Replies to post #3930 on New Colombia Resources Inc fka NEWC

[Mr. Zen]

Well let me explain this another way.

An accredited (high net worth) investor takes out a private placement (144 shares) and must hold them for 6 months before he can sell them or transfer them into free trading shares in his account and hold them longer as free trading shares. That is where the trade-able part of the float comes from, when we as retail investors buy shares we are buying from the float and none of the money goes back to the company. Retail investors do nothing for the company except raise or lower the value of the shares.
The reason why accredited investors take shares on restriction (144 shares) is that they could not get a large quantity at a fixed price otherwise. If the company has a private placement memorandum for lets say (example only) 5 million shares at .04 then an accredited investor could very easily buy 1 million at .04 and pay $40,000 to the company which the company could use for ongoing expenses.
As a retail investor you could not buy 1 million shares at .04 the float is too low and the price would move up too quickly.