Cease And Desist

DEFINITION of 'Cease And Desist'

Cease and desist is an order given by a government administrative agency or the courts to stop any suspicious or illegal activities. Falling under the Financial Institutions Regulatory and Interest Rate Control Act of 1978, a cease and desist order places an injunction on a company or person, prohibiting the activities that are deemed suspect. For corporations or financial institutions, a cease and desist order may be issued to prevent risky banking practices or the sale of fraudulent securities.

BREAKING DOWN 'Cease And Desist'

A cease and desist letter is often the first step to ask a party to stop performing an illegal activity. These letters may be sent in situations of defamation, slander, libel, trademark infringement, copyright infringement or patent infringement. Other suitable situations also include harassment, debt collection or a breach of contract. A cease and desist letter may also be issued to force an entity to refrain from labor practices or unfair compensation.

The letter must comply with laws in the jurisdiction where it is sent. After notification is given, a hearing is usually called to determine whether any wrongdoing has occurred or if the action may continue. Failure to comply with a cease and desist order is punishable by the courts, although a cease and desist letter by itself is not a guarantee of a lawsuit. During the period of time between when the letter is served and the trial, an entity is required to suspend certain activities.

Ramifications of a Cease and Desist Letter

A cease and desist letter is not legally binding. It is an opinion of one individual, typically an attorney. In addition, the ABA Model Code of Professional Responsibility dictates a lawyer “shall not present, participate in presenting, or threaten to present a criminal charge solely to obtain an advantage in a civil matter.” Such a legal threat has no legal significance other than being a negotiation tactic. Cease and desist letters often require a signature upon delivery. The letter is typically sent with a return receipt requested although this is not required.

Preconditions

Three preconditions usually have to be met before an attorney may raise the prospect of charges without violating his professional conduct code. First, the charges must be related to a civil matter. Second, the attorney must believe the civil claim and associated criminal charges are based on merit in relation to the law. Finally, an attorney must not attempt to exert or improperly influence the criminal process. An attorney must not appear to have authority over the potential judicial proceedings.

RELATED TERMS
  1. Financial Institutions Regulatory ...

    A United States Federal law enacted in 1978 pertaining to depository ...
  2. Attorney's Letter

    A letter sent by a CPA to the client's attorney. The attorney's ...
  3. Confirmed Letter Of Credit

    A second guarantee, in addition to a letter of credit, that commits ...
  4. Demand Letter

    A letter sent to a debtor requesting payment. A demand letter ...
  5. Interpretive Letter

    A letter issued by banking regulators that interprets the banking ...
  6. Bank Confirmation Letter - BCL

    A letter confirming that a line of credit has been secured from ...
Related Articles
  1. Retirement

    Letter Of Instruction - Don't Leave Life Without It

    This simple document can take the guesswork and headache out of settling your estate.
  2. Investing

    Financial Analyst Cover Letters That Get You Hired

    Crafting a strong cover letter for a job can increase your chances of standing out from the crowd and landing an interview. Some techniques that help.
  3. Investing

    The Complete Guide To Job Searching: Cover Letters

    You have found a job that sounds ideal. You might have the exact skills that the employer is looking for, but unless you can broadcast your abilities, the employer may never know you are the ...
  4. Investing

    Letter of Credit

    A letter of credit is a document from a bank promising to pay the holder a certain amount if the holder fulfills certain obligations. Sellers in commercial transactions often require buyers to ...
  5. Personal Finance

    Picking the Best Real Estate Attorney for Your Next Purchase

    Learn about the process of picking the best real estate attorney for a given situation and the different resources that can be used.
  6. Personal Finance

    Attention Home Buyers! Why You Need A Lawyer

    Property transactions are complex and subject to specific state/local rules. A professional can simplify the process.
  7. Personal Finance

    Is Personal Legal Insurance A Good Deal?

    Some employers offer personal legal insurance as an opt-in benefit. Would it make sense for you?
  8. Retirement

    Why Designate a General Power of Attorney?

    Because it will ensure your financial and personal affairs are handled according to your wishes should you ever be incapacitated or unavailable.
  9. Managing Wealth

    Don't Be Without A Letter Of Intent

    If you don't have a letter of intent in your desk, write one now. Here's why – and what should be in it.
  10. Markets

    History Of The U.S. Federal Trade Commission

    Since the early 1900s, the Federal Trade Commission has been working to protect U.S. citizens from corporations.
RELATED FAQS
  1. What are the different types of letters of credit?

    Learn more about the different types of letters of credit that are used to facilitate exchanges between parties that might ... Read Answer >>
  2. When is it necessary to get a letter of credit?

    Capitalize on assets and negate risks by using a letter of credit. Letters of credit are often requested for buying, selling ... Read Answer >>
  3. Can entities other than banks issue letters of credit?

    Obtaining a letter of credit from a non-bank is legally acceptable according to the ICC, but companies tend to prefer to ... Read Answer >>
  4. When do I need a letter of credit?

    Learn more about the function of a letter of credit for both the buyer and the seller, and get some examples showing when ... Read Answer >>
  5. When are you legally required to get a letter of credit?

    Learn how exporters or importers who deal in international trade use letters of credit to ensure that transactions are safe, ... Read Answer >>
  6. How legally binding is a letter of intent?

    Find out when a letter of intent is binding and when it is not. Understand the roles of drafting language, relationships ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center