Volume 17, Number 5 • May/June 2008
Our mini-theme: Federal Securities
As we do from time to time, this issue of Business Law Today has several articles on a related topic--the federal securities law. This "mini-theme" seems timely on two counts: first, because of the headline-grabbing volatility of the U.S. securities markets over the last few months in the wake of the sub-prime lending crisis.Second, this year marks the 75th anniversary of the Securities Act of 1933. That early New Deal legislation was the first effort by the federal government to regulate what had previously been the regulatory domain of the states. The creation of the Securities and Exchange Commission followed a year later, as did the second of the federal securities laws, the Securities Exchange Act of 1934.
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Departments
Keeping Current:
Concise up-to-the minute summaries of new cases and developments impacting specific business law practice areas.
In this Issue:
LLC governance
Securities 1
Securities 2
Concise up-to-the minute summaries of new cases and developments impacting specific business law practice areas.
In this Issue:
LLC governance
Securities 1
Securities 2
In this issue
Everyman a venture capitalistTaking private equity public
Investment in private businesses, with the potential for high returns coupled with substantial risk, has historically been the province of wealthy individuals and institutional investors like corporations, pension plans, and endowments. Exposure to the potential rewards and risks of backing new and growing companies—commonly referred to as "private equity" investing—frequently is achieved by investing in pooled vehicles sponsored by asset managers who are compensated based on the amount of assets under management and a percentage of the fund's capital gains.
Rule 10b5-1 plans
Staying out of trouble
In August of 2000, the Securities and Exchange Commission (SEC) adopted Rule 10b5-1 under the Securities Exchange Act of 1934 establishing that a person can face insider trading liability for trading securities while "aware" of material, nonpublic information about the issuer or its securities, even if the person does not actually "use" such information in making the trade. This standard significantly broadened the circumstances under which a person could face liability for insider trading.
ALSO IN THIS ISSUE
Whistleblowers and prosecutorsAchieving the best interests of the public
The False Claims Act (FCA) offers a bounty to encourage anyone with unique information about fraud in our government's business relationships to blow the whistle, reporting what they know to public prosecutors. The Department of Justice (DOJ) is obliged to diligently investigate all allegations and has the discretionary authority to pursue criminal or civil remedies or none at all.
Being a qui tam whistleblower
It's not for everybody
In February, drug manufacturer Merck, while not admitting wrongdoing, agreed to pay over $650 million to the U.S. Treasury to settle whistleblower allegations that it failed to pay rebates to Medicaid, and that it paid hospitals kickbacks to induce them to prescribe various drugs. Using what one industry observer called "heroin dealer economics," Merck is alleged to have offered hospitals 92 percent discounts to get patients started on its drugs in the hospital so that when discharged, they would continue on them with Medicaid footing the bill, instead of using generics or competitors' less-expensive versions.
Conducting investigations of wrongful workplace conduct
Issues and guidelines
With perhaps discouraging frequency, companies need to conduct investigations into allegations of employee misconduct. The subject matter of these investigations is diverse, encompassing topics such as sexual harassment, discrimination, embezzlement, misuse of a company's computer system, information posted about a company on a blog, employee theft, workplace violence, rules violations, drug or alcohol use, and numerous other issues.
Defining employees and independent contractors
Don't try this at home!
If you hire employees, you must pay their wages, withhold taxes, give them employee benefits, be liable for any acts of negligence they may commit during their employment, and face the scrutiny of state and federal law when it comes to nondiscrimination, discipline, and termination. Independent contractors, on the other hand, are classically one-time workers who do a job for a fixed price and who generally work for multiple companies.
"Adequately protect" your interests in an economic crisis
Proactive steps for lenders facing bankrupt borrowers
Credit markets remain restrained. Financial volatility persists. Subprime delinquencies have spread to prime delinquencies. Commercial lenders increasingly are feeling the impact of the economic downturn. What is a financial institution to do in protecting its collateral position during an economic crisis?
Office of Foreign Asset Control
Do you know who your borrower is?
Since September 11, 2001, our government has implemented numerous counterterrorism measures seeking to disrupt both the plotting and financing of terrorist activities. While measures like warrantless wiretapping form the spearhead for the disruption of terrorist plots, an executive order blocking financial transactions with certain designated parties forms the basis for economic counterterrorism.
The Last Laugh
