On June 10, 2011, the Securities and Exchange Commission (SEC) issued a bulletin about reverse mergers. The bulletin provided information about reverse mergers and cautioned investors about investing in companies who go public in reverse merger transactions.
The bulletin can be viewed at www.sec.gov/investor/alerts/reversemergers.pdf.
The bulletin follows enforcement actions against several Chinese companies that have used reversed mergers to go public and access the U.S. capital markets. Several other Chinese companies that have used the reverse merger process are also alleged to have published misleading financial reports.
A reverse merger allows a private company to get its stock traded on public exchanges without going through the initial public offering using a registration statement filed with the SEC. The end result is that the private company becomes public without the scrutiny of the SEC simply by merging with a company that is already public.
A company pursuing an IPO has to file detailed registration documents with the SEC that include financial statements while a company that goes public through a reverse merger does not file a registration. Additionally, the post-merger public entity is able to avoid another regulatory filing, Form 211, if its stock was continuously traded prior to the reverse merger.
For more information about reverse mergers please visit: http://www.securitieslawyer101.com/reverse-merger-myths/
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.gopublic101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.GoPublic101.com
