Series 63 practice questionhardCriminal Penalties — Knowledge Defense
In a state-law practice set, a candidate reviews the following scenario. The key is the registration, exemption, or ethical rule doing the real work. 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. This variant keeps the same legal rule but shifts the setup so recall has to stay flexible.
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