3.1.7.1. Reasons for Issuing a Stop Order
A state securities administrator is allowed to issue a stop order as long as the order is in the public interest and one of the following conditions also applies:
• The registration is materially incomplete, false, or misleading.
• 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
• Another state or federal regulator or court entered a stop order or injunction against the security within the past year.
• The issuer’s business includes illegal activities.
• The offering is fraudulent.
• The offering involves unreasonable amounts of commissions and other compensation, or unreasonable amounts or kinds of options.
• The security’s issuer applies for registration by notification, but the security is not eligible.
• A security’s issuer applies for registration by coordination, but it does not forward amendments to the federal prospectus to the