Consumer Law at Your Fingertips

Money-Making Schemes

Security

Wisconsin Statutes chapter 551 prohibits the sale of stocks, bonds or other “securities” unless the security is registered with the Wisconsin Department of Financial Institutions (DFI).

• The registration requirement does not apply to securities exempted by state or federal law.

• The registration process focuses on “full disclosure.” In some cases, filing requirements are minimal. In other cases, the registrant must file a disclosure document, typically called a “prospectus” or “offering circular.” Regardless of the applicable filing requirements (and even if there are none), the law requires sellers to disclose material facts to prospective investors.

• A person may not engage in any deceptive or fraudulent practice in connection with the offer, sale or purchase of a security. DFI may suspend or revoke a security registration for law violations, including fraudulent practices.

• Law violators may be prosecuted, and there are private remedies for injured buyers.