2004 Minnesota Statutes

     80A.13 Denial, suspension and revocation of registration.

    Subdivision 1.    Stop order.  The commissioner may issue a stop 
 order 
 denying effectiveness to, or suspending or revoking the 
 effectiveness of, any registration statement if the commissioner 
 finds (a) that the order is in the public interest and (b) 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 80A.12, 
 subdivision 9, as of its effective date, or any report under 
 section 80A.12, subdivision 8, 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) any provision of sections 80A.01 to 80A.31 or any rule, 
 order, or condition lawfully imposed under sections 80A.01 to 
 80A.31 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; 

    (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 (i) 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 (ii) 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) except with respect to securities which are being 
 registered by notification, the terms of the securities are 
 unfair and inequitable; provided, however, that the commissioner 
 may not determine that an offering is unfair and inequitable 
 solely on the grounds that the securities are to be sold at an 
 excessive price where the offering price has been determined by 
 arm's-length negotiation between nonaffiliated parties.  The 
 selling price of any security being sold by a broker-dealer 
 licensed in this state shall be presumed to have been determined 
 by arm's-length negotiation; 

    (7) when a security is sought to be registered by 
 coordination there has been a failure to comply with the 
 undertaking required by section 80A.10, subdivision 2, clause 
 (d); 

    (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 shall vacate any such order when the 
 deficiency has been corrected; or 

    (9) the offering of securities sought to be registered is 
 not firmly underwritten and (i) the minimum amount of proceeds 
 from the sale of the securities is not more than $500,000, and 
 (ii) the maximum amount of proceeds is more than 200 percent of 
 the minimum amount of proceeds required to go forward with the 
 offering. 

    The commissioner may not institute a stop order proceeding 
 against an effective registration statement solely on the basis 
 of a fact or transaction known to the commissioner when the 
 registration statement became effective unless the proceeding is 
 instituted within the next 30 days.  

    Subd. 2.    Order to show cause.  The commissioner may issue an 
 order requiring the 
 person for whom a registration was made to show cause why the 
 registration should not be revoked.  The order shall be 
 calculated to give reasonable notice of the time and place for 
 hearing thereon, and shall state the reasons for the issuance of 
 the order.  The commissioner may by order summarily suspend a 
 registration pending final determination of any order to show 
 cause.  If the registration is suspended pending final 
 determination of an order to show cause, a hearing on the merits 
 shall be held within 30 days of the issuance of the order or 
 suspension.  All hearings shall be conducted in accordance with 
 the provisions of chapter 14.  After the hearing, the 
 commissioner shall enter an order making such disposition of the 
 matter as the facts require.  If the person for whom the 
 registration was made fails to appear at a hearing of which the 
 person has been duly notified, such person shall be deemed in 
 default and the proceeding may be determined against the person 
 upon consideration of the order to show cause, the allegations 
 of which may be deemed to be true.  The commissioner may adopt 
 rules of procedure concerning all proceedings conducted pursuant 
 to this subdivision.  

    HIST: 1973 c 451 s 13; 1982 c 424 s 130; 1985 c 251 s 3; 1986 
 c 358 s 3; 1986 c 444