DD Support Board and Research Team

[janice shell]

Because shell peddlers convince them that reverse mergers are quick and easy. What they really are is dangerous. Those shells can have many skeletons in the closet. And if they've ever officially been a shell company--even a long time ago--Rule 144 won't be available to the new entity until it files an S-1 and waits a year.

I think many people wanting to take their companies public simply don't know this. And if they don't hire a good securities attorney, they may not find out till it's too late. We saw the other day that the SEC shut down BIZM for precisely that. The company merged into a shell that was still a shell on 28 February. BIZM thought that by simply declaring that THEY were not a shell, they could begin issuing stock, and that the people who bought it could get legends lifted to make it free trading.

They were sadly wrong about that. BIZM will reopen on the Grey Market, from which it will never escape.

As you suggest, sometimes the SEC deems S-1s effective without taking a hard enough look. BUT if the company subsequently gets up to no good, the agency will at least know what it's been doing, because it will have to make regular filings.