Chapter 551

551.601(2) (2) Unlawful use of records or information. It is unlawful for the administrator or an officer, employee, or designee of the administrator to use for personal benefit or the benefit of others records or other information obtained by or filed with the administrator that are not public under s. 551.607 (2). This chapter does not authorize the administrator or an officer, employee, or designee of the administrator to disclose the record or information, except in accordance with s. 551.602, 551.607 (3), or 551.608.

551.601(3) (3) No privilege or exemption created or diminished. This chapter does not create or diminish a privilege or exemption that exists at common law, by statute or rule, or otherwise.

551.601(4) (4) Investor education. The administrator may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud. In developing and implementing these initiatives, the administrator may collaborate with public and nonprofit organizations with an interest in investor education. The administrator may accept a grant or donation from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives. This subsection does not authorize the administrator to require participation or monetary contributions of a registrant in an investor education program.

551.601(5) (5) Securities investor education and training funding. All moneys collected from the administrative assessment under s. 551.604 (4) shall be credited to the appropriation under s. 20.144 (1) (i). Subject to s. 20.144 (1) (i), the division shall use moneys credited to that appropriation for the purposes specified in sub. (4) and s. 20.144 (1) (i).

551.601 History History: 2007 a. 196.

551.602 551.602 Investigations and subpoenas.

551.602(1) (1) Authority to investigate. The administrator may do any of the following:

551.602(1)(a) (a) Conduct public or private investigations within or outside of this state which the administrator considers necessary or appropriate to determine whether a person has violated, is violating, or is about to violate this chapter or a rule adopted or order issued under this chapter, or to aid in the enforcement of this chapter or in the adoption of rules and forms under this chapter.

551.602(1)(b) (b) Require or permit a person to testify, file a statement, or produce a record, under oath or otherwise as the administrator determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted.

551.602(1)(c) (c) Publish a record concerning an action, proceeding, or an investigation under, or a violation of, this chapter or a rule adopted or order issued under this chapter.

551.602(2) (2) Administrator powers to investigate. For the purpose of an investigation under this chapter, the administrator or its designated officer may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements, and require the production of any records that the administrator considers relevant or material to the investigation.

551.602(3) (3) Procedure and remedies for noncompliance. If a person does not appear or refuses to testify, file a statement, produce records, or otherwise does not obey a subpoena as required by the administrator under this chapter, the administrator may apply to, or may refer the matter to the attorney general, district attorney of the appropriate county, or appropriate federal authority who may apply to, the circuit court of the appropriate county or a court of another state to enforce compliance. The court may do any of the following:

551.602(3)(a) (a) Hold the person in contempt.

551.602(3)(b) (b) Order the person to appear before the administrator.

551.602(3)(c) (c) Order the person to testify about the matter under investigation or in question.

551.602(3)(d) (d) Order the production of records.

551.602(3)(e) (e) Grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice.

551.602(3)(f) (f) Impose a civil penalty of not less than $5,000 and not greater than $250,000 for each violation.

551.602(3)(g) (g) Grant any other necessary or appropriate relief.

551.602(4) (4) Application for relief. This section does not preclude a person from applying to the circuit court of the appropriate county or a court of another state for relief from a request to appear, testify, file a statement, produce records, or obey a subpoena.

551.602(5) (5) Use immunity procedure.

551.602(5)(a) (a) An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the administrator under this chapter or in an action or proceeding instituted by the administrator under this chapter on the ground that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture. If the individual refuses to testify, file a statement, or produce a record or other evidence on the basis of the individual’s privilege against self-incrimination, the administrator may apply to the circuit court of the appropriate county to compel the testimony, the filing of the statement, the production of the record, or the giving of other evidence. The testimony, record, or other evidence compelled under such an order may not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order.

551.602(5)(b) (b) The immunity provided under par. (a) is subject to the restrictions under s. 972.085.

551.602(6) (6) Assistance to securities regulator of another jurisdiction. At the request of the securities regulator of another state or a foreign jurisdiction, the administrator may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating, or is about to violate a law or rule of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces. The administrator may provide the assistance by using the authority to investigate and the powers conferred by this section as the administrator determines is necessary or appropriate. The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of this chapter or other law of this state if occurring in this state. In deciding whether to provide the assistance, the administrator may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the administrator on securities matters when requested; whether compliance with the request would violate or prejudice the public policy of this state; and the availability of resources and employees of the administrator to carry out the request for assistance.

551.602 History History: 2007 a. 196; 2021 a. 238 s. 45.

551.603 551.603 Civil enforcement.

551.603(1) (1) Civil action instituted by administrator. If the administrator believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may maintain, or may refer the matter to the attorney general or district attorney of the appropriate county who may maintain, an action in the circuit court of the appropriate county to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter.

551.603(2) (2) Relief available. In an action under this section and on a proper showing, the court may do any of the following:

551.603(2)(a) (a) Issue a permanent or temporary injunction, restraining order, or declaratory judgment.

551.603(2)(b) (b) Order other appropriate or ancillary relief, which may include any of the following:

551.603(2)(b)1. 1. An asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator, that may be the administrator, for the defendant or the defendant’s assets.

551.603(2)(b)2. 2. Ordering the administrator to take charge and control of a defendant’s property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property.

551.603(2)(b)3. 3. Imposing a civil penalty up to $5,000 for a single violation or up to $250,000 for more than one violation; an order of rescission, restitution, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this chapter or the predecessor act or a rule adopted or order issued under this chapter or the predecessor act.

551.603(2)(b)4. 4. Ordering the payment of prejudgment and postjudgment interest.

551.603(2)(c) (c) Order such other relief as the court considers appropriate.

551.603(3) (3) No bond required. The administrator may not be required to post a bond in an action or proceeding under this chapter.

551.603(4) (4) Enhancement of civil penalties.

551.603(4)(a) (a) In any action under this section, if the court imposes a civil penalty under sub. (2) (b) 3. for any violation against another person who is at least 65 years of age when the violation occurs, for each such violation the civil penalty prescribed under sub. (2) (b) 3. for a single violation may be increased by not more than $5,000 and the maximum civil penalty for more than one violation may be increased by not more than $250,000.

551.603(4)(b) (b) This subsection provides for the enhancement of the civil penalties applicable for any underlying violation. If the court is not the trier of fact, the court shall direct that the trier of fact find a special verdict as to the age of any victim at the time of the violation.

551.603(4)(c) (c) It is no defense to the enhancement of civil penalties under this subsection that the defendant did not know the age of the victim or reasonably believed that the victim was not at least 65 years of age.

551.603 History History: 2007 a. 196; 2009 a. 196.

551.604 551.604 Administrative enforcement.

551.604(1) (1) Issuance of an order or notice. If the administrator determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may do any of the following:

551.604(1)(a) (a) Issue an order directing the person to cease and desist from engaging in the act, practice, or course of business or to take other action necessary or appropriate to comply with this chapter.

551.604(1)(b) (b) Issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under s. 551.401 (2) (d) or (f) or an investment adviser under s. 551.403 (2) (a) 3.

551.604(1)(c) (c) Issue an order under s. 551.204.

551.604(2) (2) Summary process. An order under sub. (1) is effective on the date of issuance. Upon issuance of the order, the administrator shall promptly serve each person subject to the order with a copy of the order and a notice that the order has been entered. The order must include a statement of any civil penalty, restitution, disgorgement, interest, or costs of investigation the administrator will seek, a statement of the reasons for the order, and notice that, within 15 days after receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a person subject to the order does not request a hearing and none is ordered by the administrator within 30 days after the date of service of the order, the order, including the imposition of a civil penalty or requirement for payment of restitution, disgorgement, interest, or the costs of investigation sought in a statement in the order, becomes final as to that person by operation of law. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend it until final determination.

551.604(3) (3) Procedure for final order. If a hearing is requested or ordered pursuant to sub. (2), a hearing must be held pursuant to ch. 227. A final order may not be issued unless the administrator makes findings of fact and conclusions of law in a record in accordance with ch. 227. The final order may make final, vacate, or modify the order issued under sub. (1).

551.604(4) (4) Civil penalty. In a final order under sub. (3), the administrator may impose a civil penalty in the form of an administrative assessment up to $5,000 for a single violation or up to $250,000 for more than one violation except that, if the violation is committed against another person who is at least 65 years of age when the violation occurs, for each such violation the civil penalty may be up to $10,000 for a single violation or up to $500,000 for more than one violation. It is no defense to the enhancement of civil penalties under this subsection that the defendant did not know the age of the victim or reasonably believed that the victim was not at least 65 years of age.

551.604(4m) (4m) Restitution, disgorgement, and interest. In a final order under sub. (3), in addition to any civil penalty under sub. (4) or costs under sub. (5), the administrator may order a person subject to the order to do any of the following:

551.604(4m)(a) (a) Pay restitution to any person suffering loss as a result of the violation.

551.604(4m)(b) (b) Disgorge any profits received as a result of the violation.

551.604(4m)(c) (c) Pay interest at the legal rate under s. 138.04 from the date of the violation.

551.604(5) (5) Costs. In a final order, the administrator may charge the actual cost of an investigation or proceeding for a violation of this chapter or a rule adopted or order issued under this chapter.

551.604(6) (6) Filing of certified final order with court; effect of filing. If a petition for judicial review of a final order is not filed in accordance with s. 551.609, the administrator may file a certified copy of the final order with the clerk of a court of competent jurisdiction. The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.

551.604(7) (7) Enforcement by court; further civil penalty. If a person does not comply with an order under this section, the administrator may petition a court of competent jurisdiction to enforce the order. The court may not require the administrator to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not less than $5,000 but not greater than $100,000 for each violation and may grant any other relief the court determines is just and proper in the circumstances.

551.604 History History: 2007 a. 196; 2009 a. 196.

551.605 551.605 Rules, forms, orders, interpretative opinions, and hearings.

551.605(1) (1) Issuance and adoption of forms, orders, and rules. The administrator may do any of the following:

551.605(1)(a) (a) Issue forms and orders and, after notice and comment, adopt and amend rules necessary or appropriate to carry out this chapter, and repeal rules, including rules and forms governing registration statements, applications, notice filings, reports, and other records.

551.605(1)(b) (b) By rule, define terms, whether or not used in this chapter, but those definitions may not be inconsistent with this chapter.

551.605(1)(c) (c) By rule, classify securities, persons, and transactions and adopt different requirements for different classes.

551.605(2) (2) Findings and cooperation. Under this chapter, except as provided under s. 551.412 (4g) (b), (c), and (d), a rule or form may not be adopted or amended, or an order issued or amended, unless the administrator finds that the rule, form, order, or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by this chapter. In adopting, amending, and repealing rules and forms, s. 551.608 applies in order to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports, and other records, including the adoption of uniform rules, forms, and procedures.

551.605(3) (3) Financial statements.

551.605(3)(am) (am) Subject to section 15 (h) of the Securities Exchange Act and section 222 of the Investment Advisers Act of 1940, and except as provided in par. (bm), the administrator may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this chapter. Except as provided in par. (bm), a rule adopted or order issued under this chapter may establish:

551.605(3)(am)1. 1. Subject to section 15 (h) of the Securities Exchange Act and section 222 of the Investment Advisers Act of 1940, the form and content of financial statements required under this chapter.

551.605(3)(am)2. 2. Whether unconsolidated financial statements must be filed.

551.605(3)(am)3. 3. Whether required financial statements must be audited by an independent certified public accountant.

551.605(3)(bm) (bm)

551.605(3)(bm)1. 1. Except as provided in subd. 2., a financial institution holding company whose securities have been registered under this chapter shall not be required to prepare or distribute to shareholders or provide to the department of financial institutions, at any time after such registration, any financial statements, financial information, annual reports, or other periodic reports except to the extent required under ss. 180.1620 and 180.1622.

551.605(3)(bm)2. 2. Each financial institution holding company whose securities have been registered under this chapter and are held by 100 or more persons in this state shall distribute to the security holders not more than 120 days after the end of each fiscal year the annual financial statements prepared under s. 180.1620. This subdivision does not apply to a financial institution holding company that has any securities registered under section 12 of the Securities Exchange Act of 1934 (15 USC 78l).

551.605(3)(bm)3. 3. If any financial statement is required of a financial institution holding company under this chapter, the financial institution holding company shall not be required to do any of the following:

551.605(3)(bm)3.a. a. Except as may be required under s. 180.1620, have the financial statement prepared in accordance with generally accepted accounting principles.

551.605(3)(bm)3.b. b. Have the financial statement examined and reported upon or reviewed by or compiled by any certified public accountant.

551.605(4) (4) Interpretative opinions. The administrator may provide interpretative opinions or issue determinations that the administrator will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. A rule adopted or order issued under this chapter may establish a reasonable charge for interpretative opinions or determinations that the administrator will not institute an action or a proceeding under this chapter.

551.605(5) (5) Effect of compliance. A penalty under this chapter may not be imposed for, and liability does not arise from, conduct that is engaged in or omitted in good faith in conformity with a rule, form, or order of the administrator under this chapter.

551.605(6) (6) Presumption for public hearings. A hearing in an administrative proceeding under this chapter must be conducted in public unless the administrator for good cause consistent with this chapter determines that the hearing will not be so conducted.

551.605 History History: 2007 a. 196; 2013 a. 36, 52.

551.606 551.606 Administrative files and opinions.

551.606(1) (1) Public register of filings. The administrator shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers, and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective under this chapter or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this chapter or the predecessor act; and interpretative opinions or no action determinations issued under this chapter.

551.606(2) (2) Public availability. The administrator shall make all rules, forms, interpretative opinions, and orders available to the public.

551.606(3) (3) Copies of public records. The administrator shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person that so requests. A rule adopted under this chapter may establish a reasonable charge for furnishing the record or certification. A copy of the record certified or a certificate by the administrator of a record’s nonexistence is prima facie evidence of a record or its nonexistence.

551.606 History History: 2007 a. 196.

551.607 551.607 Public records; confidentiality.

551.607(1) (1) Presumption of public records. Except as otherwise provided in sub. (2), records obtained by the administrator or filed under this chapter, including a record contained in or filed with a registration statement, application, notice filing, or report, are public records and are available for public examination.

551.607(2) (2) Nonpublic records. The following records are not public records and are not available for public examination under sub. (1):

551.607(2)(a) (a) Information and records obtained by the administrator in connection with an audit or inspection under s. 551.411 (4) or a pending investigation under s. 551.602.

551.607(2)(b) (b) A part of a record filed in connection with a registration statement under ss. 551.301 and 551.303 to 551.305 or a record under s. 551.411 (4) that contains trade secrets or confidential information if the person filing the registration statement or record has asserted a claim of confidentiality or privilege that is authorized by law.

551.607(2)(c) (c) A record that is not required to be provided to the administrator or filed under this chapter and is provided to the administrator only on the condition that the record will not be subject to public examination or disclosure.