Location: 1400 East Washington Avenue
Room 179A
Madison, Wisconsin
Appearances at the Hearing
Interested persons are invited to present information at the hearing. Persons appearing may make an oral presentation but are urged to submit facts, opinions and argument in writing as well. Facts, opinions and argument may also be submitted in writing without a personal appearance by mail addressed to the Department of Regulation and Licensing, Office of Administrative Rules, P.O. Box 8935, Madison, Wisconsin 53708. Written comments must be received by August 6, 2003 to be included in the record of rule-making proceedings.
Analysis prepared by the Department of Regulation and Licensing.
By final rule of the Drug Enforcement Administration (DEA), adopted effective March 3, 2000, gamma- hydroxybutric acid (GHB) was classified as a schedule I and schedule III controlled substance under the federal Controlled Substances Act (CSA) pursuant to Public Law 106-172. GHB is currently only classified as a schedule I controlled substance under the Wisconsin Controlled Substances Act in Ch.
961, Stats. The objective of the rule is to bring state classification of GHB into conformity with federal law.
Drugs that are classified as “controlled substances" under federal and state laws are subject to higher civil and criminal penalties for their illicit possession, distribution and use. Health care providers are also subject to greater record keeping requirements respecting their obtaining, prescribing and dispensing of such drugs. This is due to the fact that certain drugs have a greater likelihood of abuse, addiction and adverse consequences to patient health if utilized inappropriately, than do other drugs. The DEA administers the CSA. In doing so, it is empowered to schedule a drug as a controlled substance. Schedule IIII controlled substances are listed in
21 CFR 1308.13. Section 1308.13(c)(5) lists GHB as included in that classification for any drug product containing GHB for which an application is approved under section 505 of the Federal Food, Drug, and Cosmetic Act. Public Law 106-172 authorized the DEA to classify GHB as a schedule I and schedule III controlled substance. This forms basis for the DEA action. The board has been requested to initiate rulemaking to create a GHB classification which mirrors federal law to enable citizens of this state to benefit from FDA approved prescription drug products containing GHB.
Fiscal Estimate
1. The anticipated fiscal effect on the fiscal liability and revenues of any local unit of government of the proposed rule is: $0.00.
2. The projected anticipated state fiscal effect during the current biennium of the proposed rule is: $0.00.
3. The projected net annualized fiscal impact on state funds of the proposed rule is: $0.00.
Initial Regulatory Flexibility Analysis
These proposed rules will be reviewed by the department through its Small Business Review Advisory Committee to determine whether there will be an economic impact on a substantial number of small businesses, as defined in s.
227.114 (1) (a), Stats.
Copies of Rule and Contact Person
Copies of this proposed rule are available without cost upon request to: Pamela Haack, Department of Regulation and Licensing, Office of Administrative Rules, 1400 East Washington Avenue, Room 171, P.O. Box 8935, Madison, Wisconsin 53708 (608) 266-0495.
Notice of Hearing
Financial Institutions-Securities
NOTICE IS HEREBY GIVEN that pursuant to ss.
551.63 (1) and
(2), Stats., the Division of Securities of the Department of Financial Institutions will hold a public hearing at 345 West Washington Avenue, 4th Floor Conference Room, at 10:00 a.m. on
Monday, August 11, 2003 to consider the adoption, amendment and repeal of rules relating to conforming Wisconsin's Securities Law rules concerning broker-dealer books and record-keeping requirements to federally-mandated standards under the Securities Exchange Act of 1934.
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, PO Box 1768, Madison Wisconsin, 53701.
Analysis Prepared by the Division of Securities of the Department of Financial Institutions
The rulemaking procedures under Ch.
227 of the Wisconsin Statutes are being implemented for the purpose of adopting permanent rules to be in effect upon expiration of emergency rules issued by the Division on May 2, 2003 to conform Wisconsin's Securities Law rules concerning broker-dealer books and record-keeping requirements to federally mandated standards established in rules adopted by the U.S. Securities and Exchange Commission (“SEC") under the Securities Exchange Act of 1934 that became effective on May 2, 2003.
Congress in its passage of the National Securities Markets Improvement Act (“NSMIA") in 1996 prohibited state securities regulators from establishing or enforcing under their state securities laws or rules, record-keeping requirements for securities broker-dealers that are inconsistent with, or not required by, the U.S. Securities and Exchange Commission.
Following passage of NSMIA, the SEC commenced a rule-making process that spanned a several-year period (including a 1998 reproposal of the entirety of the proposed rules for a new public comment period), culminating in adoption in late 2001 of an extensive series of broker-dealer books and records rules for effectiveness commencing May 2, 2003. The SEC's revised books and records rules cover a comprehensive series of areas, including: (1) customer account records; (2) order ticket information; (3) customer complaints; (4) mandated reports and audits; (5) compliance manuals; (6) records maintenance, retention, production and access; and (7) records required to be maintained at a firm's home office and at “local" offices.
Because of the preemptive effects of federal law under NSMIA, all of the existing provisions of the Wisconsin administrative rules in Chapter SEC 4 under the Wisconsin Securities Law dealing with broker-dealer books and records covering the information categories (1) to (6) described above are superseded by the federal rules established by the SEC that became effective May 2, 2003. Additionally, certain existing Wisconsin Rule of Conduct provisions tied to the existing Wisconsin books and records rules need to be revised appropriately.
Consequently, it is necessary to adopt permanent rules (to be in place upon expiration of the emergency rules adopted May 2, 2003) to revise and amend Wisconsin's broker-dealer books and records rules to conform to the federal rules that became effective May 2, 2003, and to remove inconsistent requirements contained in the existing Wisconsin books and record-keeping rules. A subcommittee of the North American Securities Administrators Association (“NASAA"), an organization comprised of the securities administrators of all 50 states, including Wisconsin, has reviewed the impact of the SEC's books and record-keeping rules on existing state securities law licensing rules, and recommended that states utilize the incorporation-by- reference-of-the–federal-rules treatment contained in the proposed permanent rules.
A summary of the proposed permanent rules follows:
(1) Under Section 1, the entirety of the existing Wisconsin general books and records requirement for licensed broker-dealers as set forth in rules DFI-Sec 4.03(1) to (4) (that particularizes the types of required books and records, and prescribes records retention periods), is repealed and recreated to incorporate by reference the new, superseding, federal rules adopted by the SEC contained in sections 17a-3 and 4 under the Securities Exchange Act. New sub. (1) requires a firm to retain the books and records cross-referenced in federal SEC rules 17a-3 and 4, and new sub. (2) incorporates by reference the records preservation and retention requirements in federal SEC rule 17a-4. New subsections (3) and (4) replace the current Wisconsin rules in DFI-Sec 4.03 (3) and (4) [that prescribe branch office records and retention requirements], with language which provides that the books and records required to be prepared and maintained at broker-dealer offices triggering the definition of “branch office" under current rule DFI-Sec 1.02(7)(a), are the same records prescribed under the new federal provisions in new federal Rule 17a-3, and must be held for the retention periods specified in new federal Rule 17a-4.
(2) Section 2 repeals current Wisconsin rule DFI-Sec 4.03 (6) [which permitted broker-dealers to utilize alternative records to satisfy the principal office and branch office records required in existing rules DFI-Sec 4.03 (1) and (3)], because under NSMIA, states no longer have the authority to permit alternative forms of broker-dealer records different from the records prescribed by federal law.
(3) Section 3 is a renumbering of current rule DFI-Sec 4.03 (7) to reflect the repeal of DFI-Sec 4.03 (6) in Section 2.
(4) Under Section 4, the existing Wisconsin Rule of Conduct provision in DFI-Sec 4.05 (5) [requiring broker-dealers to provide customers with prescribed new account information and subsequent amendments to such information] is amended to both substitute a cross-reference to the new federal provision on that subject in SEC rule 17a-3(a)(17) under the Securities Exchange Act of 1934, and to repeal language in the Wisconsin rule inconsistent with federal provisions.
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.
Copy of Proposed 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: (1) No one-time revenue fluctuations; (2) No annual fiscal effects; (3) No long-range fiscal implications; (4) 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:
Broker-dealer licensees under the Wisconsin Uniform Securities Law with fewer than 25 full-time employees who meet the other criteria of s.
227.114 (l) (a), Stats. The proposed revisions to the securities broker-dealer books and record-keeping requirements and Rule of Conduct provisions are applicable equally to all broker-dealers because the requirements involved are for the protection and benefit of Wisconsin customers of those firms. All Wisconsin customers of securities broker-dealers are entitled to the public investor protection benefits of the licensing books and record-keeping requirements and Rule of Conduct provisions, 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.
See the summaries in numbered Items 1 to 4 above.
Contact Person
A copy of the full text of the proposed rule revisions and fiscal estimate may be obtained from:
Randall E. Schumann (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
Additionally, the full text of the proposed rule revisions is available on-line at the DFI Website:
Notice of Hearing
Financial Institutions-Securities
NOTICE IS HEREBY GIVEN that pursuant to ss.
551.63 (1) and
(2), Stats., the Division of Securities of the Department of Financial Institutions will hold a public hearing at 345 West Washington Avenue, 4th Floor Conference Room, at 10:30 a.m. on
Monday, August 11, 2003 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.
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, PO Box 1768, Madison Wisconsin, 53701.
Analysis Prepared by the Division of Securities of the Department of Financial Institutions
The rulemaking procedures under Ch.
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 for 2002 is conducted for the following purposes: (1) making necessary repeals of administrative rules that had been adopted under, and were applicable to, the former “individual accredited investor" securities registration exemption in 551.23 (8) (g), Stats., which was repealed and re-created effective October 1, 2002; and (2) amending several of the existing Administrative Procedure-contested case rules in Ch.
DFI-Sec 8, Rules of the Division of Securities, dealing with effectuating service and providing notice of administrative orders on named parties, as well as appearances at administrative proceedings by representatives of named parties.
A summary of the rule revisions follows:
1. Making necessary repeals of administrative rules [in DFI-Sec 2.02 (4) (a) and (b)] that had been adopted under, and were applicable to, the former “individual accredited investor"securities registration exemption in s. 551.23 (8) (g), Stats., which was repealed and re-created in
2001 Wisconsin Act 44 (that became effective October 1, 2002) to now conform totally to the federal definition of “accredited investor" under Rule 501(a) of Regulation D of the Securities Act of 1933
2. Existing rules in s.
DFI-Sec 8.03 relating to appearances at administrative proceedings by representatives of named parties need to be amended to reflect a recent Wisconsin court determination that precludes persons not licensed as attorneys in Wisconsin from representing named parties in contested case administrative proceedings before Wisconsin state agencies.
3. Existing rules in s.
DFI-Sec 8.07 relating to effectuating service of summarily-issued Division administrative orders on named parties needs to be amended to provide that if a named party is a corporation, service via certified mail can be accomplished either by sending to the corporation directly at its last known address, or by sending to the corporation's registered agent at its last known address, or by doing both.
4. Existing rules in s.
DFI-Sec 8.06 relating to effecting service by the Division of administrative orders on named parties needs to be amended to provide that if the named party is represented by legal counsel, service can be accomplished by serving legal counsel representing the named party.
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.
Copy of Proposed 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: (1) No one-time revenue fluctuations; (2) No annual fiscal effects; (3) No long-range fiscal implications; (4) 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:
None of the rule proposals have particularized applicability to small businesses.
2. Reporting, bookkeeping and other procedures required for compliance with the rules.
No reporting, bookkeeping, or other procedures were contained in this rulemaking package.
Contact Person
A copy of the full text of the proposed rule revisions and fiscal estimate may be obtained from:
Randall E. Schumann (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
Additionally, the full text of the proposed rule revisions is available on-line at the DFI Website:
