DFI-Sec 4.01 (4) (e) The applicant is currently registered and in good standing with The Securities and Futures the Financial Conduct Authority of Great Britain and has passed the Series 17 Modified General Securities Representative Qualification Examination qualification examination for United Kingdom Representatives representatives, and either the Series 63 Uniform Securities Agent State Law Examination or the Series 66 Uniform Combined State Law Examination, except that the applicant's activities may not include the offer and sale of municipal Securities securities unless the applicant passes the examination listed in sub. (3) (d). (f) The applicant is currently registered and in good standing as an agent with any Canadian stock exchange or with a securities regulator of any Canadian province or territory, or with the Investment Dealers Association Industry Regulatory Organization of Canada and has passed either the Series 37 or Series 38 Canada modules of the Series 7 general securities representative qualification examination for Canadian representatives, and either the Series 63 Uniform Securities Agent State Law Examination or the Series 66 Uniform Combined State Law Examination, except that the applicant's activities may not include the offer and sale of municipal securities unless the applicant passes the examination listed in sub. (3) (d). SECTION 70. DFI-Sec 4.01 (4) (g) is created to read:
DFI-Sec 4.01 (4) (g) The applicant has not been registered as an agent in any state for more than two years but less than five years and has elected to participate in the FINRA Maintaining Qualifications Program pursuant to FINRA Rule 1240(c), and the applicant’s appropriate FINRA qualifying examinations remain valid pursuant to effective participation in the FINRA Maintaining Qualifications Program. The applicant shall be deemed in compliance with the examination requirements of sub. (3) if the applicant elected to participate in the NASAA Examination Validity Extension Program within two years of their agent registration termination and the applicant was registered as an agent in at least one state for at least one year immediately preceding the agent registration termination.
SECTION 71. DFI-Sec 4.01 (5), (7) and Note, and (8) (intro.), (a), (c), and (d) are amended to read:
DFI-Sec 4.01 (5) Any application for registration which is not completed or withdrawn within 6 months from the date it is initially received may be deemed materially incomplete, and the division may issue an order denying the registration or entering a record to the central registration depository that the application was abandoned.
_Hlk168998294(7) A securities agent registration is effective to authorize the licensee [registrant] registrant to effectuate transactions only in the types of categories of securities that the licensee [registrant] registrant has been qualified to sell by passing the examinations specified in sub. (3). Note: The correct word is shown in brackets.
(8) (intro.) For an agent to simultaneously represent in this state more than one broker-dealer pursuant to s. 551.402 (5), Stats., or an issuer pursuant to s. 551.402 (6), Stats., the agent shall meet the following requirements shall be met, in addition to the regular agent registration requirements: (a) Each broker-dealer or issuer that the agent represents shall sign on a form designated by the division in s. DFI-Sec 9.01 (1) (b) DFI-Sec 9, a written grant of permission to the agent to represent the other employers. The written grant of permission shall include the identity of all other securities employment affiliations of the agent and contain a listing of all restrictions on the agent's securities activities imposed by the agent's employers. (c) The agent shall file the manually signed original of the form under par. (a) shall be filed with the division together with a written application, which may be in letter form, on behalf of the agent to simultaneously represent more than one broker-dealer or issuer. The division shall must approve the application in writing prior to the agent's transacting securities business while simultaneously representing more than one broker-dealer or issuer. (d) Written An agent shall provide to each securities customer of the agent written disclosure shall be provided regarding the agent's simultaneous representation of more than one broker-dealer or issuer, including the information in par. (a), to each securities customer of the agent not later than the date of receipt of the confirmation for the first securities transaction for the account of the customer by the agent after dual registration is approved by the division. SECTION 72. DFI-Sec 4.02 (2) and (4) are amended to read:
DFI-Sec 4.02 (2) The aggregate indebtedness of each broker-dealer to all other persons shall may not exceed the levels prescribed under rule 15c3-1 of the securities exchange act Securities Exchange Act of 1934.
(4) The division may by order exempt any broker-dealer from the provisions of this subsection, either unconditionally or upon specified conditions, if by reason of the broker-dealer's membership on a national securities exchange or the special nature of its business and its financial position, and the safeguards that have been established for the protection of customers' funds and securities, the division finds the provisions are not necessary in to protect the public interest or for the protection of investors.
_Hlk168576976SECTION 73. DFI-Sec 4.03 (2), (4), (5), and (6) are amended to read: DFI-Sec 4.03 (2) Every registered broker-dealer shall preserve the records required under sub. (1) according to the schedule provided in rule 17a-4 under the securities exchange act Securities Exchange Act of 1934 in compliance with the requirements of the U.S. securities and exchange commission Securities and Exchange Commission concerning preservation and microfilming of records or other means of by electronic or other means of records retention of records. (4) Every registered broker-dealer shall preserve the branch office records required under sub. (3) according to the schedule provided in rule 17a-4(k) under the securities exchange act Securities Exchange Act of 1934 in compliance with the requirements of the U.S. securities and exchange commission Securities and Exchange Commission concerning preservation and microfilming of records by electronic or other means of records retention of records. (5) This section does not require a registered broker-dealer to make and keep such records of transactions cleared for the licensee [registrant] registrant by another broker-dealer as are customarily made and kept by the clearing broker-dealer.
(6) The division may by order exempt any broker-dealer from all or part of the requirements of this section, either unconditionally or upon specified conditions, if by reason of the special nature of its business, the division finds the issuance of the order application or enforcement of all or part of such requirements is not necessary or appropriate in to the public interest or for the protection of investors.
_Hlk198225180SECTION 74. DFI-Sec 4.04 (3), (4) (intro.) and (a), (7) (c), and (8) are amended to read: DFI-Sec 4.04 (3) Except as provided in subs. (2) and (8), each Each broker-dealer shall file with the division any notice of change of control or change of name, as well as any material change in the information included in the broker-dealer's most recent application for registration, in an amendment to Form BD filed with the central registration depository within 30 days of the date of the change. (4) (intro.) Every broker-dealer shall file with the division all the following reports concerning its net capital and aggregate indebtedness:
(a) Immediate electronic or written notice whenever the net capital of the broker-dealer is less than is required under s. DFI-Sec 4.02 (1), specifying the respective amounts of its net capital and aggregate indebtedness on the date of the notice;. (7) (c) The notification required to be provided to the division under par. (a) or (b) shall be made electronically on Form BR via the central registration depository by broker-dealers eligible to file electronically, and shall be made directly with the division by broker-dealers that are not eligible to file electronically with the central registration depository. (8) Each Annually, each broker-dealer shall file a branch office renewal notice annually with . with the central registration depository by broker-dealers eligible to file electronically, and shall be made directly with the division by broker-dealers that are not eligible to file electronically with the central registration depository.
_Hlk198225210SECTION 75. DFI-Sec 4.05 (3), (4), (7), (8) (intro.), (a), (b), (c) (intro.), 1. (intro.), and 2., (d) to (f), and (g) (intro.) are amended to read: _Hlk168581365DFI-Sec 4.05 (3) A broker-dealer shall may not enter into any contract with a customer if the contract contains any condition, stipulation, or provision binding the customer to waive any rights under ch. 551, Stats., or any rule or order thereunder. Any such condition, stipulation, or provision is void. _Hlk168582035(4) No broker-dealer shall may permit or effect a withdrawal of any part of its net worth, including subordinated indebtedness, whether by redemption, retirement, repurchase, repayment, or otherwise, that would cause its net capital or its aggregate indebtedness to violate s. DFI-Sec 4.02 (1) or (2), without prior written approval of the division. _Hlk168583472(7) No broker-dealer may associate with a bank, savings institution, trust company, savings and loan association, or credit union by contract, agreement or other means for the purpose of that entity publishing or circulating advertising promoting the services offered by the broker-dealer or assisting or providing information to persons to establish an account with the broker-dealer unless one of the following applies: (a) The promotional or account-establishing functions are performed by persons registered as securities agents representing the broker-dealer; or .
(b) The promotional or account-establishing functions are performed by persons who are supervised by one of at least 2 persons at the bank, savings institution, trust company, savings and loan association, or credit union who are officers, branch or assistant branch managers, or other employees occupying a similar office or performing similar functions at each location where promotional or account-opening functions are performed, and the supervisors are registered as securities agents representing the broker-dealer.
(8) (intro.) No broker-dealer shall may conduct broker-dealer services on the premises of a financial institution where retail deposits are taken unless the broker-dealer complies initially and continuously with all of the following requirements:
(a) The broker-dealer services shall be are conducted, wherever practical, in a physical location distinct from the area in which the financial institution's retail deposits are taken. In all situations, the broker-dealer shall identify its services in a manner that clearly distinguishes those services from the financial institution's retail deposit-taking activities. The broker-dealer's name shall be clearly displayed in the area in which the broker-dealer conducts its broker-dealer services. Nothing in this paragraph prohibits the financial institution from carrying out other activities within the designated area, provided that no promotional signs or materials shall be are displayed in the designated area other than those relating to the securities services.
(b) 1. Networking and brokerage affiliate arrangements shall be are governed by a written agreement that sets forth the responsibilities of the parties and the compensation arrangements.
2. Networking and brokerage affiliate arrangements shall provide that supervisory personnel of the broker-dealer and representatives of state securities authorities, where authorized by state law, will be permitted access to the financial institution's premises where the broker-dealer conducts securities services in order to inspect the books and records and other relevant information maintained by the broker-dealer with respect to its securities services.
3. The broker-dealer shall ensure ensures that the networking and brokerage affiliate arrangement clearly outlines the duties and responsibilities of all parties. For purposes of this paragraph, “networking arrangement" and “brokerage affiliate arrangement" mean a contractual or other arrangement between a broker-dealer and a financial institution pursuant to which the broker-dealer conducts securities services on the premises of a financial institution where retail deposits are taken.
(c) (intro.) At or prior to the time that a customer's securities brokerage account is opened by a broker-dealer on the premises of a financial institution where retail deposits are taken, the broker-dealer shall comply with does all of the following.:
1. (intro.) Disclose Discloses to the customer, orally and in writing, all of the following information about the securities products purchased or sold in a transaction with the broker-dealer:
2. Make Makes reasonable efforts to obtain from each customer during the account-opening process, a written acknowledgment of the disclosures required by subd. 1. (d) If securities services include any written or oral representations concerning insurance coverage, other than FDIC or similar insurance coverage, then the broker-dealer provides clear and accurate, written or oral explanations of the coverage shall also be provided to the customers when the representations are first made.
(e) Recommendations Subject to sub. (8m) (c), recommendations by a broker-dealer concerning any non-deposit investment product with a name similar to that of the financial institution shall occur only pursuant to a sales program designed to minimize the risk of customer confusion.
(f) All confirmations and account statements shall indicate clearly that the broker-dealer services are provided by the broker-dealer.
(g) (intro.) Advertisements and sales literature that announce the location of a financial institution where broker-dealer services are provided by the broker-dealer, or that are distributed by the broker-dealer on the premises of a financial institution, shall disclose using the following language or using the shorter, logo format language in par. (h), the information in each sub. (8m) (a), all of the following subdivision paragraphs information about the securities products purchased or sold in a transaction with the broker-dealer: _Hlk171085002SECTION 76. DFI-Sec 4.05 (8) (h) and (i) are renumbered DFI-Sec 4.05 (8m) (a) and (b), and pars. (a) (intro.) and (b) (intro.), as renumbered, are amended to read: DFI-Sec 4.05 (8m) (a) (intro.) The following shorter, logo format disclosures may be used by a broker-dealer in advertisements and sales literature, including material published, or designed for use, in radio or television broadcasts, automated teller machine screens, billboards, signs, posters and brochures, to comply with the requirements of par. (g) sub. (8) (g), provided that the disclosures are displayed in a conspicuous manner: _Hlk168587107(b) (intro.) Provided that the omission of the disclosures required by par. (g) sub. (8) (g) would not cause the advertisement or sales literature to be misleading in light of the context in which the material is presented, the disclosures in par. (g) sub. (8) (g) shall not be not required with respect to messages contained in any of the following: SECTION 77. DFI-Sec 4.05 (8) (j), (k) (intro.), 1., and 2., and (L) are amended to read:
DFI-Sec 4.05 (8) (j) The broker-dealer shall promptly notify notifies the financial institution if any agent of the broker-dealer who is employed by the financial institution is terminated for cause by the broker-dealer.
(k) (intro.) The broker-dealer shall establish establishes written supervisory procedures and a system for applying the procedures. The procedures shall comply with sub. (2) and shall be designed to accomplish certain supervisory functions, including but not limited to the following: 1. Prevention and detection of violations of ch. 551, Stats., and any applicable rules and orders thereunder; . 2. Establishment of a system under which the broker-dealer approves prior to use copies of all advertising used by the financial institution relating to the securities services conducted on the premises of the financial institution for the purpose of ensuring compliance with ss. 551.501 and 551.504, Stats.; and . (L) Notify Notifies the division at the time of filing the notice of opening or change of address of a branch office as required in s. DFI-Sec 4.04 (7), that the office is located on the premises of a financial institution in this state, which notification shall include the identity of the institution. _Hlk198226382SECTION 78. DFI-Sec 4.05 (8m) (c) is created to read: 4.05 (8m) (c) With regard to the sales program described in sub. (8) (e), any marketing and advertising activities of the third-party broker-dealer shall comply initially and continuously with all of the following requirements:
1. The activities must be designed to ensure that the customer understands the difference between the broker-dealer and the financial institution and the difference between the securities offered by the broker-dealer and the depository products offered by the financial institution.
2. The broker-dealer may not market any security in a manner which suggests that it is insured by the Federal Deposit Insurance Corporation (“FDIC”) or National Credit Union Administration (“NCUA”) or guaranteed or endorsed by the financial institution.
3. All advertising for securities transactions or services must be conducted in the name of the third-party broker-dealer and the “doing business as” name for the broker-dealer and in accordance with FINRA advertising rules.
4. All marketing and advertising material is required to display the name of the third-party broker-dealer and must do so prominently in font size and color when compared to the doing business as name and the name of the financial institution.
SECTION 79. DFI-Sec 4.05 (9) (a) is renumbered DFI-Sec 4.05 (9), and, as renumbered, is amended to read:
DFI-Sec 4.05 (9) (a) Except as provided in par. (b), each Each registered broker-dealer engaged in a general securities business that ceases to do business at a principal or branch office located in Wisconsin shall mail to each Wisconsin customer with an account at the office at least 14 days before the cessation of business at the office a written notification that shall contain contains all the following information: _Hlk1686534471. (a) The date on which the office will cease to do business;, 2. (b) A description of the procedure a customer may follow to maintain the customer's account with the broker-dealer, transfer the account to another broker-dealer, or have securities and funds held by the broker-dealer delivered to the customer;,
3. (c) The name and telephone number of a person representing the broker-dealer who may be contacted without expense to the customer to answer questions regarding items in subd. 2.; and, 4. (d) Any additional information that is necessary under the circumstances to clarify the information prescribed in this paragraph.
SECTION 81. DFI-Sec 4.05 (10) and (11) (intro.) and (b) are amended to read:
DFI-Sec 4.05 (10) Each At the time of opening an account, each broker-dealer shall disclose in writing to customers at the time of opening an account, any custody fees, service fees, or maintenance fees that may be charged to the customer and the basis upon which the charges are determined. Customers shall receive written notice at least 45 days prior to the imposition of any new custody, service, maintenance, or similar fees, or any changes to existing fees of that nature.
(11) (intro.) No broker-dealer or agent, in connection with a telephone or electronic solicitation, shall may:
(b) Telephone any person in this state between the hours of 9:00 PM and 8:00 9:00 AM local time at the called person's location without that individual's prior consent.
_Hlk168668327 SECTION 82. DFI-Sec 4.06 (1) (intro.), (a), and (b) are amended to read: DFI-Sec 4.06 (1) (intro.) The following practices are deemed “dishonest or unethical business practices" or “taking unfair advantage of a customer" by a broker-dealer under s. 551.412 (4) (m), Stats., without limiting those terms to the practices specified herein in this subsection: (a) Causing any unreasonable delay in the transmitting of customer orders for execution, the delivery of securities purchased by any of its customers, the payment upon request of free credit balances reflecting completed transactions of any of its customers, or the transfer of a customer's account securities positions and balances to another broker-dealer; .
_Hlk168660370(b) Inducing trading in a customer's account which is excessive in size or frequency in view of the financial resources and character of the account; . _Hlk198288352SECTION 83. DFI-Sec 4.06 (1) (c) 1. is renumbered DFI-Sec 4.06 (1) (c), and, as renumbered, is amended to read: DFI-Sec 4.06 (1) (c) Recommending to a customer the purchase, sale, or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the customer on the basis of information furnished by the customer after reasonable inquiry concerning the customer's investment objectives, financial situation. and needs, and any other information known by the broker-dealer;. For purposes of making purchase recommendations to a customer with respect to direct participation program securities, the following investor financial income and net worth suitability standards do not preclude the use of any other information, including the criteria in this paragraph, to establish suitability or lack of suitability in specific instances:
1. The customer has an annual gross income of at least $70,000 and a net worth of at least $70,000 exclusive of the customer's principal residence and its furnishing and personal use automobiles.
2. The customer has a net worth of at least $250,000, exclusive of the customer's principal residence and its furnishings and personal use automobiles.
_Hlk168665024SECTION 85. DFI-Sec 4.06 (1) (d) to (u) are amended to read: _Hlk168998754DFI-Sec 4.06 (1) (d) Executing a transaction on behalf of a customer without authority to do so, except that use by a broker-dealer of a negative response letter in conformity with rule 2510(d)(2) of the financial industry regulatory authority 3260(D)(2) of the Financial Industry Regulatory Authority is not a violation of this rule;. (e) Executing a transaction for the account of a customer upon instructions from a 3rd party without first having obtained written 3rd party authorization from the customer;.
(f) Exercising any discretionary power in effecting a transaction for a customer's account without first obtaining written discretionary authority from the customer, unless the discretionary power relates solely to the time or price for the execution of orders pursuant to rule 2510(d)(1) 3260(d) of the financial industry regulatory authority; Financial Industry Regulatory Authority.
(g) Extending, arranging for, or participating in arranging for credit to a customer in violation of the securities exchange act Securities Exchange Act of 1934 or the regulations of the federal reserve board;.
(h) Executing any transaction in a margin account without obtaining from its customer a written margin agreement not later than 15 calendar days after the initial transaction in the account;.
(i) Failing to segregate customers' free securities or securities in safe-keeping;.
(j) Hypothecating a customer's securities without having a lien thereon unless written consent of the customer is first obtained, except as permitted by rules of the U.S. securities and exchange commission; Securities and Exchange Commission.
(k) Charging its customer an unreasonable commission or service charge in any transaction executed as agent for the customer;.
(L) Entering into a transaction for its own account with a customer with an unreasonable mark-up or mark-down;.
