Oct. 04, 2019
Dear Sec rules committee, A major concern & complaint from traders in the OTC has to do with reverse splits. Many ceos choose the corporate action to reduce the share structure so the pps will trade higher and attract greater outside investment eventually uplisting to a higher exchange. However, this is hardly the case. CEOs will reverse split the stock while taking on more convertible (toxic) debt & continue the behavior of diluting the stock. In turn, shareholder value will become zero as well as the share price for future investors. Rules and more stringent requirements are necessary to combat the death spiral in share prices and protect retail investments. In an earlier rule post I offered a suggestion to reform the grey market structure utilizing a centralized lit matching system. The grey market after reformed can house delinquent sec filers, ipos, & reverse split stocks. The reverse split stocks will need to trade a minimum of 3-6 month to prohibit dilution and foul play from market makers. This would reduce the frequency CEO’s take on toxic debt & provide no alternative to obtain reg A funding or outside investments. Many market makers who facilitate toxic debt dilution need also to be held accountable with the frequency in dilution. Rules set forth to prohibit access dilution. The sec can seek additional comments regarding Authorized share and reverse split caps. For example a current share structure and A/S should be limited by its size and increased to a max of 2-3x . A 100M SS can only go to 2-300M while a 1B SS can go to 2-3B. Toxic lenders are robbing retailers blind without no regards. Terms reached between the parties are usually horrid for shareholders. Under exception can SS be increased further. Another way to combat the toxic lending is put restrictions on the terms companies & lenders reach as well as a cap on how much is lent out. New capital formation is key to achieve a revitalized small business Otc structure. Please set forth guidelines, rules, and amendments to, to grow these companies and prevent retail fraud. Thanks Retail investor John Guerriero [redacted] Sent from AOL Mobile Mail Get the new AOL app: mail.mobile.aol.com