My interpretation of the no-action review available for issuers is different.
No action, in this instance, means no penalty, and no enforcement action by the Commission - Providing that the company asks the SEC to review if the exemption is applicable BEFORE the fairness hearing, which I suspect MYDX did not.
This is an earlier version of the SEC interpretation of Section 3(a)(10) applicability, which also has some clarifications, and the main precedents I mentioned to you earlier.
What people fail to realize is that the exemption is fraudulent if it does not meet all of these criteria. It is not a free pass to abuse existing shareholders via dilution of their equity position.
Then on June 9th 2016 this is filed in Miami-Dade court, and approved, even with the glaring discrepancy regarding the company issuing shares to settle this supposed "bona fide" debt.
Two weeks after Phoenix acquired the debt they are effecting Section 3(a)(10) to have the public pay for the debt via deeply discounted free trading shares being sold to the public, thus effectively circumventing the six month holding period required by Rule 144.
So to break it down what happened was promoters were paid to "assist" the stock during conversions. Promoters assist by luring folks to buy more stock, and are required to disclose their compensated position under Section 17(b) of the Securities Act of 1934 as amended. I have provided the precedent whereby the Commission first applied Section 17(b) to social media promotion, SEC v. Black 2000.
I have not seen a SINGLE disclosure by any of these "crisis communications specialists", has anyone?
In essence the Section 3(a)(10) exemption was hijacked so circumvent Rule 144, and the promoters were paid for promoting the stock in which discounted shares of MYDX were being sold to the public to reimburse Phoenix for paying for the promotion of MYDX.
Promoters were assisting in selling stock that was being sold for this debt owed to them.
As defined in the precedents from earlier Section 3(a)(10) exemption rulings the position of the retail shareholder must be protected when effecting a Section 3(a)(10) exemption.
1. Does this exemption adequately protect the interests of existing shareholders?
2. Is this "fair and equitable" to shareholders?
3. Does this promote the interests of shareholders?
4. Would an intelligent and honest shareholder reasonably approve of this exemption?
If I owned MYDX I would say hell no, paying for promoters with discounted shares being sold that they themselves are assisting in the sale of fails all requirements of this four prong test.
This is established SEC law. MYDX and Phoenix cannot just do what they want with the Section 3(a)(10) exemption to advance their interests.
This is but one serious matter of compliance I am finding here.
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