In New York Stock Exchange LLC v. Securities & Exch. Comm., 2020 WL 3248902 (D.C. Cir. June 16, 2020), the United States Court of Appeals for the District of Columbia Circuit invalidated the Securities and Exchange Commission’s (“SEC”) experimental transaction fee pilot program to study the market effects of broker-dealer incentive programs used by domestic stock exchanges.  The Court of Appeals held that the SEC lacked the authority under the Securities Exchange Act of 1934 (“Exchange Act”) to compel the exchanges to conduct what amounted to a “costly experiment” to see how the fees these exchanges charge and the incentives they offer “might” affect the trading habits of market participants.  The ruling demonstrates a judicial willingness to curb the SEC’s rulemaking authority under the Exchange Act for merely experimental policies.
Continue Reading DC Circuit Repudiates SEC Program for Testing Exchange Fee Structures

On July 25, 2017, the U.S. Securities and Exchange Commission (“SEC”) issued a report (“Report”) detailing its investigation into whether the DAO (an unincorporated “decentralized autonomous organization”), Slock.it UG (“Slock.it”), Slock.it’s co-founders, and intermediaries violated the federal securities laws. The SEC determined that the tokens issued by the DAO are securities under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”), and advised those who would use a distributed ledger or blockchain-enabled means for capital raising to take appropriate steps to comply with the U.S. federal securities laws. However, the SEC decided not to pursue an enforcement action at this time.
Continue Reading The SEC and ICOs: Putting the SEC’s Determination that DAO Tokens are Securities in Context

The recent United States Supreme Court ruling in United States v. Windsor (see prior blog article here) invalidated Section 3 of the Defense of Marriage Act, which had defined marriage as a union between a man and a woman.  The ruling greatly expands the estate and tax planning techniques available for married same-sex couples who live in a state like California that recognizes same-sex marriage.


Continue Reading IRS Issues Guidance Regarding Tax Treatment of Married Same-Sex Couples

In Sun Capital Partners III, L.P. et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312, 2013 WL 3814985 (1st Cir. July 24, 2013), the First Circuit held that a private equity fund could be liable for its bankrupt portfolio company’s withdrawal liability imposed under Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) on the basis of the private equity fund constituting a “trade or business” under ERISA’s controlled group rules. By way of background, ERISA generally requires employers that withdraw from a union-sponsored pension plan (also known as a “multiemployer plan”) to pay their proportionate share of the plan’s funding obligations for vested but unfunded benefits accrued by the employer’s union employees at the time of the withdrawal. The withdrawal liability provisions under Title IV of ERISA are intended to protect remaining employers that participate in a multiemployer plan from being saddled with the underfunded pension liabilities attributable to the employees of employers that withdraw from the plan. Under ERISA’s controlled group rules, withdrawal liability imposed under Title IV of ERISA is shared jointly and severally among a contributing employer and each “trade or business” under common control with the contributing employer.


Continue Reading First Circuit Finds that a Private Equity Fund Can Be Liable for the Pension Obligations of its Portfolio Company

The recent United States Supreme Court ruling in United States v. Windsor invalidated Section 3 of the Defense of Marriage Act, which had defined marriage as a union between a man and a woman. The ruling greatly expands the estate planning techniques available for married same-sex couples who live in a state like California that recognizes same-sex marriage. These include:
Continue Reading United States v. Windsor Creates New Estate Planning Opportunities For Married Same-Sex Couples

The final rules for eliminating the prohibition against general solicitation and general advertising in Rule 506 and Rule 144A offerings will become effective on September 23, 2013, which is 60 days after the July 24, 2013 date they were published in the Federal Register. The rules prohibiting certain “bad actors” from participating in securities offerings conducted in reliance on Rule 506 also become effective September 23, 2013. For more information on these final rules, please see our prior blog entry here. For more information on the JOBS Act and Rule 506, please see our prior blog entry here.
Continue Reading Rules Eliminating the Prohibition on General Solicitation for Rule 506 and Rule 144A Offerings Become Effective September 23, 2013

In In re IndyMac Mortgage-Backed Securities Litigation, No. 11-2998-CV, 2013 WL 3214588 (2d Cir. June 27, 2013), the United States Court of Appeals for the Second Circuit held that the tolling rule established by the United States Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), which suspends the applicable statute of limitations for putative class members upon the commencement of a class action, does not apply to the three-year statute of repose contained in Section 13 of the Securities Act of 1933 (“1933 Act”), 15 U.S.C. § 77m. The Court also held that the “relation back” doctrine of the Federal Rule of Civil Procedure 15(c) does not permit putative class members to intervene in the class action as named parties to revive claims that were previously dismissed for want of jurisdiction. This decision thus holds that litigants cannot circumvent Section 13’s statute of repose for 1933 Act claims by invoking American Pipe or Rule 15(c).
Continue Reading Second Circuit Rejects the Application of American Pipe’s Tolling Rule and Rule 15(c)’s “Relation Back” Doctrine to the Three-Year Statute of Repose for Section 11 and 12(a) Claims

In Boilermakers Local 154 Retirement Fund v. Chevron Corp., C.A. No. 7220-CD, 2013 WL 3191981 (Del. Ch. June 25, 2013), the Delaware Court of Chancery dismissed facial challenges to the validity of corporate bylaws that restrict the forum where corporate governance litigation may be brought. The court rejected the argument that the bylaws were statutorily invalid because they went beyond the board’s authority under the Delaware General Corporation Law (“DGCL”). The court also rejected the argument that the bylaws were contractually invalid under The Bremen v. Zapata Offshore Co., 407 U.S. 1 (1972), which holds that unreasonable forum selections clauses are unenforceable. This decision undoubtedly will result in the increased promulgation of such bylaws, greatly limiting (if not eliminating) the risk and cost of identical stockholder suits challenging board actions pursued in multiple jurisdictions.


Continue Reading Delaware Court of Chancery Upheld Enforceability of Bylaws with Forum Selection Clauses Unilaterally Adopted by Board of Directors

On July 10, 2013, the SEC adopted the amendments required under the JOBS Act to Rule 506 that would permit issuers to use general solicitation and general advertising to offer their securities, subject to certain limitations. In addition, the SEC amended Rule 506, as required by the Dodd-Frank Act, to disqualify felons and other bad actors from being able to rely on Rule 506. The long-awaited new rules will allow issuers that are permitted to rely on Rule 506 to more widely solicit and advertise for potential investors, including on the Internet and through social media.

The SEC also adopted an amendment to Rule 144A that provides that securities may be offered pursuant to Rule 144A to persons other than qualified institutional buyers, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe are qualified institutional buyers.


Continue Reading SEC Eliminates the Prohibition on General Solicitation for Rule 506 and Rule 144A Offerings