Calls For Caution Over Reverse Mergers Grow Louder

Law360, New York (June 15, 2011, 7:18 PM EDT) -- While reverse mergers can be a boon for investors, the U.S. Securities and Exchange Commission is right to warn against such transactions as they are often shortcuts to accessing the public's money without the rigors of filing for an initial public offering, lawyers said Wednesday.

The dangers of such deals, in which a publicly listed shell company essentially takes over the assets of a private company for the purpose of equities trading, are manifold, the SEC said in an investor bulletin released Friday.

The agency warned...
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