Judicial Remedies
With civil liabilities (private lawsuits) and criminal penalties (state prosecution) covered, let's turn to the judicial remedies the Administrator can request from the courts under Section 408 of the Uniform Securities Act (USA). These are the enforcement tools that bridge administrative power and court authority.
Two Remedies Available to the Administrator (Section 408)
When it appears that any person has engaged or is about to engage in a violation, the Administrator may pursue either or both:
- Cease and desist order - issued by the Administrator directly, with or without a prior hearing
- Court action - bring an action in the appropriate court to enjoin the acts or practices
The key distinction: cease and desist orders are administrative (the Administrator issues them alone), while injunctions and other court remedies are judicial (only a court can grant them).
Think of it this way: The Administrator can tell someone "stop what you're doing" on their own authority (cease and desist). But to freeze someone's assets, appoint a receiver, or force them to return money, the Administrator must ask a judge.
Court-Ordered Remedies (Section 408(b))
Upon a proper showing by the Administrator, the court may grant:
Injunctive Relief:
- Permanent or temporary injunction - ordering a person to stop (or not start) violating conduct
- Restraining order - emergency short-term relief
- Writ of mandamus - ordering a person to perform a required act
Monetary and Equitable Relief:
- Receiver or conservator - court appoints someone to manage the defendant's assets
- Rescission - unwinding the transaction
- Restitution - returning money to harmed investors
- Disgorgement - surrendering ill-gotten profits
Exam Tip: Gotchas
- The Administrator is not required to post a bond when seeking injunctive relief. Unlike private parties, the Administrator can go to court without putting up money as a guarantee.
Administrative vs. Judicial Remedies
| Remedy | Who Issues It | Prior Hearing Required? |
|---|---|---|
| Cease and desist order | Administrator | No (can be issued without prior hearing) |
| Injunction | Court (on Administrator's request) | Yes (court proceeding) |
| Receiver/conservator | Court | Yes (court proceeding) |
| Rescission/restitution/disgorgement | Court | Yes (court proceeding) |
Exam Tip: Gotchas
- The Administrator does not grant injunctions or appoint receivers. Only a court can do that. The Administrator requests these remedies but cannot issue them alone.
- If it involves money or managing assets, it requires a court. Rescission, restitution, disgorgement, and receiver appointments are all judicial (not administrative).
- Cease and desist orders do not require a prior hearing. The Administrator can issue them unilaterally, then offer a hearing afterward.