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SEC Toughens standards for Reverse Merger Companies

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U.S. Stocks Close Higher For 2nd Day, Show Gain On Week
the so-called "fear index"--as measured by the CBOE Volatility Index fell 12% to 26.58.

A larger-than-expected upward revision to U.S. gross domestic product data, showing that U.S. economy grew at a faster 3.7% in the second quarter (http://www.marketwatch.com/story/us-economy-looks-much-stronger-after-upward-revision-to-gdp-report-2015-08-27), helped lift the spirits of investors that have been unsettled by a spate of volatility. Weekly data on jobless claims (http://www.marketwatch.com/story/us-jobless-claims-fall-6000-to-271000-2015-08-27-8913022), which pointed to continued strength in the labor market, added to the optimism.

"Today's revision means the U.S. economy is growing faster and [the] consumer spending portion points to a stronger growth in the second half of the year. With this kind of growth, we expect $135 earnings per share by the end of 2016," said Phil Orlando, chief equity strategist and senior portfolio manager at Federated Investors.

That translates to a 35% rise in the S&P 500 from its current level by the end of 2016, according to Orlando.

Global equity markets rallied following a 5.3% surge in the Shanghai Composite overnight, snapping a losing streak that wiped out nearly a quarter of its value in a week. That jump cheered investors world-wide, as fears about China have been blamed for much of the recent intense selling around the globe.

See: U.S. investors shouldn't fear China's slowdown (http://www.marketwatch.com/story/us-investors-shouldnt-fear-chinas-slowdown-2015-08-27).

Even so, some China watchers are questioning what drove the move and suggest the Chinese government intervened again. Read more: China's mystery rally (http://www.marketwatch.com/story/beijing-loch-ness-monster-eyed-in-mystery-of-china-rally-2015-08-27)

Investors had fled from stocks largely due to a lack of confidence in the Chinese government's handling of its financial markets, and the perception that the government was spending all its political capital on propping up the stock market rather than investing in its domestic economy, said John Canally, chief economic strategist for LPL Financial.

"They're clumsy and not used to reacting to markets," Canally said. "They're new to this."

The rally in U.S. stocks implies that investors are treating the recent actions out of China much like they did the 1998 Asian markets crisis, when U.S. stocks sold off initially, then bounced back, Canally said.

On Wednesday, the S&P 500 jumped 3.9% as the Dow surged 619 points (http://www.marketwatch.com/story/us-stocks-on-track-to-rise-as-china-tries-fresh-stimulus-2015-08-26). The benchmark S&P stands 8.9% off its May record close, after finishing down 12.4% from that level on Tuesday.

Other markets:Asian markets rebounded (http://www.marketwatch.com/story/asian-markets-rebound-boosted-by-central-banks-us-data-2015-08-27), while European stocks also traded higher (http://www.marketwatch.com/story/european-stocks-bounce-up-tracking-rallies-in-asia-us-2015-08-27).

Crude oil (http://www.marketwatch.com/story/oil-rebounds-by-over-2-as-stocks-recover-2015-08-27) settled 10% higher, while gold (http://www.marketwatch.com/story/gold-tilts-lower-eyes-4-day-losing-streak-2015-08-27) settled slightly lower. The dollar (http://www.marketwatch.com/story/dollar-steady-against-yen-as-risk-sentiment-improves-2015-08-27-11033527) strengthened by 0.7%.

.--Victor Reklaitis in London contributed to this article.

 

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August 27, 2015 16:24 ET (20:24 GMT)

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MaxShockeR   Wednesday, 11/09/11 06:38:44 PM
Re: None
Post # of 253 
SEC Toughens standards for Reverse Merger Companies


SEC Approves New Rules to Toughen Listing Standards for Reverse Merger Companies


Quote:
FOR IMMEDIATE RELEASE 2011-235

Washington, D.C., Nov. 9, 2011 — The Securities and Exchange Commission today approved new rules of the three major U.S. listing markets that toughen the standards that companies going public through a reverse merger must meet to become listed on those exchanges.

Additional Materials
NYSE Amex Notice and Order
www.sec.gov/rules/sro/nyseamex/2011/34-65710.pdf
NYSE Notice and Order
http://www.sec.gov/rules/sro/nyse/2011/34-65709.pdf
NASDAQ Notice and Order
http://www.sec.gov/rules/sro/nasdaq/2011/34-65708.pdf

Currently, reverse merger companies like other operating companies can pay to be listed on an exchange, where investors can purchase and sell shares of the company. In some cases, regulators and auditors have greater difficulty obtaining reliable information from reverse merger companies, particularly those based overseas. Reverse mergers permit private companies, including those located outside the U.S., to access U.S. investors and markets by merging with an existing public shell company.

In summer 2010, the SEC launched an initiative to determine whether certain companies with foreign operations – including those that were the product of reverse mergers – were accurately reporting their financial results, and to assess the quality of the audits being done by the auditors of these companies. The SEC and U.S. exchanges have in recent months suspended or halted trading in more than 35 companies based overseas citing a lack of current and accurate information about the firms and their finances. These included a number of companies that were formed by reverse mergers. In June, the SEC issued an investor bulletin warning investors about companies that engage in reverse mergers.

“Placing heightened requirements on reverse merger companies before they can become listed on an exchange will provide greater protections for investors,” said SEC Chairman Mary L. Schapiro.

Under the new rules, Nasdaq, NYSE, and NYSE Amex will impose more stringent listing requirements for companies that become public through a reverse merger. Specifically, the new rules would prohibit a reverse merger company from applying to list until:

- The company has completed a one-year “seasoning period” by trading in the U.S. over-the-counter market or on another regulated U.S. or foreign exchange following the reverse merger, and filed all required reports with the Commission, including audited financial statements.

- The company maintains the requisite minimum share price for a sustained period, and for at least 30 of the 60 trading days, immediately prior to its listing application and the exchange’s decision to list.

Under the rules, the reverse merger company generally would be exempt from these special requirements if it is listing in connection with a substantial firm commitment underwritten public offering, or the reverse merger occurred long ago so that at least four annual reports with audited financial information have been filed with the SEC.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68837051 (posted by scion)





http://www.sec.gov/news/press/2011/2011-235.htm


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