DFI-Sec 5.09 (3) The division may deny, suspend, or revoke the registration of an investment adviser or investment adviser representative, if the registrant is not of good business repute or conducts business in violation of such rules and regulations as the division prescribes for the protection of investors, customers, or prospective customers.
SECTION131. DFI-Sec 5.10 (1) is amended to read:
DFI-Sec 5.10 (1) Each investment adviser shall file a copy of its current form ADV Parts 1 and II 2 electronically with the Investment Adviser Registration Depository investment adviser registration depository.
SECTION 132. DFI-Sec 5.10 (3) is repealed.
SECTION 133. DFI-Sec 5.12 is repealed.
_Hlk169517897SECTION 134. DFI-Sec 5.13 (1) (intro.) and (2) (intro.) and (a) are amended to read: DFI-Sec 5.13 (1) (intro.) For purposes of ss. 551.403 (2) and 551.404 (2), Stats., an investment adviser or an investment adviser representative is exempt from the registration requirement if its only transactions effected in this state are with any of the following: _Hlk169518445(2) (intro.) A solicitor is not required to be registered as an investment adviser or as an investment adviser representative if the solicitor is in compliance with all requirements of s. DFI-Sec 5.06 (25) DFI-Sec 5.066, and the solicitor satisfies par. (a) or (b) all of the following. (a) Provides solicitation activities that are impersonal in nature as set forth in s. DFI-Sec 5.06 (25) s. DFI-Sec 5.066 and the solicitor to whom a cash fee or any other economic benefit is paid for such referral does not trigger any of the following as being a person: _Hlk1695186161. Subject to an order of the U.S. Securities & Exchange Commission issued under section 203(f) of the Investment Advisers Act of 1940;. 2. Subject to an order of the administrator, the securities administrator of any other state, the U.S. Securities and Exchange Commission, or any self regulatory self-regulatory organization denying, suspending, or revoking registration as a broker-dealer, agent, investment adviser, or investment adviser representative or barring the person from the securities or advisory industry or associating or affiliating with the securities or advisory industry, entered after notice and opportunity for hearing;.
3. Convicted within the previous ten years of any felony, or any misdemeanor involving conduct described in section 203(e)(2)(A) through (D) of the Investment Advisers Act of 1940;.
4. Convicted within the previous ten years of any felony, or any misdemeanor involving conduct described in s. 551.412 (4) (c), Stats. ; . 5. Found by the U.S. Securities & Exchange Commission to have engaged, or has been convicted of engaging in, any of the conduct specified in section 203(e)(1), (5) or (6) of the Investment Advisers Act of 1940;.
6. Found by the administrator to have engaged, or has been convicted of engaging in, any of the conduct specified in s. 551.412 (4) (a), (b) or (f), Stats. ; . 7. Subject to an order, judgment, or decree described in section 203(e)(4) of the Investment Advisers Act of 1940;.
8. Subject to an order, judgment, or decree described in s. 551.412 (4) (d), Stats. SECTION 135. DFI-Sec 6.01 is amended to read:
DFI-Sec 6.01 An issuer of securities or any person who is an officer, director, or controlling person of the issuer is deemed to employ a “device, scheme, or artifice to defraud” the purchasers of the securities within the meaning of s. 551.501 (1), Stats., if the person applies or authorizes or causes to be applied any material part of the proceeds from the sale of the securities in any material way contrary to the purposes specified in the prospectus used in the offering of the securities and not reasonably related to the business of the issuer as described in the prospectus. For the purposes of this chapter, “prospectus” includes any written or oral representations, advertising, written offering memorandum, or similar document, in printed or electronic form, that is related to or used in the offering of the securities. SECTION 136. DFI-Sec 6.02 is amended to read:
DFI-Sec 6.02 A person authorizing or causing the distribution of securities as a stock dividend by a corporation other than the issuer, without registration of the securities under ch. 551, Stats., or the securities act Securities Act of 1933, is deemed to employ a "device, scheme or artifice to defraud" the purchasers of the securities in broker-dealer transactions, within the meaning of s. 551.501 (1), Stats., if any of the following apply: (1) The issuer of the securities was organized, or the securities were acquired, for the purpose of the distribution or in connection therewith with the distribution, either by the distributing corporation or by any person in control of, controlled by, or under common control with, the distributing corporation; or.
(2) The issuer has nominal assets or income at the time of the distribution; and if the person has reason to believe that the distribution will be followed by transactions in the securities effected through broker-dealers.
SECTION 137. DFI-Sec 6.03 is amended to read:
DFI-Sec 6.03 An issuer of outstanding securities registered under s. 551.303 or 551.304, Stats., or transactions in which are exempted from registration under s. DFI-Sec 2.02 (9) (o), or any controlling person of the issuer, is deemed to employ a “device, scheme or artifice to defraud" the purchasers of the securities within the meaning of s. 551.501 (1), Stats., if the issuer fails to provide adequate facilities for the transfer and delivery of the securities to the purchasers thereof without unreasonable delay, either directly or through its transfer agent for the securities. SECTION 138. DFI-Sec 6.05 (1) (intro.) is amended to read:
DFI-Sec 6.05 (1) (intro.) An Except as provided in sub. (2e), an issuer whose equity securities of any class have been registered under ch. 551, Stats., or predecessor laws or section 12 of the securities exchange act Securities Exchange Act of 1934, and which, on the date of the initial offer, notice, or solicitation relating to the proposed transaction, are held of record by 100 or more persons in this state, which number of holders constitutes 20% or more of the total number of holders of record of the securities, or any affiliated person of the issuer, is deemed to employ a “device, scheme or artifice to defraud" holders of the securities within the meaning of s. 551.501 (1), Stats., or to engage in an “act, practice or course of business which operates or would operate as a fraud or deceit" upon the holders, within the meaning of s. 551.501 (3), Stats., if the issuer or person enters into any transaction (including a series of transactions) in this state involving a purchase of any equity security of the issuer, other than an arm's length purchase by a person not affiliated with the issuer, which transaction has, or may have, either any of the following effects described in sub. (2) unless: SECTION 139. DFI-Sec 6.05 (1) (a) to (e) are renumbered DFI-Sec 6.05 (2e) (a) to (e) and DFI-Sec 6.05 (2e) (a) 1. (intro.), a., b., and c., (b), (c), and (d), as renumbered, are amended to read:
DFI-Sec 6.05 (2e) (a) 1. (intro.) The terms of the transaction, including compensation for the equity securities to be purchased, are fair to all holders of the securities. The terms of the transaction shall be are presumed to be fair if:
_Hlk170469578a. The compensation is no less than that independently recommended by 2 qualified, independent appraisers after reasonable investigation considering all relevant factors, and the issuer's board of directors states that the compensation is fair to security holders and was determined in good faith; . b. The latest public offering of the securities occurred more than 10 years prior to the transaction, or the compensation is greater than the public offering price;.
c. More than 50% of the securities held by persons not affiliated with the issuer approve the transaction; and.
(b) The issuer or person mails or delivers to each holder of record of the securities and files with the division, at least 20 days prior to any purchase or shareholder vote authorizing the purchase (if required), a complete and accurate description of the transaction, including, without limitation, the identity of the parties to the transaction, the source and amount of funds, the purpose of the transaction, any material plans or proposals concerning the issuer, any contracts, arrangements, or understanding involving the issuer with respect to its equity securities, a statement of the intentions of all affiliated persons (if known), current financial information concerning the issuer including pro forma data showing the effect of the transaction, federal tax consequences of the transaction to security holders and the issuer, the nature of the market for the securities before and after the transaction, the price at which purchases will be made and the basis therefor, summaries in reasonable detail of all appraisal reports or opinions (including any contrary or additional to those relied upon) and a statement that copies of the reports or opinions will be provided upon request, a statement of all projected expenses in connection with the transaction, and all other material information; .
(c) If the transaction includes a tender offer or request, or invitation for tenders, the offeror shall:
1. Permit Permits tenders to be withdrawn at any time within 7 days and after 60 days from the date of the offer;.
2. Purchase Purchases on a pro rata basis those securities tendered within 10 days from the date of the offer, if more valid tenders are received within that period than the offeror has agreed to accept; and.
3. Purchase Purchases on substantially identical terms and for identical compensation from all validly tendering security holders;.
(d) Security holders of the class not affiliated with the issuer shall be are not treated not less favorably in connection with the transaction than any who are so affiliated; and.
SECTION 140. 6.05 (1) (ae) and (am) is created to read:
6.05 (1) (ae) Causing a class of equity securities of the issuer to be subject to delisting from a national securities exchange registered under the securities exchange act Securities Exchange Act of 1934, or cease to be authorized to be quoted in NASDAQ.
(am) Causing a class of equity securities of the issuer to be eligible for termination of registration, or suspension of reporting requirements, under the securities exchange act of 1934 or under ch. 551, Stats. SECTION 141. DFI-Sec 6.05 (2) is repealed.
SECTION 142. DFI-Sec 6.05 (2e) (intro.) and (f) are created to read:
6.05 (2e) (intro.) An issuer is not deemed to employ a “device, scheme or artifice to defraud” or to engage in an “act, practice or course of business which operates or would operate as a fraud or deceit” as described under sub. (1) if any of the following situations apply:
(f) The transaction meets the requirement of rule 13e-3 (g) (2) under the Securities Exchange Act of 1934.
SECTION 143. DFI-Sec 7.01 (2) (d) is amended to read:
SECTION 144. DFI-Sec 7.01 (3) (c) 1. and 2. and (d) 1. and 2. are amended to read:
_Hlk170474402DFI-Sec 7.01 (3) (c) 1. Reasonable transportation costs that may not exceed coach class air fare; . 2. Ground transportation costs that on a per day basis may not exceed the daily rate charged by a national car rental agency in that locale for a compact-sized car; and.
_Hlk170475704(d) 1. Reasonable transportation costs that may not exceed coach class air fare ; . 2. Ground transportation costs that are on a per day basis may not exceed the daily rate charged by a national car rental agency in that locale for a compact-sized car; and.
SECTION 145. DFI-Sec 7.01 (5) (d) is repealed.
SECTION 146. DFI-Sec 7.01 (6) (h) is amended to read:
DFI-Sec 7.06 (6) (h) Delinquent filing of investment company report of sales on Form RS-IC Uniform Investment Company Notice Filling Form NF $100.
SECTION 147. DFI-Sec 7.01 (8) (a) and (c) are repealed.
SECTION 148. DFI-Sec 7.02 (1) (c) is amended to read:
7.02 (1) (c) A circular, form letter, or other advertising record to be used in connection with a going-private transaction that is subject to the filing requirement in s. DFI-Sec 6.05 (1) (b) DFI-Sec 6.05 (2e) (b). SECTION 149. DFI-Sec 7.05 (2) (a), (b) and (c) are amended to read:
DFI-Sec 7.05 (2) (a) Personnel files of office employees, former employees and job applicants; .
(b) Communications with legal counsel;.
(c) Records obtained under a pledge or reasonable expectation of confidentiality; .
SECTION 150. DFI-Sec 7.06 (1) (intro.) and (a) are amended to read:
DFI-Sec 7.06 (1) (intro.) All financial statements required by ch. 551, Stats., or these rules shall are subject to all of the following, and must be: a(a) Prepared in accordance with generally accepted accounting principles; and. SECTION 151. DFI-Sec 8.01 (intro.) and (1) are amended to read:
DFI-Sec 8.01 (1) (intro.) Every request for a hearing shall be in the form of a written petition filed with the division. A petition is considered filed when it is received by the Division. A petition for a hearing to review an order shall comply with all of the following:
(1) Plainly admit or deny each specific allegation, finding or conclusion in the order and incorporated papers. However, if the petitioner lacks sufficient knowledge or information to permit an admission or denial, the petition shall so state, and that statement shall have the effect of a denial; and.
DFI-Sec 8.02 A notice of hearing shall state the names of the parties to the hearing and the name of the hearing examiner. Unless otherwise provided in the notice of hearing, the decision of the hearing examiner shall be the final decision of the division. Every party so directed in the notice of hearing shall file an answer plainly admitting or denying each specific allegation and setting forth affirmative defenses. The party's answer shall also include notice of any motions specified in s. 802.06, Stats., that the party intends to present. Unless a different time is provided in the notice of hearing, or by the designated hearing examiner for cause shown, every answer shall be filed not later than 10 business days before the date of the hearing, or if a prehearing conference has been scheduled, not later than 5 business days before the date of the prehearing conference. Affirmative defenses, and motions required to be submitted with the party's answer, not raised by in the answer as herein provided may be deemed waived. SECTION 153. DFI-Sec 8.04 is amended to read:
DFI-Sec 8.04 All pleadings, briefs, decisions and orders filed or issued in connection with any administrative proceeding under this chapter shall be captioned “Before the division State of Wisconsin, Department of Financial Institutions, Division of Securities, State of Wisconsin” and shall be entitled “In the Matter of (name of party or parties), Petitioner (or Respondent).”
DFI-Sec 8.05 (2) A written transcript of proceedings shall be prepared upon the written request in writing of any of the following:
(a) Of any Any party, for the purpose of seeking a rehearing or judicial review; or .
(b) Of any Any person, upon tender of the estimated costs of transcription, adjusted to reflect the actual costs when determined.
DFI-Sec 8.06 A copy of every order issued without a hearing shall be sent promptly by certified mail to each party named in the order at his or her last known address or to the party's attorney of record, or shall be personally served upon the party or the party's attorney of record as provided in s. 227.48, Stats., and such service shall be considered a reasonable step to give notice, as that term is used in s. 551.611 (3) (a), Stats. SECTION 156. DFI-Sec 8.07 is amended to read:
DFI-Sec 8.07 Every order or other document is effective and issued when signed. Mailing of any order or other document under this chapter Unless required by rule or statute to be served by other means, mailing under this chapter of any order or other document by the division through first class mail to the last known address of any person, or personal service, constitutes effective service and notice thereof to the person, provided that if. If the person is a corporation, service by certified mail mailing by first class mail to the corporation’s registered agent at the registered agent’s last known address also constitutes effective service and notice to the corporation.
SECTION 157. DFI-Sec 9.01 and Note are repealed and recreated to read:
DFI-Sec 9.01 Forms.
1(1) The following forms are prescribed for use under ch. 551, Stats., and may be accessed from the division of securities website at https://dfi.wi.gov: a(a) Securities registration application, notice filing and reporting forms: 11. Forms issued by the North American Securities Administrators Association: aa. U-1. Uniform application to register securities. bb. U-2. Uniform consent to service of process. cc. U-2A. Uniform corporate resolution. dd. U-7. Small corporate offering registration (SCOR) form.
