Cafe Serendipity Holdings Inc. (CAFS)

[pinkpoop]

Rule § 17(b) of the Securities Act of 1933, as amended (the “Securities Act”) which provides the disclosure requires for compensation for promoters. 17(b) provides that “"It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof."

Regulation 17(b) requires full disclosure of the stock promoter’s compensation and services including:

(i) the type of consideration (securities or cash) and if compensation is in securities, the promoter must disclose whether the securities are restricted or unrestricted;

(ii) the amount of securities or cash paid;

(iii) the sources of the compensation (directly and indirectly) and if compensated by a third party shareholder or corporate entity, the shareholder or control persons of the entity must be identified by their individual names;

If a corporate entity is the publisher of the information the consideration, the control persons of the corporate entity must be disclosed.

Section 17(b) also requires that the compensation be disclosed in every press release, as well as other published documents, including emails or faxes. The disclosure must also state the relationship of the payer to the company being promoted. In the case of the SEC reporting company that engages a stock promoter, the issuer should disclose the transaction with the stock promoter in its periodic filings. It should be noted that the ant-fraud provisions of the securities laws apply regardless of whether Section 17(b) is complied with.
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Security Series-Investor Relations 101
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