United States Senate Majority Leader Mitch McConnell has announced that he would introduce legislation that would legalize hemp as an agriculture product. The Hemp Farming Act of 2018 would essentially remove hemp from a list of controlled substances that are prohibited under federal law. According to Majority Leader McConnell, his legislation would remove federal barriers to expand domestic production of hemp and provide hemp researchers access to federal grants from the US Department of Agriculture. (more…)
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White and Williams LLP has contributed 47 entries to our website, so far.
On March 16, 2018, the US Court of Appeals for the District of Columbia Circuit released its much anticipated ruling in ACA International, et al., v. Federal Communications Commission rejecting the expansive definition of automated telephone dialing system (ATDS) and setting aside the “one-call safe harbor rule” for reassigned cell phone numbers set forth in the Federal Communications Commission’s (the “Commission” or “FCC”) July 2015 Declaratory Ruling and Order interpreting the Telephone Consumer Protection Act (TCPA). The court also upheld the scope of the Commission’s exemption to the prohibition of robo-calls specifically for healthcare-related calls of a time sensitive nature. (more…)
SEC Enforcement Action Shines Light on Equity-Based Compensation Disclosure Compliance of Private Companies
On March 12, 2018, the US Securities and Exchange Commission (SEC) brought an action against Credit Karma, Inc., a Silicon Valley-based fintech company, for issuing stock options to its employees in violation of US securities laws. The action resulted in a cease and desist order and settlement imposing a $160,000 penalty on the company. Like so many other private companies, Credit Karma sought to rely on Rule 701 promulgated under the Securities Act to provide equity-based compensation to its employees. However, in this case, the company failed to comply with certain disclosure requirements (out of confidentiality concerns) including providing financial statements and risk disclosures after the aggregate sales price of the stock options issued exceeded $5 million in a 12-month period. (more…)
By: Howard Jiang
Under the current rules of the US Securities and Exchange Commission (SEC), foreign issuers are allowed to use International Financial Reporting Standards (IFRS) financial statements in their registration statements and periodic reports (17 CFR Parts 210, 230, 239 and 249). This substantially reduces the burden on foreign private issuers compared to complying with US Generally Accepted Accounting Principles (GAAP) auditing standards. Compliance with US GAAP requires engaging a US Public Company Accounting Oversight Board (PCAOB) qualified auditing team and applying US accounting standards, which in many respects are very different from those of the foreign private issuer’s home country or IFRS. This typically increases the complexity and costs associated with the auditing process. (more…)
On March 7, 2018, the US Securities and Exchange Commission (SEC) issued additional guidance with respect to digital assets trading platforms, affirming that platforms that offer trading of cryptocurrencies that are securities and operate as an “exchange,” as defined by the federal securities, must be registered with the SEC or operate under an exemption from registration. The SEC’s statement focuses on trading platforms that allow investors to buy and sell the vast array of digital coins including Bitcoin, Ethereum and Litecoin. The SEC guidance follows on the heels of an SEC action announced on February 21, 2018 against a former cryptocurrency exchange, Bitfunder, and its founder, who were charged with operating an unregistered exchange and defrauding its users. (more…)
Delaware Chancery Court Clarifies That Section 144 Compliance Will Not Automatically Bestow Business Judgment Protection
Most directors and officers are aware of Section 144 of the Delaware General Corporation Law, which provides that a corporate transaction involving an interested director or officer is not void solely because of that reason, or because the director or officer votes upon or otherwise participates in the meeting wherein the transaction is considered, so long as proper disclosure of the interest is provided and the majority of disinterested board members or shareholders, if by ratification, vote in good faith to approve the transaction. And, directors and officers are also keenly aware of their common law fiduciary duties (and that by properly discharging such duties Delaware law defers to the business decision made). What is less than clear, however, is whether compliance with the safe harbor provisions of Section 144 is deemed to also satisfy their fiduciary duties in approving a transaction where a director or officer has an interest. (more…)
Spotify Is Bypassing a Traditional IPO in Favor of Direct Listing. Should Other Companies Follow Its Lead?
First Spotify changed the music industry. Now it might change the way we think about public offerings.
On Wednesday, February 28, 2018, Spotify filed its prospectus to go public through a direct listing on the New York Stock Exchange (NYSE). In a direct listing, a company puts its shares on a stock exchange without first raising additional funds or offering additional shares. In doing so, the company bypasses costs associated with an underwriter and avoids the formal roadshow, testing the water discussions, and other time-consuming and costly processes associated with traditional IPOs. It also does not have the traditional 180 day contractual lockup period customarily associated with an IPO. Companies must file a registration statement with the Securities and Exchange Commission (SEC) and are still subject to SEC reporting and compliance requirements after conducting a direct listing. (more…)
Delaware Chancery Court Finds Unaffected Market Price to Be Fair Value in a Post-Dell Appraisal Decision
On February 15, 2018, in the statutory appraisal proceeding of Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., the Delaware Court of Chancery decided that the “most persuasive evidence” of Aruba Networks’ fair value was its 30-day average unaffected market price of $17.13 per share, significantly lower than the deal price that Hewlett-Packard paid in its acquisition of Aruba Networks of $24.67 per share. This decision came in the wake of the Delaware Supreme Court’s recent decisions in Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd. and DFC Global Corporation v. Muirfield Value Partners, L.P. (previously discussed in our blog), both of which endorse the use of the market-based indicators – the stock price and deal price – as evidence of fair value in a transaction following an arm’s length and robust market check. (more…)
SEC Updated Guidance on Cyber Disclosure by Publicly Traded Companies in a Digitally-Connected World
“To win a race, the swiftness of a dart availeth not without a timely start.”
~ Jean de La Fontaine
The Securities and Exchange Commission (the “Commission”) Wednesday announced updated cybersecurity guidance for public companies. This guidance reinforces the Division of Corporation Finance guidance issued in October 2011 and expands upon it to include two new topics: (i) the importance of cybersecurity policies and procedures and (ii) the application of insider trading prohibitions in the cybersecurity context. The guidance itself and early reactions make it evident that the Commission is committed to aggressively regulating this area over the long haul. (more…)
By: Michael Psathas
The state of New Jersey recently amended its corporate laws under the New Jersey Business Corporation Act (NJBCA) in an effort to provide clarity for companies incorporated within the state. The changes closely align with Delaware law and provide guidance to business owners on a host of important issues concerning the operations of corporations. The changes became effective on January 16, 2018. (more…)
- Finders May Finally Be Keepers: SEC Proposes Rules Allowing for Unregistered Broker-Dealers to Participate in Capital-Raising Transactions Under Certain Circumstances
- Update on Cannabis Reform Introduced as a Response to the COVID-19 Crisis
- Public Benefit Corporations and the ESG Movement
- Department of Labor Releases Fiduciary Guidance
- Move Over California, Delaware Law Applies to Internal Corporate Affairs