The NOBO listing Board

[righty]

Posted by: stervc
In reply to: None Date:10/17/2007 1:53:58 AM
Post #of 31829

Reg SHO SEC Update from a CBAY perspective…

I called and spoke to the SEC at (202) 551–5720 within the SEC Amendments to Regulation SHO link below:
http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-15708.pdf

I was told that stocks placed on the Regulation SHO Threshold Securities List are only those stocks that are fully reporting. I was told that those pink sheets stocks that are on the list are there because they are fully reporting.

I was told that in order for a pink sheets stock to be eligible for being on the Threshold Securities List, they must first become fully reporting and needs to apply for registration of their securities with the SEC. To do this, a company must simply fill out a Form 10-SB Registration Statement as indicated in the link below:
http://www.sec.gov/about/forms/form10-sb.pdf
(The complete submission is actually considered a package.)

I asked a series of other questions to make sure I was interpreting what I was told correctly. In short, if CBAY was to simply fill out a Form 10-SB Registration Statement and reports whatever number it submits for their Outstanding Shares (OS), the SEC will honor what they will submit. That would be the number used as the baseline for determining if there are any existing Failure to Delivers (FTDs). The system would then acknowledge such to be the case.

From calculating the “Estimated average burden hours per response” (133.0 hours) that would be required for completion from the SEC that is listed on the Form 10-SB Registration Statement, it would equate to 16.625 days given an 8 hour per day work schedule. Now taking under consideration that such possibly could not be the only task that the SEC reviewer will have to do, then you must increase that 16+ days proportionately to between 20 to 30 days. This could be where the delay exists considering if he submitted a Form 10-SB Registration Statement. Other documents are submitted with the Form 10-SB Registration Statement of which we do not ever see which is why the SEC has allotted 133 hours to complete. The form/package is not placed into the Edgar database from the SEC until after it is stamped approved/completed by the SEC.

If we see a Form 10-SB Registration Statement filed by CBAY in the near future, then it would mean that the SEC has accepted what they reported for being their official Outstanding Shares (OS) amount and the rest of the market and regulatory authorities will be required to follow suit with that number. To add, then CBAY would be “officially” placed on the Threshold Securities List. Then that is when we would have official confirmation of some Failure to Delivers (FTDs)/naked short shares in need of being covered within CBAY.

Then CBAY would fall under having the rule below enforced to our advantage:
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http://www.nasdaqtrader.com/trader/news/2007/regulatoryalerts/ra2007-086.stm

The Securities and Exchange Commission (SEC) has amended Regulation SHO to eliminate the “grandfather provision” and will take effect on October 15, 2007.

SEC Regulation SHO sets out rules governing short sales, including the mandatory close-out requirement that applies to securities in which a substantial amount of fails to deliver have occurred (“threshold securities”). Clearing agency participants and broker-dealers for which they clear positions (“participants”) must take immediate action to close out a fail to deliver position in a Threshold Security that has lasted for 13 consecutive settlement days by purchasing securities of like kind and quantity (“close-out requirement”).

The amendment eliminates one of the exceptions to the Close-out Requirement for fails to deliver established prior to a security becoming a Threshold Security (“grandfather provision”). The amendment requires Participants to close out any previously-grandfathered fails to deliver in a security that is on the Threshold Security List on October 15th. The close-out must occur within 35 consecutive settlement days of October 15th. If a security becomes a Threshold Security after October 15th, all fails to deliver must be closed out within 13 consecutive settlement days.

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So, what we look for to confirm an OTCBB movement is either a Form 10-SB Registration Statement filed or CBAY showing up on the Threshold Security List to confirm that it is officially fully reporting which would mean that the Form 10-SB Registration Statement is in the system, but pending a soon to be released for confirmation. The new CEO has been working too urgently to get things done to where I don’t think he has stopped. He is at a point now where he is waiting on a response back from the SEC. This is why I think things appear to be delayed.

v/r
Sterling