Administrative Provisions and Remedies

State Securities Administrators have broad powers to enforce the Uniform Securities Act and protect investors.

Administrator Powers

Who is the Administrator?

The state securities administrator is the official responsible for administering the state's securities laws. Title varies by state:

• Securities Commissioner
• Director of Securities
• Secretary of State
• Attorney General

Scope of Authority

Investigative Powers

The Administrator has broad investigative powers:

Actions Administrator Can Take

Subpoena Power

The Administrator may subpoena:

• Witnesses - To testify under oath
• Documents - Books, records, accounts
• Physical evidence - Any relevant materials

Subpoenas may be issued:

• Within the Administrator's state
• To persons in any state
• For matters within or outside the state

Failure to Comply (Contumacy)

If a person refuses to comply with an Administrator's subpoena:

• Administrator may request court enforcement
• Court may find person in contempt
• Penalties for contempt may apply

Types of Orders

Summary Orders (No Prior Notice Required)

Orders Requiring Notice and Hearing

Order Process

For Cease and Desist Orders

1. Administrator identifies violation or threat
2. Issues order without prior notice
3. Order is immediately effective
4. Respondent may request hearing
5. Hearing within 15 days if requested
6. Final order after hearing

For Denial/Suspension/Revocation

1. Administrator notifies respondent
2. States grounds for action
3. Respondent has right to hearing
4. Hearing conducted
5. Final order issued
6. Right to judicial review in court

Grounds for Denial, Suspension, or Revocation

Common Grounds

Timing of Violations

Penalties and Remedies

Criminal Penalties

Criminal prosecution requires:

• Willful violation
• Referral to prosecutor/Attorney General
• Proof beyond reasonable doubt

Civil Liabilities

Rescission Rights

Buyers may recover:

• Purchase price of the security
• Interest from date of purchase
• Less: Any income received from the security
• Less: Any amounts recovered on sale

Seller's Tender of Rescission

If the seller offers rescission before suit is filed:

• Buyer must accept within 30 days
• If buyer rejects, loses right to sue
• Interest rate: specified by state law

Statute of Limitations

Criminal Actions

Civil Actions

Discovery Rule

The "discovery" clock starts when:

• Plaintiff knew of the violation, OR
• Plaintiff should have known (reasonable diligence)

Coordination with Other Regulators

Information Sharing

The Administrator may share information with:

• Other state administrators
• SEC
• FINRA
• Foreign regulators
• Law enforcement

Reciprocity

States may:

• Recognize other states' orders
• Rely on findings from other jurisdictions
• Coordinate enforcement actions

Antifraud Provisions

Universal Application

Antifraud provisions apply to ALL securities transactions:

What Constitutes Fraud

Exam Tip: Administrator can issue CEASE AND DESIST without prior notice. DENIAL, SUSPENSION, and REVOCATION require notice and hearing. Criminal statute of limitations is 5 years; civil is 3 years from sale or 2 years from discovery.