551.34(1)(c)
(c) Subject to
ss. 111.321,
111.322 and
111.335, has been convicted, within the past 10 years, of any misdemeanor involving a security or any aspect of the securities business, or any felony;
551.34(1)(d)
(d) Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business;
551.34(1)(e)
(e) Is the subject of an order of the division denying an application or suspending or revoking a license as a broker-dealer, agent or investment adviser;
551.34(1)(f)
(f) Is the subject of an order entered within the past 5 years by the securities administrator of any other state or by the securities and exchange commission denying, suspending or revoking the person's registration or license as a broker-dealer, agent, investment adviser or federal covered adviser, or is the subject of an order of the securities and exchange commission or of a securities exchange or association registered under the Securities Exchange Act of 1934 suspending or expelling such person from a securities exchange or association or forbidding the association or affiliation of the person with a broker-dealer or investment adviser, or is the subject of a U.S. postal service fraud order. The division may not institute a revocation or suspension proceeding under this paragraph more than one year from the date of the order relied on, and the division may not enter an order under this paragraph on the basis of an order under another state law or federal law unless the order was based on facts which would currently constitute a ground for an order under this section;
551.34(1)(g)
(g) Has engaged in dishonest or unethical practices in the securities or investment advisory business or has taken unfair advantage of a customer;
551.34(1)(h)
(h) Is insolvent, in the sense that liabilities exceed assets or that the person cannot meet obligations as they mature, or is in such financial condition that the person cannot continue in business with safety to customers, or the person does not have sufficient financial responsibility to carry out the obligations incident to the person's operations;
551.34(1)(i)
(i) Is not qualified on the basis of such factors as training, experience and knowledge of the securities business;
551.34(1)(j)
(j) Has failed reasonably to supervise agents or, in the case of an investment adviser, employees, to assure their compliance with this chapter, but no person may be deemed to have failed in such supervision if there have been established written procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any violations of statutes, rules or orders and if the person has reasonably discharged the duties incumbent upon the person by reason of such procedures and system;
551.34(1)(k)
(k) Has failed to pay the proper filing fee, but the division shall vacate any such order when the deficiency has been corrected;
551.34(1)(L)
(L) Is selling or has sold, or is offering or has offered for sale, in this state securities through any unlicensed agent or for any dealer or issuer with knowledge that the dealer or issuer has not complied with this chapter;
551.34(1)(m)
(m) Has made any material misrepresentation to or withheld or concealed any material fact from the division, or has refused to furnish information reasonably requested by the division; or
551.34(1)(n)
(n) Has not complied with the conditions or limitations of a license issued under this chapter.
551.34(1m)(a)(a) The division shall deny an application for the issuance or renewal of a license if any of the following applies:
551.34(1m)(a)2.
2. The department of revenue certifies under
s. 73.0301 that the applicant is liable for delinquent taxes. An applicant whose application for the issuance or renewal of a license is denied under this subdivision for delinquent taxes is entitled to a notice under
s. 73.0301 (2) (b) 1. b. and hearing under
s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this subchapter.
551.34(1m)(a)3.
3. The applicant is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under
s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under
s. 49.857. An applicant whose application is denied under this subdivision for delinquent payments is entitled to a notice and hearing under
s. 49.857 but is not entitled to any other notice or hearing under this section.
551.34(1m)(b)
(b) Unless
s. 551.32 (1) (bs) 1. applies to the licensee, the division shall restrict or suspend a license under this subchapter if the licensee is an individual who fails to provide his or her social security number. The division shall restrict or suspend a license under this subchapter if the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under
s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under
s. 49.857. A licensee whose license is restricted or suspended under this paragraph is entitled to a notice and hearing under
s. 49.857 but is not entitled to any other notice or hearing under this section.
551.34(1m)(c)
(c) The division shall revoke a license if the department of revenue certifies under
s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this paragraph for delinquent taxes is entitled to a notice under
s. 73.0301 (2) (b) 1. b. and hearing under
s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this subchapter.
551.34(2)
(2) The enumeration of the causes stated in
sub. (1) shall not be exclusive and the division may deny an application or suspend or revoke any license or censure any licensee for any cause whether similar to or different from these causes when necessary or appropriate in the public interest or for the protection of investors.
551.34(3)
(3) The division may not institute a suspension or revocation proceeding on the basis of a fact or transaction known to the division when the license was issued unless the proceeding is instituted within 180 days following issuance of the license.
551.34(4)
(4) If the public interest or the protection of investors so requires, the division may by order summarily deny or suspend a license or postpone the effective date of a license. Upon the 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.
551.34(5)
(5) If the division finds that any licensee or applicant is no longer in existence or has ceased to do business as a broker-dealer, agent, investment adviser or investment adviser representative, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator or guardian, or cannot be located after reasonable search, the division may on order issued summarily revoke the license or deny the application.
551.34(7)
(7) No order may be entered under this section except under
sub. (4) or
(5) without appropriate prior notice to the applicant or licensee, as well as the employer or prospective employer if the applicant or licensee is an agent. In cases of denial orders written findings of fact and conclusions of law are required only if requested by the applicant.
551.34 Cross-reference
Cross Reference: See also ss.
DFI-Sec 4.06 and
5.06, Wis. adm. code.
FRAUDULENT PRACTICES
551.41
551.41
Sales and purchases. It is unlawful for any person, in connection with the offer, sale or purchase of any security in this state, directly or indirectly:
551.41(1)
(1) To employ any device, scheme or artifice to defraud;
551.41(2)
(2) To make any untrue statement of a material fact or 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; or
551.41(3)
(3) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
551.41 Annotation
Whether a representation is material under sub. (2) is determined based on the objective standard of whether the omitted or misrepresented fact would have made a difference to a reasonable investor's decision to invest. State v. Johnson, 2002 WI App 224,
257 Wis. 2d 736,
652 N.W.2d 642,
01-1092.
551.41 Annotation
Lack of reliance is a defense to all claims based on a misrepresentation theory. The application of s. 551.59 (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.
551.41 Annotation
Section 551.41 does not create a private right of action. Section 551.59 (1) contains a civil remedy for a violation of s. 551.41 (2), and the limitation period in s. 551.59 (5) applies. Colonial Bank & Trust Co. v. American Bankshares,
478 F. Supp. 1186 (1979).
551.41 Annotation
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 (1980).
551.41 Annotation
Proof that the defendant entered into investment contracts with a purpose or intent to defraud investors is not required for a violation of sub. (3). The state need only prove that the accused willfully engaged in conduct that operates or would operate as a fraud or deceit upon a person. The nature of the act is dispositive, not the actor's state of mind. Van Duyse v. Israel,
486 F. Supp. 1382 (1980).
551.42
551.42
Market manipulation. It is unlawful for any person, directly or indirectly, in this state:
551.42(1)
(1) To effect any transaction in a security which involves no change in the beneficial ownership thereof, or to enter any order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale or purchase of the security, have been or will be entered by or for the same or affiliated persons, for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security;
551.42(2)
(2) To effect, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in the security or raising or depressing the price of the security, for the purpose of inducing the purchase or sale of the security by others; or
551.42(3)
(3) To induce the purchase or sale of any security by the circulation or dissemination of information to the effect that the price of the security will or is likely to rise or fall because of market operations of any one or more persons conducted for the purpose of raising or depressing the price of the security, if he or she is selling or offering to sell or purchasing or offering to purchase the security or is receiving a consideration, directly or indirectly, from any such person.
551.42 History
History: 1981 c. 53 s.
43.
551.43
551.43
Broker-dealer activities. It is unlawful for a broker-dealer to effect in this state any transaction in, or to induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance, including any fictitious quotation. The division may by rule define the terms "manipulative, deceptive or other fraudulent device or contrivance".
551.43 History
History: 1995 a. 27.
551.43 Cross-reference
Cross Reference: See also ss.
DFI-Sec 4.05 and
6.04, Wis. adm. code.
551.44
551.44
Advisory activities. It is unlawful for any person who receives any consideration from another person primarily for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, in this state, to employ any device, scheme or artifice to defraud the other person; or engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon the other person. The division may adopt rules defining the terms used in this section.
GENERAL PROVISIONS
551.51(1)(1) This chapter shall be administered by the division.
551.51(2)
(2) It is unlawful for the division or any officers or employees of the division to use for personal benefit any information which is filed with or obtained by the division or an organization designated under
s. 551.32 (1) (a) and which is not generally available to the public. Nothing in this chapter authorizes the division or any officers or employees of the division to disclose any confidential information except among themselves or to other securities administrators or regulatory authorities or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of this chapter either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the division or any officers or employees of the division.
551.51 Cross-reference
Cross Reference: See also DFI-Sec and ch.
DFI-Sec 7, Wis. adm. code.
551.52
551.52
Fees and expenses. 551.52(1)(a)(a) There shall be a filing fee of $750 for every registration statement filed under
s. 551.25 or
551.26, and for every notice filing under
s. 551.29 (1) (a). If a registration statement is denied or withdrawn before the effective date or a pre-effective stop order is entered under
s. 551.28, or a notice filing is withdrawn, the filing fee shall be retained.
551.52(1)(b)1.1. An indefinite amount of securities shall be registered for offer and sale in this state under a registration statement relating to redeemable securities issued by an open-end management company or a face amount certificate company, as defined in the Investment Company Act of 1940, and the applicant shall pay the fee under
par. (a). The registrant also shall, within 60 days after the end of each fiscal year during which its registration statement is effective and within 60 days after the registration is terminated, file a report on a form prescribed by rule of the division. The form shall require the registrant to do one of the following:
551.52(1)(b)1.a.
a. Elect not to include the information under
subd.1. b. and instead pay a fee of $1,500.
551.52(1)(b)1.b.
b. Report the amount of securities sold to persons in this state during the preceding fiscal year or, if the registration is terminated, during the portion of the preceding fiscal year during which the registration was effective, 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.
551.52(1)(b)2.
2. An indefinite amount of securities is eligible for offer and sale in this state resulting from a notice filing under
s. 551.29 (1) (a) for the initial offer of a federal covered security under section 18 (b) (2) of the Securities Act of 1933, if the filing party has notified the division of the issuer's fiscal year, and the filing party pays the fee under
par. (a). The filing party shall also, within 90 days after the end of each fiscal year following the filing under
s. 551.29 (1) (a), and within 90 days after sales in this state have terminated, file a report to allow the division to determine that the amount of the fee paid is correct. The report shall be on a form prescribed by rule of the division and shall require the filing party to do one of the following:
551.52(1)(b)2.a.
a. Elect not to include the information under
subd. 2. b. and instead pay a fee of $1,500.
551.52(1)(b)2.b.
b. 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.
551.52(2)
(2) 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.
551.52(3)
(3) 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.
551.52(4)
(4) 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).
551.52(5)
(5) All fees and expenses collected under this section shall be paid into the state treasury.
551.52 Cross-reference
Cross Reference: See also s.
DFI-Sec 7.01, Wis. adm. code.
551.53(1)(1) 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:
551.53(1)(a)
(a) 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
551.53(1)(b)
(b) 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.
551.53(2)
(2) The division may by rule or order prohibit the publication, circulation or use of any advertising deemed false or misleading.
551.54
551.54
Misleading filings. 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.
551.54 History
History: 1981 c. 53;
1995 a. 27.
551.55
551.55
Unlawful representations. 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.
551.55 History
History: 1995 a. 27;
1997 a. 316.
551.56
551.56
Investigations and subpoenas. 551.56(1)(a)
(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;
551.56(1)(b)
(b) 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;
551.56(1)(c)
(c) 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
