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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Brubaker who wrote (9622)	3/21/1999 12:17:00 AM
From: kolo55	Read Replies (2) \| Respond to of 27311

Here we go again. On reporting short sales, they don't have to report short sales. I do believe they have to report changes in beneficial ownership, which would include the impact of short sales. Here was my post on this to you. Message 8305651 I believe that arranging to borrow shares, and selling those shares on the open market constitutes a material change in ownership, if the total of the shares shorted constituted a material change (see next paragraph). And according to the law, this info must be reported (paragraph E of section 13 d. of the Securities Exchange Act): E.(E) information as to any contracts, arrangements, or understandings with any person with respect to any securities of the issuer, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or guaranties of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered into, and giving the details thereof. A short sale is a loan arrangement with regard to the securities. To put this into terms you might be able to understand, if they owned 3.4M shares, and sold short 1M, then they would file a 13D reporting their ownership has been reduced to 2.4M shares. On reporting material changes in beneficial ownership, I posted this to you on the same day: SEC rules requiring reports on beneficial ownership Schedule 13D (info from SEC Edgar site). This Schedule discloses beneficial ownership of certain registered equity securities. Any person or group of persons who acquire a beneficial ownership of more than 5% of a class of registered equity securities of certain issuers must file a Schedule 13D reporting such acquisition together with certain other information within ten days after such acquisition. Moreover, any material changes in the facts set forth in the Schedule generally precipitates a duty to promptly file an amendment on Schedule 13D. The Commission's rules define the term "beneficial owner" to be any person who directly or indirectly shares voting power or investment power (the power to sell the security). Interpretive Responsibility: Division of Corporation Finance - Office of Tender Offers Information on intention of the reporting requirements and updating the beneficial ownership information: The beneficial ownership reporting requirements embodied in Sections 13(d)-[2]- and 13(g)-[3]- of the Securities Exchange Act of 1934 ("Exchange Act")-[4]- and the regulations adopted thereunder-[5]- are intended to provide investors and the subject issuer with information about accumulations of securities that may have the potential to change or influence control of the issuer. The statutory and regulatory framework also establishes a comprehensive reporting system for gathering and disseminating information about the ownership of equity securities.-[6]- These provisions require, subject to exceptions, that any person who acquires beneficial ownership of more than five percent of a class of equity securities registered under Section 12 of the Exchange Act-[7]- and other specified equity securities (collectively, "subject securities") report such acquisition on Schedule 13D within 10 calendar days. That report must be amended promptly to report any material change in the information provided, including any acquisition or disposition of one percent or more of the class.-[8]- My comments: The info contained on a Form 13D is identical to the information reported in one of the sections of the registration statement (S-3) filed by Valence. Now I don't know why you believe Castle Creek wouldn't be under the same requirements to update this information if a material change in beneficial ownership occurs (acquisition or disposal of 1% or more of the shares). You might point me to where you are getting your legal interpretation. The only thing that bothered me about this, was that Castle Creek may be trying to dodge the SEC reporting requirement by claiming that they only own 4.9% of the class shares at any point in time, as reported in the registration statement. If they have shorted a material number of shares, I consider this a risky ploy. They have apparent ownership of 11.4% of the outstanding shares, as also reported in the S-3, and dodging the reporting requirements due to the clause (restricting them to only owning 4.9% of the common at any point in time), looks pretty dicey to me. It appears to clearly violate the intent of the law. But it is possible that they are trying an end run around the SEC rules, by claiming they only own 4.9% at any point in time. I can't rule that out completely. Paul