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…

In October of this year, the U.S. Securities and Exchange Commission (“SEC”) fined Kim Kardashian $1.26 million for touting a cryptocurrency on her Instagram account. (Clara Hudson, Bloomberg). Ms. Kardashian posted an advertisement for EthereumMax, a crypto asset security, and failed to disclose that she was paid $250,000 for the post. Id. The SEC also recently adopted significant changes to the Investment Advisers Act of 1940 (“Advisers Act”) to improve the regulation of financial securities advertising. (Ellen Kaye Fleishhacker et al., Arnold & Porter). The SEC replaced the outdated framework with the “Marketing Rule” to expand the definition of advertising, increase current disclosure requirements, and provide investment advisers with more flexibility. (Michael S. Caccese et al., K&L Gates). The Kim Kardashian case and the Marketing Rule highlight the SEC’s priority of public disclosure while acknowledging investment advisers’ need for flexibility and access to online marketing channels…

After almost fifty years since founding the company in 1973, Patagonia founder and majority owner, Yvon Chouinard, and his family have donated all of the voting stock and transferred all of non-voting stock of the company in the effort to mitigate climate change and protect the environment. (Martine Paris, Bloomberg Law). In this unconventional business decision, Chouinard divested control over Patagonia to a trust and all future profits to an environmental nonprofit. (Tima Bansal, Forbes). While Chouinard considered selling the company or taking it public, he decided that transferring ownership of Patagonia, valued at about $3 billion, was the only way to both preserve nature and his company’s values….

On September 16, 2022, following President Joe Biden’s Executive Order earlier this year, the White House released its first-ever comprehensive framework for regulating cryptocurrency (the “Framework”). (The White House). After six months of collaboration between agencies across the government, including the Securities and Exchange Commission (“SEC”) and U.S. Department of the Treasury (“USDT”), among others, the agencies developed a framework to advance several priorities relating to: 1) protecting consumers, investors, and businesses; 2) enhancing financial stability; 3) counteracting illicit finance; and 4) advancing responsible innovation…

In December 2020, the Securities and Exchange Commission (“SEC”) filed a complaint in the United States District Court for the Southern District of New York against Ripple Labs, Inc. (“Ripple”), one of the crypto asset industry’s most prominent companies. (Securities and Exchange Commission, Complaint). The complaint alleged Ripple’s XRP token was an investment contract, and therefore a security which required registration under Section 5 of the Securities Act of 1933 (“Securities Act”). (Securities and Exchange Commission, Complaint; Jeff Roberts, Decrypt). Regardless of the victor, this litigation will set precedent regarding digital asset regulation in the future…

Globalization and the expansion of international trade have created an economy unlike any before. The United States (“U.S.”) has particularly benefitted from foreign trade, with many businesses dependent on it for their success. However, recent events and growing concerns surrounding the sustainability of the global business model have led to executive actions and legislative movements which may foreclose significant portions of the world for U.S. businesses and may have dramatic implications…

As the world's news cycle grows shorter by the day, events with wide-ranging consequences scarcely have a twenty-four-hour lifespan in the headlines. Few issues aside from COVID-19 and the Russian incursion into Ukraine exhibit staying power. Count the increasingly convoluted legal battle between the world's richest man, Elon Musk and Twitter, Inc. (“Twitter”) as one of these issues. (Forbes). Musk has been attempting for months to void his attempted Twitter takeover. (Giles Turner, Bloomberg). With new developments in the case making headlines every week, it is difficult to keep track of how the case began, where it stands, and the consequences of a ruling in what has turned into a high stakes tug of war…

The digital assets industry has grown exponentially since Bitcoin was first introduced in 2009. (Wulf Kaal, Digital Asset Market Evolution). Though the digital assets market value is infamous for its volatility, the worldwide market capitalization of digital assets reached over $3 trillion at its height in November 2021. (Joanna Ossinger, TIME). As investors and the public more frequently use cryptocurrencies, non-fungible tokens (“NFTs”), and decentralized finance, the risks associated with digital assets increase…

A novel type of entity has emerged in the world of global finance. It is called a Decentralized Autonomous Organization (“DAO”) and it was created to offer several benefits over traditional corporate structures. DAO’s are digital organizations built on blockchain technology and managed by their members in a democratic voting environment, DAO’s reduce transactional costs by removing the need for third parties, and DAO’s spur innovation in small business by making access to banking and capital more equitable…

Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced legislation on June 7, 2022 that would implement and divide oversight of the cryptocurrency market between the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). (David A. Lopez-Kurtz, National Law Review; Soyoung Ho, Thomson Reuters). Proposed legislation of this kind may feel anathema to the underlying premise of blockchain technology and its freewheeling pioneers…

Is there any clear sight for the future of special purpose acquisition companies (“SPACs”), which proliferated in the bull market of the pandemic? Amidst a bear market and increasing scrutiny from the Securities and Exchange Commission (“SEC”), SPACs have crashed as fast as they rose. (Lipschultz, Bloomberg Law). The features, such as their speed and lack of disclosures, that made SPACs so popular, are now causing their failure…

Automated digital investment advisory programs, often referred to as “robo-advisers”, have grown in popularity over the last decade since their initial introduction in 2008. (SEC; Investopedia). As a digital financial adviser, a robo-adviser manages investments with minimal human intervention. (Milan Ganatra, Aashika Jain, Forbes). Robo-advisers provide automated investment portfolios based on the investor’s imputed preferences, risks, and goals by using advanced algorithms that analyze investor information. (Id.; Charles Schwab). While this technology is a considerable advancement and is accurate most of the time, it is not without its drawbacks and risks…

On March 21, 2022, the U.S. Securities and Exchange Commission (“SEC”), proposed a new climate reporting rule to provide investors with more climate-related data to make informed investments. (SEC). The announcement of this proposal has been met with serious reservations by industry lobbyists and Republican politicians who view the regulation as outside of the SEC’s authority. Id. Notably, General Motors (“GM”) strongly objected to the proposal and sent their CEO to meet with members of the SEC. (SEC). While many organizations have voiced their criticisms of the proposal, whether the SEC will take heed of these objections has yet to be seen…

On May 3, 2022, the Securities and Exchange Commission (“SEC”) announced that it will add twenty positions to the newly renamed Crypto Assets and Cyber Unit within its Division of Enforcement. (Securities and Exchange Commission). This unit’s previous name was simply the “Cyber Unit,” but this new renaming indicates the SEC’s increased focus on crypto assets. Id. Since the SEC created this unit in 2017, it has brought more than 80 enforcement actions related to fraudulent and unregistered crypto asset offerings and has levied more than $2 billion dollars in fees, fines, and penalties…

The GameStop short squeeze and trading halt in early 2021 fueled debates around Wall Street hedge funds and retail trading. One of the areas that drew the most attention was the practice of payment for order flow (“PFOF”), which is a popular form of compensation received by the retail trading brokers such as Robinhood. (Alex Rampell and Scott Kupor, Andreessen Horowitz). Shortly after the trading frenzy, the Securities and Exchange Commission (the “SEC”) released a 44-page report on how the short squeeze and trading halt went down, and raised several red flags on retail broker practices in the report. (Yun Li, CNBC). Since then, the SEC’s chair, Gary Gensler, has directed efforts to research and propose a set of rules aiming to make the US retail securities market more transparent and fair…

In light of recent events and social media exposing continued racial inequalities in the United States, social justice has become a topic at the forefront of discourse. Calls for change and acknowledgment of social justice issues have reached further into the corporate sphere with both the U.S. Securities and Exchange Commission (“SEC”) and shareholders alike demanding more accountability and transparency on the impact corporations have on racial inequalities. (U.S. Securities and Exchange Commission). Recently, Apple shareholders, against the Apple CEO’s recommendation, approved proposals for audits on the company’s civil-rights impact, including the company’s diversity, pay equity, and use of concealment clauses in employment agreements. (Gurman, Bloomberg Law). This recent push is one of many instances calling for similar corporate action and accountability across the board. (Maiden, Corporate Secretary). With recent SEC focus on social justice, new regulations and shareholder pressure, social justice is a topic corporations won’t be able to avoid much longer…

The National Football League (“NFL”) implemented the Rooney Rule for hiring head coaches in 2003. (Julie Goldsmith Reiser, Lori Nishiura Mackenzie, Bloomberg Law). The Rooney Rule requires any NFL franchise interviewing candidates for head coaching positions to interview at least one minority candidate or be subject to a $500,000 fine. Id. When the Rooney Rule was first implemented, it appeared to be successful in achieving its goal of increasing the number of diverse head coaches in the NFL. Id. However, statistics now show otherwise…

The rise of artificial intelligence (“A.I.”) and automated decision-making tools in making consumer-facing decisions led federal regulators, such as those at the Federal Trade Commission (“FTC”), to identify bias in algorithms along with deceptive and manipulative conduct on the internet among their top regulatory priorities moving forward. (Ali Arain, et. al., Bloomberg Law). In particular, regulators seek to identify whether A.I. and algorithms exclude specific consumer groups in an unfair and discriminatory manner, whether data collection efforts accurately reflect real-world facts, and whether automated decision-making tools are used in a transparent manner. Id. The extent to which A.I. replicates human bias and what, if anything can be done about that, is a question regulators will need to grapple with in the coming years…