What Are the Potential Penalties for Selling Unregistered Securities?

The penalties for selling unregistered securities can be severe, including substantial civil fines, criminal prosecution leading to imprisonment, and the requirement to "disgorge" or return all profits from the illegal sale to investors. Issuers and their principals can also be barred from serving as officers or directors of public companies.

The severity of the penalty depends on the scale of the offering and the degree of intent to violate the law.