I would suggest it:
Consequences of Violations
Violations of the margin regulations are violations of the Exchange Act. They may expose the violator to:
• SEC enforcement actions, which can result in injunctive relief, civil monetary penalties or cease and desist orders.
• Criminal prosecution
– Ken Lay (Enron founder) was convicted of bank fraud and making false statements to banks by certifying on Form Uâ€1 that certain loans were not purpose credit and then using the proceeds to buy margin stock. Each of the four counts had a maximum sentence of 30 years.
•Avoidance under Exchange Act Section 29(b).
–Although there is contrary authority, a number of cases have allowed rescission of bank loans made in violation of the margin regulations, and precluded the banks from recovering the unpaid balance.
• Private rights of action.
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