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TDCI: New Rescission Rule Provides Greater Clarity to Broker-Dealers, Firms and Investors on Rescission Offers

New Rule Means Rescission Offers Will No Longer Need to Be Registered
Tuesday, May 04, 2021 | 09:14am

NASHVILLE A new rule recently adopted by the Tennessee Department of Commerce & Insurance’s (TDCI) Securities Division provides issuers, broker-dealers and Tennessee investors with more clarity when it comes to offers of rescission.

A rescission offer happens when an issuer offers to repurchase an investor’s securities and refund the purchase price plus interest. On occasion, an issuer may seek to make offers of rescission to investors when it is believed there was a possible violation of registration requirements. TDCI’s Securities Division maintains a public register of all registration applications and registration statements.

In the past, a rescission offer was required to be registered with the TDCI. The new rule still means establishing the creation of a record of the violations that necessitated the rescission offer, but it does not require the rescission offer itself to be registered. The rule sets forth all elements that must be provided to the Division for a valid rescission offer. The timing and requirements of the notice that must be sent to purchasers are all set forth in the new rule.

“This new rule promotes public confidence in capital markets as it provides clarity, consistency and transparency to people conducting and receiving rescission offers,” said TDCI Assistant Commissioner for Securities Elizabeth Bowling. “Issuers or investors who have questions should contact our team.”

Investors who have questions may contact TDCI’s Securities team via tn.gov/securities, phone at 615-741-2947 or 800-863-9117 or by email at securities.1@tn.gov.

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About the Tennessee Department of Commerce & Insurance: Fostering fair marketplaces, public safety, and consumer education that promote the success of individuals and businesses while serving as innovative leaders. Our divisions include the State Fire Marshal’s Office, Insurance, Securities, Regulatory Boards, Tennessee Law Enforcement Training Academy, Tennessee Emergency Communications Board and TennCare Oversight.