Enforcement Cases

What is the difference between an enforcement action and an enforcement order?

An enforcement action describes the process taken by the Securities Division when it believes it has evidence that a respondent (the person or company facing the charges) has violated Arizona's securities or investment management laws.

The Securities Division normally initiates an action by filing and serving a Notice of Opportunity for Hearing, which is similar to a complaint in a civil lawsuit. Respondents then have a limited time in which to request a hearing where they can present their respective cases to an Administrative Law Judge. As part of its administrative action, the Commission may also issue a Temporary Order if the alleged activity is ongoing (see explanation of term below).

When an action is pending, the Commission's Administrative Law Judge has not yet heard any evidence about the Securities Division' claims. If someone with whom you have invested or someone who is offering you an investment is the subject of an action, keep in mind that the Securities Division still has to prove the allegations spelled out in the notice. Hearings on alleged violations are public and you can attend, if you wish. To inquire about the Commission's hearing calendar, call 602-542-2237.

NOTE: Hearings are not criminal trials. If the Securities Division determines that the charges against the respondent warrant criminal prosecution, the case may be referred to a county attorney, the Arizona Attorney General or the U.S. Attorney. Only in that arena do respondents face the possibility of prison time for their violations.

At the conclusion of the hearing, the judge will draft a proposed decision that is then considered by the Commissioners, who decide whether or not to accept the findings and sanctions. The Commission' decision, formalized in the form of a written order, is made during a public open meeting. View Commission Orders.

Types of Corporation Commission Orders

The Commission may enter various types of orders. These legal documents contain certain requirements that may include any or all of the following: An order to cease the illegal activity, license/registration revocation, license/registration suspension, license/registration denial, or payment of fines and restitution.

Here are some of the main types of orders that the Commission may issue, depending upon the stage of the proceeding:

Consent Order

Sometimes prior to the hearing or even before the Securities Division files its charges, the Commission can enter into a settlement where the respondent agrees to comply with certain terms and conditions. The respondent may agree to the order without admitting or denying the facts outlined in the case.

Default Order

If the respondents do not request a hearing or enter into a settlement of the matter, the Commission may enter a default order against the respondents.

Temporary Cease and Desist Order

The Securities Division orders the respondent to immediately stop violating the securities laws by ceasing the activity in question. With this type of order, the Securities Division must eventually provide evidence to prove its allegations against the respondent at a hearing.

The Commission has issued a temporary order to cease and desist. If I'm an investor, what should I do? Carefully review the information contained in the order. We cannot advise you on specific actions that you should take. The purpose for the temporary order is to stop violations of Arizona' securities or investment management laws. You need to take this into account as you evaluate whether to stay in or to get out of the investment.

Permanent Cease and Desist Order

The Commission finds that the Securities Division has proven its case against the respondent, who must now comply with the terms of the order or be subject to additional sanctions, including contempt charges in civil court.

Depending on the type of order and its terms, a respondent may still have the right to a full hearing before a Commission Administrative Law Judge or to appeal the decision to court. Often in a settlement, the respondent waives any further right to appeal. If the right to appeal is available, however, it must be exercised within a specific time period or the respondent may have no further recourse.