Administrative Provisions and Other Remedies - Operating Procedures for the Administrator

Each state has an administrator with certain jurisdiction and powers related to the offer and sale of securities in their state. Generally, an Administrator will simply issue a cease and desist order if a problem is found. However, the Administrator can also request that the appropriate court order an injunction. Additionally, the Administrator has the power to deny, revoke, or suspend registration of persons or securities. The following section outlines an Administrator's ability to regulate the enforcement provisions of the Uniform Securities Act (USA).

Administrator Abilities
The Administrator has the ability to:

  • Investigate - At any time, the Administrator can conduct public or private investigations within or outside of a state, which the Administrator considers necessary or appropriate to determine whether a person has violated, is violating or is about to violate a rule, or to aid in the enforcement of the USA. In conducting an investigation, the Administrator can at any time:
    • require (or permit) a person to testify, file a statement or produce a record regarding facts or circumstances of a situation; or
       
    • "Publish a record concerning an action, proceeding or investigation."

In general, the Administrator has the ability to inspect records within (and outside of) their respective state. The Administrator can also require those being investigated to provide written statements -- under oath.

  • Issue subpoenas - The Administrator may at any time issue a subpoena for investigation-related information, if he/she has jurisdiction over a transaction or security in question.

Jurisdiction
NASAA's  Study Guide for the Uniform Securities Agent State Law Exam (the Series 63) states that:

The scope of the act section is intended to prescribe the limits of a state's jurisdiction to regulate securities transactions and the activities of persons engaged in the securities business by defining what "in this state" means with regard to:

    1. offers to sell or buy securities; or
    2. acceptances of offers to buy or sell securities.

Generally, the Act applies to all offers to sell or buy and all acceptances of offers to buy or sell securities if they originate from, are directed to, or are accepted in a state [emphasis Investopedia's . Any part of an offer which is "in this state" will subject the whole transaction to the Act. Thus, if the client receives a soliciting telephone call in this state, it will not matter that the client actually goes out of the state to make payment, sign a contract, or to receive a security [Section 414].
 

Exam Tips and Tricks
Watch out for long, "scenario-type" questions in which an investor is offered a stock in state A, accepts the offer in state B, and resides in state C. If the question asks which states are involved in the transaction, the answer for this one would be states A, B, and C.

  • Jurisdiction as applied to publications or radio
    An Administrator does not have jurisdiction if:
    • the publication is a bona fide newspaper or other print media, and;
    • more than two-thirds of the publication is circulated outside of the state it is published; or
    • it is a TV or radio broadcast that is syndicated from outside the state.

 

In addition, an Administrator does not have jurisdiction over:

    • any electronic communication originating from outside the state; or
    • any electronic communication that comes from within the state, but is not intended for distribution within the state.
       
  • Jurisdiction as applied to investment advice and misrepresentation
    The Administrator has jurisdiction if an individual attempts to defraud in the Administrator's state, whether or not the individual/entity in question is in the state or not.
Look Out!
An Administrator generally has jurisdiction if a transaction was originated or accepted in their state, or is directed to that state.

 

Administrative Actions


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