The Department of Homeland Security (“DHS”) announced on May 4, 2023 a planned end to the COVID-19 remote I-9 flexibility. The flexibility ends on July 31 and prior pandemic I-9s must be remediated by Aug 30, 2023. Therefore, employers should act quickly to review and remediate I-9s that were verified remotely in the past three years.
Antitrust enforcement has been heating up over the last few years in several areas – notably in healthcare and labor.[1] As the antitrust climate intensifies and spreads, private equity (PE) firms are starting to feel the heat, finding themselves the focus of increased antitrust scrutiny. Significantly, antitrust enforcement and litigation risks are moving from the portfolio companies to the PE firms themselves. Three areas of heightened risk stand out: interlocking directorates, roll-ups, and PE divestiture buyers.[2]
Continue Reading Hot Antitrust Enforcement Climate Reaches Private Equity
On May 3, 2023, New York Attorney General Letitia James introduced legislation that, if passed, would substantially increase oversight and regulation of the cryptocurrency industry in New York. James touts the bill as the “Crypto Regulation Protection, Transparency and Oversight Act,” also to be known as the “CRPTO Act.” (the “Bill”).
Continue Reading NYAG Bill Seeks to “Bring Order” to Crypto Industry
This article was originally published in Law360 on April 14, 2023.
Providing legal advice to business entities raises important issues regarding the application of attorney-client privilege between the entity and its directors. Delaware’s approach to corporate privilege springs from the recognition that corporate directors and the corporation they control are deemed “joint clients” of legal advice received while the directors form part of the board.
Continue Reading Protecting Privilege in Case of a Dispute with Former Director
Retailers and service providers with US business operations should take note: the Federal Trade Commission (FTC) is increasing its scrutiny of negative option marketing activity to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. The FTC just issued a notice of proposed rulemaking as part of its ongoing review of its 1973 Negative Option Rule—one of the primary guides for the FTC’s enforcement focus.
Continue Reading Negative Option Practices Under Increased Scrutiny in the US
Buying a small business government contractor may not be as simple as a standard acquisition. This is particularly true if the small business wants to continue to qualify for federal small business set-aside and sole-source awards during negotiations. The U.S. Small Business Administration (“SBA”) treats stock options, convertible securities, and agreements to merge (including agreements in principle), as having a “present effect” on the power to control a concern. So if a letter of intent is sufficiently firm to be considered an agreement in principle, the SBA’s regulations require such agreements be given “present effect” on the power to control a concern – deeming the two entities are immediately affiliated. In other words, the small business likely is no longer small (and, if it is a specialty small business concern, like woman-owned or service-disabled veteran-owned, it is likely ineligible for those programs as well) before the deal even is done. On the other hand, agreements to open or continue negotiations towards the “possibility of a merger or a sale of stock at some later date” are not considered agreements in principle, and are not given present effect. In practice what this means is that a letter of intent must be carefully drafted to ensure that it does not trigger the present effect rule before the parties are ready or willing to be considered affiliated.
Following the FDIC’s actions on Friday to place Silicon Valley Bank (“SVB”) in receivership, the Department of the Treasury, the FDIC, and the Federal Reserve announced several measures on Sunday, March 12, 2023 aimed at avoiding contagion in the banking sector and protecting depositors.
On February 22, 2023, the U.S. Department of Justice (DOJ) announced a new nation-wide policy to incentivize companies to self-report criminal activity. Among the cited benefits of self-reporting are discounts on fines and non-prosecution agreements. This new policy arrives on the heels of the “Monaco Memo,” issued in September 2022 by Deputy Attorney General Lisa Monaco, which directed each prosecutorial DOJ component to review its policies on corporate voluntary self-disclosures and update to reflect the guidance’s core principles. The policy also is in addition to guidance from Attorney General Merrick Garland, who in December 2022 emphasized prosecutorial leniency in criminal cases. Together, these memos show a shift from prior administrations, which emphasized prosecuting the “most serious, readily provable offense,” not leniency for self-disclosures. Notably, the new policy does not impact individual actors, who, since the 2015 Yates Memo, still are a DOJ priority. Indeed, the new policy emphasizes that crediting voluntary self-disclosure by companies will help DOJ “ensure individual accountability” for individual criminal conduct. We break down key elements of the DOJ’s policy below, including our quick thoughts on how this policy may impact corporate decisions going forward.
Inside and outside counsel should know that the way they guide clients through legal and business issues may need to change based on a recent Ninth Circuit case governing the protections afforded to those communications.[1] The following update and insights will help you mitigate against the risk of attorney-client emails being produced in litigation:
In In re McDonald’s Corp. Stockholder Derivative Litigation, No. 2021-0324 (Del. Ch. Jan. 26, 2023), the Delaware Court of Chancery (Laster, V.C.) held that officers of a Delaware corporation are subject to a fiduciary duty of oversight as articulated in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996). In doing so, the Court allowed stockholder derivative plaintiffs to proceed with oversight claims against the company’s former Global Chief People Officer, who allegedly presided over a corporate culture that condoned sexual harassment. The decision builds on Delaware jurisprudence to extend the duty of oversight to officers, not just directors, who will in most instances form part of the vanguard with respect to company efforts to implement effective reporting systems and/or to report on and respond to red flags regarding potential misfeasance at the company.
The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.
Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit