This final section pulls everything together into the master reference for Administrator powers. This is the synthesis of the entire unit; it is heavily tested on the exam.
The Administrator CAN
| Power | Court Required? |
|---|---|
| Conduct investigations (public or private) | No |
| Issue subpoenas for testimony and documents | No |
| Compel testimony (even over self-incrimination claims) | No |
| Issue cross-border subpoenas for other states | No |
| Issue cease and desist orders (with or without prior hearing) | No |
| Deny, suspend, or revoke registration of persons | No (but due process required) |
| Issue stop orders on securities registrations | No (but due process required) |
| Issue stop orders on federal covered securities for filing failures | No |
| Summarily suspend registrations pending proceedings | No |
| Cancel inactive registrations | No |
| Refer evidence for criminal prosecution | No (refers to AG/DA) |
| Make rules, forms, and orders | No |
| Publish information about violations | No |
Exam Tip: Gotchas
- Both prongs of the two-prong test are always required. Public interest alone is not enough; there must also be a statutory ground (denial, suspension, revocation, stop order).
- "Willfully" means the person intended the act, not that they intended to break the law. Someone who knowingly sold an unregistered security without knowing it was illegal still acted willfully.
- Appealing an Administrator's order does not automatically stay (pause) the order. The appeal does not put enforcement on hold unless a court specifically orders a stay.
The Administrator CANNOT
| Action | Who Has the Power | Why |
|---|---|---|
| Arrest anyone | Law enforcement | Administrator is not law enforcement |
| Impose criminal penalties (fines or imprisonment) | Courts (after prosecution by AG/DA) | Only courts can convict and sentence |
| Directly enforce subpoenas | Courts (Administrator petitions) | The USA requires court involvement for enforcement |
| Grant injunctions | Courts (Administrator petitions the court) | Injunctions are judicial remedies |
| Order rescission, restitution, or disgorgement | Courts (upon Administrator's request) | These are court-ordered remedies |
| Approve a registration | No one; registrations become "effective" | The USA prohibits this representation |
| Issue stop orders against exchange-listed covered securities | No one at state level | NYSE/NASDAQ-listed securities are fully preempted |
Exam Tip: Gotchas
- The Administrator cannot arrest, fine (criminally), or imprison anyone. Those powers belong to law enforcement and courts. The Administrator's strongest unilateral tool is revocation of registration.
- Registrations are never "approved." The Administrator cannot legally tell anyone their registration is "approved." Registrations become effective; that is the only correct term.
The Key Distinction: Administrative vs. Judicial
The most important concept in this unit is the line between what the Administrator can do alone and what requires court involvement:
| Administrative (No Court) | Judicial (Court Required) |
|---|---|
| Cease and desist orders | Injunctions |
| Deny/suspend/revoke registrations | Criminal penalties (fines, imprisonment) |
| Stop orders | Rescission |
| Summary suspensions | Restitution |
| Investigations and subpoenas | Disgorgement |
| Refer evidence to AG/DA | Enforce subpoenas / contempt |
Exam Tip: Gotchas
- The most frequently tested distinction: the Administrator can issue cease and desist orders (administrative) but cannot grant injunctions (judicial). If a question asks "who can enjoin," the answer is the court. If a question asks "who can order someone to stop," the Administrator can do that via cease and desist.
Quick-Reference: "Who Does What"
| If you need to... | Who acts? |
|---|---|
| Stop an ongoing violation immediately | Administrator (cease and desist) |
| Get a court order to stop a violation | Administrator petitions court (injunction) |
| Investigate a suspected violation | Administrator |
| Subpoena records or witnesses | Administrator |
| Punish someone who ignores a subpoena | Court (contempt) |
| Remove a bad actor's license | Administrator (revocation) |
| Get victims their money back | Court (restitution) |
| Strip a violator of profits | Court (disgorgement) |
| Put someone in jail for fraud | Court (criminal prosecution by AG/DA) |
| Block sale of unregistered securities | Administrator (stop order) |
| Block sale of NYSE-listed stock | Nobody at the state level |