Quick Answer
A cease and desist order is the Administrator's fastest tool: no court and no prior hearing required, issued the moment a violation has happened or is about to happen. It only stops conduct. It cannot touch money, and it is not the Administrator's only hearing-free power.
Now that you understand the Administrator's investigative powers, let's look at the first enforcement tool available once a violation is found: the cease and desist order.
What Authority Backs a Cease and Desist Order?
When the Administrator believes that any person has engaged or is about to engage in any act constituting a violation of the Act, the Administrator may issue a cease and desist order.
- The order directs the person to stop the prohibited activities
- The order reaches a violation of the Act or of any rule or order under it, not only the statute itself
- This is the Administrator's most immediate enforcement tool
- It does not require court involvement
- The Administrator may pursue a cease and desist order and an injunction together; the two remedies are not mutually exclusive
What Are Its Key Characteristics?
| Feature | Detail |
|---|---|
| Prior hearing required? | No (can be issued without a prior hearing) |
| Court involvement? | No (this is an administrative order) |
| Who issues it? | The Administrator (not a court) |
| Scope | Directs the person to cease and desist from further illegal activity |
| Target | Any person (registered or unregistered) |
| Trigger | Violation has occurred OR is about to occur (preventive) |
Exam Tip: Gotchas
- The cease and desist order can be issued before a violation is complete. The Administrator does not need to wait for harm to occur.
Why Does This Matter?
The cease and desist order requires neither court approval nor a prior hearing, making it the fastest way to stop securities violations in progress. It takes effect immediately, and the person must comply while any further proceedings take place.
It is not the Administrator's only hearing-free power. A registration can also be summarily suspended pending the outcome of a proceeding, with the hearing coming afterward on request. The distinction that matters is what each tool reaches: a cease and desist order stops the conduct, a summary suspension stops the person from operating, and neither one touches the violator's money. Anything monetary needs a court.
Exam Tip: Gotchas
- But it is not the only hearing-free power. A registration may also be summarily suspended pending a proceeding. If a question says cease and desist is the only thing the Administrator can do without a hearing or a court, that is the trap.
- Injunctions require court action, and criminal penalties require a court conviction. The exam tests which remedies require court involvement and which do not.
What Should You Check on Exam Day?
- A cease and desist order needs no court approval and no prior hearing, and it can stop a violation that hasn't happened yet.
- The Administrator can bring a cease and desist order and an injunction action for the same conduct; nothing forces a choice between them.
- It shares its hearing-free status with summary suspension, but only summary suspension reaches the person's ability to operate; only a court reaches the person's money.
- If a question asks who can order someone to stop, the answer is the Administrator; if it asks who can enjoin, freeze assets, or award money, the answer is the court.