[Federal Register Volume 77, Number 50 (Wednesday, March 14, 2012)]
[Notices]
[Pages 15148-15151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6067]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66541; File No. 81-937]


Order Granting an Application of BF Enterprises, Inc. Under the 
Securities Exchange Act of 1934

March 8, 2012.

I

    BF Enterprises, Inc. (``BF Enterprises'' or the ``company'') has 
filed an application under Section 12(h) of the Securities Exchange Act 
of 1934 (the ``Exchange Act'') \1\ for a Commission order exempting the 
company from the requirement to register its common stock under Section 
12(g) of the Exchange Act.\2\ Section 12(h) grants the Commission the 
authority to exempt by order, upon application of an interested person 
and after notice and opportunity for a hearing, any issuer from Section 
12(g) ``if the Commission finds, by reason of the number of public 
investors, amount of trading interest in the securities, the nature and 
extent of the activities of the issuer, income or assets of the issuer, 
or otherwise, that such action is not inconsistent with the public 
interest or the protection of investors.''
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78l(h).
    \2\ 15 U.S.C. 78l(g).
---------------------------------------------------------------------------

    In its application, BF Enterprises states that it ``was a reporting 
company under the Exchange Act until 2005 and terminated its Exchange 
Act registration pursuant to a Form 15 filed with the Commission on 
August 30, 2005 in connection with a reverse/forward stock split 
transaction,'' which the company's shareholders ``approved * * * on 
July 21, 2005 based upon a Schedule 13E-3 filed with the Commission on 
March 31, 2005 and as subsequently amended by the Company.'' According 
to the application, a shareholder commenced litigation against the 
company in the Delaware Chancery Court in 2010 that ultimately resulted 
in that shareholder transferring its shares of the company's common 
stock to 500 identical trusts before December 31, 2010, the last day of 
the company's fiscal year.
    Under Section 12(g) of the Exchange Act and the Commission's rules 
thereunder, an issuer is required to register a class of its equity 
securities if, at the end of the issuer's fiscal year, the securities 
are ``held of record'' \3\ by 500 or more persons and the issuer has 
total assets exceeding $10 million.\4\ According to the application, BF 
Enterprises had total assets of $13.3 million as of December 31, 2010. 
In addition, each of the 500 trust entities was identified as an owner 
of common stock on the records of security holders maintained by or on 
behalf of BF Enterprises. However, BF Enterprises contends that it 
should not be required to register its common stock under Section 12(g) 
and is seeking an exemptive order to that effect. Specifically, BF 
Enterprises asserts that exemptive relief would be consistent with the 
standards articulated in Section 12(h) because: (1) BF Enterprises has 
fewer than 85 total beneficial owners of its common stock, one of which 
has expressly stated that its shares are held indirectly through 500 
trust entities formed solely for the purpose of attempting to cause the 
company to register its common stock under Section 12(g) (the ``BFE 
Trusts''); (2) as of December 31, 2010, BF Enterprises had total assets 
of approximately $13.3 million and 2010 annual net income of 
approximately $103,000; (3) BF Enterprises has a total of seven 
employees and its primary business comprises two parcels of real 
estate; and (4) there is no trading activity in, and an absence of any 
regular market for, BF Enterprises' common stock.
---------------------------------------------------------------------------

    \3\ 17 CFR 240.12g5-1. Exchange Act Rule 12g-5 states that: 
``For purposes of determining whether an issuer is subject to the 
provisions of sections 12(g) and 15(d) of the Act, securities shall 
be deemed to be `held of record' by each person who is identified as 
the owner of such securities on records of security holders 
maintained by or on behalf of the issuer,'' which is subject to 
certain conditions set forth in Rule 12g-5.
    \4\ 15 U.S.C. 78l(g)(1) and 17 CFR 240.12g-1. When Section 12(g) 
was enacted, the asset threshold was set at $1 million. The asset 
threshold has been increased on several occasions, most recently to 
$10 million in 1996. See Relief From Reporting by Small Issuers, 
Release No. 34-37157 (May 1, 1996) [61 FR 21353].
---------------------------------------------------------------------------

    On May 12, 2011, the Commission issued a notice of the filing of 
the application to give any interested person an opportunity to 
``submit to the Commission in writing its views on any substantial 
facts bearing on the

[[Page 15149]]

application or the desirability of a hearing thereon.'' \5\ The 
Commission received nine comment letters on the application,\6\ some of 
which were from shareholders of BF Enterprises and all of which opposed 
the application.
---------------------------------------------------------------------------

    \5\ See Notice of an Application of BF Enterprises, Inc. under 
Section 12(h) of the Securities Exchange Act of 1934, Release No. 
34-64479 (May 12, 2011) [76 FR 28482].
    \6\ Seven different commentators submitted the nine comment 
letters. The commentators were: Daniel F. Raider (June 6, 2011 and 
June 27, 2011) (``Raider Letters''); John D. Browning (June 16, 
2011) (``Browning Letter''); Jeremy Q. Zhu (June 16, 2011) (``Zhu 
Letter''); Paul Blumenstein (June 16, 2011 and Aug. 2, 2011) 
(``Blumenstein Letters''); John H. Norberg (June 15, 2011) 
(``Norberg Letter''); Joseph M. Sullivan (June 13, 2011) (``Sullivan 
Letter''); and James E. Mitchell (June 13, 2011) (``Mitchell 
Letter'').
---------------------------------------------------------------------------

    Commentators contended that the Commission should deny the 
application because the company's shareholders have been harmed by the 
company's decision to cease filing reports under the Exchange Act. 
Among other things, the commentators raised concerns about the 
company's lack of transparency \7\ and the detrimental effect of that 
lack of transparency on security holders, particularly in terms of 
liquidity \8\ and accountability of management.\9\ Specifically, some 
commentators claimed that the company's reverse/forward stock split 
transaction was unfair to shareholders by leaving them with few or no 
alternatives to achieving fair value for their investment, particularly 
when there is a concentration of share ownership in management.\10\ In 
the view of one of these commentators, it would have been fairer to 
shareholders if the company had chosen to go private--e.g., through a 
management buyout or sale to a third party--rather than ``go dark.'' 
\11\ Commentators also expressed concern that the lack of publicly 
available information about the company may have resulted in the 
company repurchasing its common stock from the public at prices lower 
than those that would have been available in a more informed and liquid 
market.\12\ Others expressed concern about a perceived trend in 
companies ``going dark'' and the negative impact this trend has on the 
capital markets generally.\13\
---------------------------------------------------------------------------

    \7\ See, e.g., Browning Letter and Raider Letters.
    \8\ See, e.g., Browning Letter; Raider Letters and Zhu Letter.
    \9\ See, e.g., Raider Letter and Blumenstein Letters.
    \10\ Sullivan Letter; Blumenstein Letters and Zhu Letter.
    \11\ Blumenstein Letters.
    \12\ Blumenstein Letters, Mitchell Letter and Norberg Letter.
    \13\ Blumenstein Letters and Zhu Letter.
---------------------------------------------------------------------------

    Some commentators urged the Commission to revise the definition of 
``holder of record'' to reflect the concentration of ownership of 
securities of current and former Exchange Act reporting companies in 
``street name,'' noting that the current definition allows companies to 
deregister under the Exchange Act despite having beneficial owners well 
in excess of current thresholds.\14\ One commentator explained that 
company shareholders who purchased their shares on the open market 
``did so with the reasonable expectation that their shares would enjoy 
continued liquidity for so long as the Company's business remained 
viable.'' \15\ This commentator argued that the purpose for 
establishing the BFE Trusts as owners of BF Enterprises common stock 
should not serve as grounds for granting the application when the 
company's purpose in effecting the reverse/forward stock split was to 
cease filing Exchange Act reports. Some commentators urged the 
Commission not to provide the relief requested in the application, but, 
rather, to address the company's arguments in the context of a 
reconsideration of how shareholders are counted and how many holders 
should trigger Exchange Act registration.\16\ Finally, certain of the 
commentators also disputed factual assertions in the application, 
claiming that the ``market value'' or ``intrinsic value'' of the 
company's assets is in excess of $30 million \17\ and that there is 
trading interest in the company's common stock.\18\
---------------------------------------------------------------------------

    \14\ See, e.g., Sullivan Letter; Norberg Letter; and Blumenstein 
Letters.
    \15\ Blumenstein Letters.
    \16\ See, e.g., Sullivan Letter; Norberg Letter; and Blumenstein 
Letter.
    \17\ Raider Letters and Blumenstein Letters.
    \18\ Raider Letters; Blumenstein Letters; and Sullivan Letter 
(asserting that ``[t]he Company's stock has been continuously 
offered for purchase and sale by multiple market makers in the over 
the counter market since the Company's deregistration became 
effective'').
---------------------------------------------------------------------------

II

    Section 12(g) was enacted in 1964 following a study of the 
securities markets commissioned by Congress and conducted by the staff 
of the Commission in the early 1960s (the ``Special Study'').\19\ In 
this study, the staff was asked to develop a recommendation for a 
standard for registration that would be both reasonably reliable and 
easily enforceable and cover issuers that are ``sufficiently 
significant from the point of view of the public interest to warrant 
the regulatory burden to be assumed by the Government and the 
compliance burden to be imposed on the issuers involved.'' \20\ Based 
on a balance of theoretical and practical considerations, the Special 
Study concluded that the holder of record test would be the most 
appropriate measure of public interest for imposing statutory 
disclosure requirements on issuers whose securities trade over-the-
counter.\21\ The Commission added an asset test to avoid imposing 
Exchange Act reporting obligations on insubstantial issuers for which 
the burden of compliance would be disproportionate to the public 
interest served by public disclosure.\22\ The Commission subsequently 
noted that ``[t]he shareholder-of-record criteria were intended to 
provide a certain and easily applied measure of public investor 
interest and to avoid the difficulties inherent in a standard based on 
the number of beneficial owners. Congress enacted Section 12(g) and 
15(d) on the assumption that there was a significant correlation 
between the number of recordholders and the number of underlying 
beneficial owners.'' \23\
---------------------------------------------------------------------------

    \19\ Report of Special Study of Securities Markets of the 
Securities and Exchange Commission, H.R. Doc. No. 88-95 (1963).
    \20\ Id. at 17, pt. 3.
    \21\ Id.
    \22\ See SEC Chairman William Cary's remarks in the Report of 
the Committee on Banking and Currency to Accompany S. 1642, S. Rep. 
No. 88-379 (1963) (``Committee Report'') at 52.
    \23\ See On the Practice of Recording the Ownership of 
Securities in the Records of the Issuer in Other Than the Name of 
the Beneficial Owner of Such Securities, Final Report of the 
Securities and Exchange Commission (Dec. 3, 1976) at 53.
---------------------------------------------------------------------------

    Shortly after Congress enacted Section 12(g) in 1964, the 
Commission adopted Exchange Act Rule 12g5-1 to define ``held of 
record'' for purposes of Section 12(g).\24\ This definition requires an 
issuer to count, as holders of record, only persons identified as 
owners on the record of security holders maintained by or on behalf of 
the issuer in accordance with accepted practice and subject to certain 
conditions. The Commission determined not to require issuers to count 
as holders of record the separate accounts in which securities are held 
by brokers, dealers, banks or their nominees for the benefit of other 
persons. The Commission explained that this would ``have the effect of 
simplifying the process by which companies determine whether or not 
they are covered by [Section 12(g)].'' \25\ The Commission further 
stated that it would ``determine in the light of experience whether 
inclusion of these accounts at a future date is necessary or 
appropriate to prevent circumvention of the [Exchange] Act and to 
achieve the

[[Page 15150]]

intended coverage on a uniform and acceptable basis.'' \26\ The 
Commission currently is undertaking such an assessment.\27\
---------------------------------------------------------------------------

    \24\ 17 CFR 240.12g5-1.
    \25\ See Adoption of Rules 12g5-1 and 12g5-2 Under the 
Securities Exchange Act of 1934, Release No. 34-7492 (Jan. 5, 1965) 
[30 FR 483].
    \26\ Id.
    \27\ See Testimony on the Future of Capital Formation, by Mary 
L. Schapiro, Chairman, U.S. Securities and Exchange Commission, 
before the U.S. House of Representatives Committee on Oversight and 
Government Reform (May 10, 2011), available at http://www.sec.gov/news/testimony/2011/ts051011mls.html. See also Testimony on 
Crowdfunding and Capital Formation, by Meredith B. Cross, Director, 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, before the Subcommittee on TARP, Financial Services and 
Bailouts of Public and Private Programs of the U.S. House of 
Representatives, Committee on Oversight and Government Reform (Sept. 
15, 2011), available at http://www.sec.gov/news/testimony/2011/ts091511mbc.html.
---------------------------------------------------------------------------

    Congress added the exemptive authority in Section 12(h) of the 
Exchange Act to provide the Commission with ``flexibility in the 
administration'' of Section 12(g) and other reporting provisions of the 
Exchange Act applicable to securities traded in the over-the-counter 
market.\28\ To this end, Congress provided the Commission with ``ample 
authority to modify, and provide exemptions from, the statutory 
requirements for different issuers on the basis of the number of 
shareholders, trading interest in their securities, nature and extent 
of their business activities, income, asset size, or other relevant 
considerations.'' \29\ Congress also recognized that strict application 
of numerical triggers may not, in all cases, be consistent with its 
desire to balance the public benefits of reporting with its burdens on 
reporting companies, particularly smaller companies.\30\
---------------------------------------------------------------------------

    \28\ Committee Report at 63.
    \29\ Id.
    \30\ The Senate Committee observed: ``Under the Investment 
Company Act of 1940, Congress set 100 shareholders as the standard 
for measuring the public interest. Such inclusive coverage might, 
however, create a burden on issuers and the Commission unwarranted 
by the number of investors protected, the size of companies 
affected, and other factors bearing on the public interest. Unlike 
the Securities Act, which requires filing only on the occasion of an 
offering, the Exchange Act requires at least annual filings. It is 
therefore necessary on purely practical grounds to limit in some 
manner the number of issuers required to comply, so that the flow of 
reports and proxy statements will be manageable from the regulatory 
standpoint and not disproportionately burdensome on issuers in 
relation to the national public interest to be served.'' Committee 
Report at 19.
---------------------------------------------------------------------------

    The Commission balances the factors in Section 12(h), with no 
single criterion alone serving as the basis for granting an exemption; 
rather, the criteria set forth in Section 12(h) serve as ``guidelines'' 
and the Commission looks at the particular circumstances of each matter 
to determine whether an exemption meets the standards in Section 
12(h).\31\ We address each of the factors below.
---------------------------------------------------------------------------

    \31\ See, e.g., In the Matter of The National Dollar Stores, 
Ltd., Admin. Proc. File No. 3-1212, 81-79 (Sept. 11, 1968) 
(explaining that ``the criteria [set forth in Section 12(h)] are 
designed merely to provide us with guidelines in considering the 
basic tests'' of whether an exemption is not inconsistent with the 
public interest or the protection of investors; and concluding that 
limited, conditional relief warranted ``under the circumstances''); 
In the Matter of Lake Ontario Concrete Limited, Admin. Proc. File 
No. 3-2615 (May 23, 1973) (where Commission recognized ``unusual 
combination of circumstances'' in granting limited exemption); and 
In the Matter of Multi Benefit Realty Fund, et al., Admin. Proc. 
File No. 3-4400 (Mar. 11, 1976) (where four partnerships with 
aggregate assets of $183 million and 5,600 limited partners denied 
exemption despite lack of trading interest in applicants' securities 
and purported sophistication of investors because those factors 
``outweighed'' by the applicants' size and by the number of 
investors involved, with Commission specifically noting ``[t]hough 
significant, trading interest is not the sole consideration to be 
looked at in these matters'').
---------------------------------------------------------------------------

    Number of shareholders: The company asserts, and the commentators 
do not dispute, that the company had fewer than 85 beneficial holders 
of its common stock and, excluding the BFE Trusts, fewer than 25 
holders of record of its common stock as of December 31, 2010. It also 
is undisputed that the only reason why BF Enterprises would be deemed 
to have 500 or more record holders is the action of a single beneficial 
owner to create 500 trusts and to transfer ownership of shares of BF 
Enterprises' common stock to those trusts for the sole purpose of 
attempting to cause the company to register its common stock under 
Section 12(g). It is further undisputed that this shareholder is the 
only beneficiary of these trusts.
    In our view, this increase in the number of owners appearing on the 
company's books does not reflect a growth in public holders that 
requires the protections of Exchange Act reporting; nor is this 
increase ``sufficiently significant from the point of view of the 
public interest to warrant the regulatory burden to be assumed by the 
Government and the compliance burden to be imposed on the [issuer] 
involved.'' \32\ Further, imposing Exchange Act reporting obligations 
on BF Enterprises solely because of the creation of, and deposit of 
company shares into, the BFE Trusts would not result in an increase in 
``the number of investors protected'' by such reporting, as Congress 
used that phrase in the Committee Report. As such, requiring the 
company to report under the Exchange Act does not advance the public 
policy underlying the Exchange Act's reporting provisions.
---------------------------------------------------------------------------

    \32\ Special Study at 17.
---------------------------------------------------------------------------

    Trading interest in the securities: In its application, BF 
Enterprises asserts that ``there is no trading activity in, and an 
absence of any regular market for, the Company's securities.'' While 
some commentators disputed the unqualified nature of this statement, 
they acknowledged that the company's stock does not trade 
frequently.\33\ Indeed, legal counsel representing the shareholder who 
created the BFE Trusts acknowledged that, ``[i]n 2010, there were only 
a few reported trades, and, to Leeward's knowledge, there have been no 
reported trades in 2011.'' \34\ However, all of these commentators 
asserted that the level of trading interest in BF Enterprises' stock 
depends to some extent upon the availability of its financial 
information and news.\35\
---------------------------------------------------------------------------

    \33\ Raider Letters; Blumenstein Letters; and Browning Letter.
    \34\ Blumenstein Letters.
    \35\ See, e.g., Raider Letters (explaining that, due to the 
company deregistering under the Exchange Act, ``it is no surprise 
that there is only limited interest in trading Company stock'').
---------------------------------------------------------------------------

    While we are mindful that the shareholders of BF Enterprises may 
benefit in the ways they explained in their comment letters if the 
company were to resume Exchange Act reporting--e.g., increased 
transparency, greater market liquidity, enhanced management 
accountability--we also must consider the burden of Exchange Act 
reporting on an entity such as BF Enterprises and whether there is 
currently sufficient trading interest to warrant the compliance burden 
to be imposed. While we recognize that, with more information, there 
may be more trading interest, it does not appear to us that there 
currently exists sufficient trading interest that would justify 
imposing the compliance burdens of Exchange Act reporting on the 
company.
    We note that, according to otcquote.com, 47 trades, covering fewer 
than 27,000 shares, in the company's common stock were effectuated in 
the over-the-counter market during the three-year period from January 
1, 2009 through December 31, 2011.\36\ This trading activity is of a 
level that the Commission has determined in the past militates toward 
granting exemptive relief under Section 12(h).\37\ That the

[[Page 15151]]

primary reason for the low level of trading may be the company's 
decision to effect the reverse/forward stock split and ``go dark'' does 
not, in our view, negatively impact an application under Section 12(h) 
where, as here, an issuer accomplishes deregistration after notice to 
its shareholders, including notice of the negative impact on the market 
for the issuer's securities.\38\ Further, we note that the Exchange Act 
does not require reporting companies to facilitate or maintain a market 
for their securities: Exchange listing is purely voluntary as is 
qualifying for quotation on the OTC Bulletin Board.
---------------------------------------------------------------------------

    \36\ Specifically, in 2009, there were 11 trades on six days on 
volume of 6,446 shares; in 2010, there were 22 trades on nine days 
on volume of 13,200 shares; and in 2011, there were 14 trades on 
eight days on volume of 7,127 shares.
    \37\ The Commission determined that there was an ``absence of a 
regular market for the [issuer's] stock'' and a ``relatively small 
number of transactions effected'' in the stock where there were only 
four bid and one ask quotations for the shares for a one-year period 
(followed by a cessation of published quotations), and a total of 
107 sales, involving 12,117 shares, were effected over a 27-month 
period. In the Matter of Security Savings and Loan, Admin. Proc. 
File Nos. 3-2511, 81-100 (Aug. 25, 1971). The Commission 
characterized trading interest as ``inconsequential,'' ``virtually 
dormant'' and ``insignificant'' where there was an average of five 
over-the counter transactions per month for a total monthly trading 
volume of 600 to 700 shares, when compared to 441,700 shares of the 
same class traded in one year on the Toronto Stock Exchange. In the 
Matter of Lake Ontario Cement Limited, Admin. Proc. File No. 3-2615 
(81-99) (May 23, 1973).
    \38\ Blumenstein Letters (explaining that ``[t]he Company 
acknowledged in its information statement regarding the Reverse 
Split that a `public market * * * would cease to exist' for its 
shares following the transaction.'')
---------------------------------------------------------------------------

    Nature and extent of business activities, income and asset size: In 
its application, BF Enterprises asserts that it had total assets of 
$13.3 million as of December 31, 2010. BF Enterprises also states that 
is a ``real estate developer whose primary business comprises two 
properties: a real estate development in suburban Tampa, Florida, and 
an office building in Tempe, Arizona'' with its assets ``consisting 
primarily of real estate, mortgage loans receivable and cash and cash 
equivalents.'' One commentator has disputed BF Enterprises' statement 
that its total assets as of December 31, 2010 amounted to $13.3 million 
and its 2010 annual net income was approximately $103,000.\39\ 
Specifically, this commentator estimates the company's assets at more 
than $30 million and questions the net income amount given total 
revenues in 2010 of approximately $2.7 million. However, even if this 
commentator is correct, it is undisputed that BF Enterprises' assets 
exceed the Section 12(g) asset threshold of $10 million as of December 
31, 2010.
---------------------------------------------------------------------------

    \39\ Raider Letters.
---------------------------------------------------------------------------

    It is relevant, nevertheless, that the securities at issue and the 
company's operations are not of a particularly complex nature, given 
the type and nature of the company's assets and its small 
workforce.\40\ In particular, BF Enterprises' assets and income are 
clearly not ``substantial'' and the company's operations are 
``limited'' under Commission precedent.\41\
---------------------------------------------------------------------------

    \40\ The application states that the company has a total of 
seven employees. Compare In the Matter of Multi Benefit Realty Fund, 
et al., Admin. Proc. File No. 3-4400 (Mar. 11, 1976) (where 
Commission found relevant in assessing this factor that the 
investment at issue was ``more complex than those in most 
securities'' because it involved limited partnership interests in 
``highly-leveraged, tax-oriented real estate speculations'').
    \41\ The Commission characterized the applicant's income as 
``limited'' where it had ``gross operating income of $446,888 and 
net income, after dividends on savings accounts and federal income 
taxes, of $16,988.'' In the Matter of Security Savings and Loan, 
Admin. Proc. File Nos. 3-2511, 81-100 (Aug. 25, 1971). See also In 
the Matter of Orchard Supply Building Co., Admin. Proc. File No. 3-
789; 81-41 (May 1, 1967) (finding retail sales of over $3.5 million 
to be ``substantial'' and recognizing that the ``impact of those 
sales on interstate commerce cannot be immaterial'' where applicant 
engaged in the operation of three diversified hardware stores in the 
City of San Jose, California).
---------------------------------------------------------------------------

    Other factors: Several commentators expressed their concern that a 
company ``going dark'' can repurchase their securities from stranded 
shareholders at very substantial discounts to intrinsic value. While an 
illiquid market can result in a market price lower than that available 
in a more liquid market, we note that the antifraud provisions of the 
federal securities laws apply to company repurchases from its 
shareholders.\42\ Accordingly, while the availability of current 
Exchange Act information about a company may benefit its shareholders 
who seek to sell their shares into a public market, shareholders of all 
companies--whether or not subject to Exchange Act reporting--are 
protected against fraud in connection with their sales or purchases of 
company stock.
---------------------------------------------------------------------------

    \42\ For example, under Section 10(b) of the Exchange Act and 
Rule 10b-5 under the Exchange Act, a privately-held company may be 
liable for material misrepresentations or materially misleading 
omissions when repurchasing securities from its shareholders. See, 
e.g., Smith v. Duff and Phelps, Inc., 891 F.2d 1567, 1574 (11th 
Cir.1990) (holding that closely-held company had duty to disclose to 
retiring employee negotiations with prospective stock purchaser).
---------------------------------------------------------------------------

    Commentators also expressed a general concern about the ability of 
public companies to ``go dark'' \43\ and the potentially negative 
impact an exemption in this matter would have on the over-the-counter 
markets generally.\44\ However, the act of ``going dark'' is not itself 
grounds for denying the application. The appropriate thresholds for 
``going dark'' generally are a subject for study and broad public input 
and therefore more appropriately handled through rulemaking.
---------------------------------------------------------------------------

    \43\ See, e.g., Browning Letter.
    \44\ See, e.g., Blumenstein Letters (arguing that ``[a]lthough 
the Commission would only be granting relief to one company, 
investors in OTC stocks may take the granting of such an exemption 
as an indication that they should be wary of investing in any OTC 
company that is susceptible of going dark'').
---------------------------------------------------------------------------

III

    Having considered the application and the comment letters, we find 
that the requested exemption is not inconsistent with the public 
interest or the protection of investors and the purposes fairly 
intended by the policy and provisions of the Exchange Act, for the 
following reasons:
    (1) As of December 31, 2010, the company had fewer than 85 
beneficial owners of its common stock and, excluding the BFE Trusts, 
fewer than 25 holders of record of its common stock;
    (2) The BFE Trusts have only one beneficiary, who has expressly 
stated that its shares are held indirectly through 500 trust entities 
formed solely for the purpose of attempting to cause the company to 
register its common stock under Section 12(g);
    (3) There currently appears to be extremely limited trading 
interest in BF Enterprises' common stock, although we recognize that 
this may be due, in part, to the company having ceased filing reports 
under the Exchange Act;
    (4) The limited nature and extent of BF Enterprises' business 
activities; and
    (5) Repurchases by the company of its securities are subject to 
certain anti-fraud provisions of the federal securities laws, including 
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
    Accordingly, it is ordered, that pursuant to Section 12(h) of the 
Exchange Act, BF Enterprises is hereby exempted from the requirement to 
register its common stock under Section 12(g) of the Exchange Act, 
effective immediately; and
    It is further ordered, that this exemption shall remain in effect 
only for so long as counting each of the BFE Trusts as a separate 
``holder of record'' for purposes of Section 12(g) would be the sole 
reason for the number of holders of record of BF Enterprises' common 
stock to equal or exceed 500.

    For the Commission, by the Division of Corporation Finance, 
pursuant to delegated authority.\45\
---------------------------------------------------------------------------

    \45\ 17 CFR 200.30-1(e)(7).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6067 Filed 3-13-12; 8:45 am]
BILLING CODE 8011-01-P