Corporate Finance and the Securities Laws, 7th Edition (1-year Online Subscription)

This Seventh Edition of Corporate Finance and the Securities Laws is about doing deals—transactions in which companies raise funds in the U.S. and international capital markets. We have tried to retain the book’s practical orientation, which we believe was responsible for the previous editions’ considerable success. We do not intend this book as a complete treatise on the U.S. federal securities laws, nor do we intend it as an investor’s or issuer’s guide to the capital markets. Rather, we are trying to explain the legal environment in which capital markets transactions take place, just as we are trying to explain the capital markets transactions to which that environment is always trying to adapt.

Corporate Finance and the Securities Laws has recently been updated to include:

• SCOTUS asked to review Fifth Circuit decision applying Humphrey’s Executor to protect members of independent agencies from at-will removal
• Successful challenges to SEC rules for violation of the Administrative Procedure Act
• SCOTUS rejection of Chevron deference
• SEC’s shifting position on status of ETH as an investment contract
• Continuing litigation arising out of enforcement proceedings in which SEC alleges that digital assets are investment contracts and therefore securities
• SEC adoption of new ‘‘dealer’’ definition in Rule 3a5-4 and possible application to activity in digital assets
• House passage in May 2024 of Financial Innovation and Technology for the 21st Century Act (‘‘Fit21’’) to create a regulatory framework for digital assets
• Massive political spending by crypto to elect ‘‘crypto-friendly’’ candidates in 2024 elections
• Memorial Day 2024 changeover to Tþ1 and its consequences
• Recent trends in IPOs
• IPO candidate’s state of incorporation as a pre-IPO topic of discussion with underwriters
• Nasdaq under criticism for insufficient enforcement of delisting rules for stocks that trade below $1
• Nasdaq board diversity rule and related ‘‘board recruitment service’’
• TXSE Group Inc. announcement of plans to launch the Texas Stock Exchange with backing from group that includes Black-Rock and Citadel
• SEC amendment of Rule 612 of Regulation NMS to reduce minimum price increment (‘‘tick size’’) for most stocks from one cent to one-half cent
• IPO companies’ use through 2023 of specific provisions of the JOBS Act’s IPO On-Ramp
• SEC’s ‘‘human capital disclosure’’ requirements and whether EEOC data can supplement disclosure
• SEC’s climate change disclosure requirements adopted in March 2024 and SEC’s indefinite stay of the effective date of the rules pending the outcome of litigation consolidated in the Eighth Circuit
• SEC cybersecurity governance and disclosure rules adopted in July 2023; also DOJ guidelines and FBI policy statement regarding procedures a company should take if it believes the circumstances warrant a delay in filing the 8-K disclosure report
• SEC enforcement proceeding against Solar Winds and its CISO alleging that Solar Winds’ risk factor disclosure re cybersecurity was unacceptably boilerplate and generic and the district court’s disagreement with many of the SEC’s allegations
• Increased registration fee under Section 6(b) of 1933 Act as of October 1, 2024
• Pershing Square USA withdrawal of its IPO following the issuer’s CEO’s sending of a communication to strategic institutional and high net worth investors discussing reasons to purchase in the forthcoming IPO, all at a time when the preliminary prospectus on file did not contain a price range
• First direct listing, in March 2024, of a closed end fund vehicle
• New SEC rules and guidance on SPAC transactions, adopted in January 2024, affecting:
  • SPAC’s status as an investment company under the 1940 Act
  • Recent SEC enforcement proceedings and private civil litigation involving SPACs
  • Delaware Chancery Court dismissal in May 2024 of a Multiplan claim
  • When financial intermediaries will be considered ‘‘underwriters’’ in a De-SPAC transaction
  • Discussion of board’s consideration and evaluation of the De-SPAC transaction
  • Additional disclosures in connection with projections
• New ‘‘probability of default’’ determination to be used in lieu of reliance on ratings not workable for highly rated sovereign or sub-sovereign issuers because vendor models are not set up to address such issuers
• SEC enforcement proceedings arising out of American Airlines ‘‘overnight’’ share offering in 2023 as illustrating inflexibility of ‘‘bona fide purchase’’ exception to Rule 105 prohibition on purchasing shares in offering after having made short sales during restricted period
• New York Appellate Division, First Department, decision in 2023 that PSLRA stay applies in Section 11 cases brought in state court
• Difficulty of applying Morrison to cases brought in the United States against crypto exchanges that claim they have no physical headquarters in any geographic jurisdiction (Williams v. Binance)
• U.S. Supreme Court decision in April 2024 that held that Rule 10b-5(b)’s prohibition of omissions of material fact necessary ‘‘to make the statements made . . . not misleading’’ does not extend to ‘‘pure omissions,’’ but the opinion for the Court emphasized that it had taken the case as a ‘‘pure omission’’ case and not as a ‘‘half-truth’’ case
• SDNY denies in 2024 Amgen motion to dismiss Rule 10b-5 class action based on its failure to disclose $10.7 billion in potential liabilities and penalties to IRS arising out of transfer pricing practices
• Recent Corp Fin guidance on disclosure issues in which it is particularly interested, e.g., ESG risks, cloud computing, artificial intelligence, cybersecurity governance and disclosure, bank commercial real estate risk, procedures for dealing with employee complaints about workplace misconduct (and SEC’s proceeding against Activision Blizzard) and pay-versus-performance disclosures)
• Steps being taken by the company’s auditors to comply with the likely adoption of the PCAOB’s new auditing standard, Non-Compliance with Laws and Regulations
• SEC Chief Accountant statement in December 2023 in which he identified cash flows as the fourth most common accounting issue cited in restatements from 2003 through 2022 including the most frequent issue among large accelerated filers
• FASB issuance of an Accounting Standards Update in November 2023 for the purpose of improving disclosure about reportable segments, in particular for enhanced disclosure about significant segment expenses
• SEC settlement in March 2024 with Skechers U.S.A. over undisclosed related party transactions
• FINRA censure and fine of broker-dealer in September 2024 for not following standards expected of a QIU and therefore having violated rules requiring establishment and maintenance of adequate supervisory systems and procedures and requiring the observation of high standards of commercial honor and just and equitable principles of trade
• Continued interest by the Gensler SEC in increasing the standards for qualifying as an accredited investor for Regulation D purposes
• 3M reliance on Section 3(a)(10) to settle mass tort case, the Combat Arms Earplug litigation, brought by military service members and veterans. The settlement agreement involved 3M contributing a total of $6 billion between 2023 and 2029, including $5 billion in cash and $1 billion in 3M common stock. The terms of the settlement were approved after a fairness hearing and, as a result, no registration statement was required in connection with the stock issued as part of the settlement pursuant to the exemption.
• SEC announcement in August 2023 of settlement of enforcement actions against five companies for violations of Rule 12b-25
• Reduced willingness of SEC and exchanges to make accommodations to foreign private issuers, on disclosure, ‘‘clawbacks’’ and governance
• Cybersecurity governance and disclosure requirements for FPIs
• Potential liability of foreign public companies for U.S. excise tax on share repurchases
• Effect of 2013 and 2023 SEC rules promoting the liquidity and portfolio quality of money market funds on amount of commercial paper outstanding
• BlackRock and FSB proposals for structural changes to commercial paper market to reduce chances of repeat of 2020 market ‘‘freeze’’
• Frequent staff comments on REIT filings
• Private BDCs
• Recent offerings of tangible equity units
• Continued issuances of Additional Tier 1 (AT1) instruments