Investor Relations has accompanied the publication of information on the public company, and the stock price and transaction volume are increasing. People publishing this information are sometimes called "stock promoters". The stock promoter publishes information using various media such as junk mail, Internet, direct mail newsletter, stock website, press release, etc. Promoters communicate with broker / dealers, issuers, shareholders, potential investors and other market participants to enhance the awareness and interest of issuers and their securities.
Investor relations activities are illegal or problematic when implemented in compliance with federal and state securities laws. Issuers and promoters are often subject to criminal proceedings of the Justice Department and civil lawsuits by the SEC, as they ignore or do not recognize the law applicable to investor relations activities.
Several IR activities are intended to provide disclosure to shareholders concerning issuers. You may provide the issuer with a copy of the disclosure made by the Securities and Exchange Commission ("SEC"), FINRA, or a registered broker or investment dealer, or published in the journal. Newspapers and magazines.
SEC disclosure requirements.
In general, investor relations activities are considered important because they are expected to have a significant impact on the transaction price and the value of the issuer's securities in essence. As such, SEC Report Issuers and Non-Report Issuers and Equity Issuers are obligated to disclose terms of an oral or written agreement or promise on Investor Relationship Services. In addition, the background, ownership, disclosure of the business and office, the relationship between the promoter providing the issuer and the service, and the promoter that directly or indirectly issues the issuer securities, The right or intention to acquire it is necessary.
Disclosure of the service of the promoter shall be made by the issuer including:
(I) the period during which investor relations services are provided,
(Ii) Outline of IR activities to be conducted,
(Iii) the cost of service to the issuer, and
(Iv) all direct and indirect consideration, including the timing and source of payments to be provided to the promoter.
Promoter disclosure requirements
Section 17 (b) (17 (b)) of the Securities Act of 1933 (Securities Act) provides disclosure requirements for remuneration paid to IR parties. 17 (b) requires complete disclosure of the share promoter's remuneration and service. Stock promoters often play a dual role to function as both a stock promoter and a finder. If you use the Finder which has not been deregistered, you are responsible for both the report issuer and non-report issuer engaged in the Finder. In Article 15 (a) of the Securities and Exchange Act of 1934 (Securities and Exchange Act), those who do securities transactions need to register on the stock exchanges as stock exchanges. Finder such as stock seller may be involved in various securities transactions other than capital procurement including reverse merger, direct public offering, public direct transaction, public fund procurement.
FIG. 17 (b)
Me. Where the type of consideration (securities or cash) and the remuneration are securities, the promoter shall, where the securities are restricted or unlimited,
ii. The amount of securities paid or cash paid.
iii. If compensated by the source of remuneration (direct and indirect) and by a third party shareholder or corporation, shareholders or administrators of that company shall be identified with their respective personal names. And
iv. If the corporation is the issuer of the information, the administrator of the corporation must be disclosed.
In addition, in 17 (b), in addition to disclosing remuneration each time a press release is made, it is also required to disclose other publicized documents including e-mails and faxes. Disclosure must state the payer's relationship to the company to be advertised. In the case of a SEC reporting company hiring a public offeror, the issuer should reject transactions and remuneration on a periodic submission.
Apply Section 5
Stock promoters are often paid for their service in the company's stock they advertise. The stock promoter receives free trade shares in various ways. However, shares are rarely registered under the Securities Act. These fake methods include the issuance of free trade shares under Securities Act Regulation 504, third party shareholder relocation, and other convertible securities, such as convertion of debt and promissory notes. If the issuer is participating in investor relations activities or if third party shareholders arrange for third-party shareholders to pay IR services with shares, the shares are restricted securities. Under such circumstances issuing shares to the issuer of shares will be made on behalf of the issuer and the registered shares are not restricted securities.
Article 5 of the Securities Act prohibits the use of means or means of transportation or communication in interstate transactions directly or indirectly, propose to sell or sell without registration ___ ___ ___ 0 Has been submitted. In the case of a shareholder who has received share-based payment, it is necessary to acquire the registered shares or sell the shares in accordance with Rule 144. Section 5 calls their securities "free trade" even if they obtain legal opinions from Opine from securities analysts.
Apply Section 15
Article 15 of the Securities and Exchange Law of 1934 ("Transactions Law") requires that those who work as "brokers" or "dealers" in securities transactions register with the SEC. Brokers and dealers are both "business engaged" people who buy and sell securities. The securities company arranges securities transactions, and the dealer buys and sells securities in his / her account. For the purposes of the Transaction Law, when indicating "regularity of participation" in securities transactions, "engaged in business" of trading securities. Joining a single orphan transaction is insufficient to request registration. Nonetheless, the SEC and the court have broadly interpreted the term "engage in business".
In judging whether or not a person acted as an unregistered dealer, the main problem is when we received securities as compensation as a normal part of business. If the stock promoter periodically receives share-based compensation from customers in exchange for services, they are dealers and subject to broker-dealer registration provisions.
In judging whether a person acted as an unregistered broker, i) recommend whether investors were solicited or not, and (ii) to investors about the merits of investment. (Iii) Received decisions or transaction-based compensation. (Iv) have sold securities of the same or other issuer or have sold previously. (V) Investment recommendation was made. If the stock promoter contacts other than referrals to investors or broker / dealers, there is a risk of being considered an unregistered broker.
Failure to properly register as a broker / dealer could potentially be liable, including criminal fines, penalties, suspension, and withdrawal. Potential harm to the company includes the right to cancel the investor. Investors have the right to abolish. In other words, you can request repayment of capital investment without offset or deduction. The company may also be subject to sanctions and penalties from federal securities supervisors as advisors and advisors to broker-dealer activities that are not registered, such as fines, prohibition of future securities offerings, criminal acts, etc.
The act of the share promoter including inappropriate promotion of the issuer's securities may affect the eligibility of the issuer of electronic transactions from the issuer trust company ("DTC"). In many cases, due to inappropriate investor relations activities, the DTC sets "chill" or "global lock" on the issuer's securities and the affected issuer establishes an active market for the securities It makes it impossible.
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