NASAA Series 63Remedies and Administrative ProvisionsHard
Believing immediate action is necessary to protect the public, the Administrator issues an order summarily suspending a broker-dealer's registration without first holding a hearing. Which statement correctly describes this order under the Uniform Securities Act?
- AThe order requires prior approval from the SEC before it can take effect
- BThe order is invalid because due process always requires a hearing before any suspension can take effect
- CThe order is valid, but the Administrator must promptly notify the broker-dealer and grant a hearing within a reasonable time if one is requested
- DThe order automatically becomes permanent unless a federal court intervenes within 10 days
Show answer & explanationAnswer & explanation
Correct answer: C. The order is valid, but the Administrator must promptly notify the broker-dealer and grant a hearing within a reasonable time if one is requested
The Administrator may summarily suspend a registration pending final determination when the public interest requires prompt action, but due process requires that the affected party be given prompt notice and, if requested, an opportunity for a hearing to contest the order.
Why the other options are wrong
- A. SEC approval is not required for a state Administrator's summary suspension order.
- B. Incorrect; summary action without prior hearing is permitted when urgent public interest is at stake.
- D. There is no federal court intervention deadline built into the USA's suspension framework.
Summary Suspension Pending Hearing
The Administrator may summarily suspend a registration to protect the public, but must provide prompt notice and a hearing opportunity thereafter.
- Balances urgent public protection with due process rights.
- Hearing occurs after the order, not before, in emergency situations.
- Failure to request a hearing may allow the suspension to stand.
Memory trick: 'Suspend now, explain later — but always offer the hearing ladder.'