Request for Rulemaking Almost Final 9

Just wanted to update you that the growing group of attorneys ready to sign the request for rulemaking to eliminate the “evergreen” requirement in Rule 144(i) following the one year anniversary after ceasing to be a shell has just about finalized the document. I’ve gotten some great input from my colleagues, and we want to make sure that it’s right and has the full support of everyone signing it to have the maximum impact.

Given that Chairman Cox’s position given the current financial difficulties is not 100% certain, it is even more important that we get the request in very soon, and that is our goal. As soon as I send it in, we will post it here.

Thanks for your patience!

9 thoughts on “Request for Rulemaking Almost Final

  1. Reply william Silver Nov 6, 2008 11:44 am

    where can I track the progress of your effort re 144(i)?

  2. Reply Scott Lawler Mar 27, 2009 6:17 pm


    I have not found anyone talking about the aspect of amended Rule 144 and shell that I have described below and wonder if you have included this apsect in your request:

    I have a client that is a shell company but has been in existence for 5-7 years. The company issued shares back in 2001 and as of November 2005 half of the shares are held by insiders and the other half are held by non-affiliates. Under old Rule 144, the shares held by the non-affiliates could be resold without restriction of any kind in November 2007.

    The Company is now applying for quotation on the Pink Sheets. FINRA has taken the position that those shares cannot be resold under Rule 144 since the company is a shell company.

    I believe that such application of the amendment to Rule 144 to this particular shell company (and its shareholders) is a retroactive application of the new regulation and thus is an erroneous interpretation.

    Any thoughts?

    • Reply David Feldman Apr 2, 2009 6:10 am

      Scott, assuming that the company was a shell back in 2001, it has always been the SEC’s position, including after the Rule 144 changes, that shares issued by a shell cannot be sold under Rule 144 while the company remains a shell. Prior to the 144 changes it was an interpretation contained in the old infamous Worm/Wulff letters, and after the changes that was clarified as rule. The good news is Worm/Wulff had said that shell shareholders can never sell under 144 even after it ceases to be a shell, and the 144 changes reversed that and said you can sell starting one year after ceasing to be a shell and releasing Form 10 information. Hope that helps. Not legal advice, check yourself, etc…..

  3. Reply Gayle Coleman Apr 16, 2009 10:05 am

    I have a similar situation. My client was also a shell in 2000, and following a merger with an operating entity, registered all of the shares for resale back on 2003, in part as a result of the Worm/Wulff letters. In November 2008, the company filed a Form 15 with the SEC following its bankruptcy. Its shares have been trading either on the OTC or on the pink sheets since 2003.

    It continues to provide disclosure through the pink sheet OTC disclosure services and trades on the pink sheets. Now, the company is again an operating company, The shares in question have been held for more than five years, at one time were registered, and the disclosure it makes is substantially similar to the Form 10 requirements, with the exception that its financial statements are not audited, although are prepared according to GAAP.

    The company does not anticipate that it will be in a financial position to file a Form 10 once it has again been operating for more than one year, although it continues to file periodic filings according to the OTC disclosure guidelines.

    Are you aware of any possible modifications to Rule 144(i) that will address situations such as the one I described?

    • Reply David Feldman Apr 17, 2009 10:10 am

      Gayle, unfortunately at the moment the SEC’s Division of Corporation Finance is in caretaker mode until a new Director is appointed. Even then it is not clear that much that is controversial will change while the Obama administration determines whether to entirely restructure our regulatory environment. That said, our firm has been giving opinions under Section 4(1) for resales where analysis permits, since Rule 144 is only a safe harbor and not the exclusive way to sell without registration.

  4. Reply Diane Bodenstein Apr 16, 2009 4:53 pm


    The SEC has also stated that it is their intention that the 2008 amendment to Rule 144 is to be applied retroactively

  5. Reply Regan Apr 30, 2009 3:25 pm


    There is a private company that might possible do a reverse merger or change its name, raise equity under a new name and then go on the market with it’s new name on the exchange most likely on the London or Frankfurt exchange.

    Most investors purchased their shares in the US.

    Does Reverse Mergers have to be announced/reported on the exchanges
    the same way an IPO, issues of shares before it list?

    I know London stock… they announce reverse mergers, stock issue…

    If so, Can you tell me how to keep informed of new company, reverse mergers announcements/filings that is about to go public on either the German or
    London stock exchange?

    The company should be filing any time now within the next week to month but I do not know what co. it will be changing to, so I need to track all announcements before it goes public.

    I read there are seven stock exchanges on Germany, which stock exchange does small cap and reverse merger companies?

    What is the time frame ( how many days in advance ) for all the stock exchanges of a company to announce before listing or reverse merger?

    Can I find all the info. i.e. announcements,news, new issues in English?

    Any info you can direct me on how to find/monitor such info on your website
    and any other info you think would be helpful in me succeed in what I am requesting?

    I would truly appreciate it? Thanks for your informative articles.


    • Reply David Feldman Apr 30, 2009 8:32 pm

      Regan, I think you’d have to find an expert on German law to find out what rules apply regarding disclosure. Here in the US, when a reverse merger is consummated with an SEC reporting shell, a full disclosure document is filed and made public within 4 days of completion. In fact, if an agreement to merge is entered into prior to closing, that also must be announced. Hope that helped!

  6. Reply Regan May 1, 2009 7:31 am

    David, Thank you for answering my questions, your expertise and having this platform accessible to us investors. Your insights are valuable! Regan

Leave a Reply