(a)  The director may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the director finds:

(1)  That the order is in the public interest; and

(2)  That:

(i)  The registration statement as of the effective date or as of the proposed effective date in the case of an order denying effectiveness, an amendment under § 7-11-305(n) or 7-11-305(o) as of its effective date, or a report under § 7-11-305(m) contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;

(ii)  This chapter or a rule, order, or condition lawfully 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, a person occupying a similar status or performing similar functions, 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;

(iii)  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 entered under any other federal or state law applicable to the offering; but the director may not institute a proceeding against an effective registration statement under this subsection (a)(2)(iii) more than one year after the date of the order or injunction relied on, and the director may not enter an order under this subsection (a)(2)(iii) on the basis of an order or injunction entered under the securities act of another state unless the order or injunction was based on facts that currently would constitute a ground for a stop order under this section;

(iv)  The issuer’s enterprise or method of business includes or would include activities that are illegal where performed;

(v)  A security sought to be registered under § 7-11-302 is not eligible for registration under § 7-11-302;

(vi)  With respect to a security sought to be registered under § 7-11-303, there has been a failure to comply with the undertaking required by § 7-11-303(b)(4); or

(vii)  The applicant or registrant has failed to pay the proper filing fee; but the director may enter only a denial order under this subsection (a)(2)(vii) and vacate the order if the deficiency is corrected.

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(b)  The director may not institute a stop order proceeding against an effective registration statement on the basis of a fact or transaction known to the director when the registration statement became effective unless the proceeding is begun within thirty (30) days after the registration statement became effective.

(c)  The director, by order under § 7-11-712, may summarily postpone or suspend the effectiveness of the registration statement pending final determination of an administrative proceeding. As more fully set forth in § 7-11-712 upon the entry of the order, the director shall promptly notify each person specified in subsection (d) that the order has been entered and of the reasons for the postponement or suspension and that within thirty (30) days after the receipt of a written request from the person, the matter will be set down for hearing. If no hearing is requested and none is ordered by the director, the order remains in effect until it is modified or vacated by the director. If a hearing is requested or ordered, the director, after notice of an opportunity for hearing to each person specified in subsection (d), may modify or vacate the order or extend it until final determination.

(d)  No stop order may be entered under this section except subsection (c) without 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, opportunity for hearing, and written findings of fact and conclusions of law in accordance with the state administrative procedures act.

(e)  The director may modify or vacate a stop order entered under this section if the director finds that the conditions which prompted entry have changed or that it is otherwise in the public interest.