Most Recent Blog Posts
Executive branch administrative agencies in the U.S. are facing increasing scrutiny and opposition. The U.S. Supreme Court is currently grappling with constitutional challenges to administrative agencies powers and procedures through landmark cases Loper Bright Enterprises v. Raimondo, No. 22-451 (U.S. May 1, 2023) and SEC v. Jarkesy, No. 22-859 (U.S. Oct. 30, 2023). These cases reflect the ongoing debates regarding the scope and limits of administrative power in the U.S. This article delves into the cases of Loper Bright and Jarkesy and illustrates how challenges to the current power exercised by administrative agencies may impact the regulatory landscape for public companies, the Securities and Exchange Commission (“SEC”), and market integrity.
On January 10, 2024, the SEC approved the listing and trading of several spot bitcoin exchange-traded products (“ETP”), a type of ETF. (SEC). The SEC approved Grayscale’s spot bitcoin ETF application, along with ten others, including BlackRock and Fidelity applications. (Mark Maurer, The Wall Street Journal; Crystal Kim, Axios). The SEC’s approval came one day after an unauthorized individual posted a fraudulent message on the Commission’s social media account on X, formerly known as Twitter, falsely claiming that the agency had approved the products to be traded. (Hannah Lang, et al., Reuters). The SEC quickly removed the misleading post. Id. Regardless, the SEC’s decision was in response to the D.C. Court of Appeals decision. (SEC). The Appellate Court vacated its decision and remanded the matter to the SEC to decide whether to approve Grayscale’s spot bitcoin ETF application. Id. The Commission ultimately decided to approve the listing and trading of Grayscale’s spot bitcoin ETF, citing various reasons. Id.
The de minimis exemption, a trade rule nearly a century old, has significantly reshaped the retail landscape, granting foreign e-commerce giants like Shein and Temu a significant advantage over American retailers. (Jordyn Holman, The New York Times). The de minimis exemption is fueling rapid growth for these companies by allowing low-cost packages to enter the U.S. duty-free. (Yuka Hayashi et. al, The Wall Street Journal). However, the rule also raises pressing concerns regarding unfair competition, labor practices, sustainability, and the impact on U.S. tax revenues and product safety. This article explores the de minimis exemption, its role in the exponential growth of retailers such as Shein and Temu, the various concerns it presents for U.S. consumers and the U.S. government, and the potential impact of this exemption on the future of the retail industry.
As the spotlight on climate change intensifies, federal agencies, including the U.S. Securities and Exchange Commission (“SEC”) and the European Commission in the European Union (“EU”), are grappling with the environmental impacts generated by companies. The SEC, traditionally tasked with creating and enforcing policies around the investment of money, has added financial climate change consequences to its list of responsibilities. (SEC). Most recently, the SEC has doled out a new proposed climate disclosure rule, intended to create consistent reporting guidelines for publicly traded companies, curb corporate greenwashing, and protect investors. (Jessica Corso, Law360; Michael Copley, NPR; SEC). While many consider the SEC’s attempt to combat climate change admirable and well-intended, opponents to the proposed rule express concerns about its impact on farmers and small businesses. (Jim Tyson, CFO Dive).
The Department of Justice (“DOJ”) announced a new safe harbor policy for mergers and acquisitions, and companies are grappling with the potential benefits and pitfalls of utilizing the policy. The policy is a product of the DOJ’s focus on corporate criminal enforcement, as national security-related corporate crime has doubled from last year to this year. As highlighted by Deputy Attorney General Lisa Monaco, corporate crime intersects with “national security in everything from terrorist financing, sanctions evasion, and the circumvention of export control, to cyber-and crypto-crime.” (Lisa Monaco, U.S. Department of Justice). The DOJ has identified mergers and acquisitions as a source of access to corporate crime that threatens national security. Through this policy, the DOJ is hoping to create a “virtuous cycle” of acquiring companies identifying and reporting potential crimes committed by the target companies during the due diligence stage, thereby assisting the DOJ in identifying and prosecuting individuals. Id. This cooperation spares the target company from prosecution as long as the acquiring company pays back any ill-gotten funds. Id. In exchange for their whistleblowing efforts, acquiring companies are protected from prosecution, provided they follow additional requirements. This post will examine the concerns and risks acquiring companies utilizing the safe harbor policy face.
On January 1, 2024, the Corporate Transparency Act (“CTA”) came into effect, changing our perception of a “corporation” as we know it. In particular, the CTA targets small businesses with no employees, and aims to “combat money laundering, tax fraud, and other illicit activities”. (Thomas Reuters). However, the CTA’s regulatory powers remain broad, requiring all reporting companies to submit a beneficial owner report. Id. A reporting company includes all entities “that are formed or registered to do business in the United States.” (BakerHostetler). The report will include the beneficial owner’s “name, date of birth, address, and unique identifier number from a recognized issuing jurisdiction and a photo of that document.” (Thomas Reuters). A beneficial owner is classified as one that either: (1) maintains significant control over the reported company, or (2) has a 25% equity ownership interest in the reporting company. Id. Under this criterion, over 27 million small businesses fall within the regulatory scope of the CTA. Id. This does not include the 23 types of entities that are exempt from the CTA because they are already regulated under different federal and state laws. (Nicholas McMichen, DeWitt; Sandra Feldman, Wolters Kluwer). This article analyzes the objectives of the CTA, specifically how it arose, along with the implications it has for the effected parties.
On October 1, 2023, Robert F. Kennedy, Jr. (“RFK”) announced a new economic plan as part of his presidential campaign, featuring a guaranteed government-backed mortgage at 3%. (Carlson, The Hill). RFK’s government-backed mortgage plan (the “Plan”) is intended to incentivize working-class Americans to buy more homes. (https://www.kennedy24.com/help-buying-homes-video). The Plan achieves this goal by providing low interest rates, which would be appealing to working-class citizens. Id. The overall issue that RFK is aiming to address with his Plan is to stop the current takeover of the housing market by investment companies and the consequent increasing housing prices. Id. This post discusses the potential conflict that RFK’s Plan could have with existing government-backed mortgages provided by government agencies, the Federal Trade Commission’s (“FTC”) mortgage regulations, and possible economic consequences on the housing and mortgage markets.
Over the past decade, the Internal Revenue Service’s (“IRS”) budget has been cut, its workforce has been reduced, and audit rates for high-income taxpayers have nosedived. (Center on Budget and Policy Priorities). This has resulted in a large and consistently increasing tax gap (the difference between taxes paid and taxes owed). Id. After years of being underfunded, the IRS was allocated billions of dollars in federal funding via the Inflation Reduction Act of 2022 (“IRA”). (Alan Rappeport, The New York Times). This article reviews the impact of the IRA’s historic funding provided to the IRS, how the IRS is implementing the funding across its operations, and opposition that has arisen in response to the positive impact efforts, specifically surrounding the implementation of artificial intelligence (“AI”) as an enforcement mechanism.
With a market cap valued at over a staggering $1 trillion, cryptocurrency’s (or “crypto(s)”) exponential market growth has led to a hotly debated, new-found regulatory force by the U.S. Securities and Exchange Commission (“SEC”). (Forbes). The SEC’s eager regulatory control over crypto has fueled legal battles, with the most recent development involving investors advocating for bitcoin exchange-traded funds (“ETF(s)”). (Aislinn Keely, Law360). The Commission has historically resisted investor’s efforts. (Hannah Lang, et al., Reuters). However, a recent District of Columbia Court of Appeals decision, dubbed a victory for plaintiff and digital asset management company Grayscale Investments (“Grayscale”), has proven hopeful to investors. Id. This post explores the Grayscale decision, the SEC’s and Grayscale’s respective arguments, and both the narrow and broad implications of the decision against the backdrop of the SEC’s position on cryptocurrency.
The Federal Aviation Administration (“FAA”) recently proposed a rule change that, if passed, would likely put airlines like JSX out of business. (Regulations.GOV; Alison Sider, The Wall Street Journal). JSX is a Dallas-based airline founded in 2016, which operates regularly-scheduled flights using a fleet of 30-seat aircraft that provides a premium flying experience to the general public. (JSX). JSX does this by operating “semi-private” flights out of private terminals that provide flyers with easy access parking, no lines, no-hassle security, and a flexible pet policy. (JSX; Gary Leff, View From The Wing). Additionally, because JSX operates from private terminals, it can fly to destinations that other airlines cannot, such as Taos, New Mexico. Id.
The largest mass tort litigation in U.S. history has come to an end. On August 29, 2023, 3M, a company specializing in the manufacturing and distribution of industrial, safety, and consumer products, reached a $6 billion settlement, resolving hundreds of thousands of lawsuits filed by U.S. military service members (the “Plaintiffs”). The Plaintiffs claimed that they suffered hearing loss from the use of 3M’s earplugs. (Brendan Pierson, Reuters). The settlement followed 3M's failed attempt to limit its liability through a controversial legal maneuver known as the “Texas Two-Step.” Id. This article explores 3M’s legal battle, specifically its unsuccessful Texas Two-Step, and the potential impact from the failed maneuver on future corporate liability.
Under the leadership of Chair Lina Khan, the Federal Trade Commission (“FTC”) has taken an “aggressive” approach on challenging monopolies, especially in the healthcare industry. (Caitlin McCabe et al., WSJ). Echoing the FTC's recent approach to antitrust enforcement, the agency launched a civil suit on September 21, 2023, against U.S. Anesthesia Partners, Inc. (“USAP”) and private equity (“PE”) firm Welsh, Carson, Anderson & Stowe (“Welsh Carson”). (Megan McArdle, Washington Post; FTC). The FTC alleges that USAP and Welsh Carson engaged in an “anticompetitive scheme to consolidate anesthesiology practices in Texas.” Id. This lawsuit has ignited a firestorm of controversy, raising questions about fair competition and the future of the healthcare industry.
In August of 2020, Apple removed Fortnite, a popular game created by Epic Games (“Epic”), from the Apple App Store. (Perez, Techcrunch). Apple removed Fortnite the same day Epic began offering discounts to Fortnite users who made in-game purchases directly through Epic. (Browning, N.Y. Times). Apple has an “anti-steering” policy, which prohibits companies from directing app users to transact directly with the app developers and cutting out Apple as the middleman. Id. Epic’s practice violated the anti-steering policy and another Apple policy requiring that all “in-app” purchases be made through the Apple App Store where Apple collects a 30% fee. (Gilbert, Businessinsider). This policy has paid major dividends for Apple as the Apple App Store provides a significant portion of the company’s $78.1 billion in services revenue in 2022. (Leswing, CNBC).
As a result, on August 13, 2020, Epic sued Apple in federal court in the Northern District of California bringing a variety of claims including federal antitrust claims under the Sherman Act, California antitrust claims, and claims under California’s Unfair Competition Law. Epic Games, Inc. v. Apple Inc., 559 F. Supp. 3d 898, 1014 (N.D. Cal. 2021), aff'd in part, rev'd in part and remanded, 67 F.4th 946 (9th Cir. 2023).
In 2022, the Biden-Harris Administration announced plans to forgive up to $400B in student loans (“forgiveness plan”). (Amy Howe, SCOTUSblog). The Supreme Court struck the plan down in a 6-3 vote, ruling that the Biden-Harris Administration had exceeded its authority. Id. In response, the Administration has posited a new tactic to help student loan borrowers: the Savings on a Valuable Education Plan (“SAVE Plan”). This article analyzes the SAVE Plan, including key details and potential issues, as well as the positive impact it will have on future generations of college applicants.
From generating basic JavaScript code to creating a 7-day European trip itinerary, ChatGPT and other artificial intelligence (“AI”) programs are a one-stop shop for many internet users. Businesses from a wide array of industries have tapped into the countless uses of AI, revolutionizing the workforce as we know it. (Serenity Gibbons et al., Forbes). Within two months of ChatGPT’s November 2022 launch, it became the “fastest-growing consumer application in history.” (Krystal Hu, Reuters). The impressive growth of AI has fueled concerns over this ever-changing technology – including data privacy and the spread of misinformation. (David Grier, IEEE Computer Society). In response to these concerns, the Federal Trade Commission (“FTC”) is investigating OpenAI, the maker of ChatGPT, as to whether OpenAI violates consumer protection laws. (Cat Zakrzewski, Washington Post). The FTC investigation highlights the need for effective AI regulation and has sparked a nationwide discussion amongst lawmakers, employers, employees, AI companies, and other stakeholders involved in this AI arms race. (Andrew Chow et al., TIME).
San Francisco’s Anchor Brewing Company (“Anchor”, “Anchor Brewing”), the oldest craft brewer in the United States, has withstood many hardships, and until now, has been a survivor. (Ansari and Otis, The Wall Street Journal). Over the past 127 years, the brewery has survived catastrophic earthquakes, the national prohibition of alcohol, two world wars, and competition from mass-produced beers. (Albeck-Ripka, The New York Times; Anchor Brewing). Despite a history of resilience, Anchor Brewing recently announced ‘last call’ on July 12, 2023. Due to its inability to recover from the consequences of the pandemic and the failure on its parent company, Japan’s Sapporo, to profitably run the craft brewer, Anchor Brewing Company has been forced to close its doors. (Albeck-Ripka, The New York Times).
On Friday, March 10, 2023, Signature Bank lost 20% of its deposits. (Vivian Giang & Mike Dang, The New York Times; Max Reyes, Bloomberg). Two days later, on Sunday, March 12, 2023, Signature Bank failed and went into receivership. (Vivian Giang & Mike Dang, The New York Times). Signature Bank’s failure was unexpected, so much so that it’s only the second time in over a decade that the Federal Deposit Insurance Corporation (“FDIC”) created a bridge bank in response to a bank failure. (Federal Deposit Insurance Corporation). How and why did Signature Bank fail so quickly? Are more U.S. Banks next? These answers and more, but first, it’s helpful to understand what happens immediately after a bank fails.
A public company’s earnings per share (“EPS”) is one of the most used metrics for determining its profitability. (Jason Fernando, Investopedia). EPS is a formula that calculates a company’s profit by dividing its net income by its outstanding shares of stock. Id. A company’s goal is to meet or exceed its consensus EPS estimate, as this demonstrates a successful quarter and shows investors a reliable stock…
Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) as a direct response to the 2008 Financial Crisis when millions of Americans lost homes due to foreclosure. (SEC). Among myriad findings, a final report on the 2008 Financial Crisis stated that investment transactions with conflicts of interest contributed to the crisis. (Financial Crisis Inquiry Commission). For example, the commission found that financial firms marketed an investment and profited off that investment product’s decline…
After spending seven years as a proposal in limbo, the Securities and Exchange Commission ("SEC") adopted a "Pay Versus Performance" rule in August of 2022, finally meeting the statutory mandate set forth in the Dodd-Frank Act. (Candance Quinn, et. al., Bloomberg Law). As the rule’s name implies, SEC registrants must now disclose the interplay between their executive compensation actually paid and the company's financial performance. (PricewaterhouseCoopers). An additional requirement under the new rule has drawn scrutiny as it opens the door for Environmental Social Governance ("ESG") disclosures to be made…
In February 2016, Congress passed the bipartisan SEC Small Business Advocate Act of 2016 (the “Act”). The Act amended the Securities Exchange Act of 1934 to establish an independent Office of the Advocate for Small Business Capital Formation (the “Office”) within the Securities and Exchange Commission (“SEC”). (H.R. 3784). Officially established in 2019, the Office aims to assist and advance the interests of small businesses and their investors in securing access to capital and complying with SEC regulations…
On January 17th, the U.S. Department of Justice (“DOJ”) announced significant revisions to its Corporate Enforcement Policy, adding more incentives to companies that self-report corporate criminal misconduct. (Theodore Chung, JDSupra). The change marks the third major update to the policy since October 2021 as the Biden Administration tries to find the right balance between the hardline approach to white collar crime taken under the Obama Administration and the lax approach taken by the Trump Administration…
On March 21, 2022, the Securities and Exchange Commission (“SEC”) issued a rule proposal addressing Environmental, Social, and Governance (“ESG”) disclosure regulation, a concern of many investors. (SEC Press Release). The rule proposal targets disclosure of environmental issues by public companies in their required financial statements. Id. Republicans and many industry groups strongly opposed the rule, arguing that the rule would cause an unwarranted spike in compliance costs…
There is a long history of celebrities promoting various products and investments that did not turn out well for the individuals who acted on their advice. (Joe Mont, TheStreet). 50 Cent using Twitter to “pump” up the share price of a business he partially owned is one notable example. (Id.; Mike Masnick, TechDirt). FTX, a large crypto exchange which many celebrities publicly endorsed, collapsed in November 2022 in no small part due to fraud by its CEO, Sam Bankman-Fried. (Tietrich Knauth & Tom Hals, Reuters; Nathan Reiff, Investopedia). This public endorsement by various celebrities appears to be another example of celebrities scamming their fans...
Ticketmaster is facing major backlash after its system malfunctioned during the ticket pre-sale for Taylor Swift’s “The Eras” tour. Ticketmaster left fans waiting for hours on its site, with many walking away empty handed. (Julian Mark, The Washington Post). Consequently, Ticketmaster cancelled public ticket sales, resulting in thousands of overpriced tickets on the secondary market. Id. The company may have purposefully not safeguarded its site for financial gain, raising major antitrust concerns. (Eleanor Tyler, Bloomberg). Numerous claims regarding this issue have settled in arbitration…
The age-old saying “there’s no such thing as bad publicity” may not be true in the case of Google, which has become synonymous with internet searching and technology, and subsequently garnered increasing attention from regulators across the globe. On January 24, 2023, the Department of Justice (“DOJ”) filed a second antitrust lawsuit in the Eastern District of Virginia regarding Google’s role in digital advertising. (Department of Justice). The case is particularly noteworthy because it is the first U.S. lawsuit that calls for the divestiture of Google’s dominant ad tech business and seeks monetary damages for harms to the federal government…
Once valued at $32 billion, crypto exchange FTX Trading Ltd. (“FTX”) shocked the world as it collapsed and filed for bankruptcy at the end of 2022. (Max Zahn, ABC News). An article by CoinDesk initially triggered the crypto exchange fall when it reported that FTX and Alameda Research—a crypto trading firm founded by FTX founder, Sam Bankman-Fried—shared excessively close relationships and blurred finances. (Ian Allison, CoinDesk). Following the report, concerned investors requested withdrawals from the exchange, which caused the value of FTT—FTX’s native token—to nosedive…
In the past months, the stock market has seen the longest stretch of losses since 2001. (Tripp Mickle, New York Times). As investors adjust to the onset of a “bear market,” a market persistently declining in value, some venture-capital firms (“VC”) are changing their focus from investing exclusively within the startup industry to purchasing stocks of publicly traded companies. (Merriam-Webster; Berber Jin, Wall Street Journal). Inflation in the United States is at a 40-year high, and the Federal Reserve has continued to raise interest rates to combat it. (Nick Timiraos, Wall Street Journal). The market has been strained by the current interest rates, as well as the war in Ukraine, supply chain issues, and other factors…
After a three-year legal battle, Instacart withdrew its appeal to the California Supreme Court, a decision that would potentially resolve the issue of employment classification for gig economy workers in California. (Cutler, Bloomberg Law). The gig economy is defined as economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector, which has seen enormous growth over the last decade. (Merriam-Webster). The City of San Diego sued the grocery delivery service (via parent company Maplebear Inc.), alleging violations of the California labor code and unfair business practices through the misclassification of its workers as independent contractors instead of employees…
Environmental, Social, and Governance (“ESG”) Retirement Investing is a form of socially conscious investing where fiduciaries in a retirement plan review non-financial factors when analyzing investment decisions. (CFA Institute). Though the letters “ESG” may appear novel in the retirement context, “socially conscious” retirement investing is decades old. As early as the 1970s, public pension funds made socially conscious decisions within pension portfolios by divesting from “sin” stocks, like companies affiliated with smoking and gambling. (Jean-Pierre Aubry et. al, Center for Retirement Research). Millennials, the largest segment of the workforce in U.S. history, are now driving interest in ESG investing, putting trillions of dollars at stake for asset managers. (Chris Versage & Mark Abssy, Nasdaq). Workforce retirement plans are most of a non-retiree’s investment savings. (Economic Well-Being of U.S. Households, Federal Reserve). Therefore, because millennials are the largest segment of the work force, millennials increased attention in ESG to retirement investing…