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← Series 63: Regulation of Securities & Issuers
Series 63 practice questionhardAdministrator’s power to revoke exemptions retroactively

If an Administrator determines a broker-dealer acted in bad faith to abuse the private placement exemption, which of the following is TRUE regarding revocation of the exemption?

  1. AThe Administrator may retroactively deny the exemption, making all prior sales unregistered.
  2. BThe Administrator may only revoke the exemption for future transactions.✓ Correct answer
  3. CThe Administrator may not revoke the exemption at all.
  4. DThe Administrator may revoke it for prior and future transactions, but only after a hearing.
Explanation

Why B — The Administrator may only revoke the exemption for future transactions.

After the required process, the Administrator may deny or revoke an exemption prospectively for a specific security or transaction. The USA expressly states that the order may not operate retroactively, even when the Administrator suspects abuse.

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