Tag: Rule 144

When you acquire restricted securities or hold control securities, you must find an exemption from the SEC’s registration requirements to sell them in a public marketplace. Rule 144 allows public resale of restricted and control securities if a number of conditions are met. Coral Capital Partners takes a look at a variety of the issues surrounding Rule 144 of the Securities Act of 1933, with a particular interest in the variety of methods that are used in an attempt to fraudulently circumvent Rule 144 and remove the restrictive legend from securities. Additional information on Rule 144 may be found at: http://www.sec.gov/investor/pubs/rule144.htm

SEC Action on Wrap Around Agreements

Coral Capital Partners looks at recent SEC enforcement actions involving wrap around agreements, which are being used by companies and stock distributors to illegally convert debt into free trading shares. This has been a common practice since the SEC revised Rule 144 back in early 2006. The complaints provide a very good explanation as to how these wrap around agreements work In the most recent action the SEC sought sanctions against the attorney who wrote the legal opinions allowing for the shares to be issued without restrictive legends via the exemption provided by Rule 144.