Respondents' characterization of these statements as protected, forward-looking statements under the statutory safe harbor provisions of the Securities Act and the Exchange Act is inapposite since issuers of penny stock are specifically excluded from the safe harbor protection of those provisions. 24/ Also, the safe harbor protects a speaker from liability for forward-looking statements only in private actions, not in enforcement actions brought by the Commission. 25/
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14/ As is pertinent here, Exchange Act Section 3(a)(51)(A) defines a "penny stock" as "any equity security other than a security that is . . . excluded, on the basis of exceeding a minimum price, net tangible assets of the issuer, or other relevant criteria, from the definition of such term by rule or regulation which the Commission shall prescribe for purposes of this paragraph . . . ." In general, under Exchange Act Rule 3a51-1, certain equity securities -- including securities priced at five dollars or more, securities subject to last sale reporting and listed on a national securities exchange or quoted on Nasdaq, and securities of an issuer that meets either a minimum net tangible assets or revenues test -- are excluded from the definition of "penny stock." 17 C.F.R. § 240.3a51-1. See Nolan Wayne Wade, Exchange Act Rel. No. 48245 (July 29, 2003), 80 SEC Docket 2683, 2684.
sec.gov
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 53122 A/ January 13, 2006
Admin. Proc. File No. 3-11573
OPINION OF THE COMMISSION
EXCHANGE ACT PROCEEDING
Grounds for Remedial Action
Injunction
Respondents were permanently enjoined from violations of the federal securities laws.
Held, it is in the public interest to bar respondents from participating in any offering of penny stock. |
