Series 65: Administrative Stop Orders

Administrative Stop Orders

As previously mentioned, a securities registration is effective for one year from its effective date (or potentially longer, if a non-exempt offering lasts for more than a year). A securities registration may not be withdrawn within one year of its effective date. After that period, it may be withdrawn only at the discretion of the state securities administrator.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) that fails to submit a notice filing or is in violation of other security registration requirements. These stop orders are not meant to be punitive, but are used by the securities administrator to protect the public from securities and issuers that have not met important requirements to be ready for public distribution.

In order for a state securities administrator to issue a stop order to prevent a security from being registered, the order must be in the public interest, and one of the following conditions must be true:

• • 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, di