§485-13 Revocation of registration of securities; suspension during investigation; hearing. (a) The commissioner of securities may issue a stop order denying effectiveness to, or suspending, or revoking the effectiveness of, any registration if the commissioner finds that the order is in the public interest and that:
(1) 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 section 485-10(f) as of its effective date is incomplete in any material respect or contains any statement which was, in the light of the circumstances under which it was made, false or misleading with respect to any material fact;
(2) This chapter or any rule, order, or condition lawfully imposed under this chapter has been wilfully violated, in connection with the offering, by (A) the person filing the registration statement, (B) 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 (C) any 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 any court of competent jurisdiction entered under any other federal or state act applicable to the offering; but (A) the commissioner may not institute a proceeding against an effective registration statement under this clause more than one year from the date of the order or injunction relied on, and (B) the commissioner may not enter an order under this clause on the basis of an order or injunction entered under any other state act unless that order or injunction was based on facts which would currently constitute a ground for a stop order under this section;
(4) The issuer's enterprise or method of business includes or would include activities which 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 options, underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participation;
(7) When a security is sought to be registered by notification, it is not eligible for such registration; or
(8) The applicant or registrant has failed to pay the proper filing fee; but the commissioner may enter only a denial order under this clause and the commissioner shall vacate any such order when the deficiency has been corrected.
The commissioner may not enter a stop order against an effective registration statement on the basis of a fact or transaction known to the commissioner when the registration statement became effective.
(b) The commissioner may by order summarily postpone or suspend the effectiveness of the registration statement pending final determination of any proceeding under this section. Upon the entry of the order, the commissioner shall promptly notify each person specified in subsection (c) that it has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request the matter will be set down for hearing. If no hearing is requested and none is ordered by the commissioner, the order will remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to each person specified in subsection (c), may modify or vacate the order or extend it until final determination.
(c) No stop order may be entered under any part of this section except the first sentence of subsection (b) 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.
(d) The commissioner may vacate or modify a stop order if the commissioner finds that the conditions which prompted its entry have changed or that it is otherwise in the public interest to do so. [L 1957, c 314, pt of §1; Supp, §199-10; HRS §485-13; am L 1984, c 96, §6; gen ch 1985]