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Time to Modernize Rule 419: Part IV 2

Can Rule 419 be updated so that reverse merger players will be attracted to utilize an investor-protective method? Yes I believe it can. Here is my suggested proposal: 1. Maintain the requirement to put money raised in a 419 IPO in escrow, minus underwriters compensation and 10% for expenses as currently. 2. Maintain the requirement ...

Time to Modernize Rule 419: Part III

As mentioned above, as a practical matter shells could be inherited or created without the restrictions of Rule 419. But each has its limitations. Stock in Form 10 shells cannot trade until a registration is completed post-merger. “Legacy” shells face risk of undisclosed liabilities from the past and an unknown shareholder base. Shells masking as ...

Time to Modernize Rule 419: Part II

Once Rule 419 passed, as mentioned above players tried but grew frustrated setting up shells and completing reverse mergers under the rule. So what happened? Three things. First, players discovered that a shell could be created from the carcass of a former operating public company that was sold or went out of business. Their stock ...

Time to Modernize Rule 419: Part I

This is the first in a multi-part posting I intend to share with you developing a case for modernizing Rule 419 under the Securities Act of 1933. First I will outline the rule briefly, then talk about what happened after the rule was passed, then discuss why modernizing the rule makes sense given both market ...

SEC Gives More Comment Time on Nasdaq “Seasoning” Proposal 1

I was finally able to review the SEC’s release on September 12 which extended the time to comment on Nasdaq’s proposal to “season” reverse merger companies on the over-the-counter markets for six months before uplisting. It appears the SEC is seeking to harmonize the Nasdaq’s proposal with the similar proposals from the NYSE and NYSE ...

Tip of the Week: Make Sure You Should be Public

I often tell my clients, if you can benefit from being public, and can bear the risks of doing so, you should seriously consider it, regardless of your stage of development. However, in any well formulated decision, it is important to review the pros and cons. There are four well-recognized disadvantages to being public. First, ...

Tough Quarter for RM as SEC Roundtable Convenes

I am aboard Amtrak’s fabulous Acela train on the way to participate in a panel at today’s SEC Roundtable on microcap securities in DC. Follow the webcast live starting at 1pm Eastern time at www.sec.gov. I hope to talk about reverse mergers today. About our three year effort to reverse the “evergreen” requirement to remain ...

Regulation A Reform Hits the Senate 1

Reform of SEC Regulation A has taken a big step forward in the US Congress. As regular blogees know, the House Financial Services Committee approved a bill to increase the amount which can be raised in the “mini public offerings” permitted by Regulation A, and exempt the offering from state merit review under certain circumstances. In ...

Israel Heating Up in PIPEs

The October 4 PIPEs Report lets us know that tiny Israel is becoming more and more popular for PIPE investors that have turned their attention away from China. The PR reports that at least 12 companies from Israel raised $147.45 million from PIPEs this year. One hedge fund investor states that he feels Israeli companies ...