This chapter first describes how Rule 419 protects shareholders, then explains how reverse mergers entered the mainstream during the Internet boom, and finally describes how private investments in public equity (PIPEs) transformed the reverse merger market in the mid‐2000s. Rule 419 has been an important influence on the practice of reverse mergers. Rule 419 is intended to address a situation where a founder of a blank‐check company wants first to use it to raise money in a public offering, and then look for a company with which to complete a reverse merger. The 2005 regulation significantly increase the amount of disclosure required immediately following most reverse mergers. This helped further improve the reliability, transparency, and acceptability of these transactions. In its adopting release, in part resulting from strong encouragement from the private sector, the SEC declared that it acknowledges the legitimate use of the reverse merger technique.