Administrative Provisions and Other Remedies - Criminal Penalties and Other Provisions

Criminal penalties arise when a person or entity is proved guilty of a fraudulent securities transaction entailing a deliberate violation of the USA.

Exam Tips and Tricks
The key word in criminal liabilities is "fraudulent", meaning that the violation was deliberate.

Once the Administrator issues an order (which may result in denial, suspension or revocation of registration), the offending person or entity may appeal the Administrator's order to the appropriate court, but must do so within 60 days of the order, under the Uniform Securities Act.

Simultaneously, the affected member (agent or broker-dealer) must serve notice of the appeal to the Administrator as well. Upon receipt of the notice of appeal, the Administrator is obligated to provide the appropriate court with all evidence relevant to the case.

Unlike the normal judicial process, once the Administrator issues an order, it remains in effect unless reversed by court order. The fact that an appeal has been filed does not negate the Administrator's order unless directed by a court. The finding of courts regarding appeals is final, and the court has the right to change any part of the order.

If the offender is convicted of criminally violating the USA, he/she may be imprisoned for up to 3 years, or fined up to $5,000 (per violation).

Statute of Limitations
The statute of limitations for criminal penalties is 5 years.

Exam Tips and Tricks
It is vitally important to note that there can be no prison sentence if a person can PROVE he/she had NO KNOWLEDGE that the USA was being violated!

The Uniform Securities Act provides that an Administrator may demand a firm to "require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser, unless the security or transaction is exempted."

Exempted securities include:

  • Federal covered securities
  • Any security issued or guaranteed by Canada
  • Any security issued by a foreign national government with whom the US has diplomatic relations
  • Any security issued or guaranteed by a bank, savings institution or trust company
  • Any security issued or guaranteed by any credit union (federal or otherwise)
  • Any security issued or guaranteed by any railroad, other common carrier, public utility or holding company
  • Securities issued or guaranteed by nonprofits (e.g., church bonds)
  • Any investment contract issued in connection with an employee's stock purchase, savings, pension, profit sharing or similar benefit plan

Additionally, there could be a question regarding the Telephone Consumer Protection Act (TCPA) of 1991, which states that telemarketing organizations must adhere to the following requirements:

  • Do-not-call (DNC) lists. When a prospective caller requests to be placed on a DNC list, the firm must keep his/her name on the list for 5 years.
  • Telemarketing firms must make sure that its representatives understand how to use the DNC list and immediately record any names and phone numbers of those who wish to be placed on the list.
  • Telemarketers may ONLY call homes of prospective clients between the hours of 8a.m. and 9p.m. in the customer's time zone.
Related Articles
  1. Professionals

    Career Advice: Stockbroker Vs. Insurance Agent

    Compare and contrast careers as a stockbroker and insurance agent. Understand the skills and attributes required for success in each career.
  2. Professionals

    Series 63 Exam Prep: The Broker-Dealer

    Before you take the series 63, you need to understand jurisdiction and how it affects broker-dealers.
  3. Retirement

    What Was The Glass-Steagall Act?

    Established in 1933 and repealed in 1999, the Glass-Steagall Act had good intentions but mixed results.
  4. Forex

    How CPI Affects the Dollar Against Other Currencies

    The Consumer Price Index is a broad measure of inflation, and inflation can have a dramatic impact on a currency's value against rival currencies.
  5. Investing Basics

    How To Handle A Serious Dispute With Your Broker

    Find out what to do if you have a dispute with your broker.
  6. Economics

    3 Key Words in the Fed's Interest Rate Statement

    When you read the Federal Reserve Statement, read between the lines. There are three words in the last statement that especially stood out.
  7. Professionals

    Hedge Funds and the Law

    Learn how hedge funds have gotten in trouble for illegal insider trading. Read about questionable high-frequency trading (HFT) strategies.
  8. Economics

    Where Would the Dow Be Without Fed Intervention?

    What would the Dow look like without the accommodative monetary policies the Federal Reserve has implemented since the financial crisis?
  9. Investing

    Breaking Down the Federal Reserve's Dual Mandate

    The Fed has been tasked with a dual mandate by Congress to achieve monetary stability. We explain what the dual mandate is and what it means.
  10. Economics

    Should the Fed Be More Worried About Asset Bubbles?

    While the Fed should be concerned that assets bubbles might impact economic stability, monetary policy is not the best tool to mitigate this threat.
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  2. Series 6

    A securities license entitling the holder to register as a limited ...
  3. Comprehensive Automated Risk Data ...

    The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
  4. Corporate Financing Committee

    A regulatory group that reviews documentation that is submitted ...
  5. Division Of Reserve Bank Operations ...

    An entity under the Federal Reserve System that manages certain ...
  6. Series 79

    A examination to ensure a candidate is qualified to become a ...
  1. My 120-day Series 63 exam window is about to close, but I need more time to study. ...

    Extensions are available on rare occasions. Candidates should apply for an extension with the North American Securities Administrators ... Read Full Answer >>
  2. Do I have to be a U.S. citizen to sit for the Series 63 exam?

    United States citizenship is not required for Series 63 test-takers. Candidates may take the exam inside or outside the U.S. ... Read Full Answer >>
  3. How long must I wait after failing the Series 63 exam before I can take it again?

    Waiting periods are in place for candidates who wish to retake the Series 63 exam. Between retakes, the waiting period is ... Read Full Answer >>
  4. Is there a limit on the number of times I can re-take the Series 63 exam?

    There is no limit to the number of times a candidate may retake the Series 63 exam. The North American Securities Administrators ... Read Full Answer >>
  5. Are waivers granted to the 180-day waiting period to re-take the Series 63 exam?

    Candidates retaking the Series 63 exam must wait for 30 days after failing it on the first or second attempt. After failing ... Read Full Answer >>
  6. If I failed the Series 66, does the waiting period apply if I want to take the Series ...

    The waiting period only applies to retaking the same North American Securities Administrators Association (NASAA) exam. Candidates ... Read Full Answer >>
  7. Does NASAA or anyone else give out the series 63 exam questions?

    Outside of the proctored exam, no access to Series 63 exam questions is offered. Providing access to questions would invalidate ... Read Full Answer >>
  8. Are series 63 exams given outside of the United States?

    Series 63 exams are offered at authorized testing centers around the world. The exam does not require U.S. citizenship. Test ... Read Full Answer >>
  9. How often, and how, is a series 63 exam updated?

    Series 63 exams draw questions from a test bank based on state regulations, the Uniform Securities Act and North American ... Read Full Answer >>
Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center