Section 12 – Termination of Registration and Trading Suspensions
SEC proceedings for registration revocations and trading suspensions have become somewhat common in the microcap markets since the Securities and Exchange Commission (“SEC”) started its Operation Shell Expel initiative. Proceedings under Section 12(j) are frequently initiated when an SEC reporting company has a history of delinquent periodic reports and filings. Section 13(a) of the Securities Exchange Act of 1934, (the “Exchange Act”) and the rules promulgated thereunder require companies with a class of securities registered pursuant to Exchange Act Section 12 to file current and accurate information in periodic reports, even if the registration is voluntary under Section 12(g).
Rule 13a-1 requires issuers to file annual reports, and Rule 13a-13 requires domestic issuers to file quarterly reports. Reporting companies that do not to comply with these requirements face that risk that their securities will be suspended for up to twelve months, or their Exchange Act registration will be revoked.
Section 12(j) of the Exchange Act, grants the SEC the authority to revoke a company’s Exchange Act registration when it has a history of delinquent filings. Often, an SEC proceeding to revoke registration pursuant to Section 12(j) will be preceded by a 10 day suspension in trading.
Brokers cannot resume quotations until they determine that the issuer has satisfied the information requirements of Rule 15c2-11, which will not likely occur because the issuer failure to file its periodic reports caused the revocation or suspension.
On October 22, 2014, the SEC issued an Order instituting administrative proceedings pursuant to Section 12(j) of the Exchange Act against 21st Century Telesis II, Inc., Agemark Corp., Alnilam Corp., American Centrality Group, Inc., China Feicui Guodian Group Ltd., and Icon Public Ltd. Co.
The SEC’s Division of Enforcement alleges that all four issuers have a class of securities registered with the SEC pursuant to Exchange Act Section 12(g), and are delinquent in their reporting obligations as follows:
- 21st Century Telesis II, Inc. is a void Delaware corporation located in Costa Mesa, California 21st Century Telesis has not filed any periodic reports since itfiled a Form 10-Q for the period ended December 31, 1998.
- Agemark Corp. is a dissolved Nevada corporation located in Berkeley, California. Agemark has not filed any periodic reports since it filed a Form 10-QSB for the period ended June 30, 2004.
- Alnilam Corp is a revoked Nevada corporation located in Costa Mesa, California. Alnilam has not filed any periodic reports since it filed a Form 10-QSB for the period ended June 30, 2008.
- American Centrality Group, Inc. is a Nevada corporation located in San Jose, California. American Centrality has not filed any periodic reports since it filed a Form 10 registration statement on December 19, 2007.
- China Feicui Guodian Group Ltd. is a revoked Nevada corporation located in Palm Desert, California. China Feicui has not filed any periodic reports since it filed a Form 10-Q for the period ended March 31, 2010.
- Icon Public Ltd. Co. is an Irish company located in Dublin, Ireland. Icon has not filed any periodic reports since it filed a Form 20-F for the period ended May 31, 2002.
To determine what sanctions are imposed, a public hearing before an Administrative Law Judge will be held as provided by Rule 110 of the SEC’s Rules of Practice. Each Respondent must file an answer to the SEC’s Order within ten (10) days after service, as provided by Rule 220(b) of the SEC’s Rules of Practice.
If any Respondent fails to file an answer or fails to appear, the Respondents may be deemed in default and the proceedings may be determined against them upon consideration of the SEC’s Order. Companies should keep in mind that even after a company’s registration is revoked, it can have reporting obligations under Section 15(d). The penalty for non-compliance under Section 15(d) is $100 for every day the delinquency continues.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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