(1) Offers or sells asecurity in violation of G.S. 78A‑8(1), 78A‑8(3), 78A‑10(b),78A‑13, 78A‑14, 78A‑24, or 78A‑36(a), or of any rule ororder under G.S. 78A‑49(d) which requires the affirmative approval ofsales literature before it is used, or of any condition imposed under G.S. 78A‑27(d)or 78A‑28(g), or
(2) Offers or sells asecurity by means of any untrue statement of a material fact or any omission tostate a material fact necessary in order to make the statements made, in thelight of the circumstances under which they were made, not misleading (thepurchaser not knowing of the untruth or omission), and who does not sustain theburden of proof that he did not know, and in the exercise of reasonable carecould not have known, of the untruth or omission,
isliable to the person purchasing the security from him, who may sue either atlaw or in equity to recover the consideration paid for the security, togetherwith interest at the legal rate from the date of payment, costs, and reasonableattorneys' fees, less the amount of any income received on the security, uponthe tender of the security, or for damages if the purchaser no longer owns thesecurity. Damages are the amount that would be recoverable upon a tender lessthe value of the security when the purchaser disposed of it and interest at thelegal rate as provided by G.S. 24‑1 from the date of disposition.
(b) Any person whopurchases a security by means of any untrue statement of a material fact or anyomission to state a material fact necessary in order to make the statementsmade, in the light of the circumstances under which they are made, notmisleading (the seller not knowing of the untruth or omission), and who doesnot sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the untruth or omission,shall be liable to the person selling the security to him, who may sue either atlaw or in equity to recover the security, plus any income received by thepurchaser thereon, upon tender of the consideration received, or for damages ifthe purchaser no longer owns the security. Damages are the excess of the valueof the security when the purchaser disposed of it, plus interest at the legalrate as provided by G.S. 24‑1 from the date of disposition, over theconsideration paid for the security.
(b1) A person whowillfully violates G.S. 78A‑12 is liable to a person who purchases orsells a security, other than a security traded on a national securitiesexchange or quoted on a national automated quotation system administered by aself‑regulatory organization, at a price that was affected by the act ortransaction for the damages sustained as a result of the act or transaction.Damages are the difference between the price at which the securities werepurchased or sold and the value the securities would have had at the time ofthe person's purchase or sale in the absence of the act or transaction, plusinterest at the legal rate as provided by G.S. 24‑1 from the date of thepurchase or sale, costs, and reasonable attorneys' fees determined by thecourt.
(c) (1) Everyperson who directly or indirectly controls a person liable under subsection (a),(b), or (b1) of this section, every partner, officer, or director of theperson, every person occupying a similar status or performing similarfunctions, and every dealer or salesman who materially aids in the sale is alsoliable jointly and severally with and to the same extent as the person, unlessable to sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the existence of the factsby reason of which the liability is alleged to exist.
(2) Unless liable undersubdivision (1) of this subsection, every employee of a person liable undersubsection (a), (b), or (b1) of this section who materially aids in thetransaction giving rise to the liability and every other person who materiallyaids in the transaction giving rise to the liability is also liable jointly andseverally with and to the same extent as the person if the employee or otherperson actually knew of the existence of the facts by reason of which theliability is alleged to exist.
(3) There iscontribution among the several persons liable under subdivisions (1) and (2) ofthis subsection as provided among tort‑feasors pursuant to Chapter 1B ofthe General Statutes.
(d) Any tenderspecified in this section may be made at any time before entry of judgment.Tender shall require only notice of willingness to exchange the security forthe amount specified. Any notice may be given by service as in civil actions orby certified mail addressed to the last known address of the person liable.
(e) Every cause ofaction under this statute survives the death of any person who might have beena plaintiff or defendant.
(f) No person may sueunder this section for a violation of G.S. 78A‑24 or G.S. 78A‑36more than two years after the sale or contract of sale.
No person may sue under thissection for any other violation of this Chapter more than three years after theperson discovers facts constituting the violation, but in any case no laterthan five years after the sale or contract of sale, except that if a person whomay be liable under this section engages in any fraudulent or deceitful actthat conceals the violation or induces the person to forgo or postponecommencing an action based upon the violation, the suit may be commenced notlater than three years after the person discovers or should have discoveredthat the act was fraudulent or deceitful.
(g) (1) Nopurchaser may sue under this section if, before suit is commenced, thepurchaser has received a written offer stating the respect in which liabilityunder this section may have arisen and fairly advising the purchaser of hisrights; offering to repurchase the security for cash payable on delivery of thesecurity equal to the consideration paid, together with interest at the legalrate as provided by G.S. 24‑1 from the date of payment, less the amountof any income received on the security or, if the purchaser no longer owns thesecurity, offering to pay the purchaser upon acceptance of the offer an amountin cash equal to the damages computed in accordance with subsection (a); andstating that the offer may be accepted by the purchaser at any time within 30days of its receipt; and the purchaser has failed to accept such offer inwriting within the specified period.
(2) No seller may sue underthis section if, before suit is commenced, the seller has received a writtenoffer stating the respect in which liability under this section may have arisenand fairly advising the seller of his rights; offering to return the securityplus the amount of any income received thereon upon payment of theconsideration received, or, if the purchaser no longer owns the security,offering to pay the seller upon acceptance of the offer an amount in cash equalto the damages computed in accordance with subsection (b); and providing thatthe offer may be accepted by the seller at any time within 30 days of itsreceipt; and the seller has failed to accept such offer in writing within thespecified period.
(3) Offers shall be inthe form and contain the information the Administrator by rule prescribes.Every offer under subsection (g) of this section shall be delivered to theofferee or sent by certified mail addressed to the offeree at the offeree'slast known address. The person making the offer shall file a copy of therescission offer with the Administrator at least 10 days before delivering theoffer to the offeree. If an offer is not performed in accordance with itsterms, suit by the offeree under this section shall be permitted without regardto this subsection.
(h) No person who hasmade or engaged in the performance of any contract in violation of anyprovision of this Chapter or any rule or order hereunder, or who has acquiredany purported right under any such contract with knowledge of the facts byreason of which its making or performance was in violation, may base any suiton the contract.
(i) Any condition,stipulation, or provision binding any person acquiring any security to waivecompliance with any provision of this Chapter or any rule or order hereunder isvoid.
(j) The rights andremedies provided by this Chapter are in addition to any other rights orremedies that may exist at law or in equity, but this Chapter does not createany cause of action not specified in this section or G.S. 78A‑37(d). Ifthe requirements of Chapter 1D of the General Statutes are met, punitivedamages are available to the extent provided in that Chapter.
(k) The purchaser of aviatical settlement contract may rescind or cancel the purchase agreement forany reason by providing written notice of rescission or cancellation to theissuer or the issuer's agent, by certified mail, return receipt requested,within 10 business days after each of the following: (i) the date on which thepurchase agreement for the viatical settlement contract is signed by thepurchaser, and (ii) the date of actual notice to the purchaser of theassignment, transfer, or sale of all or a portion of an insurance policy onwhich the viatical settlement contract is based. Notice of rescission iseffective upon deposit in the United States mail. The notice of rescission neednot take a particular form and is sufficient if it expresses the intention ofthe purchaser to rescind the transaction. For purposes of this subsection andsubsection (k1) of this section only, the rescission period of 10 business daysfollowing the purchaser's signing of the purchase agreement shall also be knownas the "initial 10‑day rescission period."
(k1) Immediately uponreceipt of any consideration by an issuer or its agent pursuant to a viaticalsettlement purchase agreement, the issuer or its agent shall deliver theconsideration to a domestic independent escrow agent. For purposes of thissection, "domestic independent escrow agent" means an escrow agent,located in this State, and not affiliated with the issuer, its affiliate, itsofficers or directors, or its promoter, or any agents thereof. The domesticindependent escrow agent shall maintain the funds received, in their entirety,in an escrow account or trust account located in this State, for the initial 10‑dayrescission period following the signing of the purchase agreement, as providedin subsection (k) of this section, unless the domestic independent escrowagent, prior to the completion of the initial 10‑day rescission period,receives notice of the purchaser's cancellation or rescission of the purchaseagreement in accordance with this section. If the purchase agreement isrescinded or cancelled within the initial 10‑day rescission period, thedomestic independent escrow agent shall immediately deliver the funds, in theirentirety along with any interest earned on the funds during the time in whichthe funds were held in escrow, to the purchaser upon receiving notice, bycertified mail, from the issuer or its agent that the purchase agreement hasbeen rescinded or cancelled by the purchaser. If the purchase agreement has notbeen rescinded or cancelled within the initial 10‑day rescission period,the domestic independent escrow agent shall release the funds to the issuer orits agent in a manner to be determined by agreement between the issuer and thedomestic independent escrow agent. Until the funds become available for releaseby the domestic independent escrow agent to the issuer upon the expiration ofthe initial 10‑day rescission period without rescission or cancellationby the purchaser, the funds are not subject to claims by creditors of theissuer, its affiliates, or associates.
(l) Within 90 daysafter the sale or execution of a contract of sale for an investment of fundsintended to be used to purchase a viatical settlement contract or contracts,the seller shall provide the purchaser with a rescission offer in accordancewith rules prescribed by the Administrator, if, within that period, there hasnot been the identification of each and every viatical settlement contractacceptable to the purchaser which has been or shall be purchased for theinvestment. The purchaser may accept the rescission offer within 10 businessdays after receiving it. Acceptance of the rescission offer is effective uponcompliance by the purchaser with the procedural requirements for notice ofrescission or cancellation by a viatical settlement purchaser set forth insubsection (k) of this section. The seller shall keep a record of the rescissionoffer and its acceptance or rejection for at least three years after providingthat offer and shall provide that record to the Administrator at theAdministrator's request. For purposes of this subsection only,"purchaser" means a person who executes a contract of sale, with aseller, for an investment of funds to be used to purchase a viatical settlementcontract or viatical settlement contracts when, at the time of execution of thecontract, each and every viatical settlement contract to be purchased pursuantto the investment has not been identified. (1925, c. 190, s. 23; 1927, c. 149, s. 23; 1955, c.436, s. 10; 1971, c. 572, s. 2; 1973, c. 1380; 1975, c. 19, s. 22; c. 144, s.3; 1977, c. 781, s. 2; 1983, c. 817, ss. 20, 21; 1987, c. 282, s. 9; 1991, c.456, s. 5; 2001‑183, s. 1; 2001‑436, s. 11; 2003‑413, ss. 5‑10.)
(1) Offers or sells asecurity in violation of G.S. 78A‑8(1), 78A‑8(3), 78A‑10(b),78A‑13, 78A‑14, 78A‑24, or 78A‑36(a), or of any rule ororder under G.S. 78A‑49(d) which requires the affirmative approval ofsales literature before it is used, or of any condition imposed under G.S. 78A‑27(d)or 78A‑28(g), or
(2) Offers or sells asecurity by means of any untrue statement of a material fact or any omission tostate a material fact necessary in order to make the statements made, in thelight of the circumstances under which they were made, not misleading (thepurchaser not knowing of the untruth or omission), and who does not sustain theburden of proof that he did not know, and in the exercise of reasonable carecould not have known, of the untruth or omission,
isliable to the person purchasing the security from him, who may sue either atlaw or in equity to recover the consideration paid for the security, togetherwith interest at the legal rate from the date of payment, costs, and reasonableattorneys' fees, less the amount of any income received on the security, uponthe tender of the security, or for damages if the purchaser no longer owns thesecurity. Damages are the amount that would be recoverable upon a tender lessthe value of the security when the purchaser disposed of it and interest at thelegal rate as provided by G.S. 24‑1 from the date of disposition.
(b) Any person whopurchases a security by means of any untrue statement of a material fact or anyomission to state a material fact necessary in order to make the statementsmade, in the light of the circumstances under which they are made, notmisleading (the seller not knowing of the untruth or omission), and who doesnot sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the untruth or omission,shall be liable to the person selling the security to him, who may sue either atlaw or in equity to recover the security, plus any income received by thepurchaser thereon, upon tender of the consideration received, or for damages ifthe purchaser no longer owns the security. Damages are the excess of the valueof the security when the purchaser disposed of it, plus interest at the legalrate as provided by G.S. 24‑1 from the date of disposition, over theconsideration paid for the security.
(b1) A person whowillfully violates G.S. 78A‑12 is liable to a person who purchases orsells a security, other than a security traded on a national securitiesexchange or quoted on a national automated quotation system administered by aself‑regulatory organization, at a price that was affected by the act ortransaction for the damages sustained as a result of the act or transaction.Damages are the difference between the price at which the securities werepurchased or sold and the value the securities would have had at the time ofthe person's purchase or sale in the absence of the act or transaction, plusinterest at the legal rate as provided by G.S. 24‑1 from the date of thepurchase or sale, costs, and reasonable attorneys' fees determined by thecourt.
(c) (1) Everyperson who directly or indirectly controls a person liable under subsection (a),(b), or (b1) of this section, every partner, officer, or director of theperson, every person occupying a similar status or performing similarfunctions, and every dealer or salesman who materially aids in the sale is alsoliable jointly and severally with and to the same extent as the person, unlessable to sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the existence of the factsby reason of which the liability is alleged to exist.
(2) Unless liable undersubdivision (1) of this subsection, every employee of a person liable undersubsection (a), (b), or (b1) of this section who materially aids in thetransaction giving rise to the liability and every other person who materiallyaids in the transaction giving rise to the liability is also liable jointly andseverally with and to the same extent as the person if the employee or otherperson actually knew of the existence of the facts by reason of which theliability is alleged to exist.
(3) There iscontribution among the several persons liable under subdivisions (1) and (2) ofthis subsection as provided among tort‑feasors pursuant to Chapter 1B ofthe General Statutes.
(d) Any tenderspecified in this section may be made at any time before entry of judgment.Tender shall require only notice of willingness to exchange the security forthe amount specified. Any notice may be given by service as in civil actions orby certified mail addressed to the last known address of the person liable.
(e) Every cause ofaction under this statute survives the death of any person who might have beena plaintiff or defendant.
(f) No person may sueunder this section for a violation of G.S. 78A‑24 or G.S. 78A‑36more than two years after the sale or contract of sale.
No person may sue under thissection for any other violation of this Chapter more than three years after theperson discovers facts constituting the violation, but in any case no laterthan five years after the sale or contract of sale, except that if a person whomay be liable under this section engages in any fraudulent or deceitful actthat conceals the violation or induces the person to forgo or postponecommencing an action based upon the violation, the suit may be commenced notlater than three years after the person discovers or should have discoveredthat the act was fraudulent or deceitful.
(g) (1) Nopurchaser may sue under this section if, before suit is commenced, thepurchaser has received a written offer stating the respect in which liabilityunder this section may have arisen and fairly advising the purchaser of hisrights; offering to repurchase the security for cash payable on delivery of thesecurity equal to the consideration paid, together with interest at the legalrate as provided by G.S. 24‑1 from the date of payment, less the amountof any income received on the security or, if the purchaser no longer owns thesecurity, offering to pay the purchaser upon acceptance of the offer an amountin cash equal to the damages computed in accordance with subsection (a); andstating that the offer may be accepted by the purchaser at any time within 30days of its receipt; and the purchaser has failed to accept such offer inwriting within the specified period.
(2) No seller may sue underthis section if, before suit is commenced, the seller has received a writtenoffer stating the respect in which liability under this section may have arisenand fairly advising the seller of his rights; offering to return the securityplus the amount of any income received thereon upon payment of theconsideration received, or, if the purchaser no longer owns the security,offering to pay the seller upon acceptance of the offer an amount in cash equalto the damages computed in accordance with subsection (b); and providing thatthe offer may be accepted by the seller at any time within 30 days of itsreceipt; and the seller has failed to accept such offer in writing within thespecified period.
(3) Offers shall be inthe form and contain the information the Administrator by rule prescribes.Every offer under subsection (g) of this section shall be delivered to theofferee or sent by certified mail addressed to the offeree at the offeree'slast known address. The person making the offer shall file a copy of therescission offer with the Administrator at least 10 days before delivering theoffer to the offeree. If an offer is not performed in accordance with itsterms, suit by the offeree under this section shall be permitted without regardto this subsection.
(h) No person who hasmade or engaged in the performance of any contract in violation of anyprovision of this Chapter or any rule or order hereunder, or who has acquiredany purported right under any such contract with knowledge of the facts byreason of which its making or performance was in violation, may base any suiton the contract.
(i) Any condition,stipulation, or provision binding any person acquiring any security to waivecompliance with any provision of this Chapter or any rule or order hereunder isvoid.
(j) The rights andremedies provided by this Chapter are in addition to any other rights orremedies that may exist at law or in equity, but this Chapter does not createany cause of action not specified in this section or G.S. 78A‑37(d). Ifthe requirements of Chapter 1D of the General Statutes are met, punitivedamages are available to the extent provided in that Chapter.
(k) The purchaser of aviatical settlement contract may rescind or cancel the purchase agreement forany reason by providing written notice of rescission or cancellation to theissuer or the issuer's agent, by certified mail, return receipt requested,within 10 business days after each of the following: (i) the date on which thepurchase agreement for the viatical settlement contract is signed by thepurchaser, and (ii) the date of actual notice to the purchaser of theassignment, transfer, or sale of all or a portion of an insurance policy onwhich the viatical settlement contract is based. Notice of rescission iseffective upon deposit in the United States mail. The notice of rescission neednot take a particular form and is sufficient if it expresses the intention ofthe purchaser to rescind the transaction. For purposes of this subsection andsubsection (k1) of this section only, the rescission period of 10 business daysfollowing the purchaser's signing of the purchase agreement shall also be knownas the "initial 10‑day rescission period."
(k1) Immediately uponreceipt of any consideration by an issuer or its agent pursuant to a viaticalsettlement purchase agreement, the issuer or its agent shall deliver theconsideration to a domestic independent escrow agent. For purposes of thissection, "domestic independent escrow agent" means an escrow agent,located in this State, and not affiliated with the issuer, its affiliate, itsofficers or directors, or its promoter, or any agents thereof. The domesticindependent escrow agent shall maintain the funds received, in their entirety,in an escrow account or trust account located in this State, for the initial 10‑dayrescission period following the signing of the purchase agreement, as providedin subsection (k) of this section, unless the domestic independent escrowagent, prior to the completion of the initial 10‑day rescission period,receives notice of the purchaser's cancellation or rescission of the purchaseagreement in accordance with this section. If the purchase agreement isrescinded or cancelled within the initial 10‑day rescission period, thedomestic independent escrow agent shall immediately deliver the funds, in theirentirety along with any interest earned on the funds during the time in whichthe funds were held in escrow, to the purchaser upon receiving notice, bycertified mail, from the issuer or its agent that the purchase agreement hasbeen rescinded or cancelled by the purchaser. If the purchase agreement has notbeen rescinded or cancelled within the initial 10‑day rescission period,the domestic independent escrow agent shall release the funds to the issuer orits agent in a manner to be determined by agreement between the issuer and thedomestic independent escrow agent. Until the funds become available for releaseby the domestic independent escrow agent to the issuer upon the expiration ofthe initial 10‑day rescission period without rescission or cancellationby the purchaser, the funds are not subject to claims by creditors of theissuer, its affiliates, or associates.
(l) Within 90 daysafter the sale or execution of a contract of sale for an investment of fundsintended to be used to purchase a viatical settlement contract or contracts,the seller shall provide the purchaser with a rescission offer in accordancewith rules prescribed by the Administrator, if, within that period, there hasnot been the identification of each and every viatical settlement contractacceptable to the purchaser which has been or shall be purchased for theinvestment. The purchaser may accept the rescission offer within 10 businessdays after receiving it. Acceptance of the rescission offer is effective uponcompliance by the purchaser with the procedural requirements for notice ofrescission or cancellation by a viatical settlement purchaser set forth insubsection (k) of this section. The seller shall keep a record of the rescissionoffer and its acceptance or rejection for at least three years after providingthat offer and shall provide that record to the Administrator at theAdministrator's request. For purposes of this subsection only,"purchaser" means a person who executes a contract of sale, with aseller, for an investment of funds to be used to purchase a viatical settlementcontract or viatical settlement contracts when, at the time of execution of thecontract, each and every viatical settlement contract to be purchased pursuantto the investment has not been identified. (1925, c. 190, s. 23; 1927, c. 149, s. 23; 1955, c.436, s. 10; 1971, c. 572, s. 2; 1973, c. 1380; 1975, c. 19, s. 22; c. 144, s.3; 1977, c. 781, s. 2; 1983, c. 817, ss. 20, 21; 1987, c. 282, s. 9; 1991, c.456, s. 5; 2001‑183, s. 1; 2001‑436, s. 11; 2003‑413, ss. 5‑10.)
(1) Offers or sells asecurity in violation of G.S. 78A‑8(1), 78A‑8(3), 78A‑10(b),78A‑13, 78A‑14, 78A‑24, or 78A‑36(a), or of any rule ororder under G.S. 78A‑49(d) which requires the affirmative approval ofsales literature before it is used, or of any condition imposed under G.S. 78A‑27(d)or 78A‑28(g), or
(2) Offers or sells asecurity by means of any untrue statement of a material fact or any omission tostate a material fact necessary in order to make the statements made, in thelight of the circumstances under which they were made, not misleading (thepurchaser not knowing of the untruth or omission), and who does not sustain theburden of proof that he did not know, and in the exercise of reasonable carecould not have known, of the untruth or omission,
isliable to the person purchasing the security from him, who may sue either atlaw or in equity to recover the consideration paid for the security, togetherwith interest at the legal rate from the date of payment, costs, and reasonableattorneys' fees, less the amount of any income received on the security, uponthe tender of the security, or for damages if the purchaser no longer owns thesecurity. Damages are the amount that would be recoverable upon a tender lessthe value of the security when the purchaser disposed of it and interest at thelegal rate as provided by G.S. 24‑1 from the date of disposition.
(b) Any person whopurchases a security by means of any untrue statement of a material fact or anyomission to state a material fact necessary in order to make the statementsmade, in the light of the circumstances under which they are made, notmisleading (the seller not knowing of the untruth or omission), and who doesnot sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the untruth or omission,shall be liable to the person selling the security to him, who may sue either atlaw or in equity to recover the security, plus any income received by thepurchaser thereon, upon tender of the consideration received, or for damages ifthe purchaser no longer owns the security. Damages are the excess of the valueof the security when the purchaser disposed of it, plus interest at the legalrate as provided by G.S. 24‑1 from the date of disposition, over theconsideration paid for the security.
(b1) A person whowillfully violates G.S. 78A‑12 is liable to a person who purchases orsells a security, other than a security traded on a national securitiesexchange or quoted on a national automated quotation system administered by aself‑regulatory organization, at a price that was affected by the act ortransaction for the damages sustained as a result of the act or transaction.Damages are the difference between the price at which the securities werepurchased or sold and the value the securities would have had at the time ofthe person's purchase or sale in the absence of the act or transaction, plusinterest at the legal rate as provided by G.S. 24‑1 from the date of thepurchase or sale, costs, and reasonable attorneys' fees determined by thecourt.
(c) (1) Everyperson who directly or indirectly controls a person liable under subsection (a),(b), or (b1) of this section, every partner, officer, or director of theperson, every person occupying a similar status or performing similarfunctions, and every dealer or salesman who materially aids in the sale is alsoliable jointly and severally with and to the same extent as the person, unlessable to sustain the burden of proof that the person did not know, and in theexercise of reasonable care could not have known, of the existence of the factsby reason of which the liability is alleged to exist.
(2) Unless liable undersubdivision (1) of this subsection, every employee of a person liable undersubsection (a), (b), or (b1) of this section who materially aids in thetransaction giving rise to the liability and every other person who materiallyaids in the transaction giving rise to the liability is also liable jointly andseverally with and to the same extent as the person if the employee or otherperson actually knew of the existence of the facts by reason of which theliability is alleged to exist.
(3) There iscontribution among the several persons liable under subdivisions (1) and (2) ofthis subsection as provided among tort‑feasors pursuant to Chapter 1B ofthe General Statutes.
(d) Any tenderspecified in this section may be made at any time before entry of judgment.Tender shall require only notice of willingness to exchange the security forthe amount specified. Any notice may be given by service as in civil actions orby certified mail addressed to the last known address of the person liable.
(e) Every cause ofaction under this statute survives the death of any person who might have beena plaintiff or defendant.
(f) No person may sueunder this section for a violation of G.S. 78A‑24 or G.S. 78A‑36more than two years after the sale or contract of sale.
No person may sue under thissection for any other violation of this Chapter more than three years after theperson discovers facts constituting the violation, but in any case no laterthan five years after the sale or contract of sale, except that if a person whomay be liable under this section engages in any fraudulent or deceitful actthat conceals the violation or induces the person to forgo or postponecommencing an action based upon the violation, the suit may be commenced notlater than three years after the person discovers or should have discoveredthat the act was fraudulent or deceitful.
(g) (1) Nopurchaser may sue under this section if, before suit is commenced, thepurchaser has received a written offer stating the respect in which liabilityunder this section may have arisen and fairly advising the purchaser of hisrights; offering to repurchase the security for cash payable on delivery of thesecurity equal to the consideration paid, together with interest at the legalrate as provided by G.S. 24‑1 from the date of payment, less the amountof any income received on the security or, if the purchaser no longer owns thesecurity, offering to pay the purchaser upon acceptance of the offer an amountin cash equal to the damages computed in accordance with subsection (a); andstating that the offer may be accepted by the purchaser at any time within 30days of its receipt; and the purchaser has failed to accept such offer inwriting within the specified period.
(2) No seller may sue underthis section if, before suit is commenced, the seller has received a writtenoffer stating the respect in which liability under this section may have arisenand fairly advising the seller of his rights; offering to return the securityplus the amount of any income received thereon upon payment of theconsideration received, or, if the purchaser no longer owns the security,offering to pay the seller upon acceptance of the offer an amount in cash equalto the damages computed in accordance with subsection (b); and providing thatthe offer may be accepted by the seller at any time within 30 days of itsreceipt; and the seller has failed to accept such offer in writing within thespecified period.
(3) Offers shall be inthe form and contain the information the Administrator by rule prescribes.Every offer under subsection (g) of this section shall be delivered to theofferee or sent by certified mail addressed to the offeree at the offeree'slast known address. The person making the offer shall file a copy of therescission offer with the Administrator at least 10 days before delivering theoffer to the offeree. If an offer is not performed in accordance with itsterms, suit by the offeree under this section shall be permitted without regardto this subsection.
(h) No person who hasmade or engaged in the performance of any contract in violation of anyprovision of this Chapter or any rule or order hereunder, or who has acquiredany purported right under any such contract with knowledge of the facts byreason of which its making or performance was in violation, may base any suiton the contract.
(i) Any condition,stipulation, or provision binding any person acquiring any security to waivecompliance with any provision of this Chapter or any rule or order hereunder isvoid.
(j) The rights andremedies provided by this Chapter are in addition to any other rights orremedies that may exist at law or in equity, but this Chapter does not createany cause of action not specified in this section or G.S. 78A‑37(d). Ifthe requirements of Chapter 1D of the General Statutes are met, punitivedamages are available to the extent provided in that Chapter.
(k) The purchaser of aviatical settlement contract may rescind or cancel the purchase agreement forany reason by providing written notice of rescission or cancellation to theissuer or the issuer's agent, by certified mail, return receipt requested,within 10 business days after each of the following: (i) the date on which thepurchase agreement for the viatical settlement contract is signed by thepurchaser, and (ii) the date of actual notice to the purchaser of theassignment, transfer, or sale of all or a portion of an insurance policy onwhich the viatical settlement contract is based. Notice of rescission iseffective upon deposit in the United States mail. The notice of rescission neednot take a particular form and is sufficient if it expresses the intention ofthe purchaser to rescind the transaction. For purposes of this subsection andsubsection (k1) of this section only, the rescission period of 10 business daysfollowing the purchaser's signing of the purchase agreement shall also be knownas the "initial 10‑day rescission period."
(k1) Immediately uponreceipt of any consideration by an issuer or its agent pursuant to a viaticalsettlement purchase agreement, the issuer or its agent shall deliver theconsideration to a domestic independent escrow agent. For purposes of thissection, "domestic independent escrow agent" means an escrow agent,located in this State, and not affiliated with the issuer, its affiliate, itsofficers or directors, or its promoter, or any agents thereof. The domesticindependent escrow agent shall maintain the funds received, in their entirety,in an escrow account or trust account located in this State, for the initial 10‑dayrescission period following the signing of the purchase agreement, as providedin subsection (k) of this section, unless the domestic independent escrowagent, prior to the completion of the initial 10‑day rescission period,receives notice of the purchaser's cancellation or rescission of the purchaseagreement in accordance with this section. If the purchase agreement isrescinded or cancelled within the initial 10‑day rescission period, thedomestic independent escrow agent shall immediately deliver the funds, in theirentirety along with any interest earned on the funds during the time in whichthe funds were held in escrow, to the purchaser upon receiving notice, bycertified mail, from the issuer or its agent that the purchase agreement hasbeen rescinded or cancelled by the purchaser. If the purchase agreement has notbeen rescinded or cancelled within the initial 10‑day rescission period,the domestic independent escrow agent shall release the funds to the issuer orits agent in a manner to be determined by agreement between the issuer and thedomestic independent escrow agent. Until the funds become available for releaseby the domestic independent escrow agent to the issuer upon the expiration ofthe initial 10‑day rescission period without rescission or cancellationby the purchaser, the funds are not subject to claims by creditors of theissuer, its affiliates, or associates.
(l) Within 90 daysafter the sale or execution of a contract of sale for an investment of fundsintended to be used to purchase a viatical settlement contract or contracts,the seller shall provide the purchaser with a rescission offer in accordancewith rules prescribed by the Administrator, if, within that period, there hasnot been the identification of each and every viatical settlement contractacceptable to the purchaser which has been or shall be purchased for theinvestment. The purchaser may accept the rescission offer within 10 businessdays after receiving it. Acceptance of the rescission offer is effective uponcompliance by the purchaser with the procedural requirements for notice ofrescission or cancellation by a viatical settlement purchaser set forth insubsection (k) of this section. The seller shall keep a record of the rescissionoffer and its acceptance or rejection for at least three years after providingthat offer and shall provide that record to the Administrator at theAdministrator's request. For purposes of this subsection only,"purchaser" means a person who executes a contract of sale, with aseller, for an investment of funds to be used to purchase a viatical settlementcontract or viatical settlement contracts when, at the time of execution of thecontract, each and every viatical settlement contract to be purchased pursuantto the investment has not been identified. (1925, c. 190, s. 23; 1927, c. 149, s. 23; 1955, c.436, s. 10; 1971, c. 572, s. 2; 1973, c. 1380; 1975, c. 19, s. 22; c. 144, s.3; 1977, c. 781, s. 2; 1983, c. 817, ss. 20, 21; 1987, c. 282, s. 9; 1991, c.456, s. 5; 2001‑183, s. 1; 2001‑436, s. 11; 2003‑413, ss. 5‑10.)
