Securities, such as stocks and bonds, are a large part of the economy so it's no surprise that there are securities laws at both the federal and state level. Federal securities laws are enforced by the U.S. Securities and Exchange Commission while the Tennessee Securities Division, which is a part of the Department of Commerce and Insurance, has the responsibility of enforcing the Tennessee Securities Act and protecting investors in the state.
Securities fraud occurs when a person makes misleading or untrue statements about a company or its stocks to convince people to make financial decisions about the company based on that information. In most states, including Tennessee, securities fraud is generally treated as a serious crime since it can cause significant financial damage.
Tennessee Securities Act and Investment Fraud Laws: The Basics
Grasping the meaning of a statute can be challenging, particularly when it comes to complicated areas of law, such as securities and investment regulation. That's why it's helpful to read an overview of laws that's written in a way that doesn't involve legal jargon. The following chart provides a brief overview of Tennessee Securities Act and investment fraud laws as well as links to applicable statutes.
Tennessee Code, Title 48, Chapter 1, Part 1, Section 48-1-101, et seq. (Tennessee Securities Act of 1980)
It's unlawful for a person in connection with the offer, sale, or purchase any security in Tennessee to:
- Use a device or scheme to defraud;
- Make a false statement of a material fact or omit a necessary material fact; or
- Engage in an act, practice, or course of business that operates as a fraud.
It's also unlawful for a person who receives consideration (such as money) primarily for providing advice as to the value of securities in Tennessee to engage in any of the acts listed above or to take/have custody of securities or funds of a client except as the commissioner may by rule permit or unless the person is licensed as a broker-dealer.
|Charges and Penalties
Willful violation of the Tennessee Securities Act is a Class D felony punishable by 2 to 12 years of imprisonment* and fines up to $5,000.
*A person can't be imprisoned for violating a rule or order related to securities if they prove that they didn't have actual knowledge of the rule or order.
Tennessee Code, Title 47, Chapter 8, Section 47-8-101, et seq. (Investment Securities)
Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.
Tennessee Securities Act and Investment Fraud Laws: Related Resources
For additional information and resources related to this topic, please click on the links below:
Charged with Violating Tennessee Securities Act and Investment Fraud Laws? Talk to a Lawyer
Securities fraud is a felony in Tennessee, which means that a conviction can lead to imprisonment and a criminal record. But in order to be convicted, the prosecution must prove its case against you. The best way to fight the charges is to get an advocate on your side. If you've been charged with violating Tennessee Securities Act and investment fraud laws, it's in your best interest to contact a criminal defense attorney to discuss your case and find out about your options.