State Administrator Powers

The State Administrator (sometimes called the securities commissioner or director) is the official responsible for enforcing the Uniform Securities Act (USA) in each state. Understanding the Administrator's powers and limitations is critical for the Series 63 exam.

Role of the State Administrator

The State Administrator is the primary regulator of securities activities within a state. Key responsibilities include:

• Enforcing the provisions of the USA
• Protecting investors from fraud and unfair practices
• Registering securities, broker-dealers, agents, investment advisers, and IARs
• Investigating potential violations
• Taking enforcement actions when necessary

Exam Tip: The Administrator's most important role is enforcing the anti-fraud provisions of the USA. Protecting investors from fraud is their highest priority.

Powers of the Administrator

Regulatory Powers

Enforcement Powers

Limitations on Administrator Powers

The Administrator has significant authority but also has important limitations:

What the Administrator CANNOT Do

• Make new law - The Administrator interprets and enforces existing law but cannot create new statutes (only the legislature can do that)
• Impose jail time - Only courts can impose criminal penalties including imprisonment
• Violate constitutional rights - Must respect 5th Amendment rights against self-incrimination
• Act arbitrarily - Must act in the public interest and follow due process

Key Point: The Administrator enforces the law but does not make it. The USA was created by legislators, and the Administrator interprets and enforces its provisions.

Public Interest Standard

The Administrator must find that taking action is in the public interest before taking enforcement actions. Factors considered include:

• Protection of investors
• Prevention of fraud
• Maintenance of fair and honest markets
• Severity of the violation
• History of prior violations

Delegation of Powers

The Administrator may delegate certain powers to designated officers or employees, but some powers typically cannot be delegated, such as:

• Issuing final orders
• Making rules
• Conducting adjudicatory hearings

Interstate Cooperation

State Administrators cooperate with each other and with federal regulators:

Exam Alert: The Administrator may investigate and take action regarding violations occurring in other states if the conduct affects investors in the Administrator's state.

Filing Requirements and Records

The Administrator may require:

• Filing of registration applications and amendments
• Maintenance of specific books and records
• Periodic reports and financial statements
• Notification of material changes in business

Record Retention

Securities professionals must maintain required records for the period specified by the Administrator. These records must be made available for inspection upon request.

Key Takeaways

• The Administrator is the state official responsible for enforcing the USA
• Primary role is protecting investors through anti-fraud enforcement
• Has broad powers including rule-making, licensing, investigations, and enforcement
• Cannot make new laws (only interpret and enforce existing law)
• Cannot impose jail time (only courts can do this)
• Must act in the public interest
• May cooperate with other states and federal regulators
• Can investigate violations occurring in other states