ERHC Energy Inc (ERHE)

[Krombacher]

SSC, you're missing a key point about how gag orders and court-imposed restrictions can work. The Harris County restraining order could have legally prevented ERHC from making disclosures that would normally be required under SEC regulations. Under the authority of the Tenth Amendment, state court orders can take precedence over federal disclosure mandates like those from the SEC, particularly when sensitive legal matters are involved.

Judicial gag orders are not rare when confidential negotiations or legal proceedings are at stake, and these orders can supersede regular SEC filing requirements. For example, in SEC v. Romeril, a gag order prevented the defendant from making public statements about their case, even though this information could be relevant to shareholders. This shows that courts can uphold gag orders that limit what companies or individuals can disclose under federal securities law. You can read more about the case here: https://www.law360.com/articles/1279571/sec-v-romeril-explained

Another example of court interference with SEC rules is SEC v. Tullos, where courts acknowledged that state-level court orders can restrict required disclosures, even when in conflict with federal law. More on that case here: https://www.sec.gov/news/digest/1984/dig072084.pdf.

In ERHC's case, the Harris County court order could have similarly restricted public disclosures, including filings to the SEC, specifically relating to Offor’s share transactions or company status. Importantly, gag orders don't have to apply to everyone equally—Offor or ERHC could have been restricted from disclosing information, while others were not.

Finally, regarding Auctus, if it could have converted its shares, it would have done so, selling on the open market like other debt holders, due to its ability to convert at below-market prices. Since it couldn't convert (due to the share count being close to the authorized maximum), it was left with uncollectable debt and had to pursue litigation instead. This supports the narrative that the debt was toxic only to the share price, not the company itself.

Krombacher