Summary of All Remedies Under the USA
With all four remedy categories under the Uniform Securities Act (USA) covered (civil, criminal, judicial, and SIPC), this section brings everything together in a single reference that shows how the enforcement landscape fits together.
Master Remedy Comparison
| Remedy Type | Authority | Who Initiates | Key Features |
|---|---|---|---|
| Administrative (cease and desist) | Administrator | Administrator | No prior hearing required; immediate |
| Judicial (injunctions, receivers) | Court | Administrator requests | Admin need not post bond |
| Criminal (fines, imprisonment) | Court | Attorney General/District Attorney (AG/DA) prosecution | Willful violations; max $5,000 / 3 years per violation |
| Civil (rescission, damages) | Court | Buyer (private right of action) | Burden on seller; 3-year / 2-year statute of limitations |
| SIPC (asset restoration) | Federal court / trustee | SIPC initiates | Firm failure; $500K total / $250K cash |
Enforcement Flow
Think of it this way: The Administrator is like a detective and traffic cop rolled into one. They can investigate and issue stop orders on their own, but if they want someone fined, jailed, or forced to pay money back, they need a court (or a prosecutor) to make it happen.
- Violation occurs → Administrator investigates
- Administrative route: Administrator issues cease and desist order (no court needed)
- Judicial route: Administrator asks court for injunction, receiver, rescission, restitution, or disgorgement
- Criminal route: Administrator refers evidence to attorney general/district attorney → AG/DA prosecutes in court
- Civil route: Injured buyer files private lawsuit → court awards rescission or damages
- SIPC route: Broker-dealer fails → SIPC initiates liquidation → trustee distributes customer property
Key Thresholds and Time Limits
- Criminal fine (max per violation): $5,000
- Criminal imprisonment (max per violation): 3 years
- Criminal statute of limitations: 5 years
- Civil statute of limitations (from sale): 3 years
- Civil statute of limitations (from discovery): 2 years
- Rescission offer response period: 30 days
- Securities Investor Protection Corporation (SIPC) total coverage per customer: $500,000
- SIPC cash sub-limit: $250,000
Memory Aid: 5-5-3
- 5-year statute of limitations
- $5,000 maximum fine
- 3 years maximum imprisonment
Who Can Do What
| Action | Administrator | Court | AG/DA | Buyer |
|---|---|---|---|---|
| Investigate | Yes | No | No | No |
| Issue cease and desist | Yes | No | No | No |
| Grant injunction | No | Yes | No | No |
| Appoint receiver | No | Yes | No | No |
| Order rescission/restitution | No | Yes | No | No |
| Prosecute criminally | No | Yes (trial) | Yes (initiates) | No |
| Sue for civil damages | No | Yes (forum) | No | Yes (initiates) |
| Refer for criminal prosecution | Yes | No | N/A (receives) | No |
Exam Tip: Gotchas
- The Administrator has broad investigative and administrative power but cannot: (1) prosecute criminally, (2) grant injunctions, (3) appoint receivers, or (4) order monetary relief. Those all require a court.
- The Administrator can: (1) investigate, (2) issue cease and desist orders, (3) deny/suspend/revoke registrations, and (4) refer cases for criminal prosecution.
Burden of Proof Summary
| Context | Burden Falls On | Standard |
|---|---|---|
| Civil liability (fraud) | Seller | Did not know + reasonable care |
| Control person defense | Control person | Did not know + reasonable care |
| Criminal prosecution | State (AG/DA) | Beyond a reasonable doubt + willfulness |
| Imprisonment defense | Defendant | No knowledge of the rule/order |
Exam Tip: Gotchas
- In civil cases, the burden is on the seller to prove innocence (did not know and exercised reasonable care). In criminal cases, the state must prove guilt beyond a reasonable doubt. This reversal catches many students off guard.
- The imprisonment defense is narrow. A defendant can avoid prison by proving they had no knowledge of the rule or order violated, but this does not eliminate fines or other penalties.