Private Company Fraud and Enforcement

Companies can get big without going public. The number of U.S. listed companies is down by half, and the last few years have seen more capital raised on the private side than on the public side. Despite this well-documented shift to raising capital privately, public companies are still the focus of securities law and enforcement. A major exception is that anti-fraud provisions apply to all companies, public or private. My article Private Company Fraud examines the SEC’s securities fraud actions against private companies – including unicorns – as a way of analyzing information loss from the shift to private capital.… Read more

Admissions and Accountability in Civil Enforcement

Whether and when targets of civil enforcement admit wrongdoing has been in and out of the public spotlight since the 2007-2008 financial crisis, when the issue seemed tied up in frustrations that suspected wrongdoers—especially banks and corporations—were getting off too lightly.  And the Securities and Exchange Commission has been at the heart of the debate.  Its policy of allowing targets to settle without admitting they did anything wrong prompted judicial rebukes, a public debate, and ultimately an announced policy change in 2013.  Admissions would be required when they furthered “public accountability” and “acceptance of responsibility.”  The decision to ask for … Read more

Multinational Enterprises and the Reach of U.S. Courts

Global business puts pressure on geographically limited courts. U.S. courts, for instance, can reach only defendants with contacts with the forum territory, usually the specific U.S. state in which the court is located. But litigation may be brought against part of a multinational business that has separately organized entities in different countries. Often the local subsidiary has direct contacts, but the plaintiffs want to sue the absent parent as well. Can they? The somewhat unsatisfactory answer is that it depends. Often it depends on whether the local subsidiary’s contacts with the forum territory “count” as those of the parent company. … Read more