Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-04 - Division of Securities
Chapter 0780-04-03 - Industry Regulation
Section 0780-04-03-.11 - PERSONS DEEMED NOT TO BE "AGENTS"

Universal Citation: TN Comp Rules and Regs 0780-04-03-.11

Current through September 24, 2024

(1) An individual associated person of a broker-dealer shall be exempt from the definition of "agent" as defined under T.C.A. § 48-1-102(3) if such individual associated person effects any of the two (2) types of transactions in securities described in paragraph (2) of this Rule for a customer in this state and satisfies the following conditions:

(a) Such individual associated person is not ineligible to register in this state for any reason other than such a transaction in securities;

(b) Such individual associated person is registered with a securities association registered under the 1934 Act and is also registered in at least one (1) state; and

(c) The broker-dealer with which such individual person is associated is appropriately registered in this state.

(2) For purposes of this Rule, the following are the two (2) types of transactions referred to in paragraph (1):

(a) A transaction that is effected on behalf of a customer who:
1. Maintained an account with the broker-dealer employing the associated person for thirty (30) days prior to the date of the transaction; and

2. Was assigned to such individual associated person for fourteen (14) days prior to the day of the transaction and such individual associated person is registered with the state in which the customer was resident or was present for at least thirty (30) consecutive days during the one (1) year period prior to the day of the securities transaction; or

(b) A transaction that is:
1. Effected on behalf of a customer who maintains an account with the broker-dealer for thirty (30) days prior to the date of the securities transactions; and

2. Effected during the period, beginning on the date on which such individual associated person of a broker-dealer files an application for agent registration in this state and ending on the earlier of:
(i) Sixty (60) days after the date on which the application is filed; or

(ii) The date on which this state notifies the associated person that it has denied the application for registration or has stayed the pendency of the application for cause.

For purposes of part (2)(a)2. of this Rule, each of up to three (3) individuals, who are associated persons of a broker-dealer and who are designated by such broker-dealer to effect securities transactions for a customer in this state during the absence or unavailability of the principal associated person for a customer, may be treated as an associated person to which such customer is assigned.

(3) An exemption from the definition of "agent" claimed on the basis of the transaction set forth in subparagraph (2)(a) of this Rule shall not be effective if the customer is present in this state for thirty (30) or more consecutive days or has permanently changed his or her residence to this state and the associated person of the broker-dealer fails to file an application for agent registration in this state pursuant to T.C.A. §§ 48-1-109 and 48-1-110 not later than ten (10) business days after the later of:

(a) The date of the transaction;

(b) The date of discovery of the customer's presence in this state for thirty (30) or more consecutive days; or

(c) The change in the customer's residence.

(4) The exemptions set forth herein shall not exempt any person from the operation of the antifraud provision of the Act set forth at T.C.A. § 48-1-121.

Authority: T.C.A. §§ 48-1-102, 48-1-109, 48-1-110, 48-1-115, 48-1-116, 48-1-121, and §15 of the Securities and Exchange Act of 1934, as amended by §103(a) of the National Securities Markets Improvement Act of 1996.

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