February 4, 1999
RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE
Re: Simplystocks.com
Incoming letter
dated January 19, 1999
Based on the facts presented, the Division's view
is that the issuance of securities in consideration of a person's registration
on or visit to an issuer's internet site would be an event of sale within the
meaning of section 2(a)(3) of the Securities Act of 1933. As a result, such an
issuance would violate section 5 of the Act unless it was the subject of a
registration statement or a valid exemption from registration.
This
position is based on the representations made to the Division in your letter.
Any different facts or conditions might require another result.
Our
understanding is that the Divisions of Market Regulation and Investment
Management will reply separately to your letter.
Sincerely,
Michael Hyatte
Special Counsel
INQUIRY-1: Simplystocks.com
8963
Complex Drive, Suite F
San Diego, CA 92123
619.565.7873
800.877.3282
Fax: 619.514.3947
www.simplystocks.com
January 19, 1999
Attn: Mrs. Catherine McGuire, Chief Counsel
Division of Market [*2]
Regulation
Securities Exchange Commission
450 Fifth St NW
Washington, D.C. 20549-10-1
Dear Mrs. McGuire,
Ms.
Lori Nice suggested that I contact you regarding an upcoming 'free' stock
giveaway we are planning on the Internet. My name is Jay Lacny, President of
Simplystocks.com a non publicly traded
California Corporation headquartered in San Diego. Simplystocks.com has taken the SEC
Edgar Database and put this information into a 'standardized' format for both
Personal and Institutional Investors research use. We will be offering our
service and products on both the Internet and on CD. Our competitors include
Market Guide, S&P Comstock, Media General & Zacks. Market Guide is the
most similar competitor and currently has a market cap of $ 80,000,000 USD.
Simplystocks.com has an almost
identical product line to Market Guide with the one exception, Market Guide has
an established customer base while Simplystocks.com is a startup with no
revenue, just accumulated expenses exceeding $ 1,000,000 from all Principles and
Investors.
Our marketing plans include an offering of a 'free' stock
give away to individuals who visit our website during an 180 day period. The
customer will simply log [*3] in to
the Simplystocks.com website and give their
name, address, social security number, phone number, e-mail address and then
choose a login and password. After completing this they become eligible for the
stock pool. Each time they revisit the website and use their login and password
they will accumulate another entry into the stock pool. (Automated entries using
computer generated algorithms will be disqualified. Each login will be limited
to one entry per login per day). As an example, if 100,000 people visit the
Simplystocks.com website 2 times each
there would be a total of 2 points per person for a total of 200,000 overall
points. If we have 150,000 stocks to be issued then 75,000 people would receive
2 stocks each. A computer generated 'algorithm' operated and overseen by an
'independent' third party will select the recipients of the stocks. The total
stock given away will be 10% of Simplystocks.com issued stock and be
appropriated as follows: 8% for the pool and 2% of the total for 1 individual
drawn from the pool separately. Friends, relatives, or employees of Simplystocks.com or Simply Internet
(parent company) will be ineligible for this free stock offering. Stocks will
[*4] not be
issued directly to individuals, rather a e-mail notification of success will be
sent.
We intend to start an aggressive advertising campaign including
direct email, banner advertising, Radio, TV and Print Interviews to promote both
the Simplystocks.com products and our free
stock offering. Our product will be offered free for the first 180 days to any
website or financial institution that currently uses our competitors products.
This will enable us to gain market share and branding. Thereafter we intend to
make an offering of our products at below market rates reflecting our reduced
production costs which are substantially lower than our competition. Our exit
strategies include an IPO or more likely a merger with a large financial
institution who may be seeking to acquire a visible heavily trafficked website
such as ours.
Two companies have offered free stock on the Internet in
the past 12 months. They are Travelzoo.com an offshore company and Ecompare
based out the same offices as Travelzoo.com in Palo Alto. These companies have
had dialogue with the SEC according to our information but did not receive a no
action letter. I am being represented by Heller Ehrman White & McAuliffe
[*5] who also
represented Ecompare. My investors have requested that I personally follow up
with the SEC to assure that we are following all guidelines and regulations.
The Internet is rapidly changing direction and focus on how business is
being conducted. Simplystocks.com will now be the third
company to offer free stock on the web and it will be unlikely that it is the
last. As this is uncharted waters for all involved and I would like to extend an
offer to work with the SEC on making case history for these type of
transactions. We will communicate very closely with yourself or whomever you
choose at the SEC prior to implementing any offering, advertising, or promotion
and engage ourselves in a discussion of how to move forward. The management of
Simplystocks.com is highly ethical and
in no way wants to give off any hint of misrepresenting our product or offering
to the consumers. I have been selected to make our business a successful and
visible one. We are confident this marketing idea will bring a benefit to our
clients with 'no strings' attached while providing us with the branding of Simplystocks.com which translates into
sales and profitability.
In conclusion, I trust that I [*6] have presented a overall picture of what we
are trying to accomplish. Simplystocks.com is a legitimate
company that has already invested vast resources into a product that Investors
are voraciously seeking. Simplystocks.com controls its own data
and will provide an unbiased view of the fundamentals of a companies true health
which overtime will create loyalty. I would like to arrange a time to discuss
this opportunity for both the SEC and Simplystocks.com to set a precedent in
offering 'free' stock on the Internet. I will call you to arrange a time to
discuss this further or if you prefer you may reach me at 800.877.3282, or
619.261.7355(cell), or jay@simplystocks.com.
Regards,
Jay Lacny
President
Simplystocks.com