2006 New Mexico Statutes - 58-13B-25 — Denial, suspension and revocation of registration.

58-13B-25. Denial, suspension and revocation of registration.

A.     The director may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the director finds that the order is in the public interest and that:   

(1)     the registration statement as of its effective date or as of the proposed effective date in the case of an order denying effectiveness, an amendment under Subsections N or O [Subsections M or N] of Section 24 [ 58-13B-24 NMSA 1978] of the New Mexico Securities Act of 1986, as of its effective date, or a report under Subsection M [Subsection L] of Section 24 of that act, is incomplete in any material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact;   

(2)     the New Mexico Securities Act of 1986 [Chapter 58, Article 13B NMSA 1978] or a rule, order or condition lawfully imposed under that act has been violated, in connection with the offering by:   

(a)     the person filing the registration statement;   

(b)     the issuer, a partner, officer or director of the issuer, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or   

(c)     an underwriter;   

(3)     the security registered or sought to be registered is the subject of an administrative stop order or similar order or a permanent or temporary injunction of a court of competent jurisdiction entered under any other federal or state law applicable to the offering, but:   

(a)     the director may not institute a proceeding against an effective registration statement under this paragraph more than one year after the date of the order or injunction relied on; and   

(b)     the director may not enter an order under this paragraph on the basis of an order or injunction entered under the securities act of another state unless the order or injunction was based on facts that currently would constitute a ground for a stop order under this section;   

(4)     the issuer's enterprise or method of business includes or would include activities that are illegal where performed;   

(5)     the offering has worked or tended to work a fraud upon purchasers or would so operate;   

(6)     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 or at unreasonable price to the public;   

(7)     a security sought to be registered pursuant to Section 21 [ 58-13B-21 NMSA 1978] of the New Mexico Securities Act of 1986 is not eligible for such registration;   

(8)     with respect to a security sought to be registered pursuant to Section 22 [ 58-13B-22 NMSA 1978] of that act, there has been a failure to comply with the undertaking required by Paragraph (4) of Subsection B of that section; or   

(9)     the applicant or registrant has failed to pay the proper filing fee, but the director may enter only a denial order under this paragraph and shall vacate the order when the deficiency is corrected.   

B.     The director may not institute a stop order proceeding against an effective registration statement on the basis of a fact or transaction known to the director when the registration statement became effective unless the proceeding is instituted within the next thirty days after the registration statement became effective.   

C.     The director may vacate or modify a stop order entered under this section if the director finds that the conditions which prompted entry have changed or that it is otherwise in the public interest.   

D.     The director by order may summarily postpone or suspend the effectiveness of the registration statement pending final determination of an administrative proceeding. Upon the entry of the order, the director shall promptly notify each person specified in Subsection E of this section that the order has been entered and of the reasons for the postponement or suspension and that within fifteen days after the receipt of a written request from the person the matter will be set down for hearing. If no hearing is requested and none is ordered by the director, the order remains in effect until it is modified or vacated by the director. If a hearing is requested or ordered, the director, after notice of an opportunity for hearing to each person specified in Subsection E of this section, may modify or vacate the order or extend it until final determination. If a hearing is requested, it shall be conducted pursuant to Section 53 [ 58-13B-53 NMSA 1978] of the New Mexico Securities Act of 1986.   

E.     No stop order may be entered under any part of this section except the first sentence of Subsection D of this section without:   

(1)     appropriate prior notice to the applicant or registrant, the issuer and the person on whose behalf the securities are to be or have been offered;   

(2)     opportunity for hearing; and   

(3)     written findings of fact and conclusions of law.