§ 7-11-306 - Denial, suspension, and revocation of registration.
SECTION 7-11-306
§ 7-11-306 Denial, suspension, andrevocation of registration. – (a) The director may issue a stop order denying effectiveness to, or suspendingor revoking the effectiveness of, a registration statement if the directorfinds:
(1) That the order is in the public interest; and
(2) That:
(i) The registration statement as of the effective date or asof the proposed effective date in the case of an order denying effectiveness,an amendment under § 7-11-305(n) or 7-11-305(o) as of its effective date,or a report under § 7-11-305(m) contains any untrue statement of materialfact or omits to state a material fact necessary in order to make thestatements made, in light of the circumstances under which they were made, notmisleading;
(ii) This chapter or a rule, order, or condition lawfullyimposed under this chapter has been willfully violated, in connection with theoffering, by the person filing the registration statement; by the issuer, apartner, officer, or director of the issuer, a person occupying a similarstatus or performing similar functions, or a person directly or indirectlycontrolling or controlled by the issuer, but only if the person filing theregistration statement is directly or indirectly controlled by or acting forthe issuer; or by an underwriter.
(iii) The security registered or sought to be registered isthe subject of a permanent or temporary injunction of a court of competentjurisdiction or an administrative stop order or similar order entered under anyother federal or state law applicable to the offering; but the director may notinstitute a proceeding against an effective registration statement under thissubparagraph more than one year after the date of the order or injunctionrelied on, and the director may not enter an order under this subparagraph onthe basis of an order or injunction entered under the securities act of anotherstate unless the order or injunction was based on facts that currently wouldconstitute a ground for a stop order under this section;
(iv) The issuer's enterprise or method of business includesor would include activities that are illegal where performed;
(v) A security sought to be registered under § 7-11-302is not eligible for registration under § 7-11-302;
(vi) With respect to a security sought to be registered under§ 7-11-303, there has been a failure to comply with the undertakingrequired by § 7-11-303(b)(4); or
(vii) The applicant or registrant has failed to pay theproper filing fee; but the director may enter only a denial order under thissubparagraph and vacate the order if the deficiency is corrected.
(b) The director may not institute a stop order proceedingagainst an effective registration statement on the basis of a fact ortransaction known to the director when the registration statement becameeffective unless the proceeding is begun within thirty (30) days after theregistration statement became effective.
(c) The director, by order under § 7-11-712, maysummarily postpone or suspend the effectiveness of the registration statementpending final determination of an administrative proceeding. As more fully setforth in § 7-11-712 upon the entry of the order, the director shallpromptly notify each person specified in subsection (d) that the order has beenentered and of the reasons for the postponement or suspension and that withinthirty (30) days after the receipt of a written request from the person, thematter will be set down for hearing. If no hearing is requested and none isordered by the director, the order remains in effect until it is modified orvacated by the director. If a hearing is requested or ordered, the director,after notice of an opportunity for hearing to each person specified insubsection (d), may modify or vacate the order or extend it until finaldetermination.
(d) No stop order may be entered under this section exceptsubsection (c) without appropriate prior notice to the applicant or registrant,the issuer, and the person on whose behalf the securities are to be or havebeen offered, opportunity for hearing, and written findings of fact andconclusions of law in accordance with the state administrative procedures act.
(e) The director may modify or vacate a stop order enteredunder this section if the director finds that the conditions which promptedentry have changed or that it is otherwise in the public interest.