Section 6.02. Stock distributions.

  A person authorizing or causing the distribution of securities as a stock dividend by a corporation other than the issuer, without registration of the securities under ch. 551 , Stats. , or the securities act of 1933, is deemed to employ a "device, scheme or artifice to defraud" the purchasers of the securities in broker-dealer transactions, within the meaning of s. 551.501 (1) , Stats., if:

(1)  The issuer of the securities was organized or the securities were acquired for the purpose of the distribution or in connection therewith, either by the distributing corporation or by any person in control of, controlled by, or under common control with, the distributing corporation; or

(2)  The issuer has nominal assets or income at the time of the distribution; and if the person has reason to believe that the distribution will be followed by transactions in the securities effected through broker-dealers.

History: Cr. Register, December, 1969, No. 168 , eff. 1-1-70; am. Register, August, 1972, No. 200 , eff. 9-1-72; am. Register, December, 1980, No. 300 , eff. 1-1-81; corrections made under s. 13.93 (2m) (b) 1., Stats., Register, December, 1996, No. 492 ; CR 08-077 : am. (intro.) Register December 2008 No. 636 , eff. 1-1-09 .