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
At thesaurus.com, words like "color" and "enliven"
are synonyms to the word "seasoning." Unfortunately I don't believe Nasdaq's
extreme overreaction to a real, but relatively controlled issue, does either to
the world of reverse mergers or the markets in general...
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...
By Kevin M. LaCroix, Esq., Executive Vice President, OakBridge Insurance Services and Peter M. Gillon, Partner, Pillsbury Winthrop Shaw Pittman LLP
One of the most distinctive U.S. litigation trends over the last twelve months has been the surge of securities class action lawsuits filed against...
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
In addition to the comment I provided to the NYSE Amex's
proposal to require reverse merged companies to "season" by trading
over-the-counter for a period before applying to uplist (with an exception for
a large public offering), I also submitted the comment below with regard to
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 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 with a reporting...
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...
As if the reverse merger world needs another black eye, a previously well known attorney in the space agreed on Tuesday to stop practicing law before the Securities and Exchange Commission for five years. This results from an alleged improper opinion letter facilitating an alleged illegal public offering...
The Securities and Exchange Commission had a very good year targeting financial fraud. Those who commit fraud, not so much.
In fiscal year 2013, the SEC’s enforcement actions resulted in a record $3.4 billion in monetary sanctions ordered against wrongdoers.
The SEC filed 686 enforcement...
Once again, Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse have prepared an annual report on the securities class action filings. And, once again, the report, Securities Class Action Filings—2013 Year in Review , has a plethora of information.
The Commission brought another action centered on reverse mergers involving Chinese issuers. This action differs from earlier cases, however, since it focuses on the promoters who are charged with manipulating the shares rather than the companies. SEC v. Kelley, (D. N.J. Filed May 5, 2014).
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...
The big guys get hit and sanctioned for improper activity in the securities world. Big banks and investment banks all pay for misdeeds, some callously viewing it as simply a cost of doing business. The Enron and WorldCom scandals, among others, taught us that big companies can also be fraudulent enterprises...