Financial Institutions--Securities
Notice is hereby given that pursuant to ss. 551.63 (1), (2) and (3), 551.22 (7), 551.23 (11) (b) and (18), 551.29 (1), 551.32 (4), (5) and (7), and 551.33 (1), (2) and (6), Stats., the Division of Securities of the Department of Financial Institutions will hold a public hearing at the time and place indicated below to consider the adoption, amendment and repeal of rules in connection with its annual review of the administrative rules of the Division of Securities relating to the operation of ch. 551, Stats., the Wisconsin Uniform Securities Law.
Hearing Information
September 7, 1999 4th Floor Conference Room
Tuesday DFI--Securities
10:00 a.m. 345 West Washington Ave.
MADISON, WI 53703
Written Comments
Written comments in lieu of public hearing testimony may be submitted which must be received no later than the hearing date and should be addressed to the Administrator of the Division of Securities, 345 West Washington Avenue, P.O. Box 1768, Madison WI 53701.
Analysis
Statutory Authority: ss. 551.63 (1), (2) and (3), 551.22 (7), 551.23 (11) (b) and (18), 551.29 (1), 551.32 (4), (5) and (7), and 551.33 (1), (2) and (6)
Statutes Interpreted: ss. 551.22 (7), 551.23 (11) (b) and (18), 551.29 (1), 551.32 (4), (5) and (7), 551.33 (1), (2) and (6), and 551.53
Summary Analysis Prepared by the Division of Securities
The rulemaking procedures under Chapter 227 of the Wisconsin Statutes are being implemented for the purpose of effectuating the Division's annual review of the Rules of the Division of Securities. The Division's annual rule revision process is conducted for the following purposes: (1) revising several securities law definitional rules to clarify language; (2) developing new securities registration exemptions and making modifications to several existing securities registration exemptions to reflect new legal or interpretive issues under the federal and state securities laws; and (3) adopting new rules, or amending existing rules, relating to the securities broker-dealer, agent, investment adviser, and investment adviser representative licensing procedures, examination and examination waiver requirements, net capital requirements, securities agent customer record requirements, and rules of conduct provisions for broker-dealers and investment advisers, to effectively regulate new securities licensing developments that have occurred in the securities industry and marketplace that require regulatory treatment.
Proposed revisions are being made in a total of over 25 different Sections. A summary of the subject matter and nature of the more significant rule revisions follows:
(1) Addition of a reference to the Internet in definitional rule s. DFI-Sec 1.02(1)(a)1. relating to the use of media advertising;
(2) Deletion of “sunset dates" for use of the registration exemptions in s. DFI-Sec 2.02(9)(a) and (9)(L) and the notice filing provision in s. DFI-Sec 2.04(1)(a);
(3) Designation under current rule s. DFI-Sec 2.01(3) [relating to securities traded on certain exchanges] of warrants and rights for securities traded on the major stock exchanges;
(4) Adding to the existing rule in s. DFI-Sec 2.02(5)(d) that limits use of the “10 offeree" securities registration exemption in s. 551.23(11), Wis. Stats., in certain circumstances, a provision that would impose a 10-day-prior-to-first-offer, notice filing requirement for use of the exemption in offerings made for federal purposes pursuant to Rule 504 under Regulation D of the Securities Act of 1933;
(5) Addition of the NASD Series number to the examination description of all of the prescribed securities agent examinations and securities principal examinations listed in s. DFI-Sec 4.01(3), (4) and (5), and adopting three new limited activity agent examinations and one new principal examination;
(6) Repeal of existing rule s. DFI-Sec 4.035 that requires securities agents to keep certain customer records and provides that agents receive copies thereof from the agent's employing broker-dealer;
(7) Adoption of the North American Securities Administrator's Association Model Rules applicable to securities broker-dealers providing securities services on the premises of financial institutions, which Model Rules follow both equivalent rules adopted by the National Association of Securities Dealers (applicable to securities broker-dealers), and regulatory Guidelines in an Interagency Statement jointly developed by federal financial institution regulatory authorities (the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation);
(8) Creation of a rule requiring licensed investment advisers to create and maintain a record of customer information that would facilitate determining suitability of investment recommendations.
(9) Creation of rules requiring a broker-dealer or investment adviser to notify the Division if they open an office in a financial institution in Wisconsin.
(10) Adoption of the NASAA Investment Adviser Competency Examination.
(11) Adoption of the recent amendments to the NASAA Model Rules regarding investment adviser net capital and custody-of-customer-funds-and-securities requirements.
Each Section that adopts, amends or repeals a rule is followed by a separate Analysis which discusses the nature of the revision as well as the reason for it.
Copies of Rule
A copy of the entirety of the proposed rule revisions to be considered may be obtained upon request to the Division of Securities, Department of Financial Institutions, 345 West Washington Avenue, 4th Floor, P.O. Box 1768, Madison, Wisconsin 53701.
Fiscal Estimate
A summary of the fiscal effects of the proposed rule revisions is as follows:
(i) No one-time revenue fluctuations;
(ii) An estimated increase of $9,600 in annual securities registration exemption fee revenue as a result of the rule establishing a filing requirement for use of the registration exemption in s. 551.23 (11), Wis. Stats., for securities offerings under Rule 504 of Regulation D under the federal Securities Act of 1933;
(iii) No long-range fiscal implications;
(iv) No fiscal effect on local units of government.
Initial Regulatory Flexibility Analysis
1. Types of small businesses that could be affected by certain of the rule revisions are:
(i) Any small business looking to raise capital in a securities offering pursuant to Regulation A under the federal Securities Act of 1933 will be able to use the amended prospectus/disclosure document rule in s. DFI-Sec 3.03 (3) allowing use of the Form U-7 disclosure document.
(ii) Any small business that would be selling securities in an offering pursuant to Rule 504 under Regulation D of the federal Securities Act of 1933 who would seek to use the limited offering exemption in s. 551.23(11), Wis. Stats., would be subject to a notice filing requirement with the Division contained in new rule s. DFI-Sec 2.02 (5) (d) 3.
(iii) Broker-dealer and investment adviser licensees under the Wisconsin Uniform Securities Law with fewer than 25 full-time employees who meet the other criteria of s. 227.114 (1) (a), Wis. Stats. The proposed revisions to the securities broker-dealer and investment adviser licensing or notice filing provisions are applicable equally to all broker-dealers and investment advisers because the requirements involved are for the protection and benefit of Wisconsin customers of those firms. All Wisconsin customers of securities broker-dealers and investment advisers are entitled to the public investor protection benefits of the licensing or filing requirements, irrespective of the size of the firm providing the securities services. Under the rule revision procedure of the Division of Securities, a copy of the proposed rule revisions is mailed to each broker-dealer licensed in Wisconsin, as well as to each investment adviser licensed or notice-filed in Wisconsin, notifying them of the proposed revisions and soliciting written comments or attendance at the public hearing regarding the proposed rules.
2. Reporting, bookkeeping and other procedures required for compliance with the rules:
(i) Rules applicable to securities broker-dealer and investment adviser licensees were added to provide for notification to the Division of the opening or change of address of an office of a broker-dealer or investment adviser on the premises of a financial institution.
(ii) Revisions were made to existing rules applicable to securities broker-dealers providing services on the premises of financial institutions that require providing certain disclosures to customers in advertisements and account-related documents, and requires reports by a broker-dealer to the financial institution if any securities agent of the broker-dealer that also is employed by the financial institution is terminated for cause.
Contact Information
A copy of the full text of the proposed rule revisions and fiscal estimate may be obtained from:
Randall E. Schumann
Telephone (608) 266-3414
Legal Counsel for the Division of Securities
Department of Financial Institutions
345 West Washington Avenue, 4th Floor
P. O. Box 1768
Madison, WI 53701
Notice of Hearings
Law Enforcement Standards Board
Notice is hereby given that pursuant to s. 165.85(4)(cm)2., Stats., and interpreting s. 165.85(4)(cm)2 a. and b., Stats., the Law Enforcement Standards Board will hold two public hearings at the following dates, times and locations to consider the creation of administrative rules pertaining to model, voluntary standards for law enforcement vehicular pursuits:
An initial hearing will be conducted at the Holiday Inn Motel, 625 West Rolling Meddows Drive, Fond du Lac, on Tuesday, August 17, 1999, from 1 – 4 pm.
An additional hearing will be conducted at the Best Western-Midway Motel, 2851 Hendrickson Drive, Eau Claire, on Wednesday, August 18, 1999, from 1 – 4 pm.
Analysis Prepared by the Training and Standards Bureau, Wisconsin Department of Justice
The following proposed rules create model, voluntary standards for law enforcement vehicular pursuits. They define pursuits; create advisory standards that could be used by any law enforcement agency to determine whether to initiate or continue pursuits; establish law enforcement pursuit driving techniques; and, establish requirements for informing officers of their department's guidelines under s. 346.03(6), Stats.
In addition, they establish curricula for basic and annual recertification training of law enforcement officers related to police pursuit standards, guidelines and driving techniques.
Text of Rule
SECTION 1. Create LES 1.03(18m) to read:
LES 1.03(18m) “Police pursuit" Means an active attempt by a traffic officer in a police vehicle to apprehend one or more occupants of a moving motor vehicle, the operator of which is resisting apprehension by disregarding the officer's visual or audible signal to stop his or her vehicle, increasing the speed of the vehicle or extinguishing the lights of the vehicle.
SECTION 2. Create LES 3.03(7)(a) (intro.) 1. (intro.) a. and b., 2. (intro.) a and b. and 3(intro.) a. through e. to read:
LES 3.03(7)(a)(intro.) A training guide entitled “Use Pursuit Guidelines" shall be approved by the board for subsection (7) and shall include student performance objectives. It shall also include the following model, advisory standards that could be used by any law enforcement agency to determine whether to initiate or continue police pursuit:
1. `Initiation of pursuits.' (intro.) Any law enforcement officer in an authorized vehicle may initiate a pursuit when the subject is attempting to avoid apprehension and any of the following situations are present:
a. The subject has committed or is attempting to commit a crime which involves an actual or threatened action which an officer reasonably believes resulted in or could result in death or great bodily harm to a person or persons; or,
b. The subject, if allowed to escape, is likely to cause injury or death to a person or persons.
2. `Continuation of pursuits.' (intro.) In determining whether or not to continue a pursuit that has been justifiably initiated, officers should consider the following factors:
a. Whether continuation of the pursuit would likely create a danger to the public, officer(s) or subject(s) which is apparently greater than the value of apprehending the subject(s), due to such factors as, but not limited to, road conditions, weather conditions, density of population, severity of the crime and necessity of pursuit by vehicle; and,
b. Whether the vehicle's registration or violator's identification has been established so that later apprehension may be accomplished, and, in the officer's opinion, there is no apparent continuing need for immediate apprehension (per provisions of s. 346.175, Stats.).
3. `Termination of pursuits.' (intro.) Law enforcement officers will terminate vehicle pursuits under any of the following conditions:
a. At any time a supervisor orders termination;
b. When the continuing distance between the pursuing and fleeing vehicles is such that further pursuit is futile;
c. When the pursued vehicle's location is unknown;
d. When the officer's vehicle or emergency equipment malfunctions; or
e. When it is necessary to stop to render aid to an injured person or persons, and no other unit is available to do so.
SECTION 3. Create LES 3.03(7)(b) to read:
LES 3.03(7)(b) A training guide entitled “Use Emergency Vehicle Driving Techniques" shall be approved by the board for subsection (7) and shall include student performance objectives for police pursuit driving techniques.
SECTION 4. Create LES 3.07 (title) (1) to read:
LES 3.07 Minimum standards for recertification training. (1) Minimum standards for recertification training for law enforcement and tribal law enforcement officers shall require that law enforcement and tribal law enforcement officers with exception of those who serve on a temporary or probationary basis shall biennially complete at least 4 hours of training the curriculum of which shall include reference to employer's guidelines provided under s. 346.03(6) Stats. Training may also include achievement of student performance objectives from board approved training guides entitled “Use Pursuit Guidelines" and “Use Emergency Vehicle Driving Techniques" and/or review, for policy development, or applicable research and new technology and/or training to employ new technology.
Initial Regulatory Flexibility Analysis
Proposed rules of the Law Enforcement Standards Board do not affect small businesses.
Fiscal Estimate
