IFGX Blog

  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...

This kind of action, stock promotion, in the first place affects investors then restricts capital development, and in the end undermines effective pricing methods throughout all markets. So stock advertising represents an issue in the industry if it's deceptive and manipulating, by impacting trade the national stock market on the one hand and over-the-counter on the other.  To prevent this OTC Markets Group created a Promotional Risk flag, which is the way investors can detect this kind of stock promotion program. The first thing that the OTC Markets team does is accumulate data from a large group of players and study it just before displaying the Promotional Risk flag on their website if they notice any sign of stock promotion. In this group of stock promotion signs OTC Markets Group just added another one-Shell Risk designation. That mark warns that a firm shows criteria common of shell firms based on an assessment of the firm’s main annual financial records.  Wha...