Issuers must satisfy the criteria set by DTCC to be settled through DTC. All companies must satisfy this criteria in order to be DTC eligible, including both Securities and Exchange Commission (“SEC”) reporting and non-reporting issuers. DTC eligibility has become a growing concern in going public transactions.
Issuers must satisfy the criteria set by DTCC to be settled through DTC. All companies must satisfy this criteria in order to be DTC eligible, including both Securities and Exchange Commission (“SEC”) reporting and non-reporting issuers. DTC eligibility has become a growing concern in going public transactions.
The Depository Trust and Clearing Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”) was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. DTC Eligibility has become an often unexpected burden for companies in going public transactions.
The Depository Trust and Clearing Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”) was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. DTC Eligibility has become an often unexpected burden for companies in going public transactions.
MasterSnacks Cryptocurrency: Legal Issues in Cryptocurrency and BlockchainCitrin Cooperman
If your business is involved in cryptocurrency or Blockchain, it is in your best interest to understand the legal implications that may come along with transacting in digital assets. In this session, Jeff Neuburger, partner at Proskauer Rose and head of its Blockchain Practice, to covered the following topics and more:
- Categorization of cryptocurrencies as securities and resulting implications
- Types of licenses necessary to be involved in a cryptocurrency business
- Non-fungible tokens and associated legal issues
- Smart contracts
Capgemini, Infosys Finacle, the Voltron team (BNP Paribas, HSBC, SEB, Standard Chartered) as well as TradeIX and the Marco Polo Network (Commerzbank, Dürr Aktiengesellschaft, LBBW) all present at Corda for Corporates sessions at Sibos 2019.
In late 2017, we hosted a webinar for financial legislation experts to answer questions about ICOs and their legal status in various jurisdictions. These slides are a preview of 18 insights and answers to the key questions every company
considering an ICO needs to ask.
FirstPartner's 2016 Blockchain Ecosystem Market Map helps to decrypt the blockchain landscape with a visual overview of the emerging ecosystem, players, technologies and trends. It clearly summarises three main areas of focus emerging around the core blockchain or distributed ledger protocols:
1) Bitcoin and Cryptocurrencies: Providing an alternative to centrally managed "fiat" currencies, this sector includes Bitcoin exchanges, Bitcoin wallets, miners and cryptocurrency payment processors. The map illustrates how these companies interact and features some leading players including Coinbase, Circle, Kraken and 21 Inc.
2) The Financial Services Blockchain: This has been the main area of focus over the last 12 months as attention shifts from Bitcoin to Financial Services applications. An increasing number of players are focussing on commercialising blockchain technologies for banks, securities, derivatives and asset markets and institutional investors - and are attracting VC funding to do so. Ripple and Ethereum are leading candidate protocols for payment processing and smart contracts and players including Ripple, Chain and Digital Asset Holdings are gaining traction with Financial Institutions. The Map highlights leading technology companies and some of the banks, card schemes and processors who are investing in or evaluating distributed ledger technologies.
3) Other Use Cases: The distributed ledger concept and its ability to support transparent and tamper-proof asset registration, proof of ownership and asset transfer transactions makes it potentially applicable to multiple non financial use cases. The Map highlights a number of candidate use cases including publishing, legal, distributed data storage, document management and IoT. Some of the pioneering initiatives and companies exploring these applications are included.
Crucially the Map also provides a clear pictorial explanation and summary of the leading protocols at the heart of the ecosystem and concepts including coloured coins and smart contracts that supplement them to make a number of the proposed services possible.
A printable version of the map can be downloaded from www.firstpartner.net.
Issuers must satisfy the criteria set by DTCC to be settled through DTC. All companies must satisfy this criteria in order to be DTC eligible, including both Securities and Exchange Commission (“SEC”) reporting and non-reporting issuers. DTC eligibility has become a growing concern in going public transactions.
The Depository Trust and Clearing Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”) was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. DTC Eligibility has become an often unexpected burden for companies in going public transactions.
The Depository Trust and Clearing Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”) was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. DTC Eligibility has become an often unexpected burden for companies in going public transactions.
MasterSnacks Cryptocurrency: Legal Issues in Cryptocurrency and BlockchainCitrin Cooperman
If your business is involved in cryptocurrency or Blockchain, it is in your best interest to understand the legal implications that may come along with transacting in digital assets. In this session, Jeff Neuburger, partner at Proskauer Rose and head of its Blockchain Practice, to covered the following topics and more:
- Categorization of cryptocurrencies as securities and resulting implications
- Types of licenses necessary to be involved in a cryptocurrency business
- Non-fungible tokens and associated legal issues
- Smart contracts
Capgemini, Infosys Finacle, the Voltron team (BNP Paribas, HSBC, SEB, Standard Chartered) as well as TradeIX and the Marco Polo Network (Commerzbank, Dürr Aktiengesellschaft, LBBW) all present at Corda for Corporates sessions at Sibos 2019.
In late 2017, we hosted a webinar for financial legislation experts to answer questions about ICOs and their legal status in various jurisdictions. These slides are a preview of 18 insights and answers to the key questions every company
considering an ICO needs to ask.
FirstPartner's 2016 Blockchain Ecosystem Market Map helps to decrypt the blockchain landscape with a visual overview of the emerging ecosystem, players, technologies and trends. It clearly summarises three main areas of focus emerging around the core blockchain or distributed ledger protocols:
1) Bitcoin and Cryptocurrencies: Providing an alternative to centrally managed "fiat" currencies, this sector includes Bitcoin exchanges, Bitcoin wallets, miners and cryptocurrency payment processors. The map illustrates how these companies interact and features some leading players including Coinbase, Circle, Kraken and 21 Inc.
2) The Financial Services Blockchain: This has been the main area of focus over the last 12 months as attention shifts from Bitcoin to Financial Services applications. An increasing number of players are focussing on commercialising blockchain technologies for banks, securities, derivatives and asset markets and institutional investors - and are attracting VC funding to do so. Ripple and Ethereum are leading candidate protocols for payment processing and smart contracts and players including Ripple, Chain and Digital Asset Holdings are gaining traction with Financial Institutions. The Map highlights leading technology companies and some of the banks, card schemes and processors who are investing in or evaluating distributed ledger technologies.
3) Other Use Cases: The distributed ledger concept and its ability to support transparent and tamper-proof asset registration, proof of ownership and asset transfer transactions makes it potentially applicable to multiple non financial use cases. The Map highlights a number of candidate use cases including publishing, legal, distributed data storage, document management and IoT. Some of the pioneering initiatives and companies exploring these applications are included.
Crucially the Map also provides a clear pictorial explanation and summary of the leading protocols at the heart of the ecosystem and concepts including coloured coins and smart contracts that supplement them to make a number of the proposed services possible.
A printable version of the map can be downloaded from www.firstpartner.net.
BlockToken - How to Launch an ICO or STOGenson Glier
BlockToken describes to the Australian Crypto community how to launch a token offering within today's current climate. This presentation discusses the various methods used in the marketing and distribution of ICO and STO campaigns.
Deatherage presentation blockchain, cryptocurrency, smart contracts and the l...Scott Deatherage
Blockchain, cryptocurrency, smart contracts and the law provides a general outline of blockchain technology, cryptocurrency, and smart contracts as well as a discussion of legal issues related to these topics.
Breakout Session: Head for the Exit: How to Structure, Negotiate & Close the ...Healthegy
Presentation by McDermott Will & Emery at Medtech Conference 2016.
Participant:
Kristian Werling, Partner – McDermott Will & Emery, LLP
Powered by:
Healthegy
For more healthcare innovation
Visit us at Healthegy.com
Access models for the buy side | CCP Central Counterparty | Eurex Clearing Eurex
With the balance in supply and demand in traditional financial market structure deteriorating, the buy side community is facing a variety of challenges. Increasing costs for the banks driven by new regulatory requirements translate into higher fees, wider spreads or even service reductions for the buy side not only for derivatives, but also for securities financing transactions. Additionally the concentration of banks offering client clearing creates challenges with regards to counterparty risk concerns and porting in case of a Clearing Member default.
► Visit our website: http://www.eurexclearing.com
► Twitter: http://twitter.com/eurexgroup
► LinkedIn: http://www.linkedin.com/company/eurex
BlockToken - How to Launch an ICO or STOGenson Glier
BlockToken describes to the Australian Crypto community how to launch a token offering within today's current climate. This presentation discusses the various methods used in the marketing and distribution of ICO and STO campaigns.
Deatherage presentation blockchain, cryptocurrency, smart contracts and the l...Scott Deatherage
Blockchain, cryptocurrency, smart contracts and the law provides a general outline of blockchain technology, cryptocurrency, and smart contracts as well as a discussion of legal issues related to these topics.
Breakout Session: Head for the Exit: How to Structure, Negotiate & Close the ...Healthegy
Presentation by McDermott Will & Emery at Medtech Conference 2016.
Participant:
Kristian Werling, Partner – McDermott Will & Emery, LLP
Powered by:
Healthegy
For more healthcare innovation
Visit us at Healthegy.com
Access models for the buy side | CCP Central Counterparty | Eurex Clearing Eurex
With the balance in supply and demand in traditional financial market structure deteriorating, the buy side community is facing a variety of challenges. Increasing costs for the banks driven by new regulatory requirements translate into higher fees, wider spreads or even service reductions for the buy side not only for derivatives, but also for securities financing transactions. Additionally the concentration of banks offering client clearing creates challenges with regards to counterparty risk concerns and porting in case of a Clearing Member default.
► Visit our website: http://www.eurexclearing.com
► Twitter: http://twitter.com/eurexgroup
► LinkedIn: http://www.linkedin.com/company/eurex
Technology Initial Public Offerings - Legal and Practical Considerations for ...Now Dentons
Technology IPOs on the TSX
We've translated our IPO guide into Slideshare, to make it easier to review the slides and incorporate them into your own decks. This deck covers:
- advantages and disadvantages of going public
- IPO readiness - step to prepare in the 12 months before an IPO
- which market: TSX or NASDAQ?
- IPO process
- special issues for U.S. companies going public on the TSX
Clarke Global - Digital Securities OverviewKadeemClarke3
Comprehensive deck overviewing asset tokenization, securities regulation, blockchain, and future opportunities with digital securities. Created by Kadeem Clarke, founder of Clarke Global and former blockchain VC investor
8 Decimal Capital Security Token Industry OverviewKadeemClarke3
8 Decimal Capital, a leading fund in the blockchain venture capital space, has begun focusing on security tokens (STs) and security token offerings (STOs). We believe this new technology will revolutionize the financial industry and how assets are managed and traded.
US Senate Financial Reform Managers Amendment Summary, March 23, 2010catelong
The law firm Davis Polk created this Managers Amendment Summary to the March Dodd bill
It details changes in the wording of the proposed law from an earlier draft
Most private companies are unable to locate an underwriter prior to going public. A direct public offering (“Direct Public Offering”) provides a viable solution to this dilemma. A Direct Public Offering allows a company to sell its shares directly to investors without the use of an underwriter. With a Direct Public Offering, the company files a registration statement with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”).
Typically, in going public transaction Form S-1 (”S-1”) registration statements are used.
A company can use a Form S-1 registration statement to register securities on its own behalf in an initial public offering, register securities on behalf of its selling security holders in a secondary offering or register securities on its own behalf as well as for selling security holders.
SEC registration statements are the most efficient and reliable method for a private company to...obtain public company status. Using a registration statement, companies provide transparency to investors and avoid the risks of reverse merger transactions. This blog post addresses some of the most common questions we are asked about SEC registration statements and and the going pubic process.
Changing Face of Chapter 11 January 2014Ted Stenger
Finance and Legal experts on the changes in Chapter 11 including the end of Mega case, turnarounds in Chapter 11 are dead and the rush to get in and out of Chapter 11
THE NUTS & BOLTS OF BANKRUPTCY LAW 2022: The Nuts & Bolts of a Lift Stay MotionFinancial Poise
Most businesses of any meaningful size in the United States have a line of credit or term loan with a bank or other lender that is secured by a lien on substantially all of the assets of that business. One of the strongest tools in a secured lender’s toolbox is the ability to ask the bankruptcy court to lift or modify the automatic stay to allow the secured lender to get to its collateral. Needless to say, the debtor will often oppose the lender’s request. This is just one of many aspects of litigation surrounding the automatic stay. The bankruptcy code provides for specific circumstances under which relief from the stay is permitted, and litigation over whether the requisite conditions exist is common. This webinar discusses the scope of the automatic stay and the procedure and grounds for seeking relief.
Part of the webinar series:
THE NUTS & BOLTS OF BANKRUPTCY LAW 2022
See more at https://www.financialpoise.com/webinars/
Dodd-Frank Act: Corporate Governance Checklist for Commercial End-UsersLexisNexis
This checklist is a corporate governance tool for certain nonfinancial entities that wish to elect the commercial end-user exception to the clearing requirements under Title VII of the Dodd-Frank Act. Checklist courtesy of Lexis Practice Advisor, Securities & Capital Markets.
Shieldpay - Changing Properties (the future of real estate transactions)Peter Janes
Shieldpay - Changing Properties
Shieldpay has published our White Paper on Third Party Managed Accounts (TPMAs). This is an overview of the current regulatory position of using TPMAs such as Shieldpay for property transactions.
WG Consulting held an early morning breakfast seminar at the Houston Junior League to discuss the Dodd-Frank Compliance landscape as it currently stands as is expected to shape out--and how that effects energy businesses of all sizes today.
How crypto tokens qualify under swiss law a comprehensive frameworkRonald Kogens
HOW CRYPTO-TOKENS QUALIFY UNDER SWISS LAW: A COMPREHENSIVE FRAMEWORK
Blockchain technology has become a reality as part of the digitalisationof the economy. Every day, there is proof of disruptive transformations of long-standing mechanisms into new ecosystems on the blockchain. While existing market participants are in many cases overwhelmed by the new normal, the new players operate with the greatest creativity and efficiency.
There are no limits to the new ecosystems. The blockchainoffers countless possibilities of disintermediation, of participating in and transferring assets, of recordkeeping and of creating e-commerce beyond the boundaries of national currencies. And we are only at the beginning of this transformation.
Tokens created on the blockchaincan be used to represent a wide variety of instruments and processes. For example, a new means of payment can be created or indirect rights to shares, loans or access rights can be digitised. The legal qualification of the tokens is a major challenge due to the aforementioned diversity.
The important (and not so new) principle for finding your way around in this new digital environment is: “first analyse the context, then undertake the legal classification under the rules of the existing laws.” The hybrid nature of many tokens will defy the clear categories within which the law is typically structured and any attempt to commence by looking at traditional legal instruments and impose them on the tokens of the new ecosystems will therefore fail. Instead each token has to be taken apart and its components must be qualified individually.
In order to bring the tokens of the new ecosystems closer to the public, FRORIEP's Disruptive Technologies Practice Group has developed a Token Framework. In doing so, a distinction is made between cryptocurrencies, tokens giving title to monetary claims and tokens for other purposes. Tokens giving title to monetary claims are further categorisedas being either debt, equity or participation rights tokens. These subcategories stem from the financial treatment of the obligations on the balance sheet or (in the case of participation rights tokens) on the profit & loss statement of the issuer.
The following diagrams show the possible functions of tokens on the blockchainand the FRORIEP Token Framework.
Real-World Assets STO + Institutional DeFi Integration
Institutional DeFi refers to tokenize real-world assets with regulatory compliance and institutional-level controls for consumer protection. One of the main benefits of Institutional DeFi is the potential to transform the traditional financial system by making it more transparent, efficient, and accessible while maintaining the necessary safeguards for investor protection and financial stability. This can lead to new products, cost reduction, and faster settlement times for financial institutions.
STO (Security Token Offering) of real-world assets involves the issuance of security tokens that represent ownership of a real-world asset, such as a share of stock, bond, or real estate property. The tokenization and securitization process is carried out by an issuer who follows the necessary regulatory requirements. These security tokens can be listed, distributed, and traded on Institutional DeFi applications to automate various processes such as trading, settlement, and custody. This allows for greater security, efficiency, transparency, and liquidity.
#defi #fundraising #sto #tokenization #nft #securitization #security
Similar to DTC Eligibility & Going Public - Ask Securities Lawyer 101 (20)
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A Direct Public Offering (“DPO”) like an Initial Public Offering (“IPO”) eliminates many of the risks and expenses associated with reverse mergers into public shell companies. Issuers going public using a DPO also have fewer hurdles to obtaining electronic trading from Depository Trust Company (“DTC”).
Tier 1 of Regulation A+ provides an exemption for
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month period while Tier 2 provides an exemption
for securities offerings of up to $50 million in a 12-
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securities in its offering can elect to proceed under
either Tier 1 or Tier 2.
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Investor relations or stock promotion involves the dissemination of information about a public company to increase its stock price and/or trading volume.
The person who publishes this information is sometimes referred to as a “Stock Promoter”, “Investor Relations Provider” or “Stock Tout”.
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Companies become subject to the SEC’s periodic reporting requirements a number of ways including by filing a registration under the Securities Act of 1933, as amended or pursuant to the Securities Exchange Act of 1934. The SEC periodic reporting rules require that publicly traded companies disclose a wealth of information to the public. Periodic reporting also requires that these reports… Read More
The Securities Act of 1933, as amended (the “Securities Act”) requires the sale of a security to be registered under the Securities Act, unless the security or transaction qualifies for an exemption from registration. Rule 144 of the Securities Act provides a safe harbor that permits holders of “restricted securities” to resell their securities in the public market if specific condition
A Private Placement Memorandum (“PPM”) is also referred to as a confidential offering circular or memorandum. PPM’s are used by private companies in going public transactions and by existing public companies to raise capital by selling either debt or equity in an exempt offering. Most exempt offerings are private placements.
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DTC Eligibility & Going Public - Ask Securities Lawyer 101
1. DTCC does not always dis-
close the reason for a chill
or lock, not does it suggest
how long it will be in effect.
Generally, two people are
needed to help an issuer
remove a chill. These peo-
ple are a DTCC Market Par-
ticipant and a securities
lawyer acceptable to DTCC.
In This Issue
Depository Trust & Clearing
Company Q&A
Proposals for DTCC Chills
and Global Locks Withdrawn
DTCC Conspiracy Theories
on the Rise
DTCC Chill Removal Special-
ists
DTCC Identifies Cyber-
Attacks As Most Significant
Risk to Financial Markets
Depository Trust & Clearing Company Q&A
Q: What is the Depository Trust & Clearing Company (“DTCC”)?
A: It is the only stock depository in the United States.
Q: How do public companies obtain DTCC eligibility?
A: Issuers must satisfy specific criteria established by DTCC to receive initial DTCC eligi-
bility after their going public transaction is complete, and to remain DTCC eligible. Even
after the securities become DTCC eligible, DTCC may limit or terminate its services.
Q: Why is the DTCC so important to public companies and companies going public?
A: When DTCC provides services as the depository for an issuer’s securities, its securities
can trade electronically. Without DTCC eligibility, it is almost impossible for an issuer to
establish an active market in its stock. This is especially important for private companies
going public who are seeking to raise capital.
Q: How will a DTCC Chill or Global Lock impact trading of my company’s stock?
A: DTCC Chill restricts DTCC’s services, including limiting a DTCC participant’s ability to
deposit or withdraw chilled securities. A DTCC Chill may last a few days or for an extend-
ed period of time depending upon the problems that caused the chill and the issuer’s
willingness to address them. A “Global Lock” is a termination of all of DTCC’s services to
an issuer. Like a DTCC Chill, a Global Lock may last a few days or for an extended period
of time, depending on the reason for the action. If the fundamental issue cannot be cor-
rected, then the security will be removed from DTCC’s depository, and transactions in the
security subject to the Global Lock will no longer be eligible for clearing at any registered
clearing agency. When this happens, clearance and settlement of open market trades is
significantly delayed because trades can only occur upon physical delivery of stock certifi-
cates between the buyer and seller’s brokerage firms. In such circumstances it could take
weeks for trades to clear and settle.
Published by Hamilton & Associates Law Group, P.A. November 2014
2. Proposals for DTCC Chills and Global Locks
Withdrawn
On December 18, 2013, the DTCC submitted a proposed rule change to the Securities and
Exchange Commission (“SEC”), which regulates its activities. Its aim was to “specify pro-
cedures available to issuers of securities deposited at DTC for book entry services when
DTC imposes or intends to impose restrictions on the further deposit and/or book entry
transfer of those securities…”
In plain English, the new rule would provide that in most cases, issuers would receive
advance notice of planned DTCC chills or global locks, and would be able to protest the
imposition of the chill or lock proposed. Emergency actions would still be possible, but
issuers could protest them after the fact. It also set a limit for the duration of DTC chills
and locks: six months in the case of issuers who are SEC registrants, and one year in the
case of non-registrants.
DTCC had explained its proposals earlier, in a White Paper released in September 2013.
Following the submission of the rule change to the SEC, there was a comment peri-
od. DTCC responded with two amendments to the proposals. More comments were
offered through the summer of 2014. We at Hamilton & Associates submitted two com-
ments to the SEC, and blogged about the proposed rule here, here and here. We ap-
plauded the depository’s efforts to create a standardized appeal process for issuers who
believed DTCC actions were unwarranted. We further suggested that DTCC publish a
central list of chilled or locked stocks. Issuers do not always tell their investors about
these events, an omission that can result in confusion about the company’s status with
the depository.
Months passed, and the proposed rule had still not become effective. Then on August
18, 2014, at the height of the summer vacation season and three days before the end of
the deadline for Commission action, the SEC announced that DTCC had withdrawn the
proposed rule and its amendments. No further announcement was made, and the with-
drawal escaped general notice.
DTCC has not commented on the withdrawal, and we are left to wonder what the rea-
sons for it may have been. In the SEC’s announcement, there was no suggestion that the
old proposal might be substituted with a new one, so it seems issuers and investors will
once again be left with inadequate information about deposit chills and global locks, and
issuers may once again find these actions difficult to protest.
DTCC Chill
Removal
Specialists
Recently, quite a few websites have
popped up claiming their operators
can remove DTCC Chills and Global
Locks. The irony is that most of these
service providers participate in the
activities that can cause the loss of
DTCC’s services in the first place.
Some of these quick fixes are offered
by the same lawyers who render
flawed tradability opinions and the
same transfer agents who knowingly
or blindly accept the opinions that
cause DTCC difficulties in the first
place.
Similarly, stock promoters with pump
and dump websites now tout that
they can remove DTCC Chills despite
the fact that their own dubious ser-
vices have resulted in DTCC problems.
There are only two people who can
help you remove a DTCC Chill, a secu-
rities attorney acceptable to DTCC,
who can render a tradability opinion
concerning the issuer’s unrestricted
shares held by DTCC, and a DTCC
Market Participant, who can ask that
DTCC provide its services with respect
to a security. Anyone else claiming he
can secure DTCC eligibility or remove
a DTCC Chill is unqualified to do so.
3. How Is DTCC
Eligibility Lost?
DTCC chills and freezes occur
when there is a suspicion or
indication that the issuer or
persons associated with the
issuer have violated the securi-
ties laws. Additionally, DTCC
Chills often follow offerings
made under Rule 504 of Regu-
lation D which result in the
issuance of free trading securi-
ties.
Factors that may cause an
issuer’s securities to lose DTCC
eligibility include:
i. having multiple name chang-
es and reverse splits;
ii. issuing improperly free trad-
ing shares which have not been
registered with the SEC in reli-
ance upon Rule 504, 144 or
upon conversion of debt;
iii. engaging in a reverse mer-
ger with a company that has
been involved in a state receiv-
ership or custodianship action
or other action which resulted
in a state court order to obtain
control of a public shell compa-
ny;
iv. engaging in a reverse mer-
ger with a public shell company
which resulted in the issuance
or transfer of unregistered free
trading shares;
v. being involved in improper
investor relations activities
including spam campaigns,
pump and dump schemes, or
other fraudulent activities; and
iv. being subject to an SEC
investigation or being associat-
ed with stock promoters, bro-
kers, lawyers or accountants
that have been subject to in-
vestigations by the SEC, FINRA
or the Justice Department.
DTCC Conspiracy Theories on the Rise
When DTCC eligibility is limited or terminated, companies often express astonish-
ment and scream foul play asserting various conspiracy theories. We have all read
about issuers who self-righteously proclaim that their loss of DTCC was due to con-
niving short sellers, nefarious clearing firms and the purported “agenda” of the
Securities and Exchange Commission (“SEC”) to eliminate small broker dealers
and penny stock companies.
When DTCC eligibility is lost, issuers will often tell their stockholders, they have no
idea what happened. Since only the company can direct its transfer agent to issue
free trading shares, most often it knows exactly why DTCC limited or suspended its
services. Many officers and directors of microcap companies are facing the harsh
reality that reliance upon a legal opinion will not provide them with an effective
defense to securities violations.
DTCC’s Office of Corporate and Regulatory Compliance monitors unusually large
deposits of microcap securities that are deposited into DTCC when there is a suspi-
cion or indication that the issuer or persons associated with the issuer have violat-
ed the securities laws. With Microcap stocks, this behavior typically involves the
deposit of large blocks of unrestricted securities in reliance upon flawed legal opin-
ions rendered in connection with convertible notes, reverse merger transactions
or Rule 504 offerings. Where any of the foregoing are present, the issuer should
expect a review by DTCC and should be prepared to provide a competent legal
opinion from an independent securities attorney.
Because DTCC may choose to refer securities violations it discovers to the SEC’s
Division of Enforcement, issuers need to consult with qualified legal counsel at all
stages of the DTCC process, particularly when information must be provided by the
issuer.
Issuers expecting to obtain and maintain DTCC eligibility need to recognize that
they may be penalized if they go public in a reverse merger with a public shell
company or use the services of securities professionals.
4. Contact Us
Give us a call for more information about Periodic Reporting, Going Public, Crowdfunding, SEC Registration
statements, direct public offerings or securities law!
Hamilton & Associates Law Group, P.A.
101 Plaza Real South, Suite 202 North
Boca Raton, FL 33432
Phone: (561) 416-8956
Fax: (561) 416-2855
Email: info@securitieslawyer101.com
Visit us on the web at:
www.securitieslawyer101.com
www.gopublic101.com
www.jobsact101.com
DTCC Identifies Cyber-Attacks as Most Significant
Risk to Financial Markets
On August 7, Depository Trust & Clearing Corporation (DTCC) released a report identifying threats to the stability of
the financial markets. DTCC considers cyber-attacks that can bypass U.S. and E.U. industry security systems and laws to be the
most significant danger to our markets today.
Distributed Denial of Service (“DDoS”) Attacks DDoS attacks have increased in the past year. DDoS attacks typically attempt to
flood the bandwidth and network connectivity between a financial institution and the broader Internet. These attacks are carried
out by sending a large volume of requests from compromised machines to the institution’s website.
Advanced Persistent Threats Advanced Persistent Threats (APT) are stealthier because APT attacks are not public. Their objec-
tive is not to disrupt Internet-facing communications, but rather to infiltrate an institution’s systems and monitor or ex-filtrate
data to a server outside the firm. APT attacks are very difficult to detect, unlike DDoS attacks, which are visible and often publi-
cized prior to an attack. In an APT attack the infected malware could be sent by a variety of means including e-mail attachments
or compromised websites. The attackers often use social networking tools to perform reconnaissance and identify key employees
at a firm. The attackers then compromise the machines of those individuals, and propagate horizontally and vertically within the
target organization.