In a state-law practice set, a candidate reviews the following scenario. The exam wants the best state-securities answer, not a practical business answer. In a criminal prosecution for securities fraud, the defendant claims he relied in good faith on legal advice from his attorney. This defense:

AAutomatically eliminates criminal liability
BMay negate the element of willfulness if the reliance was reasonable and in good faith✓ Correct answer
CIs irrelevant because ignorance of the law is never a defense
DShifts the criminal liability to the attorney who provided the advice

Explanation

Why B — May negate the element of willfulness if the reliance was reasonable and in good faith

In criminal prosecutions under USA Section 409, the prosecution must prove willfulness. Good faith reliance on competent legal counsel may negate the willfulness element, but the reliance must be genuine and reasonable. The defendant bears the burden of demonstrating the advice was sought and followed in good faith. The exam trick is the framing, not the underlying Uniform Securities Act rule.

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