SIE practice questionhardSEC Rulemaking Authority
Under the Securities Exchange Act of 1934, the SEC has the authority to do all of the following EXCEPT:
- ADirectly prosecute criminal violations of securities law✓ Correct answer
- BApprove or disapprove SRO rule changes
- CBring civil enforcement actions against securities law violators
- DRequire registration of broker-dealers
Explanation
Why A — Directly prosecute criminal violations of securities law
The SEC can bring civil enforcement actions but cannot directly prosecute criminal cases. Criminal prosecution of securities violations is handled by the Department of Justice (DOJ). The SEC can refer cases to the DOJ for criminal prosecution. The SEC does have authority to require broker-dealer registration, approve or disapprove SRO rule changes, and bring civil actions including seeking injunctions, disgorgement, and civil monetary penalties.
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