(a) A security or transaction exemption filed in accordance with Arkansas Code § 23-42-503(d) or Arkansas Code § 23-42-504(b) of the Arkansas Securities Act, Arkansas Code § 23-42-101 et seq., may be disallowed when the following occurs:

1. (1) The exemption under which the filing was made is not available to the issuer or applicant;
2. (2) The filing is not complete;
3. (3) The fee is not sufficient;
4. (4) The filing fails to comply with any provision of the Arkansas Securities Act or this part; or
5. (5) The filing indicates conduct prohibited by the Arkansas Securities Act including, but not limited to, false or misleading statements or omissions of material fact.

(b)

1. (1) In the event any of the above grounds of subsection (a) of this section are present with respect to an application, the applicant will be notified by deficiency letter by United States Postal Service, facsimile, or electronic mail on or before the tenth business day after receipt of the filing.
2. (2) Such deficiency letter shall serve as notice in lieu of a pleading or order.

3. (3) Upon an applicant’s failure to satisfy the deficiencies, the following may occur:

   1. (A) The applicant may request that the filing be withdrawn;
   2. (B) An order disallowing the security or transactional exemption will be entered; or
   3. (C) If applicable, a summary order or a pleading to deny the exemption will be entered.

(c) A security or transaction exempt pursuant to Arkansas Code § 23-42-503(a)(7), Arkansas Code § 23-42-503(a)(8), Arkansas Code § 23-42-503(b), Arkansas Code § 23-42-503(c), Arkansas Code § 23-42-504(a)(9), or Arkansas Code § 23-42-504(a)(10) of the Arkansas Securities Act may be denied prior to issuance or execution of security or transaction when the following is determined:

1. (1) The exemption claimed is not available;
2. (2) The security or transaction fails to comply with any provisions of the Arkansas Securities Act or this part;
3. (3) There has been or is about to be conduct prohibited by the Arkansas Securities Act; or
4. (4) A required filing was not made.

(d) A security or transaction exemption subject to Arkansas Code § 23-42-503(a)(7), Arkansas Code § 23-42-503(a)(8), Arkansas Code § 23-42-503(b), Arkansas Code § 23-42-503(c), or Arkansas Code § 23-42-504(a) of the Arkansas Securities Act may be revoked after issuance or execution of security or transaction when the following is determined:

1. (1) The exemption claimed was not available;
2. (2) The filing, if made, was not complete or contained false and misleading statements or omissions of material fact;
3. (3) A fact or event becomes known which would have been the cause of a disallowance or denial of the exemption had it been known;
4. (4) The claimant failed to comply with the Arkansas Securities Act or this part; or
5. (5) A claimant did not comply with representations made or conditions imposed.