September 20, 2021

Lawyer Nightmares: CIK Number Change Results in 12(j) Proceeding

Here’s the scenario: a company moved to Canada and changed its name, and when it did so, it mistakenly changed its CIK number with the SEC. As a quick trip to the Edgar page on the SEC’s website will inform you, that “Central Index Key” number is used to identify corporations and individual people who have filed disclosure with the SEC. You aren’t supposed to change your CIK for a name or address change, but hey, what’s the worst that could happen? How about the SEC instituting a Section 12(j) proceeding seeking to involuntarily deregister your securities:

On September 22, 2020, the Commission issued an order instituting an administrative proceeding (“OIP”) against STRATABASE under Section 12(j) of the Securities Exchange Act of 1934.1 The OIP alleged that STRATABASE had violated periodic reporting requirements and sought to determine, based on those allegations, whether it was “necessary and appropriate for the protection of investors to suspend . . . or revoke the registration” of STRATABASE’s securities.

On June 21, 2021, the Division of Enforcement moved to dismiss this proceeding. The Division states that, on June 9, 2021, it spoke with counsel for Strata Power Corporation, the successor to STRATABASE. The Division states that it subsequently confirmed the following representations made during that conversation by counsel for Strata Power Corporation: (i) that when STRATABASE changed its name after moving to Canada in 2004, it also inadvertently changed CIK numbers; and (ii) that Strata Power Corporation was up to date in its periodic filings at the time that this proceeding was instituted and remains current.

Fortunately, the SEC granted the Division’s motion to dismiss, but can you imagine being the poor lawyer who received notice of the institution of this proceeding?

John Jenkins