Anybody here well versed in toxic finance? How can a financier receive more than 5% of the OS of a stock and then sell it into the marketplace without filing a form 13?
You mean a Schedule 13. It depends on whether they've really "received" the stock in question. Most of the time, they hold promissory notes. It's hard to calculate how much stock will be issued in connection with the conversion of the note, because the conversion rate is "market-adjustable", as the SEC says. And often there's an equity-blocker clause in their financing agreements that prevents them from holding more than 4.99 percent of the o/s at any one time. That's actually to their advantage, because it means they won't become affiliates, and so don't need to file those Schedule 13s, and aren't limited to selling more than 1 percent of the o/s every 90 days.
But the difference between 5 percent and 10 percent is a bit of a gray area. In most cases, you have to hold 10 percent or more to be considered an affiliate.
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