Administrative Sanction

After an examination, the State G Administrator concludes that Rurik Falsham, a registered agent, willfully sold securities using materially false earnings projections. The Administrator revokes his registration, the county prosecutor files criminal charges over the same sales, and three customers file civil suits. Falsham argues that only one of the three may go forward. Under the Uniform Securities Act:

1. A.the administrative revocation bars the criminal prosecution on double jeopardy groundsAn administrative registration sanction is remedial, not a criminal punishment, so double jeopardy does not attach.
2. B.all three may proceed, because administrative, civil and criminal consequences under the Act are cumulative and independentCorrect. The Act layers the three tracks; none displaces another.
3. C.the civil suits must be stayed until the criminal case has been resolvedThe Act imposes no such stay. Private actions proceed on their own timetable.
4. D.the criminal charge may proceed only if the Administrator refers the matter and the customers withdraw their suitsA prosecutor may act on any lawful source of evidence, and private suits are irrelevant to that decision.

Why: A single course of conduct can generate three independent consequences under the Act: an administrative sanction imposed by the Administrator, a criminal prosecution brought by the appropriate prosecuting authority, and private civil actions brought by the purchasers. Nothing in the Act makes them alternatives. An administrative revocation is remedial rather than punitive in the constitutional sense, so double jeopardy does not bar the later prosecution, and neither the administrative nor the criminal track controls the buyers' private remedy.

The Administrator issues a cease and desist order against Halbrook Capital, directing it to stop selling unregistered notes. Halbrook ignores the order and keeps selling. To compel Halbrook to comply, the Administrator must:

1. A.Apply to the appropriate court for an injunction, since a cease and desist order is not self-enforcingCorrect. The Administrator must go to court, whose contempt power supplies the compulsion.
2. B.Hold Halbrook in contempt and impose a fine directly through an administrative proceedingContempt is a judicial power. An Administrator cannot exercise it.
3. C.Issue a second cease and desist order carrying an automatic civil penalty for noncomplianceRepeating an order adds nothing. The Act routes enforcement of conduct through the courts.
4. D.Refer the matter to the SEC, which alone may enjoin conduct in interstate commerceState Administrators may seek injunctions in their own courts and need no federal referral.

Why: A cease and desist order is an administrative directive; it is not self-enforcing. If the respondent disregards it, the Administrator must apply to the appropriate court for an injunction or other equitable relief, and it is then the court's contempt power that compels obedience. The Administrator can also pursue administrative sanctions against registrations and refer the matter for criminal prosecution, but only a court can order and enforce an injunction.