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The Isolated Offering, Vol 10, Issue 3

The Isolated Offering, Vol 10, Issue 3

Tuesday, 09 March 2010 00:00

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	The Isolated Offering A Newsletter of The Lebrecht Group, APLC
March 9, 2010	Volume 10, Number 3
In This Issue Smaller Reporting Companies and Section 404(b): Where are We? DTC: The Final, Final Hurdle Follow Us on Facebook UPDATE: Issuer Purchases of Their Own Common Stock in the Open Market Smaller Reporting Company Alliance Created to Service Needs of Smaller Reporting Companies Equity Lines Emerge as Attractive Financing Alternative for Public Companies [pdf] Rule 3(a)(10) Fairness Hearings: An Overview What if One of my Service Providers is Under SEC Investigation? View LinkedIn Profile for Craig V. Butler, Esq. Archived Newsletters Contact Us http://www.thelebrechtgroup.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it 9900 Research Drive Irvine, CA 92618 (949) 635-1240 406 W. South Jordan Parkway Suite 160 South Jordan, UT 84095 (801) 983-4948 Visit Our Blog	Smaller Reporting Companies and Section 404(b): Where are We? If you are an officer or director of a small public company with a fiscal year end of December 31st, as you read this you are about one year away from requesting an auditor attestation report in compliance with Section 404(b) of Sarbanes-Oxley from your company's independent auditor. If your company has a fiscal year end of June 30th, you are much closer as the independent auditor attestation reports mandated under Section 404(b) are schedule to kick in for smaller reporting companies starting with the end of their first fiscal year after June 15, 2010. The purpose of the article is to answer some of the most common questions we are being asked by our clients, as well as, provide a brief overview of what Section 404(b) mandates, determine if any relief is in sight, make suggestions as to what officers and directors of smaller reporting companies should be doing now, and then a brief opinion regarding what this author thinks our legislature should do with Section 404(b) as it applies to small public companies. [more] DTC: The Final, Final Hurdle *After clearing the SEC and FINRA, DTC approval used to be a matter of course for a company ready to be publicly-traded, now it is an obstacle barring some companies from trading, what happened?* Imagine successfully navigating the 110 meter hurdles and crossing the finish line only to find another hurdle in your path at 115 meters? That is exactly what many smaller issuers are encountering. After successfully navigating their registration statement through the Securities and Exchange Commission and their 15c2-11 through FINRA, and actually getting a trading symbol for the OTC Bulletin Board, some smaller issuers are being told their shares cannot trade electronically due to a holdup at The Depository Trust Company (DTC). Not only is this holdup an aggravation for the company and its shareholders, it can be a very expensive one due to the fact the company is already subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended ("Exchange Act"). What happened? Why has DTC-eligibility become a road block? What is DTC? DTC is a subsidiary of The Depository Trust & Clearing Company. According to its website, DTC was created in 1973 to "reduce costs and provide clearing and settlement efficiencies by immobilizing securities and making "book-entry" changes to ownership of the securities. DTC provides securities movements for NSCC's net settlements, and settlement for institutional trades (which typically involve money and securities transfers between custodian banks and broker/dealers), as well as money market instruments." Everyone got that? O.k., in layman's terms this means DTC provides the electronic basis through which stock sales bought and sold through brokers are transferred from the seller's brokerage account to the buyer's account. For example, when you place an order through your broker to buy shares of XYZ, Inc. that order goes through your broker to a clearing firm and then on to DTC to be processed. DTC receives the order and then operates back through the clearing firm and the seller's broker to move the shares from the seller's account to the buyer's account. [more]