551.404(5)
(5) Limits on employment or association. It is unlawful for an individual acting as an investment adviser representative, directly or indirectly, to conduct business in this state on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. Upon request and for good cause, the administrator, by order issued, may waive, in whole or in part, the application of the requirements of this subsection.
551.404(6)
(6) Referral fees. An investment adviser registered or exempt from registration under this chapter, a federal covered investment adviser that has filed a notice under
s. 551.405 or is exempt from such notice filing requirement, or a broker-dealer registered or exempt from registration under this chapter is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered or exempt from registration under this chapter, a federal covered investment adviser that has filed a notice or is exempt from filing a notice under
s. 551.405, or a broker-dealer registered or exempt from registration under this chapter with which the individual is employed or associated as an investment adviser representative.
551.404 History
History: 2007 a. 196.
551.405
551.405
Federal covered investment adviser notice filing requirement. 551.405(1)(1)
Notice filing requirement. Except with respect to a federal covered investment adviser described in
sub. (2), it is unlawful for a federal covered investment adviser to transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with
sub. (3).
551.405(2)
(2) Notice filing requirement not required. The following federal covered investment advisers are not required to comply with
sub. (3):
551.405(2)(a)
(a) A federal covered investment adviser without a place of business in this state if its only clients in this state are:
551.405(2)(a)1.
1. Federal covered investment advisers, investment advisers registered under this chapter, and broker-dealers registered under this chapter.
551.405(2)(a)2m.
2m. Accredited investors as defined and listed in
17 CFR 230.501 (a) (1), (2), (3), (7), or (8) under Regulation D under the Securities Act of 1933.
551.405(2)(a)3.
3. Bona fide preexisting clients whose principal places of residence are not in this state.
551.405(2)(a)4.
4. Other clients specified by rule adopted or order issued under this chapter.
551.405(2)(b)
(b) A federal covered investment adviser without a place of business in this state if the person has had, during the preceding 12 months, not more than 5 clients that are resident in this state in addition to those specified under
par. (a).
551.405(2)(c)
(c) Any other person excluded by rule adopted or order issued under this chapter.
551.405(3)
(3) Notice filing procedure. A person acting as a federal covered investment adviser, not excluded under
sub. (2), shall file a notice, a consent to service of process complying with
s. 551.611, and such records as have been filed with the Securities and Exchange Commission under the Investment Advisers Act of 1940 required by rule adopted or order issued under this chapter and pay the fees specified in
s. 551.614 (2).
551.405(4)
(4) Effectiveness of filing. The notice under
sub. (3) becomes effective upon its filing and expires on December 31 unless any of the following occurs:
551.405(4)(b)
(b) The notice filing is limited or extended for not more than 6 months and the notice filer pays a fee, adjusted proportionately by the administrator by rule or order.
551.405(4)(c)
(c) The administrator specifies a different expiration date by rule or order.
551.405 History
History: 2007 a. 196.
551.406
551.406
Registration by broker-dealer, agent, investment adviser, and investment adviser representative. 551.406(1)(1)
Application for initial registration. A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing with the administrator, or an organization which the administrator by rule designates, an application and a consent to service of process complying with
s. 551.611, and paying the fee specified in
s. 551.614 and any reasonable fees charged by the designee of the administrator for processing the filing. The application must contain all of the following:
551.406(1)(a)
(a) The information or record required for the filing of a uniform application.
551.406(1)(b)
(b) Upon request by the administrator, any other financial or other information or record that the administrator determines is appropriate.
551.406(2)
(2) Amendment. If the information or record contained in an application filed under
sub. (1) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
551.406(3)(a)(a) If an order is not in effect and a proceeding is not pending under
s. 551.412, registration is effective 30 days from the filing of the application or at the earliest of the following times prior to the expiration of 30 days from the filing of the application, whichever is earlier, unless the registration is denied:
551.406(3)(a)1.
1. The date that the administrator issues registration to the applicant.
551.406(3)(a)2.
2. The date that approval of registration status is transmitted by the administrator to the applicant through the central registration depository of the National Association of Securities Dealers, Inc.
551.406(3)(a)3.
3. On January 1 for any renewal application filed during December of the preceding year with the central registration depository, unless the administrator makes a written request for additional information relevant to the application prior to January 1.
551.406(3)(b)
(b) A rule adopted or order issued under this chapter may set an earlier effective date or may defer the effective date until noon on the 45th day after the filing of any amendment completing the application.
551.406(4)
(4) Registration renewal. A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect under
s. 551.412, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this chapter, by paying the fee specified in
s. 551.614, and by paying costs charged by the designee of the administrator for processing the filings.
551.406(5)
(5) Additional conditions or waivers. A rule adopted or order issued under this chapter may impose other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996. An order issued under this chapter may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.
551.406(6)(a)(a) In addition to the information required elsewhere under this section, an application for registration shall contain, in the case of an individual, the individual's social security number and, in the case of a person who is not an individual, the person's federal employer identification number. The administrator may not disclose any information received under this paragraph to any person except the following:
551.406(6)(a)1.
1. The department of revenue, for the sole purpose of requesting certifications under
s. 73.0301.
551.406(6)(a)2.
2. The department of children and families in accordance with a memorandum of understanding under
s. 49.857.
551.406(6)(b)
(b) If an applicant for the issuance or renewal of a registration 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 registration, shall submit a statement made or subscribed under oath or affirmation to the administrator that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of children and families.
551.406(6)(c)
(c) Any license issued or renewed in reliance upon a false statement submitted by an applicant under
par. (a) or
(b) is invalid.
551.406 History
History: 2007 a. 196.
551.407
551.407
Succession and change in registration of broker-dealer or investment adviser. 551.407(1)
(1)
Succession. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to
s. 551.401 or
551.403 or a notice pursuant to
s. 551.405 for the unexpired portion of the current registration or notice filing.
551.407(2)
(2) Organizational change. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a change in control. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of this chapter. If there is a change in control, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered under this chapter shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within 45 days after filing its amendment to effect succession.
551.407(3)
(3) Name change. A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration. The amendment becomes effective when filed or on a date designated by the registrant.
551.407(4)
(4) Change of control. A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued under this chapter.
551.407 History
History: 2007 a. 196.
551.408
551.408
Termination of employment or association of agent and investment adviser representative and transfer of employment or association. 551.408(1)
(1)
Notice of termination. If an agent registered under this chapter terminates employment by or association with a broker-dealer or issuer, or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser or federal covered investment adviser, or if either registrant terminates activities that require registration as an agent or investment adviser representative, the broker-dealer, issuer, investment adviser, or federal covered investment adviser shall promptly file a notice of termination. If the registrant learns that the broker-dealer, issuer, investment adviser, or federal covered investment adviser has not filed the notice, the registrant may do so.
551.408(2)
(2) Transfer of employment or association. If an agent registered under this chapter terminates employment by or association with a broker-dealer registered under this chapter and begins employment by or association with another broker-dealer registered under this chapter; or if an investment adviser representative registered under this chapter terminates employment by or association with an investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under
s. 551.405 and begins employment by or association with another investment adviser registered under this chapter or a federal covered investment adviser that has filed a notice under
s. 551.405; then upon the filing by or on behalf of the registrant, within 30 days after the termination, of an application for registration that complies with the requirement of
s. 551.406 (1) and payment of the filing fee required under
s. 551.614, the registration of the agent or investment adviser representative is:
551.408(2)(a)
(a) Immediately effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record or the investment adviser representative's Investment Adviser Registration Depository record or successor record does not contain a new or amended disciplinary disclosure within the previous 12 months.
551.408(2)(b)
(b) Temporarily effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record or the investment adviser representative's Investment Adviser Registration Depository record or successor record contains a new or amended disciplinary disclosure within the preceding 12 months.
551.408(3)
(3) Withdrawal of temporary registration. The administrator may withdraw a temporary registration if there are or were grounds for discipline as specified in
s. 551.412 and the administrator does so within 30 days after the filing of the application. If the administrator does not withdraw the temporary registration within the 30-day period, registration becomes automatically effective on the 31st day after filing.
551.408(4)
(4) Power to prevent registration. The administrator may prevent the effectiveness of a transfer of an agent or investment adviser representative under
sub. (2) (a) or
(b) based on the public interest and the protection of investors.
551.408(5)
(5) Termination of registration or application for registration. If the administrator determines that a registrant or applicant for registration is no longer in existence or has ceased to act as a broker-dealer, agent, investment adviser, or investment adviser representative, or is the subject of an adjudication of incapacity or is subject to the control of a committee, conservator, or guardian, or cannot reasonably be located, a rule adopted or order issued under this chapter may require the registration be canceled or terminated or the application denied. The administrator may reinstate a canceled or terminated registration, with or without hearing, and may make the registration retroactive.
551.408 History
History: 2007 a. 196.
551.409
551.409
Withdrawal of registration of broker-dealer, agent, investment adviser, and investment adviser representative. Withdrawal of registration by a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective 60 days after the filing of the application to withdraw or within any shorter period as provided by rule adopted or order issued under this chapter unless a revocation or suspension proceeding is pending when the application is filed. If a proceeding is pending, withdrawal becomes effective when and upon such conditions as required by rule adopted or order issued under this chapter. The administrator may institute a revocation or suspension proceeding under
s. 551.412 within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending.
551.409 History
History: 2007 a. 196.
551.411
551.411
Postregistration requirements. 551.411(1)
(1)
Financial requirements. Subject to section 15 (h) of the Securities Exchange Act of 1934 (
15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (
15 USC 80b-18a), a rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter.
551.411(2)
(2) Financial reports. Subject to section 15 (h) of the Securities Exchange Act of 1934 (
15 USC 78o (h)) or section 222 (b) of the Investment Advisers Act of 1940 (
15 USC 80b-18a), a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file such financial reports as are required by a rule adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
551.411(3)
(3) Record keeping. Subject to section 15 (h) of the Securities Exchange Act of 1934 (
15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (
15 USC 80b-18a):
551.411(3)(a)
(a) A broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall make and maintain the accounts, correspondence, memoranda, papers, books, and other records required by rule adopted or order issued under this chapter.
551.411(3)(b)
(b) Broker-dealer records required to be maintained under
par. (a) may be maintained in any form of data storage acceptable under section 17 (a) of the Securities Exchange Act of 1934 (
15 USC 78q (a)) if they are readily accessible to the administrator.
551.411(3)(c)
(c) Investment adviser records required to be maintained under
par. (a) may be maintained in any form of data storage required by rule adopted or order issued under this chapter.
551.411(4)
(4) Audits or inspections. The records of a broker-dealer registered or required to be registered under this chapter and of an investment adviser registered or required to be registered under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the administrator, within or without this state, as the administrator considers necessary or appropriate in the public interest and for the protection of investors. The administrator may also conduct an examination of the books, records, and affairs of an applicant for registration as a broker-dealer or investment adviser. An audit or inspection may be made at any time and without prior notice. The administrator may copy, and remove for audit or inspection copies of, all records the administrator reasonably considers necessary or appropriate to conduct the audit or inspection. The administrator may assess a reasonable charge for conducting an audit or inspection under this subsection.
551.411(5)
(5) Custody and discretionary authority bond or insurance. Subject to section 15 (h) of the Securities Exchange Act of 1934 (
15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (
15 USC 80b-18a), a rule adopted or order issued under this chapter may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount prescribed by the administrator by rule. The administrator may determine the requirements of the insurance, bond, or other satisfactory form of security. Insurance or a bond or other satisfactory form of security may not be required of a broker-dealer registered under this chapter whose net capital exceeds, or of an investment adviser registered under this chapter whose minimum financial requirements exceed, the amounts required by rule or order under this chapter. The insurance, bond, or other satisfactory form of security must permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in
s. 551.509 (10) (b).
551.411(6)
(6) Requirements for custody. Subject to section 15 (h) of the Securities Exchange Act of 1934 (
15 USC 78o (h)) or section 222 of the Investment Advisers Act of 1940 (
15 USC 80b-18a), an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer and an investment adviser representative may not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser. A rule adopted or order issued under this chapter may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client.
551.411(7)
(7) Investment adviser brochure rule. With respect to an investment adviser registered or required to be registered under this chapter, a rule adopted or order issued under this chapter may require that information or other record be furnished or disseminated to clients or prospective clients in this state as necessary or appropriate in the public interest and for the protection of investors and advisory clients.
551.411(8)
(8) Continuing education. A rule adopted or order issued under this chapter may require an individual registered under
s. 551.402 or
551.404 to participate in a continuing education program approved by the administrator and administered by a self-regulatory organization or, in the absence of such a program, a rule adopted or order issued under this chapter may require continuing education for an individual registered under
s. 551.404.
551.411(9)
(9) Interest rate on customer accounts. No registered 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.
551.411 History
History: 2007 a. 196.
551.412
551.412
Denial, revocation, suspension, censure, withdrawal, restriction, condition, or limitation of registration. 551.412(1)(1)
Disciplinary conditions — applicants. If the administrator finds that the order is in the public interest and
sub. (4) authorizes the action, an order issued under this chapter may deny an application, or may condition or limit registration of an applicant, to be a broker-dealer, agent, investment adviser, or investment adviser representative and, if the applicant is a broker-dealer or investment adviser, of a partner, officer, director, person having a similar status or performing similar functions, or person directly or indirectly in control of the broker-dealer or investment adviser.
551.412(2)
(2) Disciplinary conditions — registrants. If the administrator finds that the order is in the public interest and
sub. (4) authorizes the action, an order issued under this chapter may revoke, suspend, censure, condition, or limit the registration of a registrant and, if the registrant is a broker-dealer or investment adviser, of a partner, officer, director, person having a similar status or performing similar functions, or person directly or indirectly in control of the broker-dealer or investment adviser. However, the administrator may not do any of the following:
551.412(2)(a)
(a) Institute a revocation or suspension proceeding under this subsection based on an order issued under a law of another state that is reported to the administrator or a designee of the administrator more than one year after the date of the order on which it is based.
551.412(2)(b)
(b) Under
sub. (4) (e) 1. or
2., issue an order on the basis of an order issued under the securities act of another state unless the other order was based on conduct for which
sub. (4) would authorize the action had the conduct occurred in this state.
551.412(3)
(3) Disciplinary penalties — registrants. If the administrator finds that the order is in the public interest and
sub. (4) (a) to
(f),
(h),
(i),
(j),
(L),
(m), or
(o) to
(r) authorizes the action, an order under this chapter may censure, impose a bar, or impose a civil penalty in an amount not to exceed a maximum of $10,000 for a single violation or $100,000 for more than one violation, or in such amount as agreed to by the parties, on a registrant and, if the registrant is a broker-dealer or investment adviser, a partner, officer, director, person having a similar status or performing similar functions, or person directly or indirectly in control of the broker-dealer or investment adviser.
551.412(4)
(4) Grounds for discipline. A person may be disciplined under
subs. (1) to
(3) if the person:
551.412(4)(a)
(a) Has filed an application for registration in this state under this chapter or the predecessor act within the previous 10 years, which, as of the effective date of registration or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained a statement that, in light of the circumstances under which it was made, was false or misleading with respect to a material fact.
551.412(4)(b)
(b) Willfully violated or willfully failed to comply with this chapter or the predecessor act or a rule adopted or order issued under this chapter or the predecessor act within the previous 10 years.
551.412(4)(c)
(c) Has been convicted of a felony or within the previous 10 years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance.
551.412(4)(d)
(d) Is enjoined or restrained by a court of competent jurisdiction in an action instituted by the administrator under this chapter or the predecessor act, a state, the Securities and Exchange Commission, or the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance.
551.412(4)(e)
(e) Is the subject of an order, issued after notice and opportunity for hearing, by any of the following:
551.412(4)(e)1.
1. The securities or other financial services regulator of a state or the Securities and Exchange Commission or other federal agency denying, revoking, barring, or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative.
551.412(4)(e)2.
2. The securities regulator of a state or the Securities and Exchange Commission against a broker-dealer, agent, investment adviser, investment adviser representative, or federal covered investment adviser.
551.412(4)(e)3.
3. The Securities and Exchange Commission or a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization.
551.412(4)(e)4.
4. A court adjudicating a United States Postal Service fraud order.
551.412(4)(e)5.
5. The insurance regulator of a state denying, suspending, or revoking registration as an insurance agent.
551.412(4)(e)6.
6. A depository institution or financial services regulator suspending or barring the person from the depository institution or other financial services business.
