Are Reverse Mergers A Nevada Problem?

Yesterday, the Securities and Exchange Commission issued this bulletin on the risks of investing in reverse merger companies. In this post from the week before, I wrote about a recent article that found that Nevada is second only to Delaware in attracting out-of-state publicly traded corporations. The article by Professors Michal Barzuza and David C. Smith looked at the number of accounting restatements and found:

“Our results suggest that Nevada corporate law attracts a certain class of firms that are prone to financial reporting failures and that these failures are followed by significant losses to shareholder value.”

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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