Several recent statements by prominent regulators, as
well as scathing press articles, primarily talking about the problem with
Chinese reverse mergers, have decided to declare that because of the challenges
in China, reverse mergers in general are bad. I"m not enjoying this time travel
The Reverse Merger Wire reported today that
the Nasdaq, in a filing with the SEC, is requesting that post-reverse merged
companies that wish to uplist to Nasdaq have at least 6 months of trading over
the counter before being allowed to move up. Apparently the idea is that having
a few public filings...
Well you can never accuse me of being a good newsman! A
short report in our industry trade publication surprised all. Nasdaq apparently
was requesting a 6-month wait for all post-reverse merged companies to uplist
to Nasdaq. During the 6 months they must trade over the counter at least at
Despite, as The Reverse Merger Report put it,
"continued attacks from short sellers, mounting fraud allegations, and numerous
ongoing investigations of Chinese companies by the Securities and Exchange
Commission," we completed the first quarter of 2011 strong in terms of number
The New York Times reported today that the SEC is
investigating Longtop Financial Technologies, a Chinese software company that
was taken public in 2007 by Goldman Sachs, with Deloitte & Touche as their
auditors. Deloitte immediately resigned and Longtop's trading has been halted.
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...
Just 37 reverse mergers were completed in the second
quarter of 2011, according to the Reverse Merger Report . That's down
over 50% from the second quarter of last year. Still way more than IPOs, but
down is down. Much of this, of course has to do with China. Only three Chinese
APOs were completed...
I have finally had the chance to actually sit and read
the SEC's vaunted "Investor Bulletin" on reverse mergers that came out last
month. In recent years these bulletins have been seen more often. One warning
folks about the retail foreign exchange market. Another on life settlements...
Shoe #2 drops with a thud. The NYSE
Euronext announced earlier this month that, like the Nasdaq, it wants
reverse merger companies to trade on the over-the-counter market before being
allowed to apply to uplist. Luckily, like Nasdaq, it exempts companies coming
to the NYSE with a firm commitment...
As you know we previously reported that the Nasdaq has
proposed requiring reverse merged companies to trade on the over-the-counter
markets and meet other criteria for six months before being able to list on
Nasdaq. The initial proposal in April said that the 6-month wait would not be
Earlier this week, the SEC's Division of Corporation
Finance issued some guidance with the staff's observations in its reviews of
"super" Forms 8-K filed following reverse mergers. As we know, in 2005 the SEC
adopted a rule requiring the filing within four business days after a merger...
The latest issue of The Reverse Merger Report includes
an unfortunate comment in its article on the BATS exchange, a new national
securities exchange that is soon going to be taking on new listings. Its
listing requirements are similar to Nasdaq. We were hopeful that this might be
a home for future...
The Reverse Merger Wire reports that Public
Company Accounting Oversight Board (PCAOB) Chair James Doty is growing a
little impatient with Chinese securities regulators over the issue of
inspections of Chinese accounting firms that are auditing US public companies.
There was an apparently positive...
On November 8, 2011, the SEC
approved new rules that add requirements for initial listings that are
accomplished through a reverse merger with a publicly traded shell company.
Those that feel the new rules will have little impact base their view on the
fact that American exchanges had already informally...
SEC Form 8-K is meant to report "current events" that
occur between quarterly periodic reports by public companies. They are
effective upon filing and not generally subject to SEC review. In 2005, to
appropriately close a disclosure loophole, the SEC started requiring that an
8-K be filed...
In the brave new world of post-"seasoning" smallcap land,
how does a company decide the best way to go public? If one assumes a
traditional initial public offering is not available, or undesirable even if
so, but a company sees the benefits of being public and can bear the costs of
In what appears to be the first actual judgment in the
several dozen cases involving allegations of impropriety in cases of Chinese
companies that went public in the US, a $77 million arbitration award was
granted to a plaintiff in an arbitration case in Hong Kong.
AIG CEO Hank Greenberg's...
Like the rise and fall of some Hollywood stars, the reverse merger has faced both criticism and popularity over the decades. Through the 2000s many of us successfully showed the market how these combinations into non-operating public vehicles (including special purpose acquisition companies, or SPACs...