4 ms·
What flavor of fraud might this OTC malarkey be propping up?
by sk5t 6y ago
What flavor of fraud might this OTC malarkey be propping up?
- tyingq 6y agoThe key bit seems to be this: "If you are a company — particularly a Chinese company — that would like to be publicly traded in the U.S., but that would prefer to avoid the scrutiny that comes with an initial public offering, doing a “reverse merger” — acquiring the empty shell of a near-defunct but public U.S. company — is often an easy way to do it."
- okareaman 6y agoThis can't be a new idea. Why is it making news now?
- ac29 6y agoBecause this particular company is funnier than a typical shell company.
- okareaman 6y agoI found a comapany selling "clean" shell corporations. Yes, they're boring: http://interlistcapital.com/Services/BuyAPublicShell http://interlistcapital.com/Services/BuyAPublicShell
- tyingq 6y agoMaybe the sort of brashness of being honest that's it's a tiny deli with sketchy paid wages, miniscule revenues, etc.
- bombcar 6y agoBecause talking about it made a bunch of people buy it. It's like posting about how some scamcoin is a scam and so people run out to buy the scamcoin. Though it's probably more like "$15 on a meme stock is nothing".
- gumby 6y agoNot only is it not a new idea, its what a SPAC has been since time immemorial
- blueline 6y agofrom the article: > People occasionally conflate these shell-company reverse mergers with the current boom in special purpose acquisition companies, but they are really very different. A SPAC goes public and raises money specifically for the purpose of taking a private company public; it sells shares to the public and then has a public vote with a lot of disclosure to complete its merger. A reverse merger generally involves a public shell of a more or less defunct operating company (or at least one that pretended to have operations); the shell will be fairly closely held by a few insiders, and there will be no real money inside it. It is not a high-profile way to go public and raise money, the way a SPAC is; it’s a low-profile way to sneak into the public markets.
- wp381640 6y agoIt’s not only not news but one of the larger finance stories years ago was the spate of fraudulent Chinese reverse-mergers Wouldn’t surprise me if they have another run at it considering how many new retail investors there are today and the froth in the market
- grumple 6y agoDoes the SEC just have no teeth or oversight at all?
- defen 6y agoMaybe it’s a Webistics situation.
- dillondoyle 6y agoIt's too fun to think about the original why? and what?! It's probably because I'm re-watching the Sopranos but sounds like a more fun answer than pump and dump would be a front company. Dirty cash -> sandwich -> corp money -> consulting corp money. In that fantasy would be weird to not report more revenue. Plus added opportunity to flip the corp into a merger like the article says which sounds more likely. Though the SEC probably won't like a takeover with a RICO indictee as owner ;)