Administration of the USA Flashcards
What are the four basic tools to enforce the USA?
- Orders issued by the Administrator
- Actions against registration
- Civil Actions
- Criminal Actions
What is an offer?
Attempts to dispose of, and solicitations to buy a security for value
What is a sale?
Any contract or agreement to dispose of a security on the day the trade is executed
What is jurisdiction?
- The power to interpret and apply the law
- Territorial range of authority or control
When does an administrator have jurisdiction?
- Offer made in state
- Offer originates in state
- Offer directed to and received in state
- Offer accepted in state
What happens in an Administrator initiated investigation?
written statements under oath of details concerning violation, can be public or private
What is inspectorial power?
Overall power and ability of administrator to investigate real and potential violations of the USA
When happens when an Administrator subpoenas witnesses?
Requires they produce materials relevant to inquiry
What happens if subpoena is ignored?
Administrator may request enforcement by court. Failure to obey is punishable as contempt of court
What is a cease and desist order?
Demand by administrator to immediately halt an activity or risk facing legal action. Effective on date of issuance
When is a cease and desist order issued?
Person is engaging in, about to engage in, or has engaged in any violation of USA
How are cease and desist issues ordered?
Can be issued without hearing and includes statement as to whether civil penalty is sought or costs of investigation need to be recovered.
When is hearing held after cease and desist order?
Within 15 days after written request is made
What is an injunction?
Restraining order requested by administrator if noncompliance with cease and desist order
When is a registration cancelled by the Administrator?
If registered person is
- not living
- ceased business
- found mentally incompetent
- cannot be located after reasonable search
When is withdrawal of registration effective?
30 days after filing of withdrawal application
If there are revocation or suspension proceedings pending during withdrawal, when is withdrawal effective?
As determined by administrator
How long does administrator have ability to institute proceedings with withdrawal?
Up to one year following effective date of withdrawal
How does Administrator enforce state securities laws?
- Laws that apply to everyone
- Rules that apply to defined persons
- Orders that apply to specific persons
When is a civil court used?
When customers seek monetary remedies for violations of securities acts
What is recovery amount for customer in civil case for securities sold in violation of the act?
Full purchase price + interest +court costs - income received
What is a Letter of Rescission?
Letter used when firm realizes that it has effected illegal sale.
What does Letter of Rescission represent?
Offer to buy back security, plus interest, minus income
How long does client have to act on Letter of Rescission?
30 days of receipt
What is amount client may sue to recover in civil case for fraudulent investment advice?
Cost of advice + loss due to advice + interest +court costs - income
How long does client have to sue from violation or rendering of advice?
Three years
How long does client have to sue from discovery of violation?
Two years
When does criminal liability exist?
If person willfully violates USA
What is maximum penalty for criminal charge?
$5,000 fine, three years in prison, or both
What is statute of limitation for criminal penalty?
Five years after alleged violation
