551.31(4)(c)2.
2. When an investment adviser representative licensed in this state employed by a federal covered adviser terminates his or her employment, the investment adviser representative shall promptly file a notice with the division in accordance with rules promulgated by the division.
551.31(4m)
(4m) It is unlawful for any federal covered adviser to transact investment advisory business in this state unless one of the following conditions is met:
551.31(4m)(b)
(b) The federal covered adviser has no place of business in this state, and, during the preceding 12-month period, the adviser has not had more than 5 clients who are residents of this state, exclusive of clients described under
s. 551.23 (8) (a) to
(f).
551.31(5)
(5) A bank, savings institution or trust company not licensed as a broker-dealer may execute orders for the purchase or sale of securities as agent for the purchaser or seller thereof in accordance with rules adopted by the division.
551.31(6)
(6) It is unlawful for any licensed broker-dealer, agent or investment adviser, or any person directly or indirectly controlling a licensed broker-dealer or investment adviser, to transact business in this state if the licensee is in violation of this chapter, or any rule under this chapter, or any order under this chapter of which the licensee or person has notice, or if the information contained in the licensee's or person's application for license, as of the date of such transactions, is incomplete in any material respect or is false or misleading with respect to any material fact.
551.31(7)
(7) An agent may make offers and sales of securities for more than one issuer that is a limited partnership or for more than one issuer that is an investment company without obtaining a separate license for each limited partnership or investment company represented by the agent if all of the following conditions are satisfied:
551.31(7)(a)
(a) The limited partnerships have the same general partner, or the investment companies have the same investment adviser.
551.31(7)(b)
(b) An application to amend the agent's license to name each additional limited partnership or investment company as the agent's employer is filed with and approved by the division before the agent makes any offers or sales in this state on behalf of the additional limited partnership or investment company.
551.31 Annotation
Violators of subs. (1) and (3) are subject to strict liability. What constitutes transacting business as an investment advisor in violation of sub. (3) is discussed. Garretto v. Elite Advisory Services, Inc.,
793 F. 2d 796 (1992).
551.32
551.32
Licensing and notice filing procedure. 551.32(1)(a)(a) A broker-dealer, agent, investment adviser or investment adviser representative may obtain an initial or renewal license by filing with the division, or an organization which the division by rule designates, an application together with a consent to service of process under
s. 551.65 (1).
551.32(1)(b)
(b) An application under
par. (a) shall contain whatever information the division by rule requires concerning the applicant's form and place of organization, proposed method of doing business and financial condition, the qualifications and business history of the applicant, including, in the case of a broker-dealer or investment adviser, the qualifications and business history of any partner, officer, director, or any person occupying a similar status or performing similar functions or any controlling person, any injunction or administrative order or conviction of a misdemeanor involving securities and any conviction of a felony, and any other matters which the division determines are relevant to the application. The division may by rule or order require an applicant for an initial license to publish an announcement of the application in one or more specified newspapers published in this state.
551.32(1)(bm)1.1. In addition to information required under
par. (b) and except as provided in
par. (bs), an application under
par. (a) shall contain the following:
551.32(1)(bm)1.a.
a. In the case of an individual, the individual's social security number.
551.32(1)(bm)1.b.
b. In the case of a person who is not an individual, the person's federal employer identification number.
551.32(1)(bm)2.
2. The division may not disclose any information received under
subd. 1. to any person except as follows:
551.32(1)(bm)2.a.
a. The division may disclose information under
subd. 1. to the department of revenue for the sole purpose of requesting certifications under
s. 73.0301.
551.32(1)(bm)2.b.
b. The division may disclose information under
subd. 1. a. to the department of workforce development in accordance with a memorandum of understanding under
s. 49.857.
551.32(1)(bs)1.1. If an applicant for the issuance or renewal of a license under this section is an individual who does not have a social security number, the applicant, as a condition of applying for or applying to renew the license, shall submit a statement made or subscribed under oath or affirmation to the division that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of workforce development.
551.32(1)(bs)2.
2. Any license issued or renewed in reliance upon a false statement submitted by an applicant under
subd. 1. is invalid.
551.32(1)(c)
(c) Licensing under this subchapter is effective 30 days after an application is filed, other than for an application for license as an agent for an issuer of securities exempted under
s. 551.23 (10) or
(19) in which case licensing is effective 10 business days after the application is filed or such earlier time as the division permits, except:
551.32(1)(c)1.
1. Licensing is not effective if an order is in effect, or a proceeding is pending, under
s. 551.34;
551.32(1)(c)2.
2. If the division makes a written request for additional information relevant to the application within 30 days after the application is filed, the licensing is not effective until 30 days after the information is filed in response to that written request or in response to any subsequent written request for information by the division within 30 days after a response to a written request is filed;
551.32(1)(c)3.
3. If an amendment to a pending application is filed, licensing is effective 30 days after the amendment is filed; and
551.32(1)(c)4.
4. The division may by rule or order specify an earlier effective date.
551.32(1m)(a)(a) If required under
s. 551.31 (4m), a federal covered adviser shall file with the division a notice filing together with the fee prescribed under
s. 551.52 (2). The notice filing shall consist either of a notice filing form prescribed by the division by rule or a copy of those documents that have been filed with the federal securities and exchange commission as the division, by rule or order, may require.
551.32(1m)(b)
(b) An initial notice filing is effective upon receipt by the division of the documents and fee required in
par. (a). A renewal notice filing is effective upon the expiration under
sub. (8) (a) of the prior notice filing, or upon receipt by the division of the documents and fee required under
par. (a), whichever is later.
551.32(1m)(c)
(c) To the extent not prohibited by federal law, a federal covered adviser, for whom a nonpayment or underpayment of any required fee to the division has not been remedied within 10 days of the receipt by the adviser of written notification from the division of the nonpayment or underpayment, shall either become licensed or qualify for an exclusion or exemption from licensure. The written notification by the division under this paragraph may be transmitted electronically.
551.32(1s)
(1s) The division shall cooperate with other securities administrators and regulatory authorities to simplify and coordinate license application, notice filing and renewal procedures.
551.32(2)
(2) Before action on an application the division may designate an employee to make an examination of the books, records and affairs of the applicant at the applicant's expense.
551.32(3)
(3) A licensed broker-dealer or investment adviser may file an application for licensing of a successor, and a federal covered adviser may file a notice filing for a successor, whether or not the successor is then in existence, for the unexpired portion of the year. There shall be no filing fee.
551.32(4)
(4) The division may by rule prescribe standards of qualification with respect to training, experience and knowledge of the securities business and provide for an examination, which may be written or oral or both, to be taken by any class of or all applicants and the division may by order require an examination of a licensed broker-dealer, agent, investment adviser or investment adviser representative for due cause.
551.32(5)
(5) The division may, by rule or order, establish a minimum net capital requirement for licensed broker-dealers, subject to the limitations of section 15 of the Securities Exchange Act of 1934 and may establish a minimum net capital requirement for licensed investment advisers, subject to the limitations of section 222 of the Investment Advisers Act of 1940.
551.32(6)
(6) The division may, by rule or order, require licensed broker-dealers and investment advisers who have custody of or discretionary authority over client funds or securities, to post bonds in amounts as the division may prescribe by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers, and may determine the conditions of the bonds. No bond may be required of any licensee whose net capital exceeds the amount prescribed by rule or order of the division. Every bond required by rules promulgated under this subsection shall provide for suit on the bond by any person who has a cause of action under
s. 551.59 and, if the division by rule or order requires, by any person who has a cause of action not arising under this chapter. Every bond required by rules promulgated under this subsection shall provide that no suit may be maintained to enforce any liability on the bond unless the suit is brought within the time limitations of
s. 551.59 (5).
551.32(7)
(7) The division may by rule or order impose other conditions or limitations in connection with the issuance of licenses under this chapter as the division deems appropriate in the public interest or for the protection of investors.
551.32(8)(a)(a) Every license or notice filing under this section expires on December 31 unless one of the following occurs:
551.32(8)(a)2.
2. The license or notice filing is limited or extended for not more than 6 months, and the licensee or notice filer pays a fee, adjusted proportionately by the division by rule or order.
551.32(8)(a)3.
3. The division specifies a different expiration date by rule or order.
551.32(8)(b)
(b) No license or notice filing under this section is effective after its expiration. The expiration of a license or notice filing for which a renewal application has not been filed constitutes an application for withdrawal under
sub. (9).
551.32(9)(a)(a) Withdrawal from the status of a licensed broker-dealer, agent, investment adviser or investment adviser representative becomes effective 30 days after receipt by the division or by an organization designated by rule of the division under
sub. (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
s. 551.34 (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.
551.32(9)(b)
(b) Termination of a notice filing under
s. 551.32 (1m) is effective upon receipt by the division of written notification of termination.
551.32 Cross-reference
Cross Reference: See also chs.
DFI-Sec 4 and
5, Wis. adm. code.
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 prescribes by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers. All records required shall be preserved for the period prescribed by the division by rule or order. All required records 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 prescribes by rule or order, subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers.
551.33(3)
(3) If the information contained in any application for a 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 filing the application or document shall promptly file a correcting amendment, except that a federal covered adviser shall file a correcting amendment when it is required to be filed with the securities and exchange commission, unless notification of the correction has been given under
s. 551.32 (9) (a).
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) (e).
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.
551.33(8)
(8) With respect to investment advisers, the division may, by rule or order, require that certain information be furnished or disseminated as necessary or appropriate in the public interest or for the protection of investors and advisory clients. If the division promulgates rules or issues orders under this subsection requiring that information be furnished or disseminated, the division may, in its discretion, permit investment advisers to satisfy requirements of these rules or orders in whole or in part by furnishing clients or prospective clients information that would satisfy the requirements of the Investment Advisers Act of 1940.
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 willfully violated or willfully 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, investment adviser or federal covered 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, employees, 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(1m)(a)(a) The division shall deny an application for the issuance or renewal of a license if any of the following applies:
551.34(1m)(a)2.
2. The department of revenue certifies under
s. 73.0301 that the applicant is liable for delinquent taxes. An applicant whose application for the issuance or renewal of a license is denied under this subdivision for delinquent taxes is entitled to a notice under
s. 73.0301 (2) (b) 1. b. and hearing under
s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this subchapter.
551.34(1m)(a)3.
3. The applicant is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under
s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under
s. 49.857. An applicant whose application is denied under this subdivision for delinquent payments is entitled to a notice and hearing under
s. 49.857 but is not entitled to any other notice or hearing under this section.
551.34(1m)(b)
(b) Unless
s. 551.32 (1) (bs) 1. applies to the licensee, the division shall restrict or suspend a license under this subchapter if the licensee is an individual who fails to provide his or her social security number. The division shall restrict or suspend a license under this subchapter if the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under
s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under
s. 49.857. A licensee whose license is restricted or suspended under this paragraph is entitled to a notice and hearing under
s. 49.857 but is not entitled to any other notice or hearing under this section.
551.34(1m)(c)
(c) The division shall revoke a license if the department of revenue certifies under
s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this paragraph for delinquent taxes is entitled to a notice under
s. 73.0301 (2) (b) 1. b. and hearing under
s. 73.0301 (5) (a) but is not entitled to any other notice, hearing or review under this subchapter.
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.
