551.02(8)
(8) "Issuer" means any person who issues or proposes to issue any security and any promoter who acts for an issuer to be formed, except:
551.02(8)(a)
(a) With respect to certificates of deposit or trust certificates, "issuer" means the person performing the acts and assuming the duties of depositor, manager or trustee pursuant to the provisions of the trust or other instrument under which the security is issued; and
551.02(8)(b)
(b) With respect to certificates of interest or participation in oil, gas or mining titles or leases, "issuer" means the owner of any such title or lease who creates fractional interests therein for purposes of sale.
551.02(9)
(9) "Nonissuer" means not directly or indirectly for the benefit of the issuer.
551.02(10)
(10) "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government, a political subdivision of a government or any other entity.
551.02(11)(a)(a) "Sale" or "sell" includes every sale, disposition or exchange, and every contract of sale of, or contract to sell, a security or interest in a security for value.
551.02(11)(b)
(b) "Offer" or "offer to sell" includes every attempt or offer to sell or dispose of, or solicitation of an offer to purchase, a security or interest in a security for value, but does not include solicitation by a licensed broker-dealer of tentative reservations of securities which shall not be binding upon the purchaser until ratified by the purchaser after the securities may legally be sold.
551.02(11)(c)
(c) Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
551.02(11)(d)
(d) Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is considered to include an offer of the other security.
551.02(11)(e)
(e) The terms defined in this subsection do not include any bona fide pledge or loan of a security.
551.02(11)(f)
(f) A securities broker-dealer or agent who effects a brokered securities transaction is considered to have effected a sale or purchase of a security.
551.02(12)
(12) "Securities Act of 1933", " Securities Exchange Act of 1934", " Investment Company Act of 1940", " Investment Advisers Act of 1940" and " Internal Revenue Code" mean the federal statutes of those names as amended on January 1, 1998, including such later amendments as the division determines are not inconsistent with the purpose of this chapter.
551.02(13)(a)(a) "Security" means any stock; treasury stock; note; bond; debenture; evidence of indebtedness; share of beneficial interest in a business trust; certificate of interest or participation in any profit sharing agreement; collateral trust certificate; preorganization subscription; transferable share; investment contract; commodity futures contract; voting trust certificate; certificate of deposit for a security; limited partnership interest; certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease; or, in general, any interest or instrument commonly known as or having the incidents of a security or offered in the manner in which securities are offered; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of or option, warrant or right to subscribe to or purchase or sell, any of the foregoing.
551.02(13)(b)
(b) "Security" does not include any fixed or variable insurance or endowment policy or annuity contract under which an insurer promises to pay money either in a lump sum or periodically for life or some other specified period; any beneficial interest in any voluntary inter vivos trust not created for the purpose of carrying on any business or solely for the purpose of voting; or any beneficial interest in any testamentary trust; or any member's interest that includes all of the rights set forth in
s. 183.0102 (11) in a limited liability company organized under
ch. 183 if the aggregate number of members of the limited liability company, after the interest is sold, does not exceed 15, and the articles of organization do not vest management of the limited liability company in one or more managers.
551.02(13)(c)
(c) Except as provided in
par. (b), "security" is presumed to include a member's interest in a limited liability company organized under
ch. 183 if the articles of organization vest management of the limited liability company in, or if the operating agreement delegates the essential managerial responsibility of the limited liability company to, one or more managers who are not members, or if the aggregate number of members of the limited liability company, after the interest is sold, exceeds 35. "Security" is presumed not to include a member's interest in a limited liability company organized under
ch. 183 if the aggregate number of members of the limited liability company, after the interest is sold, does not exceed 35 and the articles of organization do not vest management of the limited liability company in, nor does the operating agreement delegate the essential managerial responsibilities of the limited liability company to one or more managers who are not members.
551.02(14)
(14) "State" means any state, territory or possession of the United States, the District of Columbia and Puerto Rico.
551.02 Annotation
A profit-sharing agreement between management and labor in exchange for wage concessions was not a security. Fore Way Express, Inc. v. Bast,
178 Wis. 2d 693,
505 N.W.2d 408 (Ct. App. 1993).
551.02 Annotation
When a certificate of stock was mailed to the plaintiff in Wisconsin, and extensive solicitation was conducted by the defendants in Wisconsin, there was an "offer" within sub. (11) (b). Since the securities were neither registered in Wisconsin nor exempt from registration, the plaintiff was entitled to rescind the transaction and recover the purchase price of the securities, plus costs. Hardtke v. Love Tree Corp.
386 F. Supp. 1085 (1975).
551.02 Annotation
An "offer to sell" under sub. (11) (b) was made when the defendant gave an unexecuted partnership agreement to the plaintiff implicitly inviting the plaintiff to return it completed as to form and amount. Feitler v. Midas Associates,
418 F. Supp. 735 (1976).
551.02 Annotation
State and federal regulation of condominiums. Minahan, 58 MLR 55.
551.02 Annotation
When Does A Member's Interest in an LLC Become a Security? Briska. Wis. Law. Sept. 1994.
REGISTRATION AND NOTICE FILING
PROCEDURES; SECURITIES
551.21
551.21
Registration requirement. 551.21(1)
(1) It is unlawful for any person to offer or sell any security in this state unless at least one of the following conditions is met:
551.21(1)(a)
(a) The security is registered under this chapter.
551.21(1)(c)
(c) The security is a federal covered security.
551.21(2)
(2) It is unlawful for any issuer or registrant of any securities registered under this chapter, or any person in control of or controlled by or under common control with the issuer or registrant, to offer or sell any of the registered securities in this state if the issuer or registrant is in violation of this chapter, or any rule under this chapter, or any order under this chapter of which he or she has notice, or if the registration statement relating to the securities, as of the date of such offer or sale, is incomplete in any material respect or contains any statement which is false or misleading with respect to any material fact.
551.21 Annotation
Sub. (1) is violated through an offer to sell an unregistered security, even if no sale occurs. State v. Johnson, 2002 WI App 224,
257 Wis. 2d 736,
652 N.W.2d 642.
551.21 Annotation
When a certificate of stock was mailed to the plaintiff in Wisconsin, and extensive solicitation was conducted by the defendants in Wisconsin, there was an "offer" within s. 551.02. (11) (b). Since the securities were neither registered in Wisconsin nor exempt from registration, the plaintiff was entitled to rescind the transaction and recover the purchase price of the securities, plus costs. Hardtke v. Love Tree Corp.
386 F. Supp. 1085 (1975).
551.21 Annotation
Registration and reporting requirements for exempt transactions are discussed. Feitler v. Midas Associates,
418 F. Supp. 735 (1976).
551.21 Annotation
The financing of corporate expansion through industrial revenue bonds. Mulcahy & Guszkowski. 57 MLR 201.
551.22
551.22
Exempt securities. The following securities are exempt from registration under
s. 551.21 (1):
551.22(1)(a)(a) Any security, including a revenue obligation, issued or guaranteed by the United States, any state, any political subdivision of a state or any agency or corporate or other instrumentality of one or more of the foregoing; or any certificate of deposit for any of the foregoing; but any revenue obligation payable from payments to be made in respect of property or money used under a lease, sale or loan arrangement by or for a nongovernmental industrial or commercial enterprise is exempted only as provided under
par. (b). A security, other than a security issued or guaranteed by the United States or an agency or corporate instrumentality of the United States and other than a revenue obligation, is exempt under this subsection only if the issuer's financial statements are prepared according to generally accepted accounting principles or guidelines which the division designates by rule.
551.22(1)(b)
(b) Unless subject to a letter of credit of a bank, savings bank or savings and loan association as provided in this paragraph, a revenue obligation of an issuer specified under
par. (a) that is payable from payments to be made in respect of property or money used under a lease, sale or loan arrangement by or for a nongovernmental industrial or commercial enterprise is exempted subject to rules adopted by the division. A revenue obligation is exempt from any filing under the rules of the division if it is the subject of an irrevocable letter of credit from a bank, savings bank or savings and loan association in favor of holders of the revenue obligations providing for payment of all principal of the revenue obligations and all accrued and unpaid interest to the date of an event of default on the revenue obligations, and the letter of credit is accompanied by an opinion of counsel stating:
551.22(1)(b)1.a.a. That payment of debt service will not constitute a preference under federal bankruptcy law if a petition in bankruptcy with respect to the enterprise is filed; or
551.22(1)(b)1.b.
b. That the letter of credit will provide for reimbursement to holders of the revenue obligations if they are required by order of a federal bankruptcy court to disgorge as a preference any payment of a debt service; and
551.22(1)(b)2.
2. That the enforceability of the letter of credit would not be materially affected by the filing of a petition under federal bankruptcy law with respect to the enterprise or any person obligated to reimburse the bank, savings bank or a savings and loan association for payments made under the letter of credit.
551.22(2)
(2) Any security, excluding a revenue obligation, issued or guaranteed by Canada, any Canadian province, any political subdivision of any such province, any agency or corporate or other instrumentality of one or more of the foregoing, or any other foreign government with which the United States currently maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer or guarantor.
551.22(3)
(3) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution or trust company organized under the laws of any state and subject to regulation in respect of the issuance or guarantee of its securities by a governmental authority of that state.
551.22(4)
(4) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings bank or federal savings and loan association, or any savings bank or savings and loan or similar association organized under the laws of any state and licensed to do business in this state, but not including the capital stock of a state-chartered capital stock savings bank or savings and loan association.
551.22(5)
(5) Any security issued or guaranteed by any federal credit union, or any credit union or similar association organized and supervised under the laws of this state.
551.22(6)
(6) Any security issued or guaranteed by any railroad, other common carrier, public service corporation, public utility or public utility holding company, which is subject to regulation in respect of the issuance or guarantee of the security by a governmental authority of the United States, any state, Canada or any Canadian province.
551.22(7)
(7) Any security listed, or approved for listing upon notice of issuance, on a securities exchange designated by rule of the division, subject to rules that the division may promulgate under this subsection; any security of the same issuer which is of senior or substantially equal rank to the security listed, designated or approved for listing or designation; any security called for by subscription rights or warrants so listed, approved or designated; or any warrant or right to purchase or subscribe to any of the foregoing.
551.22(8)
(8) Any security issued to its members by a domestic corporation organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic or reformatory purposes; and any evidences of debt issued by any such corporation to nonmembers in compliance with rules adopted by the division.
551.22(9)
(9) Any commercial paper meeting the requirements established by rule of the division and which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within 9 months of the date of issuance, exclusive of days of grace, or any renewal of such paper which is likewise limited, or any guarantee of such paper or of any such renewal.
551.22(10)
(10) Any investment contract or other security issued in connection with an employee's stock purchase, savings, pension, profit sharing or similar benefit plan if, in the case of plans which are not qualified under section
401 of the internal revenue code and which provide for contribution by employees, there is filed with the division prior to any offer or sale a notice specifying the terms of the plan and any additional information required under
s. 551.24 (6), and the division does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required under
s. 551.24 (6), within 10 days after the date of filing that information.
551.22(12)
(12) Any securities of a cooperative corporation organized under
ch. 185.
551.22(13)
(13) Any option to put or call any outstanding security transactions in which are exempted under
s. 551.23 (3).
551.22(14)
(14) Any security issued by a licensed broker-dealer to its officers, partners or employees, subject to rules adopted by the division.
551.22(15)
(15) Any contract for the sale or purchase of a commodity for future delivery, if it is traded or executed on a contract market designated under
7 USC 7.
551.22(16)
(16) Contribution notes issued under
s. 611.33 (2) (b),
613.33 (2) or
614.33, and any debt securities approved by the commissioner of insurance and issued under
s. 611.75 (2) in connection with the conversion of a stock insurance corporation to a mutual, or under
s. 613.75 or
614.76 in connection with the conversion of a service insurance corporation or fraternal to a mutual.
551.22(17)
(17) Any security as to which the division by rule or order finds that registration is not necessary or appropriate for the protection of investors.
551.22 Cross-reference
Cross Reference: See also ss.
DFI-Sec 2.01 and
2.03, Wis. adm. code.
551.23
551.23
Exempt transactions. The following transactions are exempt from registration under
s. 551.21 (1):
551.23(1)
(1) Any isolated nonissuer transaction, whether effected through a broker-dealer or not.
551.23(2)
(2) Any nonissuer transaction effected by or through a licensed broker-dealer pursuant to an unsolicited order or offer to purchase; but the division may by rule require that the records of the broker-dealer confirm that the order or offer to purchase was unsolicited.
551.23(3)
(3) Any sale of any outstanding security by or on behalf of a person not the issuer and not in control of the issuer or controlled by the issuer or under common control with the issuer at a price reasonably related to the current market price if any of the following conditions are met:
551.23(3)(a)
(a) The issuer has any securities registered under section 12 of the Securities Exchange Act of 1934 or exempted from registration by section 12 (g) (2) (G) or 12 (g) (3) of that act, or the issuer is an investment company registered under the Investment Company Act of 1940.
551.23(3)(b)
(b) Securities of the same class have been registered under this chapter under a registration statement becoming effective within 2 years preceding the sale and the registration has not been revoked or suspended.
551.23(3)(c)
(c) Securities of the same class have been registered under the Securities Act of 1933 and there is filed with the division prior to any offer or sale a notice of the proposed sale, other information as the division by rule requires and any additional information required under
s. 551.24 (6), and the division does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required under
s. 551.24 (6), within 10 days after the date of filing that information.
551.23(3)(d)
(d) The issuer or applicant files with the division such information, and an undertaking to file such reports, as the division by rule requires and any additional information required under
s. 551.24 (6), and the division does not by order disallow the exemption within 10 days after the date of filing such information required by rule or, if additional information is required under
s. 551.24 (6), within 10 days after the date of filing that information.
551.23(4)
(4) Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter or among underwriters.
551.23(5)
(5) Any transaction in a bond or other evidence of indebtedness secured by a real or chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage, deed of trust or agreement, together with all the bonds or other evidences of indebtedness secured thereby, is offered and sold as a unit.
551.23(6)
(6) Any judicial sale or any transaction by a personal representative, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator.
551.23(7)
(7) Any transaction executed by a bona fide pledgee without any purpose of evading this chapter.
551.23(8)
(8) Any offer or sale of a security to any of the following:
551.23(8)(b)
(b) A bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association, if the purchaser or prospective purchaser is acting for itself or as trustee with investment control.
551.23(8)(c)
(c) An investment company as defined under
15 USC 80a-3 or a pension or profit-sharing trust, except that an offer or sale of a security to a pension or profit-sharing trust or to an individual retirement plan, including a self-employed individual retirement plan, is not exempt under this paragraph unless the trust or plan is administered by a bank, savings institution, savings bank, credit union, trust company, insurer, broker-dealer, investment adviser, federal covered adviser or savings and loan association that has investment control.
551.23(8)(d)
(d) This state or any of its agencies or political subdivisions.
551.23(8)(e)
(e) The federal government or any of its agencies or instrumentalities.
551.23(8)(f)
(f) Any financial institution or institutional investor designated by rule or order of the division.
551.23(9)
(9) Any offer or sale of a preorganization subscription, if no commission or other remuneration is paid or given directly or indirectly for soliciting any subscriber in this state and no advertising is published or circulated unless it has been permitted by the division, and if the subscription is not binding and no payment is made by any subscriber until the securities subscribed for may legally be sold.
551.23(10)
(10) Any offer or sale of its securities by an issuer having its principal office in this state, if the aggregate number of persons holding directly or indirectly all of the issuer's securities, after the securities to be issued are sold, does not exceed 25, exclusive of persons under
sub. (8), if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, except to broker-dealers and agents licensed in this state, and if no advertising is published unless it has been permitted by the division.
551.23(11)(a)(a) Any transaction pursuant to an offer directed by the offeror to not more than 25 persons in this state, excluding persons exempt under
sub. (8) but including persons exempt under
sub. (10), during any period of 12 consecutive months, whether or not the offeror or any of the offerees is then present in this state, if the offeror reasonably believes that all the persons in this state are purchasing for investment, and no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state other than those exempt by
sub. (8).
551.23(11)(b)
(b) The division may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of offerees permitted, or waive the conditions in
par. (a), and may require reports of sales under this exemption.
551.23(12)
(12) Any transaction pursuant to an offer to existing security holders of the issuer, other than an entity designated in
s. 551.52 (1) (b), or of a corporation which, prior to the offer, owned substantially all of the voting stock of the issuer or whose controlling persons organized the issuer for the purpose of the offer, if no commission or other remuneration other than a standby commission is paid or given directly or indirectly for soliciting any security holder in this state, and if, prior to any offer or sale, the issuer files a notice specifying the terms of the offer, all other information which the division by rule requires and any additional information required under
s. 551.24 (6), and the division does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required under
s. 551.24 (6), within 10 days after the date of filing that information. In this subsection, "security holder" includes a person who at the time of the transaction is a holder of convertible securities or nontransferable warrants or a holder of transferable warrants that are exercisable within not more than 90 days of their issuance but does not include a person who at the time of the transaction is a holder of only transferable warrants that are exercisable for more than 90 days after their issuance.
