Antifraud Provisions
Chapters in this video
- 0:00 Zero exemptions: exempt securities still trigger fraud liability
- 1:49 The three prongs of fraud and the intent trap on prong three
- 3:06 Enforcement cascade from license suspension to criminal prosecution
- 5:04 The $5,000 fine and 3-year prison numbers for willful violations
- 5:43 Advisory antifraud provision and the unregistered adviser trap
- 6:08 Principal trade written disclosure and per-transaction consent
- 7:26 Rapid-fire exam recap
What this video covers
- Why the universal antifraud provision has absolutely no exemptions, not even for exempt securities or exempt transactions
- How the three prongs of fraud differ, and why prong three (conduct that operates as fraud) does not require proof of intent
- The full enforcement toolkit available to the state Administrator: administrative proceedings, cease and desist orders, judicial injunctions, criminal prosecution, and civil liability
- Why criminal penalties require willful violations but administrative and civil actions often do not
- The two specific numbers to memorize for state criminal penalties: $5,000 maximum fine and 3 years maximum imprisonment
- How the advisory antifraud provision applies to anyone receiving compensation for securities advice, registered or not
- The strict per-transaction written disclosure and consent requirement for principal trades, and the limited exemption the Administrator may grant
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