Series 63 practice questionhardFederal vs. State Securities Law Penalties
An issuer of a federally covered security is accused of material misstatement in its prospectus. Which authority may pursue enforcement?
- ABoth state Administrator and the SEC✓ Correct answer
- BOnly the SEC
- COnly the state Administrator
- DNeither; covered securities are exempt from all enforcement
Explanation
Why A — Both state Administrator and the SEC
Although covered securities are exempt from state registration, both the SEC and state Administrators have antifraud enforcement authority (USA Section 410, Section 18(c)). Only the SEC (B) or only the state (C) is incorrect, and there is no exemption from enforcement (D).
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