551.202 Exempt transactions.

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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.

(11)A transaction in a note, bond, debenture, or other evidence of indebtedness secured by a mortgage or other security agreement if all of the following apply:

(a)The note, bond, debenture, or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit.

(b)A general solicitation or general advertisement of the transaction is not made.

(c)A commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this chapter as a broker-dealer or as an agent.

(12)A transaction by an executor, administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator.

(13)A sale or offer to sell to any of the following:

(a)An institutional investor.

(am)An accredited investor, as defined in Rule 501

(a)adopted under the Securities Act of 1933 ( 17 CFR 230.501

(a)), provided that prior to the sale in this state to an accredited investor described in Rule 501

(5)or

(6)adopted under the Securities Act of 1933, the seller files a consent to service of process with the administrator in the form required under s. 551.611 . Failure to file the consent as required is a cause for administrative action by the administrator under s. 551.604 but does not result in the loss of this exemption. This consent is not required to be filed if any of the following apply:

1. The issuer of the securities to be sold has its principal place of business or a majority of its full-time employees located in this state.

2. The issuer or seller of the securities files or has previously filed a consent to service of process with the administrator.

3. The seller is a broker-dealer or agent of the issuer registered under this chapter.

(ar)A certified investor, or a person whom the issuer reasonably believes is a certified investor at the time of the sale or offer of the security, if all of the following apply:

1. The transaction meets the requirements of the federal exemption for intrastate offerings in section 3

(11)of the Securities Act of 1933 ( 15 USC 77c

(a)(11)) and Rule 147 adopted under the Securities Act of 1933 ( 17 CFR 230.147 ).

2. If the offer or sale of the security had been undertaken under an exemption specified in Rule 506

(a)to

(c)adopted under the Securities Act of 1933 ( 17 CFR 230.506

(a)to (c)), the transaction would not have been disqualified from the exemption under Rule 506

(d)adopted under the Securities Act of 1933 ( 17 CFR 230.506

(d)), except that the administrator may waive the requirement under this subdivision and authorize transactions in reliance on the exemption under this paragraph notwithstanding the condition specified in this subdivision.

(b)A federal covered investment adviser.

(c)Any other person exempted by rule adopted or order issued under this chapter.

(a)Subject to par.

(b), any transaction pursuant to an offer directed by the offeror to not more than 25 persons in this state excluding those persons designated in sub.

(13)but including persons exempt under sub.

(24), during any period of 12 consecutive months whether or not the offeror or any of the offerees is then present in this state if all of the following apply:

1. No general solicitation or general advertising is made in connection with the offer to sell or sale of the securities unless it has been permitted by the administrator.

2. No commission or other remuneration is paid or given, directly or indirectly, to a person other than a broker-dealer registered under this chapter or an agent registered under this chapter for soliciting any person in this state other than those persons designated in sub.

(13).

3. The offeror reasonably believes that all the purchasers in this state, other than those designated in sub.

(13), are purchasing for investment.

(b)The administrator may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of offerees permitted, or waive the conditions in par.

(a), and may require reports of sales under this exemption.

(a)Any transaction pursuant to an offer directed by the offeror to not more than 100 residents of this state, excluding those persons designated in sub.

(a),

(am), and

(ar)but including persons exempt under sub.

(24), if all of the following apply:

1. The issuer is a business entity that is organized under the laws of this state and authorized to do business in this state, that has its principal office in this state, and that has a majority of its full-time employees working in this state.

2. No commission or other remuneration is paid or given, directly or indirectly, for any person’s participation in the offer or sale of securities for the issuer unless the person is registered as a broker-dealer or agent under this chapter.

3. No general solicitation or general advertising is made in connection with the offer to sell or sale of the securities unless it has been permitted by the administrator.

4. If the transaction had been undertaken under an exemption specified in Rule 506

(a)to

(c)adopted under the Securities Act of 1933 ( 17 CFR 230.506

(a)to (c)), the transaction would not have been disqualified from the exemption under Rule 506

(d)adopted under the Securities Act of 1933 ( 17 CFR 230.506

(b)The exemption under this subsection and the exemption under sub.

(27)may be used in conjunction with each other.

(15)A transaction under an offer to existing security holders of the issuer, including persons that at the date of the transaction are holders of convertible securities, options, or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in this state and if, prior to any offer or sale of any security that is not a federal covered security, the issuer files a notice specifying the terms of the offer, all other information that the administrator by rule requires, and any additional information reasonably related to the offering required to be filed by the administrator within 10 days after the filing date of the notice, and the administrator does not by order disallow the exemption within 10 days after the date of filing the notice or, if additional information is required, within 10 days after the date of filing that information.

(16)An offer to sell, but not a sale, of a security not exempt from registration under the Securities Act of 1933 if all of the following apply:

(a)A registration or offering statement or similar record as required under the Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 adopted under the Securities Act of 1933 ( 17 CFR 230.165 ).