Failure to abide by the regulatory securities framework will result in criminal, civil, administrative and private civil causes of action. Also note, contrary to popular belief, there is no federal or state exemption for friends and family members. Some of the Penalties include:
- Monetary fines;
- Refunds of amounts paid to investors; and
- Prohibition on conducting future sales
Because of the uncertainty and expense that the securities laws add to transactions, the application of the securities laws should be addressed in the earliest business planning stages of any business organization or business transaction.