A recent federal court ruling has raised some serious concerns in the private equity industry. In Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pensions Fund, the United States Court of Appeals for the Third Circuit held that two private equity funds were liable for pension liabilities incurred by a portfolio company in which they invested, based on the fact that the funds were effectively engaged in a “trade or business” for the purposes of the Employee Retirement Income Security Act of 1974 (ERISA).
Car-Ride Apps Become Transportation Network Companies
Before receiving cease and desist letters in November 2012, companies providing smartphone apps connecting users in need of rides to willing drivers had operated in their own unregulated market. That has changed now that the California Public Utilities Commission (“CPUC”) voted on September 19th to accept a proposal to regulate the nascent industry.The CPUC asserted its jurisdiction over Transportation Network Companies (“TNCs”) as a subset of chartered passenger services already under their regulatory control.
Consumer Financial Protection Bureau Clarifies New Mortgage Servicing Rules
The Consumer Financial Protection Bureau (CFPB) recently issued an interim final rule, as well as an explanatory bulletin, to further detail and clarify the requirements of the agency’s mortgage servicing rules that were finalized in January 2013 (the Servicing Rules). The Servicing Rules implement the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amending the Real Estate Settlement Procedure Act of 1974 (RESPA) and the Truth in Lending Act (TILA) to provide borrowers with more detailed information regarding their loans, ensure that borrowers are not unexpectedly assessed charges or fees, and inform borrowers of alternatives to foreclosures.
IPO Alert: Chinese Internet Behemoth Alibaba plans IPO in the U.S.
After a period of breathtaking growth, China’s biggest e-commerce company, Alibaba, has recently planned its initial public offering. Now the two major U.S. stock exchanges are ready to fight for the right to host. Though it has not been announced yet, Alibaba’s plan to raise $10 to $15 billion will likely overshadow Twitter’s highly anticipated Nov. 15 listing on the New York Stock Exchange. Relatively loose regulations in the United States, in contrast to Hong Kong’s stringent regulations, may be the fundamental factor that contributes to the biggest IPO since Facebook’s rocky debut last year.
SEC Proposes Rules on Crowdfunding
On October 23, 2013, the Securities and Exchange Commission (SEC) proposed rules which would, if adopted, govern the offer and sale of securities under new Section 4(a)(6) (the “Crowdfunding Exemption”) of the Securities Act of 1933 (Securities Act), provide a framework for the regulation of registered funding portals and brokers, and exempt securities sold pursuant to the Crowdfunding Exemption from the registration requirements of Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act).
Tomorrow’s Fantasy Football: Owning Stock in Players
A San Francisco-based startup has created a new financial product that may push sports betting to a new level, challenging regulators and existing law.
Fantex, Inc. wants you to buy stock in Arian Foster, the Houston Texan’s Running Back. As an investor, you can receive up to 20% of Foster’s future earnings from his playing contracts, endorsement deals, broadcasting contracts, or any other income that he receives from contracts attributed to his brand.
Out of Context- Delaware Clarifies on “Weak” Fairness Opinions
A footnote in a recent Delaware decision should relieve some of the anxiety felt in the investment banking community that the courts were inviting plaintiffs to allege fiduciary duty breaches by a target board in any sale where the fairness opinion analysis could be perceived as “weak.”
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Federal Judge Must Decide: Is Detroit Bankrupt?
Watching the Tigers lose to the Red Sox on Saturday was a little sad because if anyone needs a win, it is the city of Detroit. Saddled with massive debt and struggling to deliver basic services to its citizens, no one can deny that the city is in trouble. Now the question looms: is it bankrupt? U.S. Bankruptcy Judge Steven Rhodes started hearing arguments on Wednesday morning in the largest municipal bankruptcy filing in U.S. history—the City of Detroit wants to file for Chapter 9 bankruptcy.
International Business: Airline Regulatory Woes on Both Sides of the Atlantic
The past few weeks have seen the airline industry suffer from regulatory issues both in the U.S. and abroad.
In the United States, the proposed merger of American Airlines and U.S. Airways is causing a headache. Officially bankrupt since 2011, American Airlines’ bankruptcy exit plan was approved by a federal judge in late September of this year, such plan being contingent upon its merger with U.S. Airways going ahead successfully.
SEC Chair White Addresses Possibility of Disclosure Reform
It is well known that Chair White and her staff have stressed that their immediate focus is on completing the mandatory rulemaking under the Dodd-Frank and JOBS Acts, but in a sign of possible things to come after that task, Chair White spoke to the National Association of Corporate Directors (NACD) about the risk of information overload in the disclosure companies provide to investors.
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