The Attack on Nasdaq’s Board Diversity Rule

The recent pushback by conservative legal groups against equality and diversity on corporate boards has accelerated to new levels in the past few months. The latest example is a challenge to Nasdaq’s board diversity rule, which was approved in August 2021.

Beginning in 2025, the rule will require companies to disclose the level of gender and ethnic diversity on their boards of directors and to explain any lack thereof. On August 29, the U.S. Court of Appeals for the Fifth Circuit heard arguments in a case seeking to vacate the SEC’s order approving the rule.

The petitioners, the Alliance for … Read more

Ninth Circuit Gives Plaintiffs Some “Slack” on Tracing Shares

On September 20, 2021, the Ninth Circuit took aim at a foundational requirement in securities litigation that has long bedeviled plaintiff’s attorneys. In a 2-1 decision in Pirani v. Slack Technologies, the court imposed a strict liability standard under Section 11 of the Securities Act of 1933 for shares sold as part of a direct listing. This includes shares normally subject to an exemption from registration requirements, the baseline for Section 11 litigation. While this is a case of first impression, given the unique circumstances of Slack’s IPO, the ruling may still have major implications for the standards of … Read more

The Lowdown on SEC Approval of the NYSE Primary Direct Listing Proposal

Direct listings, the most promising disruptor of IPOs, received a significant boost this week, thanks to the U.S. Securities and Exchange Commission (SEC) ruling on a petition from the Council of Institutional Investors.

Most common in the tech industry, direct listings have been put to the test four times in the last two years. Spotify and Slack paved the early path with their direct listings in 2018 and 2019, respectively. Earlier this year, Palantir and Asana used direct listings as an alternative to the traditional underwritten IPO and have continued to generate an enormous amount of media attention in their … Read more

Alternative Venture Capital: The New Unicorn Investors

The COVID-19 outbreak provides fertile ground for sweeping regulatory changes. On May 19, 2020, for example, President Trump issued “Regulatory Relief to Support Economic Recovery Executive Order 13924”, which prompted the U.S. Securities and Exchange Commission (“SEC”) and Department of Labor (“DOL”) to promulgate new rules to protect investors and facilitate capital formation. The SEC adopted amendments aimed at harmonizing and improving the “patchwork” exempt offering framework, while the DOL announced that 401(k) plan fiduciaries have the ability to invest in private equity funds.

The primary purpose of these changes is to democratize and equalize access to … Read more

Will the Pandemic Sink Deals?

Almost everyone has experienced buyer’s remorse. It’s the feeling of purchasing, say, a big-screen TV at full price, only to see it on sale later for 50 percent off. Imagine, though, agreeing to pay $6 million for a chain of yoga studios just before the government shuts down exercise classes to slow the spread of a highly infectious disease. Or, more generally, agreeing to buy a company just before the stock market drops 30 percent, throwing the economic future of entire industries into turmoil.

That’s the kind of buyer’s remorse on steroids hitting scores of acquirers that committed to M&A … Read more