Chapter 551

551.402(6)(b) (b) An application to amend the agent’s registration to name each limited partnership or investment company as the agent’s employer is filed with and approved by the administrator before the agent makes any offer or sale in the state on behalf of the additional limited partnership or investment company.

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

551.403 551.403 Investment adviser registration requirement and exemptions.

551.403(1) (1) Registration requirement. It is unlawful for a person to transact business in this state as an investment adviser unless the person is registered under this chapter as an investment adviser or is exempt from registration as an investment adviser under sub. (2).

551.403(2) (2) Exemptions from registration. The following persons are exempt from the registration requirement of sub. (1):

551.403(2)(a) (a) A person whose only clients in this state are:

551.403(2)(a)1. 1. Federal covered investment advisers, investment advisers registered under this chapter, or broker-dealers registered under this chapter.

551.403(2)(a)2. 2. Institutional investors, except any institutional investor described in s. 551.102 (11) (k), (m), or (o).

551.403(2)(a)2m. 2m. Accredited investors as defined in Rule 501 (a) (1) or (3) adopted under the Securities Act of 1933.

551.403(2)(a)3. 3. Bona fide preexisting clients whose principal places of residence are not in this state if the investment adviser is registered or exempt from registration under the securities act of the state in which the clients maintain principal places of residence.

551.403(2)(a)4. 4. Any other client exempted by rule adopted or order issued under this chapter.

551.403(2)(b) (b) A person without a place of business in this state if the person has had, during the preceding 12 months, not more than 5 clients that are resident in this state in addition to those specified under par. (a).

551.403(2)(c) (c) Any other person exempted by rule adopted or order issued under this chapter.

551.403(3) (3) Limits on employment or association. It is unlawful for an investment adviser, directly or indirectly, to employ or associate with an individual to engage in an activity related to investment advice 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 an investment adviser, federal covered investment adviser, or broker-dealer by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization, unless the investment adviser did not know, and in the exercise of reasonable care could not have known, of the denial, suspension, revocation, or bar. Upon request from the investment adviser and for good cause, the administrator, by order, may waive, in whole or in part, the application of the prohibitions of this subsection to the investment adviser.

551.403(4) (4) Investment adviser representative registration required. It is unlawful for an investment adviser to employ or associate with an individual required to be registered under this chapter as an investment adviser representative who transacts business in this state on behalf of the investment adviser unless the individual is registered under s. 551.404 (1) or is exempt from registration under s. 551.404 (2).

551.403 History History: 2007 a. 196; 2011 a. 32.

551.403 Annotation Violators of s. 551.31 (1) and (3) are subject to strict liability. What constitutes transacting business as an investment advisor in violation of s. 551.31 (3) is discussed. Garretto v. Elite Advisory Services, Inc., 793 F. Supp. 796 (1992).

551.403 Note NOTE: The above annotation refers to ch. 551 as it existed prior to its repeal and recreation by 2007 Wis. Act 196.

551.404 551.404 Investment adviser representative registration requirement and exemptions.

551.404(1) (1) Registration requirement. It is unlawful for an individual to transact business in this state as an investment adviser representative unless the individual is registered under this chapter as an investment adviser representative or is exempt from registration as an investment adviser representative under sub. (2).

551.404(2) (2) Exemptions from registration. The following individuals are exempt from the registration requirement of sub. (1):

551.404(2)(a) (a) An individual who is employed by or associated with an investment adviser that is exempt from registration under s. 551.403 (2) or a federal covered investment adviser that is excluded from the notice filing requirements of s. 551.405.

551.404(2)(am) (am) An individual who is employed by or associated with an investment adviser or a federal covered investment adviser and whose clients in the state are exclusively those clients listed in s. 551.403 (2) (a) 1. to 2m. and 4.

551.404(2)(b) (b) Any other individual exempted by rule adopted or order issued under this chapter.

551.404(3) (3) Registration effective only while employed or associated. The registration of an investment adviser representative is effective only while the investment adviser representative is employed by or associated with an investment adviser registered under this chapter or a federal covered investment adviser that has made or is required to make a notice filing under s. 551.405.

551.404(4) (4) Limit on affiliations. An individual may transact business as an investment adviser representative for more than one investment adviser or federal covered investment adviser unless a rule adopted or order issued under this chapter prohibits or limits an individual from acting as an investment adviser representative for more than one investment adviser or federal covered investment adviser.

551.404(5) (5) Limits on employment or association. It is unlawful for an individual acting as an investment adviser representative, directly or indirectly, to conduct business in this state on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. Upon request and for good cause, the administrator, by order issued, may waive, in whole or in part, the application of the requirements of this subsection.

551.404(6) (6) Referral fees. An investment adviser registered or exempt from registration under this chapter, a federal covered investment adviser that has filed a notice under s. 551.405 or is exempt from such notice filing requirement, or a broker-dealer registered or exempt from registration under this chapter is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered or exempt from registration under this chapter, a federal covered investment adviser that has filed a notice or is exempt from filing a notice under s. 551.405, or a broker-dealer registered or exempt from registration under this chapter with which the individual is employed or associated as an investment adviser representative.

551.404 History History: 2007 a. 196.

551.405 551.405 Federal covered investment adviser notice filing requirement.

551.405(1) (1) Notice filing requirement. Except with respect to a federal covered investment adviser described in sub. (2), it is unlawful for a federal covered investment adviser to transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with sub. (3).

551.405(2) (2) Notice filing requirement not required. The following federal covered investment advisers are not required to comply with sub. (3):

551.405(2)(a) (a) A federal covered investment adviser without a place of business in this state if its only clients in this state are:

551.405(2)(a)1. 1. Federal covered investment advisers, investment advisers registered under this chapter, and broker-dealers registered under this chapter.

551.405(2)(a)2. 2. Institutional investors.

551.405(2)(a)2m. 2m. Accredited investors as defined and listed in 17 CFR 230.501 (a) (1), (2), (3), (7), or (8) under Regulation D under the Securities Act of 1933.

551.405(2)(a)3. 3. Bona fide preexisting clients whose principal places of residence are not in this state.

551.405(2)(a)4. 4. Other clients specified by rule adopted or order issued under this chapter.

551.405(2)(b) (b) A federal covered investment adviser without a place of business in this state if the person has had, during the preceding 12 months, not more than 5 clients that are resident in this state in addition to those specified under par. (a).

551.405(2)(c) (c) Any other person excluded by rule adopted or order issued under this chapter.

551.405(3) (3) Notice filing procedure. A person acting as a federal covered investment adviser, not excluded under sub. (2), shall file a notice, a consent to service of process complying with s. 551.611, and such records as have been filed with the Securities and Exchange Commission under the Investment Advisers Act of 1940 required by rule adopted or order issued under this chapter and pay the fees specified in s. 551.614 (2).

551.405(4) (4) Effectiveness of filing. The notice under sub. (3) becomes effective upon its filing and expires on December 31 unless any of the following occurs:

551.405(4)(a) (a) The notice filing is renewed.

551.405(4)(b) (b) The notice filing is limited or extended for not more than 6 months and the notice filer pays a fee, adjusted proportionately by the administrator by rule or order.

551.405(4)(c) (c) The administrator specifies a different expiration date by rule or order.

551.405 History History: 2007 a. 196.

551.406 551.406 Registration by broker-dealer, agent, investment adviser, and investment adviser representative.

551.406(1) (1) Application for initial registration. A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing with the administrator, or an organization which the administrator by rule designates, an application and a consent to service of process complying with s. 551.611, and paying the fee specified in s. 551.614 and any reasonable fees charged by the designee of the administrator for processing the filing. The application must contain all of the following:

551.406(1)(a) (a) The information or record required for the filing of a uniform application.

551.406(1)(b) (b) Upon request by the administrator, any other financial or other information or record that the administrator determines is appropriate.

551.406(2) (2) Amendment. If the information or record contained in an application filed under sub. (1) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

551.406(3) (3) Effectiveness of registration.

551.406(3)(a) (a) If an order is not in effect and a proceeding is not pending under s. 551.412, registration is effective 30 days from the filing of the application or at the earliest of the following times prior to the expiration of 30 days from the filing of the application, whichever is earlier, unless the registration is denied:

551.406(3)(a)1. 1. The date that the administrator issues registration to the applicant.

551.406(3)(a)2. 2. The date that approval of registration status is transmitted by the administrator to the applicant through the central registration depository of the Financial Industry Regulatory Authority, Inc.

551.406(3)(a)3. 3. On January 1 for any renewal application filed during December of the preceding year with the central registration depository, unless the administrator makes a written request for additional information relevant to the application prior to January 1.

551.406(3)(b) (b) A rule adopted or order issued under this chapter may set an earlier effective date or may defer the effective date until noon on the 45th day after the filing of any amendment completing the application.

551.406(4) (4) Registration renewal. A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect under s. 551.412, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this chapter, by paying the fee specified in s. 551.614, and by paying costs charged by the designee of the administrator for processing the filings.

551.406(5) (5) Additional conditions or waivers. A rule adopted or order issued under this chapter may impose other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996. An order issued under this chapter may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.

551.406(6) (6) Additional information required.

551.406(6)(a) (a) In addition to the information required elsewhere under this section, an application for registration shall contain, in the case of an individual, the individual’s social security number and, in the case of a person who is not an individual, the person’s federal employer identification number. The administrator may not disclose any information received under this paragraph to any person except the following:

551.406(6)(a)1. 1. The department of revenue, for the sole purpose of requesting certifications under s. 73.0301.

551.406(6)(a)1m. 1m. The department of workforce development, for the sole purpose of requesting certifications under s. 108.227.

551.406(6)(a)2. 2. The department of children and families in accordance with a memorandum of understanding under s. 49.857.

551.406(6)(b) (b) If an applicant for the issuance or renewal of a registration under this section is an individual who does not have a social security number, the applicant, as a condition of applying for or applying to renew the registration, shall submit a statement made or subscribed under oath or affirmation to the administrator that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of children and families.

551.406(6)(c) (c) Any license issued or renewed in reliance upon a false statement submitted by an applicant under par. (a) or (b) is invalid.

551.406 History History: 2007 a. 196; 2013 a. 36; 2023 a. 258.

551.407 551.407 Succession and change in registration of broker-dealer or investment adviser.

551.407(1) (1) Succession. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to s. 551.401 or 551.403 or a notice pursuant to s. 551.405 for the unexpired portion of the current registration or notice filing.

551.407(2) (2) Organizational change. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a change in control. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of this chapter. If there is a change in control, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered under this chapter shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within 45 days after filing its amendment to effect succession.

551.407(3) (3) Name change. A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration. The amendment becomes effective when filed or on a date designated by the registrant.

551.407(4) (4) Change of control. A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued under this chapter.

551.407 History History: 2007 a. 196.

551.408 551.408 Termination of employment or association of agent and investment adviser representative and transfer of employment or association.

551.408(1) (1) Notice of termination. If an agent registered under this chapter terminates employment by or association with a broker-dealer or issuer, or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser or federal covered investment adviser, or if either registrant terminates activities that require registration as an agent or investment adviser representative, the broker-dealer, issuer, investment adviser, or federal covered investment adviser shall promptly file a notice of termination. If the registrant learns that the broker-dealer, issuer, investment adviser, or federal covered investment adviser has not filed the notice, the registrant may do so.

551.408(2) (2) Transfer of employment or association. If an agent registered under this chapter terminates employment by or association with a broker-dealer registered under this chapter and begins employment by or association with another broker-dealer registered under this chapter; or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under s. 551.405 and begins employment by or association with another investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under s. 551.405; then upon the filing by or on behalf of the registrant, within 30 days after the termination, of an application for registration that complies with the requirement of s. 551.406 (1) and payment of the filing fee required under s. 551.614, the registration of the agent or investment adviser representative is:

551.408(2)(a) (a) Immediately effective as of the date of the completed filing, if the agent’s Central Registration Depository record or successor record or the investment adviser representative’s Investment Adviser Registration Depository record or successor record does not contain a new or amended disciplinary disclosure within the previous 12 months.

551.408(2)(b) (b) Temporarily effective as of the date of the completed filing, if the agent’s Central Registration Depository record or successor record or the investment adviser representative’s Investment Adviser Registration Depository record or successor record contains a new or amended disciplinary disclosure within the preceding 12 months.

551.408(3) (3) Withdrawal of temporary registration. The administrator may withdraw a temporary registration if there are or were grounds for discipline as specified in s. 551.412 and the administrator does so within 30 days after the filing of the application. If the administrator does not withdraw the temporary registration within the 30-day period, registration becomes automatically effective on the 31st day after filing.

551.408(4) (4) Power to prevent registration. The administrator may prevent the effectiveness of a transfer of an agent or investment adviser representative under sub. (2) (a) or (b) based on the public interest and the protection of investors.

551.408(5) (5) Termination of registration or application for registration. If the administrator determines that a registrant or applicant for registration is no longer in existence or has ceased to act as a broker-dealer, agent, investment adviser, or investment adviser representative, or is the subject of an adjudication of incapacity or is subject to the control of a committee, conservator, or guardian, or cannot reasonably be located, a rule adopted or order issued under this chapter may require the registration be canceled or terminated or the application denied. The administrator may reinstate a canceled or terminated registration, with or without hearing, and may make the registration retroactive.

551.408 History History: 2007 a. 196.

551.409 551.409 Withdrawal of registration of broker-dealer, agent, investment adviser, and investment adviser representative. Withdrawal of registration by a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective 60 days after the filing of the application to withdraw or within any shorter period as provided by rule adopted or order issued under this chapter unless a revocation or suspension proceeding is pending when the application is filed. If a proceeding is pending, withdrawal becomes effective when and upon such conditions as required by rule adopted or order issued under this chapter. The administrator may institute a revocation or suspension proceeding under s. 551.412 within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending.

551.409 History History: 2007 a. 196.

551.411 551.411 Postregistration requirements.

551.411(1) (1) Financial requirements. Subject to section 15 (h) of the Securities Exchange Act of 1934 (15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (15 USC 80b-18a), a rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter.

551.411(2) (2) Financial reports. Subject to section 15 (h) of the Securities Exchange Act of 1934 (15 USC 78o (h)) or section 222 (b) of the Investment Advisers Act of 1940 (15 USC 80b-18a), a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file such financial reports as are required by a rule adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

551.411(3) (3) Record keeping. Subject to section 15 (h) of the Securities Exchange Act of 1934 (15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (15 USC 80b-18a):

551.411(3)(a) (a) A broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall make and maintain the accounts, correspondence, memoranda, papers, books, and other records required by rule adopted or order issued under this chapter.