Do you know what the term Gypsy Swap means?

 A gypsy swap represents a way of raising capital that entails encouraging existing stockholders to swap their free trading common stock into restricted stock. This kind of transaction-gypsy swap, stock promoters have been using for a long period of time.

Thus to the Securities and Exchange Commission, gypsy swaps are a method of evading the Securities Act of 1933, and violate Section 5 of the Securities Act. Both investors and issuers should be aware of transactions that seem to be legal on the surface but in effect are gypsy swap transactions that are illegal under securities regulations.

The SEC has stated categorically that gypsy swaps are breaches of Section 5 of the Securities Act, and that all parties are subject to monetary and other civil penalties, which also include disgorgement.  It’s crucial for investors and issuers to note that a gypsy swap is only one approach to get around Section 5 of the Securities Act’s registration obligations. Any transaction in which the issuer enables the provision of free-trading shares to a new investor should be carefully analyzed and evaluated by counsel for possible breaches and alternative legal forms.

Government agencies are responsible for supervising gypsy swaps to assure they do not violate any laws.

When participating in a gypsy swap, there are a few factors to bear in mind from the trader’s perspective, such as obvious red signals.

Overall, this strategy consists of a sequence of transactions aimed at increasing money for the company. But what is the price of risk, and should you ever get involved in such a transaction?!

An overall conclusion is that every participant should follow the guidelines set forth by the SEC and FINRA in order to hold and trade under the rules.  

 

IFGX.COM 


 

#IFGX #stock #stocks #stockmarket #trade #trader #trading #company #participants #rules #business 

Comments

Post a Comment

Popular posts from this blog

Do you know what amended Rule 15c2-11 is?

The SEC amended Exchange Act Rule 15c2-11, which is a crucial element of the over-the-counter (OTC) market regulatory system. The changes are intended to improve the rule, which was last considerably changed about thirty years ago, and to take into account developments in communications technology.   Prior to actually posting quotations in OTC securities, broker-dealers must analyze current and information available to the public, according to the modified rule. To improve investor protection, the amendments also restrict some of the exemptions available under Rule 15c2-11 and add new exclusions for low-risk securities.     Given the current rule’s timeliness and modifications, its practical implementation streamlines the process of small-cap companies going public. For firms accessing the OTCQB and OTCQX markets, OTC Markets Group can now undertake “Initial Reviews” under Rule 15c2-11, which is a replacement to the regular FINRA Form 211 process.   The r...
Read more

Do you know how to improve your stock trading portfolio?

For beginners, putting together a profitable investment portfolio is a difficult undertaking, but there are plenty of ways to do so. The ideal strategy for a given investor will be determined by a number of characteristics, including risk tolerance, time frame, and the amount of capital available for investment.   In terms of investing, growth can be explained in various ways. In the investment world, growth is typically characterized as capital appreciation, which occurs when the price or worth of an investment rises during the time. Short-term and long-term growth are both possible, but significant short-term growth involves a higher level of risk.   The next strategy is purchasing and holding investments and represents likely the most straightforward technique for generating growth that can even be one of the most beneficial throughout time.   This method applies to those who pay closer attention to the markets or particular assets and can outperform the bu...
Read more