Accredited Investors
Institutional Investors

Statute: § 551.23(8), Wis. Stats.

Used for:  Offers or sales of securities to

1. the issuer;

2. specified financial institutions, insurers, broker-dealers, federal covered advisers, or investment advisers acting for their own account or as trustee with investment control;

3. a pension or profit-sharing trust or plan that is administered by a specified financial institution, broker-dealer, federal covered adviser, or investment adviser with investment control;

4. the state and any of its agencies or political subdivisions;

5. the federal government and any of its agencies or instrumentalities;

6. any entity or person designated as a financial institution or institutional investor designated by rule or order including a venture capital company and a qualified institutional buyer;

7. an "accredited investor" as defined federally in Regulation D, Rule 501(a) [17 CFR 230.501(a)];

Filing requirement: : Self-Executing. No filing or Consent to Service of Process is necessary in order to claim this exemption.

Administrative Code reference: § DFI­Sec 2.02(4), Wis. Adm. Code.

Frequently asked questions:

Q: Is this exemption self-executing?

    A: Yes. No filing or Consent to Service of Process is required.

Q: Does this exemption cover sales to all pension or profit sharing trusts?

    A: No. The trust assets must be managed by a bank, trust company, or institutional manager.

Related considerations:  The licensing exclusions set forth at § 551.31(1)(a), Wis. Stats., which allow transacting securities business in Wisconsin as a broker­dealer, agent, or investment adviser without being licensed, are available only if the firm's or agent's Wisconsin clients are solely those persons/entities listed in § 551.23(8)(a)-(f), Wis. Stats.  The licensing exclusion does not apply to sales to accredited investors under (8)(g).

Important interpretive letters:

7/24/92 letter re:  Paine Webber.   Availability for use of § 551.23(8)(b), Wis. Stats., specifically requires that the offer or sale of securities to any of the specified exempt account entities involve the purchaser acting either "for itself" or "as trustee" with investment control.  Therefore, an investment adviser's portfolio transactions under a "wrap" type program involving investments in a portfolio exclusively consisting of American Depository Receipts ("ADR's") on behalf of any Wisconsin participant­customer would necessitate a legal agreement or other document establishing a formal trust/trustee relationship before exemption status under this section would be available.

5/11/87 letter re:  Scudder Treasurers Trust.  Offers and sales of securities of a Trust and its component Funds, which were designed exclusively for the investment management needs of treasurers and financial officers of corporations and financial institutions, which required a minimum purchase amount of $250,000, and which were not available to private individual investors, constituted transactions exempt from registration in Wisconsin.

6/7/83 letter re:  Federated Financial Corporation. Neither the language of this section of the Statutes nor its related administrative rule provisions contain specific language that includes a subsidiary of any of the designated entities. Therefore, offers and sales to subsidiaries of the designated entities may not be made under this exemption.

History: Adopted on January 1, 1970.  Revised from Uniform Act § 402(b)(8).  Amended effective 9/30/71 to add "savings and loan association" and "the state or an agency or instrumentality." Repealed and recreated effective 4/27/84 to reorganize into separate paragraphs.  Amended effective 5/3/88 to add to paragraph (c) that pension or profit­sharing trusts must be administered by specified financial institutions.  Amended effective 5/7/92 to add "savings bank" to paragraphs (b) and (c). Amended effective 12/3/93 to add "individual accredited investor" exemption category in paragraph (g).  Amended July 9, 1998, to reflect the adoption of the National Securities Markets Improvement Act of 1996. Amended October 1, 2002 to delete "individual" concept and incorporate by reference the federal accredited investor definition in Rule 501(a) under Regulation D [17 CFR 230.501(a)].