Glossary term
Cease and Desist Order
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Desist order
A cease and desist order is a regulator's formal instruction to stop conduct that breaks the law or rules, or to stop a practice that is likely to cause harm, and not to repeat it.
Explanation
Regulators in many countries can issue these orders without first going to court, though the target can usually challenge them. The order names the conduct, states the legal basis, and tells the firm or person to stop and, sometimes, to take steps to put things right. It can be issued after a hearing, or on a temporary basis when urgent action is needed to protect customers or markets. It may stand alone or be paired with a fine, a restitution requirement or a ban. Ignoring an order is itself a breach and usually leads to a heavier penalty or court enforcement. Orders are often published. Speed is the reason it is used on continuing misconduct, such as unlicensed activity or misleading promotions, where each extra week adds victims.
Example
An online platform with no licence is offering investment products to the public and advertising guaranteed returns. The regulator issues a cease and desist order demanding that it stop taking new customers and remove the adverts within seven days. When the operator ignores it, the regulator goes to court for an injunction.
Not to be confused with
- Injunction
- An injunction is normally granted by a court. The regulator itself issues a cease and desist order, though a court may later enforce it.