49:3-64 - Issuance of stop order
49:3-64 Issuance of stop order.
17. (a) The bureau chief may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if he finds:
(1)that the order is in the public interest: and
(2)that:
(i)The registration statement, as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment under subsection (i) of section 15 of P.L.1967, c.93 (C.49:3-62) as of its effective date, or any report under subsection (h) of section 15 of P.L.1967, c.93 (C.49:3-62), is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact; or
(ii)Any provision of this act or any rule, order, or condition lawfully imposed thereunder has been willfully violated, in connection with the offering by (A) the person filing the registration statement, (B) the issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling or controlled by the issuer, or (C) any underwriter; or
(iii) The security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction of any court of competent jurisdiction entered under any other federal, foreign or State act applicable to the offering; but the bureau chief may not institute a proceeding against an effective registration statement under this subsection more than two years from the date of the order or injunction relied on; or
(iv)The issuer's enterprise or method of business includes or would necessarily include activities which are illegal where performed; or
(v)(Deleted by amendment, P.L.1985, c.405).
(vi)(Deleted by amendment, P.L.1985, c.405).
(vii) The applicant or registrant has failed to pay the proper filing fee, as set by rule of the bureau chief;
(viii) The issuer, any partner, officer or director of the issuer, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling or controlled by the issuer, or any broker-dealer or other person involved directly or indirectly in the offering (A) has been convicted of any crime of embezzlement under state, federal or foreign law or any crime involving any theft, forgery or fraudulent practices in regard to any state, federal or foreign securities, investment advisory, banking, insurance, or commodities trading laws or anti-fraud laws; (B) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities, commodities, banking, insurance or investment advisory business; (C) is the subject of an effective order of the bureau chief denying, suspending, or revoking securities registration, registration as a broker-dealer, agent, investment adviser or investment adviser representative; (D) is the subject of an order entered by any federal or state securities, commodities, banking, insurance or investment advisory administrator or self-regulatory organization denying or revoking any securities, commodities, banking, insurance or investment advisory license or registration under federal or state securities, commodities, banking, insurance or investment advisory law, including, but not limited to, registration as a broker-dealer, agent, investment adviser, investment adviser representative, or the substantial equivalent of those terms as defined in this act, or is the subject of an order of the Securities and Exchange Commission, a self-regulatory organization, the Commodity Futures Trading Commission, an insurance commissioner, or a federal or state banking regulator, suspending or expelling him from a national securities or commodities exchange or national securities or commodities association registered under the "Securities Exchange Act of 1934" or the "Commodity Exchange Act," or from engaging in the banking or insurance business, or is the subject of a United States Postal Service fraud order, except the bureau chief may not institute a revocation or suspension proceeding pursuant to this subsubparagraph (D) of this subparagraph more than two years from the date of the order relied on and he may not enter an order pursuant to this subsubparagraph (D) of this subparagraph on the basis of an order under another state act unless that order was based on facts which would currently constitute a ground for an order under New Jersey law; (E) has engaged in dishonest or unethical practices in the securities business; or (F) is insolvent, either in the sense that liabilities exceed assets or in the sense that obligations cannot be met as they mature; or
(ix)The offering is a blind pool.
(b)(Deleted by amendment, P.L.1997, c.276.)
(c)The bureau chief may by order summarily postpone or suspend the effectiveness of the registration statement pending final determination of any proceeding instituted pursuant to this section. Upon entry of such an order, the bureau chief shall promptly notify each person specified in subsection (d) of this section that it has been entered and of the reasons therefor.
(1)Upon service of notice of the order issued by the bureau chief, the applicant shall have up to 15 days to respond to the bureau in the form of a written answer and written request for a hearing. The bureau chief shall, within five days of receiving the answer and a request for a hearing, either transmit the matter to the Office of Administrative Law for a hearing or schedule a hearing at the Bureau of Securities. Orders issued pursuant to this subsection to postpone or suspend the effectiveness of any registration statement shall be subject to an application to vacate upon 10 days' notice, and in any event a preliminary hearing on the order to postpone or suspend the effectiveness of any registration statement shall be held within 20 days after it is requested, and the filing of a motion to vacate the order shall toll the time for filing an answer and written request for a hearing.
(2)If an applicant fails to respond by either filing a written answer and written request for a hearing with the bureau or moving to vacate an order to postpone or suspend the effectiveness of any registration statement within the 15-day period prescribed, the registrant shall have waived the opportunity to be heard and the order shall remain in effect until modified or vacated.
(d)No stop order may be entered pursuant to this section, except as provided in subsection (c), without (1) appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be offered, (2) opportunity for hearing, and (3) written findings of fact and conclusions of law.
(e)The bureau chief may vacate or modify a stop order if he finds that the conditions which prompted its entry have changed.
(f)Notwithstanding any other provision of this act to the contrary, the bureau chief may bring an administrative or court action pursuant to section 29 of this act (C.49:3-70.1) to seek and obtain civil penalties for violations of this section.
L.1967,c.93,s.17; amended 1985, c.405, s.10; 1987, c.301, s.3; 1997, c.276, s.20.