(a)The commissioner may issue a stop order
denying effectiveness to, or suspending or revoking the effectiveness
of, a registration statement if the commissioner finds that the order is
in the public interest and that:
(1)the registration statement as of its effective date or before the
effective date in the case of an order denying effectiveness, an
amendment under section 5(j) of this chapter as of its effective
date, or a report under section 5(i) of this chapter, 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;
(2)this article, a rule adopted or order issued under this article, or
a condition imposed under this article has been willfully violated,
in c
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(a) The commissioner may issue a stop order
denying effectiveness to, or suspending or revoking the effectiveness
of, a registration statement if the commissioner finds that the order is
in the public interest and that:
(1) the registration statement as of its effective date or before the
effective date in the case of an order denying effectiveness, an
amendment under section 5(j) of this chapter as of its effective
date, or a report under section 5(i) of this chapter, 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;
(2) this article, a rule adopted or order issued under this article, or
a condition imposed under this article 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; by 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;
(3) the security registered or sought to be registered is the subject
of a permanent or temporary injunction of a court with
jurisdiction or an administrative stop order or similar order issued
under any federal, foreign, or state law other than this article
applicable to the offering, but the commissioner may not institute
a proceeding against an effective registration statement under this
subdivision more than one (1) year after the date of the order or
injunction on which it is based, and the commissioner may not
issue an order under this subdivision 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;
(4) the issuer's enterprise or method of business includes or would
include activities that are unlawful where performed;
(5) with respect to a security sought to be registered under section
3 of this chapter, there has been a failure to comply with the
undertaking required by section 3(b)(4) of this chapter;
(6) the applicant or registrant has not paid the filing fee, but the
commissioner shall void the order if the deficiency is corrected;
or
(7) the offering:
(A) will work or tend to work a fraud upon purchasers or would
so operate; or
(B) has been or would be made with unreasonable amounts of
underwriters' and sellers' discounts, commissions, or other
compensation, or promoters' profits or participations, or
unreasonable amounts or kinds of options.
(b) To the extent practicable, the commissioner by rule adopted or
order issued under this article shall publish standards that provide
notice of conduct that violates subsection (a)(7).
(c) The commissioner may not institute a stop order proceeding
against an effective registration statement on the basis of conduct or a
transaction known to the commissioner when the registration statement
became effective unless the proceeding is instituted within thirty (30)
days after the registration statement became effective.
(d) The commissioner 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 commissioner shall promptly notify each person specified
in subsection (e) that the order has been issued, the reasons for the
revocation, denial, postponement, or suspension, and that within fifteen
(15) 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 commissioner within thirty (30) days after the
date of service of the order, the order becomes final. If a hearing is
requested or ordered, the commissioner, 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.
(e) A stop order may not be issued under this section without:
(1) appropriate notice to the applicant or registrant, the issuer, and
the person on whose behalf the securities are to be or have been
offered;
(2) an opportunity for hearing; and
(3) findings of fact and conclusions of law in a record.
(f) The commissioner may modify or vacate a stop order issued
under this section if the commissioner 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.