NOW LETS SEE IF THIS CLEARS THINGS UP...
According to the SEC complaint, Edward Bronson and E-Lionheart Associates. LLC (also doing business as Fairhills Capital) bought billions of shares of substantially discounted unregistered non-exempt stock from approximately 100 OTC Link (PK) companies and illegally dumped them onto the public market allegedly reaping over $10 million in illegal profits.
OTC Link (PK) clients of Fairhills Capital and related entities that issued free-trading 504 shares (list under development):
So we see here that SNDY sold free trading 504 shares to Fairhills Capital.
So what are free trading 504 shares?
Rule 504 (“Rule 504”) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) provides an exemption from the registration requirements of the federal securities laws which allows issuers to offer and sell up to $1,000,000 of their securities in any 12-month period. Rule 504 is an exemption frequently misunderstood and misused to create illegal free trading shares. As discussed below, fraudsters attempt to make an “end run” around Rule 504 requirements by improperly relying upon state statutes in Delaware, Wyoming, New York and Texas which have been the subject of various SEC enforcement actions. The abuses surrounding Rule 504 are so widespread that the SEC has brought numerous enforcement actions against attorneys rendering legal opinions for the issuance of free trading shares in Rule 504 offerings. In addition, DTC often refuses to accept opinions from attorneys rendering bogus opinions to issue free trading shares in reliance upon Rule 504.
The Rule 504 exemption is available to issuers that are not blank check companies and that do not have to file reports with the SEC under the Securities Exchange Act of 1934. A blank check company is defined under federal securities law as a development stage company that does not have a specific business plan or purpose OR HAS INDICATED THAT ITS BUSINESS PLAN IS TO ENGAGE IN A MERGER OR ACQUISITION WITH AN UNIDENTIFIED COMPANY OR COMPANIES.(Which by the way is exactly what SNDY has told us in both presidents letters this year)
Investors in Rule 504 offerings receive “restricted” securities, meaning the securities cannot be resold without registration or an applicable exemption. Rule 504 provides three circumstances where issuers can issue securities that are not restricted. The reality is that issuers simply do not comply with the requirements of Rule 504 that would enable them to issue unrestricted securities. Investors and issuers that rely upon legal opinions to issue unrestricted shares in offerings made in reliance upon Rule 504 should be aware that violations involving unregistered distributions of securities to the public, including those issued in Rule 504 offerings that do not require proof of intent; meaning that reliance on an opinion rendered by securities counsel is not an effective defense to these violations. Now maybe SNDY seeked counsel and was told they could sell free rule 504 shares and was give incorrect information. If that was done by error on legal advise we cannont hold SNYD accountable and I'm sure they will clear this up as quickly as possible. It does not diminish the company in any way. This rule 504 is very complicated. Now listed below is the correct way to offer rule 504 shares.
Requirements to Issue Unrestricted Securities in Rule 504 Offerings.
Unrestricted securities may be issued in a Rule 504 offering if and only if:
i. The issuer registers the offering in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;
ii. The issuer registers and sells the offering in a state that requires registration and disclosure delivery, and also sells in a state without those requirements so long as the company delivers the disclosure documents required by the state where the company registered the offering to all purchasers including those in the state which has no such requirements; or
iii. The company sells exclusively according to state law exemptions that permit general solicitation and advertising so long as the company sells only to “accredited investors.”
Every single state statute that provides for an accredited investor exemption has a corresponding statute that requires that 504 shares must be “purchased for investment,” , Each such state defines “purchased for investment” as shares held for 12 months prior to resale. Thus, any purchaser in a 504 offering who publicly resells his or her shares within twelve months of the purchase date engages in a distribution and is deemed to be an “underwriter” under SEC rules.
Now it could also be that SNDY did everything right and got caught up in Fairhills Capital illegally dumping shares into the open public market. This is what I think happened. Remember the beginning of this post:
According to the SEC complaint, Edward Bronson and E-Lionheart Associates. LLC (also doing business as Fairhills Capital) bought billions of shares of substantially discounted unregistered non-exempt stock from approximately 100 OTC Link (PK) companies and illegally dumped them onto the public market allegedly reaping over $10 million in illegal profits.
I believe Fairhills Capital is the one in the wrong not SNDY. This company dump stocks in approx. 100 other companies. They all could not of been wrong. And remember this as I pointed out earlier:
The Rule 504 exemption is available to issuers that are not blank check companies and that do not have to file reports with the SEC under the Securities Exchange Act of 1934. A blank check company is defined under federal securities law as a development stage company that does not have a specific business plan or purpose OR HAS INDICATED THAT ITS BUSINESS PLAN IS TO ENGAGE IN A MERGER OR ACQUISITION WITH AN UNIDENTIFIED COMPANY OR COMPANIES.(Which by the way is exactly what SNDY has told us in both presidents letters this year)
That is reassuring to me to learn this. Nothing has changed with the company in what they are doing. They are debt free, they are still moving forward to obtain their CE mark and obviously are seeking a merger or acquisition. That is why we are all invested.
Take care my friends,
Mike
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