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Securities & Franchising
Our Offices will be closed on:
September 3 and September 6, 2010
The Department of Financial Institutions and Office of Credit Unions will be closed on Friday September 3, 2010 as a result of the day being designated as a Furlough Day for employees of the Department of Financial Institutions and the Office of Credit Unions.
In addition, we will also be closed on Monday September 6, 2010 for Labor Day.
Although the Agency will be closed to the public, Internet Web Services will still be available for individuals who are accessing or filing documents over the Internet. For additional information regarding documents that can be filed or processed over the Internet for a specific program, please visit that program’s information on our web site.
A full list of the days that the Agency will be closed during this calendar year is available by visiting the link shown below:
2010 Closure Dates (PDF: 18 KB / 1 page)
Information Categories
What's New
- New rule effective October 1, 2010 relating to minor revisions to securities law and franchise law administrative code sections (PDF: 131 KB / 12 pages)
The revisions primarily address investment adviser solicitation activities using language developed by the NASAA Investment Adviser Regulatory Policy and Review Project Group. Other changes include: (1) revising the Wisconsin Exemption by Filing rule in 2.028 to permit early-stage WI issuers to raise capital using the rule, only from sales of “equity” securities, not from sales of debt securities; (2) amending rule 2.02(5)(d)1 [which requires a 10-day notice filing for offerings by oil, gas or mining issuers seeking to use the 25-offeree-per-12-month-period exemption in 551.202(14), Wis. Stats.] so that the filing requirement applies to any type of entity, not just to limited partnerships as the current language provides.
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Update on DFI’s New Online Franchise E-Filing Service
Update: August 2010
In January of 2010, Wisconsin’s Department of Financial Institutions made available a new web-based application which will allow customers to file franchise registrations and amendments online. Wisconsin is the first state to develop an electronic filing system for franchise registrations and amendments.
DFI encourages customers to use the new online application, since paper filings can get delayed in the mail, and have extra costs related to printing and mailing the filing to DFI. The online filing process takes about 10 minutes, and DFI receives the filing instantly. Also, there is NO additional fee for filing online!
In Wisconsin, franchise registrations and amendments are “effective upon receipt”. As such, your filing will become effective as soon as the online filing process is complete. The online filing process provides a simple way to upload the franchise disclosure document (in .pdf format).
A link to the online filing application can be found on DFI’s homepage under the QuickFile section, and at: https://www.wdfi.org/apps/franchiseefiling/
Another major feature of the new Franchise E-Filing system, is that it allows customers to search for franchise registrations, see their status (active or expired), and also see the disclosure documents for active filings that were made online.
We hope you enjoy the ease and convenience of using the new online application. Please contact us at 608-266-8557 if you have any comments or questions on using the new application.
- 2009 Wisconsin Act 344 Regarding Life Settlements - Sections Revising Securities Law Provisions (PDF: 988 KB / 2 pages)
2009 Wisconsin Act 344 (enacted May 13, 2010, but not effective until November 1. 2010) is legislation developed by the Wisconsin Office of the Commissioner of Insurance which primarily deals with the insurance law regulatory aspects of so-called “life settlements” [where the death benefit of a life insurance policy on an individual is marketed and sold as an investment security to a purchaser]. Similar arrangements involving the sale of the death benefit of a life insurance policy on a person with a terminal illness (referred to as “viatical settlements”) had previously (in 2008) been added to the definition of “security” in section 551.202(28) of the Wisconsin Securities Law, and new Act 344 revises several existing Securities Law references to “viatical settlements” to instead now read “life settlements.”
- Securities
Law Penalty Enhancer Legislation Is Signed and Becomes Effective (PDF: 686 KB / 2 pages)
The new law is contained in 2009 Wisconsin Act 196 (Assembly Bill 529)
and became effective May 6, 2010. It provides penalty enhancers applicable
to persons who commit violations of the Wisconsin Securities Law involving
persons/seniors aged 65 or more. The penalty enhancers are applicable
in several contexts: (1) in civil injunctive court proceedings instituted
either by the Division, by District Attorneys, or by the Wisconsin Attorney
General; (2) in administrative proceedings instituted by the Division
of Securities; and (3) in criminal court proceedings. Under the Act,
the penalty that had existed under the Wisconsin Securities Law
for each of those situations is basically doubled (or nearly so) when
the violation victimizes a person aged 65 or older. The new law also
contains a provision that enables the Administrator to seek restitution
or disgorgement in connection with administrative proceedings instituted
by the Division.
The impetus for penalty enhancers for securities law violations that
involve seniors has come from both the state and federal levels. On
the state level, the North American Securities Administrators Association
(“NASAA,” the national association of all state securities
regulators, including Wisconsin) has for several years had as one of
its primary goals, having NASAA member states adopt penalty enhancer
legislation for securities law violations involving seniors. In that
regard, 6 states during the past year enacted penalty enhancer legislation
(North Carolina, Hawaii, Arkansas, Idaho and Missouri), and at the
end of 2009, 6 other states (including Minnesota, and Wisconsin) had
penalty enhancer legislation pending. At the federal level, Wisconsin’s
Senator Herb Kohl, Chairman of the Senate Committee on Aging, introduced
in September 2009 (together with a number of co-sponsors), S. 1659,
The Senior Investor Protection Act of 2009. That legislation would
provide enhanced penalties for violations impacting seniors under all
of the major federal securities laws.
- 2009 Wisconsin Act 345 Amends a Securities Law Subsection of “Institutional Investor” Definition (PDF: 262
KB / 1 page)
2009 Wisconsin Act 345 (effective May 28, 2010) is legislation that was developed by members of the WI State Legislature in response to a fact situation involving $200 million of collateralized debt obligation (CDO) derivatives that were sold by broker--dealer firms to several Wisconsin school districts. Because school districts in Wisconsin are “political subdivisions of the state” which fall within the definition of “institutional investor,” the school districts were able to be sold CDO derivatives for the intended purpose of generating investment income to cover shortfalls in school district employee benefit trust funds, but which derivatives instead lost most of their value in the 2008 financial meltdown. The legislation adds language to subsection (g) of the definition of “institutional investor” in 551.102(11) [which applies to employee benefit plans of political subdivisions in Wisconsin] to provide that “…. political subdivision of a state,,,” does not include a school district.
- New
rule effective January 1, 2010 relating to minor revisions to securities
administrative code sections for conformity with Wisconsin securities
statutes, filings and examination matters. (PDF: 46
KB / 7 pages)
- Wisconsin Biennial Budget Legislation Contains Securities
Law Fee Changes Effective July 1, 2009.
The Budget Legislation fee changes impact investment companies and
the fees for securities agents and investment adviser representatives,
as well as broker-dealer and investment advisor branch office fees
in the following respects, and are applicable to filings made on
or
after
July 1,
2009:
(1) License/Registration fees for securities agents and investment
adviser representatives are increased from the current $30 per person
to $80 per person. Notice (PDF: 55
KB / 1 page)
(2) Broker-dealer and investment adviser branch office fees are
increased to $80 from the current $30.
(3) All securities registration filing fees (by
coordination or qualification) are increased from the current $750
to $1,500,
as
is the initial filing fee for investment company/federal covered
security filings.
(4) The annual sales report-related fees for investment companies
(which formerly were a minimum of $150 and a maximum of $1500)
are increased to a minimum of $750 and a maximum of $15,000. The same
computation "formula" of
0.05 % of sales in Wisconsin is unchanged for purposes computing
the fee between the minimum and the maximum amounts.
- Securities Division Adopts Permanent Rules Effective April
1, 2009 That Prohibit Use of Misleading Senior Designations/Certifications
Permanent rules became effective April 1, 2009 to protect seniors
in Wisconsin from being misled through the use by securities licensees
of designations and credentials that imply or represent that a person
has special expertise, certification, or training in financial planning
for seniors, but where such designations and/or credentials are either
non-existent or do not involve significant education, testing, training
or experience, and in reality are marketing ploys.
The permanent rules supersede emergency rules adopted in September
2008 on the subject.
The Division's rulemaking is based on a “Model Rule On The
Use of Senior-Specific Certifications and Professional Designations,” developed
by the North American Securities Administrators Association, Inc.
("NASAA Model Rule"), and adopted by the NASAA membership,
including Wisconsin, on March 20, 2008. The Wisconsin rule-making
involved amending the list of “dishonest or unethical business
practice” provisions applicable to broker-dealers, agents,
investment advisers and their representatives to provide that the
misleading use by licensees of senior designations or certifications
-- as particularized in the rules -- can be a basis for denial,
suspension or revocation of a license.
The NASAA Model Rule adopted in Wisconsin covers a broad
array of practices. It prohibits licensees from using any non-existent
or self-conferred certification. Also prohibited would be any designation
that "indicates or implies a level of occupational qualification
obtained through education, training, or experience" that
the person doesn't actually have. Furthermore, the rule
would
disallow designations obtained from organizations that are "primarily
engaged in the business of instruction in sales and/or marketing.” Additionally,
reasonable standards for competency would be required, along with
monitoring designees and minimum continuing-education standards.
- Interest
on Free Credit Balances Available to Wisconsin Investors
- Online Broker-dealer
Guide now available.
Broker-dealers and their securities agents now have an online Guide
to all aspects of licensing and regulatory oversight in Wisconsin. Divided
into topics such as Applications, Recordkeeping, Examinations, Securities
Agents and more, readers can now find answers to questions related to
the initial licensing application process and the regulation of broker-dealers
and their securities agents plus links to all application forms and
licensing statutes and Administrative Code sections referred to in the
Guide.
Other Information
Securities and Franchising
Overview -- for a summary of the mission and activities
of DFI's Division of Securities
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