The PIPEs Report - July 3, 2007

Comment Sought on First of Several Proposals Affecting PIPEs

A month after the Securities and Exchange Commission offered sweeping amendments to key regulations governing the PIPE industry, the agency began soliciting comments on two of the six proposals: reducing the Rule 144 affiliate and non-affiliate holding periods for restricted securities in reporting companies to six months from two years and one year, respectively, and allowing companies of any size, subject to conditions, to register shares for primary offerings using Form S-3, or in the case of foreign issuers, Form F-3. Full Story

Subprime Fallout Extends to PIPE Market

At least four recent PIPE issuers saw their share prices plummet by more than 50% in the waning hours of trading on June 26, as their placement agent Brookstreet Securities commenced liquidation. Reports indicate Brookstreet’s executive vice president Scott Brooks — also the founder’s son — is attempting to shift operations and employees to Los Angeles-based investment firm Wedbush Morgan Securities, while law firm Shepherd Smith and Edwards has taken steps towards a class action law suit against the beleaguered broker-dealer. Late last week, the Irvine, Calif., company reported that investigators from the SEC were reviewing its records. Full Story

The Securities and Exchange Commission is asking for additional comments on the definition of the term “significant deficiency” as part of its project to help public companies comply with Section 404 of the Sarbanes-Oxley Act of 2002. The extended comment period, which ends July 18, stems from the commission’s implementation of Section 302 and Section 404 of SOX. The rules require a company’s management to disclose “material weaknesses” and “significant deficiencies” to both the audit committee and the external auditor. But while the term “significant deficiency” appears in the rules, a definition does not. Full Story

• SEC Strengthens Rule Against Pre-Offering Short Sales
• GLG Merging with U.S. Blank Check Co. in $3.4B Deal
• Och-Ziff Files for $2B IPO
• DTCC Applauds SEC’s Disclosure Initiative on Failed Trades
• CryoCor: The New Dendreon?
• DTC Aligns with SEC on Foreign Companies
• Canadian Regulator Takes Action Against Mining Company
• Florida Congressman Raises PIPE Market in Hearing with SEC
• Investors in Kronos Could End Up Owning 93%
• Former Intervoice CEO Settles with SEC
• Fictional PIPEs Fuel Fraud Claims
• Reg SHO ‘Tick Test’ Final Rule Out
• Hirings and Firings