Series 63: Reasons For Issuing A Stop Order

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. 1. the registration is materially incomplete, false, or misleading
2. 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

1. 3. another state or federal regulator or court entered a stop order or injunction against the security within the past year
2. 4. the issuer’s business includes illegal activities
3. 5. the offering is fraudulent
4. 6. the offering involves unreasonable amounts of commissions and other compensation, or unreasonable amounts or kinds of options
5. 7. a security applies for registration by notification, but is not eligible
6. 8. a security applies for registration by coordination, but does not forward amendments to the federal prospectus