Glossary term
Injunction
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Court injunction
An injunction is a court order, often sought by a regulator, that requires a person or firm to stop certain conduct or to take a specified step, with penalties for contempt if it is ignored.
Explanation
In regulation, injunctions are a remedy for conduct that is continuing or about to happen. A regulator applies to a court, showing a breach or strong risk of one, and asks for an order. A temporary or interim injunction can be granted quickly, sometimes without notice to the other side, to preserve the position until a full hearing; a permanent injunction follows a final decision. Typical uses include halting unlicensed activity, stopping misleading promotions, and freezing assets so that money cannot be moved before a penalty or compensation is ordered. Disobeying one is contempt of court and can mean fines or imprisonment. Some regulators have comparable powers of their own, such as cease and desist orders. Courts grant it because waiting for a full trial would let the harm continue and money move out of reach.
Example
A company is selling unregistered investment schemes and moving investors' money offshore. The regulator goes to court the same day, and a judge grants an interim injunction stopping new sales and freezing the company's accounts until a full hearing can be held three weeks later.
Not to be confused with
- Cease and Desist Order
- A cease and desist order is issued by the regulator. An injunction comes from a court and carries contempt sanctions.