New Hampshire Revised Statutes 421-B:3-306 – Denial, Suspension, and Revocation of Securities Registration
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(a) Stop orders. The secretary of state may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the secretary of state finds that the order is in the public interest and that:
(1) the registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under N.H. Rev. Stat. § 421-B:3-305(j) as of its effective date, or a report under N.H. Rev. Stat. § 421-B:3-305(i) is incomplete in a 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) this chapter or an order issued under this chapter or a condition imposed under this chapter has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; 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 by an underwriter;
(3) the security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering, but the secretary of state may not issue an order under subsection (a)(3) on the basis of an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, 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 unlawful where performed;
(5) with respect to a security sought to be registered under N.H. Rev. Stat. § 421-B:3-303, there has been a failure to comply with the undertaking required by N.H. Rev. Stat. § 421-B:3-303(b)(4);
(6) the applicant or registrant has not paid the filing fee, but the secretary of state shall void the order if the deficiency is corrected;
(7) the offering:
(A) will work or tend to work a fraud upon purchasers or would so operate; or
(B) has been or would be made with unreasonable amounts of underwriters’ and sellers’ discounts, commissions, or other compensation, or promoters’ profits or participations, or unreasonable amounts or kinds of options; or
(8) the issuer or a partner, officer, or director of the issuer or a person having a similar status or performing a similar function has been convicted of a felony or misdemeanor in connection with the offer, purchase, or sale of a security or of a felony involving fraud or deceit, including forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud.
(b) Enforcement of subsection (a)(7). To the extent practicable, the secretary of state by order issued under this chapter shall publish standards that provide notice of conduct that violates subsection (a)(7).
(c) Institution of stop order. The secretary of state may not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the secretary of state when the registration statement became effective unless the proceeding is instituted within 60 days after the registration statement became effective.
(d) Summary process. The secretary of state may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the secretary of state shall promptly notify each person specified in subsection (e) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within 15 days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the secretary of state, within 30 days after the date of service of the order, then the order becomes final. If a hearing is requested or ordered, the secretary of state, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.
(e) Procedural requirements for stop order. A stop order may not be issued under this section without:
(1) appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;
(2) an opportunity for hearing; and
(3) findings of fact and conclusions of law in a record in accordance with N.H. Rev. Stat. § 421-B:6-604(c).
(f) Modification or vacation of stop order. The secretary of state may modify or vacate a stop order issued under this section if the secretary of state finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.
(1) the registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under N.H. Rev. Stat. § 421-B:3-305(j) as of its effective date, or a report under N.H. Rev. Stat. § 421-B:3-305(i) is incomplete in a 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;
Terms Used In New Hampshire Revised Statutes 421-B:3-306
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Filing: means the receipt under this chapter of a record by the secretary of state. See New Hampshire Revised Statutes 421-B:1-102
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Hearing: means the receipt and consideration by the department of evidence or argument, or both, in accordance with this chapter and other applicable law, and includes:
(A) Conducting trial-type evidentiary hearings;
(B) Directing the filing of exhibits, affidavits, memoranda or briefs;
(C) Directing the delivery of oral argument; or
(D) Any combination of these or similar methods. See New Hampshire Revised Statutes 421-B:1-102 - including: shall be construed as introducing a non-exhaustive list. See New Hampshire Revised Statutes 421-B:1-102
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Issuer: means a person that issues or proposes to issue a security, subject to the following:
(A) The issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security, or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued. See New Hampshire Revised Statutes 421-B:1-102 - Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Order: means an order issued pursuant to this chapter. See New Hampshire Revised Statutes 421-B:1-102
- Person: means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity. See New Hampshire Revised Statutes 421-B:1-102
- Profits: shall include the promise to pay money, deliver securities, or deliver in-kind goods;
(iii) The third party providing the efforts may or may not be an affiliate or associated with the promoter or the common enterprise. See New Hampshire Revised Statutes 421-B:1-102 - Revocation: means the recall and cancellation of a license, registration or privilege for either a definite or indefinite period of time. See New Hampshire Revised Statutes 421-B:1-102
- Sale: includes every contract of sale, contract to sell, or disposition of, a security or interest in a security for value, and "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. See New Hampshire Revised Statutes 421-B:1-102
- Secretary of state: means the New Hampshire secretary of state or his or her designee. See New Hampshire Revised Statutes 421-B:1-102
- Security: means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; membership interest in a limited liability company; partnership interest in a limited partnership; partnership interest in a registered limited liability partnership; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; investment metal contract or investment gem contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. See New Hampshire Revised Statutes 421-B:1-102
- State: means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. See New Hampshire Revised Statutes 421-B:1-102
- Suspension: means the temporary recall or denial of any license, registration or privilege granted for a specified period of time. See New Hampshire Revised Statutes 421-B:1-102
(2) this chapter or an order issued under this chapter or a condition imposed under this chapter has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; 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 by an underwriter;
(3) the security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering, but the secretary of state may not issue an order under subsection (a)(3) on the basis of an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, 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 unlawful where performed;
(5) with respect to a security sought to be registered under N.H. Rev. Stat. § 421-B:3-303, there has been a failure to comply with the undertaking required by N.H. Rev. Stat. § 421-B:3-303(b)(4);
(6) the applicant or registrant has not paid the filing fee, but the secretary of state shall void the order if the deficiency is corrected;
(7) the offering:
(A) will work or tend to work a fraud upon purchasers or would so operate; or
(B) has been or would be made with unreasonable amounts of underwriters’ and sellers’ discounts, commissions, or other compensation, or promoters’ profits or participations, or unreasonable amounts or kinds of options; or
(8) the issuer or a partner, officer, or director of the issuer or a person having a similar status or performing a similar function has been convicted of a felony or misdemeanor in connection with the offer, purchase, or sale of a security or of a felony involving fraud or deceit, including forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud.
(b) Enforcement of subsection (a)(7). To the extent practicable, the secretary of state by order issued under this chapter shall publish standards that provide notice of conduct that violates subsection (a)(7).
(c) Institution of stop order. The secretary of state may not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the secretary of state when the registration statement became effective unless the proceeding is instituted within 60 days after the registration statement became effective.
(d) Summary process. The secretary of state may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the secretary of state shall promptly notify each person specified in subsection (e) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within 15 days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the secretary of state, within 30 days after the date of service of the order, then the order becomes final. If a hearing is requested or ordered, the secretary of state, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.
(e) Procedural requirements for stop order. A stop order may not be issued under this section without:
(1) appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;
(2) an opportunity for hearing; and
(3) findings of fact and conclusions of law in a record in accordance with N.H. Rev. Stat. § 421-B:6-604(c).
(f) Modification or vacation of stop order. The secretary of state may modify or vacate a stop order issued under this section if the secretary of state finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.