In Shareholder Representative Services LLC v. RSI Holdco, LLC, No. 2018-0517-KSJM, 2019 WL 2290916 (Del. Ch. May 29, 2019), the Delaware Court of Chancery reaffirmed that a target company may protect its pre-merger privileged communications in a post-closing dispute with the acquirer by including clear and unambiguous language in the merger agreement that seeks to protect the privilege. This decision provides additional guidance to sellers intent upon protecting their rights in potential post-closing litigation…

Corporate & Securities Law Blog

Opportunity Zones Update: NEW PROPOSED TREASURY REGULATIONS (PART II)

By Judith Fiorini, Amy Tranckino & John Crisp on May 21, 2019

Qualified Opportunity Zone Businesses BACKGROUND In December 2017, as part of the Tax Cuts and Jobs Act (“TCJA”), Congress established a new tax incentive program to promote investment in certain low-income communities designated by the IRS as qualified opportunity zones. The tax incentives obtained by investing in a qualified opportunity fund (“QOF”) allow taxpayers to (i) defer paying taxes on capital gain from the sale or exchange of appreciated assets; (ii) receive a permanent exclusion…

Corporate & Securities Law Blog

Opportunity Zones Update: NEW PROPOSED TREASURY REGULATIONS (PART I)

By Amy Tranckino, Judith Fiorini & John Crisp on April 30, 2019

Background In December 2017, as part of the Tax Cuts and Jobs Act (“TCJA”), Congress established a new tax incentive program to promote investment in certain low-income communities designated by the IRS as qualified opportunity zones. Section 1400Z-2 of the Internal Revenue Code provides three compelling tax incentives to encourage investment in qualified opportunity funds (“QOFs”). Taxpayers can defer paying taxes on capital gain from the sale or exchange of appreciated assets by investing such…

Corporate & Securities Law Blog

New Effort to Exempt Crypto Currency from Certain SEC, Tax and Other Regulatory Burdens

By James Gatto on April 19, 2019

A new bill, the Token Taxonomy Act was introduced to congress to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude digital tokens from the definition of a security, to direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography, to adjust taxation of virtual currencies held in individual retirement accounts, to create a tax exemption for exchanges of…

Corporate & Securities Law Blog

United States Supreme Court Holds That Knowing Dissemination of False Statements Made by Others Can Constitute Primary “Scheme Liability” In Violation of Rule 10b-5(a) and (c)

By John Stigi on April 1, 2019

In Lorenzo v. Securities & Exchange Comm., No. 17-1077, 2019 WL 1369839 (U.S. Mar. 27, 2019), the Supreme Court of the United States (Breyer, J.) held that an individual who did not “make” a false or misleading statement within the meaning of Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011) (blog article here), but instead disseminated it to potential investors with intent to defraud, can be held to have…

Corporate & Securities Law Blog

Second Circuit Holds That Issuer’s Alleged Statements Concerning Its Regulatory Compliance Efforts Do Not Constitute Material Misstatements

By John Stigi & John Landry on March 12, 2019

In Singh v. Cigna Corp., No. 17-3484-cv, 2019 U.S. App. LEXIS 6637 (2d Cir. Mar. 5, 2019), the United States Court of Appeals for the Second Circuit affirmed the dismissal of a class action complaint that purported to base a securities fraud claim upon alleged statements made by defendant Cigna Corporation (“Cigna” or the “Company”) about its efforts to comply with Medicare regulations. According to the complaint, the statements materially misled investors and, when…

Corporate & Securities Law Blog

With the SEC, Cooperation is Key

By Andrea Cataneo & Winnie Weil on March 8, 2019

As an expensive “slap on the wrist,” the Securities and Exchange Commission (“SEC” or the “Commission”) recently concluded that approximately $12.7 million worth of funds raised in a 2017 Initial Coin Offering (“ICO”) by Gladius Network LLC (“Gladius”) were part of an unregistered securities offering, and all proceeds must be returned to investors. However, the penalty to Gladius for their regulatory violations was zero.…

Corporate & Securities Law Blog

Ninth Circuit Holds That Statutes Do Not Constitute “Rules or Regulations of the SEC” for Purposes of Sarbanes-Oxley Act Whistleblower Claims

By John Stigi, Jennifer Redmond & Kristi Thomas on March 4, 2019

In Wadler v. Bio-Rad Laboratories, Inc., No. 17-16193, 2019 WL 924827 (9th Cir. Feb. 26, 2019), the United States Court of Appeals for the Ninth Circuit held that statutes, including the Foreign Corrupt Practices Act (“FCPA”), do not constitute “rule[s] or regulation[s] of the Securities and Exchange Commission” (“SEC”) for purposes of determining whether an employee engaged in protected activity in a whistleblower claim under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). …

Corporate & Securities Law Blog

SEC Issues New Guidance on Diversity Disclosure Requirements

By Jeffrey Fessler & Justin Anslow on February 11, 2019

On February 6, 2019, the Securities and Exchange Commission released two Compliance and Disclosure Interpretations (CDIs) discussing disclosure requirements in instances where a director or board nominee self-identifies specific diversity characteristics, such as race, gender, ethnicity, religion, nationality, disability, sexual orientation and cultural background.…

Corporate & Securities Law Blog

Court Finds Cybersecurity-Related Claims Sufficient in Securities Class Action

By Jonathan E. Meyer & Elfin Noce on February 6, 2019

In the aftermath of Equifax’s data breach, a federal court recently found that allegations of poor cybersecurity coupled with misleading statements supported a proper cause of action. In its decision, the U.S. District Court for the Northern District of Georgia allowed a securities fraud class action case to continue against Equifax. The lawsuit claims the company issued false or misleading statements regarding the strength and quality of its cybersecurity measures. In their amended complaint, the plaintiffs…

Corporate & Securities Law Blog

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Delaware Chancery Court Provides Useful Guidance for Protecting Pre-Merger Privileges in Post-Closing Litigation Between Buyers and Sellers

Opportunity Zones Update: NEW PROPOSED TREASURY REGULATIONS (PART II)

Opportunity Zones Update: NEW PROPOSED TREASURY REGULATIONS (PART I)

New Effort to Exempt Crypto Currency from Certain SEC, Tax and Other Regulatory Burdens

United States Supreme Court Holds That Knowing Dissemination of False Statements Made by Others Can Constitute Primary “Scheme Liability” In Violation of Rule 10b-5(a) and (c)

Second Circuit Holds That Issuer’s Alleged Statements Concerning Its Regulatory Compliance Efforts Do Not Constitute Material Misstatements

With the SEC, Cooperation is Key

Ninth Circuit Holds That Statutes Do Not Constitute “Rules or Regulations of the SEC” for Purposes of Sarbanes-Oxley Act Whistleblower Claims

SEC Issues New Guidance on Diversity Disclosure Requirements

Court Finds Cybersecurity-Related Claims Sufficient in Securities Class Action

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