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In May, we saw a slower month for crypto enforcement actions by state and federal regulators. See our March 2022 Crypto Enforcement Actions Roundup blog here where we discuss the regulatory guidance and jurisdiction of federal and state agencies to enforce these matters.
Continue Reading May 2022 Crypto Enforcement Actions and Regulatory Guidance Roundup

In Sirott v. Superior Court, 2022 Cal. App. LEXIS 389 (Cal. App. May 5, 2022), the First Appellate District of the California Court of Appeal (Humes, J.) analyzed the ownership requirements a plaintiff must satisfy to pursue derivative claims on behalf of a limited liability company.  Under California Corporations Code § 17709.02 (“Section 17709.02”), a putative derivative plaintiff must show both “contemporaneous” and “continuous” ownership to proceed with a derivative lawsuit.  Subject to certain statutorily defined exceptions, the contemporaneous ownership prerequisite requires the plaintiff to plead that it was a member of the limited liability company at the time of
Continue Reading California Court of Appeal Clarifies that a Derivative Plaintiff Must Demonstrate Both “Contemporaneous” and “Continuous” Ownership to Maintain a Derivative Suit on Behalf of a Limited Liability Company

In Crest v. Padilla, No. 19STCV27561, 2022 WL 1565613 (Cal. Super. May 13, 2022), the Superior Court of California for the County of Los Angeles (Duffy-Lewis, J.) issued a decision following a bench trial finding that Senate Bill 826 (“SB 826”), California’s law requiring gender diversity on boards of directors, violates the Equal Protection Clause of the California Constitution.  The ruling comes after a decision in a different case issued in April of this year, which found that Assembly Bill 979 (“AB 979”), which required publicly held corporations with principal executive offices in California to include “underrepresented communities” on
Continue Reading Los Angeles Superior Court Invalidates California Law Requiring Gender Diversity on Company Boards

In April, we continued to see a steady pace in the seriousness and frequency of crypto enforcement actions by state and federal law enforcement.  (See our March 2022 Crypto Enforcement Actions Roundup blog here where we discuss the regulatory guidance and jurisdiction of federal and state agencies to enforce these matters.)
Continue Reading April 2022 Crypto Enforcement Actions And Regulatory Guidance Roundup

In Crest v. Padilla, No. 20STCV37513 (Cal. Super. Apr. 1, 2022), the Superior Court of California for the County of Los Angeles (Green, J.) declared that Section 301.4 of the California Corporations Code is unconstitutional under the California state Constitution.  Section 301.4 requires publicly held corporations which have their principal executive offices located in California to include “underrepresented communities” on their boards of directors.  The trial court granted the taxpayer plaintiffs’ motion for summary judgment, concluding that the statute violated equal protection clause of the California Constitution.  The court’s decision renders the constitutionality of Section 301.4 ripe for appellate
Continue Reading Los Angeles Superior Court Invalidates California Board Diversity Statute, Rendering It Ripe for Review by the California Court of Appeal

In the wake of President Biden’s March 9, 2022, executive order outlining his Administration’s desire to establish a comprehensive federal approach to crypto policy and regulation,[1] federal agencies are continuing to focus on enforcement of crypto under existing regulations. Although NFTs and cryptocurrencies are novel technologies, they still fall squarely within the jurisdiction of various federal agencies’ current jurisdictions, as illustrated by three recent enforcement actions by the CFTC, the SEC, and the DOJ.[2]
Continue Reading March 2022 Crypto Enforcement Actions Roundup

In Tola v. Bryant, No. 16150, 2022 Cal. App. LEXIS 241 (Cal. App. Mar. 24, 2022), the First Appellate District of the California Court of Appeal applied Delaware’s new formulation of the test for determining whether a stockholder has standing to assert derivative claims on behalf of a company.  Under the test articulated by the Delaware Supreme Court in United Food & Commercial Workers Union v. Zuckerberg, 262 A.3d 1034, 1058 (Del. 2021), a stockholder of a Delaware corporation has standing to assert derivative claims when the stockholder can plead particularized facts, on a director-by-director basis, demonstrating that
Continue Reading California Court of Appeal Addresses Derivative Standing and Failure of Oversight Claims Under Delaware Law

On March 30, 2022 the U.S. Securities and Exchange Commission (“SEC”) announced its 2022 examination priorities. Among the “significant focus areas” is Environmental, Social, and Governance (“ESG”) investing. SEC examiners will be scrutinizing disclosures by registered investment advisors (“RIA”) that advertise ESG strategies or claim to incorporate certain ESG criteria, to ensure disclosures regarding portfolio management practices do not involve materially false and misleading statements or omissions.
Continue Reading SEC Announces 2022 Examination Priorities, Includes ESG

On March 21, 2022, the U.S. Securities and Exchange Commission (the “SEC”) published the proposed rule entitled the “Enhancement and Standardization of Climate-Related Disclosures” that would require registered public companies to disclose certain climate-related information in registration statements and periodic reports.[1] The proposed rule and amendments, “would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers,” said SEC Chair Gary Gensler.[2]
Continue Reading SEC Proposes Rules Requiring Climate-Related Disclosures from Registered Public Companies

On February 10, 2022, the U.S. Securities and Exchange Commission (the “SEC”) proposed amendments to accelerate the filing deadlines for Schedule 13D and Schedule 13G beneficial ownership reports, expand beneficial ownership reporting obligations to include the acquisition of certain derivative securities and clarify the standards for formation of a group that would be subject to beneficial ownership reporting obligations. The proposed amendments are intended to provide more timely information to meet the needs of the current financial markets. SEC Chair Gary Gensler stated, “These amendments would update our reporting requirements for modern markets, reduce information asymmetries, and address the timeliness
Continue Reading SEC Proposes Amendments to Schedule 13 Beneficial Ownership Reporting Requirements

The U.S. Securities and Exchange Commission (SEC) recently issued proposed amendments to the Securities Exchange Act [1] (the “Exchange Act”) that would significantly broaden the definition of “exchange” for purposes of regulation under the Exchange Act (“Proposed Rule”).[2] Designed to address a “regulatory gap,”[3] the Proposed Rule would cover “platforms for all kinds of asset classes that bring together buyers and sellers.”[4]  Under the Proposed Rule, communication protocol systems—trading systems that offer the use of non-firm trading interest and provide protocols to bring together buyers and sellers of securities—would have to register with the
Continue Reading SEC Proposed Amendments Could Significantly Impact DeFi Companies

Although the number of corporate mergers surged during President Biden’s first year in office, all signs point to a tougher regulatory environment for deals going forward.

In 2021, $5.8 trillion changed hands as a result of corporate mergers across the globe.[1]  This 64 percent increase over 2020 far surpassed the previous annual record,[2] and now the Biden Administration appears to be taking steps toward fulfilling the President’s goal of ramping up antitrust enforcement.[3]  One such measure includes taking a more critical approach when evaluating proposed mergers, and federal agencies have already filed several high-profile investigations.[4]
Continue Reading Looking Ahead to Tougher Merger Guidelines and Enforcement

  • Higher Thresholds For HSR Filings
  • On January 24, 2022, the Federal Trade Commission announced revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The filing thresholds are revised annually, based on the change in Gross National Product (GNP) and after last year’s atypical decrease they have again increased.
    Continue Reading Higher Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

    On December 27, 2021, the California Court of Appeal issued two decisions addressing whether claims arising from statements made in filings with the Securities and Exchange Commission (“SEC”) fall within California’s statute designed to deter “strategic lawsuits against public participation,” or “SLAPPs,” arising from protected speech.  In Sugarman v. Benett, No. B307753, 2021 WL 6111725  (Cal. App. Dec. 27, 2021) (“Benett”), and Sugarman v. Brown, No. B308318, 2021 WL 6111718 (Cal. App. Dec. 27, 2021) (“Brown”), the Court held that state law claims arising out of disclosures in federal SEC filings may be subject to California’s anti-SLAPP statute,
    Continue Reading California Court of Appeal Holds that SEC Filings May Be Protected Activities Under Anti-SLAPP Statute

    This December, the Delaware Supreme Court penned two decisions that shined the spotlight on purchase agreement provisions that are often afterthoughts in negotiations.  In Golden Rule Financial Corporation v. Shareholder Representative Services, No. 61, 2021, 2021 WL 5754866 (Del. Dec. 3, 2021) (ORDER), the Court reviewed the post-closing “true up” language and determined that “consistently applied” accounting principles in the post-closing true up does not necessarily mean “in the same manner as had been applied prior to closing.”  And in AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC, –A.3d–, 2021 WL 5832875 (Del. Dec. 8,
    Continue Reading Delaware Supreme Court Shines Spotlight on Boilerplate Purchase Agreement Provisions