502.306 - DENIAL, SUSPENSION, AND REVOCATION OF SECURITIES REGISTRATION.

        502.306  DENIAL, SUSPENSION, AND REVOCATION OF      SECURITIES REGISTRATION.         1.  Stop orders.  The administrator may issue a stop order      denying effectiveness to, or suspending or revoking the effectiveness      of, a registration statement if the administrator finds that the      order is in the public interest and that any of the following apply:         a.  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 502.305, subsection 10, as      of its effective date, or a report under section 502.305, subsection      9, 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.         b.  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.         c.  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 administrator shall 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 administrator shall 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.         d.  The issuer's enterprise or method of business includes or      would include activities that are unlawful where performed.         e.  With respect to a security sought to be registered under      section 502.303, there has been a failure to comply with the      undertaking required by section 502.303, subsection 2, paragraph      "d".         f.  The applicant or registrant has not paid the filing fee,      but the administrator shall void the order if the deficiency is      corrected.         g.  The offering is subject to any of the following:         (1)  Will work or tend to work a fraud upon purchasers or would so      operate.         (2)  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.         h.  The financial condition of the issuer affects or would      affect the soundness of the securities, except that applications for      registration of securities by companies which are in the development      stage shall not be denied based solely upon the financial condition      of the company.  For purposes of this rule, a "development stage      company" is defined as a company which has been in existence for      five years or less.         i.  A person who is an issuer, correspondent, or applicant, as      listed on the uniform application to register securities form known      as "Form U-1", has abandoned the registration statement.  The      administrator may enter an order pursuant to this paragraph if a      notice of abandonment is sent to the last known address of each      person, and the person fails to take corrective action within the      time specified by the administrator.  The notice of abandonment shall      state the reasons for the administrator's action, specify the      corrective action required, and specify the time period for      submitting a response.  However, the time specified shall not be less      than fifteen days.         2.  Enforcement of subsection 1, paragraph "g".  To the extent      practicable, the administrator by rule adopted or order issued under      this chapter shall publish standards that provide notice of conduct      that violates subsection 1, paragraph "g".         3.  Institution of stop order.  The administrator shall not      institute a stop order proceeding against an effective registration      statement on the basis of conduct or a transaction known to the      administrator when the registration statement became effective unless      the proceeding is instituted within thirty days after the      registration statement became effective.         4.  Summary process.  The administrator 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 administrator shall      promptly notify each person specified in subsection 5 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 administrator, within thirty days after the date of      service of the order, the order becomes final.  If a hearing is      requested or ordered, the administrator, 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.         5.  Procedural requirements for stop order.  A stop order      shall not be issued under this section without all of the following:         a.  An appropriate notice to the applicant or registrant, the      issuer, and the person on whose behalf the securities are to be or      have been offered.         b.  An opportunity for hearing.         c.  Findings of fact and conclusions of law in a record in      accordance with chapter 17A.         6.  Modification or vacation of stop order.  The administrator      may modify or vacate a stop order issued under this section if the      administrator 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.  
         Section History: Recent Form
         2004 Acts, ch 1161, §15, 68         Referred to in § 502.201, 502.202, 502.203, 502.204, 502.303,      502.304, 502.304A, 502.305