Replies to post #114112 on DD Support Board and Research Team

[janice shell]

To the outside observer, the SEC's methods for removing delinquent filers from the marketplace seem almost entirely random. Sometimes--I think nowadays, most of the time--they send delinquency letters; other times they don't. In a sense, it doesn't matter; the companies are aware of their obligations.

If HJOE had received the letter and then had, as a result, called the SEC to discuss the matter, that might have bought them time. We'll never know if they'd have responded. For almost two years now, they've sought to use their hiring of crooked auditor Terry Johnson as an excuse for not filing. But Johnson had many other clients, and nearly all of them simply hired a new auditor and moved on.

Had HJOE brought up its litigation with KBM, the SEC would simply have said: "We don't care".

I remember a case from about four years ago involving a woman who was CEO of two penny companies. One was an SEC registrant. She got a delinquency letter in January, and either didn't respond, or had a single conversation with the SEC. No filings were submitted. In May, the SEC suspended and filed an OIP to revoke registration. The CEO initially tried to object, but to no avail.

Once upon a time, the SEC was willing to bargain, allowing delinquent companies that had been suspended six months to a year to catch up with their filings. But that's changed; evidently they found the companies just about never actually complied. Nowadays, they suggest that the issuer simply accept revocation and then, if it's interested in becoming a public company again, begin the registration process by filing a Form 10 when it feels capable of dealing with the SEC's requirements.

Since that became SEC policy, I've seen several companies accept revocation while promising shareholders that they'd file a new Form 10 as soon as possible. None of them actually did so. I wouldn't be surprised to see HJOE take that route. It would save them face with their shareholders, to some extent, and would also save them the trouble of publishing financials reports, as they'd be a private company.