It is clear from my legal practice that this “well-meaning” regulation has also substantially raised the time, cost and expense for investors to deposit and sell securities of smaller priced issuers, whether purchased in private placements or SEC registered offerings; and at the same time, has disproportionately increased the risks associated with these types of transactions for issuers, transfer agents, broker-dealers and their clearing houses, along with associated costs to mitigate these risks.
In today’s securities market, many micro-cap issuers choose to raise funds through “self-underwritten” offerings, in which securities are sold directly by the company’s directors and officers rather than through an outside underwriter. Both federal and state securities laws acknowledge this method of fundraising, commonly exempting issuers from the statutory definition of “broker-dealers.”
The attorneys of the Burningham Law Group have a collective 90 years of experience in mergers and acquisitions, specializing in “reverse mergers.” We have been instrumental in the completion of well over 200 mergers or acquisitions involving publicly-held companies and have served as consulting attorneys to lawyers across the United States that have been involved in similar securities transactions.
On February 15, 2008, the Securities and Exchange Commission’s (the “SEC”) amended Rule 144, which governs the resale of “restricted securities.” These amendments were an attempt to deal with the resale of “shell company” securities, shell company transactions and the persons who promote them. In many instances, these amendments have resulted in lawyers rendering the types of legal opinions that were customarily rendered prior to the adoption of Rule 144 in 1972. In our estimation, this is a step backwards.