Chapter 3: Remedies and Administrative Provisions - D. Summary Flashcards
Summary
In this chapter, you have reviewed the role of the state securities administrators and learned that they are empowered by the Uniform Securities Act (USA). The administrators have jurisdiction over offers to buy or sell securities, and any acceptance of an offer, if the transaction was effected or accepted in the state, or if the offer originated in the state or was directed into the state. The state securities administrators have the power to initiate investigations into violations of the USA and can subpoena individuals and documents, and compel individuals to testify. Administrators can issue a cease and desist order for actual or potential violations of the USA, but must provide for a hearing within 15 days of the request. They can request an injunction or restraining order, but cannot issue an injunction.
Under state law, the statute of limitations for civil suits is 3 years from the alleged violation, or 2 years from discovery of the violation, whichever comes first. A willful violation of the USA is a felony, and the maximum penalty under state law is a $5,000 fine, 3 years in prison, or both.
Remember that this is different from criminal liability for a felony under federal law, where the maximum penalty is a $10,000 fine, 5 years in prison, or both. If an individual or firm that sells securities is found to be in violation of the USA, the customer is entitled to recover the original purchase price of the security; attorney fees; and interest on the money invested. Likewise, if a customer is charged a fee for investment advice provided by an individual or firm that has violated the USA, the customer is entitled to the cost or fee for the advice, plus interest; attorney fees; and any net loss due to the advice rendered.
