SEC Warns About Investing in RTOs
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The SEC has issued an investor bulletin warning about investing in companies that enter U.S. markets through so-called "reverse mergers" or "reverse takeovers (RTOs)."
A reverse merger is a transaction that involves a public "shell company" merging with a private operating company, that is usually seeking access to funding in the U.S. capital market.
"Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies," said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. "As with any investment, investors should thoroughly research the company – including ensuring there is accurate and up-to-date information – before making a decision to invest."
In recent months, the SEC has suspended trading in a number of reverse merger entities: (1) Heli Electronics Corp. (HELI); (2) China Changjiang Mining & New Energy Co (CHJI); (3) RINO International Corporation (RINO); (4) Advanced Refractive Technologies, Inc. (ARFR); (5) HiEnergy Technologies, Inc. (HIET); and (6) Digital Youth Network Corp. (DYOUF):
A reverse merger is a transaction that involves a public "shell company" merging with a private operating company, that is usually seeking access to funding in the U.S. capital market.
"Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies," said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. "As with any investment, investors should thoroughly research the company – including ensuring there is accurate and up-to-date information – before making a decision to invest."
In recent months, the SEC has suspended trading in a number of reverse merger entities: (1) Heli Electronics Corp. (HELI); (2) China Changjiang Mining & New Energy Co (CHJI); (3) RINO International Corporation (RINO); (4) Advanced Refractive Technologies, Inc. (ARFR); (5) HiEnergy Technologies, Inc. (HIET); and (6) Digital Youth Network Corp. (DYOUF):
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