SB483: Bill Text

SB483,96,3 (4) Liability of unregistered broker-dealer and agent. A person acting as a broker-dealer or agent that sells or buys a security in violation of s. 551.401 (1), 551.402 (1), or 551.506 is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in sub. (2) (a) to (c), or, if a seller, for a remedy as specified in sub. (3) (a) to (c).

SB483,96,10 (5) Liability of unregistered investment adviser and investment adviser representative. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of s. 551.403 (1), 551.404 (1), or 551.506 is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate under s. 138.04 from the date of payment, costs, and reasonable attorney fees determined by the court.

SB483,96,16 (6) Liability for investment advice. A person that receives directly or indirectly any consideration for providing investment advice to another person and that employs a device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business that operates or would operate as a fraud or deceit on the other person is liable to the other person. An action under this subsection is governed by the following:

SB483,96,21 (a) The person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the legal rate under s. 138.04 from the date of the fraudulent conduct, costs, and reasonable attorney fees determined by the court, less the amount of any income received as a result of the fraudulent conduct.

SB483,96,24 (b) This subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.

SB483,97,2 (7) Joint and several liability. The following persons are liable jointly and severally with and to the same extent as persons liable under subs. (2) to (6):

SB483,97,6 (a) A person that directly or indirectly controls a person liable under subs. (2) to (6), unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist.

SB483,97,11 (b) An individual who is a managing partner, executive officer, or director of a person liable under subs. (2) to (6), including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist.

SB483,97,16 (c) An individual who is an employee of or associated with a person liable under subs. (2) to (6) and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist.

SB483,97,21 (d) A person that is a broker-dealer, agent, investment adviser, or investment adviser representative that materially aids the conduct giving rise to the liability under subs. (2) to (6), unless the person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.

SB483,97,24 (8) Right of contribution. A person liable under this section has a right of contribution as in cases of contract against any other person liable under this section for the same conduct.

SB483,98,2 (9) Survival of cause of action. A cause of action under this section survives the death of an individual who might have been a plaintiff or defendant.

SB483,98,3 (10) Statute of limitations. A person may not obtain relief:

SB483,98,5 (a) Under sub. (2) for violation of s. 551.301, or under sub. (4) or (5), unless the action is instituted within one year after the violation occurred.

SB483,98,8 (b) Under sub. (2), other than for violation of s. 551.301, or under sub. (3) or (6), unless the action is instituted within the earlier of 2 years after discovery of the facts constituting the violation or 5 years after the violation.

SB483,98,13 (11) No enforcement of violative contract. A person that has made, or has engaged in the performance of, a contract in violation of this chapter or a rule adopted or order issued under this chapter, or that has acquired a purported right under the contract with knowledge of conduct by reason of which its making or performance was in violation of this chapter, may not base an action on the contract.

SB483,98,17 (12) No contractual waiver. A condition, stipulation, or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with this chapter or a rule adopted or order issued under this chapter is void.

SB483,98,20 (13) Survival of other rights or remedies. The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist, but this chapter does not create a cause of action not specified in this section or s. 551.411 (5).

SB483,98,22 551.511 Rescission offers. A purchaser, seller, or recipient of investment advice may not maintain an action under s. 551.509 if all of the following apply:

SB483,99,5 (1) The purchaser, seller, or recipient of investment advice receives in a record, before the action is instituted, an offer stating the respect in which liability under s. 551.509 may have arisen and fairly advising the purchaser, seller, or recipient of investment advice of that person's rights in connection with the offer, and any financial or other information necessary to correct all material misrepresentations or omissions in the information that was required by this chapter to be furnished to that person at the time of the purchase, sale, or investment advice, and any of the following:

SB483,99,14 (a) If the basis for relief under this section may have been a violation of s. 551.509 (2), an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest at the legal rate under s. 138.04 from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest at the legal rate under s. 138.04 from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection.

SB483,99,23 (b) If the basis for relief under this section may have been a violation of s. 551.509 (3), an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at the legal rate under s. 138.04 from the date of the sale, or, if the purchaser no longer owns the security, an offer to pay the seller upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser's conduct that may have caused liability and interest at the legal rate under s. 138.04 from the date of the sale.

SB483,100,3 (c) If the basis for relief under this section may have been a violation of s. 551.509 (4), and if the customer is a purchaser, an offer to pay as specified in par. (a), or, if the customer is a seller, an offer to tender or to pay as specified in par. (b).

SB483,100,6 (d) If the basis for relief under this section may have been a violation of s. 551.509 (5), an offer to reimburse in cash the consideration paid for the advice and interest at the legal rate under s. 138.04 from the date of payment.

SB483,100,11 (e) If the basis for relief under this section may have been a violation of s. 551.509 (6), an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct, and interest at the legal rate under s. 138.04 from the date of the violation causing the loss.

SB483,100,15 (2) The offer under sub. (1) states that it must be accepted by the purchaser, seller, or recipient of investment advice within 30 days after the date of its receipt by the purchaser, seller, or recipient of investment advice or any shorter period, of not less than 3 days, that the administrator, by order, specifies.

SB483,100,17 (3) The offeror has the present ability to pay the amount offered or to tender the security under sub. (1).

SB483,100,20 (4) The offer under sub. (1) is delivered to the purchaser, seller, or recipient of investment advice, or sent in a manner that ensures receipt by the purchaser, seller, or recipient of investment advice.

SB483,100,23 (5) The purchaser, seller, or recipient of investment advice that accepts the offer under sub. (1) in a record within the period specified under sub. (2) is paid in accordance with the terms of the offer.

SB483,101,3 subchapter Vi ADMINISTRATION AND JUDICIAL REVIEW

SB483,101,5 551.601 Administration. (1) Administration. The administrator shall administer this chapter.

SB483,101,12 (2) Unlawful use of records or information. It is unlawful for the administrator or an officer, employee, or designee of the administrator to use for personal benefit or the benefit of others records or other information obtained by or filed with the administrator that are not public under s. 551.607 (2). This chapter does not authorize the administrator or an officer, employee, or designee of the administrator to disclose the record or information, except in accordance with s. 551.602, 551.607 (3), or 551.608.

SB483,101,15 (3) No privilege or exemption created or diminished. This chapter does not create or diminish a privilege or exemption that exists at common law, by statute or rule, or otherwise.

SB483,102,2 (4) Investor education. The administrator may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud. In developing and implementing these initiatives, the administrator may collaborate with public and nonprofit organizations with an interest in investor education. The administrator may accept a grant or donation from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives. This subsection does not authorize the administrator to require participation or monetary contributions of a registrant in an investor education program.

SB483,102,7 (5) Securities investor education and training funding. All moneys collected from the administrative assessment under s. 551.604 (4) shall be credited to the appropriation under s. 20.144 (1) (i). Subject to s. 20.144 (1) (i), the division shall use moneys credited to that appropriation for the purposes specified in sub. (4) and s. 20.144 (1) (i).

SB483,102,9 551.602 Investigations and subpoenas. (1) Authority to investigate. The administrator may do any of the following:

SB483,102,14 (a) Conduct public or private investigations within or outside of this state which the administrator considers necessary or appropriate to determine whether a person has violated, is violating, or is about to violate this chapter or a rule adopted or order issued under this chapter, or to aid in the enforcement of this chapter or in the adoption of rules and forms under this chapter.

SB483,102,18 (b) Require or permit a person to testify, file a statement, or produce a record, under oath or otherwise as the administrator determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted.

SB483,102,21 (c) Publish a record concerning an action, proceeding, or an investigation under, or a violation of, this chapter or a rule adopted or order issued under this chapter.

SB483,103,2 (2) Administrator powers to investigate. For the purpose of an investigation under this chapter, the administrator or its designated officer may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements, and require the production of any records that the administrator considers relevant or material to the investigation.

SB483,103,9 (3) Procedure and remedies for noncompliance. If a person does not appear or refuses to testify, file a statement, produce records, or otherwise does not obey a subpoena as required by the administrator under this chapter, the administrator may apply to, or may refer the matter to the attorney general, district attorney of the appropriate county, or appropriate federal authority who may apply to, the circuit court of of the appropriate county or a court of another state to enforce compliance. The court may do any of the following:

SB483,103,10 (a) Hold the person in contempt.

SB483,103,11 (b) Order the person to appear before the administrator.

SB483,103,13 (c) Order the person to testify about the matter under investigation or in question.

SB483,103,14 (d) Order the production of records.

SB483,103,16 (e) Grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice.

SB483,103,18 (f) Impose a civil penalty of not less than $5,000 and not greater than $250,000 for each violation.

SB483,103,19 (g) Grant any other necessary or appropriate relief.

SB483,103,23 (4) Application for relief. This section does not preclude a person from applying to the circuit court of the appropriate county or a court of another state for relief from a request to appear, testify, file a statement, produce records, or obey a subpoena.

SB483,104,12 (5) Use immunity procedure. (a) An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the administrator under this chapter or in an action or proceeding instituted by the administrator under this chapter on the ground that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture. If the individual refuses to testify, file a statement, or produce a record or other evidence on the basis of the individual's privilege against self-incrimination, the administrator may apply to the circuit court of the appropriate county to compel the testimony, the filing of the statement, the production of the record, or the giving of other evidence. The testimony, record, or other evidence compelled under such an order may not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order.

SB483,104,14 (b) The immunity provided under par. (a) is subject to the restrictions under s. 972.085.

SB483,105,6 (6) Assistance to securities regulator of another jurisdiction. At the request of the securities regulator of another state or a foreign jurisdiction, the administrator may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating, or is about to violate a law or rule of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces. The administrator may provide the assistance by using the authority to investigate and the powers conferred by this section as the administrator determines is necessary or appropriate. The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of this chapter or other law of this state if occurring in this state. In deciding whether to provide the assistance, the administrator may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the administrator on securities matters when requested; whether compliance with the request would violate or prejudice the public policy of this state; and the availability of resources and employees of the administrator to carry out the request for assistance.

SB483,105,17 551.603 Civil enforcement. (1) Civil action instituted by administrator. If the administrator believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may maintain, or may refer the matter to the attorney general or district attorney of the appropriate county who may maintain, an action in the circuit court of the appropriate county to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter.

SB483,105,19 (2) Relief available. In an action under this section and on a proper showing, the court may do any of the following:

SB483,105,21 (a) Issue a permanent or temporary injunction, restraining order, or declaratory judgment.

SB483,105,23 (b) Order other appropriate or ancillary relief, which may include any of the following:

SB483,106,3 1. An asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator, that may be the administrator, for the defendant or the defendant's assets.

SB483,106,6 2. Ordering the administrator to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property.

SB483,106,11 3. Imposing a civil penalty up to $5,000 for a single violation or up to $250,000 for more than one violation; an order of rescission, restitution, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this chapter or the predecessor act or a rule adopted or order issued under this chapter or the predecessor act.

SB483,106,12 4. Ordering the payment of prejudgment and postjudgment interest.

SB483,106,13 (c) Order such other relief as the court considers appropriate.

SB483,106,15 (3) No bond required. The administrator may not be required to post a bond in an action or proceeding under this chapter.

SB483,106,22 551.604 Administrative enforcement. (1) Issuance of an order or notice. If the administrator determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may do any of the following:

SB483,106,25 (a) Issue an order directing the person to cease and desist from engaging in the act, practice, or course of business or to take other action necessary or appropriate to comply with this chapter.

SB483,107,3 (b) Issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under s. 551.401 (2) (d) or (f) or an investment adviser under s. 551.403 (2) (a) 3.

SB483,107,4 (c) Issue an order under s. 551.204.

SB483,107,18 (2) Summary process. An order under sub. (1) is effective on the date of issuance. Upon issuance of the order, the administrator shall promptly serve each person subject to the order with a copy of the order and a notice that the order has been entered. The order must include a statement of any civil penalty or costs of investigation the administrator will seek, a statement of the reasons for the order, and notice that, within 15 days after receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a person subject to the order does not request a hearing and none is ordered by the administrator within 30 days after the date of service of the order, the order, including the imposition of a civil penalty or requirement for payment of the costs of investigation sought in a statement in the order, becomes final as to that person by operation of law. If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend it until final determination.

SB483,107,23 (3) Procedure for final order. If a hearing is requested or ordered pursuant to sub. (2), a hearing must be held pursuant to ch. 227. A final order may not be issued unless the administrator makes findings of fact and conclusions of law in a record in accordance with ch. 227. The final order may make final, vacate, or modify the order issued under sub. (1).

SB483,108,3 (4) Civil penalty. In a final order under sub. (3), the administrator may impose a civil penalty in the form of an administrative assessment up to $5,000 for a single violation or up to $250,000 for more than one violation.

SB483,108,6 (5) Costs. In a final order, the administrator may charge the actual cost of an investigation or proceeding for a violation of this chapter or a rule adopted or order issued under this chapter.

SB483,108,12 (6) Filing of certified final order with court; effect of filing. If a petition for judicial review of a final order is not filed in accordance with s. 551.609, the administrator may file a certified copy of the final order with the clerk of a court of competent jurisdiction. The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.

SB483,108,21 (7) Enforcement by court; further civil penalty. If a person does not comply with an order under this section, the administrator may petition a court of competent jurisdiction to enforce the order. The court may not require the administrator to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not less than $5,000 but not greater than $100,000 for each violation and may grant any other relief the court determines is just and proper in the circumstances.

SB483,108,24 551.605 Rules, forms, orders, interpretative opinions, and hearings. (1) Issuance and adoption of forms, orders, and rules. The administrator may do any of the following:

SB483,109,4 (a) Issue forms and orders and, after notice and comment, adopt and amend rules necessary or appropriate to carry out this chapter, and repeal rules, including rules and forms governing registration statements, applications, notice filings, reports, and other records.

SB483,109,6 (b) By rule, define terms, whether or not used in this chapter, but those definitions may not be inconsistent with this chapter.

SB483,109,8 (c) By rule, classify securities, persons, and transactions and adopt different requirements for different classes.

SB483,109,17 (2) Findings and cooperation. Under this chapter, except as provided under s. 551.412 (4g) (b) and (c), a rule or form may not be adopted or amended, or an order issued or amended, unless the administrator finds that the rule, form, order, or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by this chapter. In adopting, amending, and repealing rules and forms, s. 551.608 applies in order to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports, and other records, including the adoption of uniform rules, forms, and procedures.

SB483,109,23 (3) Financial statements. Subject to section 15 (h) of the Securities Exchange Act and section 222 of the Investment Advisers Act of 1940, the administrator may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this chapter. A rule adopted or order issued under this chapter may establish:

SB483,110,3 (a) Subject to section 15 (h) of the Securities Exchange Act and section 222 of the Investment Advisers Act of 1940, the form and content of financial statements required under this chapter.

SB483,110,4 (b) Whether unconsolidated financial statements must be filed.

SB483,110,6 (c) Whether required financial statements must be audited by an independent certified public accountant.

SB483,110,13 (4) Interpretative opinions. The administrator may provide interpretative opinions or issue determinations that the administrator will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. A rule adopted or order issued under this chapter may establish a reasonable charge for interpretative opinions or determinations that the administrator will not institute an action or a proceeding under this chapter.

SB483,110,16 (5) Effect of compliance. A penalty under this chapter may not be imposed for, and liability does not arise from, conduct that is engaged in or omitted in good faith in conformity with a rule, form, or order of the administrator under this chapter.

SB483,110,20 (6) Presumption for public hearings. A hearing in an administrative proceeding under this chapter must be conducted in public unless the administrator for good cause consistent with this chapter determines that the hearing will not be so conducted.

SB483,111,4 551.606 Administrative files and opinions. (1) Public register of filings. The administrator shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers, and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective under this chapter or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this chapter or the predecessor act; and interpretative opinions or no action determinations issued under this chapter.

SB483,111,6 (2) Public availability. The administrator shall make all rules, forms, interpretative opinions, and orders available to the public.

SB483,111,12 (3) Copies of public records. The administrator shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person that so requests. A rule adopted under this chapter may establish a reasonable charge for furnishing the record or certification. A copy of the record certified or a certificate by the administrator of a record's nonexistence is prima facie evidence of a record or its nonexistence.

SB483,111,17 551.607 Public records; confidentiality. (1) Presumption of public records. Except as otherwise provided in sub. (2), records obtained by the administrator or filed under this chapter, including a record contained in or filed with a registration statement, application, notice filing, or report, are public records and are available for public examination.

SB483,111,19 (2) Nonpublic records. The following records are not public records and are not available for public examination under sub. (1):