551.202 Exempt transactions.

1,051 words·~5 min read·/wi/chapter-551/551-202

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

551.202 Exempt transactions. The following transactions are exempt from the requirements of ss. 551.301 to 551.306 and 551.504 :

(1)An isolated nonissuer transaction, whether effected by or through a broker-dealer or not.

(2)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least 90 days if, at the date of the transaction, all of the following apply:

(a)The issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person.

(b)The security is sold at a price reasonably related to its current market price.

(c)The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution.

(d)A nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued under this chapter or a record filed with the Securities and Exchange Commission that is publicly available contains all of the following:

1. A description of the business and operations of the issuer.

2. The names of the issuer’s executive officers and the names of the issuer’s directors, if any.

3. An audited balance sheet of the issuer as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization.

4. An audited income statement for each of the issuer’s 2 immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement.

(e)Any of the following requirements is met:

1. The issuer of the security has a class of equity securities listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System.

2. The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940.

3. The issuer of the security, including its predecessors, has been engaged in continuous business for at least 3 years.

4. The issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had such an audited balance sheet, a pro forma balance sheet for the combined organization.

(3)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security of a foreign issuer that is a margin security defined in regulations or rules adopted by the Board of Governors of the Federal Reserve System.

(4)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of section 13 or 15

(d)of the Securities Exchange Act of 1934 ( 15 USC 78m or 78o (d)).

(5)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security to which any of the following applies:

(a)The security is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its 4 highest rating categories.

(b)The security has a fixed maturity or a fixed interest or dividend, if all of the following apply:

1. A default has not occurred during the current fiscal year or within the 3 previous fiscal years, or during the existence of the issuer and any predecessor if less than 3 fiscal years, in the payment of principal, interest, or dividends on the security.

2. The issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous 12 months a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person.

(6)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter effecting an unsolicited order or offer to purchase, but with respect to a nonissuer transaction involving a security that is not a federal covered security the administrator may require by rule that the records of the broker-dealer confirm that the order or offer to purchase was unsolicited.

(7)A nonissuer transaction executed by a bona fide pledgee without the purpose of evading this chapter.

(8)A nonissuer transaction by a federal covered investment adviser with investments under management in excess of $100,000,000 acting in the exercise of discretionary authority in a signed record for the account of others.

(9)A transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims, or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the administrator after a hearing.

(10)A transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters.