Watford have been placed under transfer embargo for a breach of Football League rules, but have escaped a points deduction and a fine.
Meanwhile, the club's former owner Laurence Bassini has been banned from football for three years.
The Hornets and Bassini, who sold the club in June, were charged in August for breaches of financial regulations.
Under the terms of their transfer embargo, Watford can sign players with prior permission from league officials.
The breaches have no connection to Watford's current owners the Pozzo family.
"It is clear from the decision of the Football Disciplinary Commission that the offences which the club has been found guilty of were committed by one or two individuals who are no longer associated with the club - and without the knowledge of the full board of the club,"