284.01 A registration statement under the Securities Act relates to the initial public offering of common stock. After the offering, the issuer’s net tangible assets will be less than $2 million and the common stock will not be an NMS Stock, as defined in Section 242.600(b)(47) of Regulation NMS. The public offering price is $5 a share.
The question is whether the prospectus forming part of the registration statement should disclose the applicability of Rule 15g-9, the penny stock cold-calling rule, in the event of a price decline in the aftermarket. With the advice of the Division of Trading and Markets, the Division staff recommended disclosure concerning the rule in the prospectus. The purpose of the disclosure in these circumstances is to alert dealers required to deliver a prospectus in the 90 days after the effective date of their additional responsibilities under Rule 15g-9 if the trading price falls below $5. [September 30, 2008]
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