1997 Wisconsin Act 316

551.31 (2) (a) (intro.) It is unlawful for any broker-dealer or issuer to employ an agent to represent it in this state unless the at least one of the following conditions is met:

1. The agent is licensed for that broker-dealer or issuer in this state, the.

2. The agent is excluded exempted from the licensing requirement under sub. (1m) or the (1).

3. The agent is not required under sub. (7) to obtain a separate license to represent that issuer.

316,38 Section 38 . 551.31 (2) (d) of the statutes is amended to read:

551.31 (2) (d) When an agent who is required to be licensed under sub. (1) terminates employment with a broker-dealer or issuer, or terminates those activities which make that individual an agent, or transfers employment between licensed broker-dealers, the agent, the broker-dealer or the issuer shall promptly file a notice in accordance with rules adopted by the division.

316,39 Section 39 . 551.31 (3) of the statutes is repealed and recreated to read:

551.31 (3) Unless exempt from licensing under this subsection, it is unlawful for a person to transact business in this state as an investment adviser unless licensed under this chapter as an investment adviser. All of the following persons are exempt from licensing under this subsection:

(a) A person who is licensed as a broker-dealer under this chapter.

(b) A person whose only clients in this state are persons described under s. 551.23 (8) (a) to (f).

(c) A person who has no place of business in this state and, during the preceding 12-month period, has not had more than 5 clients who are residents of this state, exclusive of clients described under s. 551.23 (8) (a) to (f).

316,39m Section 39m. 551.31 (3m) of the statutes is created to read:

551.31 (3m) Unless exempt from licensing under this subsection , it is unlawful for a person to transact business in this state as an investment adviser representative for an investment adviser unless licensed under this chapter as an investment adviser representative. All of the following persons are exempt from licensing under this subsection:

(a) A person who is licensed as an agent under this chapter.

(b) A person whose only clients in this state are persons described under s. 551.23 (8) (a) to (f).

(c) A person who has no place of business in this state and, during the preceding 12-month period, has not had more than 5 clients who are residents of this state, exclusive of clients described under s. 551.23 (8) (a) to (f).

316,40 Section 40 . 551.31 (4) of the statutes is repealed and recreated to read:

551.31 (4) (a) It is unlawful for any investment adviser who is required to be licensed under this chapter to employ an investment adviser representative to represent the investment adviser in this state, unless the investment adviser representative either is licensed for that investment adviser in this state or is a person described under sub. (3m) (a), (b) or (c).

(b) It is unlawful for any person having a place of business located in this state who is employed or supervised by, or is associated with, a federal covered adviser, to act as an investment adviser representative in this state, unless the investment adviser representative either is licensed in this state or is a person described under sub. (3m) (a), (b) or (c).

(c) 1. When an investment adviser representative licensed in this state employed by an investment adviser who is required to be licensed under this chapter terminates his or her employment, the investment adviser shall promptly file a notice with the division in accordance with rules promulgated by the division.

2. When an investment adviser representative licensed in this state employed by a federal covered adviser terminates his or her employment, the investment adviser representative shall promptly file a notice with the division in accordance with rules promulgated by the division.

316,41 Section 41 . 551.31 (4m) of the statutes is created to read:

551.31 (4m)   It is unlawful for any federal covered adviser to transact investment advisory business in this state unless one of the following conditions is met:

(a) The federal covered adviser's only clients who are residents of this state are described under s. 551.23 (8) (a) to (f).

(b) The federal covered adviser has no place of business in this state, and, during the preceding 12-month period, the adviser has not had more than 5 clients who are residents of this state, exclusive of clients described under s. 551.23 (8) (a) to (f).

(c) The federal covered adviser has complied with the notice filing provisions under s. 551.32 (1m).

316,42 Section 42 . 551.32 (title) of the statutes is amended to read:

551.32 (title) Licensing and notice filing procedure.

316,43 Section 43 . 551.32 (1) (a) of the statutes is amended to read:

551.32 (1) (a) A broker-dealer, agent or, investment adviser or investment adviser representative may obtain an initial or renewal license by filing with the division, or an organization which the division by rule designates, an application together with a consent to service of process under s. 551.65 (1).

316,44 Section 44 . 551.32 (1) (b) of the statutes is amended to read:

551.32 (1) (b) An application under par. (a) shall contain whatever information the division by rule requires concerning the applicant's form and place of organization, proposed method of doing business and financial condition, the qualifications and experience business history of the applicant, including, in the case of a broker-dealer or investment adviser, the qualifications and experience business history of any partner, officer, director, or any person occupying a similar status or performing similar functions or any controlling person, any injunction or administrative order or conviction of a misdemeanor involving securities and any conviction of a felony, and any other matters which the division determines are relevant to the application. The division may by rule or order require an applicant for an initial license to publish an announcement of the application in one or more specified newspapers published in this state.

316,45 Section 45 . 551.32 (1) (d) of the statutes is renumbered 551.32 (1s) and amended to read:

551.32 (1s) The division shall cooperate with other securities administrators and regulatory authorities to simplify and coordinate license application, notice filing and renewal procedures.

316,46 Section 46 . 551.32 (1m) of the statutes is created to read:

551.32 (1m) (a) If required under s. 551.31 (4m), a federal covered adviser shall file with the division a notice filing together with the fee prescribed under s. 551.52 (2). The notice filing shall consist either of a notice filing form prescribed by the division by rule or a copy of those documents that have been filed with the federal securities and exchange commission as the division, by rule or order, may require.

(b) An initial notice filing is effective upon receipt by the division of the documents and fee required in par. (a). A renewal notice filing is effective upon the expiration under sub. (8) (a) of the prior notice filing, or upon receipt by the division of the documents and fee required under par. (a), whichever is later.

(c) To the extent not prohibited by federal law, a federal covered adviser, for whom a nonpayment or underpayment of any required fee to the division has not been remedied within 10 days of the receipt by the adviser of written notification from the division of the nonpayment or underpayment, shall either become licensed or qualify for an exclusion or exemption from licensure. The written notification by the division under this paragraph may be transmitted electronically.

316,47 Section 47 . 551.32 (3) of the statutes is amended to read:

551.32 (3) A licensed broker-dealer or investment adviser may file an application for licensing of a successor, and a federal covered adviser may file a notice filing for a successor, whether or not the successor is then in existence, for the unexpired portion of the year. There shall be no filing fee.

316,48 Section 48 . 551.32 (4) of the statutes is amended to read:

551.32 (4) The division may by rule prescribe standards of qualification with respect to training, experience and knowledge of the securities business and provide for an examination, which may be written or oral or both, to be taken by any class of or all applicants, as well as persons who represent or will represent an investment adviser, and the division may by order require an examination of a licensed broker-dealer, agent or, investment adviser or investment adviser representative for due cause.

316,49 Section 49 . 551.32 (5) and (6) of the statutes are repealed and recreated to read:

551.32 (5) The division may, by rule or order, establish a minimum net capital requirement for licensed broker-dealers, subject to the limitations of section 15 of the Securities Exchange Act of 1934 and may establish a minimum net capital requirement for licensed investment advisers, subject to the limitations of section 222 of the Investment Advisers Act of 1940.

(6) The division may, by rule or order, require licensed broker-dealers and investment advisers who have custody of or discretionary authority over client funds or securities, to post bonds in amounts as the division may prescribe by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers, and may determine the conditions of the bonds. No bond may be required of any licensee whose net capital exceeds the amount prescribed by rule or order of the division. Every bond required by rules promulgated under this subsection shall provide for suit on the bond by any person who has a cause of action under s. 551.59 and, if the division by rule or order requires, by any person who has a cause of action not arising under this chapter. Every bond required by rules promulgated under this subsection shall provide that no suit may be maintained to enforce any liability on the bond unless the suit is brought within the time limitations of s. 551.59 (5).

316,50 Section 50 . 551.32 (8) of the statutes is created to read:

551.32 (8) (a) Every license or notice filing under this section expires on December 31 unless one of the following occurs:

1. The license or notice filing is renewed.

2. The license or notice filing is limited or extended for not more than 6 months, and the licensee or notice filer pays a fee, adjusted proportionately by the division by rule or order.

3. The division specifies a different expiration date by rule or order.

(b) No license or notice filing under this section is effective after its expiration. The expiration of a license or notice filing for which a renewal application has not been filed constitutes an application for withdrawal under sub. (9).

316,51 Section 51 . 551.32 (9) (b) of the statutes is created to read:

551.32 (9) (b) Termination of a notice filing under s. 551.32 (1m) is effective upon receipt by the division of written notification of termination.

316,52 Section 52 . 551.33 (1) of the statutes is amended to read:

551.33 (1) Every licensed broker-dealer, agent and investment adviser shall make and keep all accounts, correspondence, memoranda, papers, books and other records which the division by rule prescribes by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers. All records required shall be preserved for 3 years unless the division by rule prescribes otherwise for particular types of records the period prescribed by the division by rule or order. All required records shall be kept within this state or shall, at the request of the division, be made available at any time for examination by the division either in the principal office of the licensee or by production of exact copies thereof in this state.

316,53 Section 53 . 551.33 (2) of the statutes is amended to read:

551.33 (2) Every licensed broker-dealer and investment adviser shall file such reports as the division by rule prescribes by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers.

316,54 Section 54 . 551.33 (3) of the statutes is amended to read:

551.33 (3) If the information contained in any application for a license or other document filed with the division or an organization designated under s. 551.32 (1) (a) is or becomes inaccurate or incomplete in any material respect, the licensee filing the application or document shall promptly file a correcting amendment, except that a federal covered adviser shall file a correcting amendment when it is required to be filed with the securities and exchange commission, unless notification of the correction has been given under s. 551.32 (9) (a).

316,55 Section 55 . 551.33 (4) of the statutes is amended to read:

551.33 (4) The division shall make periodic examinations, within or without this state, of the business and records of each licensed broker-dealer and investment adviser, at such times and in such scope as the division determines. The examinations may be made without prior notice to the broker-dealer or investment adviser. The expense reasonably attributable to any such examination shall be paid by the broker-dealer or investment adviser whose business is examined, but the expense so payable shall not exceed an amount which the division by rule prescribes. For the purpose of avoiding unnecessary duplication of examinations, the division, insofar as it is practicable in administering this subsection, may cooperate with securities administrators of other states, the securities and exchange commission, and any national securities exchange or national securities association registered under the securities exchange act Securities Exchange Act of 1934. The division shall not make public the information obtained in the course of examinations, except when the division's duty under this chapter requires the division to take action regarding any broker-dealer or investment adviser or to make the information available to one of the organizations specified in this subsection, or except when called as a witness in any criminal or civil proceeding.

316,56 Section 56 . 551.33 (8) of the statutes is created to read:

551.33 (8) With respect to investment advisers, the division may, by rule or order, require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients. If the division promulgates rules or issues orders under this subsection requiring that information be furnished or disseminated, the division may, in its discretion, permit investment advisers to satisfy requirements of these rules or orders in whole or in part by furnishing clients or prospective clients information that would satisfy the requirements of the Investment Advisers Act of 1940.

316,57 Section 57 . 551.34 (1) (b) of the statutes is amended to read:

551.34 (1) (b) Has wilfully violated or wilfully failed to comply with any provision of this chapter or a predecessor law or the securities act Securities Act of 1933, the securities exchange act Securities Exchange Act of 1934, the investment advisers act Investment Advisers Act of 1940, the investment company act Investment Company Act of 1940, or any rule under any of such statutes or any order thereunder of which he or she has notice;

316,58 Section 58 . 551.34 (1) (f) of the statutes is amended to read:

551.34 (1) (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 or, 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 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;

316,59 Section 59 . 551.34 (5) of the statutes is amended to read:

551.34 (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 or, 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.

316,60 Section 60 . 551.34 (6) of the statutes is renumbered 551.32 (9) (a) and amended to read:

551.32 (9) (a) Withdrawal from the status of a licensed broker-dealer, agent or, investment adviser or investment adviser representative becomes effective 30 days after receipt by the division or by an organization designated by rule of the division under s. 551.32 (1) (a) of an application to withdraw or within such shorter period as the division determines, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within 30 days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the division by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the division may institute a revocation or suspension proceeding for the grounds specified under sub. (1) (b), (g), (m) or (n) within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which the license was in effect.

316,61 Section 61 . 551.44 of the statutes is amended to read:

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; or take or have custody of any securities or funds of any client unless the adviser is licensed as a broker-dealer under this chapter. The division may adopt rules defining the terms used in this section.

316,62 Section 62 . 551.52 (1) (a) of the statutes is amended to read:

551.52 (1) (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). When 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.

316,63 Section 63 . 551.52 (1) (b) of the statutes is renumbered 551.52 (1) (b) 1. and amended to read:

551.52 (1) (b) 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 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 in which. The form shall require the registrant does any to do one of the following:

a. Elects Elect not to report include the information under subd. 2. 1. b. and instead pays pay a fee of $1,500.

b. Reports 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 pays 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.

316,64 Section 64 . 551.52 (1) (b) 2. of the statutes is created to read:

551.52 (1) (b) 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:

a. Elect not to include the information under subd. 2. b. and instead pay a fee of $1,500.

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.

316,65 Section 65 . 551.52 (2) of the statutes is amended to read:

551.52 (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 a person representing an investment adviser , and $200 in the case of 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 or, 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.

316,66 Section 66 . 551.53 (1) (b) of the statutes is amended to read:

551.53 (1) (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.

316,67 Section 67 . 551.55 of the statutes is amended to read:

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.