Rules, forms and orders.
Administrative files and opinions.
Service of process.
TITLE AND DEFINITIONS
This chapter shall be known and may be cited as the "Wisconsin Uniform Securities Law".
In this chapter, unless the context otherwise requires:
"Advertising" means any circular, prospectus, advertisement or other material or any communication by radio, television, pictures or similar means used in connection with a sale or purchase or an offer to sell or purchase any security.
"Agent" means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect transactions in securities. A partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent if he or she is within this definition. "Agent" does not include an individual who represents an issuer in doing any of the following:
Effecting transactions exempted by s. 551.23
, other than transactions exempted under s. 551.23 (8) (g)
in which the individual receives a commission or other remuneration directly or indirectly for soliciting or selling to any person in this state.
Effecting other transactions if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state.
"Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for the person's own account. "Broker-dealer" does not include any of the following:
A bank, savings institution, or trust company, when effecting transactions for its own account or as agent under s. 551.31 (5)
A personal representative, guardian, conservator, or pledgee.
A person licensed as a real estate broker under ch. 452
and whose transactions in securities are isolated transactions incidental to that business.
Other persons not within the intent of this subsection whom the division by rule or order designates.
"Division" means the division of securities.
"Federal covered adviser" means a person who is registered under section 203 of the Investment Advisers Act of 1940.
"Federal covered security" means any security that is a covered security under section 18 (b) of the Securities Act of 1933 or regulations promulgated under that act.
"Fraud", "deceit" and "defraud" are not limited to common law deceit.
"Guaranteed" means guaranteed as to payment of principal, interest or dividends.
"Investment adviser" means any person who, for compensation, engages in the business of advising others, either directly or through publications, writings or electronic means, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. "Investment adviser" does not include any of the following:
A bank, savings institution or trust company.
A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of his or her profession.
A broker-dealer or agent whose performance of these services is solely incidental to the conduct of his or her business as a broker-dealer or agent and who receives no special compensation for them.
A publisher of any bona fide newspaper, news magazine or business or financial publication with a regular and paid circulation or a publisher of any securities advisory newsletter with a regular and paid circulation which does not provide advice to subscribers on their specific investment situation.
A federal covered adviser, unless the federal covered adviser is required to become licensed or qualify for an exclusion or exemption from licensure under s. 551.32 (1m) (c)
A person who is excluded from the definition of "investment adviser" under section 202 (a) (11) of the Investment Advisers Act of 1940.
Other persons not within the intent of this subsection whom the division by rule or order designates.
"Investment adviser representative" means any of the following, unless excluded under par. (b)
A supervised person, as defined by the division by rule, of an investment adviser or a federal covered adviser, unless one of the following applies:
Not more than a percentage, specified by the division by rule, of the clients of the supervised person are natural persons who are not excepted persons, as defined by the division by rule.
The supervised person does not, on a regular basis, solicit, meet with or otherwise communicate with clients of the investment adviser or federal covered adviser.
The supervised person provides only impersonal investment advice, as defined by the division by rule.
A 3rd-party solicitor, as defined by the division by rule.
"Investment adviser representative" does not include any person excluded by the division by rule or order.
"Issuer" means any person who issues or proposes to issue any security and any promoter who acts for an issuer to be formed, except:
With respect to certificates of deposit or trust certificates, "issuer" means the person performing the acts and assuming the duties of depositor, manager or trustee pursuant to the provisions of the trust or other instrument under which the security is issued; and
With respect to certificates of interest or participation in oil, gas or mining titles or leases, "issuer" means the owner of any such title or lease who creates fractional interests therein for purposes of sale.
"Nonissuer" means not directly or indirectly for the benefit of the issuer.
"Person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, a political subdivision of a government or any other entity.
"Sale" or "sell" includes every sale, disposition or exchange, and every contract of sale of, or contract to sell, a security or interest in a security for value.
"Offer" or "offer to sell" includes every attempt or offer to sell or dispose of, or solicitation of an offer to purchase, a security or interest in a security for value, but does not include solicitation by a licensed broker-dealer of tentative reservations of securities which shall not be binding upon the purchaser until ratified by the purchaser after the securities may legally be sold.
Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.
The terms defined in this subsection do not include any bona fide pledge or loan of a security.
A securities broker-dealer or agent who effects a brokered securities transaction is considered to have effected a sale or purchase of a security.
"Securities Act of 1933", " Securities Exchange Act of 1934", " Investment Company Act of 1940", " Investment Advisers Act of 1940" and " Internal Revenue Code" mean the federal statutes of those names as amended on January 1, 1998, including such later amendments as the division determines are not inconsistent with the purpose of this chapter.
"Security" means any stock; treasury stock; note; bond; debenture; evidence of indebtedness; share of beneficial interest in a business trust; certificate of interest or participation in any profit sharing agreement; collateral trust certificate; preorganization subscription; transferable share; investment contract; commodity futures contract; voting trust certificate; certificate of deposit for a security; limited partnership interest; certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease; or, in general, any interest or instrument commonly known as or having the incidents of a security or offered in the manner in which securities are offered; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of or option, warrant or right to subscribe to or purchase or sell, any of the foregoing.
"Security" does not include any fixed or variable insurance or endowment policy or annuity contract under which an insurer promises to pay money either in a lump sum or periodically for life or some other specified period; any beneficial interest in any voluntary inter vivos trust not created for the purpose of carrying on any business or solely for the purpose of voting; or any beneficial interest in any testamentary trust; or any member's interest that includes all of the rights set forth in s. 183.0102 (11)
in a limited liability company organized under ch. 183
if the aggregate number of members of the limited liability company, after the interest is sold, does not exceed 15, and the articles of organization do not vest management of the limited liability company in one or more managers.
Except as provided in par. (b)
, "security" is presumed to include a member's interest in a limited liability company organized under ch. 183
if the articles of organization vest management of the limited liability company in, or if the operating agreement delegates the essential managerial responsibility of the limited liability company to, one or more managers who are not members, or if the aggregate number of members of the limited liability company, after the interest is sold, exceeds 35. "Security" is presumed not to include a member's interest in a limited liability company organized under ch. 183
if the aggregate number of members of the limited liability company, after the interest is sold, does not exceed 35 and the articles of organization do not vest management of the limited liability company in, nor does the operating agreement delegate the essential managerial responsibilities of the limited liability company to one or more managers who are not members.
"State" means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.
See also ch. DFI-Sec 1
, Wis. adm. code.
A profit-sharing agreement between management and labor in exchange for wage concessions was not a security. Fore Way Express, Inc. v. Bast, 178 Wis. 2d 693
, 505 N.W.2d 408
(Ct. App. 1993).
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 sub. (11) (b). 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
An "offer to sell" under sub. (11) (b) was made when the defendant gave an unexecuted partnership agreement to the plaintiff implicitly inviting the plaintiff to return it completed as to form and amount. Feitler v. Midas Associates, 418 F. Supp. 735
State and federal regulation of condominiums. Minahan, 58 MLR 55.
When Does A Member's Interest in an LLC Become a Security? Briska. Wis. Law. Sept. 1994.
REGISTRATION AND NOTICE FILING
Registration requirement. 551.21(1)
It is unlawful for any person to offer or sell any security in this state unless at least one of the following conditions is met:
The security is registered under this chapter.
The security is a federal covered security.
It is unlawful for any issuer or registrant of any securities registered under this chapter, or any person in control of or controlled by or under common control with the issuer or registrant, to offer or sell any of the registered securities in this state if the issuer or registrant is in violation of this chapter, or any rule under this chapter, or any order under this chapter of which he or she has notice, or if the registration statement relating to the securities, as of the date of such offer or sale, is incomplete in any material respect or contains any statement which is false or misleading with respect to any material fact.
Sub. (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
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 s. 551.02. (11) (b). 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
Registration and reporting requirements for exempt transactions are discussed. Feitler v. Midas Associates, 418 F. Supp. 735
The financing of corporate expansion through industrial revenue bonds. Mulcahy & Guszkowski. 57 MLR 201.
The following securities are exempt from registration under s. 551.21 (1)
Any security, including a revenue obligation, issued or guaranteed by the United States, any state, any political subdivision of a state or any agency or corporate or other instrumentality of one or more of the foregoing; or any certificate of deposit for any of the foregoing; but any revenue obligation payable from payments to be made in respect of property or money used under a lease, sale or loan arrangement by or for a nongovernmental industrial or commercial enterprise is exempted only as provided under par. (b)
. A security, other than a security issued or guaranteed by the United States or an agency or corporate instrumentality of the United States and other than a revenue obligation, is exempt under this subsection only if the issuer's financial statements are prepared according to generally accepted accounting principles or guidelines which the division designates by rule.