Financial exploitation of vulnerable adults with securities accounts, violations of the Wisconsin Uniform Securities Law, granting rule-making authority, and providing a penalty

Current law also requires, with exceptions, certain securities industry professionals to be registered with the Division of Securities in DFI, including an individual who represents a broker-dealer in securities transactions (securities agent) and an investment adviser representative.

This bill allows a securities agent, investment adviser representative, or other individual serving in a supervisory, compliance, or legal capacity for a broker-dealer or investment adviser (qualified individual) who reasonably suspects that financial exploitation of an adult at risk or an individual who is 60 years of age or older (together, vulnerable adult) has occurred or is being attempted to notify the division, an adult-at-risk agency or elder-adult-at-risk agency (together, APS agency), a law enforcement agency, or any combination of these, as well as certain other persons, including a legal guardian, a person identified on a contact list provided by the vulnerable adult, and a spouse, parent, adult child, or other individual reasonably associated with the vulnerable adult. The bill also allows a broker-dealer or investment adviser to delay a transaction on, or disbursement from, an account of a vulnerable adult or an account on which a vulnerable adult is a beneficiary if all of the following apply: 1) the broker-dealer, investment adviser, or qualified individual reasonably suspects that the requested transaction or disbursement may result in financial exploitation of a vulnerable adult; and 2) the broker-dealer or investment adviser promptly notifies the division, an APS agency, or a law enforcement agency and provides written notice of the delay and the reason for the delay to all parties authorized to transact business on the account. The division may, by rule, establish additional guidelines for the delay of a transaction or disbursement. Any delay of a transaction or disbursement expires on the earlier of the following: a determination by the broker-dealer or investment adviser that the transaction or disbursement is not reasonably likely to result in financial exploitation of the vulnerable adult; or, subject to exceptions, 15 business days after the date on which the broker-dealer or investment adviser first delayed the transaction or disbursement of the funds. The bill provides for immunity from liability for a broker-dealer, investment adviser, or qualified individual that, in good faith and exercising reasonable care, acts in accordance with these provisions.

Current law includes numerous provisions prohibiting specified conduct in connection with securities transactions or the offering or sale of securities. Under current law, a person who violates the state's securities laws may be subject to criminal liability or civil liability or both. A person who willfully violates the state's securities laws, with certain exceptions, is guilty of a Class H felony, punishable by a maximum fine of $10,000 or a maximum term of imprisonment of six years or both.

A person may also be subject to a civil enforcement proceeding for violating the state's securities laws. In a civil enforcement proceeding, the court in a circuit court proceeding or the division in an administrative proceeding may impose a civil penalty of not more than $5,000 for a single violation or not more than $250,000 for more than one violation. Current law also includes a penalty enhancer for securities law violations committed against a person who is at least 65 years of age. For criminal offenses, the maximum fine may be increased by not more than $5,000 and the maximum term of imprisonment may be increased by not more than five years, and for civil offenses the civil penalty may be increased by not more than $5,000 for a single violation or not more than $250,000 for more than one violation.

Under this bill, this penalty enhancer applies to violations committed against a vulnerable adult.

Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report.