The Administrator has broad investigative authority. The Administrator may require written statements under oath, publish information about violations, and investigate both inside and outside the state when determining whether a violation occurred in the Administrator’s own state. However, the Administrator does not have authority to investigate another state’s securities law violations. That responsibility belongs to the Administrator of that other state.

Investment advisers may use investment adviser representatives who work as independent contractors, provided they are properly registered and supervised. This arrangement is common among independent financial planners and is not, by itself, a cause for disciplinary action.

Why the Other Answers Are Incorrect

Failure to disclose a bankruptcy filing may be grounds for disciplinary action because it is material information.

Although the Administrator’s denial authority based on criminal convictions is generally limited to certain convictions within the past 10 years, a fraud conviction still must be disclosed.

A suspension by FINRA or another securities regulator may provide grounds for the Administrator to take disciplinary action.

The Administrator may investigate violations, inspect records, require specific forms, and issue cease and desist orders. However, an injunction must be issued by a court, not directly by the Administrator.

Why the Other Answers Are Incorrect

The Administrator may prescribe forms for securities registration.

The Administrator may issue cease and desist orders, including in some cases without prior notice.

The Administrator may inspect the offices and records of registered broker-dealers during normal business hours.

The Administrator may deny registration of a security if the issuer’s business would involve illegal activity in the state where registration is sought. The Administrator may also deny registration if the offering includes unreasonable underwriting compensation or selling expenses.

Why the Other Answers Are Incorrect

An issuer is not required to have a history of paying dividends in order to register securities. Many companies, especially growth companies, may reinvest earnings rather than distribute dividends.

The Administrator has broad investigative and enforcement powers, including the ability to conduct investigations, compel testimony, and deny registrations when statutory grounds exist. However, the Administrator cannot personally issue an injunction. An injunction must be issued by a court.

Why the Other Answers Are Incorrect

The Administrator may compel witnesses to testify during an investigation.

Investigations may be conducted publicly or privately. They are not required to be open to the public.

A felony conviction within the past 10 years may be grounds for denying registration.

The Administrator has broad investigative and enforcement authority, including the ability to investigate out-of-state broker-dealers, issue subpoenas, and issue cease and desist orders. However, an agent’s registration may not be suspended or revoked without an opportunity for a hearing.

Why the Other Answers Are Incorrect

The Administrator may investigate broker-dealers outside the state when their conduct affects business or investors within the state.

The Administrator may issue subpoenas to persons located outside the state.

The Administrator may issue a cease and desist order without first holding a hearing, subject to the procedural protections required under the Act.

The Administrator may summarily deny or revoke a security’s exemption without first holding a hearing. However, the issuer must be given an opportunity for a hearing after the action. If a hearing is requested in writing, the matter must be set for hearing within the required period.

Why the Other Answers Are Incorrect

The burden of proving that an exemption applies is on the person claiming the exemption, not on the Administrator.

The Administrator may not revoke the exemption of a federal covered security.

The issuer’s written agreement is not required for the Administrator to summarily deny or revoke an exemption.

The Administrator may examine the records of registered persons, even when those records are located outside the state. The Administrator may also designate an officer to conduct investigations, take evidence, subpoena witnesses, and compel testimony.

The Administrator may refer evidence of willful violations for criminal prosecution, but only a court may sentence a person to imprisonment.

Why the Other Answers Are Incorrect

Any answer including sentencing a violator to prison is incorrect because the Administrator does not have judicial sentencing authority.

A complete registration statement satisfies one of the filing requirements and would not be grounds for denial, suspension, or revocation. However, an incomplete or misleading registration statement could create a basis for Administrator action.

Why the Other Answers Are Incorrect

Failure to pay required filing fees may be grounds for denial, suspension, or revocation.

Unreasonable or excessive underwriting compensation may be grounds for Administrator action.

A stop order or similar adverse order from a federal authority may also be grounds for action against the registration statement.

A cease and desist order is an order requiring a person to stop a specific activity. The state Administrator has authority to issue cease and desist orders under the Uniform Securities Act. If the person continues the activity after the order, the Administrator may seek an injunction from a court of competent jurisdiction.

Why the Other Answers Are Incorrect

Any answer that excludes one of the statements is incomplete. The order may require immediate cessation of the activity, may be issued by the Administrator, and may lead to a court-issued injunction if the violation continues.