But in the world of very small public companies, not so much. Sure, we’re getting more financings done than before, which is great. But here’s the problem. The PIPE market, which helped fuel tons of financings for microcaps in the late 2000s, is tremendously challenged. Many funds simply shut down during the downturn. Others are under investigation. Many of the others, still around, have made clear they would really rather invest only where they have immediate liquidity in their investment.

Companies with more than $75 million in “public float” can use “short form” registration on Form S-3. This allows them to take some shares, make them tradable, and let them sit on the shelf until an investor comes along. This form can be effective in just a few weeks and is simple. Then when an investor writes a check he gets shares he can trade right away. The SEC, in 2007, proposed allowing all full SEC reporting companies to use short form registration, but in their final rule on the subject summarily reversed this and took it away for “smaller reporting companies” (SRCs) with less than $75 million in public float.

The SRCs, if current in their filings, should also have this ability. By the way, a company that’s an SRC but trading on a major exchange can also use S-3. So many tiny companies are struggling to raise money at a time when they should not have to. If the SEC could allow SRCs to be S-3 eligible, they could do so with limitations. Only once a year. Only a certain percentage of company stock. The benefit would be huge and very little risk of reducing investor protection.

The good part of it: lots of money has been pouring into mutual funds in the last year, and it’s done well, so people feel wealthier. The theory is this translates into more spending, which of course drives economic growth.

But unemployment remains high, and housing is still pretty weak. So the economy seems to continue its slow growth pattern while the market continues to project more future growth. But let’s do a little happy dance for the Dow.

The rules add a speed bump, requiring companies merging with reporting shell companies to trade in the over the counter markets for at least one full fiscal year. You can bypass the restriction with a $40 million public offering. This placed a giant skewer through a large number of deals in which a company merged with a shell, completed a PIPE, then moved immediately to a public offering of $15 or $20 million and trading on the Nasdaq or NYSE Amex. Very few reverse merging companies can attract a $40 million public offering.

In the year plus since the rules passed, many fewer reverse mergers. Companies that are on the over-the-counter markets struggle in a decimated PIPE market and no ability to sell shares through short form registration. Underwriters are not thrilled to do a public offering that doesn’t “uplist” the company to a major exchange. So these companies have had tremendous difficulty raising money. And this in a frothy market about to hit new highs.

I suggest that the exchanges consider lowering the threshold on the Amex and Nasdaq to $10 or maybe $15 million. The investor protections are the same in both types of offerings. The exchanges retain substantial discretion if they feel a shell or its promoters seem in any way shady. In all other listing requirements the standards for the exchanges below the NYSE “big board” are lower except here. This change makes sense and retains all the protections of a larger public offering. I’m just saying.

We took the opportunity to update the look of the site a little, hope you like it!

We are also just weeks away from launching a new blog to go with this one…we’ll let you know as we get closer!

OK back to me typing stuff and you reading it!

I was a bell-bottom wearing 12 year old when the Dow first hit 1000 in the early 1970s after taking 76 years to get to that point.  It hit 10,000 in March 1999. And now here we are.

As I write this the Dow is now at 14,014, just 150 points shy of that 2007 all time high. But this hoped for new record is in a different world, isn’t it? We remain stuck in economic doldrums, real estate only slowly now beginning to recover, corporate profits improving, unemployment still a real problem. Let’s hope this is a manageable rally that finds manageable corrections and keeps moving ahead.

One thing you can always count on. The market always comes back. The long term market trend has always been up. The zillion dollar question of course is when it will go up vs. the nasty alternative. We also know that the market has historically been a leading indicator, a sign of things to come in the economy. While we are hearing some prognosticators talk about dire predictions for the next few years, the market is telling us otherwise.

This is also good for New York’s key economic driver – Wall Street. We are very busy getting financings completed for our clients, and this is obviously a good thing. What does this lead to? New jobs both on the Street and for the companies that get financed. Go 2013!

She was a well-known (and well-respected) prosecutor here in New York, appointed by Pres. Bill Clinton. She successfully nailed terrorists, Wall Streeters and mobsters. Most recently she has been in private law practice at Debevoise & Plimpton for the last 10 years. She has also served on the board of the Nasdaq.

It will be interesting to see how Ms. White (who is also a terrific speaker) tackles small business issues as the new SEC Chair. We wish her all the best.

AIG CEO Hank Greenberg’s C.V. Starr & Co. sued the founding shareholders of China MediaExpress, which had gone public through a reverse merger in the US. There is also apparently a companion case that Greenberg brought in the US as well, this one against the company itself. So it is the founders that have to pay the arbitration judgment, not the company. Greenberg has also sued Deloitte’s Chinese affiliate which was the auditor of CME.

The arbitrators in Hong Kong determined that CME was a “fraudulent enterprise.”