Pink Sheet Current Free Trading Shares Cheat Sheet
Rule 504
Free trading shares being issued by pink sheet current companies in reliance upon rule 504 are being illegally issued. Some states allow free trading shares to be issued if a full registration statement is publicly filed and reviewed by the relevant state. A form U-7 or similar registration statement must be filed in a state recognizing the 504 exemption. A form U-7 is an expansive disclosure document which takes months to clear comments of the state securities regulators. Yes, all of the Wisconsin, Texas, Nevada and Wyoming 504 offerings you find disclosed towards the end of the Information Statements filed on OTC Markets website are being illegally issued as free trading. The legal opinions are bogus and a review of the litigation releases on the SEC’s website demonstrates the number of issuers and attorneys sued for bogus 504 offerings.
In order to satisfy the federal requirements of Rule 504, you must comply with both federal and state law.
Note conversions
Yes, billions of shares of free trading stock are being issued by former shell companies upon note conversions based upon bogus legal opinions. If an issuer has had name changes, reverse mergers, changes of control and been inactive or dissolved it is probably a shell or former shell company. Rule 144 is clear. Rule 144 is not available for the resale of securities issued by either reporting or non-reporting shell companies or an issuer that has been, at any time (even 20 years ago) previously been shell company, until the issuer meets specified conditions below:
A) the issuer of securities that was formerly a reporting or non-reporting shell company has ceased to be a shell;
B) the issuer of the securities is subject to the reporting requirements of section 13 or 15(d) of the exchange act;
c) the issuer of the securities has filed all reports and material required to be filed under section 13 or 15(d) of the exchange act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to filed such reports and materials), other than form 8-k reports; and
D) at least one year has elapsed from the time the issuer filed current form 10 type information with the sec reflecting its status as an entity that is not a shell company. This means the issuer must file audited financial statements with the sec then wait 12 months or register the shares on a registration statement under the 1933 act such as on Form S-1.
A summary of a few of the many enforcement actions against lawyers who author flawed Rule 144 and Rule 504 opinions is set forth below.
In SEC v. Cassandra Armento, Defendants, the SEC brought an action against attorney, Cassandra Armento, with violations of the federal securities laws in connection with 504 legal opinions she rendered on behalf of twelve issuers.
In SEC v. Integrated Services Group, Inc., the SEC charged attorney, David M. Loev with violations of the registration provisions connection with his 504 legal opinions.
In SEC v. Robert H. Jaffe the SEC charged attorney, Robert H. Jaffe with direct or indirect violations of the antifraud, reporting, and securities registration provisions in connection with his 504 legal opinions.
In SEC v Marcus Luna, the SEC charged attorney, Marcus Luna with engaging in a public distribution without registration with the SEC in connection with his 504 legal opinions.
In the SEC v. William D. O'Neal, the SEC charged attorney, William Neal with securities violations in connection with his 504 legal opinions.
In the SEC v. Stephen J. Czarnick, the SEC charged attorney, Stephen J. Czarnik, with issuing bogus legal opinion letters stating that offerings were in compliance with a private placement exemption under Rule 504.
In the SEC v John Briner, the SEC charged attorney, John Briner in connection with his participation and legal opinions involving an invalid Rule 504 offering in order to create purportedly free-trading Golden Apple stock.
In the SEC v. Carmine Bua, the SEC charged attorney, Carmine Bua with issuing bogus 504 opinion letters for Global Development and Environmental Resources.
In the United States v Phillip Windom Offill, Jr, the Department of Justice filed criminal charges against securities attorney Phillip Windom Offill, Jr, in connection with his 504 legal opinions for 9 different issuers.
In the United States v Michael Simon Krome the Department of Justice filed criminal charges against securities attorney Michael Simon Krome, in connection with his 504 legal opinions for C02 Tech.
