NASAA Series 63Remedies and Administrative ProvisionsMedium
Under the Uniform Securities Act, a person may be criminally prosecuted for violating the Act only if:
- Athe violation caused measurable financial loss to at least one investor
- Bthe person acted willfully
- Cthe Administrator first issued a cease-and-desist order against the person
- Dthe security involved was exempt from registration requirements
Show answer & explanationAnswer & explanation
Correct answer: B. the person acted willfully
Criminal liability under the USA requires willfulness — a knowing and intentional violation. No proof of investor loss is required, and criminal prosecution does not depend on a prior administrative cease-and-desist order.
Why the other options are wrong
- A. Financial loss is not an element of a criminal violation.
- C. A prior cease-and-desist order is not a prerequisite to criminal prosecution.
- D. Exemption status of the security is unrelated to the willfulness requirement.
Willfulness Requirement for Criminal Liability
Under the USA, criminal penalties apply only to willful violations of the Act, meaning the person knew (or should have known) of the wrongful conduct.
- Willfulness does not require intent to violate the law, just intent to do the act.
- No investor loss required to prove criminal violation.
- Maximum penalties often include fines and imprisonment, set by state statute.
Memory trick: 'No willful mind, no criminal find.'