Wednesday, October 5, 2011

A Tool for Micro Cap Executives: The No Action Letter

As an executive, there are many responsiblities including making sales, promoting your company, recruiting personnel, and filing with government agencies to make sure everything is within the parameters of the law.  In the micro cap sector, many questions arise to what can and what can not be done in accordance to securities regulation.  To answer some of these questions, the Securities and Exchange Commission has allowed question and answer sessions in the form of a "No Action Letter"

As stated on the S.E.C. website:

An individual or entity who is not certain whether a particular product, service, or action would constitute a violation of the federal securities law may request a "no-action" letter from the SEC staff. Most no-action letters describe the request, analyze the particular facts and circumstances involved, discuss applicable laws and rules, and, if the staff grants the request for no action, concludes that the SEC staff would not recommend that the Commission take enforcement action against the requester based on the facts and representations described in the individual’s or entity's original letter. The SEC staff sometimes responds in the form of a no-action letter to requests for clarification of the legality of certain activities.

You can find a compilation of Staff No Action, Interpretive, and Exemptive Letters from the Divisions of Corporation Finance, Investment Management, and Market Regulation and the Office of Chief Accountant in the "Staff Interpretations" section of our website.

These letters to the S.E.C. should be written and sent by an attorney, and the letters should be pointed to exactly what you are going to do, with no deviation.  Any deviation from the no action letter may leave a company or party prone to litigation, since it will be nullified in the eyes of the S.E.C.

The micro cap manager is not the only one that can take advantage of this tool.  Investment banks, touters, promoters, micro cap funds, and micro cap traders are all parties that have utilized this tool.  Hope this was helpful, please see the S.E.C. website for more information.


The Micro Cap Company Team
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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email, If you would like to advertise on The Blog, click here

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