As the pressure for clean alternatives to conventional gas-powered vehicles mounts, entrepreneurs, such as Elon Musk, have transformed the electric-powered vehicle industry into a future-oriented marketplace and are making electric vehicles accessible for Americans. For example, Tesla Motors (“Tesla”) is now the number one electric automaker in the United States (“U.S.”). Tesla makes up 35% of the electric vehicle market, beating traditional companies such as General Motors and Ford. (Edison Electric Institute). With success comes competition. In 2014, Trevor Milton founded Nikola Corporation (“Nikola”), which manufacturers semi-trucks and pick-up trucks powered by hydrogen and electric batteries, in competition with Tesla’s electric Cybertruck. (Forbes). However, as of June 2020, Nikola was worth $23 billion despite having zero sales and zero revenues and Trevor Milton has been accused of misrepresenting the company’s technology to investors. (Id.; Graham Rapier, Business Insider).
Read MoreOne of the year’s most anticipated IPOs was that of Casper Sleep, Inc., the direct-to-consumer mattress company that officially went public in February 2020. (Claire Roth, Bloomberg). Casper entered the market at $12 per share and closed its first day with shares trading at $13.50, not exactly the hottest start for one of Wall Street’s newest additions. (Id.) Since then, the mattress retailer now faces a lawsuit from its shareholders claiming that, among other things, Casper misled investors by claiming in its initial registration statement that its gross profit margins were improving. (Complaint, Lematta v. Casper Sleep, Inc., Docket No. 1:20-cv-02744 (E.D.N.Y. June 19, 2020)). In reality, as its first quarter filing states, the newly public company was subject to decreasing profit margins and a near 100% increase in net losses year over year. (Casper Sleep, Form 10-Q). The suit against one of Wall Street’s newest IPOs is set to continue its proceedings this fall.
Read MoreOn August 26, 2020, the Securities and Exchange Commission (“SEC”) officially updated the definition of “accredited investors” under the Securities Act of 1933 (“Securities Act”). (Press Release, SEC Modernizes the Accredited Investor Definition). The amendments greatly expand the threshold of determining whether an investor is accredited in Rule 215 and Rule 501(a) of the Securities Act, signaling a significant overhaul of the growing market for exempt offerings.
Read MoreWith the 2020 Presidential Election just around the corner, voting paraphernalia, media campaigns, and the like are hard to avoid. Now, Corporate America is jumping on the voting bandwagon. Some companies, like designer fashion brand Tory Burch, are donating proceeds from limited-edition “VOTE” branded merchandise to get-out-the-vote programs. (Kate Kelly and Sapna Maheshwari, New York Times). Restaurant chain Shake Shack is giving away free French fries to all customers that vote early.
Read MorePresident Trump continues to escalate the United States (“U.S.”) and China Trade war. President Trump has expanded his campaign against China’s government by going after Chinese tech companies, jeopardizing the future of technology and innovation as investors must navigate cross-border tech investments amidst trade tensions. (Kevin Cirilli, Bloomberg L.P.) The Trump administration’s campaign to slow money flowing from investment funds into Chinese companies is not easing anytime soon, as U.S. politicians continue to claim venture capital funds and endowments have directed growing potions of their investments into Chinese companies linked to human rights abuses and national security threats.
Read MoreThe ongoing pandemic has negatively impacted the global market in nearly every sector and has led many companies to file for bankruptcy. For example, Hertz Global Holdings Inc. thrived as a car-rental company before the pandemic broke out but now is on the verge of bankruptcy. (Brickley, Wall Street Journal). Despite filing for Chapter 11 bankruptcy in May, Hertz intends to hand out $14.6 million in bonuses to executives after having already paid out $16.2 million in a similar fashion. Id. This type of “retention” bonus was rare before the economy recently turned downward, but a spike in these bonuses could lead to an influx of novel bankruptcy claims from creditors. Id.
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