Securities on the Internet

On May 22, 1996, the Division issued an Order providing that offers of securities made on the Internet are exempt from the securities registration requirement of § 551.21, Wis. Stats., and exempt from the advertising filing requirement in § 551.53 (1)(b), Wis. Stats., if certain conditions are met. The Order follows:

BEFORE THE DEPARTMENT OF FINANCIAL INSTITUTIONS
DIVISION OF SECURITIES
STATE OF WISCONSIN

AMENDED ORDER EXEMPTING CERTAIN OFFERS OF SECURITIES MADE ON THE INTERNET FROM SECURITIES REGISTRATION

WHEREAS the Division of Securities, Department of Financial Institutions ("Division"), is charged with the administration of Chapter 551, Wis. Stats., the Wisconsin Uniform Securities Law (the "Law"), and section DFI-Sec 1.01 et seq. of the Rules of the Division of Securities promulgated under the Law;

WHEREAS it is appropriate and necessary that a May 22, 1996 Order regarding the above-titled subject matter that had been issued by the Division's predecessor (the Wisconsin Office of the Commissioner of Securities), be amended to reflect the renaming of the agency as the Division of Securities which took place incident to the July 1, 1996 date of a reorganization in which several state agencies, including the former Wisconsin Office of the Commissioner of Securities, became separate Divisions of the Department of Financial Institutions.

WHEREAS section 551.63(1) of the Law provides, in part, that "[t]he Division may make, amend and rescind any ... orders that are necessary to carry out this chapter ...;"

WHEREAS section 551.23(1)(intro.) of the Law states that: "The following transactions are exempt from registration under s. 551.21(1): ...," and s. 551.23(18) thereunder states: "Any other transaction as to which the Division by rule or order finds that registration is not necessary or appropriate for the protection of investors."

WHEREAS the Division acknowledges that an attempt or offer to dispose of, or the solicitation of an offer to buy, a security or an interest in a security for value, that is made on or through the Internet, the World Wide Web or a similar proprietary or common carrier electronic system (such systems hereinafter being referred to collectively as the "Internet"), would constitute an "offer" for purposes of section 551.02(11)(b) of the Law and would otherwise trigger the securities registration and the sales literature filing requirements in sections 551.21(1) and 551.53 of the Law;

WHEREAS the Division also acknowledges that use of the Internet may be a legitimate means of raising capital, and that a communication made on the Internet may be directed not only to particular recipients but also to anyone with access to the Internet;

WHEREAS the Division finds that the issuance of this Amended Order is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes fairly intended by the policy and provisions of the Law;

WHEREAS the Division further finds that the registration of, and the filing of advertising materials relating to, certain Internet offers is not necessary or appropriate in the public interest or for the protection of investors;

THE DIVISION THEREFORE ORDERS THAT:

Pursuant to section 551.23(18) of the Law, offers of securities made by, or on behalf of, issuers on or through the Internet shall be exempt from the securities registration requirement in section 551.21(1) and exempt from the advertising filing requirement in section 551.53(1)(b) of the Law if all of the following conditions are met:
1. The Internet offer indicates, directly or indirectly, that the securities are not being offered to residents of Wisconsin;
2. The Internet offer is not specifically directed to any person in Wisconsin by, or on behalf of, the issuer of the securities; and
3. No sales of the issuer's securities are made in Wisconsin as a result of the Internet offering until such time as the securities being offered have been registered under sections 551.25 or 551.26 of the Law, and a final prospectus or Form U-7 is delivered to Wisconsin investors prior to such sales.
Nothing in this Amended Order shall preclude an issuer, or a person acting on behalf of an issuer, which offers securities on the Internet or effects sales to Wisconsin residents following such an offering from relying upon any other applicable exemption pursuant to section 551.22 or 551.23 of the Law, nor shall this Order relieve such persons from liability under section 551.41 of the Law.
This Amended Order shall remain in effect until amended or rescinded by the Division.

So ordered at Madison, Wisconsin, this 18th day of December, 1997.

[SEAL]

Patricia D. Struck

Administrator

Division of Securities