TITLE AND DEFINITIONS
551.01
551.01
Short title. This chapter shall be known and may be cited as the "Wisconsin Uniform Securities Law".
551.02
551.02
Definitions. In this chapter, unless the context otherwise requires:
551.02(1)
(1) "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.
551.02(2)
(2) "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:
551.02(2)(b)
(b) Effecting transactions exempted by
s. 551.23, other than transactions exempted under
s. 551.23 (10) or
(19) in which the individual receives a commission or other remuneration directly or indirectly for soliciting or selling to any person in this state; or
551.02(2)(c)
(c) Effecting other transactions if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state.
551.02(3)
(3) "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:
551.02(3)(c)
(c) A bank, savings institution or trust company, when effecting transactions for its own account or as agent under
s. 551.31 (5);
551.02(3)(d)
(d) An executor, administrator, guardian, conservator or pledgee;
551.02(3)(f)
(f) A person licensed as a real estate broker under
ch. 452 and whose transactions in securities are isolated transactions incidental to that business; or
551.02(3)(h)
(h) Other persons not within the intent of this subsection whom the division by rule or order designates.
551.02(4)
(4) "Division" means the division of securities.
551.02(5)
(5) "Fraud", "deceit" and "defraud" are not limited to common law deceit.
551.02(6)
(6) "Guaranteed" means guaranteed as to payment of principal, interest or dividends.
551.02(7)
(7) "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:
551.02(7)(a)
(a) A bank, savings institution or trust company;
551.02(7)(b)
(b) A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of his or her profession;
551.02(7)(c)
(c) 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;
551.02(7)(d)
(d) 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;
551.02(7)(f)
(f) Other persons not within the intent of this subsection whom the division by rule or order designates.
551.02(8)
(8) "Issuer" means any person who issues or proposes to issue any security and any promoter who acts for an issuer to be formed, except:
551.02(8)(a)
(a) 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
551.02(8)(b)
(b) 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.
551.02(9)
(9) "Nonissuer" means not directly or indirectly for the benefit of the issuer.
551.02(10)
(10) "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.
551.02(11)(a)(a) "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.
551.02(11)(b)
(b) "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.
551.02(11)(c)
(c) 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.
551.02(11)(d)
(d) 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.
551.02(11)(e)
(e) The terms defined in this subsection do not include any bona fide pledge or loan of a security.
551.02(11)(f)
(f) A securities broker-dealer or agent who effects a brokered securities transaction is considered to have effected a sale or purchase of a security.
551.02(12)
(12) "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, 1970, including such later amendments as the division determines are not inconsistent with the purpose of this chapter.
551.02(13)(a)(a) "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.
551.02(13)(b)
(b) "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.
551.02(13)(c)
(c) 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.
551.02(14)
(14) "State" means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.
551.02 Annotation
Profit sharing agreement between management and labor in exchange for wage concessions was not a security. Fore Way Express, Inc. v. Bast, 178 W (2d) 693, 505 NW (2d) 408 (Ct. App. 1993).
551.02 Annotation
Where certificate of stock was mailed to plaintiff in Wisconsin, and extensive solicitation was conducted by defendants in Wisconsin, it qualified as an "offer" within (11) (b). Since securities were neither registered in Wisconsin nor exempt from registration, plaintiff was entitled to rescind transaction and recover purchase price of securities plus costs. Hardtke v. Love Tree Corp. 386 F Supp. 1085.
551.02 Annotation
"Offer to sell" under (11) (b) occurred when defendant gave unexecuted partnership agreement to plaintiff, thus implicitly inviting plaintiff to return it completed as to form and amount. Feitler v. Midas Associates, 418 F Supp. 735.
551.02 Annotation
State and federal regulation of condominiums. Minahan, 58 MLR 55.
551.02 Annotation
When Does A Member's Interest in an LLC Become a Security? Briska. Wis. Law. Sept. 1994.
REGISTRATION OF SECURITIES
551.21
551.21
Registration requirement. 551.21(1)
(1) It is unlawful for any person to offer or sell any security in this state unless it is registered under this chapter or the security or transaction is exempted under
s. 551.22 or
551.23.
551.21(2)
(2) 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.
551.21 Annotation
See note to 551.02, citing Hardtke v. Love Tree Corp. 386 F Supp. 1085.
551.21 Annotation
Registration and reporting requirements for exempt transactions discussed. Feitler v. Midas Associates, 418 F Supp. 735.
551.21 Annotation
The financing of corporate expansion through industrial revenue bonds. Mulcahy, Guszkowski, 57 MLR 201.
551.22
551.22
Exempt securities. The following securities are exempt from registration under
s. 551.21 (1):
551.22(1)(a)(a) 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.
551.22(1)(b)
(b) Unless subject to a letter of credit of a bank, savings bank or savings and loan association as provided in this paragraph, a revenue obligation of an issuer specified under
par. (a) that is 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 subject to rules adopted by the division. A revenue obligation is exempt from any filing under the rules of the division if it is the subject of an irrevocable letter of credit from a bank, savings bank or savings and loan association in favor of holders of the revenue obligations providing for payment of all principal of the revenue obligations and all accrued and unpaid interest to the date of an event of default on the revenue obligations, and the letter of credit is accompanied by an opinion of counsel stating:
551.22(1)(b)1.a.a. That payment of debt service will not constitute a preference under federal bankruptcy law if a petition in bankruptcy with respect to the enterprise is filed; or
551.22(1)(b)1.b.
b. That the letter of credit will provide for reimbursement to holders of the revenue obligations if they are required by order of a federal bankruptcy court to disgorge as a preference any payment of a debt service; and
551.22(1)(b)2.
2. That the enforceability of the letter of credit would not be materially affected by the filing of a petition under federal bankruptcy law with respect to the enterprise or any person obligated to reimburse the bank, savings bank or a savings and loan association for payments made under the letter of credit.
551.22(2)
(2) Any security, excluding a revenue obligation, issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor.
551.22(3)
(3) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution or trust company organized under the laws of any state and subject to regulation in respect of the issuance or guarantee of its securities by a governmental authority of that state.
551.22(4)
(4) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings bank or federal savings and loan association, or any savings bank or savings and loan or similar association organized under the laws of any state and licensed to do business in this state, but not including the capital stock of a state-chartered capital stock savings bank or savings and loan association.
551.22(5)
(5) Any security issued or guaranteed by any federal credit union, or any credit union or similar association organized and supervised under the laws of this state.
551.22(6)
(6) Any security issued or guaranteed by any railroad, other common carrier, public service corporation, public utility or public utility holding company, which is subject to regulation in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada or any Canadian province.
551.22(7)
(7) Any security listed, or approved for listing upon notice of issuance, on the New York stock exchange, the American stock exchange, or a securities exchange designated by rule of the division; any security designated, or approved for designation upon notice of issuance, as a national market system security by the national association of securities dealers, inc., subject to rules that the division may promulgate under this subsection; any security of the same issuer which is of senior or substantially equal rank to the security listed, designated or approved for listing or designation; any security called for by subscription rights or warrants so listed, approved or designated; or any warrant or right to purchase or subscribe to any of the foregoing.
551.22(8)
(8) Any security issued to its members by a domestic corporation organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic or reformatory purposes; and any evidences of debt issued by any such corporation to nonmembers in compliance with rules adopted by the division.
551.22(9)
(9) Any commercial paper meeting the requirements established by rule of the division and which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within 9 months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal.
551.22(10)
(10) Any investment contract or other security issued in connection with an employe's stock purchase, savings, pension, profit sharing or similar benefit plan if, in the case of plans which are not qualified under section
401 of the internal revenue code and which provide for contribution by employes, there is filed with the division prior to any offer or sale a notice specifying the terms of the plan 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.
551.22(12)
(12) Any securities of a cooperative corporation organized under
ch. 185.
551.22(13)
(13) Any option to put or call any outstanding security transactions in which are exempted under
s. 551.23 (3).
551.22(14)
(14) Any security issued by a licensed broker-dealer to its officers, partners or employes, subject to rules adopted by the division.
551.22(15)
(15) Any contract for the sale or purchase of a commodity for future delivery, if it is traded or executed on a contract market designated under
7 USC 7.
551.22(16)
(16) Contribution notes issued under
s. 611.33 (2) (b),
613.33 (2) or
614.33, and any debt securities approved by the commissioner of insurance and issued under
s. 611.75 (2) in connection with the conversion of a stock insurance corporation to a mutual, or under
s. 613.75 or
614.76 in connection with the conversion of a service insurance corporation or fraternal to a mutual.
551.22(17)
(17) Any security as to which the division by rule or order finds that registration is not necessary or appropriate for the protection of investors.
551.23
551.23
Exempt transactions. The following transactions are exempt from registration under
s. 551.21 (1):
551.23(1)
(1) Any isolated nonissuer transaction, whether effected through a broker-dealer or not.
