NASAA Series 63Remedies and Administrative ProvisionsMedium
The Administrator issues a cease-and-desist order against an investment adviser without a prior hearing, believing immediate action is necessary. Under the Uniform Securities Act, what right does the adviser generally have after receiving the order?
- AThe right to request a hearing, after which the Administrator must schedule one within a reasonable time
- BThe right to ignore the order until a hearing is held
- CThe right to immediately sue the Administrator in federal court for damages
- DNo right to a hearing, since the order is final and unappealable
Show answer & explanationAnswer & explanation
Correct answer: A. The right to request a hearing, after which the Administrator must schedule one within a reasonable time
When the Administrator issues a summary order without a prior hearing, the affected party has the right to request a hearing, and the Administrator must promptly schedule one to determine whether the order should be affirmed, modified, or vacated. The order remains in effect while the hearing process proceeds, and it cannot simply be ignored.
Why the other options are wrong
- B. The order remains effective and enforceable until modified or vacated after a hearing.
- C. Direct federal damages suits against the Administrator are not the standard remedy under the Act.
- D. Due process requires an opportunity for a hearing upon request, even after summary action.
Post-Summary-Order Hearing Rights
A person subject to a summary cease-and-desist or suspension order has the right to request a hearing, which the Administrator must promptly schedule to review the order.
- Summary orders are effective immediately upon issuance
- Affected party may request a hearing to contest the order
- Order remains valid and enforceable during the hearing process unless vacated
Memory trick: Act now, hear later — but the hearing must come.