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INVESTIGATIONS

A state securities administrator may investigate a broker dealer, an investment adviser, or an agent in any state if it feels that a violation has taken or may take place. The administrator may also subpoena people, books, and records in any state and may administer oaths to compel people to testify. Anyone who displays contempt for the administrator's order is guilty of contumacy and may be found in contempt of court if the administrator asks the court to enforce its orders.

CIVIL AND CRIMINAL PENALTIES

A state securities administrator may issue a cease and desist order without a prior hearing or notice. The administrator may appoint a receiver to oversee the assets of violators and may require them to make restitution. Anyone who is found to have criminally violated the laws of the USA is subject to a $5,000 fine and/or three years in prison. People who criminally violate the Investment Advisers Act of 1940 are subject to a $10,000 fine and/or five years in prison. The statute of limitations for an administrator taking action is five years. An investor who sues for a violation of the USA is entitled to receive:

• The value paid for the securities minus any income received during the holding period (e.g., dividends).

• Interest on the money for the holding period.

• Court costs.

Civil actions may be taken against:

• An agent

• A firm

• The agent's supervisor

If an investment adviser violates the provisions of the USA, clients may sue to recover:

• Advisory fees.

• Losses.

• Interest on the money.

• Attorney fees and court costs, minus any income received as a result of the advice.

JURISDICTION OF THE STATE SECURITIES ADMINISTRATOR

Although the USA sets forth model legislation for state securities laws, it is the responsibility of the state securities administrator to administer the laws within the state.

 
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