Tag Archives: U.S. Securities and Exchange Commission

Public company website disclosure

This is an article that we created for our clients as a guide to creating website webpages that conform to the requirements setup by the U.S. SEC.  If there omissions or inaccuracies, please tell us as we would like to get this right for our clients.  Here is a 1934 Act Disclosure (MS Word format) and 1934 Act Disclosure (PDF version) as well.

Background Discussion

First, there are two different types of publicly traded companies – those that are regulated by the U.S. Securities Act of 1933[1] (“1933 Act”), which are not required to disclose financial activities through the U.S. Securities and Exchange Commission (“S.E.C.”) prescribed methods, and those that are regulated by the U.S. Securities Act of 1934 (“1934 Act”), which requires regulated companies to periodically report information through prescribed forms.

We believe that the disclosure that we refer to within this document is equally important for each type of publicly traded company, but only 1934 Act companies will have SEC mandated periodic financial reports, i.e. 10K, 10Q, 8K, Form 3, Form 4, etc.

[In 2000,] the SEC adopted Regulation FD to address the selective disclosure of information by publicly traded companies and other issuers.  Regulation FD provides that when an issuer discloses material nonpublic information to certain individuals or entities—generally, securities market professionals, such as stock analysts, or holders of the issuer’s securities who may well trade on the basis of the information—the issuer must make public disclosure of that information. In this way, the new rule aims to promote the full and fair disclosure.” — SEC website description.

Investor Webpage

There are slight nuances between 1933 Act public companies and 1934 Act public company (requiring SEC filings and disclosure).  Here is an example of BenchMark Energy Corporation’s investor web page on September 6th, 2013.

As you can see, we haven’t used any RSS feeds at all, just hard coded information.  This is simple and doesn’t require a fee. does provide Level II quotes as part of its package for Pink Sheets current information companies.  See their website for more information; also, this requires their fee, which currently is $5,200 per year.

Menu Items

There are no set items that are required, except a list of the SEC filings containing all of the SEC disclosure filings that the company has made.  The easiest thing to do, rather than embed those items, is to reference another website (in this case, the website) so that the other site is liable for any misstatements of fact.  Due to linking to other sites, we normally add this disclaimer:

Disclaimer for Non-affiliated Websites

PUBLIC COMPANY NAME (SYMBOL, hereafter referred to as “XXXX”) provides a number of links (within the menu structure) that are not affiliated with PUBLIC COMPANY NAME, nor do we endorse these websites or the content.  PUBLIC COMPANY NAME and its officers do not post comments nor reply to posts on investor message boards, nor do we sponsor or promote a specific message board over another.  This lists Internet websites that provide community for our shareholders / investors.

Here is what our menu structure would normally look like:

  • Investors Page
    • SEC Filings  where ‘XXXXXXXXXXXXXX’ is the proper name of the company.  Make sure that it goes to the correct company disclosure webpage on the SEC’s site.
    • Management & Board
      This should be a webpage on your website.  If not, just include the management and board on the investor webpage.
    • Board Committees
      This should be a webpage on your website.  If not, just include the management and board on the investor webpage.
    • Ethics Statements

This should be a webpage on your website.  If not, just include the management and board on the investor webpage.

  • Quotes
    You can create a single webpage on your website that lists out a number of locations for quotes, but I normally just include links – less risk that something goes wrong with the RSS embedding.

[1] The complete act is available at

[2] You must look up this message board number yourself, if it exists.  If it doesn’t exist, you will need to request a board be created by the website administrator.

© 2013 by Rhodes Holdings LLC, all rights reserved except excepts from the website.


Posted by on September 8, 2013 in BLOG, Business, Public markets


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New Regulation FD

In recent days (April 2 to be exact), the U.S. Securities and Exchange Commission (“S.E.C.“) issued a report that said that Regulation FD could be satisfied by issuers by posting disclosure to social media sites.  To us, this is a logical extension of the J.O.B.S. Act since its intention was to allow small companies to capitalize themselves through the larger reach of the Internet. The S.E.C. release, available at, provides more insight.

Regulation FD is very important for publicly traded companies – it basically states that all investors should receive good and proper information disclosure from publicly traded companies at the same time.  Only certain venues were considered proper outlets to post “Press Releases” and even information on the company’s website was limited and specified.  Nothing worse than getting a comment from the S.E.C. on a registration statement relating to improper disclosure on the company’s own website – news sections posting information news before the official press release or 8K, company newsletters that disclose something improperly, etc.  Here is the S.E.C.’s definition of Regulation FD (

Here are some simple rules that we train our client organizations to follow:

  1. Create an “Investors” section of their website.  Link to other public venues for quotes, etc. such as Yahoo! Finance, Google Finance, Market Watch, OTC Markets.
    1. List board members, including committees.
    2. List transfer agent.
    3. List company’s SEC counsel.
    4. List company’s Ethics Statement.
  2. Create a “News” section of website wherein only items that have been released officially through a Regulation FD authorized distributor, such as Market Wire, Mac Report, Business Wire, etc..
  3. Create a “BLOG” section of website for opinions.
  4. Always release information as follows:
    1. Issue 8K, if required.
    2. Issue press release through FD authorized distributor.
    3. Put exact copy of press release on company’s website.
    4. Put exact copy or link to press release on LinkedIn and Facebook company pages.

      Image representing LinkedIn as depicted in Cru...

      Image via CrunchBase

Disclosure is a “by the numbers” issue, meaning every company should come

Image representing Yahoo! Finance as depicted ...

Image via CrunchBase

up with a standard operating procedure (“SOP”) and follow it religiously – more to ensure that news gets the largest reach but also to ensure that a company doesn’t go afoul of the authorities.


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What were they thinking…

First, I must apologize for the dearth of information on the public markets and financing techniques therein over the last four months coming from our BLOG.  Our associated group of organizations (Rhodes Holdings LLC, ReCap Marketing & Consulting LP, and American Equity Fund LLC) have been involved in a number of actions to protect shareholder value as well as having been asked to put together a number of “go public” projects for clients.  With that said, expect a new focus on providing a look into what is going in the public markets…

OTC Markets

Since the Jumpstart Our Business Startups Act (“J.O.B.S.“) Act was signed into law on April 5, 2012, there has been a “promise” in the air that it would help get capital formation for the micro-cap market started again.  This really hasn’t happened since the Congress and President can’t seem to get their acts together (pun intended), and the Securities & Exchange Commission (“SEC“) hasn’t released the details on how it will enforce the J.O.B.S. Act provisions, like changes to internet marketing of stocks (general solicitation).

OTC Markets Group Inc. had hoped that this Act would help drive their business, but alas FINRA is all about limiting the markets that OTC Markets Group Inc. serves by making it impossible to deposit shares in Pink Sheet companies as well as OTC:BB companies.  The crux of the problem that those of us working in the

Seal of the U.S. Securities and Exchange Commi...

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

micro-cap arena are facing is that even if you follow all the rules (register your shares, pay cash for stock, etc.), the broker dealers and their compliance departments are running scared of the SEC and FINRA’s rules, so stock just doesn’t get sold.  If no stock gets sold, that capital doesn’t get re-invested into other micro-cap stocks – thus, the velocity of money associated with micro-caps has ground to a halt.  Read what OTC Markets Group Inc. has to say:

In a few cases, it has eased regulation and shown that at least some of those in Congress listened.  The J.O.B.S. Act did make it so that issuers did not have start filing SEC mandated disclosure statements (10Q, 10K, 8K, etc.) until they reach 2,000 shareholders – previously it was 500 shareholders triggered filing requirements.  Read CFO magazine‘s article on banks de-registering:

All in all, the J.O.B.S. Act has not helped us reach its stated goal – helping jump start capital formation.  It may still help, but those of you who thought that crowd funding was going to take over capital formation, it hasn’t delivered the goods.

Accredited Investors

The J.O.B.S. Act did make some changes to the accredited investor definition, which would be very helpful.  The original 1933 Act definition is as follows for Rule 501 definitions.  Here is what the General Counsel of Second Markets had to say about the proposed implementation in his letter to the SEC.  In general, we at Rhodes Holdings LLC are keeping track of what is happening in the marketplace that will make it easier for our clients to access the capital they need.  Here are some websites associated:


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Accounting rules, IPO readiness, and Crowdfunding

Rhodes Holdings LLC has had a strong relationship with Clear Financial Solutions, Inc. and its principal, Steven Plumb.  This is their Fall 2012 newsletter, which I believe is worthwhile for public company management members…

New SEC Resource Extraction Issuer Rules

On August 22, 2012, the United States Securities and Exchange Commission (SEC) adopted final rules requiring annual disclosure of payments made to foreign governments and the U.S. federal government by “resource extraction issuers.”  These new disclosure requirements apply to all cash or in-kind payments made to foreign governments or the U.S. federal government by Exchange Act reporting oil, natural gas, and mining companies, domestic and foreign, in connection with the commercial development of oil, natural gas, or minerals.  The rules require disclosure to be made in an annual Form SD to be filed with the SEC not more than 150 days following the end of each fiscal year ending after September 30, 2013.  For resource extraction issuers with a calendar year end, the first filing will be due on May 30, 2014.

These rules fulfill a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act to further the objectives of the Extractive Industries Transparency Initiative.  These rules can have a far reaching impact on the competitiveness of extractive industry companies and should be evaluated by all domestic and foreign companies, including smaller reporting companies, that are required to file annual reports with the SEC and are engaged in the commercial development of oil, natural gas, or minerals.

We suggest that you begin analyzing the rules and developing strategies to gather information and track contracts, payments and related expenditures.

You can read the SEC press release here.

Crowd Funding

There’s been a recent development that may shift a few paradigms in the world of finance called “crowd funding.”  Crowd funding is simply the raising of funds from many people rather than a few large investors.  This is usually done using the internet due to the ease of communication and transfer of funds.  With the passing of the Jumpstart Our Business Startups Act (JOBS Act) in April, crowd funding has become a viable option for raising business capital.  The act allows companies to solicit and sell securities to non-accredited investors and, according to Jim Brendel of Accounting Today, increases the minimum number of total investors that requires a company to file publicly from 500 to 2,000.1

Through efficient utilization of the internet and other media, a company could fund a project with hundreds of small investments rather than looking for thousands or millions of dollars from just a few investors.  Many artists and even private individuals have already had great success with crowd funding through websites such as,, and including a fully funded tour of by British rock group Marillion.2  This new reality drastically increases the amount and availability of investment capital as the next generation of business is funded not by Swiss bank accounts but by Mr. and Mrs. Smith’s checking account.  Sources and more on crowd funding:


IPO Readiness

Is your company considering going public or looking to be acquired by a public company?  In either situation, you should begin positioning your company to act and report as if it were a public company.  Consider the following as you move toward your goal:

  • Begin the IPO readiness process early enough so that your pre-listed company acts and operates like a public company at least a year before the IPO
  • Commit substantial resources to the IPO process and build the quality management team, robust financial and business infrastructure, corporate governance and investor relations strategy that will attract the right investors
  • Properly assess the amount of time the IPO journey will take, or the level of scrutiny and accountability faced by a public company

Consider the following facts, as reported by Ernst & Young:

  • Investors base an average of 60% of their IPO investment decisions on financial factors especially: debt to equity ratios, EPS growth, sales growth, ROE, profitability and EBITDA growth
  • Investors base an average of 40% of their IPO investment decisions on non-financial factors especially: quality of management, corporate strategy and execution, brand strength and operational effectiveness, and corporate governance
  • Articulate a compelling equity story backed up by a strong track record of growth which sets you apart from your peers while maximizing value for owners

About Us

Clear Financial Solutions, Inc. specializes providing Contract CFO and SEC Reporting Services.  We are experienced entrepreneurs with extensive public company and start up experience.  Hire the expertise and vision of seasoned financial and accounting professionals and let us help you succeed by doing more of what you do well and improving what you don’t.

Call on us today at (713) 780-0806 to schedule a free one hour confidential consultation or visit our website

Steven Plumb, President

© 2012 by Clear Financial Solutions, Inc., all rights reserved. Terms of Use · Privacy Policy

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Posted by on September 24, 2012 in BLOG, Business, Entrepenuers, Public markets


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SEC Securities: The Quiet Period


During a Quiet Period, a publicly-listed company cannot make any announcements about anything that could cause a normal investor to change their position on the company’s stock. The SEC interprets this rule broadly, even including board members, management, and employees talking about the company. Normally, that means the company does not discuss any of the following:

  • New deals or wins signed in that current quarter. Announcements about previously-sold implementations going live are allowed, but must be explicitly described as such
  • Management changes
  • Progress against company goals
  • Major product or service announcements
  • Major partnership announcements

Why it Matters

The quiet period precedes the introduction of a company into the capital market. During that time, the amount of public exposure and hype must be minimized to hinder any potential interference with SEC efforts to evaluate its filings and the release of any information which may cause investors to “jump the gun” on valuations and expectations for the company. The SEC’s intention is to create a level playing field for all investors in the capital market, ensuring that all have the same information about the company when it goes out for sale on the market.

Activities During the Quiet Period

The federal securities laws do not define the term “quiet period,” which is also referred to as the “waiting period.” However, a quiet period extends from the time a company files a registration statement with the SEC until SEC staff declare the registration statement “effective.” During that period, the federal securities laws limit what information a company and related parties can release to the public. The failure to comply with these restrictions generally is referred to as “gun-jumping.

On June 29, 2005, the Commission voted to adopt modifications to the registration, communications, and offering processes under the Securities Act of 1933. Among many other provisions, the rules update and liberalize permitted offering activity and communications to allow more information to reach investors by revising the “gun-jumping” provisions under the Securities Act. The cumulative effects of these rules are as follows:

  • Well-known seasoned issuers are permitted to engage at any time in oral and written communications, including use at any time of a new type of written communication called a “free writing prospectus,” subject to enumerated conditions (including, in some cases, filing with the Commission).
  • All reporting issuers are, at any time, permitted to continue to publish regularly released factual business information and forward-looking information.
  • Non-reporting issuers are, at any time, permitted to continue to publish factual business information that is regularly released and intended for use by persons other than in their capacity as investors or potential investors.
  • Communications by issuers more than 30 days before filing a registration statement will be permitted so long as they do not reference a securities offering that is the subject of a registration statement.
  • All issuers and other offering participants will be permitted to use a free writing prospectus after the filing of the registration statement, subject to enumerated conditions (including, in some cases, filing with the Commission). Offering participants, other than the issuer, will be liable for a free writing prospectus only if they use, refer to, or participate in the planning and use of the free writing prospectus by another offering participant who uses it. Issuers will have liability for any issuer information contained in any other offering participant’s free writing prospectus as well as any free writing prospectus they prepare, use, or refer to.
  • The exclusions from the definition of prospectus are expanded to allow a broader category of routine communications regarding issuers, offerings, and procedural matters, such as communications about the schedule for an offering or about account-opening procedures.
  • The exemptions for research reports are expanded.

A number of these rules include conditions of eligibility. Most of the rules, for example, are not available to blank check companies, penny stock issuers, or shell companies.

The rules address the treatment under the Securities Act of electronic communications, including electronic road shows and information located on or hyper-linked to an issuer’s website. The rules define written communication as any communication that is written, printed, a radio or television broadcast, or a graphic communication. The definition of graphic communication and, thus, electronic road show excludes communications that are carried live and in real-time to a live audience, regardless of the means of transmission. Electronic road shows for initial public offerings of common equity or convertible equity securities will have to make a bona fide electronic road show readily available to an unrestricted audience to avoid filing the electronic road show with the Commission. No other road shows will be subject to filing.

Research Reports

The newly public company is subject to a “quiet period,” of 40 days after the registration becomes effective, which restricts insiders and affiliated underwriters from issuing earnings forecasts and research reports regarding the firm for a specified period following the initial public offering (IPO). As soon as this quiet period ends, the analysts of managing underwriters typically initiate research coverage with favorable recommendations, and the market responds positively even though this information is predictable.
The general purpose behind the quiet period is to give investors enough time to do their due diligence and allow market forces to establish a fair value without influence from the firm’s management or affiliated analysts who may try to hype the stock. In other words, everything that is relevant should be included in the written prospectus.

Immediately upon expiration of the quiet period, analysts affiliated with investment banks that participated as the lead underwriter or as a co-manager in the deal typically initiate favorable research coverage.

© 2012 by Sonfield & Sonfield, 770 South Post Oak Lane, Houston, Texas 77056-1937.  Reproduced with permission here.

To insure that we comply with U.S. Treasury Department Circular 230. We inform you that any U.S. tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Posted by on August 20, 2012 in BLOG, Business, Public markets


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Crowdfunding, JOBS Act, and creative project funding…

JOBS Act – Title II, III and IV Explained

Title II of the JOBS Act has reversed rules on general solicitation and advertisement of a Rule 506 offering, as long as all ultimate purchasers are accredited investors. Within 90 days following enactment of the law, the Securities and Exchange Commission must revise Rule 506 to provide that Rule 502’s limitations on solicitation and advertisement do not apply to Rule 506 transactions involving accredited investors only. This makes the identification of accredited investors especially significant. Prior to the JOBS Act, purchasers have been allowed to self-certify that they qualify as accredited investors. In a departure from this long-approved practice, however, the JOBS Act provides that issuers are now required to take “reasonable steps” to ensure investors purchasing securities through a Rule 506 offering are “accredited investors.” It remains unclear what steps the SEC will require from issuers to verify that purchasers under Rule 506 are actually accredited investors. According to the 14 Law Firm Consensus Report released on April 5, 2012, the current version of Rule 506 will remain in effect until the SEC puts forward the new rules.

Read More at  This article was written by Michael T. Rave, Ronald H. Janis, Frank E. Lawatsch, Jr., David Swerdloff, Lane Watson, Veronica M. Gonzalez and Edward Bion Piepmeier.  Excerpt above from a newsletter mailing from PPMLogix, used by permission from Mr. Stapleton at PPM Logix.

Crowd funding for creative projects

There are some interesting items articles that are coming to my attention.  This one, from a client (Frank Neukomm) has a flavor for start-ups:

Startups Look to the Crowd (Yahoo! Finance)
By JENNA WORTHAM | New York Times – Mon, Apr 30, 2012 12:25 PM EDT

But here is one that I really think is interesting – project funding for creative projects.  Take a look at Kick Starter.  My sister, Jenni Rebecca Stephenson who is the Managing Director of the newly merged Fresh Arts and SpaceTaker organization, says that:

[The site] works best when it involves a product or takeaway.  The biggest challenge of Kickstarter versus some of the others it that you don’t get ANY of the money unless you can raise ALL of your goal.  That serves as motivation for some, but a barrier for others.

Space Taker has been hosting workshops with other crowd funding entities for two years!  Like Indiegogo.  Two years, my sister is way ahead of her time, and obviously more hip and happening then me (just doing SEC related work outs and helping our clients get funding by transaction structuring) – that was a little tongue and cheek, but really, Space Taker is way ahead of other arts organizations…

And then OTC Markets kicks in with their own information hub at

© 2012 by Rhodes Holdings LLC, except where noted and credited.


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Interacting with the SEC

Seal of the U.S. Securities and Exchange Commi...

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

In working with public clients in the micro-cap arena, Rhodes Holdings LLC (“RHL”) interacts with many companies that have had the SEC investigate different aspects of their business dealings (as a public company).  As part of our due diligence on these clients before we agree to work with them, RHL determines if there are any on-going SEC investigations, informal or formal, that could point to the company being a “pump and dump scheme” or a company involved with fraud.  What we have found is in the past, the SEC never formally closed either their formal or informal investigations or queries, so the companies and individuals never really knew if their good names were cleared.

In comes the Dodd-Frank statue (I never really thought much about it, but here is a piece of legislation that has a silver lining)…

SEC Enforcement Investigation and Compliance Examination and Inspection Deadlines Enforcement

Under the Dodd-Frank statute, the SEC staff is given 180 days after issuing a “Wells Notice” to either
file an action or notify the Director of Enforcement that the staff does not intend to pursue an action; this deadline can be extended for one 180-day period. (Section 929U)

The Text of the Dodd-Frank Act
International Association of Risk and Compliance Professionals (IARCP)

Dodd Frank Act Section 929U
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section 4D the following new section:



‘‘(1) IN GENERAL.—Not later than 180 days after the date on which Commission staff provide a written Wells notification to any person, the Commission staff shall either file an action against such person or provide notice to the Director of the Division of Enforcement of its intent to not file an action.

‘‘(2) EXCEPTIONS FOR CERTAIN COMPLEX ACTIONS.—Notwithstanding paragraph (1), if the Director of the Division of Enforcement of the Commission or the Director’s designee determines that a particular enforcement investigation is sufficiently complex such that a determination regarding the filing of an action against a person cannot be completed within the deadline specified in paragraph (1), the Director of the Division of Enforcement of the Commission or the Director’s designee may, after providing notice to the Chairman of the Commission, extend such deadline as needed for one additional 180-day period.

If after the additional 180-day period the Director of the Division of Enforcement of the Commission or the Director’s designee determines that a particular enforcement investigation is sufficiently complex such that a determination regarding the filing of an action against a person cannot be completed within the additional 180-day period, the Director of the Division of Enforcement of the Commission or the Director’s designee may, after providing notice to and receiving approval of the Commission, extend such deadline as needed for one or more additional successive 180-day periods.

My take

The key here is that a Wells Notice needs to be issued, which in information investigations rarely is forthcoming.  All in all though, this is a step in the right direction.


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