56-3-703 - Profits from unfair use of information recoverable Exceptions. - Tennessee Statutes

56-3-703. Profits from unfair use of information recoverable Exceptions.

(a)  For the purpose of preventing the unfair use of information that may have been obtained by the beneficial owner, director, or officer by reason of the relationship to the company, any profit realized by the person from any purchase and sale, or any sale and purchase, of any equity security of the company within any period of less than six (6) months, unless the security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of the beneficial owner, director, or officer in entering into the transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six (6) months.

(b)  Suit to recover the profit may be instituted at law or in equity in any court of competent jurisdiction by the company or by the owner of any security of the company in the name and in behalf of the company, if the company fails or refuses to bring suit within sixty (60) days after request or fails diligently to prosecute it thereafter; but no suit shall be brought more than two (2) years after the date the profit was realized.

(c)  This section shall not be construed to cover any transaction where the beneficial owner was not the beneficial owner both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions that the commissioner by rules and regulations exempts as not comprehended within the purpose of this section.

[Acts 1965, ch. 95, § 2; T.C.A., §§ 56-251, 56-333.]