The Administrator, Enforcement, and Liability
The last section of the exam covers the official who runs the state securities program and the remedies available when the act is broken. The recurring theme is the division of labor between the Administrator and the courts. The Administrator investigates, subpoenas, issues cease and desist orders, and denies, suspends, or revokes registrations; courts issue injunctions, impose criminal sentences, and review final orders. Alongside those public remedies sits a private one: an investor who was sold securities unlawfully can sue to get the money back, and a firm that discovers its own violation can cut off that liability with a proper rescission offer.
Jurisdiction and Scope of Authority
The Administrator is the state official or agency charged with administering the securities act. Jurisdiction attaches to an offer or sale that originates in the state, is directed into and received in the state, or is accepted in the state, which means a single telephone call or letter can bring two states into play. Two exceptions narrow the reach: offers appearing in a bona fide newspaper published outside the state and offers in radio or television broadcasts originating outside the state are not deemed made in the state. Because the act reaches offers as well as sales, the Administrator may act even where nothing was ever bought.
Investigations and Administrative Orders
The Administrator may investigate suspected violations inside or outside the state, administer oaths, subpoena witnesses and records, and require written statements under oath. None of this depends on a criminal charge, and refusal to comply is addressed by asking a court to compel obedience. On the enforcement side the Administrator may issue a cease and desist order with or without a prior hearing, and may summarily postpone or suspend a registration while a proceeding is pending, subject to prompt written notice and a hearing on request. What the Administrator cannot do is equally testable: injunctions and imprisonment come only from a court.
Civil Liability, Rescission, and Penalties
A purchaser who bought securities in a sale that violated the registration or antifraud provisions may sue to recover the price paid plus interest, less any income received on the security, together with court costs and reasonable attorney's fees, upon tendering the security back. A seller who discovers the violation first can head off that suit by making a written rescission offer that discloses the violation and offers the same amount; if the purchaser does not accept within the period the act allows, the right to sue is lost. Willful violations are separately punishable as crimes, prosecuted in court by the appropriate prosecuting authority after the Administrator refers the evidence.
Records, Service of Process, and Judicial Review
Registration carries with it an obligation to make and keep the records the Administrator prescribes and to submit to examinations at reasonable times and as often as necessary, whether the records sit inside the state or elsewhere. Filings must be kept current, so information that becomes materially inaccurate must be promptly amended. The consent to service of process filed with the original application lets the Administrator accept legal papers on a registrant's behalf with the same effect as personal service, which is what makes out-of-state firms reachable. A registrant who disagrees with a final order may petition the appropriate court for review within sixty days, though filing the petition does not by itself suspend the order.
Last updated: July 2026