SEC Response to my Request for Interpretive Guidance

I received a telephonic response to my request for interpretive guidance on Rule 144(i). See prior blog entries for the request itself.

The bad part of the response: the Staff believes that 144(i) is retroactive to issuers who stopped being shells before the effectiveness of the rule. Thus, every company that was ever a shell, even in the past, is subject to its restrictions. We were hoping they would exempt companies that completed reverse mergers before the new rule was adopted.

The good part of the response: the Staff went out of its way to state that they “share my concerns” raised in the letter.

Here’s what I think: I pushed to get them to interpret the rule in a way that was not that easy to do, but could have been done. But in doing so, they could have easily said, “We disagree, it is retroactive, sorry you are out of luck.” But by going out of their way to say that they understand and share the concerns raised, one hopes that means continuing advocacy efforts are not yet hopeless on this issue.

I have several thoughts on how to proceed from here, and I will start sharing them with some of the RM “braintrust” that I have come to rely on in recent years. That glass, friend Tim, respectfully, is still 80% full.

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