Quick Answer
USA criminal penalties apply only to willful violations, with a maximum $5,000 fine and 3 years imprisonment per violation, prosecuted by the attorney general or district attorney rather than the Administrator, within the Act's optional 5-year limit. The Administrator cannot impose jail time; only a court conviction can.
Criminal penalties under the Uniform Securities Act (USA) apply to willful violations. The administrator does not prosecute criminal cases directly; it refers evidence to the state attorney general or district attorney for prosecution. The attorney general may also act independently.
What Are the USA Criminal Penalties?
| Element | Detail |
|---|---|
| Standard | Willful violation of any provision of the act or any rule or order under it. A false or misleading statement in a document filed with the Administrator is criminal only if the person also knew it was false or misleading |
| Maximum fine | $5,000 per violation |
| Maximum imprisonment | 3 years per violation |
| Combined | Fine and/or imprisonment |
| Defense | No imprisonment for violating a rule/order if person proves they had no knowledge of the rule/order |
| Criminal statute of limitations | No indictment or information more than 5 years after the alleged violation. This sentence is bracketed, optional language in the Act, so it applies only where the state adopts it |
Memory Aid: 5-5-3: $5,000 fine, optional 5-year criminal limit, 3 years prison. All the numbers are 5 or under.
Exam Tip: Gotchas
- "Willful" is the required element. Inadvertent violations are NOT criminal offenses under the USA.
- The USA does not preempt other criminal law. Prosecution under the USA does not bar prosecution for the same conduct under a general fraud or theft statute or at common law. The state may pursue both; it does not have to choose one.
What Should You Check on Exam Day?
- Only willful violations are criminal under the USA; inadvertent violations are not
- USA maximum penalties: $5,000 fine and 3 years imprisonment per violation, fine and/or imprisonment
- Only the misleading-filings provision needs extra proof: a false statement in a filing is criminal only if the person knew it was false. A willful failure to register or file is still a crime
- A person cannot be imprisoned for violating a rule or order if they prove they had no knowledge of it
- No indictment or information more than 5 years after the alleged violation (the "5-5-3" memory aid). The Act brackets this sentence as optional language, so the five-year limit is not a fixed nationwide rule
- The Administrator refers evidence to the attorney general or district attorney; the Administrator does not prosecute directly
- The USA does not limit the state's power to prosecute the same conduct under any other criminal statute or at common law