Lot78 Inc. (LOTE)

[janice shell]

The SEC did not seem to question the custodianships in the subpoena enforcement action and FINRA is obviously approving them or they would not be trading.

I don't think the SEC even knew about the custodianships. When they sent those subpoenas for document production, they wanted information about the S-1s he wrote and/or opined on. Obviously they believe someone who isn't named in them has actual control of the companies that were registered.

Nearly all the custodianship shells had active Forms 211. Two or three--BIZZ, LUVE, and I believe one other--were suspended by the SEC as delinquent filers after Tracy made his application for custodianship. Since they're now Grey, presumably no one will buy them.

A couple have done name and ticker changes; Tracy or someone else representing the company would have had to submit a corporate action request for that. FINRA did approve, but chances are they didn't even know they were custodianship shells.

But if the LOTE merger, and others like it, goes through, that will require approval from FINRA. The merger agreement is a sloppy mess; Tracy had better fix that, because the mistakes are so obvious I don't think the people at FINRA could miss them.

The custodianships are not illegal if material information is properly disclosed throughout the process.

True enough. But the relevant Nevada statute requires applicants for custodianship to disclose whether they're being investigated by the SEC, FINRA, or law enforcement. Tracy's been under SEC investigation since October 2015. Has he informed the Nevada court of that? He just started the custodianship process for 10 more shells on 20 July.