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Replies to post #41298 on SiNtx Technologies Inc (SINT)
The SEC's order finds that AAI violated Rule 105 of Regulation M under the Securities Exchange Act of 1934 ("Rule 105"), which prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing the same security in the offering, absent an exception. The rule applies regardless of the trader's intent and is designed to prevent potentially manipulative short selling before the pricing of covered offerings. The SEC's order finds that AAI violated Rule 105 by participating in three follow-on offerings occurring in December 2019, June 2020, and April 2021, respectively, after it had engaged in short sales of the same securities during the restricted period, and that AAI's violations stemmed from an incorrect understanding of how to comply with an exception to Rule 105.
Short-swing trading is defined as the purchase and sale (or vice versa) of a company’s stock within a six-month period by persons deemed to be ‘insiders,’ who are presumed to have access to confidential corporate information not generally available to other participants in the public mar-ket.” Morales v. Quintel Ent., Inc., 249 F.3d 115, 121 (2d Cir. 2001). An insider is “a person who is directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security.” 15 U.S.C. § 78p(a)(1). The SEC’s regulations do not require that a single person own more than 10%. Instead, a “per-son” will be“deemed a beneficial owner pursuant to section 13(d) of the [Exchange] Act and the rules thereunder.” 17 C.F.R. § 240.16a-1(a)(1); Morales, 249 F.3d at 122. And § 13(d) states that a beneficial owner can be a “group.” 15 U.S.C. § 78m(d)(3) (“When two or more persons act as a . . . group for the purpose of acquiring, holding, or disposing of securities of an issuer, such . . . group shall be deemed a ‘person’ for the purposes of this subsection.”). Consistent with § 13(d), Rule 13d-5(b) states that a group is formed when “two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer.” 17 C.F.R. § 240.13d-5(b)(1); see alsoRoth v. Jennings, 489 F.3d 499, 507–08 (2d Cir. 2007). That agreement “may be formal or informal and may be proved by direct or circum-stantial evidence.” Morales, 249 F.3d at 124. Finally, to be held liable under § 16(b), a trader must be an insider at the time of both purchase and sale. 15 U.S.C. § 78p(b). And both trades must take place within a six-month window. Id
The alleged target was publicly traded Catalyst subsidiary Callidus Capital Corp., claims the lawsuit, which dubs the Anson, West Face and several associated and unrelated individuals as “Wolfpack Conspirators.”
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