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Securities
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July 31, 2024
Chancery Goes With Deal Price In Exchange Co. Appraisal
A venture capital firm that sued for an appraisal of its investment in FairXchange Inc. is entitled to $10.42 per share, the same as the $330 million deal price that Coinbase Global Inc. offered when it bought the securities exchange startup in 2022, a Delaware vice chancellor ruled Tuesday.
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July 31, 2024
SEC Asked For Public Tax Reporting By Group With $2.3T
The U.S. Securities and Exchange Commission was asked Wednesday to begin a rulemaking procedure to require public country-by-country reporting of tax by nearly 90 investment funds, labor unions, activists and others with combined assets over $2.3 trillion.
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July 31, 2024
Doc 'Muddle' Stalls Trump Media SPAC Figure's Ouster Suit
Pointing to multiple, conflicting operating agreement versions, a Delaware vice chancellor said she was unable to rule Wednesday on a suit to uphold dismissal of the managing member of a blank check company sponsor for the deal that took former President Donald Trump's social media company public.
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July 31, 2024
CrowdStrike Investors Sue Over Stock Drop After Outage
A group of CrowdStrike investors sued the cybersecurity company Tuesday in Texas federal court, alleging that it misrepresented the measures it was taking to prevent a system crash, which caused its stock price to plummet after the platform experienced a massive outage earlier this month.
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July 31, 2024
NYC Fraudster Gets Two Years For Crime Borne Of 'Nastiness'
A Manhattan federal judge sentenced a New York City woman to two years in prison Wednesday for stealing $290,000 from investors who backed her purported investment club, saying the defendant's criminal conduct, including threats to victims, was uncommonly callous.
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July 31, 2024
DraftKings Closes NFT Platform Over 'Legal Developments'
DraftKings has announced that it is shuttering its nonfungible token marketplace due to "recent legal developments," with the decision coming weeks after a Massachusetts federal judge permitted a proposed securities class action involving the marketplace to move forward.
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July 31, 2024
Dutch Regulators OK Freshfields-Guided Asset Exchange
A Dutch digital asset exchange is touting itself as the first widely accessible and regulated crypto derivatives exchange in Europe after receiving a license from the government of the Netherlands, aided by the guidance of Freshfields Bruckhaus Deringer LLP, the firm has announced.
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July 31, 2024
Rising Star: Robbins Geller's Ting H. Liu
Ting H. Liu of Robbins Geller Rudman & Dowd LLP helped investors secure a $350 million settlement against Alphabet after the Google parent company suffered a data breach, earning her a spot among the securities law practitioners under age 40 honored by Law360 as Rising Stars.
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July 30, 2024
FDIC Moves To Revamp Brokered Deposit Regs In Policy Push
The Federal Deposit Insurance Corp. on Tuesday unveiled a proposal that would subject more bank deposits to heightened regulation as "brokered" funds, outlining new rules that the agency pitched as addressing risks highlighted by failures of firms like First Republic Bank and Voyager, a crypto lender.
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July 30, 2024
FTX Users Say Sullivan & Cromwell Must Face Abetting Claims
FTX customers told a Florida federal judge on Tuesday that Sullivan & Cromwell LLP can't dismiss customer claims it aided and abetted the defunct cryptocurrency exchange's fraud as "speculative allegations" when the customers' complaint "paints a much more detailed and nefarious picture."
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July 30, 2024
4th Circ. Refuses To Certify Class Of Golf Course Investors
The Fourth Circuit on Tuesday declined to reverse a lower court order denying class certification to a group of Chinese investors who allege their money was used to purchase several golf courses, ruling they are not similar enough to make certification proper.
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July 30, 2024
Atty Teams Wrestle In Chancery Over WWE Merger Suit Pick
Two legal tag teams have pitched competing bids to lead a Delaware Court of Chancery suit aimed at World Wrestling Entertainment Inc. and its $21.4 million merger with Ultimate Fighting Championship, with one stressing the depth of its complaint and the other, in part, stressing depth of experience in pressing sexual misconduct claims.
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July 30, 2024
FTX Exec Gets Prison Report Date Delayed After Dog Attack
A New York federal judge on Tuesday allowed ex-FTX executive Ryan Salame to delay his surrender date to begin his prison term from August to October, as he was forced to undergo medical treatment and surgery after being mauled by a German shepherd while visiting a friend's house last month.
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July 30, 2024
FINRA Says Jarkesy Doesn't Apply To Its Internal Proceedings
The Financial Industry Regulatory Authority is opposing a broker's attempt to get the regulator's internal proceedings against him tossed, saying that he has no case under the U.S. Supreme Court's recent Jarkesy decision because FINRA is not a government regulator subject to the same constitutional challenges as the U.S. Securities and Exchange Commission.
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July 30, 2024
NJ Men Accused Of Running $6.7M Fuel Investment Scam
Two Middlesex County men ran a scheme using fake identities and "sham companies" to defraud investors out of about $6.7 million that they thought was going into fuel products businesses, according to an indictment announced Monday by New Jersey Attorney General Matthew J. Platkin.
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July 30, 2024
Chancery Rejects Forte-Camac Deal As 'Not Fair' To Class
A Delaware Chancery Court judge on Tuesday rejected a settlement between Forte Biosciences Inc. and Camac Partners LLC that would have ended the activist investor's class action over Forte's alleged board entrenchment, finding that the proposed deal gave Camac "unique and personal benefits" that weren't shared with the rest of the class.
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July 30, 2024
Calif. Broker-Dealer To Pay FINRA $1.5M For Excessive Trades
Broker-dealer Western International Securities Inc. has agreed to pay more than $1.5 million to settle allegations from the Financial Industry Regulatory Authority that the firm failed to properly monitor potentially excessive trading in about 100 accounts, and it was hit with a separate cease-and-desist order from the U.S. Securities and Exchange Commission Tuesday over Regulation Best Interest violations.
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July 30, 2024
$8.5B Gores-Led Metal Packaging Co. SPAC Draws Del. Suit
A former shareholder of the blank-check company that took Ardagh Metal Packaging Group SA public has packaged up a Delaware Court of Chancery lawsuit seeking damages in the wake of the merged company's stock plunge after going public in an $8.5 billion cash-and-share deal.
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July 30, 2024
Feds, SEC Say Creator Of Crypto Co. BitClout Misled Investors
Federal prosecutors and the U.S. Securities and Exchange Commission announced parallel actions Tuesday against the founder of crypto project BitClout for allegedly duping investors and spending millions of proceeds for his own benefit.
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July 30, 2024
Crypto Groups Say Loper Bright Defeats SEC Dealer Rule
The crypto industry groups fighting U.S. Securities and Exchange Commission regulations that could force some of their members to register with the agency as securities dealers are arguing that the U.S. Supreme Court's recent abandonment of Chevron deference bolsters their argument that the SEC lacked the authority to expand its definition of dealer.
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July 30, 2024
SEC Sues NC Investment Adviser Over Bogus Guarantees
A North Carolina investment adviser lied to clients about the safety of their investments when he sold them on risky corporate bonds issued by a financial services company that went bankrupt, the U.S. Securities and Exchange Commission said in a newly filed complaint.
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July 30, 2024
SEC Asks To Amend Token Claims In Binance Complaint
The U.S. Securities and Exchange Commission told a D.C. federal court that it plans on amending its claims concerning third-party tokens that traded on crypto exchange Binance's platform, according to a Tuesday status update in the enforcement suit.
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July 30, 2024
AI Dominance In Startup Funding Has Small Biz Concerned
Except for funding for artificial-intelligence startups, early-stage companies are struggling to raise capital amid higher interest rates and lean markets for initial public offerings and mergers and acquisitions, members of a small business-focused panel advising the U.S. Securities and Exchange Commission said Tuesday.
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July 30, 2024
Activist Investor Demands Against US Firms Spike 9%
The number of U.S. companies subject to shareholder activist demands in the first half of this year increased to 449 from 412 companies in the first half of last year, representing a 9% jump, according to a report published Tuesday by Diligent Market Intelligence.
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July 30, 2024
Houston Energy CEO Ran $21M Stock Scheme, SEC Says
The U.S. Securities and Exchange Commission on Monday sued the head of a Houston energy company in Texas federal court, alleging he raised more than $21 million from over 300 investors nationwide through a fraudulent and unregistered offering of preferred stock in his fuel-blending company.
Expert Analysis
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FDIC Bank Disclosure Rules Raise Important Questions
The Federal Deposit Insurance Corp.'s new rules mandating disclosures for nonbanks offering deposit products leave traditional financial institutions in a no-man's land between fintech-oriented requirements and the reality of personal service demanded by customers, say Paul Clark and Casey Jennings at Seward & Kissel.
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Recent Wave Of SEC No-Action Denials May Be Slowing
The U.S. Securities and Exchange Commission in March granted no-action relief to Verizon and others on the grounds that a director resignation bylaw proposal would mean violating Delaware law, bucking recent SEC hesitation toward such relief and showing that articulating a basis in state law is a viable path to exclude a proposal, say attorneys at Winston & Strawn.
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Don't Use The Same Template For Every Client Alert
As the old marketing adage goes, consistency is key, but law firm style guides need consistency that contemplates variety when it comes to client alert formats, allowing attorneys to tailor alerts to best fit the audience and subject matter, says Jessica Kaplan at Legally Penned.
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10b-5 Litigation Questions Follow Justices' Macquarie Ruling
Last month, the U.S. Supreme Court held in Macquarie v. Moab that pure omissions are not actionable under U.S. Securities and Exchange Commission Rule 10b–5(b), creating a slightly higher bar for plaintiffs and setting the stage for further litigation over several issues, say Steve Quinlivan and Sean Colligan at Stinson.
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Series
Walking With My Dog Makes Me A Better Lawyer
Thanks to my dog Birdie, I've learned that carving out an activity different from the practice of law — like daily outdoor walks that allow you to interact with new people — can contribute to professional success by boosting creativity and mental acuity, as well as expanding your social network, says Sarah Petrie at the Massachusetts Attorney General’s Office.
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Navigating SPAC Market Challenges For Microcap Issuers
For microcap issuers, the special-purpose acquisition vehicle market tells a cautionary tale in which few targets attain the advantages they seek, and important considerations for companies with market capitalization of under $300 million include negotiating costs and expenses upfront to avoid becoming saddled with debt, say attorneys at Lucosky Brookman.
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Think Like A Lawyer: Follow The Iron Rule Of Trial Logic
Many diligent and eager attorneys include every good fact, point and rule in their trial narratives — spurred by the gnawing fear they’ll be second-guessed for leaving something out — but this approach ignores a fundamental principle of successful trial lawyering, says Luke Andrews at Poole Huffman.
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Circuit Split Brews Over Who's A Securities Seller Under Act
A Securities Act section that creates private liability for the sale of an unregistered security is rapidly becoming a favored statute for plaintiffs to wield against participants in both the digital asset and traditional securities markets, but the circuit courts have diverged on who may be held liable for these violations, say Jeffrey L. Steinfeld and Daniel Aronsohn at Winston & Strawn.
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Banks Have Won Syndicated Loan Battle, But Not The War
Though the U.S. Supreme Court's recent denial of certiorari in Kirschner v. JPMorgan preserves the status quo that syndicated loans are not securities, the U.S. Securities and Exchange Commission's discomfort suggests that the underlying issues have not been fully resolved, say attorneys at Crowell & Moring.
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The Art Of Asking: Leveraging Your Contacts For Referrals
Though attorneys may hesitate to ask for referral recommendations to generate new business, research shows that people want to help others they know, like and trust, so consider who in your network you should approach and how to make the ask, says Rebecca Hnatowski at Edwards Advisory.
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Compliance Strategies To Mitigate 3 New Areas Of AI Risk
The era of artificial intelligence-assisted corporate crime is here, but several concrete mitigation strategies can allow companies to address the new, rapidly evolving threats posed by deepfakes, information barrier evasion and AI model manipulation, say attorneys at Debevoise.
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SEC Off-Channel Comms Action Hints At Future Enforcement
Although the U.S. Securities and Exchange Commission’s recent enforcement action against Senvest does not shed light on how the agency will calibrate penalties related to off-channel communications violations, it does suggest that we may see more cases against standalone investment advisers, say attorneys at Sidley.
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Chancery's Carvana Suit Toss Shows Special Committee Value
The Delaware Chancery Court’s recent dismissal of a stockholder complaint against Carvana illustrates how special litigation committees can be a powerful tool for boards to regain control after litigation alleging a breach of fiduciary duty, say attorneys at Morgan Lewis.
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Series
Being An Equestrian Makes Me A Better Lawyer
Beyond getting experience thinking on my feet and tackling stressful situations, the skills I've gained from horseback riding have considerable overlap with the skills used to practice law, particularly in terms of team building, continuing education, and making an effort to reset and recharge, says Kerry Irwin at Moore & Van Allen.
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7th Circ. Mootness Fee Case May Curb Frivolous Merger Suits
On April 15, the Seventh Circuit in Jorge Alcarez v. Akorn Inc. mapped out a framework for courts to consider mootness fees paid to individual shareholders after the voluntary dismissal of a challenge to a public company merger, which could encourage objections to mootness fees and reduce the number of frivolous merger challenges filed, say attorneys at Skadden.