Rim Semiconductor Company (fka RSMI)

[WTMHouston]

R3:

Thanks for the reply. It answered some questions and raised a couple more. It makes sense that the broker would want verification that unregistered, restricted stock could be legitimately sold. After looking a bit closer at Rule 144, (amazing what happens when one actually looks at the Rule), it appears that the broker is (among other things) required to make reasonable inquiry into certain facts before the broker can execute the sales transaction. Thus, it appears, the need for information from the company.

http://www.sec.gov/divisions/corpfin/forms/144.htm

It also appears that this process does not result in "registration" of the stock. Rather, Rule 144 seems to apply the requirements and restrictions precisely because these are sales of unregistered stock. Thus, Rule 144 appears to impose burdens not only on the seller, but on the broker executing the sale to make sure that the provisions of the rule are satisfied (and thus, the public protected). As a check, the broker's reasonable inquiry responsibility seems contemplate that the company issuing the stock will have to be contacted and that such contact will usually disclose any conditions that would prevent a legal sale of the stock.

From the looks of Rule 144, I'd bet that the letter from NV to your broker contained a lot more than just that you had held the stock for at least a year.

As an aside, it also seems that those folks who loaned the company money and have a conversion option at .40 (or otherwise) would acquire restricted stock subject to Rule 144 and that their holding period would not begin until they exercised their conversion option, actually received the stock, and fully paid for the stock.

Just thinking out loud, I wonder if any or all of those loans have been converted (i.e., the one year holding period has run or is running)? It seems like the last time someone asked that question, the answer was that none had converted, but it may have been many moons ago when that question was last asked.


Troy