Stop Orders for Securities Registrations

The prior section covered registration actions against persons (broker-dealers, agents, investment adviser representatives (IARs), and investment advisers (IAs)). This section covers how the Administrator controls securities registrations under the Uniform Securities Act (USA), the parallel power for securities filings.

What Authority Backs a Stop Order?

The Administrator may issue a stop order:

• Denying effectiveness to a registration statement
• Suspending the effectiveness of a registration statement
• Revoking the effectiveness of a registration statement

Stop orders apply to all three methods of securities registration: notification (filing), coordination, and qualification.

What Is the Two-Prong Test for Stop Orders?

Just like with person registrations, the Administrator must find both:

1. The order is in the public interest, and
2. One or more of the specific statutory grounds exists

Exam Tip: Gotchas

• Both prongs are required. Finding a statutory ground alone is not enough; the Administrator must also find the action is in the public interest. Either prong failing defeats the stop order.
• This test is identical to the two-prong test for person registrations. The same structure applies to both securities and persons.

What Are the Grounds for a Stop Order?

Exam Tip: Gotchas

• The filing-fee ground is the only one limited to denial. The Administrator cannot suspend or revoke a registration solely for a missing filing fee; the order must be vacated once the fee is paid.
• The willful-violation ground requires intent. An inadvertent error in a filing is not willful, so the false-or-incomplete-filing ground applies instead.

What Limits Retroactive Action?

The Administrator may not start a stop order proceeding against an effective registration statement on the basis of facts known when it became effective, unless the proceeding is started within 30 days after the effective date.

Think of it this way: If the Administrator reviewed a filing and let it go effective, the law gives only a 30-day window to reverse course using those same known facts. After 30 days, the Administrator cannot go back and say "we knew about that problem all along." New facts discovered later, however, can always trigger action.

• Securities registration: 30 days after the effective date, on the basis of any fact or transaction the Administrator knew at effectiveness
• Person registration (a broker-dealer, agent, IA, or IAR): 90 days after registration, and only on the basis of a final judicial or administrative order the applicant disclosed before the effective date

Exam Tip: Gotchas

• The two windows are different: securities get 30 days, persons get 90. They are governed by different sections, and the triggers differ too. A securities stop order is limited by any fact the Administrator already knew. A person suspension or revocation is limited only when the applicant themselves disclosed a final judicial or administrative order, and the Administrator registered them anyway.
• The person-registration limit is narrower than it looks. It applies only to a suspension or revocation proceeding (not a denial), it does not apply to renewal registrations, and an order that is stayed or still subject to review or appeal is not "final" for this purpose.
• The clock only starts if the Administrator already knew the facts. If the issue was discovered after the effective date, neither retroactive limitation applies. The Administrator can act at any time on newly discovered facts.

How Does Summary Postponement Work?

The Administrator may by order summarily postpone or suspend the effectiveness of a registration statement pending final determination.

The notice-and-hearing framework mirrors the summary-suspension procedure for person registrations:

• Prompt notice of the order and reasons to the applicant/registrant, the issuer, and the person on whose behalf the securities are to be or have been offered
• Within 15 days of written request, the matter will be set for hearing
• If no hearing is requested and none is ordered by the Administrator, the order remains in effect until modified or vacated

Exam Tip: Gotchas

• Summary postponement does NOT require prior notice or a hearing. It can be issued immediately. The registrant may then request a hearing in writing, and the matter must be set down for hearing within 15 days after the Administrator receives that request. The 15 days is the Administrator's deadline to schedule, not a deadline for the registrant to ask.
• The 15-day window is triggered by written request, not automatically. If the registrant does nothing, the postponement stays in force indefinitely.

What Due Process Applies to Stop Orders?

No stop order (except for summary postponement) may be entered without:

1. Appropriate prior notice to the applicant/registrant, the issuer, and the person on whose behalf the securities are to be or have been offered
2. Opportunity for hearing
3. Written findings of fact and conclusions of law

Can a Stop Order Be Modified or Vacated?

The Administrator may vacate or modify a stop order if:

• The conditions that prompted it have changed, or
• Doing so is in the public interest

What Should You Check on Exam Day?

• Stop orders reach all three registration methods: notification, coordination, and qualification.
• Both prongs are always required: public interest AND a statutory ground.
• The filing-fee ground supports denial only, and the willful-violation ground requires intent, not a mere filing error.
• Keep the two clocks separate: securities registrations get 30 days for facts already known; person registrations get 90 days and only for a disclosed final order.
• Summary postponement needs no prior notice or hearing; the Administrator's 15-day clock to schedule a hearing starts only when the registrant makes a written request.