Benefit Corporations: A New Corporate Benefit to Society

California is joining a wave of states that have enacted legislation creating new corporate forms that allow for the creation of for-profit companies with a general or specific public benefit.  During the 2011 legislative session, California enacted legislation allowing for the creation of a flexible purpose corporation and a benefit corporation.  As of January 2012, companies can choose between two new corporate forms that provide directors with the flexibility to pursue social and environmental objectives, while profiting from the corporate decisions.  The two new corporate forms differ in many ways despite both benefiting from a legal protection conferred by state statute to pursue social benefits.  This article specifically looks at the advantages of a Benefit Corporation.


Facebook IPO: An Investment In Facebook Is An Investment In Zuckerberg

For the all the hype about Facebook’s initial public offering (IPO), analysts are raising important questions that the social network will need to answer to court investors successfully.

On February 2, Facebook filed its Form S-1 with the Securities Exchange Commission (SEC) seeking to raise $5 billion from the sales of Class A common stock. Analysts quickly reported their expectations that the behemoth start-up could be valued somewhere between $75 and $100 billion and that it could likely raise up to $10 billion, setting it up to become one of the largest IPOs in American history.


The Second Circuit Casts Doubt on 5% Materiality Guideline

In Litwin v. Blackstone Group, L.P. (2011) the U.S. Court of Appeals for the Second Circuit concluded that the District Court erred in dismissing Plaintiffs’ complaint because Plaintiffs plausibly alleged that omitted or misstated trends from Defendants’ initial public offering registration statement and prospectus were material under Item 303(a)(3)(ii). In so holding, the Second Circuit stressed the importance of both a quantitative and qualitative analysis of materiality, stating that “[e]ven where a misstatement or omission may be quantitatively small compared to a registrant’s firm-wide financial results, its significance to a particularly important segment of a registrant’s business tends to show its materiality.” The decision casts doubt on the widely held belief amongst practitioners that a misstatement or omission that affects less than 5% of a firm’s assets is immaterial.

The case concerned the 2007 initial public offering of Defendant Blackstone Group, L.P., an alternative asset management and financial services company holding approximately $88.4 billion in assets in 2007. Plaintiff alleged misstatements and omissions with regard to its holdings in FGIC Corp., Freescale Semiconductor, Inc, and general residential real estate holdings.


ACTA Refracta: Future Uncertain for ‘Secretive’ IP Trade Agreement

The SOPA/PIPA uprising appears to have doomed those bills, but the United States Congress is not the only entity considering new restrictions on the web.  Trade agreements are emerging as the new legal device for combatting unlicensed use of intellectual property online – avoiding the legislative process, and potentially impacting the openness of the Internet in ways that are inciting outrage in the online community.  Two such agreements are positioned to have considerable effects on the global enforcement of intellectual property rights – the Anti-Counterfeiting Trade Agreement (ACTA) and the Trans-Pacific Partnership Agreement (TPP).  This post looks at the first of these agreements, ACTA; check back shortly for our discussion of TPP.


Century Bonds- A Not-So-Rare Animal After All?

In August 2011, the University of Southern California joined Yale University and the Massachusetts Institute of Technology (‘MIT’) in selling $300 million of 100-year bonds, also known as ‘century bonds’. In October 2011, Ohio State University (‘Ohio State’), the most recent investment-grade borrower, issued $500 million of taxable AA-rated century bonds. These institutions of higher education are heating up the century bond market, once considered a rather rare bond.


Eurozone vs. Rating Agencies: The Battle Continues

News reports on the Eurozone in the last few weeks have been characterized by a dichotomy between those touting credit downgrades by rating agencies on the one hand, and attempts by Europe to reassure the markets on the other. Now that the major credit rating agencies are continuing their ‘mass downgrade’ despite the additional guarantees made by the EU leaders, the European Central Bank (ECB) is striking back by questioning the role of rating agencies in the marketplace.


The Network Lecture Series: Professor Nicholas C. Howson’s Insider Trading and China’s Administrative Law Crisis

Information is relevant to many exchanges. Those familiar with capital markets will appreciate the important role that information plays in capital trading. Securities regulators across the globe attempt to regulate the flow of information in markets to ensure efficiency and protect the interests of reasonable investors.

Prof. Nicholas Howson made a very interesting presentation regarding the nuances of Securities Law of the People’s Republic of China, 2006 (‘2006 Statute’) last Wednesday as a part of BCLBE’s lunch lecture series. His presentation addressed three broad subjects: 1) Section IV of the 2006 Statute concerning insider trading; 2) enforcement issues presented by the internal guidance issued under Article 74; and 3) general comments on the creation and reception of law in China.


Op-Ed: All Against One – Judge Rakoff’s Lonely Crusade

Since November 28,2011 Judge S. Rakoff of the Federal District Court in Manhattan has been the man of the hour. His refusal to approve a $285 million settlement of the Securities and Exchange Commission (SEC) with Citigroup Global Markets has attracted the attention of all parties involved in alike cases pursued by the SEC. It is not the disapproval itself but rather the reasoning that causes the SEC and future defendants to fear the effectiveness of settlements.


Out, Out Brief Candle: European Union Competition Commission Blocks NYSE Euronext-Deutsche Boerse Merger

As reported by the Network last month, the proposed merger between NYSE Euronext and Deutsche Boerse (DB) was in jeopardy as Juan Alumnia, head of the European Union’s Competition Commission, publicly stated that he would recommend prohibiting the deal from going forward. On February 1, the commission officially blocked the proposed merger that would have created the world’s largest exchange operator. As a result of the decision, NYSE Euronext announced that “both companies have agreed to a mutual termination of the business combination agreement originally signed by the companies on February 15, 2011.”