AB831: Bill Text

The NSMIA restricts the ability of a state to establish capital, custody, margin, financial responsibility, record keeping, bonding or financial or operational requirements for broker-dealers. This bill makes the division's authority to promulgate rules regarding minimum capital requirements and posting surety bonds subject to the limitations under the NSMIA. The bill also repeals certain record keeping requirements and makes the ability of the division to promulgate rules regarding reporting and record keeping subject to the limitations under the NSMIA.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB831, s. 1 Section 1. 551.02 (2) (intro.), (a) and (b) of the statutes are amended to read:

AB831,5,6 551.02 (2) (intro.)  "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 doing any of the following:

AB831,5,7 (a) Effecting transactions in a security exempted by s. 551.22;.

AB831,5,11 (b) Effecting transactions exempted by s. 551.23, other than transactions exempted under s. 551.23 (8) (g), (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.

AB831, s. 2 Section 2. 551.02 (4g) of the statutes is created to read:

AB831,5,14 551.02 (4g) "Federal covered adviser" means a person who is registered under section 203 of the Investment Advisers Act of 1940.

AB831, s. 3 Section 3. 551.02 (4r) of the statutes is created to read:

AB831,5,18 551.02 (4r) "Federal covered security" means any security that is a covered security under section 18 (b) of the Securities Act of 1933 or regulations promulgated under that act.

AB831, s. 4 Section 4. 551.02 (7) (intro.) of the statutes is amended to read:

AB831,6,2 551.02 (7) (intro.)  "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 any of the following:

AB831, s. 5 Section 5. 551.02 (7) (a) of the statutes is amended to read:

AB831,6,4 551.02 (7) (a) A bank, savings institution or trust company;.

AB831, s. 6 Section 6. 551.02 (7) (b) of the statutes is amended to read:

AB831,6,7 551.02 (7) (b) A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of his or her profession;.

AB831, s. 7 Section 7. 551.02 (7) (c) of the statutes is amended to read:

AB831,6,11 551.02 (7) (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;.

AB831, s. 8 Section 8. 551.02 (7) (d) of the statutes is amended to read:

AB831,6,16 551.02 (7) (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 ;.

AB831, s. 9 Section 9. 551.02 (7) (e) of the statutes is amended to read:

AB831,6,18 551.02 (7) (e) The investment board; or.

AB831, s. 10 Section 10. 551.02 (7) (ed) and (eh) of the statutes are created to read:

AB831,6,22 551.02 (7) (ed) A federal covered adviser, unless the federal covered adviser is required to become licensed or qualify for an exclusion or exemption from licensure under s. 551.32 (1m) (c).

AB831,6,24 (eh) A person who is excluded from the definition of "investment adviser" under section 202 (a) (11) of the Investment Advisers Act of 1940.

AB831, s. 11 Section 11. 551.02 (7) (em) of the statutes is created to read:

AB831,7,1 551.02 (7) (em) An investment adviser representative.

AB831, s. 12 Section 12. 551.02 (7m) of the statutes is created to read:

AB831,7,4 551.02 (7m) (a) "Investment adviser representative" means any of the following, unless excluded under par. (b):

AB831,7,6 1. A supervised person, as defined by the division by rule, of an investment adviser or a federal covered adviser, unless one of the following applies:

AB831,7,9 a. Not more than a percentage, specified by the division by rule, of the clients of the supervised person are natural persons who are not excepted persons, as defined by the division by rule.

AB831,7,12 b. The supervised person does not, on a regular basis, solicit, meet with or otherwise communicate with clients of the investment adviser or federal covered adviser.

AB831,7,14 c. The supervised person provides only impersonal investment advice, as defined by the division by rule.

AB831,7,15 2. A 3rd-party solicitor, as defined by the division by rule.

AB831,7,17 (b) "Investment adviser representative" does not include any person excluded by the division by rule or order.

AB831, s. 13 Section 13. 551.02 (12) of the statutes is amended to read:

AB831,7,24 551.02 (12) "Securities act Act of 1933", "securities exchange act Securities Exchange Act of 1934", "investment company act Investment Company Act of 1940", "investment advisers act Investment Advisers Act of 1940" and "internal revenue code Internal Revenue Code" mean the federal statutes of those names as amended on January 1, 1970 1998, including such later amendments as the division determines are not inconsistent with the purpose of this chapter.

AB831, s. 14 Section 14. Subchapter II (title) of chapter 551 [precedes 551.21] of the statutes is amended to read:

AB831,8,3 CHAPTER 551

AB831,8,4 SUBCHAPTER II

AB831,8,7 REGISTRATION OF and notice filing procedures; SECURITIES

AB831, s. 15 Section 15. 551.21 (1) of the statutes is renumbered 551.21 (1) (intro.) and amended to read:

AB831,8,11 551.21 (1) (intro.) It is unlawful for any person to offer or sell any security in this state unless it at least one of the following conditions is met:

AB831,8,12 (a) The security is registered under this chapter or the.

AB831,8,13 (b) The security or transaction is exempted under s. 551.22 or 551.23.

AB831, s. 16 Section 16. 551.21 (1) (c) of the statutes is created to read:

AB831,8,15 551.21 (1) (c) The security is a federal covered security.

AB831, s. 17 Section 17. 551.22 (7) of the statutes is amended to read:

AB831,9,2 551.22 (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.

AB831, s. 18 Section 18. 551.23 (3) (intro.) of the statutes is amended to read:

AB831,9,7 551.23 (3) (intro.) Any sale of any outstanding security by or on behalf of a person not the issuer and not in control of the issuer or controlled by the issuer or under common control with the issuer at a price reasonably related to the current market price if any of the following conditions are met:

AB831, s. 19 Section 19. 551.23 (3) (a) of the statutes is amended to read:

AB831,9,13 551.23 (3) (a) The issuer has any securities registered under section 12 of the securities exchange act Securities Exchange Act of 1934 or exempted from registration by section 12 (g) (2) (G) or 12 (g) (3) of that act, or the issuer is an investment company registered under the investment company act Investment Company Act of 1940; or.

AB831, s. 20 Section 20. 551.23 (3) (b) of the statutes is amended to read:

AB831,9,17 551.23 (3) (b) Securities of the same class have been registered under this chapter under a registration statement becoming effective within 2 years preceding the sale and the registration has not been revoked or suspended; or.

AB831, s. 21 Section 21. 551.23 (3) (c) of the statutes is amended to read:

AB831,9,25 551.23 (3) (c) Securities of the same class have been registered under the securities act Securities Act of 1933 and there is filed with the division prior to any offer or sale a notice of the proposed sale, other information as the division by rule requires 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; or .

AB831, s. 22 Section 22. 551.23 (8) (b) and (c) of the statutes are amended to read:

AB831,10,5 551.23 (8) (b) A bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association, if the purchaser or prospective purchaser is acting for itself or as trustee with investment control.

AB831,10,12 (c) An investment company as defined under 15 USC 80a-3 or a pension or profit-sharing trust, except that an offer or sale of a security to a pension or profit-sharing trust or to an individual retirement plan, including a self-employed individual retirement plan, is not exempt under this paragraph unless the trust or plan is administered by a bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association that has investment control.

AB831, s. 23 Section 23. 551.23 (16) of the statutes is amended to read:

AB831,10,17 551.23 (16) Any offer, but not a sale, of a security for which registration statements have been filed under both this chapter and the securities act Securities Act of 1933 if no stop order or denial order is in effect and no proceeding is pending under either law.

AB831, s. 24 Section 24. 551.23 (19) (a) of the statutes is amended to read:

AB831,10,23 551.23 (19) (a) Any offer or sale of securities made in reliance on the exemptions exemption provided by Rule 505 or 506 of Regulation D under the securities act Securities Act of 1933 and the conditions and definitions provided by Rules 501 to 503 thereunder, if the offer or sale also satisfies the additional conditions and limitations in pars. (b) to (f).

AB831, s. 25 Section 25. 551.23 (19) (b) of the statutes is amended to read:

AB831,11,4 551.23 (19) (b) No commission or other remuneration may be paid or given, directly or indirectly, to any person for soliciting or selling to any person in this state in reliance on the exemption under par. (a), except to broker-dealers and agents licensed in this state or exempt from licensure under s. 551.31 (1).

AB831, s. 26 Section 26. 551.23 (19) (d) of the statutes is amended to read:

AB831,11,13 551.23 (19) (d) Not later than the earlier of the date on which the first use of an offering document or the first sale is made in this state in reliance on the exemption under par. (a), there is filed with the division a notice comprised of offering material in compliance with the requirements of Rule 502 of Regulation D under the securities act Securities Act of 1933, a completed Form D as prescribed by Rule 503 of Regulation D under the securities act Securities Act of 1933, and a fee of $200. Material amendments to the offering document shall be filed with the division not later than the date of their first use in this state.

AB831, s. 27 Section 27. 551.25 (1) of the statutes is amended to read:

AB831,11,17 551.25 (1) Registration by coordination may be used for any security for which a registration statement has been filed under the securities act Securities Act of 1933 in connection with the same offering and has not become effective.

AB831, s. 28 Section 28. 551.25 (2) (intro.) of the statutes is amended to read:

AB831,11,22 551.25 (2) (intro.)  A registration statement under this section shall contain all of the following information and be accompanied by the following documents in addition to the information specified in s. 551.27 (2) and the consent to service of process required by s. 551.65 (1):

AB831, s. 29 Section 29. 551.25 (2) (a) of the statutes is amended to read:

AB831,11,25 551.25 (2) (a) Three copies of the latest form of prospectus filed under the securities act Securities Act of 1933;.

AB831, s. 30 Section 30. 551.25 (2) (b) of the statutes is amended to read:

AB831,12,6 551.25 (2) (b) If the division by rule or otherwise requires, a copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect, a copy of any agreements with or among underwriters, a copy of any indenture or other instrument governing the issuance of the security to be registered, and a specimen or copy of the security;.

AB831, s. 31 Section 31. 551.25 (2) (c) of the statutes is amended to read:

AB831,12,9 551.25 (2) (c) If the division requires, any other information, or copies of any documents, filed under the securities act Securities Act of 1933; and.

AB831, s. 32 Section 32. 551.29 of the statutes is created to read:

AB831,12,13 551.29 Federal covered securities. (1) With respect to a federal covered security that is a covered security under section 18 (b) (2) of the Securities Act of 1933, the division may, by rule or order, require the filing of any of the following:

AB831,12,23 (a) Not later than the initial offer of the federal covered security in this state, a copy of each document that is part of its registration statement filed with the federal securities and exchange commission under the Securities Act of 1933, which may, at the option of the issuer, be accompanied by a form containing the information specified by the division by rule. If a filing is required under this paragraph, the filing shall be accompanied by a consent to service of process signed by the issuer and a notice filing fee under s. 551.52 (1) (a). Any notice filing required under this paragraph is effective upon receipt by the division of the documents and fees required under this paragraph, or upon the effectiveness of the registration statement under the Securities Act of 1933, whichever is later.

AB831,13,9 (b) After the initial offer of a federal covered security in this state, a copy of each document that is part of an amendment to its registration statement filed with the federal securities and exchange commission under the Securities Act of 1933, concurrent with the federal filing, which may, at the option of the issuer, be accompanied by a form containing the information specified by the division by rule. If a filing is required under this paragraph and the amendment relates either to a name change of the issuer, or a change in the designation of the federal covered security, the filing shall be accompanied by a fee in the amount prescribed by the rule or order requiring the filing. Unless the issuer requests a later effective date, an amendment filing required under this paragraph is effective upon receipt by the division of the documents and fees required under this paragraph.

AB831,13,12 (c) For a unit investment trust or closed-end investment company to extend its offering beyond a one-year period, a notice of extension, together with any filing fee prescribed by rule or order, at the time prescribed by rule or order.

AB831,13,17 (1m) If the division promulgates rules under sub. (1) (c) for unit investment trusts or closed-end investment companies, the division shall restate in those rules the statutory annual reporting and fee requirements that are applicable to an open-end management company or a face amount certificate company under s. 551.52 (1) (b) 2.

AB831,13,25 (2) With respect to a federal covered security that is a covered security under section 18 (b) (4) (D) of the Securities Act of 1933, the division may, by rule or order, require the issuer to file a notice consisting of a completed Form D as prescribed by Rule 503 of Regulation D under the Securities Act of 1933, signed by the issuer, not later than 15 days after the first sale of the federal covered security in this state. Any filing required under this subsection shall be accompanied by a fee in the amount prescribed by the rule or order requiring the filing. The filing shall be effective upon receipt by the division of the filing and the fee.

AB831,14,7 (3) With respect to a federal covered security that is a covered security under section 18 (b) (3) or (4) of the Securities Act of 1933, the division may, by rule or order, require the filing, for purpose of providing notice to the division, of any document filed with the federal securities and exchange commission under the the Securities Act of 1933, together with a fee prescribed in the rule or order. The filing is effective upon receipt by the division of the documents and fee required under the rule or order.

AB831,14,14 (4) To the extent not prohibited by federal law, if the issuer of a federal covered security does not pay a fee required under this chapter with respect to that security and the nonpayment or underpayment of that fee has not been remedied within 10 days of receipt by the issuer of a written or electronically transmitted notification from the division, the federal covered security may not be offered or sold in this state unless it is registered under this chapter or qualifies for an exemption from registration under s. 551.22 or 551.23.