SEC To Issue “Investor Bulletin” on Reverse Mergers

Reuters is reporting that the Securities and Exchange Commission is about to release a so-called "investor bulletin" about reverse mergers. According to the report, an SEC spokesman said the bulletin would be "outlining the risks involved with reverse mergers."

As we know, the SEC is involved in a wide-ranging investigation of Chinese companies that completed reverse mergers along with their accountants, attorneys and investment bankers. Some stocks' trading has been halted, and other companies have admitted accounting irregularities.

Will this type of bulletin have a real impact in the marketplace? Hopefully not. I feel like a broken iTunes selection, but it seems more and more that the issue with Chinese companies is the companies themselves, not the method of going public. The recent disclosure that a Goldman Sachs and Deloitte & Touche client that did a traditional IPO is facing similar allegations shows that this is not about the path these companies chose.

Let's hope this anti-RM fervor begins to calm down soon.

For additional insights on reverse mergers, SPACs, other alternatives to traditional initial public offerings, the small and microcap markets and the economy, visit the Reverse Merger and SPAC Blog  by David N. Feldman, Esq., Partner of Richardson & Patel LLP.

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