I know there is a market for public listed shells for reverse mergers.

See:://www.google.com/search?sourceid=navclient&ie=UTF-8&oe=UTF-8&q=reverse+mergers

However, I was told that it is illegal to take a shell public with the
sole intention of reselling it.  You can sell your shell if you
company fails and you want to get back money you spent creating it,
but that can’t be you intention from day one.

Is this true? Where is this stated?

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Clarification of Question by edgreen321-ga on 08 Jun 2003 20:20 PDT

Note: It seems like you can set up a public REPORTING company and get
it ready for trading.  This is not what I am talking about.  I am
talking about a public TRADING company that has never held or "been a
shell" of another company.

Edgreen --

The principal law covering U.S. securities and their issuance are the
Securities Act of 1933 and the Securities Exchange Act of 1934. 
However, that doesn't prevent exchanges from setting up tighter rules
regarding either listing or Exchange members.

There are three national exchanges in the U.S. (NYSE, AMEX and NASDAQ)
but this area on regulation from the New York Stock Exchange website
may help you:
http://www.nyse.com/regulation/p1020656068597.html?displayPage=%2Fregulation%2F1022221392702.html

Best regards,

Omnivorous-GA