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 Agreement is subject to various closing matters, including SEC approval of its post-effective amendment to its registration statement and reconfirmation of Petrus 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 Share Exchange Agreement and Plan of Reorganization is subject to other closing matters, SEC approval and reconfirmation of NAS investors, pursuant to Rule 419.