Report the amount of securities sold to persons in this state during the preceding fiscal year or, if sales have terminated, during the portion of the preceding fiscal year during which sales were made, and pay a fee of 0.05% of the dollar amount of the securities sold to persons in this state, but not less than $150 nor more than $1,500.
Every applicant for an initial or renewal license under s. 551.32
shall pay a filing fee of $200 in the case of a broker-dealer or investment adviser and $30 in the case of an agent representing a broker-dealer or issuer or an investment adviser representative. Every federal covered adviser in this state that is required to make a notice filing under s. 551.32 (1m)
shall pay an initial or renewal notice filing fee of $200. A broker-dealer, investment adviser, or federal covered adviser maintaining a branch office within this state shall pay an additional filing fee of $30 for each branch office. When an application is denied, or an application or a notice filing is withdrawn, the filing fee shall be retained.
The expenses reasonably attributable to the examination of any matter arising under this chapter shall be charged to the applicant, registrant or licensee involved, but the expenses so charged shall not exceed such maximum amounts as the division by rule prescribes.
The division may by rule require the payment of prescribed fees for delinquent or materially deficient filings of information or documents required under this chapter to be filed with the division or an organization designated under s. 551.32 (1) (a)
All fees and expenses collected under this section shall be paid into the state treasury.
See also s. DFI-Sec 7.01
, Wis. adm. code.
It is unlawful for any person, in connection with the offer, sale or purchase of any security in this state, to publish, circulate or use any advertising:
That contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
That has not been filed with the division not later than the date of publication or circulation, except for advertising relating to a federal covered security or except as the division may otherwise provide by rule or order.
The division may by rule or order prohibit the publication, circulation or use of any advertising deemed false or misleading.
It is unlawful for any person to make or cause to be made, in any document filed with the division or filed under s. 551.32 (1) (a)
with an organization designated by the division or in any proceeding under this chapter, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.
History: 1981 c. 53
; 1995 a. 27
Neither the fact that a notice filing, registration statement or an application for a license has been filed nor the fact that a security is effectively registered or a person is licensed constitutes a finding by the division that any document filed under this chapter is true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the division has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer or client any representation inconsistent with the foregoing.
History: 1995 a. 27
; 1997 a. 316
Investigations and subpoenas. 551.56(1)(a)
Make such public or private investigations within or without this state as are necessary to determine whether any person has violated or is about to violate this chapter or any rule or order under this chapter, or to aid in the enforcement of this chapter or in the prescribing of rules and forms under this chapter;
Require or permit any person to file a statement in writing, under oath or otherwise as the division determines, as to all the facts and circumstances concerning the matter being investigated;
Publish information concerning any violation of this chapter or any rule or order under this chapter or concerning securities, or practices in the sale of securities, which appear or tend to be unfair, inequitable or fraudulent; and
Hold hearings, upon reasonable notice, and issue orders on the basis thereof, in respect of any matter arising out of the administration of this chapter.
For the purpose of any investigation, hearing or proceeding under this chapter, the division or any officer designated by the division may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence and require the production of any books, papers, correspondence, memoranda, agreements or other documents or records which the division deems relevant or material to the inquiry. Failure to obey a subpoena or give evidence may be dealt with in accordance with s. 885.12
No person is excused from attending and testifying or from producing any document or record before the division, or in obedience to the subpoena of the division or any officer designated by the division, or in any proceeding instituted by the division, on the ground that the testimony or evidence required of the person may tend to incriminate him or her or subject the person to a penalty or forfeiture; but no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of his or her testimony or evidence, after claiming his or her privilege against self-incrimination, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.
Whenever it appears to the division that any person has engaged or is about to engage in any act or practice constituting a violation of this chapter or any rule or order hereunder, the division may bring an action in the name of the state in the circuit court of the appropriate county to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order hereunder, or the division may refer the matter to the attorney general or the district attorney of the appropriate county. Upon a proper showing, the court may grant a permanent or temporary injunction or restraining order, or may appoint a receiver for the defendant or the defendant's assets, or may order rescission of any sales or purchases of securities determined to be unlawful under this chapter or any rule or order hereunder. The court may not require the division to post a bond.
History: 1971 c. 84
; 1981 c. 53
; 1995 a. 27
Criminal penalties. 551.58(1)(1)
Any person who willfully violates any provision of this chapter except s. 551.54
, or any rule under this chapter, or any order of which the person has notice, or who violates s. 551.54
knowing or having reasonable cause to believe that the statement made was false or misleading in any material respect, is guilty of a Class H felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction for any other offense.
The division may refer such evidence as is available concerning violations of this chapter or of any rule or order under this chapter to the attorney general or the district attorney of the appropriate county, who may, with or without any reference, institute the appropriate criminal proceedings under this chapter. If referred to a district attorney, the district attorney shall, within 90 days, file with the division a statement concerning any action taken or, if no action has been taken, the reasons therefor.
Nothing in this chapter limits the power of the state to punish any person for any conduct which constitutes a crime under any other statute.
That sub. (1) does not require a person to know his or her actions are unlawful does not render the statute unconstitutional. Mueller v. Sullivan, 141 F.3d 1232
Civil liabilities. 551.59(1)(a)(a)
Any person who offers or sells a security in violation of s. 551.21
or any rule relating thereto, or any condition imposed under s. 551.26
or any order under this chapter of which the person has notice is liable to the person purchasing the security from him or her. The person purchasing the security may sue either at law or in equity to recover the consideration paid for the security, together with interest at the legal rate under s. 138.04
from the date of payment, and reasonable attorney fees, less the amount of any income received on the security, upon the tender of the security, or for damages if the person no longer owns the security. Damages are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it and interest at the legal rate under s. 138.04
from the date of disposition. Tender shall require only notice of willingness to exchange the security for the amount specified. Any notice may be given by service as in civil actions or by certified mail addressed to the last-known address of the person liable.
A person who offers or sells a security in violation of s. 551.41 (2)
is not liable under par. (a)
if the purchaser knew of the untrue statement of a material fact or omission of a statement of a material fact or the person sustains the burden of proof to establish that he or she did not know and in the exercise of reasonable care could not have known of the untrue statement or omission.
Any person who purchases a security in violation of s. 551.41 (2)
is liable to the person selling the security to him or her, who may sue either at law or in equity to recover the security and reasonable attorney fees, plus any income received by the purchaser thereon, upon tender of the consideration received, or for damages and reasonable attorney fees if the purchaser no longer owns the security. Damages are the excess of the value of the security when the purchaser disposed of it, plus interest at the legal rate under s. 138.04
from the date of disposition, over the consideration paid for the security. Tender requires only notice of willingness to pay the amount specified in exchange for the security. Any notice may be given by service as in civil actions or by certified mail to the last-known address of the person liable.
A person who purchases a security in violation of s. 551.41 (2)
is not liable under par. (a)
if the seller knew of the untrue statement of a material fact or omission of a statement of a material fact or the person sustains the burden of proof to establish that he or she did not know and in the exercise of reasonable care could not have known of the untrue statement or omission.
Any person who willfully participates in any act or transaction in violation of s. 551.42
shall be liable to any other person who purchases or sells any security at a price which was affected by the act or transaction for the damages sustained as a result of such act or transaction. Damages shall be the difference between the price at which the other person purchased or sold securities and the market value which the securities would have had at the time of his or her purchase or sale in the absence of the act or transaction, plus interest at the legal rate under s. 138.04
and reasonable attorney fees.
Every person who directly or indirectly controls a person liable under sub. (1)
, every partner, principal executive officer or director of such person, every person occupying a similar status or performing similar functions, every employee of such person who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the act or transaction constituting the violation, are also liable jointly and severally with and to the same extent as such person, unless the person liable hereunder proves that he or she did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. There is contribution as in cases of contract among the several persons so liable.
No action shall be maintained under this section unless commenced before the expiration of 3 years after the act or transaction constituting the violation, but the time specified for commencing such action shall be extended by reason of any fact and for the time specified in ss. 893.13
No purchaser may commence an action under this section if, before suit is commenced, the purchaser has received a written offer stating the respect in which liability under this section may have arisen and fairly advising the purchaser of his or her rights; offering to repurchase the security for cash payable on delivery of the security equal to the consideration paid, together with interest at the legal rate under s. 138.04
from the date of payment, less the amount of any income received thereon or, if the purchaser no longer owns the security, offering to pay the purchaser upon acceptance of the offer an amount in cash equal to the damages computed in accordance with sub. (1)
; and stating that the offer may be accepted by the purchaser at any time within a specified period of not less than 30 days after the date of receipt thereof or such shorter period as the division may by rule prescribe; and the purchaser has failed to accept such offer in writing within the specified period.
No seller may commence an action under this section if, before suit is commenced, the seller has received a written offer stating the respect in which liability under this section may have arisen and fairly advising the seller of his or her rights; offering to return the security plus the amount of any income received thereon upon payment of the consideration received, or, if the purchaser no longer owns the security, offering to pay the seller upon acceptance of the offer an amount in cash equal to the damages computed in accordance with sub. (2)
; and providing that the offer may be accepted by the seller at any time within a specified period of not less than 30 days after the date of receipt thereof; and the seller has failed to accept the offer in writing within the specified period.
Offers shall be in the form and contain the information the division by rule prescribes. Every offer under this subsection shall be delivered to the offeree or sent by certified mail addressed to the offeree at the offeree's last-known address. If an offer is not performed in accordance with its terms, suit by the offeree under this section shall be permitted without regard to this subsection.
No person who has made or engaged in the performance of any contract in violation of this chapter or any rule or order hereunder, or who has acquired any purported right under any contract with knowledge of the facts by reason of which its making or performance was in violation, may base any suit on the contract.
Any condition, stipulation or provision binding any person acquiring any security to waive compliance with any provision of this chapter or any rule or order hereunder is void.
The rights and remedies under this chapter are in addition to any other rights or remedies that may exist at law or in equity.
See also s. DFI-Sec 7.03
, Wis. adm. code.
Chapter 551 is not the exclusive remedy for securities fraud. It does not preempt common law fraud remedies. Esser Distributing v. Steidl, 149 Wis. 2d 64
, 437 N.W.2d 884
Sub. (7) is operative only when an innocent party elects rescission and restitution and waives a breach of contract remedy. Criticare Systems, Inc. v. Sentek, Inc. 159 Wis. 2d 639
, 465 N.W.2d 216
(Ct. App. 1990).
Lack of reliance is a defense to all claims based on a misrepresentation theory. The application of sub. (1) (b) does not restrict the defense to claims under s. 551.41 (2). Carney v. Mantuano, 204 Wis. 2d 527
, 554 N.W.2d 854
(Ct. App. 1996), 95-2529
A civil action brought in Wisconsin under federal law is subject to the limitation under sub. (5). Cahill v. Ernst & Ernst, 625 F. 2d 151
An arbitration clause in a securities brokerage contract was enforceable under the federal arbitration act. Sub. (8) was in "actual conflict" with the act and was preempted. Kroog v. Mait, 712 F. 2d 1148
Section 551.59 (5) applies to actions arising out of sales of securities under SEC rules, rather than s. 893.19 (7) [now 893.93 (1) (b)]. Kramer v. Loewi & Co., Inc. 357 F. Supp. 83
Actions under ss.551.41 and 551.59 survive the death of the wrongdoer. Continental Assurance Co. v. American Bankshares Corp. 483 F. Supp. 175
The limitation period under sub. (5) begins to run when the defrauded party is in possession of essential facts that will, if diligently investigated, disclose the fraud. Gieringer v. Silverman, 539 F. Supp. 498
A defrauded party may not recover any indirect or consequential damages under sub. (1) (a). Jersild v. Aker, 775 F. Supp. 1198
Miscellaneous powers. 551.60(1)
The division may by rule or order require any issuer of securities registered or exempted by order of the division under this chapter or predecessor laws to file with the division and distribute to its security holders in this state at least annually specified financial or other information concerning the issuer.
If the division has reason to believe that any offer or sale of an unregistered security is, has been or would be fraudulent to offerees or purchasers, the division may by order summarily prohibit further offers or sales of such security in this state until it is registered under this chapter.
If the division has reason to believe that any security is being or has been offered or sold in this state by any unlicensed person in violation of this chapter or any rule or order hereunder, the division may by order summarily prohibit such person from further offers or sales of securities in this state until licensed under this chapter.
If the division has reason to believe that any unlicensed person is transacting or has transacted business in this state as an investment adviser in violation of this chapter or any rule or order promulgated under this chapter, the division may by order summarily prohibit such person from further engaging in such activity in this state until licensed under this chapter.
If the public interest and the protection of investors so require, the division may by order summarily suspend all trading in this state by broker-dealers and agents in any security for any period specified. No broker-dealer or agent may effect any transaction in, or induce or attempt to induce the purchase or sale of, any security in this state in which trading is so suspended, except in performance of a contract previously entered into. At any time after the issuance of an order under this subsection, any interested person may in writing request that the suspension of trading be vacated. Upon the receipt of a written request, the matter shall be noticed for hearing and a hearing shall be held in the manner provided in s. 551.61 (2)
. After the hearing, the division may order the suspension to be continued until modified or vacated by further order upon a finding that trading in the security will tend to work a fraud upon the purchasers or sellers of the security. Otherwise, the division shall vacate the suspension of trading and no further order may be entered under this subsection with respect to the same security in the absence of changed circumstances justifying an order.
Every corporation, partnership or association having its principal office in this state or whose securities have been registered under this chapter or predecessor laws shall, within 20 days after receipt of written request from the division made in connection with any investigation under s. 551.56 (1)
, furnish the division with a list of all or part of its security holders as the division requests, showing the amount of securities held by each security holder and the date of issuance of such securities and information reasonably related thereto, signed by the president, secretary or partner of the issuer or a person occupying a similar status or performing similar functions.
Administrative assessments; investor education. 551.605(1)(1)
Imposing administrative assessment with certain orders. 551.605(1)(a)(a)
The division or any officer designated by the division may impose an administrative assessment in the amount provided in par. (b)
on any person who is subject to an order that is issued under s. 551.24
or 551.63 (1)
in any of the following circumstances:
Following a hearing under s. 551.61
if the notice delivered to all interested parties includes notice of the division's authority to impose an administrative assessment under this subsection.
Pursuant to an order that is issued under any of the sections referred to in this paragraph and that is stipulated to by each person subject to the administrative assessment.
The amount of an administrative assessment imposed on any person under this subsection may not exceed $5,000 for each act or omission that constitutes the basis for issuing the order under any of the sections referred to in par. (a)
, except that the amount of the administrative assessment may not exceed $50,000 for any person subject to the order.
The division shall include any administrative assessment imposed under this subsection in the order issued under any of the sections referred to in par. (a)
in the manner described in par. (a) 1.
Upon the request of the division, the department of justice may bring a civil action in the circuit court for Dane County to compel payment of any unpaid administrative assessment, unless payment of the administrative assessment is stayed under s. 227.54
The administrative assessment under this subsection is in addition to any other penalty, remedy or sanction under this chapter.
(2) Investor education.
All moneys collected from the administrative assessment under sub. (1)
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 to provide information to residents of this state about investments in securities to help investors and potential investors evaluate their investment decisions, protect themselves from unfair, inequitable or fraudulent offerings, choose their broker-dealers, agents or investment advisers more carefully, be alert for false or misleading advertising or other harmful practices, and know their rights as investors.
History: 1987 a. 381
; 1995 a. 27
Hearings and judicial review. 551.61(1)
No order, other than an order issued summarily subject to sub. (2)
, may be entered by the division under s. 551.24
or 551.53 (2)
without appropriate prior notice to all interested parties, opportunity for a hearing and, except as provided by s. 551.34 (7)
, written findings of fact and conclusions of law.
Within 30 days after the division has issued an order summarily, an interested party may file a written request with the division for a hearing in respect to any matters determined by the order, except a party may file a request for a hearing regarding an order issued under s. 551.60 (3)
at any time. Within 10 days after an interested person files a written request with the division for a hearing, the matter shall be noticed for hearing, and a hearing shall be held within 60 days after notice, unless extended by the division for good cause. During the pendency of any hearing requested under this subsection, the order issued summarily shall remain in effect unless vacated or modified by the division.