When the Securities and Exchange Commission decides to finally approve some or all of the new rules that they originally proposed in May of this year we will post the results here immediately. For those of you who are still in the dark the SEC have proposed several new rules that will affect the reverse shell merger industry in a very positive way.

It appears after many years of dismissing reverse shell mergers as a necessary nuisance the SEC has reversed its opinion and is now actually embracing the concept by instituting several new favorable rules that will not only speed up the filing process but also enable companies to raise capital under more favorable terms and conditions.

When the SEC decides to hold this public hearing they are required to give 10 days’ public notice. Such notice is typically listed in the SEC’s website under “upcoming events.” Last week John White, SEC Chief of the Division of Corporation Finance, made clear he’d like to get the new small business proposals approved and finalized before New Year’s.

Commissioner White had indicated that SEC Chairman Cox wanted them to “under promise and over deliver”. If that statement is an indication of their intent then it is very possible the announcement is forthcoming in the next few weeks. There are a total of six proposals. All of the proposals have received resounding positive comments from industry experts and professionals so there is a good chance all six will be approved without significant changes. The SEC could approve all six in one hearing, or they could drag it out over several hearings. My guess is they will deal with all of the proposals in one shot

The proposal with the biggest interest is the new Rule 144K proposal. The short version is that the SEC is proposing to shorten the 144K hold period from 1 year to 6 months, excluding those individuals who hedge their position. The biggest question concerning this issue is “when will the new rule go effective and will the effective date be retroactive?” Chances are whenever the rule goes effective (most people believe that date will be around January 1, 2008) the effective date will, in fact, be retroactive. So, if you purchased a private placement in June of 2007 and the effective date of the new rule is January 1, 2008 you would be eligible to have your shares become free trading.

I will keep you posted as soon as we hear anything further on this subject.

For further information please contact me at ralph@ventanacapitalpartners.com

Bookmark to: