Rule 419

Rule 419

An SEC rule stating that funds received from a penny stock offering by a blank check company must be placed in an escrow account until certain conditions have been met. A blank check company issues penny stock for business operations that have not yet begun; it effectively asks investors to trust it. Rule 419 exists in order to protect these investors from the possibility that the company is a fraud.

Rule 419

An SEC rule that stipulates that funds received by a blank-check company from an issue of penny stock must be placed in an escrow account for the benefit of the purchaser.
References in periodicals archive ?
The Share Exchange Agreement and Plan of Reorganization is subject to other closing matters, SEC approval and reconfirmation of NAS investors, pursuant to Rule 419.
Rule 419 of the Securities Act imposes obligations and restrictions upon issuers that are deemed to be "blank check" corporations.
174) Although most SPACs voluntarily adhere to the safeguard of Rule 419 to attract investors, most SPACs are structured to be exempted from the rule.
Requirements to list on national exchanges--particularly on the NASDAQ, (176) and the New York Stock Exchange ("NYSE) (177)--codify some Rule 419 protections to which most SPACs are exempt.
The panel will also cover the history of reverse mergers, as well as the major changes that took place in 1992 when the SEC passed Rule 419 restricting the creation of public shells.
Pursuant to Rule 419 under the Securities Act of 1933, as a condition of the merger certain holders of SB Merger Corp.
Participants will also provide a brief history of reverse mergers and the penny stock market, as well as the major changes that occurred in 1992 when the SEC passed Rule 419 restricting the creation of public shells.
As a result of the merger, Whitco will become a subsidiary of Wentworth, a blank check company formed pursuant to Rule 419 of Regulation C under the Securities Act of 1933, as amended.
On October 13, 2000, the Commission advised BIOF that, in order not to be deemed a blank check company pursuant to Rule 419, it was necessary that the acquisition of United Source be completed prior to the effective date of the Registration Statement.
Since the receipt of the SEC comment on Rule 419, BIOF has sought to obtain the approval of United Source to a revision of the contract that would provide for an immediate closing of the acquisition and a refilling with the SEC to reflect such event.
The contracts signed with Continental Sports Management and Art & Beyond provide for the closing of each transaction prior to the effective date of the Registration Statement of each to be filed with SEC, thereby satisfying the provisions of SEC Rule 419.