The adjudication relates to alleged misconduct charges arising from the handling of two financial transactions in 2011 which occurred during Laurence Bassini's time as owner and director of the club.
Bassini, who sold the Hertfordshire club to the Pozzo family in June 2012, has subsequently been banned from any participation in football for three years.
But despite the transfer embargo, the club can still buy and sell players under Regulation 19 of the Football League Regulations, as long as they receive prior authorization from the relevant football authorities.
Gianfranco Zola has guided his side to third in the Championship, just two points off an automatic promotion place.
Any points deduction would have hampered their chances of returning to the Premier League but the club feel vindicated by the Commission's ruling.
"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," read a statement on Watford's official website.
"Neither Watford Football Club - nor any of its individual officers - will be making any further comment on this matter."