Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter or among underwriters.
Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit.
Any judicial sale or any transaction by a personal representative, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator.
Any transaction executed by a bona fide pledgee without any purpose of evading this chapter.
Any offer or sale of a security to any of the following:
A bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association, if the purchaser or prospective purchaser is acting for itself or as trustee with investment control.
An investment company as defined under 15 USC 80a-3
or a pension or profit-sharing trust, except that an offer or sale of a security to a pension or profit-sharing trust or to an individual retirement plan, including a self-employed individual retirement plan, is not exempt under this paragraph unless the trust or plan is administered by a bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association that has investment control.
This state or any of its agencies or political subdivisions.
The federal government or any of its agencies or instrumentalities.
Any financial institution or institutional investor designated by rule or order of the division.
Any offer or sale of a preorganization subscription, if no commission or other remuneration is paid or given directly or indirectly for soliciting any subscriber in this state and no advertising is published or circulated unless it has been permitted by the division, and if the subscription is not binding and no payment is made by any subscriber until the securities subscribed for may legally be sold.
Any offer or sale of its securities by an issuer having its principal office in this state, if the aggregate number of persons holding directly or indirectly all of the issuer's securities, after the securities to be issued are sold, does not exceed 25, exclusive of persons under sub. (8)
, if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, except to broker-dealers and agents licensed in this state, and if no advertising is published unless it has been permitted by the division.
Any transaction pursuant to an offer directed by the offeror to not more than 25 persons in this state, excluding persons exempt under sub. (8)
but including persons exempt under sub. (10)
, during any period of 12 consecutive months, whether or not the offeror or any of the offerees is then present in this state, if the offeror reasonably believes that all the persons in this state are purchasing for investment, and no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state other than those exempt by sub. (8)
The division may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of offerees permitted, or waive the conditions in par. (a)
, and may require reports of sales under this exemption.
Any transaction pursuant to an offer to existing security holders of the issuer, other than an entity designated in s. 551.52 (1) (b)
, or of a corporation which, prior to the offer, owned substantially all of the voting stock of the issuer or whose controlling persons organized the issuer for the purpose of the offer, if no commission or other remuneration other than a standby commission is paid or given directly or indirectly for soliciting any security holder in this state, and if, prior to any offer or sale, the issuer files a notice specifying the terms of the offer, all other information which the division by rule requires and any additional information required under s. 551.24 (6)
, and the division does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required under s. 551.24 (6)
, within 10 days after the date of filing that information. In this subsection, "security holder" includes a person who at the time of the transaction is a holder of convertible securities or nontransferable warrants or a holder of transferable warrants that are exercisable within not more than 90 days of their issuance but does not include a person who at the time of the transaction is a holder of only transferable warrants that are exercisable for more than 90 days after their issuance.
Any transaction incident to a class vote by stockholders, pursuant to the articles of incorporation or the applicable corporation statute, on a merger, consolidation, share exchange, reclassification of securities, or sale of corporate assets in consideration of the issuance of securities of another corporation; or any transaction incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims or property interests, or partly in such exchange and partly for cash.
Any stock split and any stock dividend by a corporation, and any share split or share dividend by a business trust, whether the corporation or business trust distributing the dividend is the issuer or not, if nothing of value is given for the dividend other than the surrender of a right to a cash or property dividend when each stockholder or shareholder may elect to take the dividend in cash or property or in stock or shares.
Any offer or sale of an evidence of debt issued by a corporation organized and operated not for private profit but exclusively for religious, educational, benevolent or charitable purposes if the security qualifies under this exemption, and if there has been filed with the division prior to any offer or sale a notice identifying the security and the basis of its qualification under this exemption together with any further information as the division by rule or order requires, and any additional information required under s. 551.24 (6)
, and if the division does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required under s. 551.24 (6)
, within 10 days after the date of filing that information. The security qualifies under this exemption if the issuer and any predecessor have not defaulted within the current fiscal year or the 3 preceding fiscal years in any fixed interest or principal obligation; and the issuer complies with rules of the division with respect to trust indentures and the use of a prospectus; and the security qualifies under either of the following:
The issuer and its predecessors have not been in existence for 3 years, and the securities proposed to be sold are secured by a mortgage or deed of trust upon land and buildings which is or will become a first lien at or prior to the issuance of such evidences of debt or provision satisfactory to the division is made for impounding the proceeds from their sale until such first lien is established, and the total amount of such securities does not exceed 50% of the then fair market value of the land and buildings included in such mortgage or deed of trust, less the amount of any unpaid special assessment taxes; or
The issuer or its predecessors have had an excess of revenues over expenses, excluding interest expense, provision for depreciation and extraordinary items, for each of the 2 fiscal years next preceding such offer or sale, or average net revenues for the last 3 fiscal years next preceding such offer or sale, of not less than 1 1/2 times the aggregate annual interest requirements on the issue of securities to be sold under this subsection and all securities of equal or prior rank to be outstanding immediately after such sale.
Any offer, but not a sale, of a security for which registration statements have been filed under both this chapter and the Securities Act of 1933 if no stop order or denial order is in effect and no proceeding is pending under either law.
Any offer or sale of warrants for or rights to subscribe to any security, provided the sale of the security deliverable on exercise of the warrant or right is in compliance with this chapter.
Any other transaction as to which the division by rule or order finds that registration is not necessary or appropriate for the protection of investors.
Any offer or sale of securities made in reliance on the exemption provided by Rule 505 of Regulation D under the Securities Act of 1933 and the conditions and definitions provided by Rules 501 to 503 thereunder, if the offer or sale also satisfies the additional conditions and limitations in pars. (b)
No commission or other remuneration may be paid or given, directly or indirectly, to any person for soliciting or selling to any person in this state in reliance on the exemption under par. (a)
, except to broker-dealers and agents licensed in this state or exempt from licensure under s. 551.31 (1)
Unless the cause for disqualification is waived under subd. 2.
, no exemption under par. (a)
is available for the securities of an issuer unless the issuer did not know and in the exercise of reasonable care could not have known that any of the following applies to any of the persons described in 17 CFR 230.262
(a), (b), or (c):
The person has filed a registration statement which is the subject of an effective order entered against the issuer, its officers, directors, general partners, controlling persons or affiliates thereof, pursuant to any state's law within 5 years before the filing of a notice required under par. (d)
denying effectiveness to, or suspending or revoking the effectiveness of, the registration statement.
The person has been convicted of any felony or misdemeanor in connection with the offer, sale or purchase of any security or franchise, or any felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud.
The person is subject to an effective administrative order or judgment entered by a state securities administrator within 5 years before the filing of a notice required under par. (d)
, which prohibits, denies or revokes the use of any exemption from securities registration, which prohibits the transaction of business by the person as a broker-dealer or agent, or which is based on fraud, deceit, an untrue statement of a material fact or an omission to state a material fact.
The person is subject to any order, judgment or decree of any court entered within 5 years before the filing of a notice required under par. (d)
, temporarily, preliminarily or permanently restraining or enjoining the person from engaging in or continuing any conduct or practice in connection with the offer, sale or purchase of any security, or the making of any false filing with any state.
Any disqualification under this paragraph involving a broker-dealer or agent is waived if the broker-dealer or agent is or continues to be licensed in this state as a broker-dealer or agent after notifying the division of the act or event causing disqualification.
The division may waive any disqualification under this paragraph upon a showing of good cause that it is not necessary under the circumstances that use of the exemption be denied.
Not later than the earlier of the date on which the first use of an offering document or the first sale is made in this state in reliance on the exemption under par. (a)
, there is filed with the division a notice comprised of offering material in compliance with the requirements of Rule 502 of Regulation D under the Securities Act of 1933, a completed Form D as prescribed by Rule 503 of Regulation D under the Securities Act of 1933, and a fee of $200. Material amendments to the offering document shall be filed with the division not later than the date of their first use in this state.
As to all sales in this state, the issuer shall reasonably believe immediately before making any sale that:
The purchaser, either alone or with the purchaser's representative, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment.
The failure to satisfy the conditions of subd. 1.
as to a purchaser shall not affect the availability of the exemption under par. (a)
as to other purchasers.
The division may, by order, increase the number of purchasers or waive any other conditions of the exemption under par. (a)
for a particular offering. The division shall not require the filing of advertising used in connection with offers or sales in reliance on the exemption. The exemption may be revoked by order of the division, but only if the offering constitutes or would constitute a violation of s. 551.31
and notice thereof has been received by the issuer, or constitutes or would constitute a violation of s. 551.41
See also s. DFI-Sec 4.10
, Wis. adm. code.
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
Has securities law regulation in the private capital markets become a deterrent to capital growth: a critical review. Coles. 58 MLR 395.
Exemption proceedings. 551.24(1)
The division may by order deny or revoke any exemption under s. 551.22
with respect to a specified security or transaction.
If the public interest and the protection of investors so require, the division may by order summarily deny or revoke any exemption under s. 551.22
with respect to a specified security or transaction. Upon entry of the order, the division shall serve upon all named parties a copy of the order and notify the parties of their right to request a hearing.
No order under this section may operate retroactively.
A person who offers or sells a security pursuant to an exemption under s. 551.22
after the exemption is denied or revoked by an order of the division does not violate s. 551.21 (1)
The person was not given notice of the order; and
The person sustains the burden of proof to establish that he or she was not given notice and did not know and, in the exercise of reasonable care, could not have known of the order.
In any proceeding under this chapter, the burden of proving an exemption or an exception from a definition is upon the person claiming it.
With respect to an exemption under s. 551.22
that is perfected if a notice or other information is filed with the division and the division does not disallow the exemption within a specified period after the filing, the division may, within 10 days after the filing date of the notice or other information, require that additional information reasonably related to the offering be filed. If the division requires additional information, the date by which the division may disallow the exemption is 10 days after the date of filing that information.
Registration by coordination. 551.25(1)
Registration by coordination may be used for any security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering and has not become effective.
A registration statement under this section shall contain all of the following information and be accompanied by the following documents in addition to the information specified in s. 551.27 (2)
and the consent to service of process required by s. 551.65 (1)
Three copies of the latest form of prospectus filed under the Securities Act of 1933.
If the division by rule or otherwise requires, a copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect, a copy of any agreements with or among underwriters, a copy of any indenture or other instrument governing the issuance of the security to be registered, and a specimen or copy of the security.
If the division requires, any other information, or copies of any documents, filed under the Securities Act of 1933.
An undertaking to forward all future amendments to the federal prospectus, other than an amendment which merely delays the effective date of the registration statement, not later than the first business day after they are forwarded to or filed with the securities and exchange commission, or such longer period as the division permits.
Unless waived in writing by the applicant before federal effectiveness, a registration statement under this section automatically becomes effective at the moment the federal registration statement becomes effective if all of the following conditions are met:
The registration statement has been on file with the division for at least 10 days.
A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commissions has been on file for 2 full business days or such shorter period as the division permits, and the offering is made within these limitations.
The registrant shall promptly notify the division by telephone or telegram of the date and time when the federal registration statement became effective and the content of the price amendment, if any, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. "Price amendment" means the final federal amendment which includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices and other matters dependent upon the offering price. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the division may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this subsection is effected, if the division promptly notifies the registrant by telephone or telegram of the issuance of the order. If the registrant proves compliance with the requirements of this subsection as to notice and post-effective amendment, the stop order shall be vacated. The division may by rule or otherwise waive any of the conditions specified in par. (a)
. If the federal registration statement becomes effective before all the conditions in this subsection are satisfied and they are not waived, the registration statement automatically becomes effective as soon as all the conditions are satisfied. If the registrant advises the division of the date when the federal registration statement is expected to become effective, the division shall promptly advise the registrant by telephone or telegram, at the registrant's expense, whether all the conditions are satisfied and whether the division then contemplates the institution of a proceeding under s. 551.28
; but this advice by the division does not preclude the institution of such a proceeding at any time.
See also ch. DFI-Sec 3
, Wis. adm. code.
Registration by qualification. 551.26(1)
Any security may be registered by qualification.
A registration statement under this section shall contain the information specified in s. 551.27 (2)
, shall be accompanied by the consent to service of process required by s. 551.65 (1)
, and shall contain such further information and be accompanied by such further documents as the division by rule or otherwise requires. For this purpose the division may classify issuers and types of securities.
Registration under this section becomes effective when the division so orders. If a registration statement has been on file for at least 30 days and all information required by the division has been furnished, the person filing the statement may at any time file a written request that the division take action within 10 days following the filing of such request. If a request is filed, and the division takes no action within the period, the registration becomes effective at the end of the 10-day period.
The division may by rule or order require as a condition of registration under this section that a prospectus containing any designated part of the information contained in the registration statement or filed with it be sent or given to each person to whom an offer is made before or concurrently with the first written offer made to the person, otherwise than by means of a public advertisement, by or for the account of the issuer or any other person on whose behalf the offering is made, or by any underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by him or her as a participant in the distribution; or the confirmation of any sale made by or for the account of any person; or the payment pursuant to any sale; or the delivery of the security pursuant to any sale; whichever first occurs.
History: 1981 c. 53
; 1995 a. 27
See also ch. DFI-Sec 3
, Wis. adm. code.
General registration provisions. 551.27(1)
A registration statement may be filed by the issuer, any other person on whose behalf the offering is to be made or a licensed broker-dealer, but the division may in specific cases require that it be executed by the issuer.
Every registration statement shall specify:
The states in which a registration statement or application in connection with the offering has been or is to be filed; and
Any adverse order, judgment or decree entered in connection with the offering by the regulatory authorities in any state or by any court or the securities and exchange commission, or any withdrawal of a registration statement or application relating to the offering.
Any document filed under this chapter or a predecessor law within 5 years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the document is currently accurate.