Chapter 551

551.206 551.206 Adjustments. At 5-year intervals after January 1, 2014, the department of financial institutions shall adjust the monetary amounts specified in s. 551.202 (26) (c) 1. a. and b. and (27) (c) 1. a. and b. to reflect changes since January 1, 2014, in the consumer price index for all urban consumers, Milwaukee-Racine area average, as determined by the U.S. department of labor. Each adjustment shall be rounded to the nearest multiple of $50,000. Each adjustment under this section shall be published on the department of financial institutions Internet site.

551.206 History History: 2013 a. 52; 2013 a. 151 s. 28.

subch. III of ch. 551 SUBCHAPTER III

REGISTRATION OF SECURITIES AND NOTICE FILING OF FEDERAL COVERED SECURITIES

551.301 551.301 Securities registration requirement. It is unlawful for a person to offer or sell a security in this state unless any of the following apply:

551.301(1) (1) The security is a federal covered security.

551.301(2) (2) The security, transaction, or offer is exempted from registration under this chapter.

551.301(3) (3) The security is registered under this chapter.

551.301 History History: 2007 a. 196.

551.301 Annotation Section 551.21 (1) is violated through an offer to sell an unregistered security, even if no sale occurs. State v. Johnson, 2002 WI App 224, 257 Wis. 2d 736, 652 N.W.2d 642, 01-1092.

551.301 Annotation When a certificate of stock was mailed to the plaintiff in Wisconsin, and extensive solicitation was conducted by the defendants in Wisconsin, there was an “offer” within former s. 551.02. (11) (b), 1969 stats. Since the securities were neither registered in Wisconsin nor exempt from registration, the plaintiff was entitled to rescind the transaction and recover the purchase price of the securities, plus costs. Hardtke v. Love Tree Corp., 386 F. Supp. 1085 (1975).

551.301 Annotation Registration and reporting requirements for exempt transactions are discussed. Feitler v. Midas Associates, 418 F. Supp. 735 (1976).

551.301 Note NOTE: The above annotations refer to ch. 551 as it existed prior to its repeal and recreation by 2007 Wis. Act 196.

551.302 551.302 Notice filing.

551.302(1) (1) Required filing of records. With respect to a federal covered security, as defined in section 18 (b) (2) of the Securities Act of 1933 (15 USC 77r (b) (2), that is not otherwise exempt under ss. 551.201 to 551.203, a rule adopted by the administrator or an order issued under this chapter may require the filing of any or all of the following records:

551.302(1)(a) (a) Prior to offer. Not later than the initial offer of the federal covered security in this state, a copy of each document that is part of its registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, which may, at the option of the issuer, be accompanied by a form containing the information specified by the administrator by rule. If a filing is required under this paragraph, the filing shall be accompanied by a consent to service of process signed by the issuer and a notice filing fee under s. 551.614. Any notice filing required under this paragraph is effective upon receipt by the administrator of the documents and fees required under this paragraph, or upon the effectiveness of the registration statement under the Securities Act of 1933, whichever is later.

551.302(1)(b) (b) After offer. After the initial offer of the federal covered security in this state, a copy of each document that is part of an amendment to its registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, concurrent with the federal filing, which may, at the option of the issuer, be accompanied by a form containing the information specified by the administrator by rule. If a filing is required under this paragraph and the amendment relates either to a name change of the issuer or a change in the designation of the federal covered security, the filing shall be accompanied by a fee in the amount prescribed by the rule or order requiring the filing. Unless the issuer requests a later effective date, an amendment filing required under this paragraph is effective upon receipt by the administrator of the documents and fees required under this paragraph.

551.302(1)(c) (c) Unit trust or investment company. For a unit investment trust or closed-end investment company to extend its offering beyond a one-year period, a notice of extension, together with any filing fee prescribed by rule or order, at the time prescribed by rule or order.

551.302(3) (3) Notice filings for certain federal covered securities. With respect to a security that is a federal covered security under section 18 (b) (4) (D) of the Securities Act of 1933 (15 USC 77r (b) (4) (D)), a rule under this chapter may require a notice filing by or on behalf of an issuer to include a copy of Form D, including the Appendix, as promulgated by the Securities and Exchange Commission, and a consent to service of process complying with s. 551.611 signed by the issuer not later than 15 days after the first sale of the federal covered security in this state and the payment of a fee as provided in s. 551.614 or by rule of the administrator; and the payment of a fee as provided in s. 551.614 or by rule of the administrator for any late filing.

551.302(4) (4) Stop orders. Except with respect to a federal covered security under section 18 (b) (1) of the Securities Act of 1933 (15 USC 77r (b) (1)), if the administrator finds that there is a failure to comply with a notice or fee requirement of this section, the administrator may issue a stop order suspending the offer and sale of a federal covered security in this state. If the deficiency is corrected, the stop order is void as of the time of its issuance and no penalty may be imposed by the administrator.

551.302(5) (5) Waiver. The administrator may, by rule or order, waive or further condition any waiver of a requirement under this section or under any rule promulgated by the administrator, or order issued, under this section.

551.302 History History: 2007 a. 196.

551.303 551.303 Securities registration by coordination.

551.303(1) (1) Registration permitted. A security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination under this section.

551.303(2) (2) Required records. A registration statement and accompanying records under this section must contain or be accompanied by all of the following records in addition to the information specified in s. 551.305 and a consent to service of process complying with s. 551.611:

551.303(2)(a) (a) A copy of the latest form of prospectus filed under the Securities Act of 1933.

551.303(2)(b) (b) A copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect; a copy of any agreement with or among underwriters; a copy of any indenture or other instrument governing the issuance of the security to be registered; and a specimen, copy, or description of the security that is required by rule adopted or order issued under this chapter.

551.303(2)(c) (c) Copies of any other information or any other records filed by the issuer under the Securities Act of 1933 requested by the administrator.

551.303(2)(d) (d) An undertaking to forward each amendment to the federal prospectus, other than an amendment that delays the effective date of the registration statement, promptly after it is filed with the Securities and Exchange Commission.

551.303(3) (3) Conditions for effectiveness of registration statement. A registration statement under this section becomes effective simultaneously with or subsequent to the federal registration statement when all the following conditions are satisfied:

551.303(3)(a) (a) A stop order under sub. (4) or s. 551.306 or issued by the Securities and Exchange Commission is not in effect and a proceeding is not pending against the issuer under s. 551.306.

551.303(3)(b) (b) The registration statement has been on file for at least 20 days or a shorter period provided by rule adopted or order issued under this chapter.

551.303(4) (4) Notice of federal registration statement effectiveness. The registrant shall promptly notify the administrator in a record of the date when the federal registration statement becomes effective and the content of any price amendment and shall promptly file a record containing the price amendment. If the notice is not timely received, the administrator may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section. The administrator shall promptly notify the registrant of an order by telecopy, telephone, or electronic means and promptly confirm this notice by a record. If the registrant subsequently complies with the notice requirements of this section, the stop order is void as of the date of its issuance.

551.303(5) (5) Effectiveness of registration statement. If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the administrator, the registration statement is automatically effective under this chapter when all the conditions are satisfied or waived. If the registrant notifies the administrator of the date when the federal registration statement is expected to become effective, the administrator shall promptly notify the registrant by telecopy, telephone, or electronic means and promptly confirm this notice by a record, indicating whether all the conditions are satisfied or waived and whether the administrator intends the institution of a proceeding under s. 551.306. The notice by the administrator does not preclude the institution of such a proceeding.

551.303 History History: 2007 a. 196.

551.304 551.304 Securities registration by qualification.

551.304(1) (1) Registration permitted. A security may be registered by qualification under this section.

551.304(2) (2) Required records. A registration statement under this section must contain the information or records specified in s. 551.305, a consent to service of process complying with s. 551.611, and, if required by rule adopted under this chapter, any, or any combination, of the following information or records:

551.304(2)(a) (a) With respect to the issuer and any significant subsidiary, its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged.

551.304(2)(b) (b) With respect to each director and officer of the issuer, and other person having a similar status or performing similar functions, the person’s name, address, and principal occupation for the previous 5 years; the amount of securities of the issuer held by the person as of the 30th day before the filing of the registration statement; the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest of the person in any material transaction with the issuer or a significant subsidiary effected within the previous 3 years or proposed to be effected.

551.304(2)(c) (c) With respect to persons covered by par. (b), the aggregate sum of the remuneration paid to those persons during the previous 12 months and estimated to be paid during the next 12 months, directly or indirectly, by the issuer, and all predecessors, parents, subsidiaries, and affiliates of the issue.

551.304(2)(d) (d) With respect to a person owning of record or owning beneficially, if known, 10 percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in par. (b) other than the person’s occupation.

551.304(2)(e) (e) With respect to a promoter, if the issuer was organized within the previous 3 years, the information or records specified in par. (b), any amount paid to the promoter within that period or intended to be paid to the promoter, and the consideration for the payment.

551.304(2)(f) (f) With respect to a person on whose behalf any part of the offering is to be made in a nonissuer distribution, the person’s name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest of the person in any material transaction with the issuer or any significant subsidiary effected within the previous 3 years or proposed to be effected; and a statement of the reasons for making the offering.

551.304(2)(g) (g) The capitalization and long term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else of value, for which the issuer or any subsidiary has issued its securities within the previous 2 years or is obligated to issue its securities.

551.304(2)(h) (h) The kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis on which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders’ fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of each underwriter and each recipient of a finder’s fee; a copy of any underwriting or selling group agreement under which the distribution is to be made or the proposed form of any such agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities that are to be offered otherwise than through an underwriter.

551.304(2)(i) (i) The estimated monetary proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the estimated amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if a part of the proceeds is to be used to acquire property, including goodwill, otherwise than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons that have received commissions in connection with the acquisition, and the amounts of the commissions and other expenses in connection with the acquisition, including the cost of borrowing money to finance the acquisition.

551.304(2)(j) (j) A description of any stock options or other security options outstanding, or to be created in connection with the offering, and the amount of those options held or to be held by each person required to be named in par. (b), (d), (e), (f), or (h) and by any person that holds or will hold 10 percent or more in the aggregate of those options.

551.304(2)(k) (k) The dates of, parties to, and general effect concisely stated of each managerial or other material contract made or to be made otherwise than in the ordinary course of business to be performed in whole or in part at or after the filing of the registration statement or that was made within the previous 2 years, and a copy of the contract.

551.304(2)(L) (L) A description of any pending litigation, action, or proceeding to which the issuer is a party and that materially affects its business or assets, and any litigation, action, or proceeding known to be contemplated by governmental authorities.

551.304(2)(m) (m) A copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering and any solicitation of interest used in compliance with s. 551.202 (17) (b).

551.304(2)(n) (n) A specimen or copy of the security being registered, unless the security is uncertificated; a copy of the issuer’s articles of incorporation and bylaws or their substantial equivalents, in effect; and a copy of any indenture or other instrument covering the security to be registered.

551.304(2)(o) (o) A signed or conformed copy of an opinion of counsel concerning the legality of the security being registered, with an English translation if it is in a language other than English, which states whether the security when sold will be validly issued, fully paid, and nonassessable and, if a debt security, a binding obligation of the issuer.

551.304(2)(p) (p) A signed or conformed copy of a consent of any accountant, engineer, appraiser, or other person whose profession gives authority for a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than an official record, that is public, which is used in connection with the registration statement.

551.304(2)(q) (q) A balance sheet of the issuer as of a date within 4 months before the filing of the registration statement; a statement of income and a statement of cash flows for each of the 3 fiscal years preceding the date of the balance sheet and for any period between the close of the immediately previous fiscal year and the date of the balance sheet, or for the period of the issuer’s and any predecessor’s existence if less than 3 years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the financial statements that would be required if that business were the registrant.

551.304(2)(r) (r) Any additional information or records required by rule adopted or order issued under this chapter, including, without limitation, a report by accountants, engineers, appraisers, or another professional person as deemed necessary by the administrator.

551.304(3) (3) Conditions for effectiveness of registration statement. A registration statement under this section becomes effective 30 days, or any shorter period provided by rule adopted or order issued under this chapter, after the date the registration statement or the last amendment other than a price amendment is filed, if all of the following apply:

551.304(3)(a) (a) A stop order is not in effect and a proceeding is not pending under s. 551.306.

551.304(3)(b) (b) The administrator has not issued an order under s. 551.306.

551.304(3)(c) (c) The applicant or registrant has not requested that effectiveness be delayed.

551.304(4) (4) Delay of effectiveness of registration statement. The administrator may delay effectiveness once for not more than 90 days if the administrator determines and notifies via comment letter or other letter that the registration statement is not complete in all material respects and promptly notifies the applicant or registrant of that determination, which may be by means of a comment letter or correspondence and not an order. The administrator may also further delay effectiveness for a further period of not more than 30 days if the administrator determines that the delay is necessary or appropriate.

551.304(5) (5) Prospectus distribution may be required. A rule adopted or order issued under this chapter may require as a condition of registration under this section that a prospectus containing a specified part of the information or record specified in sub. (2) be sent or given to each person to which an offer is made, before or concurrently, with the earliest of the following:

551.304(5)(a) (a) The first offer made in a record to the person otherwise than by means of a public advertisement, by or for the account of the issuer or another person on whose behalf the offering is being made or by an underwriter or broker-dealer that is offering part of an unsold allotment or subscription taken by the person as a participant in the distribution.

551.304(5)(b) (b) The confirmation of a sale made by or for the account of the person.

551.304(5)(c) (c) Payment pursuant to such a sale.

551.304(5)(d) (d) Delivery of the security pursuant to such a sale.

551.304 History History: 2007 a. 196; 2009 a. 180.

551.305 551.305 Securities registration filings.

551.305(1) (1) Who may file. A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made, or a broker-dealer registered under this chapter.

551.305(2) (2) Filing fee. A person filing a registration statement shall pay a filing fee as provided in s. 551.614 or as may be supplemented by rule of the administrator. If a registration statement is withdrawn before the effective date or a preeffective stop order is issued under s. 551.306, the administrator shall retain the fee as provided in s. 551.614 or as may be supplemented by rule of the administrator.

551.305(3) (3) Status of offering. A registration statement filed under s. 551.303 or 551.304 must specify all of the following:

551.305(3)(a) (a) The amount of securities to be offered in this state.

551.305(3)(b) (b) The states in which a registration statement or similar record in connection with the offering has been or is to be filed.

551.305(3)(c) (c) Any adverse order, judgment, or decree issued in connection with the offering by a state securities regulator, the Securities and Exchange Commission, or a court.

551.305(4) (4) Incorporation by reference. A record filed under this chapter or the predecessor act within 5 years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate.

551.305(5) (5) Nonissuer distribution. In the case of a nonissuer distribution, information or a record may not be required under sub. (9) or s. 551.304, unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense.

551.305(7) (7) Form of subscription. A rule adopted or order issued under this chapter may require as a condition of registration that a security registered under this chapter be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed under this chapter or preserved for a period specified by the rule or order, which may not be longer than 5 years.

551.305(8) (8) Effective period. Except while a stop order is in effect under s. 551.306, a registration statement is effective for one year after its effective date, or for any longer period designated in an order under this chapter during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution. For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered under this chapter are considered to be registered while the registration statement is effective. If any securities of the same class are outstanding, a registration statement may not be withdrawn until one year after its effective date. A registration statement may be withdrawn only with the approval of the administrator.

551.305(9) (9) Periodic reports. While a registration statement is effective, a rule adopted or order issued under this chapter may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering. No report may be required under this subsection of a financial institution holding company.

551.305(10) (10) Posteffective amendments. A registration statement may be amended after its effective date. The posteffective amendment becomes effective when the administrator so orders. If a posteffective amendment is made to increase the number of securities specified to be offered or sold, the person filing the amendment shall pay a registration fee as provided in s. 551.614 or as may be supplemented by rule of the administrator. A posteffective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid.

551.305(11) (11) Indentures. The administrator may by rule require that securities be issued under a trust indenture, unless this requirement is waived by the administrator.

551.305 History History: 2007 a. 196; 2013 a. 52.

551.306 551.306 Denial, suspension, and revocation of securities registration.

551.306(1) (1) Stop orders. The administrator may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the administrator finds that the order is in the public interest and that any of the following apply:

551.306(1)(a) (a) The registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under s. 551.305 (10) as of its effective date, or a report under s. 551.305 (9), is incomplete in a material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact.

551.306(1)(b) (b) This chapter or a rule adopted or order issued under this chapter or a condition imposed under this chapter has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; or a person directly or indirectly controlling or controlled by the issuer; but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or by an underwriter.

551.306(1)(c) (c) The security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering, but the administrator may not institute a proceeding against an effective registration statement under this paragraph more than one year after the date of the order or injunction on which it is based, and the administrator may not issue an order under this paragraph on the basis of an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, a ground for a stop order under this section.

551.306(1)(d) (d) The issuer’s enterprise or method of business includes or would include activities that are unlawful where performed.

551.306(1)(e) (e) With respect to a security sought to be registered under s. 551.303, there has been a failure to comply with the undertaking required by s. 551.303 (2) (d).