9.1.3. Administrative Stop Orders
As previously mentioned, a securities registration is effective for one year from its effective date, and it cannot be withdrawn during that year-long period. After that period, it may be withdrawn only at the discretion of the state securities administrator.
The state securities administrator may deny, suspend, or revoke a securities registration by issuing a stop order. A stop order may also be issued to stop the offer and sale of a federal covered security (other than an exchange-listed security) when that security’s issuer fails to submit a notice filing or is in violation of other security registration requirements. These stop orders are not meant to be punitive; instead, they are used by the securities administrator to protect the public from securities and issuers that have not met important requirements when preparing their issue for public distribution.
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 application 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