Replies to post #59126 on RCC Holdings Corp fka RCCH

[Qone0]

No, the CEO can sell them to an accredited investor, who then sells them to the public through the pinksheet market. Because they are free trading.

The CEO gets the million, the accredited investor makes some easy no risk return, if they are shorting in advance of buying the 504.

Good deal for the CEO
Good deal for the accredited investor
Bad deal for the pinksheet buyer

An accredited investor is defined by federal securities law as:

. a bank, insurance company, registered investment company, business development company, or small business investment company;




It's the only reason to do a form D. There are many companies set up just to run these 504's into the pinksheet market.

[Jim Bishop]

Sure he can sell to the public, as long as they are accredited investors which is pretty simple for most people that would even know what the term means and own a house.

It's also common for an accredited investor to buy free trading 504 stock, or pp stock at a discount, then sell it to friends, relatives etc.

Accredited Investors

Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as "accredited investors."

The federal securities laws define the term accredited investor in Rule 501 of Regulation D as:

a bank, insurance company, registered investment company, business development company, or small business investment company;

an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;

a charitable organization, corporation, or partnership with assets exceeding $5 million;

a director, executive officer, or general partner of the company selling the securities;

a business in which all the equity owners are accredited investors;

a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;

a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or

a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
For more information about the SEC’s registration requirements and common exemptions, read our brochure, Q&A: Small Business & the SEC.


http://www.sec.gov/answers/accred.htm