Securities Regulation in Wisconsin
Wisconsin adopted its first blue sky law in 1913 when a regulatory agency was formed as part of the Railroad Commission. In 1939, the Wisconsin Legislature created a separate office, the Securities Commissioner's Office.
On January 1, 1970, Wisconsin adopted its own version of the Uniform Securities Act. The focus of that Act was § 551.21, Wis. Stats., which states: "It is unlawful for any person to offer or sell any security in this state unless it is registered under this chapter or the security or transaction is exempted." Thus, any offer or sale of securities in Wisconsin is regulated through the provisions of the Wisconsin Uniform Securities Law, Ch. 551, Wis. Stats., and under § DFI-Sec of the Wisconsin Administrative Code.
That law continued to evolve through legislative changes and through the rule-making authority of the Commissioner of Securities. Under that law, Wisconsin was one of the "merit" states, requiring that a securities offering be fair and equitable, in addition to providing for full disclosure. However, on June 7, 1996, the Wisconsin Law was amended to eliminate the "unfair and inequitable" language. Shortly thereafter the Office of the Commissioner of Securities became the Division of Securities in the newly created Department of Financial Institutions. The focus of the registration process for securities offerings in Wisconsin by the Division thus became "full disclosure," just as it is at the federal level. However, if a registration is filed with the SEC and the Division and it receives full review by the SEC, no further review is conducted by the Division. That eliminates the perceived overlapping federal/state roadblock to capital formation. Many of the offerings now filed with and reviewed by the Division have not been filed with the SEC. Those offerings include, but are not limited to, offerings by not-for-profit entities, and intrastate offerings.
On January 1, 2009, 2007 Wisconsin Act 196 became effective and replaced the former Wisconsin Uniform Securities Law, adopted in 1970, with the updated and the modernized Uniform Securities Act of 2002.
The legislation adopted the updated USA 2002, with certain modifications recommended by the State Bar of Wisconsin's Uniform Securities Act Study Group (which included several members of the Division of Securities of the Wisconsin Department of Financial Institutions), following an extensive three-year review process. The modifications principally consisted of adding to the USA 2002, a number of provisions from the existing Wisconsin Securities Law that had been developed over the years, and which the State Bar Study Group determined were important to be preserved in the revised Wisconsin Securities Law.
The regulatory concern with full disclosure is addressed in part by the registration requirements and exemption provisions contained in the Law. To conduct an offering, it is often required that an application or notice be filed with the Division. The filing requirements depend on the registration or exemption provision relied upon. In some cases, the filing requirements may be minimal. In other cases, it will be necessary to file a disclosure document, typically called a "prospectus" or "offering circular", and various exhibits. Regardless of an issuer's filing requirements (even if there are none!), the "anti-fraud" provisions of the Wisconsin law are applicable to every securities transaction in this state, and that law requires all material facts regarding the issuer and the offering to be disclosed to prospective investors.
The Division has also cooperated with other states in easing the regulatory burden on small businesses by helping to organize and by participating in the Midwest Regional Review Program. The program is designed to streamline the process of selling a federally exempt Regulation A securities offering in two or more of the participating Midwestern states. In addition, Wisconsin has agreed to participate in the national Coordinated Equity Review Program, an effort on the part of the North American Securities Administrators Association ("NASAA") to streamline review of SEC-registered equity securities that do not qualify as Covered Securities.