1. The administrator may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any registration statement if the administrator finds that the order is in the public interest and that:
a. 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 filed under either subsection 9 or subsection 11 of section 502.208 as of its effective date, or any financial statement or report required under section 502.208, subsection 9 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;
b. Any provision of this chapter or any rule, order or condition lawfully imposed under this chapter has been willfully violated, in connection with the offering, by:
(1) The person filing the registration statement;
(2) The issuer;
(3) Any partner, officer or director of the issuer, or any person occupying a similar status or performing similar functions;
(4) Any affiliate of the issuer, but only if the person filing the registration statement is an affiliate of the issuer; or
(5) Any broker-dealer;
c. The securities registered or sought to be registered are 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 or state Act applicable to the offering; but the administrator may not institute a proceeding against an effective registration statement under this section more than one year from the date of the order or injunction relied on, and the administrator may not enter an order under this section on the basis of an order or injunction entered under any other state Act unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this section;
d. The issuer's enterprise or method of business includes or would include activities which are illegal where performed;
e. The issuance or sale of the securities has worked or tended to work a fraud upon purchasers or would so operate;
f. The offering has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participation, or unreasonable amounts or kinds of options;
g. Advertising has been used in connection with the offering contrary to the provisions of section 502.602;
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", failed to pay the proper filing fee. The administrator may enter only a denial order pursuant to this paragraph, and shall vacate any such order when the deficiency has been corrected.
j. 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.
k. A person who is an issuer, correspondent, or applicant has failed to file a sales report with the administrator within ninety days after the registration statement's annual anniversary of its effectiveness or latest renewal.
2. The administrator may not institute a stop order proceeding against an effective registration statement on the basis of a fact known to the administrator when the registration statement became effective unless the proceeding is instituted within thirty days after effectiveness.
3. The administrator may issue a summary order revoking, withdrawing, postponing, suspending, or denying the effectiveness of a registration statement pending a final determination. Upon the entry of the order, the administrator shall promptly notify persons who are the issuer, correspondent, and applicant by restricted certified mail, sent to the last known address of each person. The notice shall state that the order has been entered, the reasons for the administrator's action, and that the matter will be set down for a hearing within fifteen days after the receipt of a written request, if the request is received by the administrator within fifteen days after receipt of the notice by the persons. The hearing shall be held within forty-five days after the date of the notice of hearing unless continued by the administrative law judge for good cause with at least fifteen days' notice to the parties. If a hearing is requested or ordered, the administrator, after notice of an opportunity for a hearing to each of the persons, may modify, extend, or vacate the order. If a hearing is not requested or ordered by the administrator, the order will remain in effect until it is modified or vacated by the administrator.
4. No stop order may be entered under any part of this section except the first sentence of subsection 3 without compliance with the Iowa administrative procedure Act.
5. The administrator may vacate or modify a stop order upon a finding that the conditions which promoted its entry have changed or that it is otherwise in the public interest to do so.
[SS15, § 1920-u7; C24, 27, § 8539, 8540; C31, 35, § 8581-c10; C39, § 8581.10; C46, 50, 54, 58, 62, 66, 71, 73, 75, § 502.10; C77, 79, 81, § 502.209]
83 Acts, ch 169, § 8, 20, 21; 91 Acts, ch 40, §18; 94 Acts, ch 1031, §11-13
Referred to in § 502.206-502.208
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