Koil Energy Solutions Inc. (KLNG)

[JoeSmith]

Quiet Period
There has been some discussion about quiet periods and whether or not they really exist, I decided to research the question for my own satisfaction, here’s what I found.
This is not intended as investment advice, this is intended for discussion purposes only.
Links are included for further study.

“The federal securities laws do not define the term "quiet period," which is also referred to as the "waiting period." However, historically, a quiet period extended from the time a company files a registration statement with the SEC until SEC staff declared the registration statement "effective." During that period, the federal securities laws limited what information a company and related parties can release to the public.”
http://www.sec.gov/answers/quiet.htm

The Pre-Effective (“Waiting”) Period
“The Waiting Period typically runs from the filing of the S-1 to the date it has been declared effective by the SEC. On average, this can be one to three months before the IPO.
During this time, it is important to continue to execute your business communications strategy, with the direction of legal counsel.”

The Post-Registration (“Quiet”) Period
The Quiet Period runs from the effective date of the S-1 to as much as 30 days after the IPO.”
http://www.digitalharboronline.com/columns/archive51.html


“The SEC's new rules on public offerings are a mess. The agency's preoccupation with "gun jumping" is continuing to stifle public information on new stock offerings. The new rules opened up some information flow in the pre-registration period, but only for our largest companies -- those with information already in the market, and did not fix the quiet period. The quiet period is after registration and before the effective date, the waiting period. In the quiet period only very privileged investors (those at road shows) get any information on a new offering. It is a travesty. The SEC's efforts to control information in the Internet age should be the subject of ridicule.”
http://lawprofessors.typepad.com/business_law/2006/05/the_quiet_perio.html


“In business finance, a waiting period is the time in which a company making an IPO must be silent about it, so as not to inflate the value of the stock artificially. It is also called the quiet period or cooling-off period.”
http://en.wikipedia.org/wiki/Waiting_period

So the SEC doesn’t define a quiet period but they do require it!
Apparently it is required for an IPO, and a S-1 but how about a private placement?
Here is my answer to that and a most excellent article about quiet periods.

“In its most common securities law usage, in connection with a company’s initial public offering or IPO, the "quiet period" refers to the period in which a company is "in registration" - generally meaning that the company has affirmatively decided to undertake a public offering and sale of its securities. Because the company is trying to sell its securities to the public during this time period, the law requires that the company be careful ("quiet") about the kinds and timing of publicity it undertakes during the period. These limitations are based on the framework of the Securities Act of 1933, which prevents a company from trying to generate interest in its stock until it provides specified disclosure about the company and the offering in a document known as a "statutory prospectus."
Note that although the "quiet period" applies to all public offerings, the rules restricting communications outside the prospectus are strictest with respect to companies doing an IPO.”

Other questions from the same article
How long does a quiet period last?
During a quiet period, must all PR come to a stop?
What does "hyping the market" refer to?
Does the law require a quiet period before every quarterly earnings announcement from public companies?

” This is a dangerous area to attempt self-help, in large part because of the very broad (and non-obvious) definitions of terms such as "offer," "sale," and "prospectus."
http://www.mobilitypr.com/blog/tag/quiet-period/



“During the quiet period between a company's filing of a registration statement and declaration by the Commission of the statement's effectiveness, Commission regulations bar circulation of any information relating to the securities offering other than a preliminary prospectus.”

So how big of a deal is this if IR, the CEO or the underwriter say too much (called ‘gun-jumping’)?
You all remember DRose pulled the references to Deep Down from their website, right?

“In some cases, underwriters responsible for "gun jumping" can be forced to withdraw from an offering (having detrimental effects both on the underwriter and, potentially, the offering itself). In other cases, the SEC may require detailed disclosures about the publicity and risk factors associated with the publicity, including that the company conducting the offering might be required to repurchase the shares being sold in the offering because of the potential securities law violation.”
http://www.mobilitypr.com/blog/tag/quiet-period/

Gun-Jumping: Restrictions on Publicity in connection with a Public Offering
http://www.drinkerbiddle.com/publications/Detail.aspx?pub=254

A couple of examples:

“Bloomberg News report: "Salesforce.com Inc. said it halted its $85 million initial public offering last month because Chief Executive Officer Marc Benioff may have violated securities laws by speaking to a newspaper. Benioff's interview with the New York Times, published May 9, may have disclosed information that wasn't in the company's Securities and Exchange Commission filing, Salesforce.com said in a SEC filing today."
http://www.nysun.com/editorials/end-the-quiet-period/78463/

“The quiet period preceding Google Inc.'s anxiously awaited IPO last summer became noticeably noisier when company founders Sergey Brin and Larry Page gave an interview published in Playboy magazine, a potential violation of the SEC rules. The SEC resolved the problem by ordering Google to amend its prospectus by adding the interview to it.

Rather than slapping the search engine company with sanctions, the SEC may have figured that given the huge publicity surrounding the IPO after the registration statement was filed in April, so much already had been written about Google that the Playboy interview didn't perceptibly change things.”
http://www.investing-news.com/artman/publish/article_44.shtml

This is a great quote.
“The quiet period forces companies to live in a state of lawyerly paranoia. "Less is more in this case. To say nothing is better," said David Pasquale of the Ruth Group, who handled investor relations for NetGear's (nasdaq: NTGR - news - people ) IPO last July http://www.forbes.com/2004/08/06/cz_dw_0806google.html


My conclusion on the “quiet period” question is this,
yes it does exist,
yes it does apply to DPDW,
yes we as shareholders could pay in a big way if the company ran afoul of the rules.
Continue the silence, imo