Jury finds Guy Gentile liable as control person of SureTrader in SEC case
On Tuesday, July 2, 2024, after a ten-day trial, a jury in the United States District Court for the Southern District of Florida found Guy Gentile, the founder, owner, and CEO of MintBroker International, Ltd., f/k/a Swiss America Securities Ltd. and d/b/a SureTrader, a Bahamas-based broker-dealer, liable as a control person of SureTrader, which operated as a broker-dealer in the United States without being registered, in violation of the federal securities laws. The jury also found Guy Gentile liable for inducing SureTrader’s registration violations. Read More
Important Changes Are in Store for the SEC and Other Federal Agencies
Last week, the Supreme Court handed down two opinions that have the potential to limit the authority of the Securities and Exchange Commission in fundamental ways and to curtail, or at least redirect, its ability to discipline individuals and entities who violate the securities laws. Both address what some call the “administrative state.” Unsurprisingly, the court’s current conservative majority voted unanimously to reduce the powers of federal agencies.
The Demise of the Chevron Doctrine Read More
Does FINRA Rule 6490 Impact Going Public Transactions?
FINRA Rule 6490, has evolved since it was enacted years ago. For some time, FINRA has required that issuers provide expansive disclosures and supporting documentation not only for the corporate change subject to the notice but for the company’s entire corporate history from inception. This often creates a substantial obstacle for issuers involved in going public transactions.
FINRA Rule 6490 procedures are required of both companies subject to SEC reporting requirements and and non-reporting issuers if they undertake corporate actions. Compliance with Rule 6490’s requirements is a minor task for companies going public by filing a registration statement with the SEC. Read More
Benefits of Direct Public Offerings
While going public offers many benefits, it also comes with risks and a large number of regulations with which issuers must become familiar. Despite the risks, the U.S. capital markets remain one of the most attractive sources of financing in the world.
Going public is a complicated and intricate procedure. So, it is essential to have a securities attorney with experience in going-public transactions to help your company navigate the process and deal with the Securities & Exchange Commission (“SEC”), Financial Regulatory Industry Authority (“FINRA”), and Depository Trust Company (“DTC”). Read More
Xeriant, Inc. Fights Toxic Funder Auctus Fund in Appellate Court
Since 2017, the SEC has been bringing enforcement actions intended to curb the excesses of lenders who deal in convertible securities like promissory notes, preferred stock, warrants, debentures, and more. While the word “lenders” seems anodyne or even beneficial, these individuals and the businesses they run have come to be known to issuers and investors as “toxic lenders” or “toxic funders.” The SEC calls them “unregistered dealers,” as defined in its own Guide to Broker-Dealer Registration. Most of the companies that agree to the financings they offer are OTC or Nasdaq CM issuers.
The Commission’s actions against unregistered dealers began in November 2017, with a suit brought against Ibrahim Almagarby and his Microcap Equity Group LLC. Unlike most of his fellow lenders, Almagarby didn’t initially deal with the companies whose convertible securities he was converting and selling into the market. He instead bought “aged debt” purchased from unaffiliated third parties. Aged debt is old enough to be exempt from the registration requirements of the Securities Act of 1933 under Rule 144. As the eventual appellate opinion explained, “[m]any of the instruments he purchased did not have an existing conversion feature. So Almagarby negotiated directly with the issuers to obtain agreements that allowed him to exchange existing, non-convertible debt for convertible instruments.” Read More
Meta Materials Executives, John Brda and George Palikaras, charged with Market Manipulation, Fraud and Other Violations
Thanks to an SEC Complaint filed today, MMTLP shareholders finally have the undisputable evidence needed to point their previously misguided blame for their massive losses at the proper culprits. For months after the Financial Industry Regulatory Authority (“FINRA“) halted trading of MMTLP shares following trading on December 8, 2022, to avoid settling issues for the scheduled preferred stock dividend set to take place on December 12, 2022, MMTLP shareholders have aimed their anger toward FINRA, blaming the organization that operates to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly for spoiling their credulous short squeeze.
In reality, according to evidence collected and shared by the Securities and Exchange Commission (the “SEC“) in its complaint filed today, the rumors about the short squeeze were, in fact, started by the former CEOs of Meta Materials Inc., John Brda (“Brda”) and George Palikaras (“Palikaras”), as part of a sophisticated market manipulation scheme that they had planned months in advance. Read More
What are the SEC Reporting Requirements After My Form S-1 is Effective?
Once the SEC staff declares your company’s Securities Act registration statement on Form S-1 effective, the company becomes subject to the SEC’s reporting requirements under the Securities Exchange Act of 1934. These rules require your company to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC on an ongoing basis.
If your company qualifies as a “smaller reporting company” or an “emerging growth company,” it will be eligible to follow scaled SEC reporting requirements for its reports. Read More
Going Public Using an S-1
Using a Form S-1 Registration Statement to Go Public
Private companies that go public commonly use a registration statement (“Registration Statement”) on Form S-1 under the Securities Act of 1933, as amended (the “Securities Act”) to go public. When a Form S-1 Registration Statement is used to go public, the company will submit the Registration Statement to the Securities & Exchange Commission (the “SEC”), registering securities it plans to sell or securities held by its shareholders (“Selling Shareholders”). Read More
Court denies James L. Koutoulas’ petition to quash SEC subpoena
On May 23, 2024, the U.S. District Court for the Southern District of Florida granted the Securities and Exchange Commission’s (the “SEC“) application to enforce a subpoena for the production of documents to James L. Koutoulas (“Koutoulas ”) and denied Koutoulas’s petition to quash that subpoena.
If a person or entity refuses to comply with a subpoena issued by SEC enforcement staff pursuant to a formal order of investigation, the Commission may file a subpoena enforcement action in federal district court seeking an order compelling compliance.
According to the SEC’s filing, the SEC is investigating whether Koutoulas or the entities he controlled violated the federal securities laws in connection with the offer and sale of the “Let’s Go Brandon” Coin (“LGBCoin”). As part of the investigation, the SEC issued an administrative subpoena to Koutoulas seeking documents and communications relevant to determining whether LGBCoin was offered and sold as a security. Read More
Why use a Direct Public Offering (DPO) to Go Public on the OTC Markets
An Initial Public Offering or IPO is used by issuers seeking to go public using an underwriter. IPOs are typically conducted by issuers listing on the NYSE Stock Exchange (“NYSE”) or NASDAQ Stock Markets (“NASDAQ”). Issuers most often use a Direct Public Offering or DPO in a going public transaction seeking quotation on the OTC Markets. Direct Public Offerings provide a means for a company to go public and sell its shares directly to investors without the use of an underwriter. Even after a Direct Public Offering, the issuer can plan to use the services of an underwriter in the future and/or uplist to NASDAQ or the NYSE.
With a Direct Public Offering, the company files a Form S-1 registration statement with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), if it is a domestic issuer. If the company is a foreign issuer, it can use SEC Form S-1 or Form F-1 for its registration statement.
Both Form S-1 and Form F-1 registration statements offer flexibility, and each can be used to register securities on its own behalf in an initial public offering, to register securities on behalf of its selling security holders in a secondary offering, or register securities on both its own behalf and for selling security holders.
A significant advantage of a Direct Public Offering using a registration statement on Form S-1 or Form F-1 is that the issuer can avoid many of the risks and expenses associated with reverse merger transactions. These can include undisclosed liabilities, sketchy corporate records, DTC Chills, and SEC trading suspensions. Both the NASDAQ and NYSE impose one-year waiting periods for companies after engaging in a reverse merger transaction. Read More
11th Circuit Upholds Unregistered Dealer Justin Keener SEC Judgment
On May 29, 2024, the U.S. Court Of Appeals for the Eleventh Circuit entered its Opinion in the Securities and Exchange Commission’s (“SEC“) case against Justin Keener dba JMJ Financial (together “Keener”), upholding the United States District Court for the Southern District of Florida’s earlier ruling on all points. Read More
Tips For Going Public With A Direct Public Offering
More and more issuers going public opt for a direct public offering. Unlike an Initial Public Offering (IPO), in a direct public offering, the issuer sells shares of its stock directly to investors rather than through an underwriter. Going public transactions using a direct public offering eliminates the costs and risks associated with a reverse merger transaction. Once public, the issuer is more easily able to raise capital in a secondary securities offering. Private companies conducting a direct public offering should consider the pointers below to ensure a successful and cost-effective going public transaction.
The direct public offering process provides options for multiple structures, each with its own unique benefits and requirements. The decision about the appropriate going public structure often involves complex legal issues that vary depending upon the needs of the particular company involved. Read More
SEC Obtains $5.9 Million Judgment Against John Fierro in Unregistered Penny Stock Dealer Case
On May 21, 2024, Judge Georgette Castner of the United States District Court for the District of New Jersey entered a final judgment against John D. Fierro and JDF Capital, Inc. The SEC’s complaint alleged that the Defendants failed to register as securities dealers with the SEC or to associate with a registered dealer when they bought and sold billions of newly issued shares of penny stock from at least January 2015 through November 2017.
The Defendants obtained the shares directly from issuers after converting debt securities known as convertible notes. By failing to register, Defendants avoided certain regulatory obligations for dealers that govern their conduct in the marketplace, including regulatory inspections and oversight, financial responsibility requirements, and maintaining books and records.
The court previously granted summary judgment to the Commission. On June 29, 2023, the court found that Fierro and JDF Capital engaged in a regular business of buying and selling securities for their own account and that their failure to register as dealers violated the dealer registration requirements of Section 15(a) of the Securities Exchange Act of 1934.
In its final judgment, the court ordered Fierro and JDF Capital to pay a joint-and-several disgorgement of $4,053,148, prejudgment interest of $1,326,440, and a civil penalty of $500,000, for a total judgment of $5,879,588. The court also entered a permanent injunction against the Defendants and ordered them to surrender certain stock and conversion rights under existing convertible securities for cancellation. Read More
Are You Ready? T+1 Trade Settlement Begins Next Week
On May 21, 2024, Securities and Exchange Commission Chair Gary Gensler formally announced the U.S. securities market’s switch to a T+1 standard settlement cycle. “T+1” means all trades in all U.S. markets will be settled the day after execution. The change will become effective on Tuesday, May 28. Gensler explained briefly:
For everyday investors who sell their stock on a Monday, shortening the settlement cycle will allow them to get their money on Tuesday. Shortening the settlement cycle also will help the markets because time is money and time is risk. It will make our market plumbing more resilient, timely, and orderly. Further, it addresses one of the four areas the staff recommended the Commission address in response to the GameStop stock events of 2021. Read More
PCAOB Imposes a $400,000 Fine and Sanctions MaloneBailey, LLP for Pervasive Quality Control Violations
Less than a month after one of the biggest auditing firms in the public markets, BF Borgers, and its owner, Benjamin Borgers, were permanently banned and fined a combined $14 million by the Securities and Exchange Commission (the “SEC”) for massive quality control issues, another large auditing firm involved in the public markets is facing fines and sanctions, this time from the Public Company Accounting Oversight Board (PCAOB). On May 21, 2024, the PCAOB announced it was imposing a $400,000 fine and sanctions against MaloneBailey LLP (“MaloneBailey” or the “Firm”) for violations of PCAOB rules and quality control standards.
MaloneBailey is a public accounting firm headquartered in Houston, Texas. It is licensed to practice public accounting by the Texas State Board of Public Accountancy (License No. P05522), among other states.
According to the Disciplinary Order issued by the PCAOB, from 2018 to 2021, PCAOB inspection staff conducted three inspections of MaloneBailey. During each of these inspections, the PCAOB notified the firm of significant audit deficiencies that raised concerns about the firm’s engagement performance. Despite the firm’s awareness of these deficiencies and concerns, it failed to make effective changes to improve its system of quality control. Read More
SEC Issues BF Borgers Exemptive Order For SEC Reporting Companies
On May 20, 2024, the Securities and Exchange Commission (“SEC”) provided exemptive relief to certain SEC reporting companies affected by the SEC’s permanent suspension of BF Borgers CPA PC and its owner, Benjamin F. Borgers (together, “BF Borgers”), from appearing and practicing before the SEC as an accountant. It is expected that public companies that previously retained BF Borgers will need to engage a new, qualified, independent, PCAOB-registered public accountant to audit or review the financial information included in their SEC filings to comply with SEC Reporting Requirements. Read More
CAT’s Cradle – Ongoing Problems with the SEC’s Consolidated Audit Trail
In July 2012, the SEC adopted a new Rule 613 under Section 11A(a)(3)(B) of the Securities Exchange Act of 1934 (“Exchange Act”). It would require national securities exchanges and national Self-Regulatory Organizations (“SROs’) “to act jointly in developing a national market system (‘NMS’) plan to develop, implement, and maintain a consolidated order tracking system, or consolidated audit trail, with respect to the trading of NMS securities.” While the Financial Industry Regulatory Authority (“FINRA”) and the SROs did have their own audit trail systems, they were “limited in their scope in varying ways.” The answer was to create a new, truly comprehensive system:
A consolidated audit trail would significantly aid in SRO efforts to detect and deter fraudulent and manipulative acts and practices in the marketplace, and generally to regulate their markets and members. In addition, such an audit trail would benefit the Commission in its market analysis efforts, such as investigating and preparing market reconstructions and understanding causes of unusual market activity. Read More
Trump Media’s auditing firm, BF Borgers, busted for “massive fraud”
On May 3, 2024, the Securities and Exchange Commission announced an enforcement action against auditing firm BF Borgers CPA PC and its principal, Benjamin F. Borgers. The regulator charged the firm with “deliberate and systemic failures to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews incorporated in more than 1,500 SEC filings from January 2021 through June 2023.” Moreover, Borgers assured its many clients that their work was compliant with PCAOB standards when that was not the case, and went so far as to fabricate documentation to make it look as if PCAOB standards had been met.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, called the matter “one of the largest wholesale failures by gatekeepers in our financial markets,” adding that:
As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate non-compliant audits and reviews into more than 1,500 filings with the Commission but also undermined trust and confidence in our markets. Because investors rely on the audited financial statements of public companies when making their investment decisions, the accountants and accounting firms that audit those statements play a critical role in our financial markets. Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.
Benjamin Borgers and the firm agreed to settle the charges. BF Borgers will pay a $12 million civil penalty and Benjamin Borgers will pay a $2 million civil penalty. Both are immediately suspended from appearing or practicing before the Commission. Read More
SEC permanently bans BF Borgers and its owner Benjamin Borgers and fines them a combined $14 million for accounting fraud
On May 3, 2024, the Securities and Exchange Commission (the “SEC“) charged audit firm BF Borgers and Its owner, Benjamin F. Borgers (together, “Respondents”), with Massive Fraud affecting more than 1,500 SEC filings. The SEC found that Borgers committed deliberate and systemic failures to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews incorporated in more than 1,500 SEC filings from January 2021 through June 2023.
The SEC also charged the Respondents with falsely representing to their clients that the firm’s work would comply with PCAOB standards; fabricating audit documentation to make it appear that the firm’s work did comply with PCAOB standards; and falsely stating in audit reports included in more than 500 public company SEC filings that the firm’s audits complied with PCAOB standards.
According to the Order against the Respondents, from January 2021 through June 2023, BF Borgers had 350 clients who were required under the SEC’s rules and regulations to have their financial statements audited and/or reviewed by a PCAOB-registered accounting firm in accordance with PCAOB standards and to incorporate those financial statements into filings made with the SEC. Read More
SEC Nails BF Borgers and Ben Borgers – Issuers Must Obtain New Auditors
On May 3, 2024, the Securities and Exchange Commission provided a statement for issuers impacted by its enforcement action against BF Bofgers CPA PC. According to the SEC Action against BF Borgers, approximately 500 issuers used the services of BF Borgers for their audits between January 2021 through June 2023.
On May 3, 2024, the SEC entered an order instituting settled administrative and cease-and-desist proceedings[2] against BF Borgers CPA PC and its sole audit partner Benjamin F. Borgers CPA (individually and together, “BF Borgers”), finding that, among other things, BF Borgers:
- deliberately and systematically failed to conduct audits and quarterly reviews in accordance with applicable Public Company Accounting Oversight Board (“PCAOB”) standards;
- fraudulently issued audit reports that falsely represented that audits had been performed in accordance with PCAOB standards; and
- caused audit clients to violate certain provisions of the Exchange Act and rules thereunder, including Exchange Act Sections 13(a) and 15(d).
The Order denies BF Borgers the privilege of appearing or practicing before the Commission as an accountant. As a result, BF Borgers may not participate in or perform the audit or review of financial information included in Commission filings, issue audit reports included in Commission filings, provide consents with respect to audit reports, or otherwise appear or practice before the Commission.
A significant number of issuers will be impacted by the Order against Borgers. The SEC statement was issued to assist issuers in complying with their disclosure and reporting obligations in light of the Order involving BF Borgers. We encourage all issuers that have previously engaged BF Borgers as their independent auditor to consider the findings and sanctions discussed in the Order, taking into account their disclosure obligations under the federal securities laws. Read More
SEC Charges Convertible Note Dealer Tri-Bridge Ventures, LLC and John Francis Forsythe, III for Failure to Register
On April 29, 2024, the Securities and Exchange Commission (the “SEC“) charged John Francis Forsythe, III (“Forsythe”), a resident of New Jersey, and Tri-Bridge Ventures, LLC (“Tri-Bridge”), an entity he owns and controls, with failing to register with the SEC as securities dealers. As part of their business, Forsythe and Tri-Bridge allegedly engaged in convertible note financing and sold billions of shares of penny stock converted from such notes, generating millions of dollars in gross sales.
The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, alleges that, from at least February 2017 through at least November 2022, Forsythe and Tri-Bridge engaged in the business of entering into convertible notes with penny stock issuers or purchasing convertible notes or shares already converted from such notes from unaffiliated third parties, converting the notes into shares of stock at large discounts from market prices, and selling those newly issued shares into the public market at a significant profit. Forsythe and Tri-Bridge allegedly obtained convertible notes or shares already converted from such notes with respect to at least 31 separate issuers.
From approximately May 2019 to November 2022, with respect to at least 25 of those issuers, Forsythe and Tri-Bridge sold at least 10 billion shares of penny stock into the market, generating more than $18 million in gross sales (See Exhibit of Tri-Bridge Convertible Note Business). During their misconduct, Forsythe and Tri-Bridge were not registered with the Commission, and Forsythe was not associated with a registered broker-dealer. Read More
SEC obtains final judgment against relief defendant in George Stubos case
On April 15, 2024, the U.S. District Court for the Southern District of New York entered a final judgment against relief defendant Dori-Ann Stubos, ordering her to pay more than $2.3 million in disgorgement and prejudgment interest. In June 2022, the Securities and Exchange Commission (the “Commission”) charged George Stubos for engaging in a deceptive scheme involving several microcap companies. Dori-Ann Stubos, George Stubos’ wife, allegedly received illicit proceeds from George Stubos’ fraudulent scheme for no legitimate purpose or consideration, including for the purchase of a house in California in the name of Dori-Ann Stubos.
The court previously entered a final judgment against George Stubos by consent. George Stubos’ judgment ordered him, among other relief, to pay disgorgement of $5,367,926 and prejudgment interest of $806,108. This concludes the litigation in this matter. Read More
Ross Mandell Begins a New Life
Ross Mandell, a former broker and the owner of Sky Capital LLC and Sky Capital Holdings Ltd. was released from federal home confinement in early January of this year. He isn’t letting grass grow under his feet: he began working on plans for his new life well before his release. A cheerful and energetic Mandell plans to start new ventures, putting his lengthy struggles with the legal system behind him, though he still insists he committed no crimes.
We’ve written several times about his long journey through the courts. It all began back in 1998 when Mandell became involved with a broker-dealer called The Thornwater Company, L.P., and, after the dissolution of Thornwater, carried on with his own creation, Sky Capital, a brokerage that was active primarily in the U.K. and operated under the Sky Capital Holdings umbrella.
Sky specialized in offering private placements, most of them involving the stock of two related companies, Sky Holdings, which traded as “SKH” on the Alternative Investment Market (“AIM”) of the London Stock Exchange, and in a sister company called Sky Enterprises, which traded on the AIM as “SKE.” Both companies were incorporated in Delaware in 2001 and 2002; branches of both were incorporated in New York at the same time. The stock they offered was not registered with the SEC but issued pursuant to Regulation S, which requires that it cannot originally be sold to U.S. residents. As the holding period that comes with Reg S placements expired for investors, the stocks could trade freely on the AIM. Sky Capital Holdings was the sales agent for the stock in SKH and SKE. Read More
SEC Periodic Reporting
Companies become subject to the SEC’s periodic reporting requirements in several ways, including by filing a registration under the Securities Act of 1933, as amended or pursuant to the Securities Exchange Act of 1934. The SEC’s periodic reporting rules require that publicly traded companies disclose a wealth of information to the public. Periodic reporting also requires that these reports be written in plain English. Understanding these reports helps investors make informed decisions regarding whether to buy, sell or hold a company’s securities.
Periodic reports serve as a platform for issuers to provide shareholders with transparency by sharing their stories. However, it’s important to note that companies that provide materially false or misleading statements or omit material information necessary to render a report not misleading in their periodic reports can face serious liabilities under federal and state securities laws. Investors can access a company’s Form 10-K, Form 10-Q and Form 8-K filings on the SEC’s EDGAR database to ensure they are well-informed. Read More
Reg A+ Securities Offerings and FAST Act
Prospective For Underwriters & Broker-Dealers: Due Diligence Considerations
Unlike traditional Initial Public Offerings (“IPOs”), there is no potential liability for issuers under Section 11 of the Securities Act in connection with Regulation A+ offerings. Sellers in Regulation A+ offerings are potentially liable under Section 12(a)(2) of the Securities Act for materially misleading statements in the offering circular or in oral communications. Accordingly, the potential Securities Act liability of issuers under a Regulation A+ offering is less than in connection with a Rule 506 offering but greater than in connection with an IPO.
As such, underwriters and broker-dealers participating in a Regulation A+ offering should require a level of due diligence and disclosure comparable to that of offerings registered with the Securities & Exchange Commission (“SEC”).
Tier I and Tier II offerings will be subject to review by the Financial Industry Regulatory Authority (“FINRA”) if broker-dealers participate in the Regulation A+ offering. Read More
Investor Relations 101 – The Securities Laws & Stock Promotion
What Is Investor Relations?
Investor relations or stock promotion involves disseminating information about a public company to increase its stock price and/or trading volume. The person who publishes this information is sometimes referred to as a “Stock Promoter”, “Investor Relations Provider” or “Stock Tout”.
How Do Investor Relations Firms Promote A Stock?
Stock Promoters use many techniques, including newsletters, email advertisements, internet postings, direct mail newsletters, stock websites and message boards, press releases and phone rooms to generate interest in the securities they are hired to promote. Read More
SEC Obtains Final Judgment Against Kevin Dills – Joseph Padilla Sentenced in Criminal Case
On March 19, 2024, the U.S. District Court for the District of Massachusetts entered final judgments against California resident Kevin C. Dills and two entities that Dills controlled, Bright Star International, Inc. and Life Sciences Journeys, Inc. In June 2023, the SEC charged Dills and Joseph A. Padilla for their roles in a fraudulent stock-selling scheme.
According to the complaint, Padilla engaged in a fraudulent scheme for his own benefit and also on behalf of individuals who paid Padilla to arrange illegal stock sales. The complaint alleges that those individuals hid their identities by selling stock through offshore accounts in different names that Padilla arranged. Read More
Going Public & Exchange Act Registration For Foreign Issuers
Foreign companies going public in the United States must file a registration statement covering a class of securities pursuant to the Securities Exchange Act of 1934, as amended (“Exchange Act”) if the class of securities will be listed on a United States national securities exchange such as NASDAQ. A foreign private issuer must register a class of equity securities under the Exchange Act unless the exemption provided by Exchange Act Rule 12g3-2(b) is available. If the foreign private issuer has assets in excess of $10 million and the class of securities is held of record by either (i) 2,000 persons or (ii) 500 persons who are not AIs (in both cases, of whom at least 300 are residents in the United States).
- Foreign private issuers are automatically eligible to rely upon the Rule 12g3-2 exemption if they satisfy the following conditions: A foreign private issuer must not be an SEC reporting company. That is, they must not be required to file or furnish reports under Sections 13(a) or 15(d) of the Exchange Act.
- The foreign private issuer must maintain a listing of its securities on a “Primary Trading Market” outside the United States. A Primary Trading Market is a foreign market that, either alone or together with another foreign market, accounted for at least 55% of the trading of the issuer’s securities on a worldwide basis during the foreign private issuer’s last fiscal year.
- If trading of the securities in two foreign markets is combined to meet the 55% threshold, then trading on at least one of the foreign exchanges must be greater than the trading in the U.S. markets.
OTC Markets 101 – The Basics of Listing – OTCQB
OTC Markets Group (“OTC Markets”) requires companies seeking quotation of their securities on the OTCQB® Venture Stage Marketplace (“OTCQB”) to have an initial and ongoing $0.01 per share minimum bid price, submit an initial OTCQB application, pay annual fees, and submit annual certifications to the OTC Markets. Companies that do not meet all of these requirements are demoted to the OTC Markets Pink® Marketplace (“OTC Pink”). OTCQB companies must also be reporting with the Securities & Exchange Commission (“SEC”). OTC Markets offers companies seeking public company status new alternatives for listing while ensuring transparency for investors. Read More
FORM S-1 REGISTRATION STATEMENTS – WHAT COMPANIES NEED TO KNOW ABOUT FORM S-1 & GOING PUBLIC
Form S-1 Benefits & Going Public
When a company sells shares, the shares must be covered by an effective registration statement or exempt from the Securities & Exchange Commission’s registration statement requirements.
Form S-1 is the most commonly used registration statement form. The form offers flexibility to issuers allowing issuers to structure their securities offerings in a variety of ways, depending upon their particular needs.
All companies qualify to use Form S-1 regardless of their size, line of business and type of security being registered.
Even after The Jumpstart Our Business Startups Act (“JOBS Act”), Form S-1 is the most commonly used method of raising capital and going public. The form can be used to register shares for seed stockholders or larger accredited investors. Form S-1 provides transparency to investors and is a cost and time-effective solution for companies seeking to raise capital and go public. Read More