NASAA Series 63Remedies and Administrative ProvisionsMedium
The Administrator receives no formal written complaint from any investor but suspects that a firm is engaging in fraudulent sales practices. Under the Uniform Securities Act, the Administrator may:
- Ainvestigate the firm only after receiving a written complaint from an aggrieved investor
- Binvestigate the firm only in conjunction with a parallel SEC investigation
- Cinvestigate the firm only with prior approval of a court
- Dinvestigate the firm whether or not a formal complaint has been filed, if it appears necessary in the public interest
Show answer & explanationAnswer & explanation
Correct answer: D. investigate the firm whether or not a formal complaint has been filed, if it appears necessary in the public interest
The USA grants the Administrator broad discretionary authority to investigate potential violations on its own initiative, without needing a prior complaint, court approval, or coordination with the SEC, whenever it appears necessary or in the public interest.
Why the other options are wrong
- A. Incorrect; a formal complaint is not a prerequisite to investigation.
- B. Incorrect; state investigations are independent of any SEC action.
- C. Incorrect; court approval is not required to open an investigation.
Administrator's Investigative Authority
The Administrator may investigate suspected violations on its own initiative, without a prior complaint, court order, or SEC coordination, whenever the public interest warrants it.
- Investigations may be proactive, not just reactive to complaints.
- No court pre-approval needed to begin an investigation.
- Broad discretion supports early detection of fraud.
Memory trick: 'No complaint needed — the Administrator can sniff out trouble alone.'