Quick Answer
The state securities Administrator makes rules, investigates in or outside the state, subpoenas records, and issues cease and desist orders and stop orders without going to court. But only a court grants injunctions, orders restitution, or imposes criminal penalties. Registration actions need public interest AND a statutory ground, plus notice and hearing.
The whole unit on one sheet: what the Administrator can do alone, what needs a court, and the numbers the exam swaps.
The One-Liners That Win Points
- The Administrator (the state securities regulator) may conduct public or private investigations, within or outside the state, at their own discretion, with no court approval and no complaint needed.
- The Administrator may subpoena witnesses and documents and administer oaths, but cannot directly enforce a subpoena: a person who refuses is taken to court, and only the court can hold them in contempt.
- The Administrator may issue cease and desist orders WITH or WITHOUT a prior hearing: this is the only enforcement tool needing neither court nor hearing.
- Injunctions are judicial: only a court grants them, along with rescission, restitution, and disgorgement. The Administrator petitions; the court orders.
- Denial, suspension, or revocation of a person's registration requires the two-prong test: public interest AND a statutory ground, plus notice, opportunity for hearing, and written findings.
- Stop orders block, suspend, or revoke a securities registration and use the same two-prong test.
- Registrations are never "approved": they become effective. Saying a registration is approved is prohibited.
- A federal covered security is exempt from state registration but can still owe a notice filing and fee; the Administrator may stop-order it for a filing failure but never for NYSE or NASDAQ exchange-listed securities.
- "Willfully" means the person intended the act, not that they intended to break the law.
Numbers to Lock In
| Item | Value |
|---|---|
| Appeal a final order to court | within 60 days after entry |
| Request a hearing after summary suspension or postponement | within 15 days of written request |
| Retroactive action on securities registration (known facts) | within 30 days of effective date |
| Retroactive action on person registration (known facts) | within 90 days of registration |
| Withdrawal from registration becomes effective | 30 days after receipt |
| Administrator may pursue willful violations after withdrawal | within 1 year |
| Criminal conviction as a ground (any felony or securities misdemeanor) | within past 10 years |
Top Gotchas
- Cease and desist is administrative; an injunction is judicial. The Administrator issues the "stop right now" order alone, but only a court can enjoin. "Who can enjoin?" is always the court.
- Both prongs are always required. Public interest alone is not enough, and a statutory ground alone is not enough: the action needs both.
- The Administrator cannot award restitution, rescission, or disgorgement: those are court-ordered remedies the Administrator only requests.
- The Administrator cannot arrest anyone or impose criminal fines or imprisonment: that belongs to law enforcement and the courts.
- Filing an appeal does NOT stay the order. A suspension stays in effect during the appeal unless the court specifically grants a stay.
- 30 days (securities) vs 90 days (persons) for retroactive action on known facts are frequently swapped.
- NYSE and NASDAQ exchange-listed covered securities are fully off-limits to state stop order authority.
One-Breath Recap
The Administrator's power splits cleanly into administrative (no court) and judicial (court required): alone the Administrator makes rules, investigates in or outside the state, subpoenas records, issues cease and desist orders with or without a hearing, and stop-orders securities and person registrations under the two-prong test (public interest AND a statutory ground, plus notice and hearing). But only a court grants injunctions, orders restitution, rescission, or disgorgement, enforces subpoenas through contempt, and imposes criminal penalties. Lock the numbers (60 days to appeal, 15 days to request a hearing, 30 days securities versus 90 days persons for known facts), remember registrations become effective and never "approved," and this heavily tested unit answers itself.
Need more than the recap? This is a condensed summary. If it is not enough, read the full Administrator Powers and Administrative Actions unit for the complete lesson.