Removing a Global Chill with DTCJuly 2, 2012, by: April Frisby
We have assisted many of our public company clients with obtaining and maintaining clearing and settlement services through the Depository Trust Co. (“DTC”). Often we are brought in to opine on the status of free-trading stock after a corporate action, such as a reverse stock split, or to provide a legal opinion to support an application for listing service. Recently, we assisted a public company in removing a “global chill” that had suspended DTC service for many years and caused it to lose many funding opportunities and over a hundred thousand dollars in legal fees. After an appeal to DTC in the wake of the International Power Group (“IPWG”) SEC decision, the Company and its New York legal counsel retained us to issue the legal opinion to DTC that ultimately lifted the chill and reinstated DTC services. IPWG appealed to the SEC after fighting its own battle with the DTC. In March, the SEC ruled that the DTC must give IPWG a fairness hearing on the DTC’s suspension of book-entry clearing and settlement services.
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