ILIM - Custodianship Plays: Explained
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I'll Alert you of stocks to Buy,
before the Run happens !
Custodianship Plays: Explained
________________________________________________________________
What is a Custodianship?
There are literally thousands of penny stocks that
are publicly traded. It isn’t uncommon for some of
those stocks to get abandoned by their control people
for a variety of different reasons. When a publicly
traded company gets abandoned it doesn’t just stop
publicly trading. The abandoned shell will continue
to trade until the day that the SEC files an
administrative order to revoke the Issuers
registration (for SEC filers) or until FINRA
deletes the symbol (for non-SEC filers).
That can often mean years of trading as
nothing but a zombie ticker.
As abandoned shells, the public Issuers will
fall behind with their business license at
the state level (since nobody is around to
pay the annual fees due to the Secretary of State).
When two years pass without an entity paying
its business taxes at the state level,
the entity becomes revoked. This opens the
door for control of the public Issuer to be
taken over by an interested party
(a shareholder or debt holder for example)
through a custodianship petition.
The interested party can file a petition with
the local court requesting that the court approve
a motion to let the interested party (or an
individual of their choosing) take over control
of the abandoned shell “in the best interest
of the shareholders“. The only real concerns
the court will have is that there is
no objections to the motion and that the
custodian has a clean background.
The petitioner has to prove to the court
that they have made a legitimate effort
to contact the former control people and
they have to convince the court that
the custodian is a respectable choice
with a clean background that will act in the
best interest of the existing shareholders.
That usually isn’t hard to do so most
custodianship petitions will be granted
by the court.
The only exception is usually when the
old control people do show back up to object
or if the petitioner voluntarily dismisses
the petition (this may happen if the
SEC suspends the Issuer during the proceedings
or initiates an administrative order to
revoke trading in the Issuer during the proceedings).
________________________________________________________________
“Legal” Custodianships
vs “Fraudulent” Hijackings
The SEC frowns down on the taking over of
abandoned shells considering abandoned shells
to be “ripe for fraud” because after they are
taken over they often get used for
pump & dump schemes and other sorts of
illegal activities. Back in 2012, the
SEC initiated a program called “Shell Expel”
to try to combat the problem. Through the
Shell Expel program the SEC suspended
trading in over 568 abandoned shells
between 2012 – 2015. The program went cold
though in 2015, and since that time
custodianship filings have been on the rise.
Just the past month alone there has
been over 2 dozen new custodianship
petitions filed.
It is important to Note here that there is
a “legal” way to take control of an abandoned
Issuer and there is a “fraudulent” way.
The “Legal” way is by filing a Custodianship
petition with the court to get court approval
to become the custodian of the Issuer.
The “Fraudulent” way is pretty much any
other way people use to take over control
of an abandoned shell.
This could include:
• Making fraudulent filings with the local
Secretary of State to reinstate the entity
and add your name or the name of others as
new officers of the Issuer (without authorization)
• Making a new entity by the same name in
the same State or a different State then
filing fraudulent/forged documents with
the Transfer Agent showing that you were
transferred/sold control of the Issuer
(I recently exposed a group from New York
that was doing this)
• Making fraudulent filings with the
SEC saying you acquired control of the
shell [I recently exposed a group out of
Canada (Richard Tang) and Minnesota
(Mark Miller) that was doing this]
The SEC has filed several Complaints
against individuals for fraudulent
hijackings in the past including David Stocker
and Jason Wong (among others).
Recently we have even seen groups using
other types of fraud on abandoned shells
like hijacking their old domains to
create fake websites and/or put out
fake press releases often supported with
fake twitter pages. I built a whole IHUB
forum to expose the groups involved in
this type of fraudulent activity.
I expect SEC action against some people
involved in the not too distant future.
________________________________________________________________
The Custodianship Process
The Custodianship Process can take
several months to complete.
Once a custodianship petition
is filed with the court,
the court will set a date for a custodianship
hearing to take place approximately 4- 6 weeks
in the future. This allows time for the former
control people to be served at the last
available contact information provided
by the Issuer.
If no object is made to the custodianship petition,
the court will almost always approve the petition
at the custodianship hearing. This officially
puts the custodian in control of the shell.
After that, the Court process mainly just
involves status reports then eventually
if the court is satisfied with the how
things are going under control of the custodian,
a motion is made to discharge the custodian
officially completing the process.
________________________________________________________________
What Happens to The Shells
after Custodianships are Granted
The job of the custodian in the view of the court
is to put the interest of all the existing
shareholders first, but that almost never
ends up being the case.
Just about 100% of the time,
the custodian is taking control of the
abandoned shell for their own interests
and not that of the existing shareholders.
In some cases the custodian will even do
a reverse split wiping out the
former shareholders.
The custodian is usually looking
to sell/peddle the shell for a profit.
Shells can sell for any where from
$20,000 – $100,000 or more while the cost
of hijacking the shell usually ends
up being less than $10,000.
The custodian will often take the money
they spent gaining control of the shell
and bill the shareholders by putting
the debt on the balance sheet as
a convertible debt Note.
Those Debt notes can then end up turning
into ugly share selling schemes like
the one described in a report we recently
published for Befut Global Inc (BFTI).
Even without using bogus debt to
create share selling scams, the shells
can turn into some kind of scam
like the CYPE, WSML, and AXMP
(Milost Global/Palewater Advisory scams)
that I exposed. CYPE, WSML, and AXMP
all ended up being suspended by the SEC.
More often than not, though, the stocks
won’t get suspended and some can turn
into monster plays making hundred percent
or even thousand percent gains.
_________________________________________________________________
What Are Custodianship Plays
Why are some Custodianship plays such big movers?
Stocks that end up being taken over
through custodianship petitions can offer
several profit opportunities for
penny stock traders for a number of reasons:
1. The share prices have often fallen on
light volume to relatively low prices
(for the share structure of the stock)
due to years of inactivity putting some
of the stocks in extremely good price ranges
and setting them up with the potential
for large gains if interest builds for the stock.
2. Most have seen very little trading activity
for many years so much of the float is
owned by non-active traders that may not even
realize the stock has become active again ….
this means the retail/active float is
often even smaller than the true float.
3. Custodianship stocks are automatically
considered reverse merger candidates.
As reverse merger plays that allows for
the type of speculation that can create
big message board/social media pumps
_________________________________________________________________
When is the best time to trade custodianship plays?
The best profit opportunities often come in stages
usually stretching over several months:
1. When the custodianship petition is filed
with the courts.
This can often be the biggest short term
profit opportunity for custodianship plays.
Custodianship petitions have been done
in several states in the past:
Nevada, Florida, Colorado, Wisconsin,
Utah, California, Texas, and North Carolina,
but over the past couple of years the
overwhelming majority of custodianships
have taken place in Nevada which is great
since Nevada has a court website that offers
the public access to all their court filings
as they are docketed. We scan the
Nevada court site at least a couple times a day
for new custodianship petitions so we can get
that information to our members ahead of the pack.
2. When a custodianship petition is granted
it can often lead to some short term interest
in the stock – both leading up to the
court date for the custodianship hearing
and after the custodianship is officially granted.
As mentioned earlier, the custodianship hearing
is usually scheduled for 4 – 6 weeks after
the petition is filed with the court.
We track all the upcoming court dates for
our members so they don’t miss any
profit opportunities.
3. When the entity is reinstated at the Nevada SOS
it can often lead to some short term
interest in the stock.
Some custodians will reinstate the entity
right after the custodianship petition is granted.
Others will wait until they have found a buyer
for the shell before they reinstate the entity.
We track all Nevada SOS filings in real time
so we can catch reinstatement filings as soon as
they hit so that our members won’t miss
any profit opportunities.
4. When the custodian is discharged by
the courts (meaning the court has become
satisfied with the arrangement basically
completing the custodianship process) it
often lead to some short term interest
in the the stock – both leading up to the
court date for the discharge hearing and
after the discharge is officially granted.
This usually happens a few weeks up to
a few months after the custodianship is granted.
Some custodians put their shells up for
sale before completing the process so things
move fast after the discharge … others wait
until after completing the custodianship
process to put their shells up for sale.
We track all the upcoming court dates for
our members so they don’t miss any
profit opportunities.
5. When the shell is sold.
This is usually the other catalyst that
creates the biggest moves (besides the
custodianship petition being filed).
This is the stage that set off the big LCTZ move.
Once it is known that new owners are
taking over control of the shell it becomes
a full blown reverse merger play supported
by all kinds of yummy speculation that
message board and social media pumpers just eat up.
This stage usually will not happen until
several months (or longer)
after stage 1 (the the filing
custodianship petition).
Knowing that the stock can have
several stages of price movements,
different traders will approach a
custodianship play
with different trading plans.
Some will try to profit off as many of the stages
as possible while others will buy early and
take some profits along the way but still treat
the trade as a long term play holding shares for
that big reverse merger at the end.
The key as with any trade is buying ahead of
the pack which means catching the catalyst
as early as possible.
That is our focus for our members.
_________________________________________________________________
Which Custodianship Plays are the Best?
Not all custodianship stocks will turn into good custodianship plays. So which are the best?
• Stocks that are in lower price ranges
(typical under $.01/share or in the low pennies)
with relatively good share structures for the price
have the biggest potential to turn into big plays
so they usually draw the most interest.
• Interest can also depend on who the custodian
is for the shell. Some custodians are
more popular than others. The custodians
that were involved in big movers in the past
tend to get more attention when
they do new custodianships.
https://otcmarketresearch.com/understanding-custodianship-plays/
________________________________________________________________
Postings by trader53 to IL2M International Corp.
https://investorshub.advfn.com/boards/memberpoststoboard.aspx?userid=155361&boardid=26638
________________________________________________________________
Live! Charts
ILIM 0.0002 - Strong BUY !
I'll Alert you of stocks to Buy,
before the Run happens !
Custodianship Plays: Explained
________________________________________________________________
What is a Custodianship?
There are literally thousands of penny stocks that
are publicly traded. It isn’t uncommon for some of
those stocks to get abandoned by their control people
for a variety of different reasons. When a publicly
traded company gets abandoned it doesn’t just stop
publicly trading. The abandoned shell will continue
to trade until the day that the SEC files an
administrative order to revoke the Issuers
registration (for SEC filers) or until FINRA
deletes the symbol (for non-SEC filers).
That can often mean years of trading as
nothing but a zombie ticker.
As abandoned shells, the public Issuers will
fall behind with their business license at
the state level (since nobody is around to
pay the annual fees due to the Secretary of State).
When two years pass without an entity paying
its business taxes at the state level,
the entity becomes revoked. This opens the
door for control of the public Issuer to be
taken over by an interested party
(a shareholder or debt holder for example)
through a custodianship petition.
The interested party can file a petition with
the local court requesting that the court approve
a motion to let the interested party (or an
individual of their choosing) take over control
of the abandoned shell “in the best interest
of the shareholders“. The only real concerns
the court will have is that there is
no objections to the motion and that the
custodian has a clean background.
The petitioner has to prove to the court
that they have made a legitimate effort
to contact the former control people and
they have to convince the court that
the custodian is a respectable choice
with a clean background that will act in the
best interest of the existing shareholders.
That usually isn’t hard to do so most
custodianship petitions will be granted
by the court.
The only exception is usually when the
old control people do show back up to object
or if the petitioner voluntarily dismisses
the petition (this may happen if the
SEC suspends the Issuer during the proceedings
or initiates an administrative order to
revoke trading in the Issuer during the proceedings).
________________________________________________________________
“Legal” Custodianships
vs “Fraudulent” Hijackings
The SEC frowns down on the taking over of
abandoned shells considering abandoned shells
to be “ripe for fraud” because after they are
taken over they often get used for
pump & dump schemes and other sorts of
illegal activities. Back in 2012, the
SEC initiated a program called “Shell Expel”
to try to combat the problem. Through the
Shell Expel program the SEC suspended
trading in over 568 abandoned shells
between 2012 – 2015. The program went cold
though in 2015, and since that time
custodianship filings have been on the rise.
Just the past month alone there has
been over 2 dozen new custodianship
petitions filed.
It is important to Note here that there is
a “legal” way to take control of an abandoned
Issuer and there is a “fraudulent” way.
The “Legal” way is by filing a Custodianship
petition with the court to get court approval
to become the custodian of the Issuer.
The “Fraudulent” way is pretty much any
other way people use to take over control
of an abandoned shell.
This could include:
• Making fraudulent filings with the local
Secretary of State to reinstate the entity
and add your name or the name of others as
new officers of the Issuer (without authorization)
• Making a new entity by the same name in
the same State or a different State then
filing fraudulent/forged documents with
the Transfer Agent showing that you were
transferred/sold control of the Issuer
(I recently exposed a group from New York
that was doing this)
• Making fraudulent filings with the
SEC saying you acquired control of the
shell [I recently exposed a group out of
Canada (Richard Tang) and Minnesota
(Mark Miller) that was doing this]
The SEC has filed several Complaints
against individuals for fraudulent
hijackings in the past including David Stocker
and Jason Wong (among others).
Recently we have even seen groups using
other types of fraud on abandoned shells
like hijacking their old domains to
create fake websites and/or put out
fake press releases often supported with
fake twitter pages. I built a whole IHUB
forum to expose the groups involved in
this type of fraudulent activity.
I expect SEC action against some people
involved in the not too distant future.
________________________________________________________________
The Custodianship Process
The Custodianship Process can take
several months to complete.
Once a custodianship petition
is filed with the court,
the court will set a date for a custodianship
hearing to take place approximately 4- 6 weeks
in the future. This allows time for the former
control people to be served at the last
available contact information provided
by the Issuer.
If no object is made to the custodianship petition,
the court will almost always approve the petition
at the custodianship hearing. This officially
puts the custodian in control of the shell.
After that, the Court process mainly just
involves status reports then eventually
if the court is satisfied with the how
things are going under control of the custodian,
a motion is made to discharge the custodian
officially completing the process.
________________________________________________________________
What Happens to The Shells
after Custodianships are Granted
The job of the custodian in the view of the court
is to put the interest of all the existing
shareholders first, but that almost never
ends up being the case.
Just about 100% of the time,
the custodian is taking control of the
abandoned shell for their own interests
and not that of the existing shareholders.
In some cases the custodian will even do
a reverse split wiping out the
former shareholders.
The custodian is usually looking
to sell/peddle the shell for a profit.
Shells can sell for any where from
$20,000 – $100,000 or more while the cost
of hijacking the shell usually ends
up being less than $10,000.
The custodian will often take the money
they spent gaining control of the shell
and bill the shareholders by putting
the debt on the balance sheet as
a convertible debt Note.
Those Debt notes can then end up turning
into ugly share selling schemes like
the one described in a report we recently
published for Befut Global Inc (BFTI).
Even without using bogus debt to
create share selling scams, the shells
can turn into some kind of scam
like the CYPE, WSML, and AXMP
(Milost Global/Palewater Advisory scams)
that I exposed. CYPE, WSML, and AXMP
all ended up being suspended by the SEC.
More often than not, though, the stocks
won’t get suspended and some can turn
into monster plays making hundred percent
or even thousand percent gains.
_________________________________________________________________
What Are Custodianship Plays
Why are some Custodianship plays such big movers?
Stocks that end up being taken over
through custodianship petitions can offer
several profit opportunities for
penny stock traders for a number of reasons:
1. The share prices have often fallen on
light volume to relatively low prices
(for the share structure of the stock)
due to years of inactivity putting some
of the stocks in extremely good price ranges
and setting them up with the potential
for large gains if interest builds for the stock.
2. Most have seen very little trading activity
for many years so much of the float is
owned by non-active traders that may not even
realize the stock has become active again ….
this means the retail/active float is
often even smaller than the true float.
3. Custodianship stocks are automatically
considered reverse merger candidates.
As reverse merger plays that allows for
the type of speculation that can create
big message board/social media pumps
_________________________________________________________________
When is the best time to trade custodianship plays?
The best profit opportunities often come in stages
usually stretching over several months:
1. When the custodianship petition is filed
with the courts.
This can often be the biggest short term
profit opportunity for custodianship plays.
Custodianship petitions have been done
in several states in the past:
Nevada, Florida, Colorado, Wisconsin,
Utah, California, Texas, and North Carolina,
but over the past couple of years the
overwhelming majority of custodianships
have taken place in Nevada which is great
since Nevada has a court website that offers
the public access to all their court filings
as they are docketed. We scan the
Nevada court site at least a couple times a day
for new custodianship petitions so we can get
that information to our members ahead of the pack.
2. When a custodianship petition is granted
it can often lead to some short term interest
in the stock – both leading up to the
court date for the custodianship hearing
and after the custodianship is officially granted.
As mentioned earlier, the custodianship hearing
is usually scheduled for 4 – 6 weeks after
the petition is filed with the court.
We track all the upcoming court dates for
our members so they don’t miss any
profit opportunities.
3. When the entity is reinstated at the Nevada SOS
it can often lead to some short term
interest in the stock.
Some custodians will reinstate the entity
right after the custodianship petition is granted.
Others will wait until they have found a buyer
for the shell before they reinstate the entity.
We track all Nevada SOS filings in real time
so we can catch reinstatement filings as soon as
they hit so that our members won’t miss
any profit opportunities.
4. When the custodian is discharged by
the courts (meaning the court has become
satisfied with the arrangement basically
completing the custodianship process) it
often lead to some short term interest
in the the stock – both leading up to the
court date for the discharge hearing and
after the discharge is officially granted.
This usually happens a few weeks up to
a few months after the custodianship is granted.
Some custodians put their shells up for
sale before completing the process so things
move fast after the discharge … others wait
until after completing the custodianship
process to put their shells up for sale.
We track all the upcoming court dates for
our members so they don’t miss any
profit opportunities.
5. When the shell is sold.
This is usually the other catalyst that
creates the biggest moves (besides the
custodianship petition being filed).
This is the stage that set off the big LCTZ move.
Once it is known that new owners are
taking over control of the shell it becomes
a full blown reverse merger play supported
by all kinds of yummy speculation that
message board and social media pumpers just eat up.
This stage usually will not happen until
several months (or longer)
after stage 1 (the the filing
custodianship petition).
Knowing that the stock can have
several stages of price movements,
different traders will approach a
custodianship play
with different trading plans.
Some will try to profit off as many of the stages
as possible while others will buy early and
take some profits along the way but still treat
the trade as a long term play holding shares for
that big reverse merger at the end.
The key as with any trade is buying ahead of
the pack which means catching the catalyst
as early as possible.
That is our focus for our members.
_________________________________________________________________
Which Custodianship Plays are the Best?
Not all custodianship stocks will turn into good custodianship plays. So which are the best?
• Stocks that are in lower price ranges
(typical under $.01/share or in the low pennies)
with relatively good share structures for the price
have the biggest potential to turn into big plays
so they usually draw the most interest.
• Interest can also depend on who the custodian
is for the shell. Some custodians are
more popular than others. The custodians
that were involved in big movers in the past
tend to get more attention when
they do new custodianships.
https://otcmarketresearch.com/understanding-custodianship-plays/
________________________________________________________________
Postings by trader53 to IL2M International Corp.
https://investorshub.advfn.com/boards/memberpoststoboard.aspx?userid=155361&boardid=26638
________________________________________________________________
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