Reverse Mergers & Low Float Plays

[Potse]

FINRA policy on name/symbol changes.....

I still own my position in BDCM, was very much interested in increasing my position, and was very much interested in trying to buy some shares of OPUS. But some of my bullishness has definitely been tempered now. I would like to see Synergy provide some guidance/indication of how this issue can be resolved. Maybe FINRA and Synergy can reach agreement on an easy/quick resolution to this, but my concern and gut feeling is that this might turn out to be a fairly complicated and/or expensive problem for Synergy to fix.

It is very frustrating to see FINRA/SEC take this stance now. The SEC was not suppose to allow/accept Form 15 filings in cases where companies are not fully current on all their SEC filings. But for as long as I can remember in my time of investing in shells, the SEC has usually looked the other way on this matter. Now, they suddenly seem concerned about it.

I'm still going to enter/accumulate positions in shells that are affected by this particular policy. It definitely makes analysis of these types of shells a bit more complicated, and the risk/reward might need to be adjusted accordingly if this policy requires the shell owner or RM target to spend more time/money on the regulatory side of these shells and reverse mergers.

I just did a very quick/cursory look at some recent name/symbol changes to see if I can get some idea of what the FINRA policy is and how companies are approaching/dealing with said policy. I'm not 100% certain of this but it appears to me that FINRA will allow changes to names and symbols if the company successfully registers its shares and starts making SEC filings again (Form 10-12G). From what I have seen FINRA is not requiring companies to go back and complete any missing filings pre/post the Form 15.

I also noticed an extremely interesting recent example (SPRJ/NREG -- 12/14/2022) where FINRA approved a name/symbol change without requiring the company to become a full SEC filer again. I think that company requested a name change sometime in September/October of 2022, and FINRA granted that change apparently based on a few unaudited 1-A filings made in late 2021 or early 2022. That company was delinquent on 7 periodic filings when it made its Form 15 filing.

The approach that FINRA is taking toward denying name/symbol changes for some current OTC Market companies just does not make much sense. In fact, it seems borderline idiotic when you really think about it.

If a company that is current with its OTC Market obligations wants to change its name/symbol, and it was delinquent on its SEC obligations prior to filing a Form 15, FINRA will deny that request and cite the missed filings as a reason for the denial. However, if that same company files a 10-12G, FINRA will approve the request. That is just idiotic. If those missed filings are so important and concerning to FINRA in the first scenario, why are those missed filings no longer important to FINRA in the second scenario?

Perhaps a positive way to look at this, and the reason I am probably going to add to my positions: Maybe these types of shells might attract an overall higher quality of RM targets. Companies that are very much interested in having their stock fully reporting and/or interested in reaching higher exchanges.