What is my remedy under Wisconsin's Uniform Securities Law?
By Sean Sweeney on August 10, 2012
Wisconsin’s Uniform Securities Law provides a civil cause of action against “[a]ny person who offers or sells a security in violation of … s. 551.501.” Wis. Stats. 551.509(2). Section 551.501 in turn provides:
It is unlawful for any person, in connection with the offer, sale or purchase of a security, directly or indirectly, to do any of the following:In interpreting Section 551.501, Wisconsin courts have looked to federal court interpretation of 12(2) of the Securities Act of 1933. State v. Temby, 108 Wis. 2d at 528-29. Those cases in turn affirm that material misrepresentations going to the risks involved, the investment characteristics, or the quality of transactions, are actionable. See Kearney v. Prudential-Bache Securities, Inc., 701 F. Supp. 416, 425 (S.D.N.Y. 1988) (citing cases).
(1) To employ any device, scheme or artifice to defraud;
(2) To make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;
(3) To engage in an act, practice, or course of business which operates or would operate as a fraud or deceit upon another person.
Once it has been determined that section 551.501 has been violated, Section 551.509(2)(a) explicitly defines damages as:
the consideration paid for the security, less the amount of any income received on the security and interest at the legal rate under s. 138.04 from the date of purchase, costs, and reasonable attorneys’ fees.
From a practical standpoint, while violations of Wisconsin's Uniform Securities Law are regularly alleged in FINRA arbitrations, the mandatory interest and attorneys' fees are rarely granted.
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