Chapter 551

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).

551.306(1)(f) (f) The applicant or registrant has not paid the filing fee, but the administrator shall void the order if the deficiency is corrected.

551.306(1)(g) (g) The offering will work or tend to work a fraud upon purchasers or would so operate.

551.306(3) (3) Institution of stop order. The administrator may not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the administrator when the registration statement became effective unless the proceeding is instituted within 30 days after the registration statement became effective.

551.306(4) (4) Summary process. The administrator may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the administrator shall promptly notify each person specified in sub. (5) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within 10 days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the administrator, within 30 days after the date of service of the order, the order becomes final. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.

551.306(5) (5) Procedural requirements for stop order. A stop order may not be issued under this chapter without all of the following:

551.306(5)(a) (a) Appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered.

551.306(5)(b) (b) An opportunity for hearing.

551.306(5)(c) (c) Findings of fact and conclusions of law in a record in accordance with ch. 227.

551.306(6) (6) Modification or vacation of stop order. The administrator may modify or vacate a stop order issued under this section if the administrator finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.

551.306 History History: 2007 a. 196.

551.307 551.307 Waiver and modification. The administrator may waive or modify, in whole or in part, any or all of the requirements of ss. 551.302, 551.303, and 551.304 (2) or the requirement of any information or record in a registration statement or in a periodic report filed pursuant to s. 551.305 (9).

551.307 History History: 2007 a. 196.

subch. IV of ch. 551 SUBCHAPTER IV

BROKER-DEALERS, AGENTS,
INVESTMENT ADVISERS, INVESTMENT
ADVISER REPRESENTATIVES, AND
FEDERAL COVERED INVESTMENT ADVISERS

551.401 551.401 Broker-dealer registration requirement and exemptions.

551.401(1) (1) Registration requirement. It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under sub. (2) or (4) or s. 551.205 (1) (b) 2.

551.401(2) (2) Exemptions from registration. A broker-dealer is exempt from the registration requirement of sub. (1) if its only transactions effected in this state are with the following:

551.401(2)(a) (a) The issuer of the securities involved in the transactions.

551.401(2)(b) (b) A broker-dealer registered as a broker-dealer under this chapter or not required to be registered as a broker-dealer under this chapter.

551.401(2)(c) (c) Institutional investors.

551.401(2)(cm) (cm) Accredited investors as defined in Rule 501 (a) (1), (2), (3), (7) or (8) adopted under the Securities Act of 1933.

551.401(2)(d) (d) A nonaffiliated federal covered investment adviser with investments under management in excess of $100,000,000 acting for the account of others pursuant to discretionary authority in a signed record.

551.401(2)(e) (e) A bona fide preexisting customer whose principal place of residence is not in this state and the person is registered as a broker-dealer under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the customer maintains a principal place of residence.

551.401(2)(f) (f) A bona fide preexisting customer whose principal place of residence is in this state but was not present in this state when the customer relationship was established, if all of the following apply:

551.401(2)(f)1. 1. The broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities laws of the state in which the customer relationship was established and where the customer had maintained a principal place of residence.

551.401(2)(f)2. 2. Within 45 days after the customer’s first transaction in this state, the person files an application for registration as a broker-dealer in this state and a further transaction is not effected more than 75 days after the date on which the application is filed, or, if earlier, the date on which the administrator notifies the person that the administrator has granted registration or denied the application for registration or has stayed the pendency of the application for good cause; provided the person may effect unsolicited orders to liquidate open positions in existing customer accounts if no commission or other remuneration is paid or given directly or indirectly for effecting such transactions.

551.401(2)(h) (h) Any other person exempted by rule adopted or order issued under this chapter.

551.401(3) (3) Limits on employment or association. It is unlawful for a broker-dealer, or for an issuer engaged in offering, offering to purchase, purchasing, or selling securities in this state, directly or indirectly, to employ or associate with an individual to engage in an activity related to securities transactions in this state if the registration of the individual is denied or suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser, or a federal covered investment adviser by an order of the administrator under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. A broker-dealer or issuer does not violate this subsection if the broker-dealer or issuer did not know, and in the exercise of reasonable care could not have known, of the denial, suspension, revocation, or bar. Upon request from a broker-dealer or issuer and for good cause, an order under this chapter may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer.

551.401(4) (4) Foreign transactions. A rule adopted or order issued under this chapter may permit any of the following:

551.401(4)(a) (a) A broker-dealer that is registered in Canada or other foreign jurisdiction and that does not have a place of business in this state to effect transactions in securities with or for, or attempt to effect the purchase or sale of any securities by, any of the following: