551.33
551.33
Post-licensing provisions. 551.33(1)
(1) Every licensed broker-dealer, agent and investment adviser shall make and keep all accounts, correspondence, memoranda, papers, books and other records which the division by rule prescribes. All records required shall be preserved for 3 years unless the division by rule prescribes otherwise for particular types of records. All required records shall be kept within this state or shall, at the request of the division, be made available at any time for examination by the division either in the principal office of the licensee or by production of exact copies thereof in this state.
551.33(2)
(2) Every licensed broker-dealer and investment adviser shall file such reports as the division by rule prescribes.
551.33(3)
(3) If the information contained in any application for license or other document filed with the division or an organization designated under
s. 551.32 (1) (a) is or becomes inaccurate or incomplete in any material respect, the licensee shall promptly file a correcting amendment.
551.33(4)
(4) The division shall make periodic examinations, within or without this state, of the business and records of each licensed broker-dealer and investment adviser, at such times and in such scope as the division determines. The examinations may be made without prior notice to the broker-dealer or investment adviser. The expense reasonably attributable to any such examination shall be paid by the broker-dealer or investment adviser whose business is examined, but the expense so payable shall not exceed an amount which the division by rule prescribes. For the purpose of avoiding unnecessary duplication of examinations, the division, insofar as it is practicable in administering this subsection, may cooperate with securities administrators of other states, the securities and exchange commission, and any national securities exchange or national securities association registered under the securities exchange act of 1934. The division shall not make public the information obtained in the course of examinations, except when the division's duty under this chapter requires the division to take action regarding any broker-dealer or investment adviser or to make the information available to one of the organizations specified in this subsection, or except when called as a witness in any criminal or civil proceeding.
551.33(5)
(5) The division may by rule prohibit unreasonable charges, profits, commissions or other compensation of broker-dealers and investment advisers.
551.33(6)
(6) The division may by rule establish standards for the conduct of business by broker-dealers, agents, investment advisers and clearing corporations as defined in
s. 408.102 (1) (c).
551.33(7)
(7) No licensed broker-dealer shall be subject to
s. 138.05 (1) (a) with respect to any debit balance in a customer account if the debit balance is payable on demand and the only collateral for the balance is securities.
551.34
551.34
Denial, suspension and revocation of licenses. 551.34(1)(1) The division may by order deny an application for, or postpone the effective date of, a license or suspend or revoke any license or may censure the licensee, if the division finds that the order is in the public interest and that the applicant or licensee or, in the case of a broker-dealer or investment adviser, any partner, officer or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser:
551.34(1)(a)
(a) Has filed an application for license which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
551.34(1)(b)
(b) Has wilfully violated or wilfully failed to comply with any provision of this chapter or a predecessor law or the securities act of 1933, the securities exchange act of 1934, the investment advisers act of 1940, the investment company act of 1940, or any rule under any of such statutes or any order thereunder of which he or she has notice;
551.34(1)(c)
(c) Subject to
ss. 111.321,
111.322 and
111.335, has been convicted, within the past 10 years, of any misdemeanor involving a security or any aspect of the securities business, or any felony;
551.34(1)(d)
(d) Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities business;
551.34(1)(e)
(e) Is the subject of an order of the division denying an application or suspending or revoking a license as a broker-dealer, agent or investment adviser;
551.34(1)(f)
(f) Is the subject of an order entered within the past 5 years by the securities administrator of any other state or by the securities and exchange commission denying, suspending or revoking the person's registration or license as a broker-dealer, agent or investment adviser, or is the subject of an order of the securities and exchange commission or of a securities exchange or association registered under the securities exchange act of 1934 suspending or expelling such person from a securities exchange or association or forbidding the association or affiliation of the person with a broker-dealer or investment adviser, or is the subject of a U.S. postal service fraud order. The division may not institute a revocation or suspension proceeding under this paragraph more than one year from the date of the order relied on, and the division may not enter an order under this paragraph on the basis of an order under another state law or federal law unless the order was based on facts which would currently constitute a ground for an order under this section;
551.34(1)(g)
(g) Has engaged in dishonest or unethical practices in the securities or investment advisory business or has taken unfair advantage of a customer;
551.34(1)(h)
(h) Is insolvent, in the sense that liabilities exceed assets or that the person cannot meet obligations as they mature, or is in such financial condition that the person cannot continue in business with safety to customers, or the person does not have sufficient financial responsibility to carry out the obligations incident to the person's operations;
551.34(1)(i)
(i) Is not qualified on the basis of such factors as training, experience and knowledge of the securities business;
551.34(1)(j)
(j) Has failed reasonably to supervise agents or, in the case of an investment adviser, employes, to assure their compliance with this chapter, but no person may be deemed to have failed in such supervision if there have been established written procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any violations of statutes, rules or orders and if the person has reasonably discharged the duties incumbent upon the person by reason of such procedures and system;
551.34(1)(k)
(k) Has failed to pay the proper filing fee, but the division shall vacate any such order when the deficiency has been corrected;
551.34(1)(L)
(L) Is selling or has sold, or is offering or has offered for sale, in this state securities through any unlicensed agent or for any dealer or issuer with knowledge that the dealer or issuer has not complied with this chapter;
551.34(1)(m)
(m) Has made any material misrepresentation to or withheld or concealed any material fact from the division, or has refused to furnish information reasonably requested by the division; or
551.34(1)(n)
(n) Has not complied with the conditions or limitations of a license issued under this chapter.
551.34(2)
(2) The enumeration of the causes stated in
sub. (1) shall not be exclusive and the division may deny an application or suspend or revoke any license or censure any licensee for any cause whether similar to or different from these causes when necessary or appropriate in the public interest or for the protection of investors.
551.34(3)
(3) The division may not institute a suspension or revocation proceeding on the basis of a fact or transaction known to the division when the license was issued unless the proceeding is instituted within 180 days following issuance of the license.
551.34(4)
(4) If the public interest or the protection of investors so requires, the division may by order summarily deny or suspend a license or postpone the effective date of a license. Upon the entry of the order, the division shall serve upon all named parties a copy of the order and notify the parties of their right to request a hearing.
551.34(5)
(5) If the division finds that any licensee or applicant is no longer in existence or has ceased to do business as a broker-dealer, agent or investment adviser, or is subject to an adjudication of mental incompetence or to the control of a committee, conservator or guardian, or cannot be located after reasonable search, the division may on order issued summarily revoke the license or deny the application.
551.34(6)
(6) Withdrawal from the status of a licensed broker-dealer, agent or investment adviser becomes effective 30 days after receipt by the division or by an organization designated by rule of the division under
s. 551.32 (1) (a) of an application to withdraw or within such shorter period as the division determines, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within 30 days after the application is filed. If a proceeding is pending or instituted, withdrawal becomes effective at such time and upon such conditions as the division by order determines. If no proceeding is pending or instituted and withdrawal automatically becomes effective, the division may institute a revocation or suspension proceeding for the grounds specified under
sub. (1) (b),
(g),
(m) or
(n) within one year after withdrawal became effective and enter a revocation or suspension order as of the last date on which the license was in effect.
551.34(7)
(7) No order may be entered under this section except under
sub. (4) or
(5) without appropriate prior notice to the applicant or licensee, as well as the employer or prospective employer if the applicant or licensee is an agent. In cases of denial orders written findings of fact and conclusions of law are required only if requested by the applicant.
FRAUDULENT PRACTICES
551.41
551.41
Sales and purchases. It is unlawful for any person, in connection with the offer, sale or purchase of any security in this state, directly or indirectly:
551.41(1)
(1) To employ any device, scheme or artifice to defraud;
551.41(2)
(2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or
551.41(3)
(3) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
551.41 Annotation
Intent to defraud is not necessary element under (2). State v. Temby, 108 W (2d) 521, 322 NW (2d) 522 (Ct. App. 1982).
551.41 Annotation
Meaning of "sale" discussed. State v. Mattes, 175 W (2d) 572, 499 NW (2d) 711 (Ct. App. 1993).
551.41 Annotation
Section 551.41 does not create private right of action. 551.59 (1) contains civil remedy for violation of 551.41 (2), and limitation period in 551.59 (5) applies. Colonial Bank & Trust Co. v. American Bankshares, 478 F Supp. 1186 (1979).
551.41 Annotation
See note to 895.01, citing Continental Assur. v. American Bankshares Corp. 483 F Supp. 175 (1980).
551.41 Annotation
State was not required to prove that defendant entered into investment contracts with purpose or intent of defrauding investors. Van Duyse v. Israel, 486 F Supp. 1382 (1980).
551.42
551.42
Market manipulation. It is unlawful for any person, directly or indirectly, in this state:
551.42(1)
(1) To effect any transaction in a security which involves no change in the beneficial ownership thereof, or to enter any order or orders for the purchase or sale of any security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale or purchase of the security, have been or will be entered by or for the same or affiliated persons, for the purpose of creating a false or misleading appearance of active trading in the security or a false or misleading appearance with respect to the market for the security;
551.42(2)
(2) To effect, alone or with one or more other persons, a series of transactions in any security creating actual or apparent active trading in the security or raising or depressing the price of the security, for the purpose of inducing the purchase or sale of the security by others; or
551.42(3)
(3) To induce the purchase or sale of any security by the circulation or dissemination of information to the effect that the price of the security will or is likely to rise or fall because of market operations of any one or more persons conducted for the purpose of raising or depressing the price of the security, if he or she is selling or offering to sell or purchasing or offering to purchase the security or is receiving a consideration, directly or indirectly, from any such person.
551.42 History
History: 1981 c. 53 s.
43.
551.43
551.43
Broker-dealer activities. It is unlawful for a broker-dealer to effect in this state any transaction in, or to induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance, including any fictitious quotation. The division may by rule define the terms "manipulative, deceptive or other fraudulent device or contrivance".
551.43 History
History: 1995 a. 27.
551.44
551.44
Advisory activities. It is unlawful for any person who receives any consideration from another person primarily for advising the other person as to the value of securities or their purchase or sale, whether through the issuance of analyses or reports or otherwise, in this state, to employ any device, scheme or artifice to defraud the other person; or engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon the other person; or take or have custody of any securities or funds of any client unless the adviser is licensed as a broker-dealer under this chapter. The division may adopt rules defining the terms used in this section.
551.44 History
History: 1981 c. 53;
1995 a. 27.
GENERAL PROVISIONS
551.51(1)(1) This chapter shall be administered by the division.
551.51(2)
(2) It is unlawful for the division or any officers or employes of the division to use for personal benefit any information which is filed with or obtained by the division or an organization designated under
s. 551.32 (1) (a) and which is not generally available to the public. Nothing in this chapter authorizes the division or any officers or employes of the division to disclose any confidential information except among themselves or to other securities administrators or regulatory authorities or when necessary or appropriate in a proceeding or investigation under this chapter. No provision of this chapter either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the division or any officers or employes of the division.
551.52
551.52
Fees and expenses. 551.52(1)(a)(a) There shall be a filing fee of $750 for every registration statement filed under
s. 551.25 or
551.26. When a registration statement is denied or withdrawn before the effective date or a pre-effective stop order is entered under
s. 551.28, the filing fee shall be retained.
551.52(1)(b)
(b) An indefinite amount of securities shall be registered under a registration statement relating to redeemable securities issued by an open-end management company or a face amount certificate company, as defined in the investment company act of 1940, and the applicant shall pay the fee under
par. (a). The registrant also shall, within 60 days after the end of each fiscal year during which its registration statement is effective and within 60 days after the registration is terminated, file a report on a form prescribed by rule of the division in which the registrant does any of the following:
551.52(1)(b)1.
1. Elects not to report the information under
subd. 2. and instead pays a fee of $1,500.
551.52(1)(b)2.
2. Reports the amount of securities sold to persons in this state during the preceding fiscal year or, if the registration is terminated, during the portion of the preceding fiscal year during which the registration was effective, and pays a fee of 0.05% of the dollar amount of the securities sold to persons in this state, but not less than $150 nor more than $1,500.
551.52(2)
(2) Every applicant for an initial or renewal license under
s. 551.32 shall pay a filing fee of $200 in the case of a broker-dealer, $30 in the case of an agent representing a broker-dealer or issuer or a person representing an investment adviser, and $200 in the case of an investment adviser. A broker-dealer or investment adviser maintaining a branch office within this state shall pay an additional filing fee of $30 for each branch office. When an application is denied or withdrawn, the filing fee shall be retained.
551.52(3)
(3) The expenses reasonably attributable to the examination of any matter arising under this chapter shall be charged to the applicant, registrant or licensee involved, but the expenses so charged shall not exceed such maximum amounts as the division by rule prescribes.
551.52(4)
(4) The division may by rule require the payment of prescribed fees for delinquent or materially deficient filings of information or documents required under this chapter to be filed with the division or an organization designated under
s. 551.32 (1) (a).
551.52(5)
(5) All fees and expenses collected under this section shall be paid into the state treasury.
551.53(1)(1) It is unlawful for any person, in connection with the offer, sale or purchase of any security in this state, to publish, circulate or use any advertising:
551.53(1)(a)
(a) That contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
551.53(1)(b)
(b) That has not been filed with the division not later than the date of publication or circulation, except as the division may otherwise provide by rule or order.
551.53(2)
(2) The division may by rule or order prohibit the publication, circulation or use of any advertising deemed false or misleading.
551.54
551.54
Misleading filings. It is unlawful for any person to make or cause to be made, in any document filed with the division or filed under
s. 551.32 (1) (a) with an organization designated by the division or in any proceeding under this chapter, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.
551.54 History
History: 1981 c. 53;
1995 a. 27.
551.55
551.55
Unlawful representations. Neither the fact that a registration statement or an application for a license has been filed nor the fact that a security is effectively registered or a person is licensed constitutes a finding by the division that any document filed under this chapter is true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the division has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer or client any representation inconsistent with the foregoing.
551.55 History
History: 1995 a. 27.
551.56
551.56
Investigations and subpoenas. 551.56(1)(a)
(a) Make such public or private investigations within or without this state as are necessary to determine whether any person has violated or is about to violate this chapter or any rule or order under this chapter, or to aid in the enforcement of this chapter or in the prescribing of rules and forms under this chapter;
551.56(1)(b)
(b) Require or permit any person to file a statement in writing, under oath or otherwise as the division determines, as to all the facts and circumstances concerning the matter being investigated;
551.56(1)(c)
(c) Publish information concerning any violation of this chapter or any rule or order under this chapter or concerning securities, or practices in the sale of securities, which appear or tend to be unfair, inequitable or fraudulent; and
551.56(1)(d)
(d) Hold hearings, upon reasonable notice, and issue orders on the basis thereof, in respect of any matter arising out of the administration of this chapter.
551.56(2)
(2) For the purpose of any investigation, hearing or proceeding under this chapter, the division or any officer designated by the division may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence and require the production of any books, papers, correspondence, memoranda, agreements or other documents or records which the division deems relevant or material to the inquiry. Failure to obey a subpoena or give evidence may be dealt with in accordance with
s. 885.12.
551.56(3)(a)(a) No person is excused from attending and testifying or from producing any document or record before the division, or in obedience to the subpoena of the division or any officer designated by the division, or in any proceeding instituted by the division, on the ground that the testimony or evidence required of the person may tend to incriminate him or her or subject the person to a penalty or forfeiture; but no individual may be prosecuted or subjected to any penalty or forfeiture for or on account of his or her testimony or evidence, after claiming his or her privilege against self-incrimination, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.
