§ 5510. Rescission offers
(a) Unless a purchaser, seller, or recipient of investment advice provides written notice
of a dispute to the seller, purchaser, or provider of investment advice in conformity
to subsection (b) of this section, such purchaser, seller, or recipient of investment
advice may not maintain an action under section 5509 of this chapter if:
(1) The purchaser, seller, or recipient of investment advice receives in a record, before
the action is instituted:
(A) an offer stating the respect in which liability under section 5509 of this chapter
may have arisen and fairly advising the purchaser, seller, or recipient of investment
advice of that person’s rights in connection with the offer, and any financial or
other information necessary to correct all material misrepresentations or omissions
in the information that was required by this chapter to be furnished to that person
at the time of the purchase, sale, or investment advice;
(B) if the basis for relief under this section may have been a violation of subsection
5509(b) of this chapter, an offer to repurchase the security for cash, payable on
delivery of the security, equal to the consideration paid, and interest at the legal
rate of interest from the date of the purchase, less the amount of any income received
on the security, or, if the purchaser no longer owns the security, an offer to pay
the purchaser upon acceptance of the offer damages in an amount that would be recoverable
upon a tender, less the value of the security when the purchaser disposed of it, and
interest at the legal rate of interest from the date of the purchase in cash equal
to the damages computed in the manner provided in this subsection;
(C) if the basis for relief under this section may have been a violation of subsection
5509(c) of this chapter, an offer to tender the security, on payment by the seller
of an amount equal to the purchase price paid, less income received on the security
by the purchaser and interest at the legal rate of interest from the date of the sale;
or if the purchaser no longer owns the security, an offer to pay the seller upon acceptance
of the offer, in cash, damages in the amount of the difference between the price at
which the security was purchased and the value the security would have had at the
time of the purchase in the absence of the purchaser’s conduct that may have caused
liability and interest at the legal rate of interest from the date of the sale;
(D) if the basis for relief under this section may have been a violation of subsection
5509(d) of this chapter; and if the customer is a purchaser, an offer to pay as specified
in subdivision (B) of this subdivision (1); or, if the customer is a seller, an offer
to tender or to pay as specified in subdivision (C) of this subdivision (1);
(E) if the basis for relief under this section may have been a violation of subsection
5509(e) of this chapter, an offer to reimburse in cash the consideration paid for
the advice and interest at the legal rate of interest from the date of payment; or
(F) if the basis for relief under this section may have been a violation of subsection
5509(f) of this chapter, an offer to reimburse in cash the consideration paid for
the advice, the amount of any actual damages that may have been caused by the conduct,
and interest at the legal rate of interest from the date of the violation causing
the loss;
(2) the offer under subdivision (1) of this subsection states that it must be accepted
by the purchaser, seller, or recipient of investment advice within 30 days after the
date of its receipt by the purchaser, seller, or recipient of investment advice or
any shorter period, of not less than three days, that the Commissioner, by order,
specifies;
(3) the offeror has the present ability to pay the amount offered or to tender the security
under subdivision (1) of this subsection;
(4) the offer under subdivision (1) of this subsection is delivered to the purchaser,
seller, or recipient of investment advice, or sent in a manner that ensures receipt
by the purchaser, seller, or recipient of investment advice; and
(5) the purchaser, seller, or recipient of investment advice that accepts the offer under
subdivision (1) of this subsection in a record within the period specified under subdivision
(2) of this subsection is paid in accordance with the terms of the offer.
(b) When a purchaser, seller, or recipient of investment advice provides written notice
of a dispute containing a description of the nature of the dispute, the dates on which
it occurred, a listing of the persons or entities involved to the seller, purchaser,
or provider of investment advice, the person receiving such notice shall have 90 days
to resolve the dispute within the terms of subsection (a) of this section. After the
expiration of 90 days from the receipt of such notice, the terms of subsection (a)
shall not apply to prohibit the pursuit of relief by such purchaser, seller, or recipient
of investment advice under section 5509 of this chapter unless the terms of subsection
(a) have been satisfied. Such notice shall be sent via certified mail, return receipt
requested, or via a national courier service to the principal office and contact person
of the purchaser, seller, or provider of investment advice, which:
(1) in the case of a broker-dealer firm or its agent, shall be the principal office and
contact person for the firm as set forth in such firm’s form B-D registration on file
with the Commissioner (or any similar registration form adopted by the Commissioner
hereafter); and
(2) in the case of an investment adviser firm or its representative, shall be the principal
office and contact person for the firm as set forth in such firm’s form ADV registration
or notice filing on file with the Commissioner (or any similar registration or notification
form adopted by the Commissioner hereafter). (Added 2005, No. 11, § 1, eff. July 1, 2006.)