2006 Utah Code - 61-1-12 — Denial, suspension, and revocation of registration.

     61-1-12.   Denial, suspension, and revocation of registration.
     (1) Upon approval by a majority of the Securities Advisory Board, the director, by means of adjudicative proceedings conducted in accordance with Title 63, Chapter 46b, the Administrative Procedures Act, may issue a stop order that denies effectiveness to, or suspends or revokes the effectiveness of, any securities registration statement and may impose a fine if he finds that the order is in the public interest and that:
     (a) the registration statement, as of its effective date or as of any earlier date in the case of an order denying effectiveness, or any amendment under Subsection 61-1-11 (10) as of its effective date, or any report under Subsection 61-1-11 (9), is incomplete in any material respect, or contains any statement that was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;
     (b) any provision of this chapter, or any rule, order, or condition lawfully imposed under this chapter, has been willfully violated, in connection with the offering, by:
     (i) the person filing the registration statement;
     (ii) the issuer, any partner, officer, or director of the issuer, any person occupying a similar status or performing similar functions, or any 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
     (iii) any underwriter;
     (c) 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 any court of competent jurisdiction entered under any other federal or state act applicable to the offering; except that the division may not commence agency action against an effective registration statement under this subsection more than one year from the date of the order or injunction relied on, and it may not enter an order under this subsection on the basis of an order or injunction entered under the securities act of any other state unless that order or injunction was based on facts that would currently constitute a ground for a stop order under this section;
     (d) the issuer's enterprise or method of business includes or would include activities that are illegal where performed;
     (e) the offering has worked or tended to work a fraud upon purchasers or would so operate;
     (f) 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;
     (g) when a security is sought to be registered by notification, it is not eligible for such registration;
     (h) when a security is sought to be registered by coordination, there has been a failure to comply with the undertaking required by Subsection 61-1-9 (2)(d); or
     (i) the applicant or registrant has failed to pay the proper filing fee.
     (2) The director may enter an order under this section but may vacate the order if he finds that the conditions that prompted its entry have changed or that it is otherwise in the public interest to do so.
     (3) The director may not issue a stop order against an effective registration statement on the basis of a fact or transaction known to the division when the registration statement became effective unless the proceeding is instituted within the next 120 days.

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     (4) No person may be considered to have violated Section 61-1-7 or 61-1-15 by reason of any order or sale effected after the entry of an order under this section if that person proves by a preponderance of the evidence that he did not know, and in the exercise of reasonable care could not have known, of the order.

Amended by Chapter 133, 1990 General Session