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← Series 63: Remedies & Administrative Provisions
Series 63 practice questionhardCriminal penalties and federal law

A junior banker is convicted under the USA for a willful securities violation. Which of the following statements about the maximum criminal penalty is TRUE if federal law prescribes a higher penalty than the state law?

  1. AThe higher federal penalty automatically applies.
  2. BThe Administrator may choose which penalty to impose.
  3. CThe higher penalty applies only if the violation is prosecuted under federal law.✓ Correct answer
  4. DBoth state and federal penalties are imposed simultaneously.
Explanation

Why C — The higher penalty applies only if the violation is prosecuted under federal law.

A conviction under the model USA is subject to the state-law penalty in Section 409. A higher federal penalty applies only if federal authorities separately prosecute and obtain a conviction under the applicable federal statute; it does not automatically replace the USA penalty.

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