Exam Weight: ~4 questions (2% of exam)
This unit covers the enforcement powers available to state securities regulators and the consequences when securities laws are violated under the Uniform Securities Act (USA). Understanding who has authority, what actions they can take, and what penalties apply is essential for the exam.
What You'll Learn
- Understand the Administrator's jurisdiction (origin, directed-to, accepted-in), investigative powers (subpoenas, compelled testimony, transactional immunity), enforcement tools (cease and desist, stop orders with summary postponement), the "willful" standard, and the Administrator-versus-court comparison table that captures the most-tested distinction in the unit
- Learn the five types of administrative actions (denial, suspension, revocation, cancellation, withdrawal), the two-part test (public interest plus a listed ground), the twelve grounds for disciplinary action, summary § 204(c) suspensions with the 15-day hearing window, and due-process requirements
- Know criminal penalties under the USA (5-5-3 rule: $5,000 fine, 5-year statute of limitations, 3 years prison) versus the Investment Advisers Act of 1940 ($10,000 / 5 years), the willfulness requirement, and the Administrator's referral role to the attorney general or district attorney
- Apply civil liability rules (who can sue, controlling-person liability, buyer's and adviser-client damages formulas, rescission offers with the 30-day silence rule, the 2-year-or-3-year statute of limitations) and judicial review of Administrator orders (60-day filing deadline, substantial-evidence standard, no automatic stay)