Eric; Reg S does not apply to PFG, it is not a reporting trader under SEC rules. IPM is.
Reg S was created to permit foreign money to help balance the negative trade balance, and in recognition of the fact that the SEC stops at the border. US citizens and companies are not permitted to take part in a reg S offering. The SEC allows it to enter US commerce in 40-45 days, via the transfer agent who removes the 45 day legend. The buyers get a discount reflecting the potential for future price falls as the 45th day approaches. This varies from 10% to 40% depending on price volume, etc. The advantage is speed, A company can ask for reg S funding on Monday and be funded the same day(if all documents/ducks are in a row), whereas it can take 6 months or more for the SEC prospectus route.
Americans and US companies would regularly take part in reg S offering with the guise of an offshore company shielding them. They would short the stock in the USA and then cover at day 45 with sure stock. The SEC changed the rules this year with a 15 day notification rule, that alerted domestic stock holders at day 15, that such and sych a reg S block had been sold and was tradeable in 30 days. It killed a lot of reg S as people sold in anticipation of the dumping at day 45. It often was not dumped, as the most popular reg S buyers were offshor funds who would buy a $10 stock at $7, and show the $10 to boost their valuation. Often they did not sell. Check Zitel for a good Reg S story. The money helped the company when it needed $, and built it up. Check AURA for a down story on reg S. I think that the IPM reg S was OK, no price drop etc.(a small one??)
I think that it is premature to absolutely condemn IPM, as the jury is still out. There are suspicions, but no absolute provable negatives, nor are there absolute provable positives. An enigma is the right word. Same for Naxos, positive potential and suspicions.
Bill |
