Ashton Technology Group (fka ASTN)

[MMMARY]

Here is SEC doc mentioned

http://www.sec.gov/interps/telephone/phonesupplement1.htm


4S. Sections 5, 4(2) and 2(a)(11); Rule 415; Form S-3
(a) A company entered into an agreement with a limited number of investors under which the investors committed to provide the company with private equity capital on a periodic basis. Under the agreement, the company will exercise its right to draw down on the "equity line" arrangement and issue securities after the filing and effectiveness of a registration statement covering the resale of the equity securities that the company will issue. The timing and amount of each draw-down on the equity line will be negotiated between the company and the investors during the duration of the commitment. The securities purchase price is based on a formula tied to market price at the date of each draw-down. The company has asked whether it may register the resale of the securities it will issue under the equity line on Form S-3.


Because the investors are not at market risk and have not made an irrevocable decision to purchase the securities prior to the filing of the resale registration statement, notwithstanding the signing of the equity line agreement before the filing of the registration statement, the transaction does not satisfy the conditions of the staff's PIPEs position. Because the "resale" is actually an indirect primary distribution of the securities by the company effected through the investors, the investors are viewed as statutory underwriters within the meaning of Section 2(a)(11). Thus, while the staff will not object to the registration for resale of securities issued under such equity line arrangements, the investors must be named as underwriters in the registration statement (not identified as possible underwriters), and the company may register the securities for resale on Form S-3 only if it is eligible to use the form for a primary offering. Otherwise, the company may register the resale of the securities only on the form that it may use for a primary offering (e.g., S-1 or S-2). In addition, because the parties' execution of the "equity line" arrangement is not considered sufficient to demonstrate that a completed private placement has occurred before the time of filing of the registration statement, the company may have to disclose in the registration statement the existence of contingent liabilities for a violation of Section 5 in connection with sales of the securities made under the equity line. Further, depending on the facts of a particular case, the offering may have more characteristics of a primary offering than a ,,,

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