NASAA Series 63Remedies and Administrative ProvisionsMedium
An Administrator issues an informal interpretive opinion stating that a certain type of transaction is exempt from registration under the state's securities law. Which statement best describes the legal effect of this opinion?
- AIt automatically becomes law after 30 days if unchallenged
- BIt is binding on all courts as if it were a statute
- CIt has no value and may be disregarded by industry participants
- DIt provides guidance and may be relied upon, but is not the same as a formal rule or statute
Show answer & explanationAnswer & explanation
Correct answer: D. It provides guidance and may be relied upon, but is not the same as a formal rule or statute
Interpretive opinions and no-action positions issued by the Administrator provide useful guidance to industry participants about how the Administrator views certain conduct, but they do not carry the binding force of statutes or formally adopted rules and are not conclusive on courts.
Why the other options are wrong
- A. There is no automatic conversion of interpretive opinions into law after a time period.
- B. Interpretive opinions are not binding on courts like statutes are.
- C. These opinions have practical value and are commonly relied upon by industry participants.
Interpretive Opinions
Administrators may issue interpretive opinions or no-action letters providing guidance on how the law applies to specific situations, though these lack the force of formally adopted rules or statutes.
- Not binding on courts
- Useful for compliance guidance and good-faith reliance
- Distinct from formal rulemaking, which requires notice-and-comment procedures
Memory trick: An opinion guides, but only a rule truly binds.