An agent in Reno emails a private placement memorandum to a prospect vacationing in California. The Nevada Administrator subpoenas the agent's records. The California Administrator opens a parallel investigation. Both have jurisdiction, because the offer was made FROM Nevada and DIRECTED TO California. One email, two state enforcement actions, and a five-year exposure on the criminal side.
The state securities Administrator has authority over any offer or sale of a security if the offer originates in the state, is directed into the state, or is accepted in the state. The "any one of three" rule means a single transaction can fall under two or even three states' jurisdiction simultaneously.
- Offer made IN the state. The agent's office, computer, or phone is physically located in the state when the communication is sent.
- Offer DIRECTED TO the state. The communication is targeted to a person known to be in the state, regardless of where the sender sits.
- Offer ACCEPTED IN the state. The buyer signs or wires funds from within the state.
Common mistakes
- Picking "the Administrator holds in contempt". The Administrator ISSUES subpoenas. Only a court can hold someone in contempt. The Administrator must petition the court for enforcement.
- Treating cancellation as a sanction. Cancellation is no-fault: death, dissolution, incompetence, cannot locate. It is NEVER for misconduct. Misconduct triggers revocation.
- Forgetting the "public interest PLUS cause" double trigger. Denial, suspension, or revocation requires BOTH a finding of public interest AND an enumerated cause. Either alone is insufficient.
Bottom line
- Administrator jurisdiction attaches if the offer is made IN, DIRECTED TO, or ACCEPTED IN the state. Any one hook is enough.
- Denial, suspension, and revocation (DSR) require notice plus opportunity for hearing AND a finding of public interest PLUS an enumerated cause. Both triggers are needed, not either alone.
- Cancellation is no-fault removal for death, dissolution, incompetence, or inability to locate. It is never disciplinary; misconduct triggers revocation.
- The Administrator issues subpoenas, administers oaths, and takes sworn statements, but only a court can hold in contempt. The Administrator cannot jail anyone.
Exam shortcut
Memorize 5-3-3-2-1. $5,000 fine, 3 years prison, 3 years civil from sale, 2 years civil from discovery, 1 year Administrator post-withdrawal. Every numeric answer choice on this scope maps to one of these five numbers. If the question describes a death, dissolution, or "cannot locate," pick cancellation. Every other administrative action requires a hearing. Cancellation is the only no-fault, no-hearing option. "Public interest" alone is a wrong-answer trap.
The full lesson (about 3,091 words, 21 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- F11
- F12
- F13
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