2009 WISCONSIN ACT 344
An Act to repeal 632.68; to renumber and amend 551.102 (32); to amend 49.857 (1) (d) 20., 71.05 (1) (f), 71.26 (3) (ag), 71.45 (2) (a) 14., 73.0301 (1) (d) 12., 321.60 (1) (a) 20., 551.102 (17) (d), 551.102 (17) (e), 551.102 (28) (intro.), 601.31 (1) (mm), 601.31 (1) (mp), 601.31 (1) (mr) and 601.31 (1) (ms); and to create 632.69 of the statutes; relating to: life settlements, granting rule-making authority, and providing a penalty.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
344,1
Section
1. 49.857 (1) (d) 20. of the statutes is amended to read:
49.857 (1) (d) 20. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2), or 633.14 or a temporary license issued under s. 628.09.
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2. 71.05 (1) (f) of the statutes is amended to read:
71.05 (1) (f) Income from the sales of certain insurance policies. Income received by the original policyholder or original certificate holder who has a catastrophic or life-threatening illness or condition from the sale of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a viatical life settlement contract, as defined in s. 632.68 (1) (d) 632.69 (1) (k). In this paragraph, "catastrophic or life-threatening illness or condition" includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d).
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3. 71.26 (3) (ag) of the statutes is amended to read:
71.26 (3) (ag) Section 61 (relating to the definition of gross income) is modified to exclude income received by the original policyholder or original certificate holder who has a catastrophic or life-threatening illness or condition from the sale of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a viatical life settlement contract, as defined in s. 632.68 (1) (d) 632.69 (1) (k). In this paragraph, "catastrophic or life-threatening illness or condition" includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d).
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4. 71.45 (2) (a) 14. of the statutes is amended to read:
71.45 (2) (a) 14. By subtracting from federal taxable income the amount that is included in that income from the sale by the original policyholder or original certificate holder who has a catastrophic or life-threatening illness or condition of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a viatical life settlement contract, as defined in s. 632.68 (1) (d) 632.69 (1) (k). In this subdivision, "catastrophic or life-threatening illness or condition" includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d).
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5. 73.0301 (1) (d) 12. of the statutes is amended to read:
73.0301 (1) (d) 12. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2), or 633.14 or a temporary license issued under s. 628.09.
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6. 321.60 (1) (a) 20. of the statutes is amended to read:
321.60 (1) (a) 20. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2), or 633.14 or a temporary license issued under s. 628.09.
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7. 551.102 (17) (d) of the statutes is amended to read:
551.102 (17) (d) With respect to a fractional or pool interest in a viatical life settlement investment, "issuer" means every person who creates the fractional or pool interest for the purpose of offering or selling the interest.
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8. 551.102 (17) (e) of the statutes is amended to read:
551.102 (17) (e) With respect to a viatical life settlement investment that is not a fractional or pool interest, "issuer" means the viatical settlement provider, as defined in s. 632.68 (1) (e) 632.69 (1) (p), or the person who purchases or otherwise acquires the viatical
life settlement from a viatical settlement provider and then offers or sells viatical life settlement investments therein except that, under this paragraph, "issuer" does not include a broker-dealer or agent registered under this chapter and does not include the viator owner of the insurance policy, certificate of insurance, or death benefit underlying the viatical life settlement investment.
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9. 551.102 (28) (intro.) of the statutes is amended to read:
551.102 (28) (intro.) "Security" means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; limited partnership interest; viatical life settlement investment or similar agreement; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. The term:
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10. 551.102 (32) of the statutes is renumbered 551.102 (17m), and 551.102 (17m) (intro.) and (a), as renumbered, are amended to read:
551.102 (17m) (intro.) "Viatical
Life settlement investment" means the entire interest or any fractional or pool interest in a life insurance policy or certificate of insurance or in the death benefit thereunder that is the subject of a viatical life settlement, as defined in s. 632.68 (1) (b) 632.69 (1) (j), but does not include any of the following:
(a) The assignment, transfer, sale, devise or bequest of a death benefit, life insurance policy, or certificate of insurance by the viator owner to a viatical settlement provider pursuant to s. 632.68 632.69.
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11. 601.31 (1) (mm) of the statutes is amended to read:
601.31 (1) (mm) For initial issuance of a license as a viatical settlement provider under s. 632.68 (2) 632.69 (2) (b), $750.
344,12
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12. 601.31 (1) (mp) of the statutes is amended to read:
601.31 (1) (mp) For each annual renewal of a license as a viatical settlement provider under s. 632.68 (2) 632.69 (2) (j), $250.
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13. 601.31 (1) (mr) of the statutes is amended to read:
601.31 (1) (mr) For initial issuance of a license as a viatical settlement broker under s. 632.68 (4) 632.69 (2) (b), $750.
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14. 601.31 (1) (ms) of the statutes is amended to read:
601.31 (1) (ms) For each annual renewal of a license as a viatical settlement broker under s. 632.68 (4) 632.69 (2) (j), $250.
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15. 632.68 of the statutes is repealed.
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16. 632.69 of the statutes is created to read:
632.69 Life settlements. (1) Definitions. In this section:
(a) "Advertisement" means any written, electronic, or printed communication or any communication made by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed, directly or indirectly, before the public in this state for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequeath, or transfer the death benefit or ownership of a policy or an interest in a policy pursuant to a life settlement contract.
(b) "Broker" means a person who, on behalf of an owner and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and one or more providers, or one or more brokers. "Broker" does not include an attorney or certified public accountant who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or purchaser.
(c) "Business of life settlements" means an activity involved in the offering soliciting, negotiating, procuring, effectuating, purchasing, investing in, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothicating, or in any other manner, acquiring an interest in a policy by means of a life settlement contract.
(d) "Chronically ill" means any of the following:
1. Being unable to perform at least 2 activities of daily living, including eating, toileting, transferring, bathing, dressing, or continence.
2. Requiring substantial supervision to monitor the health and safety of the individual due to his or her severe cognitive impairment.
3. Having a level of disability similar to that described in subd. 1., as defined by the U.S. department of health and human services.
(e) "Financing entity" means a person whose principal activity related to a life settlement is providing funds to effect the life settlement contract or purchase of one or more policies and who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts, including an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a life settlement provider, credit enhancer, or any entity that has a direct ownership in a policy that is the subject of a life settlement contract. "Financing entity" does not include an investor that is not an accredited investor, as defined in
17 CFR 230.501 (a), or a purchaser.
(f) "Financing transaction" means a transaction in which a licensed provider obtains financing from a financing entity including any secured or unsecured financing, any securitization transaction, or any securities offering which is either registered or exempt from registration under federal and state securities law.
(g) "Fraudulent life settlement act" includes all of the following:
1. Acts or omissions that are committed by any person, or that a person permits its employees or its agents to engage in, for the purpose of pecuniary gain, including any of the following:
a. Presenting, causing to be presented, or preparing with the knowledge or belief that it will be presented to or by a provider, broker, purchaser, financing entity, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to an application for the issuance of a life settlement contract or a policy; the underwriting of a life settlement contract or a policy; a claim for payment or benefit under a life settlement contract or a policy; premiums paid on an insurance policy; payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or a policy; the reinstatement or conversion of a policy; the solicitation, offer, effectuation, or sale of a life settlement contract or a policy; the issuance of written evidence of a life settlement contract or a policy; or a financing transaction.
b. Employing any plan, device, scheme, or artifice to defraud in the business of life settlements.
c. Failing to disclose to an insurer, if the request for such disclosure has been made by the insurer, that the prospective owner has undergone a life expectancy evaluation by any person or entity other than the insurer or its authorized representatives in connection with the issuance of the policy.
2. Any of the following acts that any person does, or permits its employees or agents to do, in the furtherance of a fraud or to prevent the detection of a fraud:
a. Removing, concealing, altering, destroying, or sequestering from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements.
b. Misrepresenting or concealing the financial condition of a licensee, financing entity, insurer, or other person.
c. Transacting the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements.
d. Filing with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner or official.
3. Embezzlement, theft, misappropriation, or conversion of monies, funds, premiums, credits, or other property of a life settlement provider, insurer, insured, owner, or any other person engaged in the business of life settlements or insurance.
4. Recklessly entering into, negotiating, brokering, or otherwise dealing in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing for the purpose of misleading another information concerning any fact material to the policy, where the person or persons intended to defraud the policy's issuer, the provider, or the owner.
5. Attempting to commit; assisting, aiding, or abetting in the commission of; or conspiring to commit the acts or omissions specified in this paragraph.
