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All states but one that impose a sales and use tax now have laws requiring out-of-state companies to collect tax if they have a significant economic presence in a state.  The Governor of Missouri, the last remaining state, is expected to sign a similar law this month.  The change stems from a 2018 United States Supreme Court case, the impact of which is far broader than many realize.
Continue Reading The Expanded Reach of States for Sales & Use Tax Purposes – More Than Just e-Commerce Retailers are Impacted

On April 29, 2021 Governor Newsom signed California A.B. 80, largely conforming to Federal rules relating to deductibility of expenses paid with funds from forgiven Paycheck Protection Program (PPP) loans.  The $150,000 limitation in prior versions of A.B. 80 was removed, and replaced with a requirement that only non-publicly traded companies who reported losses of at least 25% in gross receipts during one quarter of 2020 can deduct such expenses.  That 25% decrease in gross receipts was also a condition for receiving a PPP loan in the second round of loans made available in late 2020.  Publicly traded companies cannot
Continue Reading California Largely (But Not Fully) Conforms to Deductibility of Expenses Paid with Forgiven PPP Loans

In Ocegueda v. Zuckerberg, No. 20-CV-04444, 2021 WL 1056611 (N.D. Cal. Mar. 19, 2021), the United States District Court for the Northern District of California became the first court to rule on a motion to dismiss claims alleging deficiencies in a company’s compliance with policies intended to promote diversity.  The plaintiff, a common stockholder of Facebook, Inc. (“Facebook” or the “Company”), alleged claims for breach of fiduciary duty and further alleged defendants made false and misleading statements in the Company’s Proxy Statement in violation of Section 14(a) of the Securities Exchange Act of 1934.  The plaintiff alleged that
Continue Reading Facebook Defeats Shareholder Suit Challenging Alleged Failures In Its Diversity and Inclusion Practices

During a March 9, 2021 industry conference, one of the four current U.S. Securities and Exchange (“SEC”) commissioners floated a new approach to calculating penalties for corporate misconduct.  Caroline A. Crenshaw, who was tapped by President Donald Trump last June to fill one of the Democratic slots on the Commission, told attendees at the Council of Institutional Investors virtual conference that the SEC needed to revisit its approach to assessing corporate penalties, and implement a new approach that tailored penalties to the “egregiousness of the actual misconduct,” accounted for all benefits of the misconduct that accrued to the corporation, and
Continue Reading SEC Commissioner Calls for a Brave New Approach to Corporate Penalties

A recent decision by a New York federal district court illustrates significant potential pitfalls for sellers in leveraged buyouts and similarly structured transactions.  In particular, it highlights the potential risks under fiduciary duty theories to directors and private equity-appointed directors, even in multi-step transactions with customary disclaimers and exculpatory by-laws.
Continue Reading Sellers Beware: Fiduciary Duty Risks to Directors

On March 4, 2021, the Securities and Exchange Commission announced the formation of a Climate and ESG Task Force in the Division of Enforcement (the “Task Force”).  The Task Force will be aimed at detecting ESG-related misconduct so that investors can fully consider these issues in their investment decisions.
Continue Reading SEC Going Cyber-Hunting for ESG-Related Misconduct

The Office of New York State Attorney General Letitia James (“NYAG”) has filed a lawsuit to shut down technology company Coinseed.  The state has accused the firm of selling unregistered securities in the form of digital tokens and operating as an unregistered broker-dealer while making material misrepresentations about the company, its management team, and fees charged to investors in connection with cryptocurrency trades.
Continue Reading New York Attorney General Sues to Shutter Cryptocurrency Trading Firm Coinseed

In Swipe Acquisition Corp. v. Krauss, CA No. 2019-0509-PAF, 2021 WL 282642 (Del. Ch. Jan. 28, 2021), the Delaware Court of Chancery held that California public policy prohibited a purported waiver of a contractual party’s right to assert a claim under the California Securities Act by reason of a Delaware choice of law provision in the parties’ stock purchase agreement.  Delaware courts will not enforce a choice of law provision if it would be contrary to a fundamental policy of the state whose law would apply but for the choice of law provision (here, California).  California law prohibits contractual
Continue Reading Delaware Court of Chancery Holds that a Contractual Delaware Choice of Law Provision Did Not Waive Plaintiff’s Claim Under the California Securities Act

As anyone who follows the industry can tell you, mergers and acquisitions activity in the aerospace and defense industry has remained robust over the past decade.  In 2019 alone, there were 460 corporate acquisitions in this sector.  And while a slowdown in 2020 deal activity is certainly expected as a result of the COVID-19 pandemic, results for at least the second quarter remained strong, with 84 deal closings.  Further, analysts project that activity in certain subsegments of the industry, including defense, space technology and cyber security, will remain vigorous for the foreseeable future, at least partially offsetting any declines in
Continue Reading M&A Pre-Flight Check: Avoiding Common Issues in Aerospace & Defense Acquisitions

As anyone who has been through a corporate sale process can tell you, there is no such thing as a “standard” M&A transaction.  Every deal is different and presents a unique set of challenges.  This is especially true of transactions involving lead generation companies, which can be very different than businesses in other industries.  Amongst other differences, companies in this space utilize a wide variety of customized commercial arrangements and are subject to numerous industry-specific regulatory requirements that buyers need to be aware of before making an investment in this space.  In this article, we highlight the top 10 issues
Continue Reading Top 10 Diligence Issues in Lead Generation Mergers and Acquisitions

On January 19, 2021, the U.S. Small Business Administration (SBA) published its 28th Interim Final Rule (Forgiveness IFR) covering the loan forgiveness requirements and review procedures for the Paycheck Protection Program, as reauthorized and amended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act), and as enacted under the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or otherwise modified from time to time prior to the enactment of the Economic Aid Act, including the Paycheck Protection Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act,
Continue Reading New Interim Final Rules Re: PPP Loan Forgiveness Requirements and Review Procedures as Amended by Economic Aid Act

  • Lower Thresholds For HSR Filings
  • On February 1st, 2021, the Federal Trade Commission announced revised, lower 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 had not been lowered since 2010.
    Continue Reading Lower Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

    On January 6, 2020, the SBA published its 26th Interim Final Rule (the First Draw PPP IFR) and 27th Interim Final Rule (the Second Draw PPP IFR)[1] with respect to the Paycheck Protection Program (PPP), as reauthorized and modified under Title III (cited as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act)) of Division N of the Consolidated Appropriations Act, 2021.  The PPP was originally enacted under the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or otherwise modified from time to time prior to the enactment of the Economic
    Continue Reading Paycheck Protection Program: SBA Issues Guidance on First Draw and Second Draw PPP Loans and Releases PPP Applications Pursuant to the Economic Aid Act

    This client alert is the second of a two part series concerning the Save Our Stages Act (the “SOS Act”), which became law on December 27, 2020 as Section 324 of the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act (the “Economic Aid Act”, comprising Title III of Division N of the Consolidated Appropriations Act, 2021).  The SOS Act establishes a new grant program (the “SOS Program”, also known as the “grant program for shuttered venue operators”) to be administered by the Small Business Administration (“SBA”) to aid certain financially distressed venue operators, event promoters or producers, and
    Continue Reading The Save Our Stages Act – Time for Eligible Businesses to Get Ready for Their Audition (Part 2 of 2)

    Among the various bills that were amalgamated in the Consolidated Appropriations Act, 2021 (the omnibus appropriations and stimulus funding bill that was signed into law on December 27, 2020) was a modified version of the Save Our Stages Act (the “SOS Act”), a bill first introduced into the Senate by Sen. John Cornyn (TX) on July 22, 2020. The SOS Act can be found in Section 324 of the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act, which act comprises Title III of Division N of the Consolidated Appropriations Act, 2021.  The SOS Act establishes a new grant
    Continue Reading The Save Our Stages Act – Time for Eligible Businesses to Get Ready for Their Audition (Part 1 of 2)

    [Update: This article has been updated since its initial publication on December 31, 2020.]

    On December 27, 2020, President Donald Trump signed into law the Consolidated Appropriations Act, 2021 (the 2021 Consolidated Appropriations Act), an omnibus statute that is comprised of, among other laws, twelve fiscal year 2021 appropriations bills for the federal government and an economic aid package to assist business concerns that continue to face hardships due to the COIVD-19 pandemic.  Title III of the 2021 Consolidated Appropriations Act, which is cited as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Act), among other
    Continue Reading UPDATED: The Reauthorization and Revival of the Paycheck Protection Program and Economic Injury Disaster Loan Program under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act