Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 258 -- Suspension of the Exemption

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1. The Commission may at any time enter an order temporarily suspending a Regulation A exemption if it has reason to believe that:
   
   
   1. no exemption is available or any of the terms, conditions or requirements of the Regulation have not been complied with, including failures to provide the Commission a copy of the document or broadcast script under Rule 254, to file any sales material as required by Rule 256 or report as required by Rule 257;
      
      
   2. the offering statement, any sales or solicitation of interest material contains any untrue statement of a 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 are made, not misleading;
      
      
   3. the offering is being made or would be made in violation of section 17 of the Securities Act;
      
      
   4. an event has occurred after the filing of the offering statement which would have rendered the exemption hereunder unavailable if it had occurred prior to such filing;
      
      
   5. any person specified in paragraph (a) of Rule 262 has been indicted for any crime or offense of the character specified in paragraph (a)3 of Rule 262, or any proceeding has been initiated for the purpose of enjoining any such person from engaging in or continuing any conduct or practice of the character specified in paragraph (a)4 of Rule 262;
      
      
   6. any person specified in paragraph (b) of Rule 262 has been indicted for any crime or offense of the character specified in paragraph (b)1 of Rule 262, or any proceeding has been initiated for the purpose of enjoining any such person from engaging in or continuing any conduct or practice of the character specified in paragraph (b)2 of Rule 262; or
      
      
   7. the issuer or any promoter, officer, director or underwriter has failed to cooperate, or has obstructed or refused to permit the making of an investigation by the Commission in connection with any offering made or proposed to be made in reliance on Regulation A.
      
      
2. Upon the entry of an order under paragraph (a) of this section, the Commission will promptly give notice to the issuer, any underwriter and any selling security holder:
   
   
   1. that such order has been entered, together with a brief statement of the reasons for the entry of the order; and
      
      
   2. that the Commission, upon receipt of a written request within 30 calendar days after the entry of the order, will within 20 calendar days after receiving the request, order a hearing at a place to be designated by the Commission.
      
      
3. If no hearing is requested and none is ordered by the Commission, an order entered under paragraph (a) of this section shall become permanent on the 30th calendar day after its entry and shall remain in effect unless or until it is modified or vacated by the Commission. Where a hearing is requested or is ordered by the Commission, the Commission will, after notice of and opportunity for such hearing, either vacate the order or enter an order permanently suspending the exemption.
   
   
4. The Commission may, at any time after notice of and opportunity for hearing, enter an order permanently suspending the exemption for any reason upon which it could have entered a temporary suspension order under paragraph (a) of this section. Any such order shall remain in effect until vacated by the Commission.
   
   
5. All notices required by this section shall be given by personal service, registered or certified mail to the addresses given by the issuer, any underwriter and any selling security holder in the offering statement.

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