Section 0780-04-03-.04 - PERSONS DEEMED NOT TO BE BROKER-DEALERS(1) Associated Persons of an Issuer. (a) An associated person of an issuer of securities shall not be deemed to be a broker-dealer by reason of his participation in the offer, sale, or transfer of the securities of such issuer if the associated person: 1. Is not subject to a statutory disqualification, as the term is defined in Section 3(a)(39) of the 1934 Act, at the time of his participation;2. Is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;3. Is not at the time of his participation an associated person of a broker-dealer; and4. Meets the conditions of any one of the following subparts (1)(a)4.(i), (1)(a)4.(ii), or (1)(a)4.(iii) of this Rule: (i) The associated person restricts his participation to transactions involving offers, sales, or transfers of securities. (I) To a registered broker-dealer or an institutional investor;(II) That are exempted from the registration requirements of the Act under T.C.A. § 48-1-103(a)(11), or that are offered, sold, or transferred pursuant to transactions that are exempt from the registration requirements of the Act under T.C.A. §§ 48-1-103(b)(2), (b)(9), or (b)(10); or(III) That are made pursuant to any of the events described in T.C.A. § 48-1-102(15)(F).(ii) The associated person meets all of the following conditions: (I) The associated person primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities;(II) The associated person was not a broker-dealer, or an associated person of a broker-dealer, within the preceding twelve (12) months; and(III) The associated person does not participate in selling an offering of securities for any issuer more than once every twelve (12) months other than in reliance on subparts (1)(a)4.(i) or (1)(a)4.(iii) of this Rule, except that for securities issued pursuant to SEC Rule 415 ( 17 C.F.R. §230.415) , the twelve (12) months shall begin with the last sale of any security included within one (1) SEC Rule 415 registration.(iii) The associated person restricts his participation to any one (1) or more of the following activities: (I) Preparing any written communication or delivering such communication through the mails or other means that does not involve oral solicitation by the associated person of a potential purchaser; provided, however, that the content of such communication is approved by a partner, officer, or director of the issuer;(II) Responding to inquiries of a potential purchaser in a communication initiated by the potential purchaser; provided, however, that the content of such responses are limited to information contained in a registration statement filed under the Act or other offering document; or(III) Performing ministerial and clerical work involved in effecting any transaction.(b) No presumption shall arise that an associated person of an issuer has violated T.C.A. § 48-1-109 solely by reason of his participation in the offer, sale, or transfer of securities of the issuer if he does not meet the conditions specified in this Rule.(c) Definitions. When used in this Rule: 1. The term "associated person of an issuer" means any natural person who is a partner, officer, director, or employee of: (ii) A corporate general partner of a limited partnership that is the issuer;(iii) A company or partnership that controls, is controlled by, or is under common control with, the issuer; or(iv) An investment adviser, registered under the Investment Advisers Act to an investment company registered under the Investment Company Act, which is the issuer.2. The term "associated person of a broker-dealer" means any partner, officer, director, or branch manager of such broker-dealer (or the person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with such broker-dealer, any agent of such broker-dealer, or any employee of such broker-dealer, except that any person associated with a broker-dealer whose functions are solely clerical or ministerial and any person who is required under the laws of any state to register as a broker-dealer in that state solely because such person is an issuer of securities or an associated person of an issuer of securities shall not be included in the meaning of such term for purposes of this Rule.(2) A retail or financing institution whose dealings in securities are limited to transactions for its own account with institutional investors or other retail or financing institutions in notes or other evidences of indebtedness secured by mortgages, deeds of trust, or agreements for the sale of real estate or personality, will not be deemed a broker-dealer if the entire mortgage, deed of trust, or agreement, together with all notes or other evidences of indebtedness secured thereby, is offered and sold as a unit.(3) The exclusions set forth herein shall not exempt any person from the operation of the antifraud provisions of the Act.Tenn. Comp. R. & Regs. 0780-04-03-.04
Original rule filed September 9, 1980; effective October 24, 1980. Amendment filed January 13, 1983; effective February 14, 1983. Repeal and new rule filed September 28, 1990; effective November 12, 1990. Amendment filed May 15, 2002; effective July 29, 2002. Amendment filed April 5, 2004; effective June 19, 2004. Repeal and new rule filed March 16, 2015; effective 6/14/2015.Authority: T.C.A. §§ 48-1-102, 48-1-103, 48-1-109, 48-1-110(f), 48-1-115, 48-1-116, 48-1-121, §3(a)(39) of the Securities Act of 1933, and 17 C.F.R. §230.415.