Securities Law and Going Public Blog

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

DTC Eligibility Q&A

The Depository Trust and Clearing Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”), was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. DTC eligibility has often become an unexpected burden for companies in going public transactions.

Issuers must satisfy the criteria set by DTCC to be settled through DTC. All companies must satisfy this criteria in order to be DTC eligible, including both Securities and Exchange Commission (“SEC”) reporting and non-reporting issuers. This presentation discusses the most common questions we receive about DTC eligibility has become a growing concern in going public transactions. Read More

Direct Public Offerings Q&A By Securities Lawyer 101

Going public transactions can be structured in numerous ways. The going public process is complicated and intricate, and it is important to have an experienced securities attorney to help your company navigate it and deal with the Securities & Exchange Commission (“SEC”), Financial Regulatory Authority (“FINRA”), and Depository Trust Company (“DTC”).

Upon completion of a going public transaction, most companies are subject to the regulations that apply to public companies, including those of the Securities Act of 1933, as amended (the “Securities Act”) and Securities Exchange Act of 1934, as amended (the “Exchange Act”). Read More

Form S-1 Registration, Filing and Requirements, Form S-1 and Going Public Lawyers

Registration Statement - Going Public Lawyer

All companies qualify to use and must comply with Form S-1 registration statement requirements. Unlike a Form 10 registration statement, which registers a class of securities, Form S-1 registers specific securities offerings or transactions and it does not become effective until all SEC comments have been resolved. Read More

Form 10 Registration Statements Q & A

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Form 10 is a Registration Statement used to register a class of securities pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”). This article addresses common questions we receive from clients about Form 10 registration statements. Read More

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This publication is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Hamilton & Associates Law Group, P.A. does not intend to create an attorney-client relationship by offering this information about Regulation A+, and your reliance on the information presented in this publication does not create such a relationship. You should consult a lawyer if you need legal advice regarding a specific situation or problem. © 2024 Hamilton & Associates Law Group, P.A.

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Form S-1 Registration Statement Attorneys – Going Public Lawyers

Private companies going public should consider Form S-1 filing requirements when contemplating their securities offering. Private companies seeking to raise capital often file a registration statement on SEC Form S-1 to meet certain requirements of the Financial Industry Regulatory Authority when going public. Upon filing, a Form S-1 is reviewed by the Securities and Exchange Commission, which may render SEC Comments. Once a Form S-1 is declared effective by the SEC, the company becomes subject to SEC reporting requirements. All companies qualify to use and must comply with Form S-1 registration statement requirements. Private companies going public should be aware of the expansive disclosure required in registration statements filed with the SEC prior to making the decision to go public. Companies conducting securities offerings should also be familiar with the Form S-1 quiet period.

A registration statement on Form S-1 can be used to register various types of securities offerings and transactions with the SEC. Form S-1 provides issuers with flexibility in the types of securities that can be registered. Hiring the right Form S-1 Registration Statement Lawyer can help the company structure its transaction in the most effective manner. Form S-1 is used more often by issuers than any other type of registration statement form and as a result, it provides flexibility. Form S-1 registration statements can be used by existing public companies or companies in connection with going public transactions.

Regardless of whether the company is public or private, Form S-1 can be used to register various types of transactions. This blog post addresses the most common questions we receive about going public using Form S-1 and the SEC registration statement process. Read More

Toxic Funders: Unregistered Dealers, Short Sellers, or Both?

We’ve often written about “toxic” promissory notes or preferred stock and the unregistered dealers who purchase them. These dealers are not the broker-dealers ordinary retail investors have accounts with. They are individuals with companies of their own that they use to provide financing to mostly microcap companies desperate for cash. In the long run, these financings almost always prove deadly for the issuers because of the way they are structured.

Initially, the company turns to a “toxic funder” or “dilution funder” for money. The company may even be solicited by a boiler room set up by one or more of these people. Like payday loan sharks, they seek out vulnerable CEOs whose companies aren’t gaining the traction they need to survive and offer them deals.

The deals are not good for the company or for the investors it already has. The funder will sometimes have done research in advance. If not, he’ll ask company management how much money is needed, and then he’ll draw up a stock purchase agreement or securities purchase agreement. He won’t be buying actual stock; instead, he’ll purchase a promissory note, preferred stock, or even a debenture. Whatever the instrument, it will be convertible to the issuer’s common stock. The terms of conversion will be explained in the securities purchase agreement and in the note itself. Read More

2024 Form 10K and 10-K Deadlines Chart

Periodic Report	Large Accelerated Filers	Accelerated Filers	Non-Accelerated Filers
Form 10-K for Fiscal Year Ended December 31, 2023	February 29, 2024	March 15, 2024	April 1, 2024
Form 10-Q for Fiscal Quarter Ended March 31, 2024	May 10, 2024	May 10, 2024	May 15, 2024
Form 10-Q for Fiscal Quarter Ended June 30, 2024	August 9, 2024	August 9, 2024	August 14, 2024
Form 10-Q for Fiscal Quarter Ended June 30, 2024	November 12, 2024	November 12, 2024	November 14, 2024

Ibrahim Almagarby Loses Unregistered Dealer Appeal

On February 14, 2024, the United States Court of Appeals for the Southern District of Florida made its ruling in the case of the Securities and Exchange Commission versus Ibrahim Almagarby and Microcap Equity Group, LLC, ruling in favor of the Commission that Almagarby was an unregistered “dealer” under the Exchange Act.

Almagarby was appealing a lower district court ruling in favor of the Commission from September 29, 2021, which ordered Almagarby to disgorge $885,126.30 in total net profits and $182,150.69 in prejudgment interest for a total of $1,067,276.99. The district court also permanently enjoined Almagarby from selling unregistered securities and from any future participation in penny-stock offerings. Read More

SEC Obtains Final Judgment against Jeffrey Auerbach for Role in Bribery Scheme

On February 5, 2024, the Securities and Exchange Commission (the “Commission”) obtained a final judgment against defendant Jeffrey Auerbach, whom the SEC previously charged for his role in a fraudulent scheme to bribe a stockbroker to buy a company’s stock in his customers’ accounts without the customers’ knowledge.

The SEC’s complaint was filed on October 4, 2019, in the federal district court in the Eastern District of New York.

According to the Complaint, from approximately July 2014 through October 2015 (the “Relevant Period”), Auerbach, a former registered representative (i.e., a stockbroker) and purported investor-relations professional; Jarid Mitchell, a purported investor-relations professional recently imprisoned for a previous securities fraud conviction; Richard Brown, a then-registered stockbroker; and Gino M. Pereira, the then-CEO of Nxt-ID, Inc. (“NXTD”), a “security technology” company and public issuer with common stock traded on the Nasdaq Capital Market, defrauded investors by knowingly or recklessly engaging in a stockbroker bribery scheme. NXTD now trades as LogicMark, Inc. (LGMK). Read More

Rule 144 Legal Opinions and Legend Removal Q&A

Section 5 of the Securities Act of 1933, as amended, (the “Securities Act”) requires the offer and sale of securities to be registered under the Securities Act, unless the security or transaction qualifies for an exemption from registration. Rule 144 of the Securities Act provides a safe harbor that permits holders of “restricted securities” to resell their securities in the public market if specific conditions are met. To resell restricted securities, the Company’s transfer agent will require a legal opinion as to the tradability of the shares. The legal opinion will discuss the resell exemption relied upon for the resale of the shares. Most often, this will be Rule 144.

This blog post discusses the most common questions we receive about Rule 144’s Safe Harbor. Read More

SEC Consent Judgments: Speak Now, or Forever Hold Your Peace

FINRA Addresses Digital Securities – Digital Assets Regulatory Notice 19-24

Most investors are likely unaware that they can petition the SEC for new rules or changes to old ones. They can even ask that rules be entirely repealed. All that’s needed is to send a proposal to the secretary of the SEC—now Vanessa Countryman—and wait for results. Petitioners come from wildly different backgrounds. Most are lawyers (often representing individuals or entities that have been sued by the Commission) or people who more broadly object to rules they believe to be unfair or even unconstitutional. For ordinary investors, objections to the “pattern day trading” rule, which is administered by FINRA, not the SEC, have long been popular—and even students occasionally weigh in. See the petition of Atticus Wong, a high school student in California, who wrote in connection with a class project about civic engagement.

The SEC explains the submission process simply:

Petitions must contain the text or substance of any proposed rule or amendment or specify the rule or portion of a rule requested to be repealed. Persons submitting petitions must also include a statement of their interest and/or reasons for requesting Commission action.

All petitions will be forwarded to the appropriate division or office of the Commission for consideration and recommendation. Following submission of the staff’s recommendation to the Commission, petitioners will be notified of any action taken by the Commission.

The agency will then post the petition on the appropriate page on its website, which is likely the last the petitioner will ever hear of it. Apparently, the Commission is not obliged to give serious consideration to any of the petitions it receives. When it responds at all, it usually does so only after years of delay, and the petitions graced by its acknowledgment are almost always denied. Read More

SEC Rules Affecting Rule 144 Legal Opinions and Shell Companies

The Securities and Exchange Commission (“SEC”) has published releases relating to Shell Companies that affect the use of Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”), by shareholders of Shell Companies. In addition, the rules limit registration of securities on Form S-8 of the Securities Act and affect disclosures required in Form 8-K under the Securities Exchange Act of 1934, (the “Exchange Act”).

What is a Shell Company?

Securities Act Rule 405 and Exchange Act Rule 12b-2 define a Shell Company as a company, other than an asset-backed issuer, with no or nominal operations; and either:

no or nominal assets;
assets consisting of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other assets.

SPAC Settles SEC Fraud and Conflict of Interest Charges

On January 25, 2024, the Securities and Exchange Commission announced that Northern Star Investment Corp. II, a special purpose acquisition company (SPAC), agreed to settle charges that it made misleading statements in forms filed with the SEC as part of its initial public offering (IPO).

According to the SEC’s order, Northern Star represented in its SEC filings that neither the company, nor anyone acting on its behalf, had initiated any substantive discussions with any potential target companies prior to the IPO. However, the SEC’s order finds that Northern Star had engaged in discussions with a target company and that company’s controlling shareholder in connection with a potential SPAC business combination dating back to December 2020 and continuing for several weeks. Furthermore, according to the SEC’s order, after announcing a merger agreement with the target company, Northern Star did not adequately disclose conflicts of interest related to its interactions with the target company in its Form S-4 filings. Read More

SEC Charges Founder of $1.7 Billion “HyperFund” Crypto Pyramid Scheme Xue Lee (aka Sam Lee) and Top Promoter Brenda Chunga (aka Bitcoin Beautee) with Fraud

On January 29, 2024, the Securities and Exchange Commission (the “SEC“) charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in a fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide.

According to the SEC’s complaint, from June 2020 through early 2022, Lee and Chunga promoted HyperFund “membership” packages, which they claimed guaranteed investors high returns, including from HyperFund’s supposed crypto asset mining operations and associations with a Fortune 500 company. As the complaint alleges, however, Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of revenue other than funds received from investors. In 2022, the HyperFund scheme (which rebranded twice during its lifespan – from HyperFund to HyperVerse, then to HyperNation) collapsed and investors were no longer able to make withdrawals. Read More

SEC Charges Aryeh Goldstein, Adar Bays, LLC, and Adar Alef, LLC for Failure to Register; Defendants Agree to Pay $1.25 Million to Settle

On January 23, 2024, the Securities and Exchange Commission (the “SEC”) announced the filing of an enforcement action against Aryeh Goldstein, a resident of Florida and New York, and two entities he controls, Adar Bays, LLC, located in Florida, and Adar Alef, LLC, doing business in Florida and New York, for failing to register as securities dealers in connection with their convertible note financing business that involved obtaining and selling securities of over 100 microcap companies.

The parties have agreed to settle the charges. Among other relief, Goldstein and his entities agreed to pay $1.25 million in monetary relief and to surrender or cancel all remaining shares of public companies allegedly obtained from their unregistered dealer activity. Read More

Frederick L. Sharp, Luis Carrillo, Courtney M. Kelln, Mike K.G. Veldhuis, and Paul Sexton Indicted for Long-Running Pump-and-Dump Schemes

Four Canadian nationals and one former California attorney, who is believed to be residing in Mexico, were indicted on Jan. 9, 2024 in connection with long-running international securities fraud schemes in which they sold millions of shares in multiple microcap—or “penny”—stock companies during pump-and-dumps, generating at least tens of millions of dollars in illicit proceeds.

The indictment charged Frederick L. Sharp, 71, and Courtney M. Kelln, 43, both of British Columbia, with two counts each of securities fraud and conspiracy to commit securities fraud. The indictment further charged Luis Carrillo, 50, previously of California, and Mike K.G. Veldhuis, 43, and Paul Sexton, 55, both of British Columbia, with one count each of securities fraud and conspiracy to commit securities fraud.

Sharp, Carrillo, Veldhuis and Kelln were previously charged in a criminal complaint.

Also among the named co-conspirators was Roger Knox, who founded and ran the Swiss asset management firm Wintercap SA and who was sentenced for securities fraud and conspiracy to commit securities fraud in October 2023, and Richard Targett-Adams, who resided in France and worked for Knox. Targett-Adams was responsible for several back-office tasks for Wintercap. Read More

Aditya Raj Sharma Indicted for $10 million Investment Fraud

Securities Lawyers Gone Wild l Brian Reiss

On January 12, 2024, the U.S. Attorney’s Office for the District of Minnesota announced Aditya Raj Sharma of Maple Grove, Minnesota, had been indicted for defrauding investors and financial institutions out of more than $10 million.

According to court documents, Aditya Raj Sharma, 50, was the founder, CEO, and president of Crosscode Inc., a cloud-based software development company headquartered first in Maple Grove and later in Foster City, California. From Crosscode’s founding in 2015 through at least May 2019, Sharma was the primary operator of the company, its controlling shareholder, and, at times, its only employee and shareholder.

According to court documents, from 2017 through at least 2019, Sharma knowingly and intentionally devised and executed a scheme to defraud investors, financial institutions, and lending and finance companies. Sharma manipulated and falsely inflated Crosscode’s financial records to induce private investors and financial entities to extend capital to his company in order to avoid or delay financial hardship for Crosscode, which was mired in debt with virtually no incoming revenue or cash-on-hand.

According to court documents, Sharma fraudulently applied for hundreds of thousands in funding from multiple lenders and finance companies as part of his multi-year scheme. In total, Sharma induced at least one financial institution to provide him with a $950,000 line of credit and further induced at least 150 investors, including Minnesotans, to provide approximately $9.25 million to Crosscode. Read More

SEC Charges Jonathan Farber, Aarif Jamani, and Brian Keasberry with Securities Fraud

On January 12, 2023, the Securities and Exchange Commission (the “SEC“) filed charges against Jonathan Farber, Aarif Jamani, and Brian Keasberry for securities fraud.

According to the complaint filed by the SEC in the United States District Court Southern District of New York, the defendants engaged in a fraudulent scheme to profit from their accumulating, manipulating, and selling of County Line Energy Inc (CYLC) stock to retail investors. The defendants shared the $5 million in profits from the stock sales that resulted in their scheme. Read More

Siddharth Jawahar Indicted for Running a Multi-Million Dollar Ponzi Scheme

The SEC obtained a final judgment on February 8, 2018, against Niket Shah, a New Jersey resident who was charged last year by the agency with stealing more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.

On December 21, 2023, Siddharth Jawahar, 36, a former investment advisor, was indicted by a grand jury in U.S. District Court in St. Louis on three counts of wire fraud and one count of investment adviser fraud. The indictment was sealed until Monday, when the FBI arrested Jawahar in Miami, Florida. The government is seeking to have Jawahar held in jail until trial.

According to the Indictment, Jawahar is accused of running a Ponzi scheme that cost investors tens of millions of dollars through a Texas-based investment company called Swiftarc Capital LLC. From July 2016 through roughly December 2023, Jawahar took in more than $35 million from Swiftarc investors but spent about $10 million on investments in companies. Jawahar used the money from new investors to repay older investors and to fuel an extravagant lifestyle that included flights on private planes, stays at luxury hotels and expensive outings at lavish restaurants. Read More

Finra Proposes Rule Change for Stricter Limits for Brokers Borrowing From Clients

On Tuesday, January 2, 2024, the Financial Industry Regulatory Authority (“FINRA”) filed a proposed rule with the Securities and Exchange Commission (the “Commission”) seeking to tighten Rule 3240, which governs borrowing and lending between registered financial professionals and their customers.

According to FINRA, between 2018 and 2021, there were an average of 15 enforcement cases per year tied to customer loan violations. In all but one case, the broker was the borrower. The amounts ranged from $1,800 to $1.35 million.

Rule 3240 was last amended in 2010 when it became part of the consolidated FINRA rulebook.

FINRA is proposing to amend Rule 3240 to strengthen the general prohibition against borrowing and lending arrangements, narrow some of the existing exceptions to that general prohibition, modernize the immediate family exception, and enhance the requirements for giving notice to members and obtaining members’ approval of such arrangements. Read More

SEC Charges Florida Real Estate Developer Rishi Kapoor with Perpetuating a $93 Million Fraud

SEC Enforcement Attorney

On January 3, 2024, the Securities and Exchange Commission (the “SEC”) announced that it obtained an asset freeze and other emergency relief concerning an alleged $93 million real estate investment fraud perpetrated by Miami-based developer Rishi Kapoor. The SEC also charged Location Ventures LLC, Urbin LLC, and 20 other related entities in connection with the fraud scheme.

According to the SEC’s complaint, from approximately January 2018, until at least March 2023, Kapoor and certain of the defendant entities solicited investors by, among other things, making several material misrepresentations and omissions regarding Kapoor, Location Ventures, Urbin, and their real estate developments. The false statements allegedly included misrepresenting Kapoor’s compensation; his cash contribution to the capitalization of Location Ventures; the corporate governance of Location Ventures and Urbin; the use of investor funds; and Kapoor’s background.

The SEC’s investigation uncovered that Kapoor allegedly misappropriated at least $4.3 million of investor funds and improperly commingled approximately $60 million of investor capital between Location Ventures, Urbin, and some of the other charged entities. During the same period, Kappor purchased a 2023 68.7-foot yacht for over $5.5 million, a dock at the Cocoplum Yacht Club for $695,000, leased a 2020 600LT Spider McLaren sportscar, and paid a private chef $10,000 per month.

Short Selling: What It Is, and What It Isn’t

Short Selling

Short selling, the practice of betting a stock will go down, not up, has been controversial since it was invented more than 400 years ago in the Netherlands. In the early 1600s, there was only one stock in Holland, or anywhere else. It was the Dutch East India Company, or VOC (Verenigde Oostindische Compagnie). Formed on March 20, 1602, it enjoyed a 21-year monopoly on trading in Asia granted by the Dutch government. Shares in the company could be purchased by any resident of the Netherlands, and then bought and sold in outdoor secondary markets. The company was extremely powerful, possessing quasi-governmental powers, but successful trading depended on many things: well-built ships, competent captains and efficient crews, good weather, peaceful trading partners, and so on. Insurance existed at the time and offered protection, but a few real disasters could cause the VOC’s stock price to plummet.

Short selling was invented by Isaac le Maire. He’d been one of the founders of the VOC in 1602 and served as a director for three years. In 1605, he was sacked amid accusations of fraud and embezzlement. He wasn’t imprisoned but was forced to sign a non-compete agreement, pledging not to become involved with companies of any nationality that traded beyond the Cape of Good Hope or the Strait of Magellan. He was cut off from involvement in the Asia trade, the business he loved and knew best. Read More

SEC Charges Dozy Mmobuosi, Tingo Group Inc, AgriFintech Holdings Inc. (f/k/a Tingo Inc.), and Tingo International Holdings Inc with Running a Massive Fraud

On December 18, 2023, the Securities and Exchange Commission (the “SEC“) announced charges against Mmobuosi Odogwu Banye, a/k/a Dozy Mmobuosi, and three affiliated U.S.-based entities of which he is the CEO– Nasdaq-listed Tingo Group Inc., OTC-traded Agri-Fintech Holdings Inc. (fka Tingo Inc.), and Tingo International Holdings Inc.–in connection with an alleged multi-year scheme to inflate the financial performance metrics of these companies and key operating subsidiaries to defraud investors worldwide. The SEC is seeking emergency relief to prevent the defendants’ continued dissemination of materially false information to investors and to protect corporate and investor assets.

The SEC’s complaint, filed on December 18, 2023, alleges that, since at least 2019, Mmobuosi spearheaded a scheme to fabricate financial statements and other documents of the three entities and their Nigerian operating subsidiaries, Tingo Mobile Limited and Tingo Foods PLC. The complaint further alleges that Mmobuosi made and caused the entities to make material misrepresentations about their business operations and financial success in press releases, periodic SEC filings, and other public statements. For instance, Tingo Group’s fiscal year 2022 Form 10-K filed in March 2023 reported a cash and cash equivalent balance of $461.7 million in its subsidiary Tingo Mobile’s Nigerian bank accounts.

In reality, those same bank accounts allegedly had a combined balance of less than $50 as of the end of fiscal year 2022. According to the SEC’s complaint, the defendants also fabricated the customer relationships that formed the basis of their purported businesses. The complaint alleges that Mmobuosi and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes and that Mmobuosi has siphoned off funds for his personal benefit, including purchases of luxury cars and travel on private jets, as well as an unsuccessful attempt to acquire an English Football Club Premier League team, among other things. Read More

New SEC Exemption from Registration for M&A Brokers

M&A BROKERS EXEMPTION

In December of 2022, President Biden signed the Consolidated Appropriations Act of 2023 into law. The new law includes a “policy rider” for certain mergers and acquisitions brokers (M&A brokers) in Division AA, Title V, Small Business Mergers, Acquisitions, Sales and Brokerage Simplification.

As a result, M&A brokers have the benefit of a federal exemption from SEC registration as a securities broker so long as a shell company is not involved in the transaction. The M&A exemption became effective in March of 2023. Read More

Raymond Pirrello, Jr, Founder and Executive of Prior2IPO and Late Stage, Charged in Investment Fraud

On December 6, 2023, a three-count indictment was unsealed in federal court in Brooklyn charging Raymond John Pirrello, Jr., also known as “Ray John,” with securities fraud conspiracy, wire fraud conspiracy and securities fraud relating to a scheme to defraud investors and prospective investors in securities offered by Late Stage Management, LLC through several sales offices, including Prior2IPO which he controlled.

The Indictment accuses Pirrello Jr, together with others, of engaging in a scheme to defraud investors and prospective investors in securities offered by Late Stage, between March 2016 and March 2023, through material misrepresentations and omissions related to, among other things, the existence and amount of fees paid by investors in stock offered by Late Stage and the methodology of setting prices for shares of stock offered by Late Stage. Read More

Swiss Private Bank, Banque Pictet, Admits To Conspiring With U.S. Taxpayers To Hide Assets And Income In Offshore Accounts And Agrees to Pay More Than $122.9 Million

Caledonian Securities & Caledonian Bank Seized by Cayman Officials

On December 4, 2023, Swiss private bank Banque Pictet et Cie SA admitted to conspiring with U.S. taxpayers and others to hide more than $5.6 billion in 1,637 secret bank accounts in Switzerland and elsewhere and to conceal the income generated in those accounts from the IRS.

As part of the resolution, Banque Pictet entered into a deferred prosecution agreement and agreed to pay approximately $122.9 million to the U.S. Treasury. The case has been assigned to U.S. District Judge Edgardo Ramos for the Southern District of New York. Read More

Why are Microcaps Trading on the NASDAQ and NYSE Exchanges?

In the past three years, some important changes have occurred to how “penny stocks” or “microcaps” trade and are regulated. By the early 2000s, they’d moved from the obscurity of the National Quotation Bureau’s Pink Sheets to a new trading platform, Cromwell Coulson’s Pink Link.

The accompanying website, initially called Pink Sheets, made quotations much easier for interested traders to access and, as time passed, also offered the kind of detailed information about many non-reporting issuers that had never been available in the past. The Pink Sheets also published quotes and SEC filings for the so-called “OTCBB” issuers that did report to the regulator. Pink Sheets’ efforts were so successful that little more than a decade later, the OTCBB, which had been operated by the Financial Industry Regulatory Authority, went out of business.

As the second decade of the new century began, Pink Sheets had been renamed “OTC Markets Group,” and “Pink Link” was called “OTC Link.” Coulson’s business had grown and was by then a public company itself, trading in its own marketplace. Penny stocks were enormously popular with the increasingly large number of people who managed their investments on the Internet, and online brokerages like E*TRADE, TD Ameritrade, and Fidelity commanded a growing share of the securities markets. Read More

Form S-3 Registration For NASDAQ, NYSE and OTC Markets Public Companies

Registration Statements on Form S-3 is a short form registration statement under the Securities Act of 1933, as amended (the “Securities Act”), which may be used by NASDAQ, NYSE and OTC Markets public companies for follow-on offerings and public resales of a company’s securities by selling shareholders. Form S-3 is commonly used a year after the completion of their going public transaction.

Securities registration on Form S-3 is only available to issuers and offerings that meet certain eligibility requirements. For public companies who meet the requirements, Form S-3 registration statements provide a time and cost-effective method of registering public resales of a company’s securities by selling shareholders. Form S-3 shelf registration statements are automatically effective upon filing and are not subject to SEC review and comment, allowing an offering to commence immediately after the Form S-3 registration statement and prospectus supplement is filed with the SEC. Read More

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