June 16, 2011
RE: File Number 81-937
We are writing to provide our comments on the application for an exemption from the provisions of Section 12(g) of the Securities Exchange Act of 1934 by B.F. Enterprises, Inc. ("BFE"). While we do not have any securities interests in BFE, we oppose the granting of applications such as this as a matter of policy. We believe the recent trend of publicly traded securities delisting then deregistering their shares ("Going-Dark"), in order to avoid the reporting requirements associated with the Securities and Exchange Act of 1934, threatens to damage the effectiveness of public equity markets.
We currently own a number of publicly traded companies that have undergone a Going-Dark process. A company often ceases to provide financial information once it has deregistered its shares. As a result, shareholders have no visibility into the performance of the company and little to no liquidity for its shares. Such a process is extremely damaging to shareholders and can create situations in which management or majority shareholders can take unfair advantage of minority shareholders.
In general, we understand that the SEC's mission is to protect investors, maintain fair and orderly markets for securities exchange, and encourage capital investments. Registration of securities protects investors via the associated reporting requirements, and therefore encourages investments and improves trading liquidity. Investors in publicly traded companies invest under the assumption that they will have regular access to a company's SEC filings as well as have a voice in corporate governance through proxy voting. Without this access, and particularly without the market liquidity that depends on investors having such access, many investors would be reluctant to invest in shares of a company.
Currently, companies with concentrated holdings have almost unchecked ability to exit their reporting requirements using reverse stock splits to cash out shareholders to get below the record shareholder limit. Minority investors are powerless to prevent such transactions and are often denied the right of a fair hearing. We believe there should be a higher standard for companies undertaking a Going-Dark transaction, especially after companies have enjoyed the benefits of being publicly traded. If companies wish to relieve themselves of SEC requirements, a more equitable method would be a going private transaction.
We believe that if the SEC grants the application of BFE to be exempted from registration, it may damage the integrity of the public markets as it will create a precedent that makes it easier for companies to be relieved of their duties to its minority shareholders. Accordingly, we oppose the exemption.
Sincerely yours,
Jeremy Q. Zhu
Managing Director
Wedbush Opportunity Capital, LLC