SEC Staff Expands Non-GAAP Relief for Business Combinations

This week the SEC staff expanded relief for the disclosure of non-GAAP financial forecasts used in business combinations.

In these transactions, public companies routinely obtain fairness opinions from an investment bank regarding the value of the consideration to be paid to shareholders, and the fairness opinions normally rely on financial projections provided by the company.  These projections are often prepared in a way that varies from GAAP and,… More

Supreme Court Preserves State Courts as a Forum for IPO Securities Class Actions

In a unanimous decision issued Tuesday, March 20, 2018, the United States Supreme Court clarified that certain securities law class action cases may proceed in state courts.  The Court declined to find that Congress intended to make federal courts the exclusive or preferred forum for resolving such claims.

The case – Cyan, Inc. v. Beaver County Employees Retirement Fund – involved the interpretation of the Securities Litigation Uniform Standards Act of 1998 (also referred to as SLUSA) and the changes that law made to the Securities Act of 1933. … More

Regulators increase scrutiny of ICO advertising

Although the SEC has been focusing substantial enforcement attention on companies that are conducting illegal coin or token offerings, it has not stopped there.  This blog post by our partner Neil Austin makes clear that the SEC and other regulators are paying attention to illegal advertising or promotion of these offerings by celebrities and other endorsers.  By now it should be crystal clear that anyone considering an ICO or other token offering should be seeking comprehensive legal advice about how to conduct the offering without tripping over a host of legal requirements.… More

Pre-IPO companies can have disclosure obligations, too.

A recent SEC enforcement action should serve as a potent reminder to pre-IPO and other private companies that SEC rules sometimes impose affirmative disclosure obligations on private companies that offer and sell securities to their employees.

Most well-advised start-ups and other emerging companies know that they need an exemption from the registration requirements of the Securities Act of 1933 in order to grant options or issue other equity awards to their employees.… More

New SEC Guidance Addresses Disclosure Requirements for Breach Events

As the SEC has made clear on numerous occasions over the past year, cybersecurity will continue to be a major enforcement priority under the Commission’s new leadership.  As we have previously covered, one new area of potential enforcement activity that the SEC has warned about concerns the failure of public companies to make disclosures regarding material cyber events.  While the SEC had previously provided some guidanceto publicly traded companies about when to disclose such events,… More

Supreme Court Invalidates SEC Expansion of Who Can Be a Whistleblower Under Dodd-Frank Act

On Wednesday February 21, 2018, the United States Supreme Court rejected a Securities Exchange Commission regulation that sought to expand the definition of a whistleblower under the Dodd-Frank Act, and thereby resolved a split in the Circuit Courts.  In Digital Realty Trust v. Somers, the Court held that anti-retaliation protection afforded to a whistleblower under the Dodd-Frank Act is available only to an individual who provides information relating to a violation of the securities laws to the Securities and Exchange Commission before suffering adverse employment action. … More

Government Shutdown: SEC Impact

In light of the risk of an imminent government shutdown, now is a good time to review the SEC’s “Operations Plan under a Lapse in Appropriations and Government Shutdown.” While the Operations Plan only covers a total government shutdown and not a partial shutdown (which occurred in 2013), the Operations Plan notes that:

  • the SEC’s EDGAR system will remain fully functional as long as funding for the contractor remains available through permitted means;…
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Massachusetts Securities Division Files First Complaint Related to Initial Coin Offering

On January 17, 2018, the Massachusetts Securities Division Enforcement Section filed a complaint against the company Caviar and its founder Kirill Bensonoff for violations of the Massachusetts Uniform Securities Act in connection with an ongoing initial coin offering (ICO).

This is Secretary of the Commonwealth William F. Galvin’s first enforcement action related to an ICO. Last month, Secretary Galvin announced that the Massachusetts Securities Division would conduct a sweep of Massachusetts entities engaged in ICOs.… More

Cybersecurity 2018 – The Year in Preview: Cryptocurrencies and Blockchain

Bitcoin is white-hot. The cryptocurrency’s price has increased an astounding 2000% in 2017 alone.  The app for Coinbase, the most popular cryptocurrency exchange, held the #1 spot on Apple’s app store, unseating the likes of Facebook and Instragram.  Earlier this month the Chicago Exchange began offering trades in bitcoin futures, the first major exchange to do so (and futures contracts were up some 560% after one day of trading).… More

Massachusetts Announces ICO Sweep

The Massachusetts Securities Division has announced that it will conduct an exam sweep of Massachusetts entities engaged in initial coin offerings (ICOs).

In the announcement, released on Friday, Massachusetts Secretary of the Commonwealth William Galvin said that he views ICOs as securities that must be registered with the state.

“Blockchain may or may not change the way banks transfer money or the way credit payments are made,… More