blank-check company

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Blank-Check Company

A company that has not yet defined its business operations. Blank check companies issue penny stocks; the funds raised through a blank check offering must usually be placed in an escrow account until certain conditions have been met. Because a blank check company has not begun or even defined its operations, it effectively asks investors to trust it. Blank check companies are therefore subject to extra regulation to protect these investors from the possibility that the company is a fraud. In any event, investing in a blank check company is always speculative.

blank-check company

A company that issues penny stock in order to finance its involvement in establishing a business in which principal operations have not yet commenced. The company either has no business plan or plans to engage in a merger or acquisition with an unspecified business entity. Essentially, the company is given a blank check with regard to investors' money. Blank-check companies are required to provide certain information prior to and after the registration of securities. In addition, funds received from a penny stock offering must be placed in an escrow account for the benefit of the purchaser. See also Rule 419.
References in periodicals archive ?
The GigCG Private-to-Public Equity (PPE) companies (also known as blank check companies or special purpose acquisition companies (SPACs)) offer financial, operational and executive mentoring to US and overseas private, and non-US public companies, in order to accelerate their path from inception and as a privately held entity into the growth-stage as a publicly traded company in the US.
The Securities and Exchange Commission today charged two lawyers it alleges helped facilitate a microcap fraud scheme involving undisclosed blank check companies secretly bound for reverse mergers.
Wilson of Nevada City, California, contributed to a fraud involving at least 22 undisclosed blank check companies. Such companies have no operations, making them attractive targets for those seeking reverse mergers for use in pump-and-dump schemes.
The SEC has charged a Florida man with fraud for being part of a scheme to register and sell stock in blank check companies disguised as promising startups to illicitly profit off the investing public.
According to the agency, Sheldon Rose created more than a dozen blank check companies that have no operations and no value other than their registered status to sell stock.
Blank check companies are entities with no purpose other than merging with another firm.
Unlike most blank check companies, this one will be listed on the American Stock Exchange, underwritten by Goldman Sachs.
The sponsors of most blank check companies retain a greater interest in the company, and there are other aspects of the structure--such as the two-tier price between warrants and shares--that result in less dilution for shareholders.
The Securities and Exchange Commission today announced fraud charges against a Florida man who was part of a scheme to register and sell stock in blank check companies masked as promising startups to illicitly profit off the investing public.