Axesstel Fails to Comply with Exchange Act
On April 24, 2017, the Securities and Exchange Commission (“SEC”) deemed it necessary and appropriate for the protection of investors that public administrative proceedings be, and hereby are, instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 (“Exchange Act”) against Axesstel, Inc.
After an investigation, the Division of Enforcement alleges that Axesstel, Inc., a Nevada corporation located in San Diego, California with a class of securities registered with the SEC pursuant to Exchange Act Section 12(g). Axesstel, Inc. is delinquent in its periodic filings with the SEC, having not filed any periodic reports since it filed a Form 10-Q for the period ended September 30, 2013, which reported a net loss of $7.5 million for the prior nine months. As of April 5, 2017, the company’s stock was quoted on OTC Link operated by OTC Markets Group, Inc., had six market makers, and was eligible for the “piggyback” exception of Exchange Act Rule 15c2-11(f)(3). Axesstel has repeatedly failed to meet its obligations to file timely periodic reports, and failed to heed a delinquency letter sent by the Division of Corporation Finance requesting compliance with Axesstel’s periodic filing obligations.
Exchange Act Section 13(a), and the rules promulgated thereunder, require issuers of securities registered pursuant to Exchange Act Section 12 to file with the SEC current and accurate information in periodic reports, even if the registration is voluntary under Section 12(g). Specifically, Rule 13a-1 requires issuers to file annual reports, and Rule 13a-13 requires domestic issuers to file quarterly reports. Rule 13a-11 requires domestic issuers to file Forms 8- K upon the occurrence of certain events.
As a result of the foregoing, Axesstel failed to comply with Exchange Act Section 13(a) and Rules 13a-1, 13a-11, and 13a-13 thereunder.
In view of the allegations made by the Division of Enforcement, the SEC deemed it necessary and appropriate for the protection of investors that public administrative proceedings be instituted to determine whether the allegations are true and, in connection therewith, to afford Axesstel an opportunity to establish any defenses to such allegations; and whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months, or revoke, the registration of each class of securities of Axesstel registered pursuant to Section 12 of the Exchange Act, and any successor under Exchange Act Rules 12b-2 or 12g-3, and any new corporate names of Axesstel.
The SEC hereby ordered that a public hearing for the purpose of taking evidence on the questions set forth hereof shall be convened at a time and place to be fixed, and before an Administrative Law Judge to be designated by further order as provided by Rule 110 of the SEC’s Rules of Practice. The SEC further ordered that Axesstel shall file an Answer to the allegations contained in the Order within ten (10) days after service of the Order, as provided by Rule 220(b) of the SEC’s Rules of Practice.
If Axesstel fails to file the directed Answer, or fails to appear at a hearing after being duly notified, Axesstel, and any successor under Exchange Act Rules 12b-2 or 12g-3, and any new corporate names of Axesstel, may be deemed in default and the proceedings may be determined against them upon consideration of the Order, the allegations of which may be deemed to be true as provided by Rules 155(a), 220(f), 221(f), and 310 of the SEC’s Rules of Practice.
This Order shall be served forthwith upon Axesstel personally or by certified, registered, or Express Mail, or by other means permitted by the SEC Rules of Practice.
The SEC further orders that, pursuant to Rule 360(a)(2) of the SEC’s Rules of Practice, 17 C.F.R. § 201.360(a)(2), the Administrative Law Judge shall issue an initial decision no later than 30 days from the occurrence of one of the following events: (A) The completion of post-hearing briefing in a proceeding where the hearing has been completed; (B) Where the hearing officer has determined that no hearing is necessary, upon completion of 3 briefing on a motion pursuant to Rule 250 of the SEC’s Rules of Practice; or (C) The determination by the hearing officer that a party is deemed to be in default under Rule 155 of the Commission’s Rules of Practice, and no hearing is necessary.
In the absence of an appropriate waiver, no officer or employee of the SEC engaged in the performance of investigative or prosecuting functions in this or any factually related proceeding will be permitted to participate or advise in the decision of this matter, except as witness or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the provisions of Section 553 delaying the effective date of any final SEC action.
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 or by email at [email protected]. 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 and compliance 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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Brenda Hamilton, Securities Attorney
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