Section DFI-Sec 2.02 - Exempt transactions(1) An "isolated nonissuer transaction" within the meaning of s. 551.202(1), Stats., means:(a) Any sale of an outstanding security by or on behalf of a person not in control of the issuer or controlled by the issuer or under common control with the issuer and not involving a distribution; but if the sale is effected through a broker-dealer, the transaction is deemed isolated only if it is one of not more than 5 such transactions effected by or through the broker-dealer in this state during the prior 12 months; and(b) Any sale of an outstanding security by or on behalf of a person in control of the issuer or controlled by the issuer or under common control with the issuer if the sale is effected pursuant to brokers' transactions in accordance with section 4 (4) of the Securities Act of 1933 and rule 144 thereunder; or pursuant to any other transaction not effected through a broker-dealer and not involving a distribution if the sale, including any other sales by the person of securities of the same class during the prior 12 months, does not exceed 1% of the outstanding shares or units of that class.(2) In any nonissuer transaction effected by or through a registered broker-dealer under s. 551.202(6), Stats., pursuant to an unsolicited order or offer to purchase, the broker-dealer shall obtain from the purchaser a written acknowledgment that the purchase was unsolicited, or the confirmation delivered to the purchaser or a memorandum delivered in connection therewith shall confirm that the purchase was unsolicited by the broker-dealer or any agent of the broker-dealer. This exemption includes only transactions between a broker-dealer and a purchaser of a security.(5) With respect to an offer or sale of a security exempted under s. 551.202(14) or (24), Stats.: (a) Offerees or persons holding directly or indirectly all the issuer's securities include all joint or common owners and all beneficial owners of its securities, and all beneficial owners of any corporation, partnership, association or trust holding any of the issuer's securities and organized in connection with the offer or sale of the securities, provided that any relative or spouse, or any relative of the spouse, taking or holding the securities in joint or common tenancy with and having the same home as the offeree or person, shall not be deemed a separate offeree or person;(b) Issuers affiliated by reason of direct or indirect control or persons affiliated by reason of direct or indirect control of any issuer are deemed to be a single issuer or person; but use of an exemption for the offer and sale of securities by such affiliated issuer or person shall not be denied on account of such affiliation provided the offer and sale are not part of a common business purpose or plan of offering, or if upon the filing of an application the division so orders. A "common business purpose or plan of offering" is presumed where the offer or sale of securities is not separate and distinct from another offer and sale of securities with respect to (i) the application of proceeds, (ii) the physical proximity of real property or other assets, or (iii) the financial affairs of the business;(d) The exemption for any offer or sale under s. 551.202(14), Stats., is withdrawn with respect to:1. Except as provided in this subdivision, any offer or sale of interests in an entity that is or will be primarily engaged in oil, gas or mining activities, any investment contract irrespective of the kind of assets held or business engaged in by the enterprise, or any certificate of interest or participation in an oil, gas or mining title or lease, or in payments out of production under the title or lease, if the aggregate offering price or face amount, whichever is greater, of all securities to be offered by or on behalf of the issuer, together with the value of any securities sold to persons in this state by or on behalf of the issuer during the prior 12 months, exceeds $100,000, unless prior to the offering the issuer files a notice of the proposed offer or sale with the division, including any prospectus, circular or other material to be delivered to offerees, and other information as the division may require, and the division does not by order withdraw, deny or revoke the exemption within 10 days. This paragraph is not applicable to any offer or sale made by a broker-dealer registered in Wisconsin if the broker-dealer is not affiliated with either the issuer or sponsor of the issuer by means of direct or indirect common control;2. Any offering of securities if the issuer, any of its officers, directors, general partners, controlling persons or affiliates thereof are or would be disqualified from use of the registration exemption in s. DFI-Sec2.029 as a result of any of the causes specified in s. DFI-Sec 2.029(3) (a) 1. to 4., except for any person or persons subject to a disqualification who meets the conditions for waiver in s. DFI-Sec 2.029(3) (b) 1., or for any person who receives a waiver by the division upon a showing of good cause that it is not necessary under the circumstances that use of the exemption be withdrawn.(7)(a) "Stock dividend or equivalent equity distribution" within the meaning of s. 551.202(22), Stats., does not include any action by the corporation which has or may have the effect of consolidating securities of a class of outstanding equity securities into a smaller number of securities of that class;(b) "Stock dividend" within the meaning of s. 551.202(22), Stats., includes the issuance of shares under a dividend reinvestment plan in which the election by a shareholder to participate in the plan is voluntary and such election may be rescinded at any time upon notice to the issuer.(9) The following transactions are exempted under s. 551.203, Stats., without limiting the division's authority thereunder: (a) An exemption under this subsection is available for any isolated issuer transaction relating to redeemable securities of an investment company registered under the investment company act of 1940, effected through a registered broker-dealer pursuant to an unsolicited order or offer to purchase, provided that the broker-dealer obtains from the purchaser a written acknowledgment that the purchase was unsolicited or the confirmation delivered to the purchaser or a memorandum delivered in connection therewith confirms that the purchase was unsolicited by the broker-dealer or any agent of the broker-dealer. A transaction is presumed to be "isolated" if it is one of not more than 3 such transactions during the prior 12 months.(c) Any transaction pursuant to an offer to existing security holders of the issuer, and to not more than 25 other persons in this state less the number of persons in this state with whom the issuer has effected any transactions during the period of 12 months preceding the offer pursuant to s. 551.202(14) and (24), Stats., excluding persons listed in s. 551.202(13), Stats., and rules there under, 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 the issuer files with the division prior to the offering a notice specifying the terms of the offer, including any prospectus, circular or other material to be delivered to offerees in connection with the transaction and such other information as the division may require, and the division does not by order disallow the exemption within 10 days.(d) For purposes of the registration exemption in s. 551.202(2), Stats., any Standard & Poor's, Mergent or Fitch securities manual that contains, in whatever format, the information specified in s. 551.202(2) (d) 1 to 4., Stats., is designated as a "nationally recognized securities manual" under s. 551.202(2) (d), Stats.(e) Any offer or sale of securities pursuant to a transaction not involving a public offering under the securities act of 1933 which the division by order exempts upon application filed by the issuer or seller, including such information as the division may require, effected in compliance with such conditions as the division may prescribe.(g) Any offer by a registered broker-dealer pursuant to a preliminary prospectus, provided all the following requirements are met:1. The securities are the subject of a registration statement filed under s. 551.303 or 551.304, Stats., or a notice filed under s. 551.201(1) or (7), or 551.202(15), Stats.;2. The preliminary prospectus has been filed with the U.S. securities and exchange commission or the division for a period of 10 days, and the division does not by order deny the exemption; and3. Before the securities referred to in subd. 1. may legally be sold, no customer funds are received and no customer signs any subscription agreement or similar document relating to the securities offered other than a tentative reservation of securities that is not binding on the subscriber until ratified by the subscriber after the securities may legally be sold.(h) Any transaction, in other than the initial public offering, involving any government security, other than a revenue obligation and other than a security issued or guaranteed by the United States, or any agency or corporate instrumentality of the United States, where the government security is of investment quality rating as determined by the office of the division of banking for the state of Wisconsin or by the comptroller of the currency by virtue of credit worthiness, or any transaction involving any government security dated prior to the effective date of this paragraph.(i) Any offer or sale of securities that qualifies for use of a transactional registration exemption under s. DFI-Sec 2.027, 2.028 or 2.029.(j) Offers or sales of a discretionary or managed trading account involving discretion or management provided by a broker-dealer registered in this state or by an investment adviser registered in this state.(k) Any offer, but not a sale, of a security through a presentation to potential investors at an organized venture capital fair or other investment forum designated in writing by the division. In order to be designated as a venture capital fair or investment forum for purposes of this exemption, a written application for designation shall be submitted to the division either by a sponsor of the fair or forum or by any interested person if accompanied by the written affirmation of a sponsor, setting forth the dates, places and times the activity will take place, the names and addresses of all sponsors of the activity, and the criteria to be met for a firm or person to participate in the fair or forum. Within 10 days from the receipt of the application or 10 days from the date of receipt of any amendment or supplemental information to the application required by the division, the division shall either designate the applicant a venture capital fair or investment forum or notify the applicant in writing why such a designation will not be made. For purposes of this paragraph, the terms "venture capital fair" or "investment forum" include, but are not limited to, gatherings open to public attendance that are sponsored by one or more not-for-profit entities at which persons representing existing or proposed businesses may make presentations regarding their business plans and products, or their financing or investment capital needs or proposals. (L) An exemption under this subsection is available for any transaction by the sponsor of a unit investment trust involving the resale of a share of beneficial interest in the trust that meets all of the following conditions: 1. The sponsor acquired the share of beneficial interest in the secondary market.2. The share of beneficial interest had been sold in the secondary market by a public holder of the share after the initial public offering of shares by the trust had been completed.(n) Any offer or sale of a security by an issuer in a transaction that meets each of the following requirements based on the North American Securities Administrators Association Model Accredited Investor Exemption: 1. Sales of the securities shall be made only to persons who are accredited investors as defined in 17 CFR 230.501(a), or who the issuer reasonably believes are accredited investors.2. The exemption is not available to an issuer that is in the development stage that either has no specific business plan or purpose or had indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.3. The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sale shall be presumed to be with a view to distribution and not for investment, except a resale pursuant to a registration statement effective under s. 551.303 or 551.304, Stats., or to an accredited investor pursuant to an exemption available under ch. 551, Stats.4. Neither the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's officers, directors, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, nor any broker-dealer or agent offering or selling the securities is or would be disqualified under s. DFI-Sec 2.029(3) (a) 1. to 4., absent an applicable waiver under s. DFI-Sec 2.029(3) (b), and with the timing of the disqualification events described in s. DFI-Sec 2.029(3) (a) computed for purposes of this exemption from the date of the filing under subd. 9. of this section.5. A general announcement of the proposed offering may be made by any means, which shall include each of the following information items only, except as provided in subd. 6., and unless additional information is specifically permitted by the division: a. The name, address and telephone number of the issuer of the securities;b. The name, a brief description and price, if known, of any security to be issued;c. A brief description of the business of the issuer in 25 words or less;d. The type, number and aggregate amount of securities being offered;e. The name, address and telephone number of the person to contact for additional information; andf. A statement disclosing that sales will only be made to accredited investors, that no money or other consideration is being solicited or will be accepted by way of this general announcement, and that the securities have not been registered with or approved by any state securities agency or the U.S. securities and exchange commission and are being offered and sold pursuant to an exemption from registration.6. The issuer, in connection with an offer, may provide information in addition to the general announcement under subd. 5., if the information meets either of the following requirements of this subdivision:a. The information is delivered through an electronic database that is restricted to persons who have been prequalified as accredited investors; orb. The information is delivered after the issuer reasonably believes that the prospective purchaser is an accredited investor.7. No telephone solicitation shall be permitted unless prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.8. Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not disqualify the issuer from claiming the exemption under this rule.9. The issuer shall file with the division within 15 days after the first sale in this state in reliance on this exemption, a copy of the general announcement, a consent to service of process, a fee of $200, and a completed Form AI as prescribed in s. DFI-Sec 9.01(1) (e) for use of this exemption.(o) Pursuant to s. 551.203, Stats., a transactional securities registration exemption is available for the 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 the issuer or an applicant files with the division prior to the offering a notice of the proposed sale, including: the prospectus used in the most recent offering of the securities proposed to be sold; a copy of the issuer's articles of incorporation and by-laws, or equivalents, as currently in effect; any information specified in ss. DFI-Sec 3.02 and 3.03, and not contained in the filed prospectus; the trust indenture, if any, under which the securities proposed to be sold are issued; the information concerning the public market for the security; a balance sheet of the issuer as of the end of the last fiscal year of the issuer preceding the date of filing and statements of income and changes in financial position and analysis of surplus for such fiscal year meeting the requirements of s. DFI-Sec 7.06; an undertaking to file with the division within 120 days (180 days with respect to a corporation organized and operated not for private profit but exclusively for religious, educational, benevolent or charitable purpose) after the end of each fiscal year of the issuer comparable financial statements of the issuer for each such fiscal year; and an undertaking to furnish the division with a written report within 30 days after the happening of any material event affecting the issuer or the securities proposed to be sold. The exemption, unless disallowed by order of the division within 10 days, is effective so long as the information required to be furnished is kept current.Wis. Admin. Code Department of Financial Institutions DFI-Sec 2.02
CR Register, December, 1969, No. 168, eff. 1-1-70; r. and reCR Register, August, 1972, No. 200, eff. 9-1-72; emerg. CR (11), eff. 11-4-75; CR (11), Register, February, 1976, No. 242, eff. 3-1-76. Am. (1) (a), (3) (a), and (b), (5) and (6), renum. (9) (10) and (11) to be (10), (11) and (9), am. (9) (10) (intro.) and (11) (a) and (e), r. and reCR (10) (b), CR (11) (f) and (g), Register, December, 1977, No. 264, eff. 1-1-78; am. (6) (b) and (d) 1., Register, September, 1978, No. 273, eff. 10-1-78; am. (5) (c), (6) (b) and (11) (f) 6., Register, December, 1979, No. 288, eff. 1-1-80; am. (1) (b), (2) and (3) (a) and (b), r. (4), renum. (5) to (11) to be (4) to (10), and am. (5) (a), (c), and (d) 1., (6), (9) and (10), Register, December, 1980, No. 300, eff. 1-1-81; CR (9) (c) and am. (10) (d), Register, December, 1981, No. 312, eff. 1-1-82; emerg. CR (10) (h), eff. 5-1-82; CR (10) (h), Register, September, 1982, No. 321, eff. 10-1-82; am. (3) (a) and (5) (d) 1., CR (10) (i), Register, December, 1982, No. 324, eff. 1-1-83; CR (10) (j), Register, August, 1983, No. 332, eff. 9-1-83; am. (1) (a), (5) (d) 1. and (10) (b), Register, December, 1983, No. 336, eff. 1-1-84; emerg. r. (10) (j), eff. 1-1-84; r. (10) (j), Register, May, 1984, No. 341, eff. 6-1-84; am. (10) (g), Register, December, 1984, No. 348, eff. 1-1-85; am. (3) (b) and (10) (f) 4., Register, December, 1985, No. 360, eff. 1-1-86; emerg. am. (10) (g) 1., eff. 1-1-86; CR (10) (j), Register, March, 1986, No. 363, eff. 4-1-86; am. (10) (g) 1., Register, May, 1986, No. 365, eff. 6-1-86; am. (1) (a) and (9) (c), CR (10) (k), Register, December, 1986, No. 372, eff. 1-1-87; am. (10) (j), Register, December, 1987, No. 384, eff. 1-1-88; r. and reCR (4) (c), am. (10) (j), CR (10) (l) and (m), Register, December, 1988, No. 396, eff. 1-1-89; am. (4) (c) (intro.), 1. and 2. (intro.), (5) (c) and (d) 3., Register, December, 1989, No. 408, eff. 1-1-90; r. (6), renum. (4) (d), (7) to (10) to be (4) (e) and (6) to (9) and am. (9) (f) 6., CR (4) (d), Register, December, 1991, No. 432, eff. 1-1-92; reprinted to correct error in (4) (d) 4., Register, February, 1992, No. 434; am. (4) (d) 4. and (6), renum. (4) (e) to be (4) (f), CR (4) (e), Register, December, 1992, No. 444, eff. 1-1-93; CR (4) (g), Register, May, 1994, No. 461, eff. 6-1-94; r. (4) (d) 1. to 5., renum. (4) (d) (intro.) to be (4) (d) and am., am. (5) (a), (9) (c), (f) 2., CR (9) (n), Register, December, 1994, No. 468, eff. 1-1-95; am. (1) (a), (4) (c) 2., (5) (d) 1., CR (4) (h), (9) (n), r. and reCR (5) (d) 2., r. (5) (d) 3., (9) (i), renum. (9) (j) to (n) to be (9) (i) to (m) and am. (9) (h) and (L), Register, December, 1995, No. 480, eff. 1-1-96; am. (5) (c), renum. (9) (f) (intro.), (m) and (n) to be (9) (f), (L) and (m) and am. (9) (f), r. (9) (f) 1. to 8., (L), Register, December, 1996, No. 492, eff. 1-1-97; corrections in (3), (8) (c) and (g) made under s. 13.93(2m) (b) 7, Stats., Register, March, 1997, No. 495; am. (9) (a) and (L), Register, December, 1998, No. 516, eff. 1-1-99; am. (9) (a) and (L) (intro.), Register, December, 1999, No. 528, eff. 1-1-00; am. (1) (intro.), (9) (c) and (m), renum. (4) (intro.) to (h) to be (4) (a) (intro.), 1. to 7. and (b), Register, December, 2000, No. 540, eff. 1-1-01; CR 01-083: am. (4) (a) 3. b., CR (9) (n), Register December 2001 No. 552, eff. 1-1-02; CR 03-069: r. (4) (b), renum. (4) (a) 1. to 7. to be (4) (intro.), (a) to (g) Register November 2003 No. 575, eff. 12-1-2003; CR 08-077: am. (1) (intro.), (2), (5) (intro.), (d), (7) (a), (b), (9) (intro.), (a), (c), (g) (intro.), 1., (i), (j), (n) 3. and 4., r. (3) (intro.), (a), (4) (g), (5) (c), (6), (8), (9) (d) and (f), renum. (3) (b) to be (9) (o) and am., renum. (4) (intro.) to (f) to be DFI-Sec 1.02(8) (intro.) to (f) and am. (8) (intro.) and (e), CR (9) (d) Register December 2008 No. 636, eff. 1-1-09; correction in (9) (c) made under s. 13.92(4) (b) 7, Stats., Register February 2009 No. 638; CR 09-056: r. (9) (b) and (m) Register December 2009 No. 648, eff. 1-1-10; CR 10-062: am. (5) (d) 1. and (9) (c) Register September 2010 No. 657, eff. 10-1-10.