Chapter 6 Answers and Explanations

1. D – Conduct investigations. State securities administrators can conduct investigations as they deem necessary to determine whether any person has violated or will violate state securities law. They do not sue registrants on behalf of the public, but allow individual clients to do that as they see fit. They do not have the power to arrest registrants, but must request the assistance of a court and law enforcement for that to occur. They are not permitted to modify the Uniform Securities Act, since it is put in place by a state’s elected officials.

2. C – Issue search warrants. An administrator does not have the authority to issue search warrants, though they can request that information and records be made available to them. Only a court of law can issue a search warrant. They can subpoena individuals, hold hearings (which is different than operating as a court of law), and review firm records.

3. C – I and II. Stop orders, as well as cease and desist orders are issued by a state administrator. There is no such thing as a resume or criminal order.

4. A – 15 days. After a hearing has been properly requested, the state administrator must set the hearing within 15 days.

5. A – Rescission. Rescission is a remedy offered by issuers or advisers who realize they have made a mistake in dealing with a client and want to fix it befo