Secondary Trading Exemption

Statute: § 551.23(3), Wis. Stats.

Used for:  Secondary market transactions in previously-issued securities by 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:

1. The issuer has any securities registered under section 12 of the Securities Exchange Act of 1934 or exempted from registration under section 12(g)(2)(G) or 12(g)(3) of that act or is an investment company; or
2. The issuer's securities of the same class have been registered under Chapter 551, Wis. Stats., within 2 years preceding the sale and the registration has not been revoked or suspended; or
3. The issuer's securities of the same class have been registered under the Securities Act of 1933 and a notice is filed and not disallowed by the Division within ten days; or
4. A notice is filed as prescribed by rule and is not disallowed by the Division within ten days.

Filing requirement:

Subs. (a) and (b): Self-Executing. No filing or Consent to Service of Process is necessary in order to claim this exemption.

Subs. (c) and (d):  Notice Filing, as set forth at § DFI-Sec 2.02(3)(a) and (b), Wis. Adm. Code.

• Filing fee: $200, as set forth at § DFI-Sec 7.01(2)(b), Wis. Adm. Code made payable to Wisconsin DFI-Division of Securities.
• Form required: There is no required form. File a cover letter, the fee, and the required exhibits at least ten days prior to the offering in this state, referencing the statute or rule section under which the notice is filed.
• Exhibits required: A copy of the prospectus, offering document, all other material to be delivered to offerees in connection with the transaction, and all other information the Division may require after the filing. If advertising is published or circulated in connection with the transactions or the securities underlying the transactions for which this exemption is claimed, it must be filed with the Division and may not be used unless and until the Division has allowed its use, unless exempt from this requirement under § DFI-Sec 7.02(1), Wis. Adm. Code.
• Review time: Ten calendar days, unless extended pursuant to § DFI-Sec 2.03(2), Wis. Adm. Code.

Related considerations: §§ 551.23(1) and (2), Wis. Stats., are also secondary trading exemptions not labeled as such. The exemption set forth here is that most commonly termed a "Secondary Trading Exemption."

Administrative Code reference: § DFI­Sec 2.02(3)(a) and (b), Wis. Adm. Code.

Frequently asked questions:

Q: Is this exemption self-executing?

    A: Subsections (a) and (b) are self-executing, subsections (c) and (d) require a  notice filing.

Q: What securities or transactions are covered by subsection  (d)?

    A: Securities involved in any transaction that meets the requirements set forth in the opening paragraph of §  551.23(3), Wis. Stats., but doesn't qualify under subsections (a), (b), or (c) of that exemption. See notice filing.

Q: What additional information is usually required by the Division?

    A: It is not uncommon for the Division to request information relating to the breadth and depth of the trading market for the security.

Q: Does Wisconsin have a "manual" exemption for secondary trading?

    A: No.

History: Adopted January 1, 1970. There is no parallel provision in the Uniform Securities Act.