The Administrator of State Y suspects that a registered investment adviser (IA) is engaging in fraudulent activities. To investigate, the Administrator has the authority to do all of the following EXCEPT:
- AExamine the IA's books and records at any time, with or without prior notice.
- BIssue an injunction against the IA without a prior hearing.
- CAdminister oaths and affirmations.
- DSubpoena witnesses and compel their attendance and testimony.
Show answer & explanationAnswer & explanation
Correct answer: B. Issue an injunction against the IA without a prior hearing.
While an Administrator has broad investigative and enforcement powers, they generally cannot issue an injunction without a prior hearing. An injunction is a judicial order, and while the Administrator can petition a court for an injunction, they typically cannot issue one themselves. They can issue cease and desist orders, but these are different from injunctions and still usually require a hearing unless it's a summary order.
Why the other options are wrong
- A. The Administrator has the power to examine books and records at any time, as part of their oversight and investigative authority.
- C. The power to administer oaths and affirmations is a common authority granted to regulatory bodies for investigations.
- D. Subpoena power is a standard investigative tool of the Administrator.
Administrator's Investigative Powers (USA)
Under the Uniform Securities Act (USA), the Administrator has broad powers to investigate potential violations, including subpoena power, examining records, and administering oaths, but cannot issue court injunctions.
- Can subpoena witnesses and compel testimony.
- Can examine books and records.
- Can administer oaths.
- Cannot issue injunctions (requires court order).
Memory trick: Investigate, record check, swear, but no court decree.