December 12, 2007
PETITION FOR CHANGE UNDER THE RULE MAKING POLICIES OF THE SECURITIES AND EXCHANGE COMMISSION: IN REFERENCE TO: S-8 AND 504 FILINGS
http://www.sec.gov/answers/rulemaking.htm
1. Elimination of grades or catergories, BB's, Pinksheets, Graysheets, and the selling of non-registered securities.
All of the stocks fall under OTC Listings. All should be graded as OTC., just like the stocks trading on the Nyse, Nasdaq, and Amex. None of these companies qualifies for anything more than just Otc stocks and trade in the OTC Sector.
2. Elimination of S-8 filings, the 504 already has a cap of one million dollars, and should be sufficient for any OTC company. S-8 filings have no cap and the worse thing ever created. To many BB filers abuse these filings deceptively, owners enrich themselves when filing these making themselves the beneficiaries. They list themselves as the employee('s), and due to there being no cap can salary themselves in any amount they choose, and or that the marketcap will allow.
A perfect example of this are 2 companies:
a. Material Techonologies, symbol MTTG (BB).
In 2006 filed (2) S-8 filings........(the first for $8 million dollars.) Prior to the (second filing the Ceo set the stage after a 300/1 reverse split and then filed (the second for $18 million dollars.). A total of $26 million dollars for the owners.
The loss of marketcap $26 million for a BB company who is running deficits of over $100mn from inception. This took the shareprice from $13.+ to 0.41 by March of 2007. There is no accountability for this money.
This is the loophole in this S-8 filing. The company could have only one employer, the owner, and the result could be the same, and frequently is.
b. World Golf, symbol WGLT a (BB), and after 4 years of filing S-8's and $12 million dollars, and retailers lost capital it reverted back to the pinks, and has de-registered its securities.
b3. This would eliminate all the filings except just the 504 capped at one million dollars for a 12 month calender year.
a. Any company filing to raise capital from the public would need to get at least one annual paid end of the year audit to account for these funds. The money used for targeted goals would have to be itemized, and could only by the company to include "hired employee's".
b. Hired employees that have social security numbers that could be filed on a seperate form to the SEC, and then reported to the IRS.
4. No owner can use this filing to create a salary for himself or herself, which would include expenses for travel or entertainment, etc.
5. The owners have the option to salary themselves from their own personal stock shares, but must file a 144 in conjunction with any stock sells.
6. There has to be a limit on how many times they can file a 504........3 to 5 filings over a 6 to 10 year period for example, with a calender year of a one year gap period between each filing, this will give the company time to build on each 504 and thus give the stock price a recovery period.
7. There should be some enforcement on how many times a company can do reverse splits, for example once every 2 years during these filings so investors don't lose their holdings and capital.
8. The Outlawing of gagged TA's. Private TA's are hired by many Pinksheet companies who have policies in place to safeguard this informanion from Investors. This is done prior to them filing 504's. Its just another form of dishonesty, and corruption. Every company should have open TA's and there should be no toleration of anything less. This is done so investors don't know how many shares they are selling daily or weekly or monthly. I can give and example of where this occurring now, Podium the symbol is PDVP and is trading on Pinksheets but I can easily comprise a list pinksheet companies engaged in this activity.
Summary:
Its mind boggling that the SEC or any regulatory body would allow investors to lose capital investments from unsavory practices in our markets than can lead into hundreds of millions of dollars annually......
There must be 20,000 companies listed on the OTC, and at least 4500 of them are actively trading. The sheer number can easily can qualify for how much money investor lose, never to recover.
"This can be a breeding ground for terrorist organizations", and or the syndicate, Russian, Italian, or Chinese that we are all to familiar with who can use this as a front and placing middlemen in Ceo slots, and partners.......Several of these companies could be engaged in this activity under one organization at any one time........its a sure bet they can fly under the radar without being detected as the above illustrates........and who is keeping track with no oversight. We have companies trading from all these countries, and many more in the Otc sector, and not limited to our own.
A task even to big for the SEC, but there is a way to stop and fight back at this kind of corruption, in the days of credit card fraud, and every type of scam imagined and unimagined going on in our country, from here and abroad, such as Nigeria for example. There is no room for this in our markets.
We are suppose to have the most credible and respected markets in the world due to the regulations we have in place and the oversight commitments from our Regulatory Bodies. But the problem is that this fails in the OTC sector, and the culprits are these filings, the S-8's and the 504's, and even the 504's have the 505's and 506's that can be used in conjunction with the 504's but carry 2 years of restricted stock sells, and even this has come under scrutiny.
We need changes and every investor who puts up their capital with the hope of seeing any new public company starting up will be successful, but not all will be and this is reality. The problem is that most of the stocks never have a real chance to free trade, because the owners are selling relentlessly and in so doing is controlling the shareprice, directly selling shares from the treasury. This should be viewed as insider selling, but the SEC has allowed this loophole and most know of it, and or learn of it before going public thru their attorneys who work for them, and or the sellers of these shell companies before the reverse merger happens.
The new owner may finance these shells with little down payment, issue shares to the seller to cover the cost and their attorney, and themselves by way of salary, and within the first year and a S-8 or 504 not only has paid for the company but they have enriched themselve with either hundreds of thousands or even millions of dollars depending on what they are allowed to file.
What investors want is not only a level playing field, but this type of corruption and fraud eliminated. This open door can accomplish it all without anyone knowing what is real or what isn't. After some have enriched themselves and have run the share counts into the billions, we have witnessed 10,000/1 reverse splits, 1000/1 r/s and 500/1 r/s..........a 100/1 rs is pretty devasting to the investor let alone a 10000/1 which causes the investors to lose all their capital and all their holdings. When they realize no one is buying anymore they up and sell the company and it starts all over again with them being issued a multitude of shares from the new buyer, who often does not want to put the entire $70k to $150k for the purchase. A downpayment of $10k to $20k is usually sufficient under these agreements.
The only other alternative retailers have who are made up mostly of the small investor, moms and pops who don't have alot of money to invest, to not invest at all.
This not to punish good and honest Ceo's, and companies who may have something we can all benefit from someday, as may even save our lives or a loved one. The good ones deserve to be treated fair and I think these proposals will accomplish this, and drive the bad ones out of our markets, and stop those who want to come in under fraudenlent means to only enrich themselves who may never have more than a symbol to accomplish this. This can give all of us some protection, knowing that our investments are not serving the means for rogue individuals, terrorist organiziatons, or companies that serve governments under dicatorship.
We are a free country and we should have free trading markets that we as American citizens can believe in. and feel some level of protection that we are not being scammed. Credit card fraud and identity theft is costing companies and individuals in our country billions of dollars annually, we should not have to succumb to this in our trading markets due to the market being bigger today than our regulatory bodies. A few simple changes can curtail many of these concerns.