Syndicators looking to raise capital from investors in Tennessee should be aware of Tennessee’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of Tennessee’s blue sky laws will help you make smart business decisions about how you put together an offer and protect yourself from potential legal trouble.


What are Blue Sky Laws in General? 

The purpose of securities laws is to protect investors. There are two levels of regulatory agencies that provide that protection: the Securities and Exchange Commission (the SEC) and each state’s security regulation agency.

Federal law has severely restricted the states’ abilities to review or restrict sales of most securities when offered through a Federal regulation (such as syndication of a Reg D offering). The states do, however, often require a notice be filed with them along with the appropriate fee, conduct investigations, and bring fraud actions if necessary in order to protect those domiciled in their states.

When everything takes place within the state, then Tennessee’s Blue Sky Rules apply. 


What if I Need to Notify Tennessee about my Regulation D Syndication?

Here are the basic facts you need to know about giving notice to Tennessee about your Reg D Rule 506b or 506c offer:

Filing fee – Fixed

New notice – $500

Late fee for late filings – None


What are Tennessee’s Blue Sky Laws?

TN ST § 45-3-116 Exemptions; securities laws

TN ST § 48-1-103 Exemption from registration and filing of sales in advertising literature

TN ST § 48-1-104 Sales unlawful unless registered, exempt, or covered

TN ST § 48-1-114 Filing of application for registration, registration statement, or notice filing, or exemption does not constitute approval by commissioner


What are Tennessee’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, savings and loan, credit unions, industrial bank thrift certificates, bank or savings and loan holding companies etc.; Cooperative marketing associations; Other entities: railroads, common carriers, public utilities, or holding companies; Listed stock exchange securities etc.; Non-profit persons; Promissory notes etc.; Exchanged security with no commission paid for solicitation; Securities meeting certain conditions


What are Tennessee’s procedures for securities law exemptions? 

Applicable to: non-profit persons, and bank or savings and loan holding companies; Procedure may include: filing notice, sales materials, and $100 fee


Frequently Asked Questions

Do I need an attorney from Tennessee then to put together an offering?

That depends. If the offering you are putting together is under Regulation D and not one of the Tennessee-specific Blue Sky Laws (as discussed above), then probably not. 

For example, if you needed a real estate syndication attorney to put together a private placement memorandum for a multifamily deal in Nashville, Tennessee, that was going to be offered in different states, and you didn’t need counsel on questions related to Tennessee laws, then chances are a licensed syndication lawyer would be able to help. They could even put together the entity for you and write the operating agreement, they just couldn’t provide you counsel on the specific laws of Tennessee and how they may or may not pertain to your offer.

However, if you were putting together a private placement memorandum for a development project in Memphis, Tennessee, all of the investors were from Tennessee, and you wanted to use one of Tennessee’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in Tennessee.


Is it ok if the real estate syndication attorney, licensed outside of Tennessee, looks over my purchase contract?

They can look, but they can’t give you advice as it pertains to Tennessee. For example, Tilden Moschetti, Esq, syndication attorney for the Moschetti Syndication Law Group, will look, if asked, about the contract underlying your purchase contract in Knoxville, Tennessee, but makes it clear that he can give business consulting advice (discussion on price and broad deal points like the length of time until closing), but cannot speak to any specific term as he is not licensed there.