The Isolated Offering, Vol 10, Issue 4
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The Isolated Offering
A Newsletter of The Lebrecht Group, APLC
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| May 4, 2010 |
Volume 10, Number 4
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| In This Issue
Free Fallin’ – From NASDAQ to the Pink Sheets Securities Clearing Firm, Brokerages, and the DTC: Roadblocks to Small Business Capital
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]
View LinkedIn Profile for Brian A. Lebrecht, Esq. Contact Us http://www.thelebrechtgroup.com 9900 Research Drive 406 W. South Jordan Parkway
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Free Fallin’ – From NASDAQ to the Pink SheetsMore and more issuers are finding that the exchange or quotation medium on which their stock is traded is being changed, sometimes without their consent or knowledge. And today there are a variety of new quotation services, or tiers within those quotation services, where an issuer might land. Why Me? The first step is to figure out why you have been delisted from the exchange or quotation medium that you were on. On listed exchanges, the most common reason in today’s market is that the issuer does not meet the minimum bid price requirement. For NASDAQ CM-listed companies, the minimum is $1.00 per share. If an issuer falls below this minimum for 30 consecutive days, they will typically receive a letter from The Nasdaq Stock Market letting them know that they have 180 days to resolve the deficiency (in the case of the minimum bid price rule, that means trading above $1.00 for 10 consecutive trading days). If, after the 180 day period, the issuer has not resolved the deficiency, it will receive a Delisting Determination Letter. The issuer then has 7 days to request a hearing on the determination. If the issuer’s request is complete, the hearing is usually scheduled 30 to 45 days from the request, during which no delisting action will be taken. Securities Clearing Firm, Brokerages, and the DTC: Roadblocks to Small Business Capitalby: Salli A. Marinov, President, First American Stock Transfer, Inc. If you, as an investor, own shares in any micro- or small-cap company trading on the non-listed markets of PinkSheets or the OTC Bulletin Boards you have probably been experiencing a myriad of problems of late. Due to a previously unforeseen consequence of FINRA Release 09-05 in January of 2009, many securities brokerages and clearing firms, as well as the Depository Trust & Clearing Corporation, have denied deposits of these shares into accounts. In the original release, FINRA warned their brokerages to perform additional due diligence to ward against problems of fraud and to prevent unregistered resales of low priced, low volume stocks trading in the non-listed markets – basically the stocks typically known as “penny stocks”. Unfortunately, the individual brokerage and clearing firms took it one step further. Rather than perform incomplete or incorrect due diligence and risk being fined by FINRA, firms all across the nation decided to create internal policies preventing the deposits of these securities in entirety. This move is against the Securities Exchange Act of 1934 that requires the promotion of fair and equitable trading practices. On the contrary, this move has decimated the public small and micro-cap industry. FINRA was contacted but has yet to respond. American economy is built on the “small guy”. All of the NYSE and AMEX companies were, at one time, small companies. Small companies, in volume, provide the most support for national employment and product usage. AtSe a time when President Obama wants support for small businesses to help the fallen economy rebound, this unforeseen consequence of the FINRA 09-05 release is preventing this support from taking hold. Last November, the 28th Annual Small Business Capital Formation Forum was presented by the Office of Small Business of the SEC’s Division of Corporate Finance at the SEC headquarters in Washington, D.C. Attendees included attorneys from many securities law firms, some brokerage firms, a securities market maker, at least two transfer agents, representatives from PinkSheets, small capital investment advisors and investor relations firms. All were in attendance to discuss and make recommendations to the Office of Small Business regarding policies for small businesses to create capital going forward. [more] |
