SB 1866

Present law prohibits persons from transacting business in this state as an investment advisor unless (i) the person is an investment advisor or an investment adviser representative; (ii) the person is required to register as an investment advisor pursua nt to federal law and has filed an initial notice filing with the commissioner of commerce and insurance ("commissioner""); or (iii) the person's only clients in this state are insurance companies. This bill also authorizes a person to transact business in this state as an investment advisor if the person is exempted from the definition of an investment advisor or investment advisor representative pursuant to a rule adopted by the commissioner. CONFIDENTIAL RECORDS Present law requires the working papers, recorded information, documents, and required records and copies of such documents obtained by or disclosed to the commissioner or another person in the course of an examination made under the Tennessee Securities Act of 1980 (""the Act"") to be kept confidential and not made public. However, this bill clarifies that the commissioner is not prohibited from disclosing the content of an examination to the securities administration of other states, the securities and ex change commission, any securities exchange or association registered under federal law, or any securities administrators' associate for the purpose of avoiding unnecessary duplication of examinations. INJUNCTIONS AND CIVIL LIABILITY Present law authorizes the commissioner to bring an action to enjoin the acts or practices of any person that has engaged or is about to engage in a violation of the Act. Upon proper showing, a permanent or temporary injunction, restraining order, writ of mandamus, disgorgement, or other proper equitable relief must be granted. This bill requires the court to appoint the commissioner as the receiver or conservator for the defendant or the defendant's assets upon the request of the commissioner. Present law creates a private right of action to enforce liability for violations of the Act in any court with jurisdiction. This bill requires that such private right of action be commenced less than five years after the violation or two years after th e discovery of the facts constituting the violation, or after such discovery should have been made, whichever expires first. CUSTOMER DISPUTES This bill authorizes broker-dealers or agents with a business location in this state to file to vacate, modify, or confirm an arbitration award relating to expungement of consumer dispute information from the Central Registration Depository system or to file an action in court to obtain expungement of customer dispute information from the Central Registration Depository system. Broker-dealers previously registered in this state with a business location in this state at the time the underlying customer d is pute occurred may also initiate such proceedings. Sixty days prior to initiation, the broker-dealer or agent must provide the department of commerce and insurance (""department"") with a written notice of the proceeding. The department must also be named a party to the proceeding. However, this bill authorizes the commissioner to waive the obligation to name the department. COOPERATIVE SCHOLARSHIP PLANS Present law authorizes the creation of educational cooperative scholarship plans and authorizes the commissioner to regulate the operation and administration of such plans. This bill eliminates educational cooperative scholarship plans."