signed by the person filing the registration statement, application, or report and contain the following:
(i) A statement identifying the information which is the subject of the request and the registration statement, application, or report relating thereto;

(ii) A statement of the grounds upon which the request is made, including a statement as to the confidentiality of the information and the measures taken to protect its confidentiality, and a statement of the adverse consequences which are expected to result if the information is disclosed through the public records of the Division;

(iii) A statement of the specific time for which confidential treatment of the information is necessary and the basis for such conclusions; and

(iv) A statement of the extent to which such information has been or will be disclosed to present or proposed investors, franchisees, lenders, or other persons.

3. Denial of Request. Material for which confidential treatment is requested shall not be deemed filed unless the request is granted, and may be withdrawn by the applicant if the request is denied, unless (i) the assistant commissioner has already taken an official action in reliance on such information prior to receiving the request for confidential treatment, (ii) the assistant commissioner determines that the withdrawal of such information is otherwise contrary to the public interest or the protection of investors, or (iii) the material for which confidential treatment is requested is otherwise required to be filed with the Division elsewhere in these Rules. If withdrawn, such information will not be considered by the assistant commissioner in connection with the registration statement, application, or report.

4. Granting Request. If a request for confidential treatment is granted, the person making such request will be notified in writing, the information will be marked "confidential" and kept separate from the public file, and the registration statement, application, or report will be noted with substantially the following legend: "Additional portions of this filing have been granted confidential treatment and are contained in a separate confidential file."

5. Disclosure of Confidential Information.
(i) Information held confidential pursuant to part (5)(f)4. of this Rule may be disclosed by the assistant commissioner, at any time and in the assistant commissioner's sole discretion, whether on the assistant commissioner's own motion or upon the request of any person.
(I) To other state or federal regulatory agencies, in accordance with law;

(II) When necessary or appropriate in any proceeding or investigation pursuant to the law under which the information was filed; or

(III) Upon a determination by the assistant commissioner that continued confidential treatment is no longer justified because the reasons therefore no longer exist or because public interest in disclosing such information outweighs the public interest in not doing so. If the assistant commissioner concludes that the disclosure of such information is necessary and in the public interest and that it is impractical under the circumstances to give notice to the person who requested confidential treatment of the information, the information may be disclosed without notice. Otherwise, the person who requested confidential treatment of such information will be given notice that the release of such information is under consideration and the reasons therefore, and an opportunity to make written representations promptly, within not more than five (5) business days, regarding the continued need and justification for continued confidentiality.

(ii) Requests to Inspect Confidential Information. A request to inspect confidential information pursuant to subitem (5)(f)5.(i)(III) of this Rule should be in writing, signed by the person making the request, and must state the justification for the request. A copy of the request for inspection will ordinarily be forwarded to the person who requested confidential treatment of the information in accordance with subitem (5)(f)5.(i)(III) of this Rule. If a request for inspection should be held confidential, the reasons therefore must be stated in such request, in accordance with part (5)(f)2. of this Rule.

(iii) Nothing contained herein shall be interpreted as affording any person a right to withdraw information once it has been received by the assistant commissioner, except as provided in part (5)(f)3. of this Rule.

6. All documents described in paragraph (5) of this Rule may be maintained or submitted to the Division through the CRD System or other electronic data gathering, access, and retrieval methods acceptable to the Division.

Authority: T.C.A. §§ 48-1-103(b)(11), 48-1-104, 48-1-107(b), 48-1-108, 48-1-109, 48-1-110, 48-1-111, 48-1-112, 48-1-115, 48-1-116, 48-1-117, 48-1-118, 48-1-121, 48-1-125, 4-5-105, 10-7-503(a)(2)(A-B), Public Acts of 1997, Chapter 164, § 8, and Public Acts of 2001, Chapter 61.

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