NASAA Series 63Remedies and Administrative ProvisionsEasy
An investor purchased unregistered securities on March 1, 2021, and discovered the registration violation on June 1, 2023. Under the Uniform Securities Act's civil liability provisions, what is the latest date by which she may bring a private cause of action against the seller?
- AMarch 1, 2026
- BMarch 1, 2024
- CJune 1, 2025
- DJune 1, 2023
Show answer & explanationAnswer & explanation
Correct answer: B. March 1, 2024
The USA requires suit within the earlier of 3 years after the contract of sale or 2 years after discovery of the violation. Three years after March 1, 2021 is March 1, 2024, while two years after discovery (June 1, 2023) is June 1, 2025. The earlier date, March 1, 2024, controls.
Why the other options are wrong
- A. This adds an extra year with no basis in the statute.
- C. This is the discovery-based deadline, but it is later than the sale-based deadline and therefore does not control.
- D. This is merely the discovery date, not a deadline.
Civil Liability Statute of Limitations
Under the USA, a private right of action must be brought within the earlier of 3 years after the sale/contract or 2 years after discovery of the violation.
- Whichever period expires FIRST controls.
- Applies to actions for rescission or damages under Section 410.
- Encourages prompt investor action once a violation is or should be discovered.
Memory trick: '3 from sale, 2 from discovery — whichever comes sooner wins the race.'