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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG) -- Ignore unavailable to you. Want to Upgrade?

To: TideGlider who wrote (30220)	6/6/1999 10:46:00 AM
From: sandbag	Read Replies (1) \| Respond to of 44908

TG, I believe the author from msnbc was trying to address the abuse of many stock promoters to hype stock for their own personal gain. I believe the SEC's intention is to prevent abuse rather than limit companies from using stock as pay in lieu of cash for services rendered. It appears that the SEC is taking things on a case by case basis to ensure that there is no abuse. Additionally, the SEC does not prevent the issuance of securities to PR/IR firms as implied by the article, as there are exemptions to the Rule 701 as well as S-8. The SEC is taking a hard stance at preventing abuse under both of these rules, but does not want to limit companies progress with those restrictions. I do not believe that G/H has intentions of abusing these rules, if indeed they are being compensated with securities. Remember that the CASH is being raised from the PP holders to fund operations and that cash may well be the means of payment to G/H. From a Rule 701 amendment, effective 4/7/99: "......... D. Consultants and Advisors Like regular employees, consultants and advisors are eligible to receive securities under the Rule 701 exemption. Similarly, where the issuer is a reporting company, consultants and advisors may receive securities in a transaction registered on Form S-8.32 Currently, the staff interprets the scope of eligible consultants and advisors differently for purposes of Rule 701 and Form S-8. The staff has interpreted Rule 701 to permit participation by a broader range of consultants and advisors, even though the words are identical in both Rule 701 and Form S-8. At the same time we proposed changes to Rule 701, we proposed changes to Form S-8 to limit further the scope of eligible consultants and advisors.33 In many cases, the Form has been misused by registering shares for issuance to consultants and advisors who do not have sufficient connection and familiarity with the company. In some cases, these persons are receiving the securities for capital-raising, rather than compensatory, purposes and engage in public distributions of the company's securities.34 In the Rule 701 Proposing Release, we asked how consultants and advisers participate in compensatory arrangements and whether we should restrict their participation. We also asked whether Rule 701 and Form S-8 should be harmonized in their treatment of these persons. We are concerned that persons who would misuse exemptions will develop new methods to abuse deregulatory safe harbors, even as we are taking steps to close down other avenues for abuse. We have determined that the flexible definition of "consultants and advisors," particularly in the context of registered offerings on Form S-8, has led to abuse. We are concerned that Rule 701 could be similarly abused if we make changes only to Form S-8, even though Rule 701 securities, unlike Form S-8 securities, are restricted.35 We are therefore adopting a definition of the term "consultants and advisors" in Rule 701 that will harmonize with the new definition in Form S-8,36 and narrow the scope of eligible consultants and advisors. As revised, securities promoters clearly will be excluded from the scope of persons eligible to participate under the exemption. Independent agents,37 franchisees and salespersons who do not have an employment relationship with the issuer no longer will be within the scope of "consultant or advisor."38 A person in a de facto employment relationship with the issuer, such as a non-employee providing services that traditionally are performed by an employee,39 with compensation paid for those services being the primary source of the person's earned income, would qualify as an eligible person under the exemption.40 Other persons displaying significant characteristics of "employment," such as the professional advisor providing bookkeeping services, computer programming advice, or other valuable professional services may qualify as eligible consultants or advisors, depending upon the particular facts and circumstances.41 Our staff will continue to handle questions about "consultant or advisor" status on a case-by-case basis through its interpretive letter process, but the terms will be interpreted in the same manner for both Rule 701 and Form S-8......" Full text of amendment can be found at, sec.gov Regards Barry