47-31B-306 Denial, suspension, and revocation of securities registration.
Denial, suspension, and revocation of securities registration.
(a) Stop orders.
The director may issue a stop order denying effectiveness to, or suspending or revoking the
effectiveness of, a registration statement if the director finds that the order is in the public interest
The registration statement as of its effective date or before the effective date in the case
of an order denying effectiveness, an amendment under § 47-31B-305(i) as of its effective
date, or a report under § 47-31B-305(h), is incomplete in a material respect or contains
a statement that, in the light of the circumstances under which it was made, was false or
misleading with respect to a material fact;
This chapter or a rule adopted or order issued under this chapter or a condition imposed
under this chapter has been willfully violated, in connection with the offering, by the
person filing the registration statement; by the issuer, a partner, officer, or director of the
issuer or a person having a similar status or performing a similar function; a promoter of
the issuer; or a person directly or indirectly controlling or controlled by the issuer; but
only if the person filing the registration statement is directly or indirectly controlled by
or acting for the issuer; or by an underwriter;
The security registered or sought to be registered is the subject of a permanent or
temporary injunction of a court of competent jurisdiction or an administrative stop order
or similar order issued under any federal, foreign, or state law other than this chapter
applicable to the offering, but the director may not institute a proceeding against an
effective registration statement under this paragraph more than one year after the date of
the order or injunction on which it is based, and the director may not issue an order under
this paragraph on the basis of an order or injunction issued under the securities act of
another state unless the order or injunction was based on conduct that would constitute,
as of the date of the order, a ground for a stop order under this section;
The issuer's enterprise or method of business includes or would include activities that are
unlawful where performed;
With respect to a security sought to be registered under § 47-31B-303, there has been a
failure to comply with the undertaking required by § 47-31B-303(b)(4); or
The applicant or registrant has not paid the filing fee, but the director shall void the order
if the deficiency is corrected.
(b) Institution of stop order. The director may not institute a stop order proceeding against an
effective registration statement on the basis of conduct or a transaction known to the director when
the registration statement became effective unless the proceeding is instituted within thirty days after
the registration statement became effective.
(c) Summary process. The director may summarily revoke, deny, postpone, or suspend the
effectiveness of a registration statement pending final determination of an administrative proceeding.
Upon the issuance of the order, the director shall promptly notify each person specified in subsection
(d) that the order has been issued, the reasons for the revocation, denial, postponement, or
suspension, and that within fifteen days after the receipt of a request in a record from the person the
matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the
director, within thirty days after the date of service of the order, the order becomes final. If a hearing
is requested or ordered, the director, after notice of and opportunity for hearing for each person
subject to the order, may modify or vacate the order or extend the order until final determination.
(d) Procedural requirements for stop order. A stop order may not be issued under this section
Appropriate notice to the applicant or registrant, the issuer, and the person on whose
behalf the securities are to be or have been offered;
An opportunity for hearing; and
Findings of fact and conclusions of law in a record in accordance with chapter 1-26.
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(e) Modification or vacation of stop order. The director may modify or vacate a stop order issued
under this section if the director finds that the conditions that caused its issuance have changed or
that it is necessary or appropriate in the public interest or for the protection of investors.
SL 2004, ch 278, § 15.
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