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On May 26, 2020, the Financial Crimes Enforcement Network, (“FinCEN”) issued a notice in the Federal Register updating cost estimates related to compliance with filing suspicious activity reports (SARs).  Under the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., certain businesses providing financial services are required to file SARs upon suspicion that a crime or violation was committed by, at, or through that financial institution (so long as certain dollar thresholds are met), or upon suspicion of insider abuse of any kind.…
Merger agreements involving acquisitions of private companies often contain terms creating post-merger obligations or “earnouts” in favor of certain classes of selling stockholders.  To address potential claims that may arise from such post-merger arrangements, selling stockholders typically designate a “shareholder representative” to handle such claims on their behalf pursuant to specifically delineated rights and duties.  In Fortis Advisors, LLC v. Allergan W.C. Holding, Inc., 2020 Del. Ch. LEXIS 181 (Del. Ch. May 14, 2020) (Zurn, V.C.), the Delaware Court of Chancery addressed the scope of such rights and duties in the context of a discovery dispute.  The Court considered…
*This post has been updated as of August 4, 2020. On May 20, 2020, the Securities and Exchange Commission formally adopted amendments to financial disclosure regulations regarding the acquisition and disposition of certain businesses. The final rules – which are intended to update disclosure requirements for the benefit of registrants and investors – represent the most comprehensive revision to the SEC’s regulations in this area in more than 30 years. The new rules can be found here.…
In Rubenstein v. Int’l Value Advisers, LLC, No. 19-560-CV, 2020 WL 2549507 (2d Cir. May 20, 2020), the United States Court of Appeals for the Second Circuit affirmed a district court’s decision holding that an investor was not a member of a “group” of corporate insiders for purposes of short-swing profit liability under Section 16(b) of the Securities Exchange Act of 1934 (the “1934 Act”), 15 U.S.C. § 78p(b).  In affirming, the Second Circuit determined that the investor’s investment management agreement delegating discretionary authority to an advisor was not an agreement with the “issuer,” and that an investment advisor’s client…
On May 13, 2020, Financial Crimes Enforcement Network (“FinCEN”) Director Kenneth Blanco delivered remarks to the Consensus Blockchain Conference regarding the agency’s recent observations in connection with virtual currencies, including the current risks of criminal exploitation of virtual currency, significant issues FinCEN anticipates for virtual currencies in the future, and the industry’s compliance with the Travel Rule.…
On May 4, 2020, the Securities and Exchange Commission (“SEC”) issued a temporary final rule easing some restrictions on small businesses seeking to raise capital pursuant to Regulation Crowdfunding (“Reg CF”).  The SEC made the move in response to feedback from its Small Business Capital Formation Advisory Committee and other outreach conducted by SEC staff regarding the industry’s urgent need for expedited access to capital while maintaining investor protections as the COVID-19 pandemic persists.…
On May 12, 2020, speaking at the Securities Enforcement Forum West 2020, Steven Peikin, the co-Director of the Securities and Exchange Commission Enforcement Division, provided an overview of the division’s activities over the last several months as it has responded to the challenges created by the COVID-19 pandemic.  The Division is actively monitoring issuers and market participants for any sign of abuse of the situation, swiftly implementing interim trading suspensions where the possibility of such abuse is identified, and filing enforcement actions in record time where it determines such abuse has occurred.…
In Taylor Lohmeyer Law Firm P.L.L.C. v. United States, No. 19-50506, 2020 WL 1966844 (5th Cir. Apr. 24, 2020), the United States Court of Appeals for the Fifth Circuit held that a Texas-based estate and tax-planning law firm (“Taylor Lohmeyer” or the “firm”) could not invoke the attorney-client privilege to quash a summons by the Internal Revenue Service (“IRS”) seeking the identities of firm clients.  In affirming the district court’s decision, the Court of Appeals ruled that Taylor Lohmeyer could not use the privilege as a “blanket” to circumvent compliance with the summons, but may have viable arguments to…
On April 30, 2020 the Federal Reserve released new term sheets for the Main Street Loan Program, which is a $600 billion loan program, that will include $75 billion capitalized by the Treasury Department under the $454 billion Congressional appropriation of Section 4003(b)(4) of Title IV of the CARES Act.   The loans will target small and mid-sized companies, defined as having less than 15,000 employees or $5 billion or less in 2019 annual revenue, and will be made by banks and other eligible lenders, with the government then purchasing between 85% to 95% of the lenders’ interest in the loans.…
Rule 23.1 of the Delaware Court of Chancery Rules requires a plaintiff asserting a shareholder derivative action to plead “with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and the reasons for the plaintiff’s failure to obtain the action or for not making the effort” (emphasis added).  In Elburn v. Albanese, 2020 Del. Ch. LEXIS 156 (Del. Ch. Apr. 21, 2020), the Delaware Court of Chancery (Slights, V.C.), addressed the “fundamental,” but rarely asked, “question of what is required to plead a fact ‘with particularity’…
The US Treasury Department is accepting CARES Act Title IV loan applications from national security businesses to provide liquidity to offset covered losses, which include losses incurred directly or indirectly as a result of the coronavirus pandemic. The Treasury Department will review loan applications submitted by 3:00 p.m. EDT on Friday, May 1, 2020. The Treasury Department does not guarantee that applications submitted after that deadline will be reviewed.…
The current COVID-19 pandemic is causing an unprecedented negative impact on businesses around the globe in nearly every sector of the economy.  Both the US Government as well as Foreign Governments have and will continue to provide short- and long-term financial support to these businesses.  However, this financial assistance will not be available to every business, nor will it be adequate in all instances to offset decreased revenue resulting directly and indirectly from the pandemic.  As a result, many businesses will be unable to accurately forecast and will not have the necessary liquidity to ride out the pandemic, and will…
The New York Stock Exchange (NYSE) and The Nasdaq Stock Market LLC (Nasdaq) both took action this month to provide issuers with much needed relief in response to the economic downturn caused by the COVID-19 pandemic. We expect that these measures will provide needed flexibility to many issuers, especially smaller reporting companies who have recently experienced significant stock price volatility and are in need of capital.…
On April 9, 2020, the Federal Reserve issued a term sheet for each of the Primary Market Corporate Credit Facility (“PMCCF”) and the Secondary Market Corporate Credit Facility (the “SMCCF”).  Under the PMCCF and the SMCCF, the Federal Reserve Bank of New York (“Reserve Bank”) will commit to lend to a special purpose vehicle (“SPV”) on a recourse basis.  Under the PMCCF, the SPV will (i) purchase qualifying bonds as the sole investor in a bond issuance; and (ii) purchase portions of syndicated loans or bonds at issuance.  Under the SMCCF, the SPV will purchase in the secondary market eligible…