Reasons for Issuing a Stop Order
In order for a state securities administrator to issue a stop order, the order must be in the public interest, and one of the following conditions must be true:
- 1. the registration is materially incomplete, false, or misleading
- 2. any of the following persons have willfully violated state securities law:
- ◊ the filer of the registration statement
- ◊ the issuer or any officer, director, or partner of the issuer
- ◊ any underwriter
- 3. another state or federal regulator or court entered a stop order or injunction against the security within the past year
- 4. the issuer’s business includes illegal activities
- 5. the offering is fraudulent
- 6. the offering involves unreasonable amounts of commissions and other compensation, or unreasonable amounts or kinds of options
- 7. a security applies for registration by notification, but is not eligible
- 8. a security applies for registration by coordination, but does not forward amendments to the federal prospectus
